For business in general, there has been little cause for celebration. By andlarge, it has been a pretty dismal year. A time of uncertainty, hesitation, retrenchment. A time when inflation, recession, high interest rates, and the specter of long-term fuel shortages have combined to stifle growth and optimism in many cases.
While some major corporations have rung up record profits, others have encountered fiscal disaster. Ask Braniff or American Airlines. Ask Chrysler or Ford. Ask a savings and loan executive or a home-builder. Ask your neighborhood service station operator or the guy who runs the corner drug store-if they’re still there. They’ll tell you that things are tough, very tough.
But don’t ask the entrepreneurs who somehow keep springing up with flourishing new businesses in the Dallas area, even against a backdrop of disillusionment, pessimism and near despair. They’ll tell you that everything is perfectly rosy, and they’ll make you believe it.
Dallas has always provided fertile ground for entrepreneurial types. Indeed, it is a city largely built on their tireless efforts, imaginative enterprise, and willingness to take risks when most other folks were frantically scurrying for some safe harbor.
During the recent illness of the national economy, entrepreneurs have flocked to Dallas to take advantage of one of America’s strongest local economies, one that has earned a reputation for being almost recession-proof. They have come because of a dynamic business climate and an easy, uncomplicated way of doing business. Still others have grown up here, with the sweet smell of success in their nostrils and dozens of local entrepreneurs to imitate. They come in all shapes and sizes, and their offerings run the gamut from the infinitely complex to the absurdly simple. Many of them won’t make it over the long haul, but others will stick around to write new chapters in the business history of Dallas.
The following four are representative of the city’s entrepreneurial diversity, and of the type of business enterprises that may one day emerge as major forces in their chosen fields.
U. S. TEL
Before St. Patrick’s Day, 1980, U. S. Telephone Communications, Inc., existed only on paper. The fledgling company had an impressive name, but had yet to sign up a single customer. But in the 15 months since that time, U. S. Tel has not only gone a long way toward living up to its name; it has also become the kind of success story of which legends – and business empires – are made. From absolute zero in March of last year, U. S. Tel now has more than 10, 000 customers and anticipates $40 million in annual sales in 1981. Even this is only a bare beginning. Within five years, the company’s leadership projects annual sales of $500 million and hundreds of thousands of customers from coast to coast.
U. S. Tel’s phenomenal growth is all the more incredible because it has transpired in a highly competitive field, populated by a number of industrial giants with more money, more manpower, and a vast head start. Those competitors include the Bell Telephone system itself, as well as such well-established national companies as Western Union, Southern Pacific, and MCI Telecommunications.
Simply put, U. S. Tel is buying excess long-distance capacity from Bell and other companies and reselling it in small portions to its own clientele -which includes many larger banks and securities firms -at rates far below what Bell and the others charge. For example, U. S. Tel pays Bell about $400 a month for a leased telephone line between Dallas and Houston, then resells long-distance time to its customers at the rate of 25 cents per minute-which still represents a savings of nearly 30 per cent off what Bell charges in standard long-distance rates.
Much of U. S. Tel’s edge in the industry has been the result of the Dallas-based company’s excellent financing, which included some $5 million in initial capital. Most of this went to hire top-quality technical personnel and to purchase expensive switching devices capable of processing hundreds of calls simultaneously. In all, the company’s investors -including former Mayor Robert Folsom and his close friend and associate, A. Starke Taylor, Jr. -have put up about $12 million to guarantee U. S. Tel’s success.
Another factor in that success has been the company’s leadership. Heading U.S. Tel as its chairman and president is 42-year-old James K. Devlin, a Harvard Law School graduate and former chief executive officer of Carterfone Communications, who demonstrated his management ability by turning that company from red ink to profitability and amassing a fortune for himself in the process.
