He’s the gold standard for the truly hands-on CEO. Even as Dollarama LP Inc. has raced past $1 billion in sales, Larry Rossy, its chief executive, has held onto the jobs of head buyer and store-location scout for the chain’s 585 outlets across Canada.
Rossy built Dollarama into the titan among Canadian dollar stores in part with his bargaining skills as a third-generation discount retailer whose grandfather opened the family’s first five-and-dime in Montreal in 1910. “There are not too many CEOs who will fight tooth and nail with suppliers for a penny on a product,” Dollarama’s boss told the National Post last year.
But Rossy’s skills go far beyond being a hard-nosed bargainer. He also foresaw the appeal of clean, well-organized stores to bargain hunters repelled by the shabbiness of most dollar stores. Rossy told the National Post that before opening Montreal-based Dollarama’s first location in 1992, he studied existing outlets and realized: “Their stores are junky, they’re buying poor product. Their stores were not well lit or merchandised. They were very unprofessional.”
Over the past decade, Rossy has achieved his vision of a professionally managed chain rising to dominance. His firm has tripled the number of its stores and left rivals such as A Buck or Two shrinking fast. Although the recession juiced up sales — which reached $303 million in the quarter ended August 2, 2009, up by 15% in a year — Dollarama was flourishing long before the slump.
Bain Capital LLC, a Boston-based private-equity fund that now has US$60 billion in assets, bought into Rossy’s vision in 2004, paying C$1.03 billion for 80% of Dollarama. Continuing as CEO, Rossy maintained strategies that helped put the chain on top in Canada. He scoured higher-priced stores for $10 items he could copy and sell for a buck — even a disposable camera. And, to keep costs rock-bottom, he bypassed importers, sourcing directly from Asian manufacturers.
Under Rossy, Dollarama made some key changes in recent years. The chain invested heavily in IT to increase its efficiency amid hectic growth. It introduced debit-card readers — almost unheard-of in its sector — to boost average transaction values. And, early this year, Dollarama introduced items priced at up to $2, boosting the number as well as value of transactions.
The most recent measure of Rossy’s success was Dollarama’s initial public offering in October, which ranked as Canada’s third-biggest IPO of 2009 to date, with $300 million raised. And, given that Canada has just one-third as many dollar stores per capita as the U.S. market, Rossy figures Dollarama has plenty of room to open more outlets. “I used to think that 750 was the most Canada could support,” he says. “I don’t think so any longer.” — Jim McElgunn
Cirque du Soleil
Guy LalibertÃ© is having an extraordinarily good time while building Cirque du Soleil into an ever-more powerful worldwide entertainment brand. The penniless stilt walker turned billionaire has won and lost millions at poker, hosted wild, week-long parties for thousands of guests and sported a bright red clown’s nose as Canada’s first space tourist.
LalibertÃ© is such a larger-than-life character that it’s easy to lose sight of the rare combination of creative and business skills that has made the Montreal-based entrepreneur so enormously successful. He neatly summed up these skills in a video marking his 2005 induction into Canada’s Marketing Hall of Legends: “I’m an expert in clowning and marketing.”
The clown understood the potential to transform the tired three-ring circus into a place of enchantment for all ages through a sophisticated and passionate blend of artistry, acrobatics, music and storytelling. And the marketing expert understood the power of endlessly inventive PR to break through the clutter and connect with the public: how many firms mark their 25th anniversary, as Cirque did this past June, by having 900 employees set the record for the most people to walk 100 metres on stilts?
Cirque’s founder has shown the daring of a trapeze artist to grow his ragtag troupe into a behemoth with nine touring shows and 10 resident shows in venues from Las Vegas to Dubai — triple the number of shows Cirque had a decade ago. Almost 100 million people have seen a Cirque performance, and annual revenue tops $800 million. But LalibertÃ© doesn’t take foolish risks. He funds expansion largely through cash flow to avoid becoming overextended and losing control of his firm. He routinely convinces the companies he partners with on his ambitious projects to put up the money while he retains full creative control. And he surrounds himself with seasoned senior executives and an advisory board drawn from the cream of Corporate Quebec.
