Grand Rapids, Michigan: An Entrepreneurial, Bootstrapping City by Rod Kackley

Amway-The Foundation

(Excerpt from Last Chance Mile: The Reinvention of an American Community)

Grand Rapids is a West Michigan — almost a Lake Michigan shoreline — community that is defined by it’s entrepreneurs, many of whom would be considered to be bootstrappers.

Two of those entrepreneurs are Rich DeVos and Jay Van Andel —  conservative, religious men — that are best known as the co-founders of Amway Corp.

(left to right: Jay Van Andel and Rich DeVos)

They were best friends at Grand Rapids Christian High School, separated only by World War Two. 

Rich and Jay stayed in touch through those years and almost as soon as they arrived home, they opened their first partnership — a flight school that mostly catered to military veterans who wanted to learn how to fly.

(Rich Devos and Jay Van Andel at their flight school)

Military veterans also get hungry. Sensing an ancillary business opportunity, the DeVos-Van Andel team also opened a drive-in restaurant to feed their students, serving butter-fried hamburgers, using their mothers’ recipe.

Jay and Rich were taught a lesson that almost all entrepreneurs may have to learn. Failure is a part of the experience. 

Neither of their first businesses did very well. Both were sold. 

Jay and Rich didn’t stop. They began another adventure.

(Rich Devos and Jay Van Andel on the ill-fated Elizabeth schooner)

Even though these entrepreneurs were the first to admit they knew nothing about sailing, the pair set off for South America in 1949 on the schooner, “Elizabeth.” It sank off the shore of Cuba. The pair had to be rescued by an American freighter. 

Was this yet another DeVos-Van Andel failure? The answer was “no,” at least not as far as they were concerned.

“That is part of our folklore,” Steve Van Andel, one of Jay’s two sons, told me. “For most people, once the boat sank, it would be the end of the story. For them it was just half-way through (the journey).”

The logic is astoundingly simple.  “Their boat had taken them as far as they needed it to take them. They didn’t need that boat anymore.”

Rich and Jay eventually got to South America.

(left to right: Steve Van Andel and Doug DeVos in front of portraits of their fathers)

Steve still has the bell from the “Elizabeth” in his office at Amway Corp. where he serves as chairman of the corporation his father and Rich created, sharing leadership duties with one of Rich DeVos’ sons, Doug, who is Amway’s president.

“People may say, ‘Rich and Jay were great visionaries’ but they were just trying to feed their families.  And our dads would even say, ‘all we did was go to work every day,’” Doug explained as he, Steve and I spent an hour together in Amway’s Ada Township corporate offices. “But they went to work every day with an attitude that they were going to make the business better.”

Amway had a humble birth in 1959, launched in the basement of Jay’s home, selling a product billed as “an all-purpose household cleaner.” Hardly glamorous, but this was the business that would make them billionaires.

“It was 1959, when it was Castro versus the United States and communism versus free enterprise,” said Doug.  “Freedom was an idea they wanted to have a piece of.”

A direct selling and manufacturing operation, Amway (which is meant to be an abbreviation for “American Way”) eventually went global. It now has more than 21,000 employees around the world and better than 3 million distributors.

Steve believes you tend to hit what you are aiming at. “And if you are aiming low that is probably where you are going to go. But if you aim high, you are probably going to go there. I think as a business you need to keep aiming up and you will eventually get there.”’

Doug agreed believing that things will get better, and if you aim high you will score high, are basic, core entrepreneurial beliefs.

“There are a lot of people doing it right now, people who are building a better mousetrap, coming up with a better idea,” he said. 

“Look at our iPads and with Steve Jobs passing, we celebrate the way that entrepreneurial spirit thought of a way we could live our lives better.”

(c) 2014 Lyons Circle Publishing Inc.

(Rick DeVos)

Start Garden, founded by Rich DeVos’ grandson, Rick, is helping a new generation of entrepreneurs. Read More.

For the latest business news and more stories of BYOB entrepreneurs go to the free Rod Kackley app for iOS and Android mobile devices. Download through the App Store or Google Play.

Last Chance Mile: The Reinvention of an American Community by Rod Kackley tells the story of how the DeVos and Van Andel families entrepreneurial heritage helped create a cluster of prosperity in Grand Rapids, the Medical Mile. It is available wherever books are sold online including Abbott Press as well as on the shelves of Barnes & Noble-Woodland Mall, Schuler Books & Music-28th Street and West Coast Coffee-Monroe Center Grand Rapids.

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The Apartment Lounge: Building an LGBT Community by Rod Kackley tells the story of two men who did what was at the time unthinkable in Grand Rapids, Michigan: they opened a gay bar. Afraid to even put the name of the establishment on their front door, Milt and Ed not only kept it open, they helped lay the foundation for this West Michigan city's LGBT community.

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Grand Rapids Needs Talent by Rod Kackley: This article examines the need in the Grand Rapids, Mich. information technology community for software and app developers, and what the business and educational communities are doing about it. 

