So we started off as a Team on February 1, 1985 (not January 1 because our fiscal year in Vector ended on January 31 and I wanted to close the books on 1984 first). I had established the battle cry "5 (as in million) in 85!" and I worked like heck to hit that goal and fulfill my committment to Erick and the Alcas Team.
This joining of Vector, by now the largest fastest growing of the 100+ companies selling Cutco, with Alcas sent shock waves through the existing network of independent Cutco Distribution companies. Virtually every one of them was in decline and they all wanted to learn what we were doing in Vector to grow the business so reliably. As they contemplated their futures, the smart ones wanted to join us right away.
In addition to running and growing Vector organically, I had to negotiate with old Cutco Distributers and bring them on in a way that caused the least trama to their teams and their egos and created maximum sales leverage. In rapid succession we added:
(The late great) Marty Domitrovich - Chicago - among his Team was Brian Pentecost a future Vector Champion and great young leader.
Ken Schmidt - perhaps the greatest individual Cutco Salesperson of all time!
Former WearEver national Sales Manager Willis Trout in Southern California - his top guy was Steve Weber (perhaps the most talented young leader I ever worked with in Vector) who went on the become a National Champion and Record Setter.
CWE the 2nd largest Cutco distributor headquartered in Napa Valley CA, the home of Cutco legend Don Muelrath. Don brought on several offices and we made Bruce Goodman his Sales Promotion Manager. I later tapped Bruce to become a zone manager and to redefine the role. He succeeded Muelrath who became a member of the Triad that replaced me when I retired.
Carlos McCracken - Charlotte, NC - smart and gracious Southern Gentleman.
Ray Arrona - Phoenix, AZ - a sweetheart of a guy who loved the business and loved his people.
We ended 1985 having hit our sales and profit goals and the Company was poised for significant growth for the next decade.
1986 to 1996
So I spent the next 8 years going back and forth from Philly to Olean and travelling the country to speak at Vector events.
Erick and I got along great on a personal level. We agreed on 97% of business issues as well. Erick knew that I had built Vector and understood the business at a level and depth that he could never reach, and that was OK. He trusted me to do the right thing and concentrated, along with his righthand man, Jim Stitt on improving the performance of the factory and they did an amazing job and ramped production up each year to keep pace with our double-digit growth. It was truly the beginning of something very special. We started on a progression of growth in sales and profits that made us both wealthy.
In each of the subsequent years we had substantial growth in sales and profits, I added additional layers of management to provide opportunity for top people and support for the young new managers coming up.
Other noteworthy people who "got their oar in the water" over the 10 year period:
After we signed the deal a young John Whelpley was assigned to come to to Springfield PA to assist us with the integration of our systems and cash flow with the team in Olean. John is a true gentle giant and an excellent accountant. He led the transition of the Vector financial systems to "connect" with the Alcas systems. A true professional who became President of Cutco and a great leader in Olean.
Connie Baxter was my Executive Assistant for most of the years I was in Vector. Connie is a true professional and provided me with high level administrative support.
Mike Lancellot joined me the summer before his Senior year at the University of Delaware. He was one of my top Reps that summer and I made him an Assistant Manager that fall. I saw leadership potential in Mike right from the beginning and I made him a protege putting him in the position to be (what amounted to) top Assistant Manager in the company during his senior year. When he graduated the following year he became a District Manager and went on to have a stellar career in WEAI and, of course in Vector - leading at every management level on his way to become one of the Team of 3 guys to succeed me when I retired.
I remained on as Chairman of Vector for a couple of years to provide guidence and counsel. In 1996 we did in excess of $100,000,000 - a long time goal. I used to sign my letters to the field - Don 108 The Board of Directors presented me with this plaque when we passed the $100 Million mark - It was amazing for me to think that we only did $315,000 in our first year and hit the $100,000,000 as I retired.
As I prepared to leave (I let Erick know 3 years before my contract ended that I did not plan to renew my contract) we began to put into place the plan for the successful transition of leadership. As I thought about it, we had Don Muelrath in the west and Mike Lancellot in the east. Both were very well known, well-liked and well-respected with their respective Teams but not so on the other side of the country. Erick had brought on Bob Haig, the former President of Princes House as my replacement a full 2 years ahead of my departure to give him time to ramp up and get to know everyone and vice-versa. Bob was a consummate professional and a great guy. I liked him alot. Erick and I spent alot of time thinking about which one he was going to choose to follow me when I left. After several months, at an Alcas BOD meeting I proposed the idea of creating a "Triad." Make all 3 of these guys Presidents; Muelrath in the west, Mike in the East and Bob in Home Office coordinating everything, They made up the Office of the President and there was a smooth transition and the guys did great and continued to grow the business. I often get the question, "Do you miss Vector?" The truth is, I do. I miss the people - so many wonderful relationships that mattered a lot to me but it was time for me to experience other things. I did not want to make a big thing about my departure. It was necessary, for their sake and the company, for me to make a clean break. I do miss the Team and I sometimes wish I could have some interaction but I guess those times are passed but I do miss them. And, uh, well, OK - I miss the paychecks too ;- )
Why I left Vector
People ask me about my decision to leave often. In hindsight there were many other options but the truth is I was burned out. I had been doing the business HARD for almost 20 years. We really had hit all of the goals I had set for the company way back when I started it. I was young enough (mid-forties) that I wanted to try and experience other things. My relationship with Erick was good but I realize now that I should have been more supportive of his dream for Cutco - to be a major INTERNATIONAL Brand.