LalibertÃ© has created a driven company culture of always trying to top yourself. Sometimes that means bold new concepts, such as the adult-themed Zumanity show that debuted in 2003 — “the sensual side of Cirque du Soleil.” Sometimes that means imaginative repackaging of proven content, such as Love, a 2006 show crafted around Beatles music, much of it mixed and rearranged from the original recording-session tapes from Abbey Road Studios. The tens of millions of dollars Cirque spends per year on R&D fuels a ceaseless stream of creative and technical innovations. The firm’s “no compromises” approach to product quality — such as hand-sewing all 20,000 costumes it uses per year — makes consumers willing to shell out big bucks for tickets.
And LalibertÃ© never forgets his vast empire’s simple mission. “We make people forget their problems for a couple of hours,” he said in the Marketing Hall of Legends video. “They leave with a smile, and that’s the best reward an entertainer could have.” — JM
To say people were surprised when Dov Charney announced plans to take his 10-year-old company public at the end of 2006 is probably an understatement. Sure, American Apparel Inc. looked good on paper: the Los Angeles-based clothing manufacturer and retailer generated an estimated $300 million in revenue in 2006, up from $40 million in 2002. But many wondered if Charney’s well-publicized, non-traditional practices — everything from running shockingly risquÃ© ads to walking around half-naked in the office, talking openly about sex — would scare off investors.
Nevertheless, on December 18, 2006, the Montreal-born and -raised CEO, who left Canada after high school, sold American Apparel to a public shell company for a tidy US$384.5 million, injecting US$125 million into the company and leaving himself with a majority stake. Investors either didn’t know of Charney’s antics or were so wowed by the numbers they just didn’t care. Besides the growth and increasingly well-known brand, the company’s reported 80% gross margin in 2006 was well above the industry average of 60%. ?
Or perhaps investors actually appreciated Charney’s non-traditional ways. He has won kudos by eschewing offshore sweatshops and setting up a factory in downtown L.A. In fact, Charney is perhaps most well known for his social activism and how well he treats his employees. He is an outspoken advocate of changing U.S. immigration policy. And his factory workers, most of whom are immigrants from Mexico, make twice the minimum wage and are offered free English lessons, subsidized meals and inexpensive health insurance. ?
Still, don’t mistake Charney for a softy. “American Apparel is not an altruistic company,” he told The Economist in 2007. “I believe in capitalism and self-interest. Self-interest can involve being generous with others.”
Although American Apparel’s 2008 sales exceeded $545 million, the past couple of years haven’t been Charney’s finest. Besides a handful of yet to be proven accusations of sexual harassment by former employees, the recession hurt American Apparel. In October, same-store sales dropped by 6% from the same month in 2008. Far more dire, the firm recently released a Securities Exchange Commission disclosure that it is in danger of breaching covenants with its lenders.
And Charney got even more bad press this fall when he was forced to fire about 1,500 of his immigrant employees after a federal investigation turned up irregularities in the identity documents that these workers had presented when they were hired. (More than 300 companies were investigated, but almost all the news coverage has focused on American Apparel.) Charney was not accused of knowingly having hired illegal aliens, and he fought the bad press by continuing to spread his message, telling the New York Times that “No matter how we choose to define or label them, [illegal immigrants] are hard-working, taxpaying workers.”
Charney still employs approximately 10,000 people globally (about 5,000 of them in L.A.), and operates some 275 stores in 20 countries. And he runs the largest garment factory in the U.S.
“We’ve had a challenging year, but we’ve accomplished a lot in a short time,” said Charney at a recent celebration of American Apparel’s six-year anniversary as a retailer. “In my opinion, we’re just getting started.”— Kim Shiffman
Mike Lazaridis and Jim Balsillie
Research in Motion
Deep down, we all know that Canadian companies don’t conquer the world. Sure, they might do well for a while; but, at some point, a foreign rival wipes the floor with the Canucks or buys them out.
Someone forgot to tell the co-CEOs of Research in Motion Ltd.
For years, the business press repeatedly warned that the Waterloo, Ont.-based BlackBerry maker’s exceptional run of hypergrowth under Mike Lazaridis and Jim Balsillie was about to come to an end. Yet this past August, Fortune named RIM the world’s fastest-growing company over the past three years. It remains No. 1 in North America in the fiercely competitive wireless e-mail market it invented, and has 32 million subscribers worldwide — four times as many as in 2007. And its revenue of US$11.1 billion in the year ended February 28, 2009, was up by 13,000% from US$85 million nine years earlier.
