THE PATRIARCH WENT IN HIS SLEEP. Melvin Starr, 69, died on a Tuesday in May, 1988. He was buried that Friday. And by the following Monday his office at the Artkraft Strauss Sign Corp. had been completely made over, right down to the carpet. It was as if Melvin Starr had never existed.
"We closed the factory on Friday, of course, for the funeral," recalls Tama Starr, Mel's daughter and his successor as Artkraft's CEO. "Then I started at 6:30 the next morning, redoing the office. I rearranged the furniture, changed the pictures on the wall, put all Mel's stuff in boxes. I changed everything that wasn't bolted down."
If that seems cold-blooded coming from a daughter, Tama explains that the renovation was a symbolic act undertaken to reassure the company's 200 employees. I wanted to go through a proper mourning period," Tama says, "but the sharks started circling immediately. Within an hour after the word got out that Mel had died, our competitors were calling our customers, telling them that Artkraft now had no leader. They tried to make us look weak. We put on a macho appearance because it was necessary. You can look at the death of a leader as an end of something," Tama says, "or you can seize the moment and say, 'Here's our new beginning."'
On that same summer Monday when Artkraft reopened, there was another dramatic piece of news: Jonathan Starr, Tama's brother, was back from a self-imposed exile in Hawaii. Having left the company six years earlier, unable to work with his father, he immediately returned to Manhattan to join Tama at the helm.
For brother and sister, this was an opportunity to recapture much of the glitter the company had lost during Mel Starr's tenure. For half a century, Artkraft Strauss had virtually monopolized the construction of Times Square's colossal neon and electric signs, in the process helping to define, as few companies have the opportunity to do, one of America's most distinctive landmarks.
The firm, located on the Hudson River a mile northwest of the famous venue, began in 1932 as a merger between two smaller companies, both owned by Jacob Starr, a Russianborn immigrant. An entrepreneur whose imagination shone as brightly as his neon signs, Jake kept a strong grip on the enterprise until his death at age 85 in 1978. His son, Melvin, was 59 when he inherited control of Artkraft, and for 10 years he ran it in a penny-pinching style that crimped the firm's growth and frustrated family members who remembered Jake's spark. When Mel died, Tama knew she had to act fast to signal the workers, and potential clients, that a renaissance was dawning at Artkraft.
The progression at Artkraft Strauss followed a classic family business paradigm-unfortunately, one for failure. An entrepreneurial founder builds a dynamic company, based largely on his own idiosyncratic genius. But he sees himself as the lone leader. As such, he doesn't delegate responsibility or bother to train his son, because he can't imagine that his son could ever succeed as he has.
By the time death resolves the issue, the son has already grown tired of it all. He fails to inspire the company, or train the third generation. Finally, his kids take over-inexperienced, and with no link to the company's original brilliance.
Artkraft Strauss followed the paradigm-to a point. Tama and Jon managed to jump the failure track. They brought new life to Artkraft Strauss because they did two things differently: They taught themselves how to run a business, instead of waiting to be taught, and they skipped backwards a generation and discovered a role model in their grandfather.
THE ROLE MODELJakearrived in New York City in 1903. He went to work for Benjamin Strauss, whose company was in the sign-making vanguard, producing electric-lightbulb-studded billboards that outshone the many marquees that were still illuminated by gas-fed flames. Intrigued, Jake took it upon himself to learn engineering at Cooper Union in New York, and headed west to seek opportunities in a new medium: neon. Georges Claude, a Frenchman whose firm held a virtual monopoly on neon tube manufacture, had licensed the technology to the Artkraft Sign company of Lima, Ohio. Jake went to work there. He showed a wonderful understanding of mechanics and a great sense for structural work, and in time bought out his employer.
During the Depression, on a visit to New York, Jake found his former company teetering on the brink of bankruptcy. He bought Strauss and merged it with Artkraft, and within a decade Times Square glowed with the neon radiance that has characterized it ever since.