The one main place where we did not agree was on further international expansion. Yes, Canada was a success but we sent Joe Grushkin, an amazingly talented and accomplished manager with 6 top performing District Managers including Adam Ginsberg (an all-time DM Champ) and Joe Cardillo who ultimately succeeded Joe G. Furthermore, the US and Canada while definitely different countries, share a lot of the same philosophies. Erick saw International expansion as the key to future growth and spent millions trying fruitlessly to get operations going in the UK and Australia (starting with English speaking nations) and dreamed of the company doing a billion dollars a year with dozens of other international markets open. This ate up tons of time, energy and capital and I just couldn't get onboard. Furthermore, I was already doing way more travel than I wanted to so I begged-off the international "train." I think this disappointed him and caused a rift in our relationship but we've patched it up and are good friends today with Erick and Marianne.
So, in addition to feeling burned out on the Cutco business and that I had hit all my goals, I was really excited about the emerging thing called the Internet. For young readers, I know it's difficult to imagine that there was a time when there was no Internet. I will admit that I didn't know how it would be used or how money would be made - but I knew it was cool and it was the new frontier and that attracted me.
Soon after my departure (done quietly and unceremoniously) Steve Weber insisted that I come out to San Diego and meet a guy named Michael Pousti. Michael may well have been the smartest person I ever worked with - he is brilliant. He was building a social media company. The easiest way to explain it is that it was 100% the FaceBook business model, only several years earlier! I invested heavily ($3 Million) in it [CollegeClub.com] and took a job as President of Sales. We were set to go public with Merrill-Lynch as our underwriter when suddenly, the "Internet Bubble" broke and all was lost.
So, I've been consulting and speaking and training ever since and still look back on my Vector experience with much love, satisfaction and pride. If I had it to do all over again, I would have figured out a way to stay and still accomplish the other things but "c'est la vie!" I am blessed with a beautiful family (that I am extremely proud of and draw much joy from) and had a lifetime full of fun and accomplishment..
Additional Acknowledgements: There are so many other people who contributed to the success of Vector it would be imposible to mention them all but I would like to highlight a few key people:
First, my Family - wife Teresa mentioned earlier and our sons Donnie and Joe. I worked hard to be present in their lives but I did travel a lot and that impacted them. They are both successful fathers, husbands and businessmen in their own right today. I cherish my relationship with them today that is active and fun. They are my 2 best male friends!
Additionally, thanks to Art Plummer, George Gillas, Nelson Burdumy, Keith Patridge, Mike McFadden, Carol Quigley, Anthony Antonelli, Filippo Mancini, Mark Karuza, Ken Schmidt, Tony Sorrenti, Adam Ginsberg, Tom Quinty, Greg Gore, Chal & Cheryl Pasley, Bruce Goodman; J. Brad Britton; Dan Casetta; Mike Zellner; Ed Viega; Lou Ferris; Mitch Leger; Scott Dennis; Dave Durand, Adam Ginsberg, Joe Cardillo; Jason Phillips; Keith Patridge; Ramez Helou, Steve Croll; Earl Kelly and hundreds of others who all contributed mightily to the early success of Vector. They paved the way to the thousands who have learned the Principles of Success since 1977 when the "seed" that became Vector Marketing Corporation was planted.
My Background and The Early History of Vector Marketing Corporation
I get many requests for information about the early formative years of Vector and since I am the only person that knows the full story, I decided to put it down here for those who want to understand the DNA of the Company and how Vector came to be. I've also included pertinent aspects of my background since they are so closely linked. There's even some info about when I first joined CUTCO. I did not try to make this complete in every way but I have attempted to show the formation and expansion of the company. Although it's long, this represents just the highlights. I suggest you read it a bit at a time. Please forgive any omissions or errors (but bring them to my attention).
First and foremost, Vector is about people. I wanted to create an arena where motivated people could excel and get recognition for their success. It’s a testament to thousands of young people who took on a challenge and conquered it. It’s about a nationwide Team of young (and young at heart) entrepreneurs who took “the road less travelled.” People who wanted to be their own boss, in business for themselves but not by themselves. Every one of which can look back with pride at their commitment and massive efforts.