The company has stayed on the hypergrowth track by adroitly marrying the science and engineering smarts of Lazaridis with the multi-faceted business skills of Balsillie. RIM draws on the world-class brainpower in the Waterloo tech cluster, which Lazaridis led the way in building, to set the pace in product development. And Balsillie has led a series of savvy business moves — from giving BlackBerrys to key business and political influencers to turn them into brand evangelists, to building partnerships with hundreds of carriers worldwide that do the heavy lifting on the marketing.
RIM didn’t settle for owning the business-smartphone category, in which it retains a 74% U.S. market share, to the Apple iPhone’s 20%, estimates Lancaster, Penn.-based ChangeWave Research, a technology-sector research firm. In 2006, RIM boldly entered the consumer market despite widespread belief that the perception of the BlackBerry as a business tool was too entrenched to overcome. Yet the brand was soon No. 1 among U.S. consumers, and its 40% market share leads the iPhone’s 30% in this category. Half of RIM’s revenue and 80% of its growth now come from consumer sales.
RIM has made the BlackBerry a smash hit with consumers, thanks in part to the company’s close work with carriers to create niche models and price plans, such as a T-Mobile exclusive smartphone for social-media fanatics selling for just US$48.88 at Walmart. Balsillie told Fortune these niche products are driven by intensive market research: “We don’t just throw spaghetti at the wall and see what works.”
The firm’s success in the consumer market also reflects its careful groundwork for massive growth. “We knew early on that the opportunity for BlackBerry was big,” Lazaridis recently told PROFIT, “and we made a conscious decision to prepare the company for scale.”
RIM is pricing its consumer models aggressively low, sacrificing some profits to build market share. Balsillie told financial analysts that this “land grab” strategy will pay off in the long run: “We could have sweeter margins for a couple of quarters, but we would rue that for the next 20 years.” — JM
She was a “mompreneur” long before the term was coined, but don’t let that cutesy label fool you. Sure, Sandra Wilson launched Robeez Footwear Ltd. in the basement of her Burnaby, B.C., home with her 18-month-old son at her feet. But since that humble opening chapter for her company, her achievements have provided great inspiration to aspiring and established entrepreneurs alike — of either gender.
Downsized out of her office job at Canadian Airlines in 1994, Wilson took a four-week, night-school course on entrepreneurship at her local high school. She began hand-stitching her now ubiquitous soft-soled leather baby shoes — named Robeez after her son, Robert — and selling them at local stores and gift shows. In 1999, Wilson earned just enough to move the company into its first commercial headquarters. What happened next surprised no one more than Wilson.
Revenue jumped from $600,000 in the year ended August 31, 2000, to $14 million four years later, then doubled to $28.5 million in fiscal 2005. Robeez was ranked No. 6 on the 2005 PROFIT 100 list of Canada’s Fastest-Growing Companies.
For someone with little business experience and training, Wilson ran Robeez with formidable management savvy. She developed Robeez into an employer of choice — subsequently branding the firm as such — by creating a collaborative, supportive, family-like corporate culture. That effort resulted in highly engaged employees and staff turnover well below the levels of other B.C. manufacturers. In 2006, she allocated 5% of revenue to employee training programs, from lunch-and-learn sessions on financial planning to English-language courses. (Chinese was the mother tongue of up to 70% of Robeez’s production staff.)
Wilson also kept a tight rein on her brand by managing distribution in-house rather than hiring third-party distributors. “When you use distributors, you’re one step removed from the customer, and you’re leaving it up to them where to place the brand,” she told PROFIT in 2006.
That strong brand would soon prove essential. Although Wilson’s innovative product created a category, Chinese copycats weren’t far behind. The strength of the brand helped Robeez compete. “We have really built a brand and a reputation in the marketplace for providing a high-quality product,” Wilson told PROFIT. “Once you have a relationship with your customer and they know your brand, and customers are coming into their stores and looking for it, it’s difficult for [Chinese firms] to have a lot of impact.”
