Improving the Bottom Line Economically and Environmentally with IceStone USA’s Dal LaMagna

July 22, 2013

JOHN SHEGERIAN: Welcome to another edition of Green is Good, and we’re so excited to have on the phone with us Dal LaMagna. He’s the President and CEO of IceStone USA. Welcome to Green is Good, Dal. DAL LAMAGNA: Good to be here. JOHN SHEGERIAN: Hey, you know, Dal, you are a serial massively successful entrepreneur with an amazing history and journey behind you, and before we get into any questions and discussions about the beautiful products you make at IceStone USA, can you share with our listeners first a little bit about your background and your journey and how you got here? DAL LAMAGNA: Well, you know, you said I’m an enormously successful entrepreneur, but I didn’t wake up successful. In fact, in the day, I was a master at failing. In fact, the book I wrote, Raising Eyebrows, which was the story of a failed entrepreneur who finally got it right, I kind of chronolize every mistakes I made. I made every mistake you can make in business and eventually figured out what not to do and succeeded with Tweezerman, which was my first company and I sold Tweezerman for $150 million and my employees, they shared 20% of that and then started investing in a social impact company, companies that make a difference, and IceStone was one of my first investments. This was back in 2004, and that’s how I got involved with IceStone, which, as you know, makes countertops out of recycled glass and cement. JOHN SHEGERIAN: Well, and for our listeners out there, I want to direct you to some wonderful websites. The first one is IceStoneUSA.com. I’m on the site right now. I know Dal’s products very, very well and they’re just simply gorgeous so please look at his beautiful website. That’s how you can see what he does or purchase his products or see where to purchase them and then also, you can buy his book or go read about his book at RaisingEyebrows.com. Dal, you just said something interesting. You sold Tweezerman for a lot of money, more money than most people will ever dream of. DAL LAMAGNA: And, more money than I ever thought I would sell it for. In fact, the company was a lot bigger than it ever would have been had it been up to me and the reason why is because I’m somewhat aggressive about employee empowerment and bringing my employees in as partners. IceStone was actually failing and it was failing as of 2011, because you know, the economic crisis stopped building. Building markets had stopped and IceStone is in that business so I took the company over in October 2011 and the first thing I did was I empowered the employees and what does that mean? First, we gave the investors and employees some% of the company, which they shared in a fair way, and then we paid a living wage to the employees at the bottom and embedded the employees in every level of decision making. The employees voted for one of themselves to be a managing partner. It was a partnership and then we have an executive committee. It’s five employees including me, who run that and the steering committee and then I taught the employees. Rather than being dictatorial, I was more professorial. I taught the employees how the company works and how the financial statement works and how it comes together and the employees turned around the company, not me. The employees of IceStone built the company to a $30-million company. The employees of IceStone actually turned IceStone around. It took us almost a year-and-a-half despite the fact we got hit by Hurricane Sandy and we were under 5 feet of water. As of last month, the company’s a break-even. JOHN SHEGERIAN: So let’s go over this. This is fascinating because we don’t get to cover this a lot on the show. When you sold Tweezerman, you mentioned at the top of the show you shared with your employees about 20% of the proceeds. DAL LAMAGNA: That’s right. The employees of Tweezerman own 20% of the company so they got 20% of the capital gains. That was $12 million that the employees — and there are 200 employees — and the employees of IceStone, they own 10% of the company but there’s a deal that we made, I made, with the investors that when investors would cover their investment, the employees will automatically go 20%. Just giving employees ownership, which is a very good thing to do in my opinion and should be something all companies do in America at least, doesn’t mean that always magic is gonna happen. You have to then tell them and train them and you have to give them the opportunity to make decisions. I really believe that the world in business turns best when the employee who’s doing the work gets to decide how to do it and has the ability to make suggestions and suggestions are followed rather than these companies that are run from the top down where the people at the top basically make the most money and control the company. This idea that companies are too big to fail, we hear it all the time. Well, I think that a lot of the companies that are too big to succeed because there’s really nobody there who really cares about the company. JOHN SHEGERIAN: So, talk about this. You’re giving our listeners exactly the tools to use in the real world, so talk about tools. What are the tools you give your employees, you gave them at Tweezerman, you give them at IceStone, and then what are the costs, as the owner now and the fiduciary of this large venture, what are the costs associated with empowering these employees and giving them these tools? DAL LAMAGNA: Well, one of the tools, of course, is knowledge. My employees that I extended the company was money because the former managers of the company, they were really good at raising money so when they needed money, they raised it from the investors so the employees in the company didn’t know that the company was losing money so the tool was not necessarily- Does every employee in my company now know what a balance sheet and a financial statement is? Yes, it’s a very simple thing to find the statement that says how much money we’re making and losing and the balance sheet basically