Editor’s note: I’m afraid you will notice some distortion in this recording. I do my best to capture the best audio possible, but it didn’t work out this time. I will take extra steps in the future to prevent the problem from re-occurring. I hope you’ll still listen to this episode, because Bob is great, but I do apologize for the poor sound quality. Please use the contact form to request a full refund, should you be so inclined.
David Noël: Hello and welcome to the Manitoba Business Podcast, featuring interviews with business leaders and entrepreneurs based in our wonderful province. I’m David Noël.
Today’s guest runs a company which is on track to sell $175 million in jeans this year. He also owns a part of two daily newspapers and several retail stores, and participates in many non-profit boards. In the interview, we discuss business succession, how to navigate drastic changes in business environments, the difficulty of issuing mass lay-offs, and the importance of community involvement.
If you enjoy today’s episode, and I hope you do, please consider adding a review on iTunes. Positive reviews will have a big impact on the success of the show, especially a brand new one like ours. Of course, please don’t be shy about sharing the show with your as well—the website is www.manitobabusinesspodcast.com
Without further ado, here is Bob Silver:
[to Bob] So, Bob, thanks so much for taking the time. Would you mind just kind of explaining who you are and what you do I guess?
Bob Silver: Well, I’m Bob Silver. I’m President and shareholder of Western Glove Works, a company that produces, and markets, and sells jeans in North America and some in Europe under the brand name Silver and Jag. I’m also a part owner of a few companies, Warehouse One – The Jean Store, Urban Barn, a furniture store, The Free Press and The Brandon Sun, Canstar Weeklies as well as Derksen Printers. And just recently we made a purchase, my partner and I, of a chain of stores called Colmark, under the banners of Bootlegger, Ricki’s, and Cleo.
David: Oh okay, very cool.
Bob: So we’re busy.
David: No kidding. Interesting. Okay, what’s the history of Western Glove Works? I know that you became the president I believe in 1980, is that correct?
David: 1981, okay. And before that, was it a family business, or how did it start out?
Bob: It was a family business. It was started by a couple of great uncles and my grandfather. It was basically owned in the late ’60s, ’70s by my great uncle. He was the majority shareholder. My father was working in the company, and he passed away at the young age of 50 from a heart attack. I came into the company at that time to help my great uncle sell the company. In the process of trying to sell the company, I decided…I was given the opportunity by my great uncle to see if I could find some partners and some equity people so that I could buy it. And that purchase went through in 1981. Owned by myself, my brother, Ron Stern out of Vancouver, and an old friend, Norman Stern, who passed away about five years ago.
David: Okay, and so what was your experience up to that point? Did your great uncle just have you because you were his nephew, or had you had some other experiences that made him think that you would be a good decision for that?
Bob: No, I had zero experience. I guess this was 1973, I would have been 23 years old, and I had no experience other than having been a pretty good student, and I think my greatest attribute was availability. I wasn’t brought in to run the company, I was brought in to learn the business, and my great uncle made it very clear to me that…he was 75 at the time, 73 at the time. He made it very clear to me that he wanted to sell the company and distribute the gains to family members. One of whom…
David: I see. So the intention wasn’t to keep it in the family as it were, he was planning to sell it off entirely?
Bob: Yes, yes. My mother and other family members could use the money from the sale, my mother more specifically. So he decided to sell it and I helped in that venture.
David: Yeah, and then what kind of…what caused you to change course and to end up leading the company?
Bob: Well, in the course of trying to sell the company, obviously the first few years were very difficult. I didn’t know anything about the business, but after three, or four, or five years, it became clear to me, as we tried to sell the company, that nobody would buy the company unless I stayed on as in management of some sort. And I said, “Well, wait a second. I thought I was selling the company. What I’m actually selling is me.” And I said, “Well, if I’m going to sell me, I want to buy a piece of me.” And that’s…then I made that decision.
David: I see. Okay, interesting. So the investors would have wanted some continuity in management that would’ve had to have been you?
David: So you were kind of stuck with it?
Bob: Yes, yes.
David: You mentioned that you were a student. In my research, I saw that you have a degree in Math and Statistics. Why Math and Stats?
