When Dave and Julie Power’s four children were growing up, the family bonded around the kitchen table while folding J.D. Power and Associates’ automobile quality questionnaires.
“You would try to pick the job you liked best: stuffing envelopes, putting on stamps or address labels,” recalls Susan Curtin, 43, the youngest of the children. A common job for younger kids was taping quarters (an incentive for people to complete the surveys) to the questionnaires, making sure the “heads” side was facing up.
The children felt very much a part of the company—and because they were paid for their work, they learned early on about the value of money. “Money could be used to get something you really want—that’s a luxury—but there’s also a responsibility to use it to better other people’s circumstances,” says Jonathan Power, 46, the third child.
The Power family’s emphasis on working together and using money responsibly continued as the company grew. And when J.D. Power and Associates was sold in 2005, these values guided family members as they charted a new path, working together to achieve their investment and philanthropic goals.
They also commissioned a history of the company and a second book about Dave Power’s 50 years in the auto industry. Retelling these stories, family members say, helped them cope with the emotional highs and lows of selling their business and clarify their priorities and goals going forward.
Modest beginnings
J.D. Power and Associates, which grew to be an internationally recognized leader in customer satisfaction research, had modest beginnings. In January 1968, Dave Power—whose full name is J. David Power III—was 37 years old and had three young children at home. One night, after working at his job with McCulloch, a California-based company that manufactured chainsaws, Dave had dinner with three fellow business school graduates who were about to quit their jobs and start their own company. Dave thought the idea sounded risky.
As Dave recalls it, one person in the group said, “You’ve got to understand, most people with an MBAs and engineering degrees get stuck in a company and work their way up, with little promotions here and there. Before they know it, they’re captives of the company. That’s more dangerous than quitting now.”
Dave wondered if he was on that same path. He had moved from Ford Motor Co. in Detroit to an advertising agency, McCann Erickson, to McCulloch. But he was still chafing at the feeling that top management wasn’t paying attention to his market research. He went home and told his wife about his dinner conversation. “She said, ‘You should quit,'” he recalls.
So Dave started J.D. Power and Associates “literally at the kitchen table in our small tract home in the suburbs of Los Angeles,” says their son Jamey Power, 51, the oldest of the four children. Dave Power’s boss at McCullough was upset to have him leave but offered to be his first client.
“When we started the company, we had no intention of doing automotive market research, even though that was my whole career,” says Dave, now 82. “Because here we were in Los Angeles, and we didn’t have any car companies here.”
But he heard from a former colleague about a Japanese car company that was re-entering the U.S. market. Dave called Toyota’s office in Torrance, Calif., but was rebuffed. He wrote a letter but got no reply. He stopped by the office and was told that the person in charge did not want to see him.
As he turned to leave, he noticed sales brochures about the company’s forklift trucks. He convinced the person running that project to pay him $600 for an overview of the U.S forklift market. He was able to parlay that report into an introduction to Toyota’s U.S. automotive executive, Tatsuro Toyoda, the son of the company’s founder.
“There was a lot of experimentation and adjusting and adapting” of the business model early on, Jamey Power says. In the early 1970s, Power surveyed owners of Mazda’s new rotary engine cars. When analyzing the data, Dave saw a pattern of engine failure. He sold the report to several car companies, and someone leaked it to the Wall Street Journal, which ran a front-page story about the issue—and about J.D. Power and Associates.
Although Mazda at first said Power was wrong, ultimately “my father’s integrity was vindicated, and Mazda became a very good client of my father’s,” Jamey says. The press covering the auto industry also came to recognize Power’s surveys.
About a decade later, J.D. Power and Associates introduced a customer satisfaction survey that pitted all the brands against each other. Subaru, which ranked second in the survey after Mercedes Benz, built an advertising campaign around that fact. “That really put J.D. Power on the map with the mainstream consumer market,” says Jamey.
For Dave and Julie Power’s children, the business was “the fabric of our family,” Curtin says. “My earliest memories as a child include accompanying my dad to the office on weekends and running through the office with the family dog.”
Company picnics were held in the park across the street from the family’s house, Curtin says, and holiday dinners often included employees who had nowhere else to go.
Julie Power was heavily involved in the company, especially in helping recruit employees. “If there was any level of interest, she would invite the potential employee and their spouse or significant other over to the house,” says Linda Hirneise, who retired in 2008 as a partner from J.D. Power and Associates. Hirneise, the company’s 33rd employee, had been teaching business classes at the local high school and was recruited by Dave and Julie Power, whose children were her students. Julie Power wanted to make sure the prospective hire and the company would be a good fit for each other, Hirneise explains.
In addition to working for the family business while they were growing up, three of the Power children worked there for a time after college as well. Jamey Power and his sister Mary, 48, had long-term careers at the company, and Jonathan Power worked in the research department for about seven years before going into clinical psychology.
Dave Power’s main focus was always on building the business, which meant an emphasis on investing the company’s profits into new initiatives, products and services. The company’s long-term future—whether it would be sold or passed on to his children—was not clearly defined.
“He never formed his company, really, to make money,” Curtin reflects. “I think he wanted to provide for his family, but he was really set on this idea that he could change the thinking in market research.”
Turning point
A turning point came in 2002, when Julie Power, who had had multiple sclerosis for more than 20 years, died at the age of 64. “While she was in declining health, we were not expecting her to die suddenly. That really shook the family and my father,” Jamey Power says.