In the thirties, Artkraft Strauss built a reputation as New York's premier builder of neon blockbusters. As part of his aggressive promotional tactics, Jake attentively cultivated New York's showbiz honchos. "Many of his friends were the theater people, the movie peoplethe Loews and the Warners-who helped him get a lot of the theater business in Manhattan," says Philip Marshall, a nephew of Jake's who is now a vice-president at Artkraft. Because of the relatively small demand for the big signs-few were erected outside of Times Square-would-be rivals dwindled to the point where Artkraft Strauss effectively controlled the business.
Jake struck up a relationship with Douglas Leigh, the "king of the spectaculars," who contrived promotional schemes and sold them to advertisers. Leigh thought up the original Camel cigarettes sign, a huge man that puffed smoke rings (actually steam from a utility duct) that became the icon for Times Square, and he drew the original sketches for dozens of neon behemoths.
"Leigh's sense of spectacular animated display gave Times Square its international reputation," wrote Rudi Stern in Let There Be Neon, a history of the medium. But it was "the technical ingenuity of the glass benders, layout men, electricians, and metalworkers at Artkraft Strauss," he maintains, that brought Leigh's concepts to reality.
MELVIN STARR, Jake's only son, lacked his father's keen sense of mechanics. Like Douglas Leigh, Mel was endowed with a talent for promotion and design. He graduated from New York University with a degree in advertising and went straight to work for the family firm in 1939.
In his early years at the company, Mel showed a flair for marketing. "If you look at a photograph of Times Square from the golden age of animated neon, the fifties and sixties," Tama says, "you'll see what my dad did, in terms of involving important national advertisers with innovative displays that became known all over the world. He built on my grandfather's sense of grandeur. He had great personal style."
Tama cites a late-fifties display that loomed over the corner of 43rd and Broadway. Artkraft built a hundred-foot-long beer bottle for Anheuser Busch. The bottle was cradled in a model of the Grand Canyon. The lights on the canyon replicated a full day's change of desert colors, but they did it every two minutes.
Running around the bottle and through the canyon was a model railroad. The name of the railroad line would change every month, to reflect a line that was featuring Budweiser beer in its bar cars. And then, there would be moving type on the sign that would advertise something like special fares on the railroad. "So here was a marketing strategy," Tama says, "that linked the railroad and the beer and the tourists in Times Square. I call that a very creative and very modern marketing strategy."
Mel not only dreamed up the strategy, he convinced the brewer and the railroads to implement it. Such deals kept the company prosperous. But although Mel helped change Times Square and did much to fortify Artkraft Strauss, he failed to gain any power while his father was alive. 'When Jake ran the company, it was very much a one-man business," says Marshall. "Jake probably wanted Me] to be more like him, but he wasn't."
In effect, Jake encouraged apathy in Mel. Jake was creative, dynamic, a personality, and he knew it. Jake had complete confidence in his own genius, and never filled Mel with dreams of rising to greatness, because he could not perceive that anyone, even his own son, could do as magnificently as he had. Also, Jake held on so long that by the time Mel had a chance to shine, he had already spent almost 40 years in Jake's shadow.
"You need to have some big successes along the way," Tama says, "so you see that your dreams can come true. Mel had a lot of limited triumphs on individual projects, but never on the corporate level, like running a division or installing a companywide system; Jake never allowed Mel those kinds of opportunities. And at 59, Mel didn't want to take any big chances, because at that age, if you fail, you can't start over."
Ironically, if Artkraft had not had such sustained growth, Mel, more the business type, might have been forced to exert more control. But the company moved along on its own momentum well enough that Mel was never compelled to take on company-wide responsibility. In turn, growth enabled Jake to avoid the task of training Mel to take over.
Still, says Mel's widow, Jean Starr, Mel never seriously considered jumping ship. "He loved his dad very much. Jake was a tough guy to work for, but Mel realized that there was some pride in that family business."
WHEN HE FINALLY DID TAKE OVER, Mel ran the company complacently. Aging tools and techniques were never replaced. New ideas went unheeded. Annual sales growth crept along at 3 to 6 percent, and competitors began to rise.
It was during this time that Mel's son, Jonathan, joined Artkraft. Possibly Mel's long, patient wait for the top spot made him assume that his son would be willing to do likewise. But Jon proved to have less forbearance. In 1982, after a five-year term during which he served in several jobs, he quit. He retreated to Maui where the family for years had run a fruit ranch. Tama had been there 10 years, writing, raising fruit, and operating a windmill-leasing business.
