J. Peterman Rides Through Success, Failure
"I had no perspective," he told attendees Tuesday at the Direct Marketing Association Catalog Council's annual networking dinner. "When you're an entrepreneur you're in the trenches. You're involved in everything. It's fun. It's action."
He described a proliferation of items as a cancer on The J. Peterman Co.
"We were adding items," he said. "More items means more inventory [and] more people to manage inventory. We had millions tied up in the warehouse."
Problems were exacerbated by the decision to "grow our way" out of trouble.
"That doesn't work because you never solve the problem," he said. "What I should have done is said, 'We're going to slash inventory, overhead and the number of items in the catalog.'"
Instead, what followed was a plan to open 70 retail stores in five years.
"You must be careful of opinions that flatter your own opinions," he said. "When the ship starts to go down, there's nothing you can do. It takes on a life of its own."
Peterman also took the audience back to 1987, when his company was born and used advertising to sell his infamous duster coats.
"Space advertising is the hardest way to sell anything," he said. "This product said 'romance.' Duster coats [were] for guys riding horses. We defined romance as the romance of a journey to another time and place more interesting than where we are today."
The operation grew to generate $65 million in sales in 1998 with $11 million in new venture capital, as well as 50 million people recognizing his name thanks to a recurring character on "Seinfeld."
"The show was never a plus or minus for the business," he said. "Our customers got the inside joke, and most people didn't realize we were a real company. Celebrity brands don't work by themselves. If I had my druthers, nobody would know who I was."
However, a year later, the story was one of bankruptcy and an asset auction.
Peterman also recalled 40 percent increases in postage and paper in 1995, the year the company suffered its first loss.
"Well-run companies shouldn't suffer a loss due to paper and postage increases," he said.
His post-bankruptcy period included writing a book, "Peterman Rides Again," as well as reacquiring the brand. A line of furniture is appearing in stores, and the "catalog is doing nicely." He said he now preferred the conservative approach as opposed to what he termed "investing in the future."
"I was always $10 million away, but never got there," he said. "Am I out of the details? No. But I'm running a small company, and a $60 million company requires [a different management style]."
He outlined four attributes necessary for success: passion, energy, learning and persistence. He also said what he wants to do with his company.
"The new catalog will be highly focused. I will be in retail, but I won't own inventory or stores. I'm going to build the company back very slowly," he said, though he would not reveal specifics when asked about the size of the current operation.
"It ain't how big the top line is, it's how big the bottom line is," he said. "We can make more money with less of a top line. The consumer will force me to grow the catalog. It's as big as the warehouse is. Will it get bigger? It's entirely possible. But it will be profitable."
Peterman urged those in the audience to take risks.
"What I learned is ... that life is like a heart monitor, up and down," he said. "As soon as it goes on a straight line, you're in trouble. Get out of the comfort zone, or you're not going to learn anything. If you don't make any mistakes, you're not doing anything."