Inside the Schlegel Family Dynasty
To some, Robert and Myrna Schlegel and their family of entrepreneurs have come to epitomize “Texas excess.” But there’s no questioning the clan’s business accomplishments.
The time was November 2008, and many people in North Texas were still thinking the world was one big Neiman Marcus Christmas catalogue. National real estate may have been tanking, but here at the grand opening of Dream Garage—a storage facility in Dallas for high-end cars—the vehicle spaces were sized and priced like Plano mini-mansions. General Motors, soon to receive a federal bailout, was a sponsor of the event, and the company’s local marketing guru had turned out to smile and pump hands.
Wealthy Dallas entrepreneurs Robert “Bob” Schlegel and his wife, Myrna, also were there, along with two of their four children, most of whom are businesspeople like their parents. Attending the event were “lifestyle guru” Kim Schlegel Whitman, now 33, and her husband, Justin, the son of Hollywood actor Stuart Whitman; and Kim’s sister Kari Schlegel, 24, a recent graduate of Southern Methodist University, an MBA student, and a Realtor. The two other Schlegel offspring—Kirby Schlegel, 31, the chairman of Schlegel Sports and the owner of two professional sports teams; and Krystal Schlegel, a 21-year-old sophomore at SMU—were not able to attend.
The night was more about family than business, though in the Schlegel household the two are often synonymous. Bob, Myrna, and Kim had turned out to support Kari, who was proudly representing Dream Garage in her capacity as a newly minted real estate saleswoman with Allie Beth Allman & Associates.
That night, Canadian-born Bob Schlegel was on the verge of a business milestone of his own: selling Pavestone Co. LP, the concrete-landscape products company he founded in 1980, to Atlanta-based Oldcastle Architectural, a Pavestone rival. The $540 million sale would make Schlegel even wealthier than he already was.
But in January—a couple of months after the Dream Garage gala—Bob Schlegel might have felt like packing up the family and heading back to his native Canada. In the teeth of a worsening recession, the Federal Trade Commission announced that it would block the Oldcastle sale, smelling a potential monopoly at your local Lowe’s or Home Depot store. Bolstered by Pavestone’s assets, the FTC said, Oldcastle would reduce competition, quality, and innovation in the patio-brick and retaining-wall business, forcing up prices to consumers.
Schlegel was stunned, and understandably so. His company had ponied up nearly $20 million in fees for the deal, and had been advised initially that it would meet with FTC approval, since Pavestone and Oldcastle together controlled just 15 percent of the nation’s total dry-cast concrete business. Most concrete-landscape products are sold to small building contractors, and the nation’s three major home stores—Home Depot, Lowe’s and Walmart—together sell only 4 percent of so-called “paver” products. The FTC’s beef, however, was that 90 percent of the home stores’ little share consisted of Pavestone and Oldcastle products. His biggest mistake, Schlegel says in retrospect, was not realizing that the FTC would look at the companies’ combined home-center sales as a monopoly. It just never occurred to us, he says, that 4 percent would be considered “cornering the market.”
If you’re a Schlegel by birth—or marriage—you work, the ups and downs of the business cycle notwithstanding. Not one of them really has to, anymore. In its most recent fiscal year, privately held Pavestone raked in an estimated $348 million in a down economy, off 12 percent from the year before. But they all work regardless—either in the family Pavestone business, or on their own.
You start out young, too: at age 15, Kirby was a paper filer. Later he worked in Pavestone’s Grapevine plant. He says he’ll never forget the day he got his first Pavestone shirt. His first paycheck was for $90, and he framed it.
Even Kim’s 2-year-old son, JR, had a modeling assignment one recent afternoon. (Getting a head start on his college fund, Kim joked.) The oldest Schlegel daughter had just stopped in for lunch at Pavestone, after her morning radio stint on The New 103.7 Lite FM (KVIL), where she appears regularly on the Gene & Julie show.
Meanwhile, Justin was working on new “green” initiatives at Pavestone, and recently sold a tract of family-owned land—something of a sales coup in a market gasping for air. Kari called to say she’d just landed a contract on a $4.9 million listing on Isabella Lane—a home that had been on the market almost a year. (The house would eventually be sold to Dallas Mavericks player Shawn Marion.) Kirby, meanwhile, was in Frisco with his Texas Tornado, a “Junior A” hockey team. He also owns the AAA Tacoma Rainiers minor-league baseball club in Washington state.
The family has a knack for turning life experiences into business opportunities. Kirby, for example, who played ice hockey until he was 7, got into sports-business because he was fascinated by what motivated people to attend sporting events. Similarly, Kim was planning her Idlewild debut when she found that the choice of high-end party rentals in New York made what was available in Dallas pale in comparison. She bought and brought back cartons of Baccarat crystal, Limoges china, and BBJ linens, which friends later asked to borrow. Someone, perhaps her mother, said, “We ought to turn this into a business.”
