Mother in the Middle
Gertrude Crain has ruled the family publishing empire by installing her rival sons in separate but equal duchies. Once she's gone, though, the stage may be set for civil war.
One can not help but feel when speaking with Gertrude Crain that she could soothe a wounded panther. Or, more importantly for her purposes, iron out the differences between her two ambitious and capable sons, Rance and Keith.
Crain Communications Inc. is well beyond the point where anybody sleeps over the store. It owns 25 business publications — most of them weekly newspapers and monthly magazines — and takes in about $140 million per year. The empire is run by Rance and Keith as separate duchies. Each has his following and there is little crossover between camps. But as long as Gertrude is chairman of the company, and handles all the money, no enmity between the two factions is evident.
In addition, the 79-year-old matriarch makes quite sure Crain does not turn into a faceless corporation. She saw to it that a reporter fighting for custody of his son could use his profit sharing as collateral for a mortgage, to show the court he was financially stable. She extended herself to Joan Miller, a former administrative assistant at Crain's flagship Advertising Age, seven months after Miller had defected to a competitor; when she got word that Miller's husband had been diagnosed as having cancer, she sent a personal letter offering moral support. "She's a very, very beautiful person," Miller says.
Yet Gertrude is a beautiful person only a fool would mess with — or believe when she insists that her "two boys" really run the business. Talk to half a dozen Crain employees and you'll hear the same story half a dozen times. On this occasion it comes from Leon Mandel, publisher of Auto Week. "I was here for about six years," Mandel says, "before I fully realized that 'Mommy' wasn't just a smiling figurehead. When I expressed my sadness over the fact that a certain disagreement within the company ran so deep, Mrs. Crain took me quietly aside and said, 'Don't worry, I'm going to knock their heads together.' "
'They," of course, were those two talented sons of hers. 'The employee sport at Crain Communications is speculating what will happen when the matriarch is no longer around to knock heads. Mandel's combination of candor and caginess exemplifies the tone of this engaging pastime. Keith Crain himself, age 49, makes no secret of the intersibling chilliness. "I would say our relationship is close in a professional manner," he says flatly. "the business is our common link." Then he summons a stream of top lieutenants, like Mandel, to offer their own theories and prognostications. Such openness, it seems fair to say, is a rarity at most corporations.
Rance Crain, 50, declined to be interviewed for this article. But ever since Keith's biggest paper, Automotive News, overtook Advertising Age, which Rance runs, as Crain's most profitable publication, the sound of gnashing teeth has become more audible to Rance's adjutants. "Our charge was clearly to make more money than Automotive News," recalls David Persson, a Rance man for 18 years and Ad Age's publisher until last August.
The general acknowledgment that Ad Age's problems stemmed from factors beyond its control, like the 1987 stock market crash, has apparently offered the firstborn Crain little comfort. Nor has it kept Keith from some subtle gloating. Asked to name his proudest professional accomplishment, he responds: "Building Automotive News to be the most important publication in our company — certainly the most profitable."
Yet the real inside scoops at Crain's — which pet projects of one brother have been quashed by the other, for instance — are closely guarded within the boardroom. The only participant there aside from Gertrude, her sons, and their wives, is Sidney Bernstein, who helped patriarch G. D. Crain (now deceased) launch Advertising Age in 1930. Bernstein will say no more than what everybody already knows: "Gertrude plays a very deep role. She is the cement in the business." Gertrude herself says the family has lately started to think about putting other outside people on the board, but no decision has been reached.
As for the future without mother, an Irish bonny lass with a game spirit that sent her ballooning across France on a recent vacation, family members maintain that they themselves have made no plans. Knowledgeable employees believe them. Even Gertrude's characteristically precise thinking deserts her momentarily when the subject is raised. "When I die," she muses, "I'm hoping that ... I don't know. Do they necessarily have to have a chairman? I honestly haven't thought about that very much." (She, apparently unfazed by sexist language, holds the title of chairman at present. Rance is president, and Keith is vice-chairman.)
Keith's judgment is suspect when he avows "things will be exactly the same." And Sid Bernstein exhibits a malfunction in his common sense when he predicts Gertrude will live forever. Chances are Gertrude will leave her boys the problem of sharing power. And it will be a shame if they cannot solve it. Because not only have they, since their father's death in 1973, expanded the company from three publications and $10 million in revenue to 26 publications and $140 million; they have also been as committed as their mother to keeping it a good place to work.
