““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
Z-line Design's Jim Sexton
Jim Sexton quit college after about a week because he wanted to create his own entrepreneurial future. "I have a knack for designing and picking things that people will buy," he said. "When I got in the leather business 25 years ago, leather was a tufted sofa with no promotion behind it and very few sold." Figuring the public would want to buy natural materials if the price point was right, he designed some items for Emerson Furniture and "they sold like crazy."
But Sexton has also seen the down side of being an entrepreneur. "About 35 years ago, I opened a store that was like a wholesale club. We built it up, but all of a sudden Nixon went down, gas prices went up, we were losing in Vietnam-and it failed," he explained. "Going bankrupt isn't fun. You have to pick yourself up and go back to work."
In 1995 he formed Z-Line Designs. Today the company is a leader in ready-to-assemble furniture. It has thousands of employees and sells to Wal-Mart, Staples, Sears, Office Max and Target. Its headquarters are in San Ramon, Calif.; its main showroom is in High Point, N.C.; and its factories are in China and Taiwan. A sponsor of Nascar on the Joe Gibbs Racing team, driven by Kyle Busch, and Indy car on the Dale Coyne Racing team, Z-Line also owns and operates three business jets. Sexton himself travels more than 200 days a year.
How did Z-Line come about?
Some friends in Silicon Valley were telling me about the Internet and people communicating by computer. And I thought, if this works, then people will be buying a lot of computers for their homes and they'll need furniture for them. So what I should do, I thought, is build the cheapest furniture that could be manufactured, which would be in China, do a flat box, which ships through distribution centers easily, and sell the furniture to the big-box retailers.
I started designing some desks and created the R-Z with frosted glass. My wife Monica asked, "What will you call the company?" Looking at the desk, it took me only about three seconds and I said, "Z-Line."
Did you fund this yourself?
Yes, and Monica and I are still the sole owners.
How did you get involved in Taiwan and China?
We hired some Chinese employees in California who knew how to do business in Hong Kong and I got an agent in Taiwan. But as we got into it, I learned that the factories there are small, so you have problems if you want 20,000 of an item. I told my agent we had to go to China. We went from one factory to another and halfway through the trip I realized my agent spoke Mandarin and the Chinese were speaking Cantonese. So I got a Chinese guy.
But it was still hard. I realized I needed to have a company run by American standards. So we fired everyone over there and I brought a Chinese factory owner to my house in America. I said, "Here's my money, you put up your money. I'll tell you what to make and how to make it. We'll never have a defect and you don't ship anything unless it is 100-percent perfect. I'll hire my own staff in China that will help run this for you."
How long did it take?
It probably took at least a year before we got through the relationship issues. We started delivering furniture to the box stores in 1996.
Had you been to China before you started doing this?
Never. The first night in my hotel, after crossing the bridge from Hong Kong, I called my wife and said, "Honey, I've lost my mind. This is horrible. I think I'll just come home." She said, "Oh, suck it up. Get out there and do your job."
How did you market to the big-box stores?
We kept pounding on doors. Then Office Depot put one of my desks in a new store in northern California. The public loved it.
But in 1997, we were down to our last $3,000. At the High Point Furniture Market, we were showing an office concept when some people from Office Max came by. The vice president said, "This is pretty interesting. I'd like to put this in 30 or 40 stores as a test." I said, "I can't do that. I have another company coming in two hours and they're planning on putting in the whole project." He said, "Are you telling me I can't buy this?" I said, "Yes." He said, "OK, we'll take one desk and put it in a thousand stores." I said, "No, you have to have the whole thing to make it work: the bookcase, the file cabinet, the desk, the printer table." He stood there a moment and said, "OK, we'll do it." And that kicked things off for us really well.
I'm guessing you didn't have anyone coming two hours later.
I think you're right about that.
Why did you decide to sponsor racing?
We wanted to brand the name Z-Line. I looked at advertising in Architectural Digest and Metropolitan Home and on television; it's very costly. I thought that if I can have a car out there for three hours with 200,000 people watching in the stands and millions more on television, a driver wearing my suits, the preseason activities-you can get national exposure. But racing is expensive, too.
Ballpark, how much does it cost to sponsor a racing team?
