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Author Archives: Doug Hennes '77 : Photo by Mike Ekern '02
VIENNA, Va. – Mark W. Gregg remembers his mom’s reaction several years ago when
he took her to see one of his real estate development projects near Washington, D.C.
“She told me that when I was a kid, I played in the sandbox a lot with trucks, building things, and that I get to do it for work now,” he said. “It’s just that the sandbox is bigger.”
A lot bigger.
Gregg no longer is molding miniature cities out of sand and water in the backyard of the Mendota Heights home where he grew up. He is the founder, managing partner and president of The Penrose Group, a development and commercial real estate firm whose imprint and influence have been unmistakable in the suburbs surrounding the nation’s capital for two decades. Housing, offices, industrial space, shopping centers – you name it, Penrose has built it to meet the demand for growth in even the bumpiest of economic times.
“Washington is like a big small town,” Gregg said. “Everybody knows what everybody
else is doing. Zoning and entitlement are more complicated and tighter here, and the
process takes longer. Some projects are years in the making. You just have to be patient.”
Gregg learned patience – and a whole lot more – from his parents. He went to St. Peter’s Catholic School in Mendota Heights and Cretin High School before matriculating
at St. Thomas, and he never will forget the lessons he learned there as well as around
the family dining table.
“We had Sunday dinners, often with priests or teachers as guests,” he said. “My parents were very into the arts, education and literature, so I knew a little bit about everything. They wanted to expose us to different cultures, and for 11 years in a row we had foreign exchange students living with us. It was interesting to sit around the table and hear them talk about their countries.”
Gregg enrolled at St. Thomas in 1975 as a biology major, having worked in his dad’s
dentist office and thinking he might follow him in that field, “but it wasn’t my calling.” He earned a degree in business, secured a job at IDS and took off on a five-month trip to explore Europe. When he got back, he showed up at IDS. “They didn’t know who I was!” he said. “The guy who hired me had left, but I had a letter of acceptance and they had to find a place for me.”
He worked in real estate lending at IDS and then First Bank Systems (now US Banks)
before moving to Denver with First Interstate Bank. He had the East Coast market, and after returning to First Bank he opened its first office in the Washington area in 1984 at age 27.
“I told them I believed Washington was a great opportunity to create profitable business,” he said. “I leased 2,000 square feet in this building – I’ve never moved from here – and told myself, ‘You’d better make it.’”
First Bank sold assets of its Washington mortgage subsidiary to Bill Reiling, a 1954 St. Thomas alumnus and trustee who owned Towle Real Estate in the Twin Cities, and Gregg worked for him. They remained business partners for several years after Gregg opened Penrose in 1990.
“I learned a lot from Bill,” Gregg said. “He is always thinking five years ahead. He would say that you always should make decisions based on your moral compass, that you shouldn’t be afraid to make a mistake but should fix it, and that you should have your next vacation planned when you go on the current one. I liked that about him.”
Gregg opened Penrose because he felt he was ready to take risks on his own, not just in running a remote office for Minnesota-based companies. He huddled with his employees and said, “Let’s come up with a name.” But they couldn’t agree on one, “so we went to the London phone book, looked at street names and found Penrose.”
“It’s not the name that’s important,” he said.
“It’s what you make the company into. You make your reputation not on a name, but
on how you treat people and how successful you are.”
Penrose certainly has been successful, thanks to projects like King Farm in Rockville, Md. Until the 1990s, the 450-acre parcel was a dairy farm surrounded by suburban
development and a new Metro stop (Shady Grove on the Red Line) two blocks away.
Gregg patiently pursued the land for five years before negotiating a deal to buy it for more than $30 million.
King Farm today is a planned community with 9,000 residents in 3,200 housing units, 1 million square feet of office space and a shopping center as well as parks, ponds and bike trails. The family barn was renovated into a cultural center. Gregg knew it was an incredibly ambitious project, but he sold his vision and arranged financing because of one trait he learned from his parents.
“I am always honest with people,” he said. “Real estate is a risky venture. Values don’t always go up, up, up. There are going to be troughs and crests. Identifying risks and how to mitigate them is important, and we present all of the risks so people understand their investment. They like our approach.”