I was the Leader and “person in charge” at the organization that I later named Vector Marketing Corporation for 19 years before I retired. The story began in 1977 when I returned to the Cutco business as a District Manager. From there I went to Division Manager in the fall of 1978 and then to President & CEO in 1981. As such, I am proud to say that I charted the course and created the culture that has made Vector a GREAT company (despite some aspects of the company operations today that I am not a big fan of). It’s gratifying for me to look back at where we started and knowing that Vector was a $100 Million Company with 400 offices when I left.
I also want to acknowledge and thank again my Partner in Vector and in life, my beautiful Teresa Freda. Teresa was a part of everything that happened including being my administrative assistant in the early years of the company. She was my sounding board and her total and complete commitment gave me the leeway to work the business and I will always be indebted to her (for that and a million other things). Together we took one small Cutco office in Broomall, Delaware County, PA and built it into an amazing multi-billion-dollar story. So, here it is - enjoy!
I remember vividly getting the key for the office I rented in the Spring of 1977. I had been in the Cutco business before under WearEver Aluminum, Inc. and I was excited to get my office up and running in time for the summer. I had a lot of trepidation though because I had a wife (my beautiful Teresa) and 2 young sons (Donnie  and Joey ) at home that were counting on me to provide for them. Little did I know that the organization I started there, then, I would later incorporate into Vector Marketing Corporation and that organization/company would have sold...
Over $5 Billion worth of Cutco knives!
I built Vector into an international Company which spans North America with hundreds of offices. It’s a company that supports hundreds of families (not counting the hundreds more in Olean, NY where Cutco is made). It is something I am immensely proud of and this is the story of what took place.
The “Pre-history” and Heritage of Vector
Cutco Cutlery was launched before I was born in the late 1940s. Cutco was a product owned and sold by WearEver Aluminum, Inc. of Chillicothe, Ohio. WearEver was a venerable direct sales company that made and sold aluminum cookware for over 50 years. WEAI was a wholly owned subsidiary of ALCOA. The company decided to expand beyond the cookware market and sell a line of kitchen cutlery. They approached Case Cutlery of Bradford, PA. and formed a joint venture between Alcoa and Case and called it “Alcas.” They purchased an empty plant in Olean, NY and launched Cutco Cutlery in 1949. It was sold exclusively by WearEver direct sales people as an add-on.
Cutco grew at a modest pace as the sales of the old-fashioned heavy aluminum cookware slowly declined. Eventually the managers at WEAI decided to emphasize Cutco and make cookware a secondary item (as it still is today). That shift in emphasis occurred in 1970.
The story of Vector actually began in 1971 when I started to sell Cutco while still in college. Teresa and I had just gotten married and I answered a blind ad in the Delaware County Daily Times. I went down to an office near the 69th Street shopping area in Upper Darby. I was 19 at the time and had a job pumping gas at the local ARCO station on Chester Pike in my home town of Sharon Hill, PA. There were about 12 guys in the room for a group interview. It was my first exposure to Cutco cutlery conducted by Mr. Justin Greenston. Guess what? I got the job!!! "Greenie" was my first manager. He had about 25 years with the company and was a wealth of knowledge. The Assistant Manager was a guy named John Demas who also lived in Delco, not far from me. John took me into the field and taught me how to sell. John was a real old time "tin men" type sales guy and I learned a lot from him but also began to see things that I didn't like about the business.
The Cutco business was very different back then. We did not set appointments by telephone, we went directly to the homes of referrals and knocked on the door and asked for an immediate "demo" (short for product demonstration). Another big difference was that training was conducted in the field. Each brand-new Rep trained in the field with a well-established salesman (it was all men back then - I knew I wanted to change that!) So, the quality of the training was subject to the success the salesman had on any given night. Since guys were going out without appointments, it was not uncommon for no presentations to be made at all - and this was called "training" and it's what everybody did.
Later after a couple of weeks I took new guys with me on my demos...many times I took 2 or 3 guys with me which was really a challenge because I had to get into the home, without an appointment, and then ask permission to have a couple more guys come in and watch! It was nuts, but people did it.
Another big difference was that our sales efforts were focused on single working girls, living at home with their parents. The idea was that married people couldn't afford Cutco but single girls would buy the knives for their "hope chest." Single working women had the disposable income to afford such expensive knives. The Homemaker Set with 8 steak knives in a walnut chest sold for around $169 in 1971. Teresa graduated from Archbishop Pendergrass High School in 1969 with almost 1,000 girls so I had a good lead bank to start – her yearbook!
These were 3 big changes I would bring into Vector down the road: phone appointments vs. just showing up; classroom (seminar) training vs. field training and calling on homeowners vs. single working girls.