Thus was born RSVP Soiree, Kim’s glam party-rental store that launched her reputation as a lifestyle entrepreneur.
She signed her first book contract at the age of 24 for a title called The Pleasure of Your Company: Entertaining in High Style (Gibbs Smith Publisher). One of the stories in that book was about a party she’d thrown for her Chihuahua, Lola. That chapter blossomed into a second book on pooch parties. Later, as Kim planned her over-the-top, 2005 wedding to Justin and couldn’t find the right wedding organizer, the Wedding Workbook was born. A fourth book was published last year.
These days Kim has signed with a manager and a “branding expert” in Los Angeles, hoping eventually to land her own TV show as a kinder, gentler Martha Stewart for the Millennial generation. On the other hand her KSW Homes company—a licensing arrangement which has her helping design houses for high-end Dallas homebuilders—has not been as successful as she had originally hoped.
Talking Business 24/7
Bob Schlegel, the 59-year-old patriarch of this driven clan, grew up on a southern Ontario dairy farm one hour west of Toronto, Canada, in the twin cities of Kitchener-Waterloo. The family’s business smarts may have originated with Bob’s industrious father Roy, a dairy farmer. The elder Schlegel taught himself the electrician’s trade and, in the 1940s, opened a gasoline station. Both Schlegels’ parents were Mennonites; their great-grandparents were Amish.
When Bob was 5 years old, he broke his neck on the farm and was in a body cast for a year. When he was 7, he was attacked and almost killed by two Great Danes; his brother, Don, rescued him. The family farmhouse burned to the ground, and young Schlegel had to repeat the ninth grade. Life was farm, work, and school—early-morning feedings, gathering the eggs, slopping the hogs. To earn extra money, Bob sold seeds, knives, and first-aid kits to neighbors. He even invested in a Pepsi vending machine at the local equipment-repair shop.
Schlegel’s mother taught summer bible school and Myrna Horst, who lived five miles away, was in her bible class. The Schlegel kids love to tell how their mother came home from school one day when she was about 8 and told her mother: “That Bob Schlegel is such a nice boy. I hope he finds himself a good wife someday.”
Myrna and Bob dated in college and married about three months after graduation, when he became an accountant at Peat, Marwick & Mitchell, apprenticing for his CPA license. Those were the days when a CPA was attached to an adding machine, and Schlegel was so fast with the machine that he won several “10-key” contests. He owns a sharp numbers mind; his children say he can calculate math in his head faster than the computer. In 1975, the self-described “landscape nut”—he grew to admire great landscaping as a child on the farm—opened his own accounting firm.
Meantime, Bob’s father had started a nursing home/retirement center in Tavistock, and Myrna worked there. Believing that such facilities might do better in the American Sun Belt, the family eyed Texas, where they liked the idea of a non-union, private-pay marketplace.
So for six years, beginning in 1979, the family drove back and forth between Canada and Dallas once or twice a month to monitor its burgeoning nursing-home business. In piled the kids, the dog, a nanny, even grandma in a Chevy van for the 22-hour trip from the Toronto tundra to the Texas sunshine. Soon Bob and Myrna were owning and operating 15 nursing and retirement centers—two in Canada and 13 in Texas, for a total of 2,200 beds and 2,000 employees, all under Myrna’s supervision.
Even with four children, home life at that point was business 24/7, with mom always on the phone. Myrna, Kirby recalls, was very adept at managing people. Bob drove the kids to school in the morning, Myrna picked them up in the afternoon, and the business talk was incessant—in the car, at the dinner table, everywhere.
“We’d ask questions, and they’d put them in kid’s terms,” Kirby says. “Or numbers—like you always want [to have] more revenue than expenses.”
Around this time, Bob came to realize that dry-concrete “pavers”—landscaping bricks that are more porous than bricks made of wet concrete—were popular in California and might also be in Texas, where people were as crazy about their landscaping as he was. The paver withstood freeze-and-thaw cycles but also flexed, which Schlegel thought would be ideal for Texas’ expanding-and-contracting clay soil. Schlegel bought one of the machines that compressed, vibrated, and compacted sand into a single concrete paver and, in 1980, founded Pavestone Co. with two partners on 22 remote acres in Grapevine.
The road to becoming the nation’s largest dry-concrete paver manufacturer was as rocky as the gravel that went into his products, though. After the real estate bust of 1986, Schlegel was forced to shutter a Pavestone facility in Houston when payroll checks began bouncing and the phones were cut off. His partners soon called it quits. Building Pavestone, Schlegel says simply, was a long, slow grind.