By late 2005, Wilson was looking for a partner with the financial resources to expand the Robeez brand even further. That led her to talks with her second-largest customer, Lexington, Mass.-based Stride Rite Corp. A year later, in September 2006, Wilson announced she had sold Robeez to Stride Rite for a cool US$27.5 million. She cut ties with Robeez soon thereafter.
Although Wilson always had high hopes for her company, she never expected Robeez to grow so big so fast. As she told the Vancouver Sun: “Never in my wildest dreams.”— KS
Garda World Security Corp.
The two dozen countries in which Stephan Cretier’s firm operates include such scary places as Iraq, Sudan, Colombia, Pakistan and Afghanistan. But for heart-stopping peril, none can match what was the scariest place of all for Garda World Security Corp. late in 2008: the TSX.
The Montreal-based company’s ultra-aggressive acquisition strategy had left it dangerously exposed when credit markets seized up. Investors fled from the highly leveraged security firm, cratering its share price from $13.74 in August 2008 to 57¢ four months later. A financial analyst warned in a note to clients that “the end of Garda as we know it is near” and predicted the company would shrink by half or be sold.
Yet Cretier, Garda’s president and CEO, insisted he had been right to borrow heavily. This allowed his firm to grow quickly to the size needed to deliver what big clients increasingly demand: one-stop shopping for security services. Over the past decade, Garda has used debt-fuelled acquisitions to grow from obscurity to No. 5 worldwide, with operations spanning cash logistics (e.g., armoured trucks), consulting and investigation, pre-employment screening and physical security. And when PROFIT asked Cretier this past April to identify a financing tactic he would recommend to other entrepreneurs, he said, “I think optimal leverage is still the best way to create value for shareholders.”
True, Cretier was forced to retreat for a while, freezing acquisitions and selling non-core assets to pay down debt. But as markets rebounded, Garda’s share price staged an astonishing recovery, to $10.24 in early November 2009. That made the Garda shares that Cretier had bought for $700,000 the previous December worth $11.6 million.
Perhaps investors recalled the bullish prospects of an industry known on Wall Street as “the silent giant.” They might also have figured that Cretier — who grew Garda’s revenue to $1.1 billion in the year ending January 31, 2009, up from $6.7 million a decade earlier — must be doing something right. Cretier boasts of having the best-trained guards in the industry, enviably low turnover and a single point of contact for clients.
And he continues to aim high. Cretier’s long-term goals include moving up to No. 3 by knocking off The Brink’s Co., whose revenue is more than triple Garda’s. And, although Cretier admitted to shareholders this past June that he’ll have to be more careful about how much risk Garda takes on, he made it clear that he’s not about to become timid: “It’s the style of the company to push things to the max.” — JM
Running an airline is a notoriously tough way to make money, but Clive Beddoe found the formula for doing so — in Dallas, to be exact. That’s where Southwest Airlines pioneered the discount-carrier model that has made it the only consistently profitable big U.S. airline. Beddoe copied this model so skillfully that even as Calgary-based WestJet Airlines Ltd. grew into a major carrier, it remained reliably in the black throughout this decade of tumult in the airline industry.
Central to this achievement is the enormous latitude that WestJet gives its staff to resolve customer issues on their own. “When you empower your people and trust them, you’ll be amazed at what they can do,” Beddoe told PROFIT in 2007, the year he moved from the company’s CEO position to chairman.
Beddoe gave his staff a much bigger share in WestJet through an employee share-ownership program (ESOP) than the equivalent at Southwest. He figured that this would heighten his employees’ sense of responsibility for customer satisfaction and cost control. Beddoe says he took the most generous ESOP he could find — one in which the employer matched employees’ share purchases up to 5% of their salary — “and then I quadrupled it to 20%.” Almost 85% of WestJet’s 7,500 staff own company shares. The airline’s strategy of turning its employees into capitalists has helped it remain a rare non-union shop in a sector in which even Southwest is unionized.
Beddoe says “employees will see through it” if you merely claim to believe in a culture in which everyone pitches in to get the job done. So, he set a humble example by helping his team sell tickets or pick up garbage after flights — even changing a plane tire at minus 30 degrees.