Everybody at Crain Communications, from Gertrude on down, will tell you that Keith and Rance have "completely different personalities." Though the matriarch may indeed have knocked their noggins together from time to time, her strategy essentially has been to keep them equal but definitely separate powers.
Keith is hefty and brusque and loves machines, especially cars. By the time he got his driver's license, he had already built himself a drag racer in the family garage. He then spent much of his late adolescence burning rubber at the local tracks.
He also threatened to blow his more bookish big brother out of the water early on. In his mid-twenties, Keith was already running two of the company's three magazines (though both were dwarfed by Ad Age, which G.D. oversaw personally until he died at age 88). Then in 1971, Keith started Crain's great age of expansion by talking his parents into buying Automotive News, which he quickly turned from a shabby money-loser into the car industry's bible. He moved to Detroit where, he has assured his mother, he wants to be buried.
Rance, meanwhile, was an apprentice reporter in the company's Washington bureau. But Gertrude was not about to let him be steamrolled. After his father's death in 1973 be took over Advertising Age. The following year he developed the company's most original publication, a weekly tabloid newspaper called Crain's Chicago Business. Sister publications have followed in New York, Cleveland, and, under Keith's tutelage, Detroit.
And so it has gone, with mom making sure the rival camps maintained parity as they both expanded. Yet Gertrude would never resort to any means as unsubtle as simply arbitrating disputes between her boys. Every decision, she and her sons agree, is a "family decision," and if it isn't really, they should at least pretend it is. Keith insists, "My mother is not the tie breaker," and that seems to be true. Rather, she is the chief consensus engineer.
In that capacity, she would rather disappoint a strong desire than override a deeply felt objection. "We only do things that everybody ultimately agrees on," says Sid Bernstein. "If there is a strong negative, there is no action." Yet part of the successful three-Crain chemistry stems from preventing strong negatives from paralyzing the company. When Keith is asked whether he ever had a particularly beloved project vetoed, his answer would do credit to John Poindexter: "I probably did, but I can't remember what it was."
The sons' different personalities have led to different residences and lifestyles. Keith, just in case Motor City became too gentrified by the time he met his maker, branched out to Akron, Ohio, where he acquired such gritty titles as Rubber and Plastics News and Tire Business. He spends much of his free time watching his three children, ages 17, 14, and 10, play hockey, and takes his winter vacation in the bracing air of northern Michigan.
Rance moved to New York City, and grew into his own slightly spacey style. "You walk into his office," David Persson relates, "and he'll sit there with his shirt untucked and his tie crooked, and say, 'What's up, babe?'"
"You might feel that he's not paying attention," remembers one employee, who helped launch Crain's New York Business. "But he follows everything closely."
For unwinding, Rance prefers the sybaritic ambience of Key Largo. As long as he and his wife were building a house down there, he figured he might as well purchase Florida Keys magazine and buy the first Crain radio station, WWUS-FM. Rance married earlier than Keith and has two daughters in their twenties. One is busy tending to Gertrude's first greatgrandchild. The other is working in an advertising agency; neither has yet to declare any intention with respect to the family business.
Rance continues to have innovative ideas, like Crain's most forward-looking publication, Electronic Media. But he has also been behind the company's worst flops: an attempt to publish Advertising Age twice instead of once a week, and a short-lived connoisseur's magazine called Collector and Investor. Keith sticks more with what he knows, like trade papers for traditional industries, and dominates the nuts-and-bolts aspects of the business: printing, circulation, real estate, and accounting.
The two sides of the company have little to do with each other. ("All of Crain," as the saying goes in the ranks, "is divided in twain.") Staffers move freely from one publication to another within the Keith or Rance zones, but crossover is almost unheard of. Veteran employees' futures are firmly hitched to one brother or the other. "I know one thing about the future," observes the trenchant Leon Mandel, "I'm going to be wearing my armor with the big red K on the front."
For all their personal differences, Keith and Rance nonetheless have a largely common philosophy of how to run a business. This clear accord has helped maintain a unified corporate culture in Crain Communications' two halves, and it may pull the sons through even without the cool maternal hand on their hot brows.
To start with, both men are extremely well liked by their editorial staffs — another rare condition in publishing — principally because they both truly get their kicks out of producing the best publications they can.