Reiling appreciates Gregg’s approach, too, singling out his “great integrity” and an ability “to keep 13 balls in the air. I guess you call that multi-tasking. A lot of would-be entrepreneurs are out there – good people, but not willing to take risks. Mark is a real entrepreneur because he is a risk taker.”
Gregg smiled at Reiling’s description but waved off the praise as he defined his success as an entrepreneur.
“A lot of it has to do with my upbringing and how I approach things,” he said. “It’s not about me. I enjoy a challenge. I like people, and I motivate them to work hard, to be fair and to be honest.”
His 40 employees jokingly refer to him as the “benevolent dictator,” although there is little in his soft-spoken demeanor to suggest he reflects the latter word. He tries to define the moniker.
“I won’t tell you how to do your job, but I want to know what you are doing,” he said. “I want people’s opinions on how we can collectively do the best possible job. We have a lot of great people who can attack a problem, think outside the box and make a profitable deal.”
Ole Kollevoll is one of those people. He joined Penrose in 1996 as general counsel and owns a minority interest. He repeated Gregg’s assessment of their employees in talking about him.
“You have to move fast on your feet,” Kollevoll said. “Mark is a real creative guy who has an instinctual grasp of real estate. He thinks outside the box all the time, so you have to move quickly because he’s so quick himself.”
Gregg’s youngest son, Michael, has worked at Penrose for more than a year and grins
when asked what it’s like to work for his dad.
“Oh, you mean the benevolent dictator?” he replied with a big smile. “He’s great. He demands respect from employees, but he treats them the same way. He wants us to
stand by our work. You ask anybody in the market about us, and they say, ‘Those
Penrose guys are good.’”
Good, perhaps, because their boss always has liked playing in a sandbox. This one is just bigger.
Amy Goldman likes investing in heroes.
As chair and executive director of the GHR Foundation, and previously as chair of the Better Way Foundation, Amy Goldman is involved in making contributions to transform organizations focused on improving the quality of life for the less fortunate around the world.
Deciding who gets funding is a daunting responsibility because the needs seem endless and the cases often are compelling, but Goldman approaches the process with the precision of an academic researcher and the heart of a compassionate philanthropist.
“I like the intellectual challenge – to examine a situation and determine the best cause of action – and I like the collaborative capabilities and the leverage we can give to a grantee,” she said. “It’s satisfying to know we can help the people who are doing the real work. They’re the heroes. It’s amazing to see what they are doing to improve society.
“And it’s fun to come into work every day and think about how to help people do a better job of serving others.”
As a young adult, Goldman never expected she would run a foundation. She was interested in a career that would combine her interests in international issues,
economics and political science.
She grew up in Edina, the youngest of seven children of Henrietta and Gerald Rauenhorst, founder and longtime chairman of Opus, a real estate development and construction company based in Minnetonka. The 1982 graduate of the Convent of Visitation School in Mendota Heights heeded her parents’ rule – they would pay only for Catholic colleges – and chose Georgetown University and its School of Foreign Service.
“I knew I wanted to live overseas and learn foreign languages, and I told the Georgetown recruiter that I wanted to be in the White House press corps.”
After earning her bachelor’s degree in international economics and politics, Goldman worked at the International Management and Development Trustee Profile Institute in Washington before enrolling in the Fletcher School of Law and Diplomacy at Tufts University in Boston. As she pursued a master’s degree in international business and East Asia, she took advantage of opportunities to teach and conduct research at Sogang and Yonsei universities in Seoul, South Korea.
Returning to the United States, she enrolled at the University of California-Berkeley to pursue a doctorate in political science and met Philip Goldman. They married, she earned a master’s degree in political science and they moved to Washington, where she obtained a MacArthur Foundation fellowship to continue her doctoral research.
She joined International Trade Services in 1993 and worked with clients on a variety of regulatory, investment and trade issues. “There was a lot of writing and advocacy work,” she said. “And I found myself using so much of what I had learned at Georgetown, Tufts and Berkeley.”