I was going to college to become a teacher and coach. Once I found the Cutco business, I learned that a sales manager is, in essence, a coach - just one that makes a lot more money. I came to the office one evening in October and found Greenie unconscious on the floor. I called the police and they took him to the hospital. The Company sent a higher up Manager by the name of Al Lizzio to figure out a plan for the office.
I really enjoyed meeting Al. He was the consummate professional and after meeting me, invited me to a District Manager meeting at a conference center on Montauk Point on Long Island, NY. I was a young kid from Sharon Hill, 9 months in the business. This place was really top end – I had never been anywhere like this before. I got to meet most of the other managers and at the end was summoned to meet with the Region Manager. His name was Vito Brancato and he was like the godfather of the #1 NE Region. I had only been in the business for 9 months but Vito saw something in me and offered me the District Manager position (called Field Counselor back then).
I was promoted to District Manager on November 1st of 1971 and took over the office in Upper Darby where I had been recruited and trained 10 months earlier. It was on Market Street at 64th, just a block outside Philadelphia proper. It was on the second floor right next to the elevated train that runs down Market Street from Center City Philadelphia out to the 69th Street Terminal in Upper Darby (at that time considered the “suburbs”). The train veered off from Market Street at 64th and went right behind my office. The whole place shook every time a train went by (about 15 minutes apart).
Since our Division Manager “retired,” my new District was assigned to Division Manager Ed Brennan who resided in North Jersey (a "world away" from the Philadelphia suburbs). It was Ed that really taught me the basics of the business from a management perspective. I learned a ton from him and remained close until his passing a few years ago.
Ed reported to Vito Brancato, who called me to tell me about my new manager. Vito was a charismatic man and an expert at operating a Direct Sales business (which he had started in with WearEver during WWII). He later invited me to his home on the North Shore of Long Island. He had his own boat dock for his 80' yacht out back. I’ll never forget, there were railroad tracks going out into the water and a flatbed railroad car specially designed to cradle the yacht. When he was done driving his boat (and in the fall) he just threw a switch and let a cable out. The railroad car rolled down into the water about 8 feet deep. Vito maneuvered the boat onto the car and the wench pulled it out of the water and into a covered "yacht garage." Needless to say, as a young man with a blue-collar background, I was incredibly impressed.
I still remember 1972 as one of the most fun and productive years of my entire business career. I had November and December of ‘71 to get ready. I had been a college student just a few months before and I remembered that I had worked during semester break to make extra money for the Spring. I reasoned that other students might also be interested in doing the same.
I came up with the idea of recruiting on campus in December and training a whole bunch of college students the week between Christmas and New Year’s Day. The program the company had used in the past during that week was a "sales blitz" where Managers and their Reps would go away for a couple of days and stay together at a hotel and canvas and sell personally. The old business model (which I rejected) called for District Managers (Field Counselors) to generate at least half their income from personal sales commissions. WearEver had an acronym - RATASAC - Recruit And Train And Sell All Concurrently. Instead of going on the sales blitz my team and I hit the campuses hard. In January 1972, my third month as a manager, my office was #2 in the country (out of around 120 offices) and lead the North East Region (about 30 offices) and the "Semester Break Program" was born which is still used in Vector today.
Throughout that year I concentrated on being a manager, not a salesperson. That fundamental shift in focus was critical in building my organization. I knew that high quality people would be drawn by that goal vs. being a FT salesperson.
WearEver actually had a competition for Assistant Managers (called dealers back then). It was kind of silly because the success of a dealer was based on the office and District Manager they were part of. But I went with it and developed a cadre of sharp young management candidates and had 3 of the top 10 college assistant managers in the country in my office including National Champion Nick Finelli and Bob Bender and John Sipple in the top 10. I always focused on this program and had many managers join my Team Full-Time after college. I had several Reps that went on to become office managers in 1973 from that first year: Jeff Heath, John Sipple, Bill Guess, Bob Bender, Al Wheymuller all became District Managers (remember - territory was wide open back then).
It was an exciting year and my office was number one in the country and I was the number 2 District Manager in the Company. I was inducted into the WearEver Hall of Fame in my very first full year!
I had just turned 21 in July of that year. Teresa and I were flown first class to Chillicothe Ohio where the corporate headquarters of WearEver were located. There were banquets and meetings where I got to speak in front of all the company executives and employees. We even had cocktails at the home of the President of the company. We were each given beautiful Hall of Fame rings and the company actually had a portrait painted of me which hung in the Hall of Fame room...pretty heady stuff for a 21-year-old Italian kid from the suburbs of Philadelphia. Here’s a picture of me (with a full head of curls [remember it was 1973] and my beautiful wife Teresa receiving my portrait from the President of WearEver, Bob Sharpton.
The good people at WEAI really went out of their way to make us feel special. Although we never hung it up or dispalyed it, it was kinda cool to have a painted portrait... I guess?
As hard as it is to believe now, WearEver never tracked or promoted "office" competition, only District competition (in addition to personal sales and division sales). When I started Vector I immediately instituted Top Office competition and it helped the business a lot.