"I had my own concept of directions to take, and my father had his," Jon explains, visibly uneasy in talking about the departure. "It probably was for the better that I left. I got some outside experience, and had a chance to develop my electronics and computer skills. And Mel was able to spend his last years running things the way he wanted to."
On Maui, Jon coupled his interests in computers and ham radio, setting up and running an emergency communications network. He became the Pacific-region manager for the American Radio Relay League, a volunteer ham group.
Jon's arrival in Hawaii meant a position at Artkraft was open. Tama decided she'd try to fill it. Tama lacked Jon's technical know-how, but she wanted to learn all she could about business, "because I realized that someday I wanted to run one. Plus, since Jon had left, I wanted to help out. After all, it was Artkraft's success that paid for my schooling and funded the windmill business." But because she had never worked full time at Artkraft, Mel installed her as a glorified secretary and junior account executive,
Tama had more to offer. She had an English degree from New York University. She had taught herself how to read and edit business contracts, and in fact had revised many for Artkraft on visits home in previous years. Also, having known in advance of Jon's plan to quit, she'd been preparing to join the firm. Tama read all she could on business, diplomacy, and power, and studied biographies of world leaders, before she joined Artkraft in 1982. Wh en she came to New York she immediately signed up for night courses in business law, accounting, and marketing,
Tama was determined not to be held back, as Mel was under Jake. "What I had to do-what everyone has to do in a family business-is find my own niche," Tama says. That way, she says, she could prove to her father, and other company executives, that she was creative and a strong manager. The niche she quickly found was one her grandfather had occupied: public relations manager and City Hall lobbyist. Under Mel, those pursuits were lacking, and as it happened, they became critically important to Artkraft soon after Tama arrived.
For all its bright lights and historical significance, Times Square had become a sleazy precinct characterized by drugs and prostitution. City bureaucrats developed a cleanup plan, known as the 42nd Street Development Project, which would level many low-rise buildings and raise four office towers, a wholesalers' mart, a hotel ... and no big neon signs. North of 42nd Street, in the heart of the square, private builders announced plans for other big new structures, also mostly neon-free.
The intention was to clear out the riff-raff and "beautify" Times Square by making its facades sober, uniform, and modern. Dyed-in-the-wool New Yorkers howled when they heard the plans, objecting that it would eliminate a lot of cheap housing for lowincome people, an endangered commodity in the city. Besides, to them, a dim and somber Times Square was an oxymoronic notion.
Tama waded into the fray, telling any reporter who would listen that something vast and important was about to be ruined. Because she was articulate and witty-and because she was the underdog in a romantic cause-she came off well. Reporters who quoted her often soft-pedaled her vested interest in the retention of a neonbright Times Square.
Tama signed on with the Municipal Art Society, a local public interest group. In 1984 the society staged a pair of Times Square "blackouts" as a way of calling attention to the issue. Led by Tama, an army of electricians shut the neon signs off, one by one. TV cameras panned the area as it went dark, and the resulting news coverage drew much attention.
In 1988, the city came up with a compromise: Times Square's new structures would still be built, but they and all other new buildings in the area would be encouraged to make use of bright lights and other features consistent with the character of the old Times Square. The new zoning regulations, needless to say, will also mean plenty of extra business for Artkraft Strauss.
Through the eighties Tama grew in her account executive role. Her first assignment was refurbishing a big roadway sign in nearby New Jersey consisting of a giant Colgate toothpaste tube lying beside a clock. The $250,000 job was medium-sized by Mel's standards, so he figured it would be a good starter project for Tama. Also, she says, "The Colgate representative was a woman, and Mel was not comfortable with female executives."
Tama had to fight for more responsibility, but she slowly got it. As she did, she found herself increasingly eager to manage the company. She was anxious to fix some of the glaring problems, such as its aging trucking operation. "I analyzed how much the obsolete equipment was costing us in downtime and repair bills, and how much money we would save if we bought, say, a used boom truck in good condition," she recalls. "I told Dad we would save $27,000 a year if we did this. He said, 'I'll let you know."'