The Goldmans adopted infants Nicholas from the Ukraine in 1997 and Julia from Russia in 2000 (Nadia, their third child, was born in 2007), and Amy became an active volunteer. One day, Philip, who had been working for the World Bank in Washington, came home with news.
“He said, ‘I got a job offer to work for the bank in Croatia, and I’m sure you’ll never consider it,’” she recalled. “I said, ‘Are you kidding? Let’s go!’ ”
The Goldmans spent two years in Croatia and returned to the United States – Minnesota, not Washington – in 2005. Amy continued her work with foundations that her father had established, starting with the Better Way Foundation, which she chaired from 2003 to 2009. It proved to be a good fit.
“It was more than just writing a check,” she said. “We worked in partnership with our grantees. Every dollar we gave had to make an impact. That was my mandate from the founder and the board.”
As Goldman dove into her work with Better Way, she saw pressing needs everywhere. The foundation decided to split its grants between domestic and international programs and targeted areas such as HIV/AIDS education in East Africa. An order of nuns received a grant to pay for a certificate program at Uganda Martyrs University after demonstrating that their most urgent need was to learn counseling and leadership skills.
Louise Myers, an international health care consultant who served on the Better Way board for six years, called Goldman’s formative efforts “brilliant.”
“She took a new foundation and did all of the right things to develop a vision, a structure, goals and a program focus,” Myers said. “She methodically built the foundation and was able to blend personalities, different agendas and dynamics that are part of any board.”
Matt Rauenhorst, her nephew, went on an eyeopening trip to Uganda in 2006 with board members to learn more about programs that could help orphans and children in poverty. “Amy showed great leadership with that trip,” he said. “She showed that a foundation like ours can make a difference.”
In 2009, Goldman moved down the hall to the GHR Foundation as its chair and executive director. It has a similar mission – “to assist those providing sustainable solutions to the world’s most pressing social issues” – and helps grantees establish longterm partnerships with educational and social service institutions.
One program is the Children in Families Initiative, which works with community organizations to create services that place children without parents, or in
out-of-home care situations, in stable environments. Another program, Sisters Support,
examines declining vocations of religious women, who historically have been powerful
forces in the fight against poverty.
“We have anecdotal data, but we’re funding a research study and then will go back and see who is proposing ways to address obstacles in their congregations,” Goldman said. “In Africa, the numbers are high but they don’t have the education, so we need to look at education and training for them.”
As infinite as the challenges and problems seem and as limited as the dollars are to address them, Goldman always is heartened by progress that she sees. It’s a result, she said, of making sound choices on programs and ensuring that those who receive funds not only spend them wisely but also have the passion and the wherewithal to affect change in their communities.
If they accomplish those goals, Goldman insists, they’ll become the true heroes of the day.
When Ron Peltier starred as the center for the St. Paul Johnson and Minnesota Gopher hockey teams, he had a simple goal every time he laced up his skates: He wanted to win.
When Peltier, fresh out of graduate school and three years of teaching, decided to try his hand at real estate, he had a simple goal every time he met with customers: He wanted to buy and sell houses.
And when Peltier became chief executive officer, and later chairman, of what now is the nation’s second-largest residential real estate brokerage firm, he had a simple goal when faced with the opportunity for growth: He wanted to make the right deal for the right reason.
Sports and real estate may be different in many respects, Peltier acknowledged, but they also share common traits, and they both have a certain “rush” to them.
“When you drop the puck, you aren’t sure where it will go but you hope you have the right strategy and people in place,” he said. “You don’t win every time, but you learn from losses what you can do better the next time.”
The same philosophy applies to business.
“There’s a real sense of satisfaction in developing client relationships from beginning to end,” he said. “You want a positive outcome, whether it’s selling a house or acquiring a company. Taking on a challenge – and there is no shortage of them – such as finding a strategic acquisition, establishing a rationale and a value and then bringing it to a conclusion … it can be a rush.”
Peltier has had a lot of rushes in his lifetime, whether they were on neighborhood rinks on St. Paul’s East Side or in the board room of HomeServices of America, which has 22 real estate brands in 20 states, including Edina Realty here in the Twin Cities. Those rushes meant hard work – and success.