The business life of a WearEver Field Counselor was very demanding. In addition to the RATASAC mentality, managers were driven to put in 60 to 70 hours per week, 6 days per week and activity occurred in each office until 11 PM. The company pushed us to take daily sales reports from our Reps (called PDI) at the office from 10 PM to 11 PM Monday through Friday and from 5 PM to 6 PM on Saturday. We also ran a sales meeting every Saturday morning at 9 AM. The comp plan at that time was much more oriented toward personal sales than office sales with an office override of only 10%. Now, expenses were very low (my office rent was only $125/month) but the Field Counselor job didn't really pay all that well after expenses. Based on the long demanding hours and low net profit, I left the Cutco business in 1973 after being inducted into the "Hall of Fame" in 1972.
I started a security company within about a month of leaving Cutco. I also sold signs and even "messed around" with Amway. Interestingly, my entrepenurial experiences over the next 4 years would come to help me a great deal later as I built Vector. More on that later but, since this is primarily about Vector I'll just make a couple of quick points about my experiences from 1973 to 1977.
I applied the sales and sales management skills and knowledge I learned in Cutco to the security business with some pretty great results. I soon came to the conclusion that it was not the right business model for me because, at that time, alarm systems were "hard wired" and could take technicians up to a week to install in a large home. We were quickly falling behind with installations backing up as sales continued to grow. I sold that company in 1974 and it is still operated today by the son of the businessman I sold it to. After the alarm business I went to work for National Utility Service (NUS) located on Madison Avenue in NYC. NUS was a very sophisticated company with offices all over the world. As utility rate analysts, we would examine a company's utility bills and search for ways to save our clients money based on the rates they were paying. I liked the company a lot and learned a very valuable skill while working there. I was only allowed to present my service to the President of each company. If he tried to pass me off, I was trained to resist that and get an appointment to meet with the #1 person at the company. Later, I'll explain how that skill helped me build Vector.
After about a year with NUS I grew tired of the travel. I covered all of PA for them and spent a lot of time in Pittsburgh (and away from my family). I was told by the company that they were going to get someone for western PA but they just keep putting it off. In 1975 I finally decided to leave NUS and start my own company which I called Commercial Utility Consultants. Once CUC was up and running I brought on my childhood friend Joe McGillian. Joe was in grad school at the time. I gave him 20% of the company from the get-go and showed him how to do the walk-thru process that was required when we brought on a new client.
The story swings back to Cutco (and the organization that would become Vector) in 1977. Vito retired and Al Lizzio became the NE Region Manager for WearEver. Al and I had some brief contact in 1973. When I informed WearEver of my decision to leave, they dispatched Al to try to convince me to stay. I thoroughly enjoyed my interactions with Al. He was a true professional. Although he was not successful in getting me to stay in 1973, we did lay the foundation for a working relationship down the road. One of the first things he did when he took over the NE Region was to call and take Teresa and I out to diner. I was still running CUC at the time but Al, in his wisdom allowed me to come back into the Cutco business as a District manager on a PT basis (a "no-no" then as now). I had both the CUC office and my Cutco office in the same building, across the hall from each other. I started back in the Cutco business in early April and that year I was the #1 District Manager in the company for the period of time that my office was open, April - December. Because I was independent, I was able to put into place many changes in the Cutco business and from that single office I built the foundation of what became Freda Enterprises and later Vector Marketing Corporation.
In addition to the 3 main changes mentioned above (working by phone appointments vs. just showing up; classroom (seminar) training vs. field training and calling on homeowners vs. single working girls) other changes I made:
- Focused on sales as a consultative process – helping customers rather than preying upon them as “enemies.”
- I also I redid the entire sales presentation and focused our training and sales program on smaller sets and piece orders to achieve a much higher closing ratio and get more "paid in full" orders rather than large financed orders which carry additional costs and risks.
- Started recruiting women as well as men which added massive strength to our Team.
-I mproved the comp plan giving managers as much as 30% overwrite on brand new Reps. This allowed them to concentrate on new business and stimulated recruiting.
- Reduced the size of the sample set. WEAI made new sales people buy an entire set of Cutco in a hard sample case – even at a great discount ($150) it was a lot of money to get from someone looking for a job. I dropped it down yet retained 99% of the effectiveness of the demonstration.
- Got rid of the silly singing and cheers that were a part of every Cutco meeting in the past.
- Took PDI during the day and stopped having managers in their offices until 11 PM. In summer everything was done by 6 PM.
- Created a professional classroom training program with a “company” (my office initially) produced training manual that I wrote.
- Did training every other weekend so that my (and my managers) personal/family life didn’t suffer.
- Perhaps most importantly, focused on the District Manager Profitability as the fundamental building block of the business.