declares how many assets you have and how many liabilities you have and what’s the company worth and those two financial documents center it right and it’s no big deal to teach people how you use that and once they see that, the employee’s attitude changes. I’ll give you an example. JOHN SHEGERIAN: Sure. DAL LAMAGNA: We do a lot of construction inside and we were filling a big hole in the floor with cement and so we have a load of cement come in and it’s right at the back door so the door opens and the cement truck backs in and dumps the cement in. Well, somehow or other, a cement pump got ordered with the order and the cement pump costs $600 to rent and my bookkeeper came to me and said, “Why are we getting a cement pump for this job?’ and I said, “What do you know about this?” She goes, “My husband’s a contractor. You don’t need a cement pump unless you’re gonna pump cement a long distance.” It turned out someone made a mistake. She picked it up. We saved $600. That would never have happened if she wasn’t an empowered employee who was an owner who knew that she could make those kinds of decisions so it works not only for the employees in the sense that they’re able to help, but it allows us financial managers that we actually save a lot of money. The first year after I took it over, the employees identified $600,000 of savings. JOHN SHEGERIAN: Holy Toledo! DAL LAMAGNA: And, not only that. One of the things that you do when you empower employees, you give them health care. You give them job security and health security, so IceStone, when I got involved, was paying for half the health care of the employees and the way that worked was that all the employees would pay $160 a piece for their share of the health care. Once we empowered the employees and we made them owners and we did all these things that we did, the higher paid employees came to me and said, “We’ve decided we want our health care to be progressive,” and I said, “Well, what do you mean,” and they said, “Well, we make more money. We think we should pay proportionally for the health care,” and I said, “That’s cool. If you can come up with any way of saving money for the company that’s related to you, I’ll take that money and put it into your share of the health care costs and they said, “Well, we don’t need these cell phones.” They all had cell phones. It’s a big factory, 55,000 square feet. You can imagine and management thought they needed cell phones to communicate with each other so we put in an intercom system. Well, they got rid of cell phones. They saved $18,000, so that went towards their share of the health care costs. It ended up that the people at the bottom, the people who get a living wage at IceStone, which is $15 an hour, they only pay $40 a month for their health care costs now and the other employees actually went down from 160 to 111 so the point is is that when everybody is an owner, everybody is empowered, everybody is involved, you’re gonna get a more efficient operation. It’s gonna be smarter. Things are gonna happen, and that’s why IceStone, a company that really struggled over the years to even make a profit, finally broke even last May. JOHN SHEGERIAN: So, let’s talk about this so now, knowledge, that makes sense. What other tools are you gonna give the employees in terms of empowering them and you know, what else besides knowledge? DAL LAMAGNA: Well, job security and health security. JOHN SHEGERIAN: Yeah, okay. DAL LAMAGNA: Nobody at IceStone, no one person could fire another person. You have to have at least another person who agrees to that process and health security, of course, is you get the health care and it’s training. We have 12 Tibetans working in the factory, so we do English language training for free. They spend an hour a week doing that and off the top of my head, I can’t think of any other specific tools. JOHN SHEGERIAN: How do you balance then? So, now you’ve given them ownership. You’ve given them these tools. They’re finding all these savings, $600,000. How do you balance the interests? You’re the CEO. You’re the businessman. How do you balance too much empowerment versus too little empowerment and make sure there’s a happy balance? DAL LAMAGNA: Well you know, the thing I struggle with every day since I’m an entrepreneur and usually, entrepreneurs, they’re making decisions. I don’t want to take a vote after I’ve made up my mind so that was a change. When am I dictatorial? When am I saying this is what we gotta do? And when am I professorial and coaching and teaching them? So, that’s a struggle for me and you know, and I’m aware of it and being aware of it, there are times when I’ll simply say look, I’m sorry but this is what we’re gonna do and those times, I know the executive committee will understand at least because we were voting on vacation time and how much people will get and you know, who wants to vote against vacation time? So, I had to just say, hey, this is how much you’re gonna get given how many years you work. JOHN SHEGERIAN: Hey, for our listeners that just joined us, we’ve got the delightful Dal LaMagna on with us right now. He’s the CEO of IceStone USA, but he also was the founder of Tweezerman and also wrote a book called Raising Eyebrows: A Failed Entrepreneur Finally Gets it Right. Talk a little bit about that book. Why’d you write it and what are some of the lessons learned that you could share with our listeners today? DAL LAMAGNA: Before, I just want to say IceStone makes the most beautiful natural countertops that are recycled glass and cement. It’s 75% glass and cement and it’s highly polished and it’s absolutely beautiful and architects love it. The book, the reason I wrote the book after I had sold Tweezerman for a lot of money and it was very successful, after having failed at so many things in my life. I wrote the book to inspire people to start their own businesses, to not fear failure, but to fear success because when you’re planning a project, you want to make sure that when you’re successful at it, you want the life that will follow. One of my failures in life is that