“It’s putting your talent on the line every day,” he said. “You’re judged, in effect, by if you can sell. It’s not about going through the motions, but getting results. You get paid for results. I liked that. If I wanted to work harder than other guys, I might be successful. I wanted to compete.”
Peltier’s competitive streak was honed on the East Side, where he grew up in a family of seven, with three sisters and a brother. His dad worked in marketing incentives for Brown & Bigelow, a calendar and playing cards company, and his mom was a head nurse for what now is Regions Hospital.
She would take the kids to hockey rinks when they were 4 years old “to burn off energy,” Peltier said. “She’d bring us up there, help us put on our skates, and we’d go at it. We’d spend Saturdays, Sundays and weeknights after our homework was done, skating. We’d play baseball, too, but we were always thinking hockey.”
Among Peltier’s early coaches, as a Pee Wee and a Bantam, was Herb Brooks. Lou Cotroneo coached Peltier at Johnson, where he played center on three state tournament teams from 1965 to 1967. At Minnesota, he played for Glenn Sonmor, Lou Nanne and Brooks again, and they reinforced core values such as commitment, responsibility and teamwork.
“I always had really good coaches,” he said. “They stuck with you in terms of how your personality was shaped and how a sense of competition developed. Their message: Whatever you did, you could do more, and 100 percent was not good enough. You had to give 110 percent.”
Peltier majored in history and political science at Minnesota and intended to go to law school but instead earned a master’s degree in education from St. Thomas in 1973. It fit nicely with his first job as a history teacher and hockey coach at the new Blaine High School. He had dabbled in real estate – buying, renovating and selling a duplex – and decided to change careers in 1977.
“Once I got the hang of the real estate business,” he said, “I thought, ‘Boy, is this empowering!’ I knew how to sell, and I knew I could do it anywhere.”
Edina Realty knew it, too. After 18 months as a sales associate, Peltier opened a Maplewood office, was promoted to regional manager for the east metro area a year later and moved up to president and CEO in 1992. Edina changed hands several times before it evolved into HomeServices of America and became part of the Berkshire Hathaway empire in 2000. His new boss? Warren Buffett.
“Whether in sports or business, you want to interact with successful people and learn from the best,” Peltier said. “You won’t learn from losers. You won’t learn from bad actors. So how would I not be excited about Berkshire Hathaway? He (Buffett) has all winners.”
HomeServices thrived and used acquisitions over a decade to expand around the country. The real estate crash hurt sales volume and revenue – they dropped from $64 billion and $2 billion in 2005 to $33 billion and $1 billion in 2010 – and HomeServices survived only by trimming costs and laying off employees and sales agents. It wasn’t fun, Peltier said, but it was necessary.
“We never saw it coming – and neither did anyone else,” he said of the recession. “I’ve been through good times and bad, but nothing like this. It took on a life of its own.”
Peltier believes the market has stabilized, even though there is little job growth, and he is eager to acquire more firms as HomeServices pursues a long-term goal to have the No. 1 or 2 brand in 60 prime markets. His “real estate is all local” philosophy remains the same, and he has no intention of trying to create a national brand.
“To put an Edina Realty in Iowa would be foolish,” he said. “We acquire companies that are well-established in their markets.”
Peltier relies on loyal employees such as Barb Jandric, another St. Paul native, to get the work done. He hired her 28 years ago as sales manager for Edina’s office in Highland Park, and today she is president of the firm.
“Ron never told me what to do,” she said. “He always allowed me to choose my own solutions, to figure things out, and then we’d talk and he’d ‘fine tune’ my ideas. I learned how to solve problems in a really good way, on my own, and I developed into a stronger leader.”
Another employee who has learned from Peltier is his wife, Arlie. They were high school sweethearts at Johnson, and after working as a Montessori teacher she went into real estate. She directs Edina’s Exceptional Properties division. She calls her husband a “smart, warm, caring, sincere, honest, direct” man who is driven to succeed.