Ray Miller, 41, a former MCI executive, is U. S. Tel’s executive vice president for marketing and the chief strategist behind its whirlwind sales blitz. “This is no game for the fainthearted or the under-capitalized, ” says Miller. “The amateurs are going to fall by the wayside. You have to have technical know-how and marketing expertise to make the whole thing work. “
John Barnes, 38, is the company’s executive vice president for finance and its chief numbers man. A former president of his own investment firm and a former director of Carterfone, Barnes is a certified public accountant with a reputation for his ability to translate raw concepts into calculated figures.
Together, these three men founded U. S. Tel, and together, they have given it an exceptionally wide range of talents and abilities. “What we have here is a unique combination, ” says Barnes.
In March, U. S. Tel activated the first of a projected five regional subsidiary companies, U. S. Tel Southwest, and named Tom Harbison, a former IBM executive who most recently headed a California computer company, as its president. Once the subsidiary is able to assume most of the responsibility for U. S. Tel operations in the Southwest (Texas, Oklahoma, and Louisiana at present), the parent organization intends to move quickly into new areas of the country, Harbison says. “We expect to be originating service in both the northeast and the southeast in the very near future, ” he says. “At the same time, we’ll be going for a higher profile here at home with a major TV ad campaign.”
The company has expanded its original service into three distinct types of longdistance operations, including one aimed for the evening long-distance user. By signing up residential customers as well as business customers, U. S. Tel is going after an ever-larger share of the estimated $34 billion spent by Americans annually on long-distance calls.
It is no accident that U. S. Tel’s headquarters is in the historic Magnolia Building in downtown Dallas, where the company has “toughed it out” as the only tenant during the structure’s renovation and where it will eventually occupy 11 floors. The location is next door to Southwestern Bell’s new skyscraper headquarters on the site of the old Baker Hotel. “If this building hadn’t been here, with all this space available, we might never have been able to do what we’re doing, ” says Miller. “We couldn’t have dreamed of a better situation, with access to Bell’s whole system just across the street. “
By some expert estimates, the resale common carrier industry, as the Federal Communications Commission (FCC) refers to it, now accounts for as much long-distance business as the entire Bell system did in 1945, a phenomenal record considering that the industry actually began less than a decade ago when the FCC ruled that Bell could not refuse to sell its excess capacity on a first-come, first-serve basis.
Still, as optimistic as he is about his own company’s future, Miller has no illusions about U. S. Tel’s ability to wrest even a sizable fraction of the long-distance market away from AT&T, the nation’s most profitable business enterprise, anytime soon. “Realistically, ” he says, “we aren’t even a pimple on Ma Bell’s backside. “
But given another decade or so, and the fruition of its carefully structured marketing plans, U. S. Tel might become a real carbuncle.
How does a gym teacher from California end up selling corny dogs in Dallas? That, in essence, is the story of Patricia McDevitt, who has parlayed boundless energy, a simple idea, and a long-standing appreciation for the lowly hot dog into a $6-million-a-year business.
After finishing college at Cal Poly Pomona with a degree in physical education, she became a teacher, but also took a part-time job with a hot dog vending operation specializing in concessions at fairs and beach amusement areas. After several years, she shifted her career emphasis to the hot dog business full time and began to see an opportunity in shopping mall concessions, where the available food was, as Pat puts it gently, “not particularly high quality. “
She approached various shopping centers in Southern California, but was unable to secure a location. Finally, when she learned that another retail food operation had backed out of a lease at Coliseum Mall in Hampton, Virginia, she rushed across the continent to open her first store.
Soon after that, the opportunity for a second store presented itself in Shreveport. Enroute there, Ms. McDevitt stopped off at D/FW airport and got her first look at Dallas. “It seemed to be an ideal place, ” she recalls.
And so, in 1976, Ms. McDevitt made Dallas the national headquarters for her company, Codo, Inc., which now operates 36 Corn Dog stores in 13 states -including seven in the Dallas area-with another 16 scheduled to open during 1981 and 1982.
The corn dog (or corny dog) has been around for a long time. Ms. McDevitt’s research indicates that it first made an appearance at fairs in the southern United States around 1918. It combined the northeast’s favorite fun food, the hot dog, (which originated at New York’s Coney Island in the 1890s) with a deep south favorite, cornbread. But in all the years it had been sold and consumed, few people had perceived the fantastic commercial possibilities of the corn dog until Pat McDevitt came along.