Tama was experiencing firsthand what Jon had discovered years earlier: Mel was unwilling to give his kids authority. "It was frustrating," she says. She never threatened to quit, though. "I didn't want to leave him completely uncovered,' Tama says, noting that her dad had suffered a serious heart attack in 1978, a few months after Jake died.
However, she did clash repeatedly with her father over his lack of a succession plan. Mel loathed all talk of the subject. But Tama kept pressing the issue, appealing to Mel's sense of family legacy, and scaring him with details about what the IRS might leave his wife and kids. She talked up how well she was doing, and how she and Jon were ironing out ways to manage the company. Eventually, Mel dealt with the financial side of succession properly. "I kept at him until he had the confidence that Jon and I could run the company if he were gone," she says. "He arranged his affairs so that we would be able to own the company, equally."
DURING HIS SELF-IMPOSED EXILE, Jon ran a printing operation and then a truck fleet, while also overseeing the ham network, gaining practical experience that he knew, in the back of his mind, would help him if he ever returned to Artkraft. It is Jon who now oversees the operational aspects of Artkraft, and Tama the administration and sales.
The siblings stayed in close touch, speaking often about the company's future. 'We talked about it knowing that Dad had this bad heart and could go any time," Tama says. "So we had an emergency plan that nobody knew about, except us. That's why everyone was so mystified at the lack of a power struggle when we did take over."
The emergency plan was simply an agreement that they would run the company together, as equals, as soon as their father passed away. And they talked about changes they would make. They had been old enough to experience Jake's enthusiasm, and they were determined to infuse the staff with it. "We modeled ourselves after Jake," Tama says. "Jake was an originator, a creative thinker. Mel was more of a care taker, and he didn't believe Jon or I could breathe fife into the company. We decided it was time to reignite Jake's spark."
WHEN TAMA, NOW 40, and Jon, 35, walked into Artkraft Strauss that Monday, they knew that the only way to get their plan underway would be with a swift and complete takeover. Luckily for Tama and Jon, they held all the company stock between them. Mel may not have been dynamic, but he had been shrewd enough to set up ownership so it could stay in the family. Tama and Jon immediately exercised their right to buy the company from Mel's estate. Tama appointed herself president and chief executive officer; Jon became chairman and chief operating officer. The siblings now run the company the same way they own it: 50-50. They even share the refurbished office, their desks touching.
The first step Tama and Jon took was to get the employees behind them. After all, for better or worse, Mel had been the boss for 10 years, and bad been the company's leading promoter and salesman for two decades before that. 'We made it real clear right from the beginning that we admired every person's knowledge and dedication to the company," Tama says. 'We sat down with all the foremen and shop stewards, and we frankly asked their indulgence, and for their help."
Not everyone was so enamored. According to Tama, one leading executive was not happy to see Jon return. He had thought he could take over when Me] died, and dominate Tama, because he had design and manufacturing knowledge that she did not. But Jon was able to counter that with his own technical abilities, and the executive retired after six months.
In addition to one-on-one meetings, Tama and Jon put up a suggestion box, and employees began to feed it regularly. 'Me siblings spread the word that workers also could pitch ideas or gripes in person, as was customary when Jake was alive. "Jonathan likes to walk the floor," says longtime purchasing manager David Ramirez, "and the men are not reluctant to come over and say, What do you think about this?' "
Was Mel that way, too? "No, Mel was unapproachable," Ramirez says flatly.
Tama, a less peripatetic manager than Jon but more of a morale booster, also has taken steps to invigorate employees' devotion to the company. For example, a year ago she held a big party in a restaurant in Times Square on the evening the company's enormous, newly-created sign for Camel cigarettes was to be switched on for the first time.
"A lot of the workers live out of town and don't get to come to Times Square at night," Tama explains. "Everybody was invited, with their husbands and wives, and we all stood outside in Times Square to see the sign fit for the first time. People had only seen it in pieces before, the piece they were working on. Now they got to see the whole thing dominating an entire city block." When the switch was thrown, everyone applauded and yelled and jumped up and down and laughed at Tama, who was ribbing them by screaming, "I built that! I built that all by myself!"