“He’s passionate about absolutely everything he does,” she said. “Business, pleasure, family, whatever. He always said you could not be a great hockey player unless you gave your heart and soul. It’s the same in real estate. It’s the same in anything he does.”
Bernadeia Johnson has a frenetic – some would say crazy – schedule. She works 12-hour days as superintendent of Minneapolis schools, starting with coffee shop meetings at dawn and often running well into the evening with community meetings. In between, there is a constant flurry of issues involving curriculum, policies, budgets, personnel and politics.
She stays sane and remains grounded by remembering why she is really in the job. It’s not just to run a $685 million, 34,000-student, 5,600-employee operation. It’s to carry out the responsibility that is so perfectly described on the nameplate on her desk:
“It’s so easy to not individualize this work,” Johnson said late one Friday afternoon, on her 51st birthday, as she sat in her office and reflected on another frenetic and crazy week. “You have to carry the images of individual kids and remember that the decisions you make affect not 34,000 children – but individual kids.”
That’s why Johnson is following five kindergarten students – out of 3,100 in the school district – to see how they are reading. The goal is to reach a certain performance level by winter break. She gets regular progress reports, stays in touch with parents and blogs about the project.
That’s why Johnson visits a school most Tuesdays and sometimes Thursdays. She often arrives unannounced to spend time in classrooms watching teachers work with students on everything from how to tell time to discussing the differences between X-rays and MRIs.
And that’s why Johnson is willing to endure seemingly endless criticism from the public when she makes controversial recommendations such as closing North High School, a community anchor for 122 years. Her bottom line: the school isn’t doing a good enough job in educating students and has lost far too many students to remain effective.
On days like this, Johnson finds herself a long way from her hometown of Selma, Ala., where she attended segregated schools until fifth grade … from the financial analyst job that she held at a bank in the 1980s … and from her first teaching assignment after deciding to change careers and enroll in the new Collaborative Urban Educator (CUE) program at St. Thomas.
Frenetic or crazy, Johnson wouldn’t have it any other way because she believes she can – and she will – make a difference in providing a better education for 34,000 children. One at a time.
“The role we play in educating students is central,” said Johnson, who last July 1 became the seventh person in a decade to serve as Minneapolis superintendent. “We are the one – the one – institution open to all students, and we can have the greatest impact on those students and what they will do with the rest of their lives. That is a wonderful opportunity.”
Bernadeia Johnson grew up in Selma during the height of racial unrest in the 1960s. She was the oldest of three children, and her parents – her mom was a teacher and her dad was a lobbyist for the United Auto Workers – were divorced. Integration came slow to the Deep South.
“There was no busing,” she said. “Just because the schools were integrated didn’t mean you went there, so mom paid for cabs. They picked us up every morning and drove us to the white school and back.”
Johnson spent summers as a teenager in Minneapolis, where maternal grandmother Hallie Hendrieth-Smith taught and served as an elementary school principal for nearly three decades. A skilled clarinetist, Johnson enrolled in Alabama A&M University on a full music scholarship, played in the concert and marching bands and majored in speech pathology. She met trombonist Reginald Johnson and they married and moved to the Twin Cities. She went to work for what now is U.S. Bank, where she had held summer jobs. Her husband has spent his career in Minneapolis and Anoka-Hennepin schools as a teacher and administrator, and today is assistant principal at Olson Middle School in Minneapolis.
A corporate downsizing led to layoffs in 1991, and Johnson found herself without a job after 13 years at U.S. Bank. With two young children at home, she struggled to find work and filed for Chapter 13 bankruptcy.
“There was a lot of reflection time without a job,” she said. “I had to take stock in what I wanted to do. I was getting a little jaundiced about the banking business.”
Then she heard about CUE. The St. Thomas School of Education, responding to a legislative initiative for alternative teaching licensure programs, had established CUE and recruited largely from communities of color. Many students – including Johnson – were in their 30s and looking for a career change – and she caught the eye of CUE founding director Trudi Taylor.
“Bernadeia stood out,” Taylor said. “She was articulate and thoughtful. We knew she would be a great teacher. She always has had this positive, can-do attitude – for herself and everyone around her – and an amazing ability to pull people together and work together.”