Mandel, who has worked cheek by jowl with publishing heavyweight William Ziff of Ziff-Davis and with the management of Car and Driver, finds that Keith Crain's "sense of joy" sets him apart: "He has the same zest about playing magazine as Roger Penske has about playing race car."
David Persson vouches for Rance though he does not work for him anymore: "He liked to make money. But the only time he would really lose it with people was if he thought we'd gotten scooped, or had printed bad facts."
Staffers also deeply appreciate the brothers' integrity — a sentiment not always evident at trade publications, where story subjects, sources, and advertisers are usually the same companies. Kathleen Hamilton, a former managing editor of Automotive News no longer with Crain, cherishes the memory of a Keith editorial lambasting General Motors for its purge of dissident director H. Ross Perot. For an encore, Keith named the Cadillac Allante the car industry's flop of the year. "GM's people then boycotted a seminar we held," Hamilton recalls. "But I don't think they pulled any advertising." (These days Keith is bullish on GM because "they have the right people down in the trenches." He criticizes Chrysler, though, for reinvesting too little during their boom years in the mid-eighties.)
Most of all, the structure of Crain Communications makes it clear that the people who put out the publications are the ones who count. In fact, they are the only ones around. The company has no middle management layer, and certainly no MBAs. The top editor is also often the publisher. He is responsible for his own budget, and reports directly to either Rance or Keith.
The brothers' enthusiasm may be great, but their supervision can be amazingly loose. "I once called Rance and told him I was going to redesign my publication," says Gloria Scoby, a company stalwart who is now publisher of Crain's Chicago Business. "He said, 'Fine."' Satraps in Keith's province report a similarly free rein.
The best way to get employees you can trust with such broad authority, both brothers believe, is to train them from within. This commitment — combined with a preference for moving rather than firing publishers who fail — is one more reason for Keith and Rance's popularity in the newsroom.
Crain Communications' compensation policy is also designed to produce a stable cadre of key personnel. Those who stick it out, that is; salaries are somewhat below industry standard, particularly at the entry level. For this reason, and because many of Crain's papers are seen as training grounds for the New York Times or the Wall Street Journal, the family expects a lot of turnover.
Employees who stay more than seven years, though, are rewarded with the vesting of a generous profit- sharing program. The Crains put the equivalent of 10 percent of salary into a profit-sharing plan, "even in the off years," notes one grateful reporter. (Post-crash 1988 was particularly rocky, but things seem to be back at full steam now.) "And when things are good they go up to 15 percent," he says. "We call it the golden handcuffs." It is from this handcuffed crew that the Crains pluck most of their publishers.
The unusual respect given to editorial people by the bosses is reflected throughout the organization. The cynicism evident at many news organizations hardly exists. And camaraderie — within, if not across, the brother lines — is exceptionally strong. "The day I arrived here," says Mary Kramer, the recently installed editor of Crain's Detroit Business, I got notes from the other editors and publishers asking, 'Can we help you?' This is my seventh job and I've never gotten that kind of reception."
Top Crain employees are encouraged to suggest new ventures, too, especially if they can finance them from the profits of the ones they are already running. Dan Miller, the original managing editor of Crain's Chicago Business, says his current baby, a sort of trade newspaper for local government officials called City and State, was born that way. "'Ale said to Rance, 'We've got the money in the budget, or maybe we'll go a little over the budget.' And we just started it." All publication heads are also invited to turn their professional grilling skills on the Crains at annual editorial meetings.
Decisions on the corporate level, however, rest strictly with the Crains. It is remarkable, considering their success in reporting on the wide world, how sheltered the two sons have been from it. This insulation may affect the future of the company. Both lived at home through college, walking the few blocks to Northwestern University. Then they went to work for the family business. People who know them well tend to agree with Dan Miller that "they would go to pieces if they had to work for somebody else." Including, presumably, each other.
The Crains won't even borrow money, for fear of having a banker in their hair. "We looked at an acquisition once that was over $100 million," Keith recalls. "It was easy to raise the equity. But the price we would have had to pay in terms of freedom, being beholden to a bank, I found particularly distasteful."
So the Crains have stuck to new properties that the old ones could pay for — like Keith's latest launch, Plastics News, which he expects will lose $5 million over three years before turning the corner. The policy is frustrating for some ambitious editors like Miller, who feels that with a "judicious use of debt" the Crains could play in an even bigger league than they do. But "they don't want anybody but Crains around the campfire."