Bob: I loved Mathematics. I loved dealing with numbers. It was pure. It was simple. Answers were clear as opposed to literature, which has opinion and connotation. Math was pure and I quite enjoyed it. I had no idea what I was going to do with the Math or Stats degree. I still don’t, but if I were a much wiser person than I am, and those were the first days of computers. We’re talking 1969, 1970, and I dare say one could have made a little bit more money in the computer business than in the apparel business.
David: Oh I think you did okay. So, you had this background in Math and Stats, and your uncle asked you to start taking a look at the business. Did that pure numbers approach work? Did you find that you were missing some pieces? Did you find that you had to learn a little bit more about the human element or did you have some other experience in that?
Bob: No, no. I found that all of the experiences that you have to learn in either being part or eventually running a company were new to me, and they all had to be learned. I must tell you that the times were much more forgiving than they are today.
David: In what way?
Bob: Well, I don’t think, specifically in the apparel business, because the apparel business was protected by a lot of quotas and high tariffs that if you had the ability to produce, you had a pretty good shot at getting orders and being in business. But I think competition and professionality have increased enormously over time and I don’t think I could get away with today’s…the way I ran the business then. Which I was kind of the jack of all trades and master of just one or two. I would design the product poorly. I would run around purchasing the fabric for the production. I would sell the product.
I did almost everything, and you can do that with a small business. And you can do that in 1971, but to do it in 2015, you have to be exceptional in everything in order to succeed, or you have to be able to find exceptional people, where you’re not exceptional. And fortunately, when I bought the business with Ron, I found the kind of Yin and Yang. I was more outgoing, more of the sales type. He’s a lawyer by background, but as far as business structure, taxation issues, he was brilliant, continues to be brilliant and…
David: So this is Ron Stern, the one that initially helped you buy the business from your great uncle?
David: And how did you find him? I think finding, for people that aren’t purchasing an existing business, finding co-founders and stuff like that is certainly a challenge. How did you come across Ron Stern?
Bob: I had gone, met a number of people who were either going to buy the business or be partners with me, and none of them clicked, and Ron’s cousin, Norman, was one of my oldest friends, and he was working with me. And I had a legal problem in Vancouver, and he suggested that I go see his cousin Ron, who is a lawyer. And Ron said, “Well, I don’t really want to talk about the legal issue because it’s not my field of law. However, Norman tells me that you’re looking to buy the company. Let’s talk.”
And we talked, and I became very comfortable with the combination, and subsequently after a number of conversations, I brought him to meet my great uncle, and I got that kind of, “Aha, this is the guy,” from the wise old man, just to reinforce the feelings that I had. So he said, “Yes, Bob. Do it.”
Bob: Yes. And so we did.
David: Was your uncle a bit of a…or your great uncle a bit of a mentor for you starting out? Was he guiding you through the process of what you were doing?
Bob: Absolutely. The management was quite thin after my father passed away, and I remember on the prospectus, when we were selling the company, he was 75. I was 25. We said average age of management was 50. But, yes, he was an extremely bright, and worldly, and experienced fellow.
David: What did you learn from him about passing the baton? You hear so many stories, whether it’s family businesses or just businesses in general, where after that first generation of leadership, or maybe after the second generation of leadership, things fall apart.
Bob: I don’t consider this to be a family business today, and I don’t think…I think my attitude is that you’re in a business. You give family an opportunity, you don’t give them a path. We get an opportunity to succeed, but you owe it to the business to find the best management you can find. If you’re lucky enough to have that within your family, terrific. If you’re not, don’t ruin the company.
For the company is more important than the individuals, and the company will continue to support those individuals where perhaps if they don’t have the talent, they can’t support themselves, or it can’t support the company. So whether it be a hockey team, or a football team, or a business, if you can’t catch the ball, or you can’t shoot the puck, you shouldn’t be on the team.
David: Right, okay. I believe the company was founded in 1921, is that correct?
David: And by 1981, that was 60 years later. How big was the company when you took it over? How big is it now? What transitions have you seen in your tenure?
Bob: Well, I think when I first came…joined my great uncle and I joined him as a stock boy as I had to learn. I wasn’t given an office and…
David: Right, so that’s embodying what you just said in terms of he was giving you an opportunity, but he wasn’t giving you a path.