Johnson flourished in the program, receiving her licensure in 1992 and her first assignment as a fifth-grade teacher at Highwood Hills School in St. Paul. It didn’t take her long to ascertain that she had made the right decision.
“I loved teaching,” she said. “I thought I was a good teacher, and I always tried to become a better teacher.”
Knowing that some educators viewed her as having taken a “back door” to her position through alternative licensure, Johnson worked even harder. She earned her master’s degree in curriculum and instruction from St. Thomas and certification from the National Board for Professional Teaching Standards, juggling course work with her duties in the classroom.
“I liked the naughty kids,” she said. “I always thought their attitudes were an expression of self and not in defiance of me. I thought I could find something in the most challenging students that they could feel good about and become successful.” She paused and laughed. “There was a little bit of defiance in me, too!”
After five years at Highwood, Johnson moved to Saturn Riverfront Academy in downtown St. Paul to intern for a year as an assistant principal and then serve in that position for a year. She had not actively considered work as an administrator but found that she liked it, encouraged by teachers who would say, “Show me what you’re doing and how you’re doing it.”
She got a call one day from Minneapolis Public Schools asking her to consider an assistant principal position, but her husband counseled her to say no. “If you are going to come to Minneapolis, you come as principal or not at all,” she recalled him saying. “So that’s what I told them.”
Somebody listened. In 1999, Johnson became principal of Elizabeth Hall Elementary School, where her grandmother had held the same position in the 1980s. She thought her granddaughter would be a good fit for the job, just as she has been a good fit as superintendent.
“She has so much to offer to young people in the way she challenges them to be the best they can,” said Hendrieth-Smith, now 94. “She always had it in her to be the best, and whatever that required, she would do it. You don’t have to tell Bernadeia what to do or where to go. She just does it.”
Reginald Johnson also believes his wife has been a good fit for her jobs, although she has needed “a little nudge,” he said. “I used to tell her all the time, ‘Bernadeia, you can do this,’ and then she gets in there and excels. She can do anything she sets her mind to. She’s that good. She’s that driven.”
The Hall position, which Johnson held for five years, challenged her. There was divisiveness among the faculty and staff, too many students fought and performance scores were low. She created safe zones and encouraged people to come to her for “tuneups.”
“I told them, ‘You can come to me for a tuneup. You can say whatever you want as long as you are respectful. Do you want to listen? To problem solve? To take action?’ One person said she found me intimidating. It blew me away. I said, ‘Wow,’ and asked why. I said, ‘Let’s do this: I’ll go away and think about my role, and you do the same.’”
They got back together, compared notes and began to get along better. Johnson later told the staff how she had had her own “tuneup” and learned a great deal from it.
In 2004, Carol Johnson, the former Minneapolis superintendent who had taken the same job in Memphis, called Johnson with an assistant superintendent offer. She moved and within five weeks was deputy superintendent. She served 16 months before taking another call – from Minneapolis superintendent Bill Green – and returning as deputy superintendent in charge of academics.
When Green decided to leave last year, the Minneapolis School Board chose not to conduct a national search but name Johnson as his successor. “I am just humbled and honored,” she said at the time. “I’m nervous and excited all rolled into one.”
It’s Election Day, and Johnson is sitting in Dunn Brothers Coffee in south Minneapolis for her weekly meeting with Minneapolis School Board Chairman Tom Madden and deputy superintendent Dan Loewenson. It’s their chance to review hot issues – and none is hotter than Johnson’s recommendation to close North High School.
Johnson has been buried in criticism about the closing of 122-year-old North, where enrollment dropped 75 percent – from 1,140 in 2004 to 265 today – as students fled for charter schools or suburban districts. Seeking a compromise, Johnson came up with a new plan: close North by 2014 and open a new North in 2012 as a 500-student magnet school.
She reviews her strategy with Madden and Loewenson, starting with a news conference to announce the plan and the board’s vote. They discuss key points to address in both settings, and Johnson vows to move forward. “I wish I didn’t have to do this,” she said, “but it’s the right thing to do.”
