The process of building has given me great joy throughout my life. In my work as a venture capitalist and philanthropist, one lesson has become clear to me: whether you’re building a new business, starting a family or playing an active role in supporting democracy in a developing country, successis more likely when you create a strong foundation.
Throughout my career, I have been focused on the retail industry. All three phases – as a retail analyst (1969-1977), a manager in a retail company (1977-1987) and as a retail venture capitalist (1987-2005) – have been satisfying. But the most fun has been in helping to build numerous retail and restaurant companies. These include Dick’s Sporting Goods, Jamba Juice, PETsMART and Whole Foods.
I’m often asked what it takes for a small retail company to prosper. I offer four basic ingredients that, in combination, help to establish the necessary foundation for success. First, select a large or rapidly growing market. Second, formulate a strategy that provides customers with exceptional value. Contributing factors toward providing this value include convenience, entertainment, fashion, price, quality, selection and service. The right blend of these factors very much depends on what product is being offered, and identifying the target audience. Sometimes the lowest price is critical, while in other circumstances selection and quality dominate.
The third ingredient is leadership. Rarely has an early-stage venture grown to be highly successful without a world-class chief executive officer. I have often been impressed with the CEOs who have led the more than 30 companies that I have backed. The best of them have had distinctly different styles and personalities, but they are very effective managers who share a solid set of values that match the culture of their companies.
The final ingredient is an attractive profit formula. Sometimes it is simply not possible to find or develop the right blend of sales, gross margin, expenses and capital expenditures. Fortunately, there are cases where exactly the right balance is achieved and retail magic occurs.
I have been fortunate to work with many motivated professionals. But not all people are afforded the same opportunities. There are an equal number of inspired young men and women in developing countries who often miss the chance to contribute to their community in a meaningful way – often due to a lack of educational and/or financial resources.
Four years ago, my wife, Ellen, and I started the Gallagher Foundation to address some of these needs. Our foundation provides college scholarships to very talented young people in South Africa, Mexico and Turkey. We hope that by helping to educate future leaders from these democratic, developing countries, we will contribute to building strong societies where everyone will one day have opportunities to excel and be a positive force regardless of race, religion or gender.
The joy we feel from our interaction with these immensely talented young people - from the time we first meet them during the selection interviews through seeing them mature during their college years - is extraordinary.
In many ways, aspiring business owners and eager new students embark on similar journeys. Their paths are often treacherous and challenging, but the rewards for hard work and dedication bring success and a foundation for lasting satisfaction. I hope that many of you also will have the opportunity to feel the joy of building throughout your lives.