I succeeded in the restaurant business and I ended up trapped working seven days a week 12 hours a day and to also give somebody a kind of fun narrative because the book isn’t a textbook. It’s a fun story about what I did and how I did it and mistakes I made to inspire people, yes, to do it, but also to say hey, watch for this. For instance, one of the things I talk about in the book is how a well-run business is like an equilateral triangle with the three important sides of the business are equally important. That is you make a product or a service, you sell it, and then you control the company. I get into how I myself had to discipline myself to make sure that- I like accounting and I was always keeping track of everything but at some point, you gotta sell and you gotta make your product and you gotta force yourself to go around that triangle so there’s lots of little lessons about contracts and when do I hire a lawyer? And, all of the nitty gritty of business experience, small business experience is kind of displayed in that book and that book has been great. Right now, we’re actually, with the book, selling the book itself has been a real challenge because a lot of books are out there so now what we do is we package the Tweezerman tweezers, which is $22, with the book that we’re selling for 25, and the book, you can find the book at RaisingEyebrows.com. JOHN SHEGERIAN: I love it, and let’s go back to IceStone. For our listeners out there again, I’m on IceStone’s site. The product is, as Dal said, is just gorgeous product. I’ve seen it in person. People I know have installed it. It is some of the most gorgeous product out there. It’s IceStoneUSA.com. Talk a little bit why did you come in? Why another mount to climb at this point in your life, did you come in and buy out IceStone and take it over? DAL LAMAGNA: Well, I actually didn’t buy it out. I was actually the largest investor in IceStone. I had like $3 million in it and there were other investors. There were 80 other investors who were mostly the movers and shakers of the progressive movement like Ben Cohen from Ben & Jerry’s and Gary Field from Stonyfield Farm Yogurts and the company in 2011 had run out of money and it lost a lot of money over the years and the building crisis had kind of affected building stock during the last economic almost depression. The company was gonna have to close and I happened to be in New York and thought well, what do we do? Are we gonna sell our equipment? So I said let me see if I can go in and turn around the company so I stepped in and became active and my plan was to basically just work there for a year like we talked about before, empower the employees and get them set up so they could run the company and succeed and boy, what a project that turned into, especially after a year, we did get to the point where we went from losing a quarter-of-a-million dollars a month to practically at break-even when we got hit by Hurricane Sandy and five feet of water flooded the factory and now at this point, I thought it was game over and the employees said, ‘No, we can fix the factory,” so I said, “Go ahead,” and they took apart 70 motors and drained them out and 5,000 electrical components and over five months it took them to do it, they got the factory running again and meanwhile, I got a small business administration, SBA, disaster loan from the government to pay for all the replacement parts and the company is now operating again and successful and for the first time in its history, as I’ve been saying, it’s at break-even and cement slabs, we make four by eight slabs. They weigh 570 pounds. I mean, it is quite different from selling a tweezer that weighs an ounce and it’s quite a different thing and so now I’m out of retirement. I’m doing this, but if you’re somebody like me, if you’re an entrepreneur and you’re really good at empowering and delegating employees. It’s fun because you don’t have to do, really, any of the work. You have to kind of steer the shop and that’s fun. JOHN SHEGERIAN: You know, we’ve got about two-and-a-half minutes left. The show is called Green is Good. We’ve got listeners all around the United States and around the world, and we’re so lucky to have this platform at Sirius XM. Talk about why people should be buying IceStone products now. This is a shameless plug, but it’s beautiful. DAL LAMAGNA: If you’re renovating your kitchen, you’re renovating your bathroom, the countertops in your kitchen, you don’t want it to be passing petrochemicals. Most countertops are made with binders that have volatile organic compounds on it like gas. IceStone is like a natural stone. It’s like granite and it’s not strip mined like marble and granite and it’s basically beautiful and it’s clean and it gets LEED certification. LEED is green certification. It’s what you call cradle to cradle. It’s another certification for green. If you’re a person who wants a green environmental living, you definitely want to put IceStone and interestingly enough, 80% of the reason why people want IceStone in their house is because it’s so beautiful but at the end of the day, it is something that is never going to emit a toxin in your environment and then of course, made in America is a big deal. We’re one of the few countertops that are made in America and people care about that now and I’m happy they do and then finally, it’s good to buy a product from a company that has empowered employees when the employees are part of the beneficiaries of the enterprise. JOHN SHEGERIAN: Absolutely, and Dal, thank you so much for coming on today. Really, your story is amazing. For our listeners out there again, please go to www.icestoneusa.com. You can learn more about his products, find out where to find them, see how gorgeous they are, or also, for the budding entrepreneurs out there, please buy RaisingEyebrows.com. Learn the journey of Dal and how successful he is and how he learned all of his lessons and became this massively successful guy. Dal LaMagna, thank for being an inspiring business leader. You are truly living proof that green is good.