Two days later, the news conference draws a big crowd, including Mayor R.T. Rybak. Johnson deftly handles tough questions and challenges the community to join her in designing the new North, promising to bring together “the intellectual horsepower” of educators, government officials, businesses, alumni, parents and students.
“This is about guaranteeing Minneapolis families that no matter where you live or what your income is or what your background is, your child will get the same educational opportunities as other students,” she told the news conference. “Being able to get into a high-quality school should not be like winning the lottery. This is about delivering excellence.”
Five days later, the board approves Johnson’s plan – with one caveat. She recommended the phase-out of old North begin without enrolling freshmen in 2011, but the board decides to allow one more freshman class.
As stressful as issues like the North closing can be, Johnson always has the perfect place to escape for a break and to remind her why she took her job. She goes to school.
On this day, after the Madden-Loewenson meeting, Johnson visits Hale and Field schools. They are “twinned” schools, Hale as a K-4 and Field as a 5-8. Her first stop is Tracey Schultz’s eighth-grade science class, where students are discerning chemical reactions between elements. Later, other students compare X-rays and MRIs, and Schultz tosses in EEGs to enrich the discussion.
“You do so well in science here,” Johnson tells the students. She had received letters from parents praising Schultz and decided to see her in action. “I just wanted to know what works well.”
Johnson’s next stop is at Hale, a mile away, where first-graders are learning to tell time. “We didn’t even make one mistake!” one girl tells Johnson. Down the hall, fourth-graders pack a 36-Macintosh laboratory, and Johnson crouches next to a boy to watch him work on a math problem. All of this is done unannounced, with Johnson sliding in and out of classrooms. The practice is unnerving in one sense, admits Steven Norlin-Weaver, in his fourth year as Field principal, “but I’m not sure it’s a big deal. What are we going to do differently?”
That’s what Johnson likes to hear, she says later at lunch.
“I don’t want to go into schools to see a show,” she said, and she certainly didn’t get one in Schultz’s classroom. “The kids wanted to tell me what they were learning. They were able to communicate. There was a buzz – a real energy – in her classroom. …
“Every student engaged in an explanation of X-rays and MRIs. It was interactive. She called on students.
And if a student didn’t know an answer or got it wrong, there was an acceptance of that and a willingness to move on.”
Those experiences are affirmative for Johnson as well – and they reflect a philosophy formed over 20 years as a teacher and administrator and stated ever so simply on a nameplate on her desk:
“As long as I remember that,” she said, “I’ll be okay.”
You almost think Ray Barton is joking when he talks about how he built Great Clips into the largest hair-care brand in the world. No high-powered marketing campaigns backed by million-dollar budgets from wealthy investors. No simultaneous openings of dozens of shops in multiple markets around the country. No acquisitions of rival hair salon chains. Barton succeeded the old-fashioned way: one store and one market at a time. That was his strategy nearly 30 years ago as a start-up, and it remains his strategy today.
“We just plodded along,” he said. “We never were a star. We put one foot ahead of the other, just like a horse. Then we woke up one day and we were the biggest.”
He shrugs, not in an immodest way, but to suggest that was the only way he felt comfortable doing business. He knew from the beginning that he wanted to build Great Clips into a national brand because he felt one was bound to emerge in the industry.
“When we started franchising, there was this idea of building a national brand,” he said. “We may not have used that term, but was it possible? Yes. Some chains had 400-500 salons, but no national presence. We figured, ‘Why not us?’”
Why not, indeed. Great Clips has become that national brand, with 2,900 stores in 43 states and Canada and annual revenues of $800 million. Barton expects to hit a long-envisioned 3,000-store milestone this year and $1 billion in revenue by 2013. Not bad for a guy who went to five colleges, left two jobs in a six-month period and lost money in his first franchise venture before landing with Great Clips.
Barton was born in South Dakota, the only boy in a family of six kids and the son of an engineer dad who built grain elevators and a mom who ran a restaurant and a cheese shop. They moved around the Midwest during his childhood and settled in the Twin Cities, where he graduated from Minnetonka High School in 1967.