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Michigan Could Miss the Next Wave of Automotive by Rod Kackley: This article examines the problem of the “Missing Middle” being faced by the Big Three in Detroit. It’s a talent problem. Find out what the auto industry is doing about finding its Lost Generation. 

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Selling Everything But The Gobble, Bootstrapping the Michigan Turkey Producers Cooperative by Rod Kackley

The way Dan Lennon tells the story of Michigan Turkey Producers Cooperative; he leaves you wondering how this company could have wound up with a top line on its financial statement of more than $200 million, thirteen years after its launch.

He and his partners started without a business plan, without a computer, and without a banker who would even talk to them.

“Banks all asked, ‘who are you guys?’” Lennon said. “We spent more than a year just trying to get a bank to talk to us.” 

Two dozen turkey growers in in the Grand Rapids, Mich. area who were making a good living supplying birds to the Sara Lee plant in Zeeland, Mich. about 45 minutes south of Grand Rapids, were told in October 1998 there was no longer a market for the birds.

They all lost their contracts.

Ten of the turkey growers went out of business. Fifteen stayed, banded together, and formed a cooperative. They decided if Sara Lee wouldn’t process their birds, they would do it themselves.

But they had to build a processing facility. Without that, they had no hope.

Entrepreneurs are often advised to seek out ‘friends, family and fools’ for financing in the opening days. Lennon struck out with them too. “One potential investor said he could double his money in the stock market and it would safe there. So, he wouldn’t invest with us and we didn’t fit into any of the government programs.”

The outlook was grim. However, they were able to work out a loan package with CoBank to finance the $20 million construction of a turkey processing facility. But when the bank decided it needed 50 percent down instead of thirty, they had to scramble.

Growers who had purchased stock at $1.50 per shackle — the hooks that would be used to hold turkey carcasses in the plant — increased their investments to $2 per shackle to cover the difference, and they were able to start construction of the Michigan Turkey Producers facility in Wyoming, Mich., near Grand Rapids,  in 1999.

The project was finished in eight months, and turkeys began being processed in March 2000.  But that high point was followed by some rough years. Lennon said they lost money in 2003, 2004, 2007 and 2008 because of the volatility of corn prices. MTPC couldn’t raise its prices fast enough to compensate.

What a difference a decade can make. When the MTPC-Wyoming, Mich. plant opened, it took workers all day to kill 200 turkeys. Now they can process 200-thousand birds a day. “We processed 4.8 million turkeys last year and we have the ability to double that,” he explained to an audience in May 2012. 

Like any CEO, Lennon has to sing two songs at the same time. While extolling the virtues of MTPC and expressing optimism for the future; Lennon also spoke about the challenges that are on the horizon.

Lennon said MTPC was “very lean” at the executive and sales levels of the company. “When you find good people it is tough to get them to relocate (to West Michigan),” he explained. 

MTPC was also having trouble getting good people to work on the plant floor. It wasn’t a hesitancy to relocate that was causing the problem in that case, according to Lennon. His company just couldn’t find enough people who want to work.

“Unemployed people are making almost as much sitting home as we would be able to pay them,” he said. “We are struggling to find people who are willing to come in, work hard, and advance to a position where they can make more money.”

Describing his company as entering its “teenage years,” he also warned that puberty would not be easy for MTPC if only because a flat consumption market would “complicate the future. We need to make more value-added products with higher price points. We need to do more cooking.”

The main sales target for the immediate future: national chain restaurants that already have turkey on their menus. The way Lennon sees it, turkey cold cuts don’t make it. MTPC’s future will be built on turkey served hot. That is the way turkey tastes best, Lennon explained and he wants to find restaurants that agree with him.

“National chain restaurants love turkey,” he said. “We could probably chase McDonald’s or Burger King or Wendy’s until we are blue in the face and not get anywhere. We are going after restaurants that have turkey on the menu. Arby’s does a nice job. We are talking to them, but that may take a few more years.”

Michigan Turkey Producers Cooperative has discovered another new revenue stream in partnership with the people building the nation’s first biomass gasification system where turkey litter is transformed into 300 kilowatts of electricity. bio-digester in Howard City, Michigan, north of Grand Rapids.

Lennon said that means the Cooperative will be “able to sell everything but the gobble.”

Michigan Could Miss the Next Wave of Automotive Technology by Rod Kackley: The article tells the story of the talent shortage facing the Detroit Three in Michigan. Read More

Grand Rapids Needs Talent by Rod Kackley: This article explores the problems facing the information technology community in Grand Rapids, Mich. as it search for new software and mobile app developers. Read More

Last Chance Mile: The Reinvention of an American Community tells the story of how entrepreneurs, politicians, educators, artists and even zombies, came together to chance the way the world sees Grand Rapids, Mich.

Last Chance Mile is available wherever books are sold online including Abbott Press, as well as on the shelves of Barnes & Noble-Woodland Mall, Schuler Books & Music-28th Street and West Coast Coffee-Monroe Center, Grand Rapids, Mich.

For more books, articles and essays by Rod Kackley, click here.