- Ran the business primarily “management oriented” vs personal sales oriented
In 1978 I decided to concentrate on the Cutco business. I had brought on another partner into CUC by the name of Herb Winokur and when I left CUC, I set things up so that Herb and Joe were 50/50 partners. To make a long (40 year) story short, Herb passed away many years later and Joe bought his shares and Joe is still the owner and President of CUC today.
By the end of 1977 I had 8 strong management candidates, among them Mike Lancelot who would become one of my successors 20 years later. This team also included Art Plummer, Chris Brigham, Jay Clark, George Gillas, Harry Bratton and Mike Logan. As we went into 1978, we laid out a plan to break the half-million dollar mark for the year, including doing $100,000 for July, which also would have been an all time record. Our January Holiday Seminar was a big success and we were the top District in the country right out of the gates and we never looked back. We were dealt a big blow when our office building in Broomall PA burned down on the 3rd weekend in April, just as we were about to launch our college recruiting. I had to scramble and find a new place, negotiate a lease, buy new furniture and get us moved in, including new phone lines, in about 3 days.
We got it done, sold over $108,000 in July (at a time when the average office did $120,000 for the entire year). We recruited and trained over 250 students that summer among them Jim Hutchinson and Al DiLeonardo (the President of Vector East today). We reached $467,000 for the YTD by September 1st. At that time I had 4 guys ready to go out as District Managers and in order for them to be promoted I decided to take my promotion to Division Manager that fall and not complete that year as a DM. It would have been my 2nd year inducted into the Hall of Fame as a DM out of the 3 full years I was in that role.
In 1979 we continued to grow going from 5 offices to 10. 1980 was an incredible year for me as I was National Champion at the Division Manager level in only my 2nd full year as a DVM and I did it with a Division I had started from scratch just a short while before. 1980 was also a pivotal year for the Cutco business at large. At a nationwide meeting of Division Managers in Chicago that fall, the top management team of WearEver announced that they were getting out of the Direct Sales business. Despite our growth, the rest of the Cutco sales team nationally was in serious decline. The management team at WEAI had concluded that there was no future in the Cutco business. They gave each then Division Manager, me and about 50 others across the country, the opportunity to start our own distribution company. We could buy Cutco products from them in bulk at wholesale prices, set up our own admin, warehouse, shipping, etc. There was "wailing and gnashing of teeth" among my fellow DVMs. I called Teresa that night and told her that we had finally gotten the big break we had been hoping for.
The Start of Vector (originally called FREDA Enterprises)
In December of 1980 I called a HS science teacher by the name of Stu Smith and asked if he would be interested in some additional PT work. Stu had joined my Team a few months earlier as a PT Cutco Rep under DM Art Plummer. I knew him to be intelligent and responsible and that he had great attention to detail. I asked him if he would take on the role of processing our orders and calculating commissions. He agreed. He worked PT during the school year and FT during the summers for the first 3 years of the company's existence. He was actually the first FT employee in Vector and he calculated commissions and overrides by hand for 3 years until I bought a custom software package in 1984 which Stu designed and implemented for us.. There is absolutely no doubt in my mind that Stu Smith played a huge part in the success of Vector, and still does today (2019). Because of Stu's dedication and reliability, I was able to concentrate on the sales and marketing side of the business. He was a massive asset in the early years of the company and certainly was an exteremly valuable employee. Stu contributed more to the success of Vector than any other Member of my Team in the early yes. I simply could not have done it without him.
So, in January 1981 we launched as our own independent company. We were a "customer" of WearEver and bought Cutco in bulk and had it shipped to our small warehouse on MacDade Blvd. in Glenolden PA. I was able to set my own prices. Had to set up banking and credit-card processing. Handle all of our own printing. Purchase shipping materials. Set up our UPS account and arrange for it all to happen within a few weeks.
I was fortunate that all of our managers stayed with me into the "new" venture. We had staff meetings weekly as I helped them grow and learn. Stu Smith did yeoman work and processed all orders and calculated all commissions and wrote checks. Furthermore, I had decided to pay commissions weekly instead of monthly the way WEAI did.
Unlike most other Cutco organizations, January was a big month for us and I spent some late nights with my brother-in-law Frank Riccelli packing orders to get them out to customers in a timely fashion. All of this while still serving in my role as "Division Manager" as well as President/CEO of the company (I also ran a "pilot" office so I could experiment and work on programs). I was guiding and mentoring my young team of office managers and running my pilot office on Baltimore Pike in Springfield, PA above an insurance office.
All of this was made possible by funding which came from a second mortgage on our home as well as my parents home. We really did risk everything we had to make the business work. This added to the already massive debt of graditude I owed my parents and we made sure to show our appreciation in later years.
We ended up 1981 with sales around $757,000 - about $5,000 more than we had done the year before but it was an increase non-the-less and we were able to maintain our record of consecutive annual increases despite the turmoil that was caused by the restructuring of the business. It wasn't until 1993 that we had a year with no growth!