Bob: Right, I think our revenues in those days were just touching on $3 million, and this year I hope to be 175 million. And when I first came into the company, it had, again, as I said prior, your selling production. We had some labels, they weren’t…we had a lot of different types of product inclusive of double knit slacks, and leisure suits, and dressier pants and things of that nature. A lot of products I didn’t wear and I didn’t understand, and I looked around at what was going on in the world and the Baby Boom generation of which I was one, was coming into the main stream, and they weren’t wearing double knit slacks, they weren’t wearing that type of apparel.
They were wearing jeans. And so I decided that…we did make some jeans at the time. It was the area I thought we could concentrate on and grow, and indeed we did. But in those days, we weren’t…even though I did some jeans, and that’s the area I concentrated on, we did a lot of private label. And which was making garments under other store labels and didn’t do a lot of branding. So that’s the biggest shift we’ve had in this company, is to go away from anything but our own brands. I discovered over time that the only thing you can contribute…if you’re dealing with a retailer and says, “I could have my private label program.”
Next year they may decide they’re going directly to China or they’re going somewhere else, and you have no control. And even with license arrangements, which we had many, the licensor was in control of your fate, and could decide that after your license tenure, you could be in jeopardy. And so we started, thanks to my brother who was in the company and he’s the one who has been instrumental in developing the Silver brand and the success of the Silver label.
David: Yeah, okay. And we’ll dig into the Silver label in a minute. Before we get there though, would it be fair to say that one of the bigger challenges that you’ve seen in your tenure is that shift from being a licensed manufacturer to actually running your own brands?
Bob: Well, for our company, it has been because we had a number of licenses over time, inclusive of Wrangler Jeans, inclusive of Calvin Klein, and Indian Motorcycle, and Victoria Beckham, and Sheryl Crow, and inevitably, some of them did exceptionally well, some not so well, but at the end of it, you didn’t have control of the situation. And you would have to pay royalties and other fees for this [kind of] thing. Well, my goodness. Imagine at the time I was selling a private label product to a store for $12.
I was selling the same product under the Calvin Klein name for $33 and paying 14% royalties. Seeing well, neither of those seemed to be the perfect model, but building a brand is very hard work and takes great perseverance, and that’s what my brother and his team brought to the company.
David: What impact did the advent of off-shore manufacturing have on this company?
Bob: It did change the company completely. We at the height of our employment had 1,200 people employed here in Winnipeg. We had three different facilities, over 500,000 square feet production and distribution space. We ran three shifts in our laundry. Our hydro bills were a hundred grand a quarter, just because we were washing so many jeans. And we now employ 120 people, have no sewing machines, and it’s only…we employ people in the marketing, the distribution, the logistics, and the financial side of the company and some distribution.
But all of our production is offshore, we could not compete. We still can’t compete. There are some anomalies in the business that do very, very well, selling Canadian-made products and I think Canada Goose is the poster boy for that. Having said that, we just couldn’t compete, so we shifted all of our production off-shore, and even if we thought of doing production here in say, in Winnipeg, the support systems are no longer there. The people who fixed machines, the people who sold machines, the people who sold thread, and buttons, and fabric and all of that has also shifted. So it would be difficult, if not impossible for us to redo that.
David: This might sound like a weird question, but I imagine that there is an emotional impact to both being driven by the markets and need to make decisions like that, and to also be the person who’s implementing them. When business leaders need to make business decisions that affect a lot of people, right, a lot of employees, how do you face that? How do you do that?
Bob: It’s very difficult. It’s human beings and their lives who are affected. And I wasn’t the one who started the train going, and I was one of the last ones to get on the train, but even when we were a unionized company, and he’s a dear friend of mine, the head of the union, Robert Zeigler. I say, “Robert, I can’t do it anymore. I just can’t. I got to go.” And you know what he said to me? “What took you so long?”
But it doesn’t make it easier on the people. And the production people stayed with me until the bitter end and none of them…they were all sad, but I don’t think they were resentful because it wasn’t…they saw it coming. They knew it had to be, but I still some of them in various jobs. A lot of them work at the Health Science Center, etc. They don’t seem to have the…what saved my psyche was that these were all hard working people, very good people, and inevitably they all found, the ones who wanted to, all found jobs because they deserved it.
David: Good. So you’ve seen the shift from local production to off-shore production and you’ve seen a shift from developing basically other people’s brands to producing your own. And with that, it seems like a big shift into owning the distribution channels as well. Whether it’s…well actually, let’s start from that for a second, is Warehouse One, does that belong to you personally or not completely, but is that personal ownership or is that through the company here?
