Entrepreneurs inspire me. I am so impressed by their willingness—strike that, their need—to risk their all in service to an idea, a calling, a vision of a better life and a better world. While the vast majority of people opt for a safe, secure work life (as if such a thing existed anymore), entrepreneurs know that if they do not risk everything, they risk even more.
It was my pleasure to write profiles of four Twin Cities businessmen who will soon be inducted into the Minnesota Business Hall of Fame. One of those men is Jim Dolan. His story, from the July issue of Twin Cities Business magazine, is below. But I first wanted to present a few anecdotes Jim told me that I was unable to shoehorn into the final piece. Jim offered these stories when I asked him how he came to appreciate entrepreneurship.
I was in a parks and recreation program in Jackson, Tennessee, when I was seven years old. We made arts-and-craft objects like lanyards and little swords out of gimp and straight pins and beads. At the end of the day, a lot of kids didn’t want theirs so I took them and tried to sell them to people around the neighborhood. I sold some but it took me a while to figure things out. I had two younger sisters who were cute, and I wasn’t, so I made them my sales force. They were going door to door and were selling things at a nice mark-up. I was able to get the other kids in the parks program to make things for me for a penny each and I was selling them for a dime each. So I had a sales force, I had low-cost production and I had a little business going. I called it Cardinal Industries. I had a sign made, which I propped in front of my house against a tree, that said we made high-quality jewelry. But my business topped out because there were about forty homes in our neighborhood and there were busy roads all around it and my sales force couldn’t cross the street.
I learned about cherry bomb futures when I was in junior high school. Like all kids, I had invested heavily in fireworks on July 4. I had forgotten some of them in my closet and discovered them the following Christmas. I was going to blow them up because that’s what kids do, and then a friend of mine offered me a dollar each for them. I had only paid a quarter the previous July. That’s how I learned the time value of fireworks: What’s worth a quarter in July was worth a dollar in December. That’s an opportunity. So I sold all my cherry bombs to my friend, and the next July 4 I took all my savings and bought all the fireworks that I could. I squirreled them away and began to sell them around Halloween. From Halloween to New Year’s, I was the only source of fireworks in this small town in western Oklahoma. I made a killing. I was marking them up like crazy. I took all of those profits and ordered a lot more fireworks, which turned out to be my downfall, because I was ordering so many explosives that law enforcement took notice and came to the house to find out why so much explosive material was being delivered to our house. So that ended my career selling fireworks.
My parents were very organized people. My dad was a chief petty officer in the navy and my mother was a sergeant in the army. They were very big on process and fairness, so a treat had to be something that was divisible by three. That usually meant Hershey bars or M&Ms, which over time became our favorite. Being the oldest, my parents would give me the bag of M&Ms and tell me to divide them into three equal groups. It eventually dawned on me how to redefine the situation to my advantage.
Once I had divided the M&Ms into three equal piles, I would divide my pile into colors. I’d eat the brown ones first because they were the most numerous. I’d get to the red ones last because there were fewer of them. When my sisters noticed, I told them that there was a value system to M&Ms. I explained that the red ones were the best, the green ones were almost as good, and so on. I learned that I could persuade them to trade with me based on that value system. I would trade one red M&M to them for ten brown ones. They would be very happy with having a small pile of reds and greens and maybe some yellows, and I would be very happy with having a large pile of browns and a few yellows.
This wasn’t a one-afternoon thing, it went on for years. It didn’t catch up to me. Ever. Not even to this day. Did my parents know? I don’t recall going out of my way to tell them about it. The game ended when I went off to college.
It’s a lesson in salesmanship. It’s all about perceived value: persuading someone that value is there and acting on it. Perception trumps reality. My sisters believed they got the better end of the deal because they got the really valuable M&M’s. They were very happy. So was I. Everybody won.
I love those stories! And here is Jim’s Hall of Fame profile:
MINNESOTA BUSINESS HALL OF FAME
After 18 years, Jim Dolan’s $300 million company is still evolving. In 1993, after Dolan teamed up with Cherry Tree, a Minnetonka-based financial services company, to purchase Finance and Commerce, a daily Minneapolis business tabloid, Dolan Media grew to become the nation’s second largest publisher of metropolitan business newspapers, a position it still holds. In 1995, Dolan acquired a small regional public records company and used it as a springboard to build Dolan Information, which became a national powerhouse and industry game-changer before it was sold in 2003. On May 26, 2010, Dolan Media Company was rechristened The Dolan Company to reflect the fact that two-thirds of the company’s revenues are now generated by its Professional Services Division, which has quickly become a leading national provider of specialized services to the legal profession.
Life as a Minnesota media and marketing mogul is a long way from Dolan’s 1971 graduation from the University of Oklahoma School of Journalism. In 1973, Dolan’s entrepreneurial apprenticeship was ignited when legendary publishing magnate Rupert Murdoch, founder of News Corporation, purchased the San Antonio Express-News, his first U.S. acquisition and the paper for which Dolan toiled as a reporter.
Until Murdoch transferred Dolan and his wife Sylvia to Australia for several months to learn the operations side of the newspaper business, Dolan had been dismissive of business and finances and had no intention of abandoning journalism. After eye-opening stints in every department, he learned, often painfully, how decisions like holding the paper for late sports scores affected every department from sales to circulation to advertising. “I would cause a problem and experience the results of that problem on the same day the problem erupted,” Dolan recalls. “Rupert thought that before I made a decision or gave an order I should know the consequences. I came back to the U.S. better prepared to be a manager.”