After the stabilizing year in 1981, in 1982 I really began to improve the business, to innovate and build. About midway through the year it occurred to me that many of our customers had purchased just a couple of pieces of Cutco and I reasoned that there had to be a latent market there as the level of satisfaction with Cutco was always very high. Post sale appreciation went up as people used the knives on a daily basis. I decided to initiate a direct mail program to reach out to these previous customers. Now the key to being able to do this was to have the confidence and support of my District Managers. We were up to 8 offices and "channel conflict" was a distinct possibility. I reassured my Team that the direct mail program would NOT undermine them or our core business and I instituted a program of tracking sales in their territories and paying a commission to each manager based on sales made to old customers. Now, this was not the sophisticated direct mail program that we evolved in Cutco as time went on. I wrote a basic one page letter and sent it and an old Cutco brochure I had left over along with a modified price list. The envelopes were hand addressed and we sent everything by first class mail. Despite the crudeness of the attempt and the lack of enthusiastic support from the field organization, the "Christmas Mailer" was a success and has been carried on and improved greatly over the years from those humble beginnings.
We ended up 1982 with over $1.2 million in sales (about what a top Vector office does today) but it was great to break the million dollar mark. We were growing... attracting more talented people to open offices and expand the business. We launched our weekly newsletter and sales report and introduced a Christmas bonus program for our managers that was partially based on how long they had been with us. It was well received to say the least and I think the company still does it in 2019.
In 1983, as Vector continued to grow, We had strong internal growth but we also had several other former WEAI Division Managers (who had their own companies as I had Vector) that joined our team wanting to be part of something that was growing rather than something that was slowly dying. We welcomed Anthony Antonelli, Charlie Zanna, John Hancherick Raphael Navaro and Ray Arrona and onto our Team. Anthony had been a National Champion in WEAI and Ray Arrona loved the Cutco business and was a strong Vector Team Members for 20+ years before retiring.
Through this interest in joining Vector among other company owners I became aware that the Cutco business at large was not doing well at all. Alcoa and WearEver had given up on the business which had long been considered the "black sheep" of the Alcoa family. Erick Laine bravely fought to get control of the business and wrestled it away from WearEver and entered negotiations with Alcoa to buy the business from them.
As fast as Vector was growing, the rest of the Cutco business was in rapid decline. Most of the managers had come up under the old philosophy of the business and we not adapting well to running their own company.
In 1983 I was tapped by Al Lizzio to assist in the training and motivation of the management teams of other companies that were selling Cutco around the country. Reluctantly, I agreed and we had a steady flow of other sales managers from around the country coming to observe our training and recruiting programs. The ones who understood and adopted our programs did much better but they couldn't duplicate the entire "magic" that was Vector. Some grasped some of what we were doing and they improved but didn't flourish - the others died.
We went into 1984 with 17 offices strong. The semester break program which I had started in 1972, was well refined and we had a fantastic January which set the pace for the year. We did over $750,000 that year and my personal income grew to $125,000.
I could have made a lot more money but I reinvested my profits into the business and established programs that strengthened my managers and created a greater financial opportunity for them. I understood that the District Manager was the building block of the business and they had to have a solid opportunity or they would turn-over as I had witnessed in Wear-Ever.
These programs super-charged our growth and I believe are still in effect today:
These were all ways I reinvested in the business and they powered our growth.
But despite our impressive growth the Cutco business at large was really struggling. It was in 1984 that Erick Laine invited me to Olean and approached me about somehow merging our 2 companies. I saw the handwriting on the wall and concluded that I needed to do something (though my first reaction was "not interested") or Cutco would fail.
So, in addition to my duties as President of Vector, driving and building the business, almost the entire year of 1984 was devoted to the negotiations regarding "merging" Vector with Alcas. So, in addition to the normal day-to-day activities associated with running Vector, I traveled to Olean NY about once a month to meet with Erick Laine and his Team. In addition to negotiating the best deal I could for me and my Team, I also had the arduous task of educating the people at Alcas about the Cutco Direct Sales business. They were engineers and finance guys and literally had "no idea" of how to run the direct sales business. In fact, in 1983, as soon as they bought the company from Alcoa, they began an initiative to take Cutco retail which was a miserable failure and almost bankrupt the company. So discussions were tough because they really didn't want to be in direct sales and I really didn't want to give up control of my company, yet we all had to agree it was the best course at a very difficult time. When I went to Alcas for meetings, I met with Erick and his 6 top people... and me!
The Cutco business overall had been in a slow steady decline for about 10 years. Erick and his team had concluded, quite understandably, that the direct sales business model was dead (fortunately, they were wrong). They were actually correct in assuming that the model as constructed and operated by Wear-Ever was dead. But over the previous 7 years, my organization grew, substantially, every year. A fact they could not ignore.