WestJet’s “Because owners care” spirit has been far from the only factor in its dramatic growth since 2000, when its domestic market share trailed Air Canada’s, by 77% to 7%. WestJet expanded well past its Western Canada home base, first to Eastern Canada, then to the U.S. and sunspot destinations. It bought more than 80 Boeing 737s, giving itself North America’s newest and most fuel-efficient fleet. It rolled out innovations such as live seatback TV, online check-in and added legroom. By 2009, Air Canada’s share had shrunk to 57% and WestJet’s had grown to 36%.
Beddoe told the Globe and Mail this past February that by 2014, WestJet could overtake Air Canada: “Let’s not jump the gun, but I have a long-standing confident view for the future of WestJet.”
It seems there’s nothing like routinely cranking out profits while your rivals bleed red ink or go out of business to confirm that you picked — and then enhanced — the right formula. — JM
Just Energy Income Fund
She has experienced more than her fair share of hardship and heartache. A physician in her native Yugoslavia, Rebecca MacDonald arrived in Toronto in 1974, only to discover her schooling was worthless in Canada, preventing her from practicing medicine. In 1992, her husband Pearson was killed in a car accident, leaving MacDonald to support and raise their two children. Four years later, she was diagnosed with rheumatoid arthritis, an often-agonizing autoimmune disease that left her unable to walk without pain.
But MacDonald refused to let these events define her — or impede her ambition. Proof: in 2009, you’ll find her happy, healthy and running a firm with $1.89 billion in sales in its most recent fiscal year.
In 1989, when Ontario was deregulating natural gas, MacDonald and her husband formed Energy Marketing Inc., selling gas contracts door to door. She later sold it to form a similar business in the U.K. In 1997, after re-examining the Ontario market, she launched Ontario Energy Savings Corp. Sales reached $81 million in just three years. She took the firm public as Energy Savings Income Fund in 2001; two years later, revenue had reached half a billion dollars. With sales on track to exceed $2 billion in the year ending March 31, 2010, the firm, renamed Just Energy Income Fund, is among the biggest woman-founded and woman-run companies in Canada. (MacDonald stepped down as CEO in 2005; but, as executive chair, she remains the most senior decision-maker.)
“You have to believe in your product,” she told PROFIT in 2007. “You have to commit an enormous number of hours and hard work. Then, you have to make sure you’re prepared to work that much harder to bring it to another level.” This philosophy extends to her firm’s hundreds of salespeople, who are highly trained and work exclusively on commission.
MacDonald and her business have earned many accolades in the past decade. She won the Canadian Woman Entrepreneur of the Year award for lifetime achievement in 2002; took the No. 1 spot on PROFIT’s list of Canada’s Top Women Entrepreneurs for six consecutive years; and Just Energy made the PROFIT 100 ranking of Canada’s Fastest-Growing Companies from 2004 to 2007.
But, among the triumphs, there have been some near-tragedies. The Ontario government made a snap decision to re-regulate electricity prices in 2002, precipitating a 25% drop in Just Energy’s stock price and a $400-million plunge in the firm’s market capitalization. Furious, MacDonald rebounded by expanding into other provinces as well as the U.S.
Life hasn’t been easy for MacDonald. But it seems that she’ll never run out of gas. — KS
The Holmes Group
He’s loud. He curses. He sports a buzz cut and wears tank tops and overalls, revealing beefy upper arms. So, what on earth could Mike Holmes have in common with prim and proper Martha Stewart? Loads.
No, Holmes has never been convicted of lying to federal investigators; in fact, his personal motto, tattooed right on his arm, is “Make it Right,” and he’s often referred to as “Canada’s most trusted contractor.” But consider the similarities between Holmes and Stewart. Both gained fame doing what they do best — for Holmes, that’s renovating houses — on national television. Both capitalized on that success by publishing best-selling books and syndicated newspaper columns, and by launching magazines bearing their increasingly famous names. And both have eponymous product lines.
Driven by genuine passion and an innate entrepreneurial drive, Stewart and Holmes have parlayed their celebrity into fast-growing businesses: Toronto-based The Holmes Group has 40 employees and has grown its revenue by an estimated 200% over the past three years. And when it comes to new projects and brand extensions, there appears to be no end in sight.