Gertrude has her own agenda. While she might have been able to exert her influence simply by dint of her extraordinary personality, she thought it wise to have a power base too. Back when her husband was still alive, she hit upon a simple but foolproof means of establishing it: Hold the money.
Gertrude grew up in suburban Pelham, New York, and was working as a secretary at NBC when she met G.D. in 1936. He had launched Advertising Age six years earlier, and came in regularly to sell advertising. She demurred the first few times he asked her to lunch, thinking, "maybe he was some big butter and egg man from Chicago." She was 25, he, a widower of 51. (Two daughters by G.D.'s first marriage are deceased.)
The beauteous Gertrude eventually relented, and the two were married within a year. She moved to Chicago, and concentrated on the role of wife and mother until Rance and Keith were in high school. Then, one day, she went downtown to G.D.'s office and asked him, "What are we doing with all this money that we're making?"
He suggested that she take charge of investing it. Her first reaction was, "My God, this man must be out of his mind." But she learned the Wall Street ropes soon enough, and still manages the family's capital, plus the company's pension, benefit, and profitsharing funds — a portfolio that unquestionably makes her, to use Gordon Gekko's classic formulation, a player.
After G.D.'s death, Gertrude positioned herself squarely at the center of things by taking charge of accounts payable. To this day, she signs every nonpayroll check that Crain's issues. Some people find this annoying — like the writer whose payment was delayed for three weeks because Gertrude was in Europe. Gertrude, however, gently points out that, "If you sign a check, you're much more inclined to look at what you're signing. So if there's anything I want to question, I can pick up the phone and talk to any one of the publishers. And they're glad to explain." Well, they might be.
Without Gertrude, the stage would seem to be equally set for civil war, partition, or coexistence, if not brotherly love. Each eventuality has its group of partisans and the family, or Keith anyway, seems to enjoy the game.
That may be because if there is bloodletting, most Crain-watchers expect the practical, consistent Keith to get the best of it. "I think Rance could almost be happy taking Ad Age and the stuff in Key Largo," David Persson offers. "He became a grandfather, which I think he never thought he would be. It mellowed him a lot."
The talk in the Washington office, on the other hand, is of a split down the middle along existing lines. Then there are optimists like Dan Miller, who feel that "the company is more in synch than it's ever been before. When there's a lot of tension between the two of them, you get this sense of paralysis. But that's not what's going on Dow."
Then too, considering the shape Gertrude seems to be in, she may hold the reins until some of the grandchildren make their presences felt.
Whatever the end of this story, its outlines thus far will surely be familiar to many family business people. Beaming over her boys' achievements, their mother reflects, "I should have had ten sons." Rance and Keith may be forgiven for feeling that two is plenty.
Advice goes by the boards
Family business consultants who have worked with other sticky successions say it's high time the Crains took the subject out of the closet, and recruited outside board members to help them wrestle with it.
"I think mom particularly has the responsibility to get things moving," says Barbara Hollander, a Pittsburgh-based family business consultant. "Ideally, she should enlist the help of a board of directors and an ownership council."
Léon Danco, who heads the Center for Family Business in Cleveland, is far more emphatic on the need for outsiders: "In my opinion, no business can last long without the advice of a strong board. That means non-owners, non-employees, non-bankers, non-suppliers. People without self-interest."
Keith and Rance Crain, Danco thinks, should jointly pick four privy counselors whom they view as "mutually self-respecting, risk-taking peers." He scoffs at the notion that such good men or women might be hard to find. "I have put together hundreds of such boards," Danco says.
Gertrude Crain says she and her sons are thinking about expanding the current family-plus-one-loyal- employee board. But folks who know them well get the definite feeling that any new members will be a long time in coming. The family has never gone in much for strategic planning, the function the consultants say should be a board's number two priority, after ironing out power sharing. Keith describes the Crain business style as "intuitive and opportunistic." To put it metaphorically, "When the brothers and sisters [newspapers and magazines, that is] get older, then they support the little kids coming up. It's fairly simple."
So, if the textbook wisdom is correct, the Crains are headed for chaos. Then again, the brothers flouted another axiom: that family business scions be sent away for an internship at another firm. They might just pull through by doing things their way.