Negotiating with Alcas was very difficult because they were struggling and had limited resources. Plus, I was 33 years old and most of the people I was meeting with were seasoned Alcoa employees plus the Alcas Attorney and Accountant, but we made it work.I thought long and hard about keeping my independence, keeping 100% ownership of Vector. The problem was that unless we did the deal, Alcas would probably have failed and Cutco would have closed it's doors. The company had lost money each of it's first 2 years under management ownership and the banks were getting very nervous. So, taking everything and everyone into consideration, I decided to go ahead with the deal selling Vector to Alcas and I became part owner in the Alcas plant that made Cutco.
1985 - the year of the merger
One of my favorite "inventions" was the Vector Presidents Banquet I ran each year at our Strategic Leadership Conference. When I say "We did it right," I mean RIGHT!! Dinner check was often over $5,000. Champagne – Caviar - the best private dining room at the best restaurant in the city. It was amazing, even if I do say so myself and I understand that the tradition lives on. This picture was from my last (of 10) Presidents Banquet in 1995. Many of the people in the picture are still active with Vector today. I don't know, do you think those guys look happy?
Top Row (l to r): Bruce Goodman; J. Brad Britton; Dan Casetta; Scott Dennis; Adam Ginsberg
Second Row: Joe Cardillo; Jason Phillips; Keith Patridge; Ramez Helou
Front: Steve Croll; Don Freda; Erick Laine; Earl Kelly
Later that night I told Teresa that it was a very good deal for all concerned but that it had aspects to it that were not perfect for us. Not that we didn't do well financially because we did. But we gave up control and put it in the hands of people that really didn't understand the sales side of the business. This put me in a constant position of tension. I was the junction point and for 8 of the next 10 years I sat alone in Alcas meetings, representing the Vector POV and Vector interests. It did start a 10 year odyssey that would see Vector grow to hundreds of offices nationwide, open in Canada (led by Joe Grushkin who was #1 Branch manager in 1985) and over $100 Million in annual sales. It was a great run despite having to travel to Olean NY 8 times a year for Board of Directors meetings (ugh).
About a week after I signed I got an emergency call from Erick and Bob Lorenz. Alcas had a $2 Million mortgage note with the local bank in Olean and it was due for renewal. During all of our discussions I had insisted and it had been clearly spelled out and agreed that I would not be responsible in any way for the debt that existed before I became an Alcas shareholder. The point of the call was to inform me that the bank had decided that they were NOT going to renew the Alcas mortgage unless I also signed personally as an Alcas shareholeder. It meant that I would be putting up our home in Springfield PA ($150,000) and our beach house in Ocean City NJ ($225,000). I thought about it for about a minute (literally) and said, "Well, if we're going to be partners, let's be partners." and I agreed to sign [probably the stupidest decision I ever made]. Not that it was dumb to do - it was dumb not to get anything for it.
One of the things I am most proud of in my career is that Vector has continued as a strong company. A current Vector Manager sent me this video clip as a tribute. It's the great Kentucky head basketball coach, John Calipari being interviewed by Charlie Rose. A nice compliment to me because John talks about the winning tradition established by previous head coach (1930s) Aldolf Rupp and the tradition that he passed down to coaches that followed him. I tried to do that at Vector and I guess it is self-evident that I succeeded. But I have to acknowledge the thousands of people who've come after me and keep the dream alive and who pass it on the Vector Leaders of today... and tomorrow!
I remember feeling a tremendous sense of responsibility when we signed the papers and sealed the deal. So many families in Vector and at Alcas relying on me to continue to grow the business and bring to Alcas the profitability that they were unable to attain without part of their company being involved in selling their product at the retail level. Those higher margins that we got at Vector would drive growth for all concerned but it was reliant upon me to make it happen.
The day came to sign the papers: Feb. 1, 1985 and it was a BIG deal at Alcas. Teresa came with me and Marianne Laine gave her a corsage to wear and I got a boutonniere. They had become good friends and enjoyed each others company. In the background you see some of the dishware that Alcas also sold in an effort to bolster sales.The mood was very positive for the Alcas/Cutco Team. Bringing on someone who understood the direct sales business and had the talent and apptitude to drive it and grow it was an important milestone.
After all the papers were signed (Teresa had to sign too because we owned Vector jointly) we went out to dinner with the Laines. Setting business aside, we genuinely liked Erick and Marianne and enjoyed their company. They are bright genuine people and we valued our relationship with them which grew and strengthed over the 10 years we were partners together They were genuinely nice people, as we found virtually everyone in Olean to be. Marianne's family was Italian and her and Teresa became good friends. And Erick and I were very close personally..
Thank you to all of the thousands of people who contributed to creating Vector and to the young professionals who continue the tradition today!
With Love, Respect and Gratitude