“I had determined that corn dogs were the number one selling product at fairs and amusement areas, ” she explains, “and I knew they had extremely high volume potential. Our high sales volume is based on the fact that we can serve 48 corn dogs in a five-minute period.”
Ms. McDevitt says her operating rules can generally be summed up in two words: quality and simplicity.
“We have a simple menu of only three items, ” she says, “corn dogs, corn cheese, and fresh lemonade. Corn cheese is American cheese melted inside cornbread batter, and tastes something like a grilled cheese sandwich. ” Their lemonade is made fresh several times a day using California Sunkist lemons and no artificial ingredients; after they squeeze the lemons, they beat the peels to extract extra flavor and pulp.
Corn dog stores are tiled in cheerful shades of red and yellow. The sales girls dress in sporty, colorful shorts and T-tops that are appealing in a frivilous, light-hearted way. Each stand has a bright, appealing, youth-oriented ambience. These components, in addition to a readily marketable product, contribute to Codo’s success.
Customer response has been overwhelming. At Redbird Mall, where the original Dallas Corn Dog store is located, Codo has the highest dollar volume per square foot of any retail establishment in the entire center. In two other malls, Corn Dog stores rank either first or second in sales-per-foot statistics, and in six others, they are the top volume sellers among all food outlets.
Approximately half of all Codo’s stores are in Texas, but the chain also flourishes as far away as New Jersey, Philadelphia, Pittsburg, Indianapolis, the Carolinas, and Florida. All are company-owned stores and are staffed by more than 600 full-time and part-time employees.
For a 34-year-old entrepreneur and a five-year-old company, those are some doggone impressive figures.
Video of Texas
In the winter of 1973, Craig Curtright was pulling the eyeteeth out of the mouths of baby pigs. He had gotten into farming after a long, nerve-racking stint in consumer products retailing, but the rural life, he discovered, was just as demanding as life in the business world. After two years of farming, he threw in the towel and the plyers and came back to the video business in Dallas, where he believed he belonged.
Curtright is a product of three colleges-the University of Missouri, Dallas College of SMU, and North Texas State University – where he juggled two degrees (one in mechanical engineering, the other in business). He has worked in a variety of marketing and merchandising positions over the years, and describes his experience as “more earthly than textbook oriented. ” Among the many corporations for which he has worked are: Firestone, Litton Industries, Porter Burgess, Co., and Quasar.
Curtright, now only 38, was working as Merchandise Coordinator in JC Penney’s Treasury Department when Quasar came out with its first video recorder. In the spring of 1979, he was approached by two South African investors who wanted to break into the video industry. Curtright formed a corporation with them and prospered fabulously when he sold his interest in their franchise a few years later: His stock had multiplied in value four times. But Curtright wanted to go into business on his own. He had discovered, while dealing with his South African partners, that there were “too many egos to feed. “
Video stores, by this time, were in every neighborhood shopping center. With the Financial assistance and moral support of his new and passive partners, Tracy Watson and Roy Eddins, Curtright opened his first video store in Fort Worth last October.
Video paraphernalia must have been just what the public wanted. Curtright was selling portable and deck video cassette recorders, videotapes, and accessories, and by mid-November, Video of Texas opened another unit on Dallas Parkway. By Christmas of that same year, the two stores had grossed over a million dollars in retail sales.
The key, Curtright says, is not that video is hot or that his financial backing is solid; both of those factors are elements of his success. But “the key is people. We reward our 22 employees and they stay with us. We’re good to them and they’re good to us. ” Curtright reads assiduously and says that the video industry is growing so quickly that he has to spend several hours every day briefing himself on the lastest developments and merchandising techniques.