The family faced some challenging opportunities with the business. Dave was over 70 years old. He had been working over the years to make the company less dependent solely on him and had recruited and retained experienced senior executives by giving them stock ownership. These stockholders expected that at some point there would be a financial exit for them. In addition, investment bankers and potential acquirers were asking Dave about selling or merging the business. And the business had evolved quite a bit from its roots as a “mom and pop” family business. It needed a way to fund further growth.
After exploring different options, “I decided that what we needed to do was sell the whole thing, stay on for a work-out period, and get on with it and do other things,” says Dave. He and his children were all interested in philanthropy, especially in what they could do to help find a cure for MS.
After making the decision to pursue a sale, they started to “put the pieces in place to make the company more attractive and valuable,” says Jamey. The company was sold to the McGraw-Hill Companies in 2005; terms of the sale were not disclosed. Jamey and Dave Power stayed with the company until 2009, and Mary Power stayed until 2010.
Jamey notes that in the time leading up to the decision to sell, the family had a lot of informal conversations. “It was after the sale, when we had a different family asset to manage, that we started to get more formalized around family governance,” he explains.
The wealth generated by the sale was divided up into a combination of trusts and a family limited partnership with the four siblings as managing partners. Some of the trusts are for individual family members and some are held collectively.
The sale meant that “the four of us were sort of brought back together from a business standpoint,” Curtin says. “Something my father did that was brilliant was that he included all of us in this process. He really handed it over to the four siblings and said, ‘I want you to figure this out; it’s going to be yours.’ “
The family’s transition
Now the family no longer runs a business. Instead, the siblings and their father meet formally three or four times a year (sometimes all in person and sometimes with Curtin, the only one who lives outside California, on the phone) to receive updates from their advisers on their investments and to evaluate new investment opportunities. (They have frequent informal conversations as well.) They also use these meetings to guide their family foundation’s grant making.
The Powers use a multifamily office, the Threshold Group, with offices in Gig Harbor, Wash., to help with the administrative and investment work. Threshold Group offers advice on investments and tax planning, helps educate the younger generation and provides assistance with the family’s philanthropic activities.
Why work together to invest and donate money instead of simply dividing the proceeds from the sale among the family members? One reason is that the family chose to pool its assets to provide scale and efficiency. The other, says Dave, was that he wanted to create a structure in which the family would continue to work together.
“They’re very loyal to each other and supportive of each other,” says Kristen Powers Bauer, the Threshold Group’s senior managing director for the Western region and senior relationship manager, who has been working with the family since 2005. “They wanted to raise the third generation to be connected to each other and thoughtful community members. They really are a tightly connected family.”
The family foundation, founded in 2005, is called the Kenrose Kitchen Table Foundation in honor of the company’s origins and the street where the family lived. Its two main focuses are medical research and education. Curtin is the lead director running the foundation, though all four siblings, some spouses, and Dave Power are involved in decisions and relationships with grantees. The foundation does not have any outside staff.
The family supports research into advances in therapies for multiple sclerosis and works closely with the National Multiple Sclerosis Society. The family foundation also helped create a program at Boston Children’s Hospital to research and treat the developmental outcomes of children with complex cardiac disease.
In education, the family has created a need-based scholarship program at the College of the Holy Cross in Worcester, Mass., which Dave Power and Curtin attended, as did Dave’s father and uncle. One of Dave’s grandchildren is soon to graduate from the school as well. They have also developed entrepreneurial internships at Holy Cross and at the University of San Diego.
In addition, each sibling’s household has a small pool of funding to use for community-based grants based on their own interests. Jonathan’s family, for example, has supported a summer camp program for kids with cancer and their siblings.
Family members serve on boards and otherwise help the organizations the foundation supports. “We try to use our minds as well, not just our finances,” says Mary.
The family has made the transition from running a company to philanthropy fairly smoothly.
“I see a lot of entrepreneurs who struggle with not going into an office every day after selling a business,” Bauer says. The Power family has “really done a nice job of transitioning and finding value and purpose in their lives when they’re not operating a company. The wealth does not define them. They live really the same lives that they did, trying to be good community members and good parents and good mentors.”
The sale of the company has given the family time to work on two book projects. One, A Life of Satisfaction, is a privately published volume that tells the history of the family and the company. The book is not for sale, but the family has given copies to former and current employees, key clients and family friends. They have also saved copies for future generations.
“It was a great joy for us all to work on,” especially after the emotionally charged years of their mother’s death and the sale of the company, says Jamey. “It helped us turn the page on that chapter of our lives.”
Dave, who remarried in 2003, to Joan Heiler, also worked with two writers on a business profile called Power: How J.D. Power III Became the Auto Industry’s Adviser, Confessor, and Eyewitness to History. That book, which came out in September 2013, focuses on his experiences with the auto industry. It also tells the story of how he built such a successful company from nothing.
“It was a capstone project for my dad’s career and allowed more business stories to be told,” Jamey says.
“I think when my folks started the company, nobody in their wildest dreams would have thought it would be this internationally recognized firm,” says Mary.
The family’s long-term philanthropic goals are still evolving, as is the siblings’ partnership.
“We’ve evolved as a sibling group since the sale of the company in how we work together,” Curtin says. “It’s really important to realize that it’s fluid and things change. We are looking at it as an opportunity not only to give back, but as a tool to bring the next generation up and keep the family history alive.
Margaret Steen is a freelance writer based in Los Altos, Calif.
Copyright 2014 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.