Holmes isn’t new to entrepreneurship, having run his own construction companies since the age of 19. But the 2000s are when he became the name and face of a popular brand — which, Holmes says, he didn’t plan and is “a lot of work, but seemed like the right thing to do.” Holmes on Homes, a television series in which Holmes and his crew tear down improper renovation work and proceed to “make it right,” launched in 2003 and has for years been HGTV Canada’s top-rated show; last April, it premiered to U.S. viewers. Make It Right: Inside Home Renovation, Holmes’ 2006 bestseller, is reportedly close to breaking publisher HarperCollins Canada’s sales record, currently held by Wayne Gretzky’s 1990 autobiography.
And 2009 was Holmes’ busiest year yet. In the spring, he launched a home-inspection business in Ontario, with plans to expand it to Alberta. His new show, Holmes Inspection, premiered in October; and, at press time, his magazine, Holmes Magazine, was slated to launch in November. The Holmes Group is also behind an ambitious, green-housing development in the Calgary area. And then there’s the line of workwear and boots bearing his company’s logo, available in Canada and the U.S.
Despite Holmes’ growing home-renovation empire, he insists that profits aren’t his only priority. Last summer, for example, Holmes worked with the Brad Pitt-led Make It Right Foundation — the two met over a dispute about the foundation’s name, a phrase that Holmes had trademarked — to oversee construction on eco-friendly homes in New Orleans neighbourhoods that had been devastated by hurricane Katrina. The green movement is Holmes’ current obsession.
“Money does not interest me,” insists Holmes, who nevertheless says The Holmes Group is set to grow by another 200% in 2010, and is likely to double its employee count. “It’s really about making a difference.” — KS
When it comes to the athletic-wear business, you’d think Chip Wilson had a crystal ball. In 1998, when many North Americans thought of yoga as an exotic pursuit best left to hippies and Hindus, Chip Wilson saw it as an emerging business opportunity. With funds borrowed against his modest Vancouver bungalow, he founded yoga-apparel designer and retailer Lululemon Athletica Inc. — and it caught on like wildfire. By 2005, it boasted 29 stores in Canada, the U.S., Australia and Japan, and annual sales of $80 million. Just two years after that, with 52 locations and 650 employees, Lululemon went public on the Toronto Stock Exchange and the Nasdaq, raising $328 million and boosting Wilson’s net worth to an estimated $1.8 billion. Yoga had indeed become the latest exercise craze and, from the peak of North Vancouver’s Grouse Mountain, stretched into half-moon pose, Wilson was cashing in.
Wilson had plenty of entrepreneurial experience in the apparel industry. Having also foreseen the growth of the skate-, surf- and snowboarding outerwear trend, he launched Vancouver -based Westbeach Snowboard Ltd. in 1980, selling it in 1997. “I call it my 20-year MBA,” he told PROFIT in 2005.
Lululemon’s roots are in the hyper-healthy Vancouver community of Kitsilano, but the firm quickly succeeded in markets around the world, partially due to Wilson’s unique ambassador program. Lululemon employees found respected yoga instructors in every market, and in exchange for free clothes, the yogis offered product feedback and information on the community’s preferences. Perhaps most important, the ambassadors provided Lululemon with instant credibility. “It’s subliminal,” Wilson said. “They start wearing the clothing, and people think, ‘I respect that person, and he’s wearing Lululemon.’ The subconscious puts it all together.”
Wilson is arguably busier than ever, even though he’s no longer Lululemon’s CEO — he stepped down from the role in 2005 and made news by hiring former Starbucks executive Christine Day for the position in 2008. He’s chairman and head product developer of the 110-store chain, and in 2009 his firm launched Ivivva, a retailer of yoga-inspired athletic apparel for tweens. In Wilson’s spare time, he organizes Chip’s Not Dead Yet, an annual charity walk for B.C. Children’s Hospital, and also co-runs Imagine1Day Foundation, which provides education for children in Ethiopia.
For Wilson, the 1980s were about surfing, the 1990s about snowboarding and skateboarding, and the 2000s about yoga. So, what does the next decade hold for him? “It would be impossible not to be in the athletic-clothing business,” he told Business Edge last year. “That’s all I think about.” — KS