“My fortes, ” Curtright says, “are in marketing. I also try to act faster and stay aggressive. “
Starting Video of Texas in Dallas was also advantageous. “Dallas is one of the top three markets. It’s like California in the early Seventies. Dallas was a vehicle to success because of the stability here. “
Curtright is quick to assert that he is not merely capitalizing upon the video boom. Some franchises will not make it over the long haul, he says, because they are followers. Video of Texas, Curtright hopes, will survive by leading the industry.
Asked if video stores are particularly profitable investments, Curtright laughs and says, “Yes. ” He has scheduled two new store openings -in Piano and Car-rollton- after which he and his partners will explore the feasibilities of expanding in Waco and Longview.
North American Sound
You might say that Gregg Dodrill has always marched to a different drummer. Or maybe he just hears the drumbeats more clearly than the rest of us.
While Dodrill was growing up in Fort Worth, attending Arlington Heights High School, studying marketing and banking at North Texas State University, working as a salesman for SCM Corporation, getting married and fathering two sons, his world has been dominated by sound.
“I started out like any other stereo buff, ” he says, “but it wasn’t long until I discovered that I was different. I kept working my way up to better and better sound systems, until I finally had the best system you could buy anywhere – but that still wasn’t enough. I wanted more, so I started building my own speakers, striving for more perfect designs. “
His quest for audio perfection led him into several off-beat business ventures. His first company, Entertainment Systems of Dallas, operated a sort of “portable disco, ” featuring a $15, 000 sound system, a light system, and sometimes a live drummer, which performed at parties for $250 a night.
In 1974, Dodrill went into partnership with a friend in a second company called Beta Sound, Inc. But he decided after a year that he had acted prematurely, turned the business over to his friend, and went back to work on improving speaker designs. In 1976, he launched another company, North American Sound, in the garage of his North Dallas home -and this time he was in business to stay.
In sales volume, the growth of the company has been modest -from $84, 000 in speaker sales in 1976 to a projected $380, 000 for 1981-but that’s exactly the way Dodrill planned it, and exactly the way he intends to keep it. “We’re more goal-oriented toward quality than sales volume, ” he says. “We’re selling about 90 speaker pairs a month right now, or about three times what we need to pay our bills, and that’s fine with us. We’ve been approached by several large organizations about handling the bulk of our production, but we’re not interested in get-rich-quick propositions. It’s too easy to go bust in situations like that. “
What Dodrill, 33, and his small staff (two full-time and three part-time employees) are looking for is the kind of slow but sustained growth that will allow North American Sound to keep its quality high while avoiding serious production crunches. But the firm recently moved into newly leased office-warehouse space in Addison and is now in the process of expanding the retail market for its six exclusive speaker system designs, which it builds from scratch. “We’re looking for only about one new top quality retail outlet per month to realize our goal of a 40 per cent annual growth rate in sales over the next three years, ” says Dodrill. “What we want to do is pay our own way and grow through retained earnings.”
Systems produced by North American Sound are currently being sold by some two dozen stores across the country. They range in price from $300 to $1000, but according to Dodrill, they compare in sound quality to speaker systems costing up to $7000 retail. “Normally, the retail price is about five times the manufacturing cost, ” he explains, “so stores that deal with us can sell our $560 speakers for about $1500 and still offer a great value to their customers. “
Dodrill gives credit for the exceptional capabilities of the systems he produces and sells to input he has received from top experts in the field. “I’m in a unique position in that I’ve come in contact with several near-geniuses in audio engineering and have been able to utilize these people’s expertise in our products. That’s how we think we’re able to get 95 per cent of component capability out of our systems. Actually, that’s the reason we’re in business in the first place. “
Dodrill believes his company knows what retailers are looking for in quality stereo systems. The real boom in his sales, he predicts, will come if the buying public learns to look for these same features, instead of judging products by what they read about them. Other speaker manufacturers vehemently dislike Dodrill because he skips the middle steps, and sells his speakers for less. “One of our big problems so far has been credibility, ” he says. “People say, ’How can something be that good at such a low price?’ Too many people buy speakers by how they look on paper instead of trusting their ears to determine performance. “
The sound people may then hear is that of a different drummer.