Bob: No, through the same partnership arrangements we have, slightly different at Warehouse One, but one might think that that was a great, brilliant move for verticality, and that you could control your distribution. And we found that the Silver price points were too high for Warehouse One, and we put no pressure on Warehouse One to buy Silver product, or and put no pressure on Silver to sell Warehouse One. These companies have to…and Bootlegger is a company I mentioned we just purchased, or a part of the purchase, and they buy a lot of Silver product.
But if I force Bootlegger to buy the product when it’s not right, I’m doing both, I’m supporting this company’s poor execution, or poor design, and I’m hampering Bootlegger. So that would make no sense. So these purchases are not done for supply chain control. They’re bought because we assume that they’re good companies and they’re going to make money.
David: Right, and because you still understand the industry, even if it’s not the right fit for your specific brand, it’s at least apparel and it…
Bob: Well, there is some knowledge that we have, and there’s some areas that size can make a difference. Whether it be in purchasing insurance for all companies, whether there’s some synergies in supply chain management with whom we do business. If those are natural, we’ll take advantage of them. If they are not natural and you have to force them, you’ve made a mistake.
David: Right. Now jumping back a little bit to the Silver brand, in my research I noticed that there was, at least in 2013 in the article that I saw, that there was an impetus for developing retail locations for that brand as well. Has that continued and is that…?
Bob: No, no. It was a supreme failure.
David: Oh no.
Bob: Oh yes. In one year, we opened seven stores in the United States. We thought that that would…two thirds of our business is in the United States, that would be a good thing for us to do. And we executed very poorly. We did everything you could think of, improperly. Well, not as proper as we should have as to architecture, choice of locations and management. And we discovered that the best thing we could do was do an orderly retreat, which we did. We keep one store open in Mall of Americas, the rest we closed, and learned our lesson. And if all the right ingredients come our way, starting with some brilliant management because even though we are suppliers of blue jeans, does not mean we know how to run retail stores. So we just, we cut our losses, got out and start to concentrate back on what we do best, which is design, fit, and sell jeans.
David: I see, interesting. So you think that the lack of retail experience was the biggest impediment there?
Bob: While we were always…the lack of retail experience is one thing but we…it’s about execution, and we knew we didn’t know how to do it. We thought we hired somebody who could do it with us, and that person didn’t succeed. And in many areas of life, you have a choice between an exceptional plan poorly executed or an average plan executed quite well, and in many cases, I’ll take the latter. Because if you can’t execute what you’re talking about, you’re going to fail.
David: Right. In light of that, in light of the fact that the people are going to be doing the executing are so important, how do you pay for the right people? If you were to do it again, how would you know that you have found the right person?
Bob: Well, in this particular experience, we wanted to grow a chain from 0 to 100 stores over the course of 10 or 15, whatever the years were. And we made the calculated error of thinking you hire somebody from The Gap, or somebody from Disney Stores, or somebody who had run a hundred stores. And that’s considerably different than having the entrepreneurial skill to build the stores.
David: Right, so the person who can run a hundred stores is not necessarily the same as the person who is able to grow from 0 to 100?
Bob: That’s right.
David: I see.
Bob: And the person who grows from 0 to 100…when you come from this large company, you tend to think bureaucratically. You think, “Okay, for this number of stores, I need this type of management.” When you’re more entrepreneurial, and you grow it from the ground up, you say, “I’m gonna do 70% of it myself, and I’m going to hire somebody to do 30%. And then when I get to two stores, I’m going to do this.” And you’re growing organically, and you’re doing a lot of it yourself, and you’re doing…because you can’t afford to do it otherwise. That was not the skill set. We thought the person was quite entrepreneurial, but they ended up being more bureaucratic than entrepreneurial.
David: I see. In general, when choosing management, you mentioned at the beginning you’ve got ownership stake in a slew of companies, and it sounds like the approach that you tried to base on that you were saying with relation to the Bootlegger family of companies is that you try to take a relatively hands-off approach. You try to let them do what they’re good at. But in light of that, I’m sure there are still…in spite of that I guess, I’m sure there is still…choosing the right people is always the important thing, right?