Melvin Starr would never have approved such a companypaid celebration, Tama says. His attitude would have been "It's a waste." Indeed, a few years before his death, Mel had even frowned on Tama's buying the workers T-shirts bearing a new company logo (which itself had been designed at her instigation). She went ahead and got the shirts, but it wasn't until after Mel's death that she followed through on two other morale-pumping endeavors: painting Artkraft's name on company trucks, and allowing employees to enter internal contests to design new signs-on company time.
"These things are small, but that's how people get the picture, through symbolic activity," she says. "And after all, we're in the symbol business."
TAMA AND JON did more than just assert that theirs was a new age for the company. In the first six months, they spent more than $ 100,000 for computers and new technology, a bigger bill for updated equipment than Mel had ever paid in his 10 years in control. In the following year and a half, they spent even more to modernize the plant. "My father was more oldtechnology than anti-technology," Jon says. "He lived back in the forties and fifties. He enjoyed replicating those times more than heading off in new directions."
And while the huge metal, neon, and electric lightbulb signs that made Times Square famous still comprise the bulk of Artkraft Strauss's business, the third generation has catapulted the company's products into the nineties. For one, they are experimenting with a new four-foot-long "traveling message display" (a wide, shallow sign across which electronic words move from right to left) that automatically presents text from a live satellite feed. Only one such sign exists now, but if the tests prove successful, Tama and Jon envision the signs on street comers all over major cities, providing live news and other information to passersby. Brother and sister have also pushed harder for new kinds of accounts outside of Manhattan, creating electric highway signs and adding flash toscoreboards in such places as Philadelphia's Veterans' Stadium and St. Louis's Busch Memorial Stadium.
In a way, the experimental sign symbolizes a return by the third generation to the company's roots. Jake Starr reveled in the business opportunities presented by technological advances that changed the sign-maker's craft-at the turn of the century, it was electric lightbulbs, and two decades later, the neon-filled glass tube. Jake pounced on both creations. Tama and Jon understand that innovation is fundamental to their success. They also try to replicate grandpa's aggressive instincts, and have taught themselves sales smarts and technical know-how.
As co-chiefs, Tama and Jon have accomplished a great deal in two years. For openers, Artkraft's revenues-85 percent of which come from work in the New York City metropolitan area (25 percent from Times Square alone) rose from $12 million in 1988 to $16 million in 1989, and are anticipated to be $18 million in 1990. And they bought out four smaller competitors, all based in New York City.
Profitability has improved as well, the siblings claim. "Someone who inherits a business with a lot of old inefficiencies has a terrific opportunity," Tama says, "because just doing some obvious things, like plugging leaks, will improve your bottom line."
One of the biggest leaks they plugged at Artkraft was in the company's fleet of 30 boom trucks, pickups, and vans. Mel's custom was to replace vehicles only after they had reached mechanical senility. But every time a truck broke down, the highly paid crews who depended on it-painters, electricians, sheet-metal workers, or sign hangers-would be idled for hours. As soon as they took over, Tama and Jon replaced the 10 oldest vehicles, including a boom truck known among the troops as "the dinosaur. " That quickly reduced repair costs and worker downtime.
Further inefficiency was eliminated in the back office, where accountants, estimators, and others labored with pencils and ledgers, instead of computer programs. Shortly after Jon and Tama took control, cartons of hardware and software began arriving.
The new bosses also bought goodies for the factory hands, including a computer-driven router. "It's state-of-the-art," purchasing manager Ramirez says of the $200,000 machine. "An operator can just bang out a set of metal or plastic letters [using a computer keyboard] like it's nothing. Before, all our letters were cut by hand with a jigsaw or a band saw. It took at least five times longer, and the quality wasn't even as good. The men have equipment now they never dreamed of. And all this has taken place in less than two years."
The Starrs' spending spree, financed mainly through bank loans, began to pay for itself so quickly that the company s debt from the money it spent on modernization now stands at only $100,000, Tama says. What's more, the sellers of the companies that Artkraft bought agreed to take their payouts over extended periods. "So we're not a bunch of high-flying cowboys taking out billions of dollars in loans," she asserts. "This is still a pretty fiscally conservative company."