He served in the Navy Reserves, got an accounting degree from San Diego State University and spent four years with Grant Thornton in Denver and Minneapolis. He joined Century 21 to develop real estate franchises and then an oil exploration company, but neither job panned out. Nor did his franchise with The Barbers chain. He opened a Town Square salon in 1981 in downtown St. Paul, intrigued by the hair care industry and similarities with Century 21 when it came to franchising potential. He lost money and sold the franchise after a year, but got to know Great Clips founders Steve Lemmon and David Rubenizer, who had four salons. Barton came on as a partner to recruit franchisees and sell a simple concept.
“Quality, convenience, price – we called it our value quotient,” Barton said.
At the time, independent salons and barber shops with the classic red, white and blue poles dominated the business. You made an appointment for 9 a.m. to 5 p.m. Tuesday through Friday or on Saturday morning, and you bought a shampoo, cut-and-style package for $16.
“We unbundled the services,” he said. “If you wanted just a haircut, you could get it. Six bucks. We were open until 9 p.m. and all day Saturday. Right away, we were different. Convenience was a huge factor, and our stylists were well trained. We did more haircuts and better haircuts.”
Barton and partners sold the first franchises to friends and family members, including his wife and mom, and targeted Des Moines and Omaha before expanding into Denver and the Twin Cities. They provided marketing clout via television and radio advertising and developed training programs, although they scrambled on the latter.
“We realized we didn’t have a training program,” Barton said, so I called my sister and asked her to help us develop one. She said, ‘Sure, when do you need it?’ I said, ‘Two weeks …’”
“And I told him, ‘Of course,’” said Rhoda Olsen, then a Land O’ Lakes human resources manager.
Olsen came through with the training program and joined Great Clips in 1987 as vice president of human resources. Eleven years later she was named president – the No. 2 position under chairman, chief executive officer and majority owner Barton, who had bought out his original partners.
“Actually, I’m No. 2, and she’s No. 1,” Barton said. “I have my job because of Rhoda’s great work.”
Olsen laughs at her brother’s wry humor. She admires how he never wavered from a vision that “we would be the biggest and best, and he never let anybody try to steer us off that path.” As for her role, “I never thought I could do these jobs, but he did, and that carried the day.”
Potential franchisees would approach Great Clips. An Indiana man visited Barton and mailed him a $10,000 check for a franchise, but Barton hesitated because Great Clips had no presence or support services there.
“He figured we wouldn’t say no if he sent us the money,” Barton said, “but we had a strategy. We thought long-term, not short. What was best for us that day was to cash the check because we needed the money. But we were disciplined enough to send back the check.”
In 1988, during the first Great Clips franchisee meeting, Barton proclaimed a “3,000 (salons) by 2000” goal, with annual sales of $1 billion. Two years later, he wrote a mock 1999 Wall Street Journal story about Great Clips’ success and had franchisees sign the story. Never mind that Great Clips didn’t hit those marks; that wasn’t the point.
“It unified our whole organization on a quest,” he said. “It was very powerful from that perspective. When I wrote notes to franchisees, I always finished, ‘I look forward to working with you as we get to 3,000 by 2000.’ My wife said, ‘You have to stop saying 3 by 2.’ I asked her why. She said, ‘Because people are starting to believe you.’”
Jim Hemak believed. He was working for Junior Achievement in Denver when he opened his first franchise in 1984. He built his Great Clips empire to 39 stores in Milwaukee, Colorado Springs and Denver before selling most of them. He owns nine today.
“Ray was extremely committed to a vision of making Great Clips the largest hair salon brand even when we had only 30 to 40 salons,” Hemak said. “People would raise their eyebrows and say, ‘Right, Ray …’ and he’d say, ‘Hey, we’re gonna do it.’ He was tenacious. He had a lot of moxie.”
That tenacity and moxie still are there today. So is Barton’s focus on adding franchises one at a time. So is his commitment to quality.
“Winning is always fun, but we have challenges,” he said. “We don’t spend much time resting (on our laurels). We just think about how we can get better – for our customers and our franchisees.”