Back in San Antonio, Murdoch took Dolan under his wing, eventually promoting him to executive editor and having him run the whole news operation. Dolan was later sent to News Corporation offices in New York City where he was put in charge of the New Media Group. “That’s where I aggressively got into the finance world and the deal side of things,” Dolan says. “I didn’t have time to audit courses so I got the syllabus from Columbia Grad School and NYU and bought whatever business textbooks were assigned to students. I had to catch up fast.”
Bitten by the business bug, Dolan resigned from News Corporation after 12 years and took a bold step to prepare himself for the next chapter of his career. “I hired a team of industrial psychologists out of my own pocket to study me,” he says. “I wanted an independent appraisal of my strengths and weaknesses in order to increase the odds of my success.”
Soon after, Dolan formed a small mergers and acquisitions partnership with a former colleague. After four successful years, he joined a New York-based investment bank, quickly advancing to executive vice president.
When Cherry Tree founder Tony Christianson was introduced to Dolan in New York, the two struck up a friendship and began looking for opportunities to start a company in the media sector. “We looked at everything—newspapers, magazines, newsletters, radio, TV—all across the country, and we found a very interesting opportunity in local business-to-business media,” Dolan says. “Our research indicated there were more than 600 little entities around the country, there were no big chains and the margins were really high.”
After Dolan and Christianson zeroed in on Finance and Commerce, Dolan relocated to Minneapolis and was soon building a portfolio. “We bought the second publication in Milwaukee a year and a day after the first one, bought the third one four months later in Baltimore and it was off to the races,” Dolan remembers. The Dolan Company’s Business Information Division, which sells high-value proprietary content to attorneys, is now comprised of 64 newspapers in 21 markets.
Dolan jumped into the data business in 1995 when he acquired two Minnesota-based providers of public-records information. Organic growth, subsequent acquisitions and significant investments of research and technology grew this division, referred to internally as The National Group, into a large and successful group of public records companies. Essentially, Dolan’s team electronically tapped into courthouses to gather each day’s credit information for the entire country and immediately deliver it to credit bureaus, major financial institutions and credit card companies.
Dolan’s mastery of the public-records business didn’t just improve his bottom line, it transformed an industry. The ability to rely on faster, better and cheaper consumer data allowed credit card companies and other financial institutions to improve the quality of their credit decisions and lower their write-offs. Dolan “loved the business” and had no intention of selling it, even when Dayton, Ohio-based LexisNexis started calling. “I told them it wasn’t for sale the first six or eight times,” Dolan says. “Finally, in 2003, I named a big number, thinking it would scare them away, and to my surprise, they said, ‘Okay.’”
To fill the gap left by The National Group’s departure, Team Dolan ventured into professional services. It was a natural progression. “After selling content to a professional group, it’s a logical next step to sell them services,” Dolan says.
The Professional Services Division is comprised of three operating units. National Default Exchange is a leading provider of mortgage default processing services in the U.S. Counsel Press’ proprietary document conversion system assists attorneys in organizing, printing and filing appellate briefs and records. DiscoverReady provides outsourced discovery management and fixed-fee document review services to major companies and their counsel.
While the two divisions of The Dolan Company are distinctly different entities with separate management teams, they operate synergistically. They share leads and market with each other and occasionally pursue opportunities together. More notably, the Professional Services Division generates public notice advertising which regularly finds its way into the Business Information Division’s newspapers.
Dolan’s business strategy is so sound, not even a recession can slow him down. “We have cyclical and counter-cyclical businesses and we have geographical balance so in any kind of economic cycle, we’re strong and we’re growing,” he says. “We are spitting off cash like crazy, which gives us, in these times, the capital to do things other people are unable to do. This is our third recession in this company; we plan for this kind of thing and we’re ready for it.”
Part of that planning was the decision to take the company public in August 2007, a decision Dolan doesn’t regret even though the credit markets collapsed a month later. “We needed better access to capital,” he says. “During our private years we did 13 rounds of private equity raising and refinanced our debt too many times to count. It was getting to be such a time drain that we looked for some other way to finance ourselves. It was a very choppy time to be public at all and here we were a brand new public company barely knowing what to do. We went out at $14.50 a share and went as high as $32; now we’re at around $11.50 but that’s nowhere near where I think we should be.”
Dolan’s success has not surprised Cherry Tree’s Tony Christianson, who continues to be an investor in and director of The Dolan Company. “Jim is a great entrepreneurial CEO who has built a significant company, and one that will probably be more significant in the future,” Christianson says. “He’s not a one-trick pony. If you looked at all the Hall of Fame winners, you would see that they are lifetime business builders. That’s definitely what Jim Dolan has done so far and continues to do.”
Indeed, Dolan’s outlook can be summed up in three words: full steam ahead. “In the very beginning we were a newspaper rollup company,” he says. “Then we got into public records, did a nice divestiture of that and everybody was very happy with the money. Then we got into services. I’m still thinking, how far can this thing go? We’re not done yet.”
ABOUT PHIL BOLSTA
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