Today, the company’s automated plant in Grapevine is Pavestone’s mothership. Here, Pavestone products are developed, tested, or bounced around to give them their trademark aged, antique look. There’s also a top-secret stone lab for new colors and custom quartz surface blends. Schlegel has invested millions of dollars in complex machinery that cranks out 80 million pavers a year.
His kids once told Bob the formula for Pavestone’s success was simple: “You just put sand and dirt in on one side, and money comes out on the other.”
As someone who missed 80 days of third grade commuting to Texas from Canada, Kimberly Schlegel Whitman says her parents more than made up for it with her wedding to Justin, which set a new benchmark for “Dallas lavish.” The nuptials involved 1,200 guests at the Meyerson Symphony Center, a 33,000-square-foot tent, the entire Dallas Symphony Orchestra, 12 bridesmaids, and a Givenchy couture wedding dress with a 20-foot train that Kim flew to Paris to buy and fit. The wedding, the Schlegels say, cost “north of half a million dollars.”
In 1994, Bob and Myrna sold their PeopleCare Heritage Centers to Albuquerque-based Horizon Healthcare Corp. for a reported $62 million. To celebrate the jackpot, they took their four children on a year-long, round-the-world trip that started in Australia and ended in Turkey. Myrna home-schooled according to a planned curriculum and brought along tutors; Bob worked Pavestone by phone, fax, and computer. “It was European Vacation with 22 pieces of checked baggage,” Bob recalls. Wherever they landed, trucks were needed to pick up the luggage.
There’s no doubt the Schlegels live very well, which they believe has sometimes caused them to be misunderstood. In 2002, for example, the producers of the TV series Dallas hired scriptwriter Robert Harling—a Schlegel family friend—to write the screenplay for a movie to be based on the hit show. Harling wanted to base the script on the Schlegel family dynasty.
This caught the attention of The New York Times, which decided to shoot Dallas’ newest wealth dynasty at Southfork Ranch for its Sunday magazine. Myrna was in the hospital when the reporter first called. “They wanted Kirby to get a few of his good-looking buddies,” she recalls. “We were just going to be in the background. But it got worse and worse.”
By worse and worse, she means the subject evolved from a conventional fashion spread to poking fun at the Schlegel family’s “Texas excess.” With Myrna out of pocket, she says, the photographers talked Bob into showing off the family’s 18,562-square-foot home on Valley Ridge Road. Valued by Dallas County at $11.3 million, the manse features 10 bedrooms, 12-and-a-half baths, six fireplaces, marble floors, and a tennis court. The Schlegels took The New York Times at their word, one friend says, and got burned for it.
Now living on their own, Kari and Kirby share a 12,000-square-foot penthouse at the W that’s on the market for $11.75 million. Kari, of course, is the listing agent. Each sibling’s wing is anchored by a foyer/bar/party room with a full balcony view of Dallas. The young Schlegels entertain at least as frequently as their parents.
Those who know the Schlegels well insist they haven’t let money “change them,” however. One winter day, when their Bentley was motoring down Valley Ridge, a neighbor kid is said to have thrown a snowball at the car. The Bentley stopped, and out jumped Myrna. The kid’s mother held her breath for a tongue lashing. Instead, Myrna picked up a snowball and threw it back, laughing.
Local socialites also say the family is one of the most generous in Dallas, with a lengthy list of philanthropic donations and awards. They donated the pavestone circular driveway at Lee Park, for example, and an entire street—Schlegel Street—is named after them at SMU because of the money they’ve given to the school.
“To whom much is given, much is expected,” says Kim, quoting a Mennonite phrase she and her siblings heard repeatedly from her father and grandfather. Indeed, they say, the phrase has become a family mantra.
The ultimate landscaper, Bob Schlegel is optimistic about the legacy he has planted for the next generation.
He’s eager to raise equity, synergy, and production for Pavestone’s 16 plants, which stretch from California to the East Coast. Pavestone is currently branding itself as the “eco-friendly” paving solution, an earth-friendly alternative to concrete.
When Bob lost the Oldcastle sale, Kirby says he told his dad: Don’t worry, you might have lost it all in the stock market, anyhow. “We’ve come to terms with it,” Myrna says of the failed deal. “Really, it may have been a blessing in disguise.”
So, would the family try to sell the company again? “Only if the price is right,” Myrna says. “We’re not going to give it away, and the company is doing very well.” Are there any current suitors? “There are companies who want to buy us,” she says. “But now is not the right time.”
Schlegels: At a Glance
Robert, the father
Chairman and CEO, Pavestone Co. LP
Myrna, the mother
Vice president, Pavestone Co. LP
Chairman and CEO, Schlegel Sports
Licensed agent, Allie Beth Allman & Associates
Student at Southern Methodist University
“Lifestyle” entrepreneur, author
A Pavestone marketing director, married to Kim