ALTHOUGH TAMA AND JON may have gotten the employees behind them, the two could not have led the company on graciousness and inspiration alone. They have had lasting success because they took it upon themselves to be prepared.
Tama and Jon were self-starters, and their takeover tale holds a crucial lesson for the "next" generation. Mel did not actively train his kids to lead the company, in part because he was simply tired of it all, and in part because he did not have faith that they could succeed him-just as Jake had felt.
Tama and Jon were determined not to get caught in the same trap their father did. They knew their time would come, and they made sure they would be ready. Says Tama: "Too many people who find themselves in our position take the attitude that it's up to the older generation to make sure the younger generation will be prepared. But it's the younger generation's problem. You have to keep forcing the succession issue. You have to go out and find your own legal advice. You have to train yourself to succeed. Otherwise, your chance may never come, and if for some unforeseen reason it suddenly does, you'll blow it."
Kevin McManus is a feature writer in Silver Spring, Maryland.
Artkraft Strauss's founder, Jake Starr, could have done several things to improve his relationship with his only son, Mel, and to prepare him to take over one day. Jake could have made sure that Mel got outside experience before joining the firm, and he should have given Mel more responsibility on the job, especially for projects that were independent of Jake, says John Messervey, president of the National Family Business Council in Chicago. He also should have set a date for transition. "It's absurd for an 85-year-old man to run a multimillion-dollar company, if continuity is a concern," says Messervey. It wasn't.
"Jake was blinded by the bright fights I of the company and his personal success and status," notes Steve Swartz, a Minneapolis-based partner in the family business consulting division of McGladrey & Pullen. "His relationships with famous people were probably very seductive, and probably intensified his selfcenteredness. But he could have tried to share the fame with Mel as part of the reward for doing a good job."
More important, says Swartz, Jake could have recognized the value of the differences between himself and Mel. That's the key to success for Mel's kids, Tama and Jon, who are building on their differences and treat them like an asset not a liability.
"Jake just didn't recognize the inconsistency between running things as a one-man show and wanting Mel to be more like him," Swartz concludes. "It was not realistic or helpful for Jake to expect Mel to be a clone, or to be disappointed that Mel wasn't. There would have been more conflict bad Met been more like his father."
Melvin Starr took over very late from his father, Jake. But he had an opportunity to prepare his kids, Tama and Jon, and it seems he would have placed a premium on doing so. "Mel should have avoided making the s me mistake his father made," says John Messervey, president of the National Family Business Council in Chicago.
Steve Swartz, a Minneapolis-based partner in the family business consulting division of McGladrey & Pullen, agrees: "Jake overshadowed everyone; Me] was aloof Both men's behavior, though, stifled their children."
John Ward, professor of private enterprise at Loyola University in Chicago, says of Mel: "Maybe it was the heart attack. He may have intended to help his kids, but a life-threatening experience can change the chemistry of everything." Messervey adds, "At the time Mel took over, he was grieving his father's death, and trying to figure out bow to fill the tremendous void, Taking over at 59, Me] was tired. Why would he want to risk anything? His search his whole life had been to win his father's approval and he never got it. Mel's only incentive at that point was not to allow the business his father had built to go under."
That made it impossible for Mel to nurture his kids. Messervey says the next best thing was for Mel to do what he did: Drive out Jon. "Maybe he subconsciously pushed Jon out because of his own deep disappointment that he hung on so long and got back nothing in a nourishing sense."
Ironically, if Mel had been more open to the ideas of Tama and Jon, he may have created competition between the siblings. "Their alliance was fused by their common frustration with their father," says Swartz. In the end, succession worked, but many family members were hurt along the way. "I can't celebrate the survival of a family business at that price," Ward says.
Business: Large advertising displays.
Sales (1989): $16 million.
Founded: 1932, by Jake Starr.
CEO, chairman: Tama Starr, Jonathan Starr-sister and brother. third generation.
Ownership: Held 50-50 by Tama and Jon.
Challenge: Reinvigorate a company that had languished under the second generation.