Choosing the right management. And so in this specific case with the Silver retail, it was a case of not finding someone who is entrepreneurial enough. In general, how can you know if someone is the right fit for the job?
Bob: You do your due diligence, you have experience, and you have to accept that you’re never going to be right all the time. So you do as much homework as you can. You have enough people interviewing the individuals as possible. But business is such that you’re not going to win every game. You’re gonna lose some. And so with the same, you have to cut your losses when you think appropriate.
Change your management when you think appropriate. You’re never going to have, “Aha, everything is perfect. It’s great.” I was lucky to find a partner that way, but it’s like a marriage, a lot of divorces. So you have to be prepared to make mistakes. The expression that I use is the greatest hitter in baseball of all time, hit the ball 4 out of 10 times. Of all time, right?
David: Yeah. Now I guess in business, the challenge is it’s easier for people to hang on to those failures longer than they need to. Right? It sounds like you…I’m sure that cutting the retail stores for Silver was a difficult decision and you made that decision earlier than later. You were able to cut your losses, as you put it. How do you know when to do that? That seems like a pretty important decision for anyone in business if the mantra of failing often is accepted, then you need to identify failures quickly, right?
Bob: Well, true enough. But today’s information is so readily available with systems that you’re losing money and nobody is giving you a plan that makes sense to turn that ship around, you got to do something.
David: Right, so it comes back to those pure numbers. It comes back to that…partially that actually came from at the beginning with in terms of your Math and Stats background.
Bob: Well, that always helps, but most investments you get into, if you’re green feeling, you’re gonna see losses as you begin. It just never works that way, but it’s all about planning. Even if you’re gonna lose money in the first year, and as you’re budgeted to lose money, if you lose more than you budgeted, you’ve got some questions to ask. If you lose less, you have to figure out why and maximize on that.
So it’s all about…what was the expression that…plan your work and work your plan. And in the planning they say, “I’m not gonna make money in year one. I’m not gonna make money in year two and these are the reasons why.” You buy into that and say, “Yes, that makes sense.” But year three is the turnaround time or year two. And if you see the first year you’re tracking very poorly to that, you’ve got some real questions to answer. So it’s all about budgeting and analyzing the variants of the budget.
David: Okay, we’re coming close to time here, and so I have two questions that I want to ask, and I’m gonna ask them both at once. They’re a bit of a departure from what we said until now, and after that we will be done. The two questions are, if I do a Google search for your name, I see a long list of organizations, non-profit organizations, or organizations in which you take a non-profit role such as Chancellorship of Winnipeg and a member of the Business Council of Manitoba, etc., etc. A long list. A, what’s the motivation behind that participation in community organizations? And B, how on earth do you do it all?
Bob: Well, the B part is easy if you’ve made the right choices in people to do things. And I’ve made some smart choices, collectively with others, and it allowed me the time to do that. And for the first, I don’t think anybody has a choice. You are a member of the community. If you’re gonna sit back and say, “That’s for somebody else to do. That’s for somebody who’s got more money, who’s got less money.
That’s for somebody else to do.” How is anything gonna get done? So I think it’s just part of the human condition is you have to participate. And this community can. It’s a great community, and one of the reasons it’s great, there’s a lot of people like myself who take responsibility. I sit on the United Way, I was chair and it’s huge numbers of people, doing it year after year, after year, after year because it’s the right thing to do. And there’s people in need, and so some of them are, whether it be money you give, or time that you give, you got to give.
David: That’s a valuable perspective, especially the idea that…I think there’s probably a few people listening to this podcast that are thinking from the other perspective. “I’ll let the people with a lot of money do that.” And you’re saying, “Yeah, there’s people with less money and with more money always.” And it’s just you got to jump in right away.
Bob: It certainly it’s not about how much money you have, and some of the best work is sweat equity. Whether it’s building a Habitat for Humanity, or whether it’s helping people throw sand bags. To me, that’s the sign of…those are the times I’m proudest to be a Winnipegger is when you have a flood.
David: Oh, right. Yeah, people coming together.
Bob: Yes, or snow storms, and people getting stuck, and people stopping and pushing them out. That’s the beauty of our community, and being part of the community has enabled me to be successful, and let’s live in the best community we can build.
David: Absolutely. Well, thanks so much for taking the time, Bob. It’s really been a pleasure.
Bob: You’re very welcome. Terrific.