It's in the neighborhood of $5 million per year.
How did you get involved with Nascar and Joe Gibbs Racing?
Racecar driver Kevin Conway sent me an e-mail about Nascar and we decided to meet. He came in with a PowerPoint about Nascar demographics that convinced me. Nascar's fans are our customers. At the last minute he asked, "Would you like to be a partner with Joe Gibbs?" So I flew and met J.D., the son of Joe. It was like an interview. We talked for a couple hours with him and Joe and they said, "OK, we like you and you can join our team." Last year I decided with Joe Gibbs to pick Kyle Busch after watching him the year before. He just has this intensity about him. He's doing a terrific job this year. [Busch was the top-ranked driver in Nascar's Nationwide Series as this issue went to press.-Ed.]
How effective has racing been for Z-Line?
Not much happened the first year. Then this year with Kyle Busch, it all started to light up. When you win, things happen. This year, we picked up over 50 new accounts. Now we have customers that are running our car and Kyle in their advertising, giving away hats, doing promotions on our products. In our ad now we say, "You call them customers. We call them fans." People are going into stores and asking for Z-Line desks. And we're expanding our product line. We also see a big jump on our Web site after every race. So it's working really, really well.
What is your management style?
We have entrepreneurs inside my company-about eight top-level managers-who are each operating a business inside my business, working their own numbers and figuring their own profits. I've hired people that are probably a lot smarter than I am and let them do their jobs. We get together each day or each week and discuss where they're going. We get a lot done. Z-Line is a 24/7 operation and very fast. We can design a desk in three days, start manufacturing 15 days later and ship 10,000 pieces 30 days after that.
What do you consider to be your role as the CEO?
To be a guiding light and find the next opportunity. We don't sit back ever and probably reinvent ourselves each year. I also watch over all the financials.
What are the worst mistakes a CEO can make?
Micromanaging. I think that you let the people underneath you have lots of room to make mistakes, or don't make mistakes, and see where it goes. Don't watch everything to the last detail.
How did you get into business jets?
After 9/11, my CFO came to me and asked, "Whatever happened to this airplane idea? You've said, 'We can't go here, you can't go there because your back's hurting and so on.' If you had been at that meeting, we would have made that sale. But you weren't and we lost it." So we looked into costs and depreciation schedules. That's when we first went out to get a plane.
What did you look for?
I wanted a plane with long range, so the Lear 25 came up. Then we bought a Falcon 50, which we fly all over the world, and eventually the Gulfstream III, because we needed room for more people. We fly a lot-350 to 400 hours in each airplane a year. I rebuilt the inside of all my airplanes and put in all the comforts of home.
I understand you are a pilot but don't fly your jets.
I became a pilot in 1967. This was just me enjoying my life. We have three pilots and our own mechanics. I'm in the back-probably their worst nightmare. I make sure my planes are taken to the nth degree of perfection.
How do you see the U.S. economy developing?
I think we're creeping along and you'll see it go up inch by inch, but 2010 will be difficult. We have to build our way out of our reliance on oil. Our technology is amazing and will help pull us out of this. Americans are the best in the world at building businesses.
If President Obama asked you for economic advice, what would you tell him?
I met President Obama, and I think what he is doing is exactly what I would be doing if I were him-reaching out around the country and the world, meeting people, finding out what's going on in China, Russia and other countries, interacting. That's what needs to be done now and I think he's doing a great job of it. It's a total world economy now.
What do you consider your greatest success?
I have to say my daughter, my son and my wife. Businesses come and go, but nothing is more important than my family. We also believe a lot in charities:
Make-A-Wish Foundation and Operation Helmet.
CEO Files Résumé: Jim Sexton
POSITION: President, CEO and founder of Z-Line Designs, San Ramon, Calif.
PREVIOUS POSITIONS: Designer, Emerson Furniture.
PERSONAL: Born in Norfolk, Va. Age 59. Married 30 years. Two adult children. He and his wife live in Blackhawk, near San Ramon and have condos in Capitola, Calif., and at the Bath Club on Miami Beach. Collects exotic cars, including four Mercedes-Benzes, two Ferrari Spiders, a Lamborghini Diablo and a Bentley Flying Spur.