Harman Corp has been in the family that bears its name for three generations, churning out plastic parts just outside downtown Rochester. It's the kind of specialized manufacturing Metro Detroit built its economy upon years ago. But above that manufacturing space sits
Brand Labs, a rapidly growing e-commerce company co-founded by Kevin Harman and Dane Downer. Together the two businesses form a combination of old and new economy that inspires local leaders to voice cliches like "win-win."
Harman worked at the family business for 17 years before striking out on his own with Downer. Today the 3-year-old Brand Labs employs 45 people who create, manage and market e-commerce sites for companies as small as
EcoMowers in Traverse City and as large as
The National Geographic Society. Their client list, 500 names and growing, is getting so big it must be written in ever-smaller letters to fit on the company white board. Interestingly, the partners attribute their new economy success to lessons learned in old economy manufacturing.
"A lot of the principles of the day-to-day operations are similar between that business and selling directly to the consumer," Harman says. "You're still selling. You're still having to market. It really wasn't that much of a stretch, because in business the thing you really need is sales."
And they expect to apply yet more of those old school lessons in the near future. Brand Labs is betting that more and more manufacturers are going to demand greater web presence, and will be willing to pay handsomely for it over the next few years.
"They have been the slowest to the market at this point," Downer says. "They have been the last to say they can no longer just go straight to the consumer. Everybody is going in that direction so at some point they need to figure out how to get in the game. With the background experience we have in manufacturing and e-commerce, it's an easy transition for us."
"We're both very confident that there is going to be some huge investment in 2011 in making that move, especially for the manufacturers," Harman says. "These people are approaching us now, saying they need to make a change to our website. Ultimately, if you're going to invest in an online presence you have to be willing to buy to get those conversions online. What better way than e-commerce?"
Downer and Harman recently invited
Metromode's Jon Zemke into their offices to talk web-based commerce, family businesses and art.
Brand Labs has quintupled its staff in the last few years. How have you been able to accomplish this in spite of the Great Recession, and what did you sign over to the devil to make this happen?DOWNER
(laughs): It's the niche we choose to focus on: e-commerce. Even in the downturn of the economy, you have still heard about e-commerce moving up. The amount of talent we have been able to bring in here has allowed us to grow and be at the forefront.
HARMAN: It's really about our employees and the culture we have here. We have excellent schools here.
DOWNER: Everyone is local, and it's a pretty amazing talent pool.
Ever get the feeling things are going almost too well?DOWNER: There are still so many exciting things going on that we have something else in our back pocket ready. It's not like we're just riding this e-commerce wave and it will go down. There are so many opportunities in this niche, like software or application development.
HARMAN: It's also about staying focused. When you're in the online channels you have to stay focused on the forefront of technology. That's so exciting.
You talk about staying at the forefront of technology, but a lot of people say that. How do you make sure you stay there?HARMAN: One of the things we embrace is analytics. It's one thing to have access to this data but what are you going to do with this data? We spend a great deal of time strategizing around it. That's how we stay fresh.
DOWNER: A lot of our innovation comes from working with our clients. We are problem solvers. It's a healthy balance of paying attention to what everyone is doing and listening to our clients.
How do you make sure your company doesn't fall into the trap of growing too fast?HARMAN (takes a deep breath and looks to Downer): We were doing that in the early years. We made a decision between do we want to be a churn-and-burn agency or a boutique agency. We choose the latter. At this point, we're not the cheapest agency out there.
DOWNER: We are at the point that when someone comes to us we are interviewing them as much as they are interviewing us. We want to open up great relationships and become their partner in e-commerce. In doing so you slow down the growth but you get great customers.
Internet branding, SEO, and social media. How do you convey the importance of these things to business people who are unfamiliar or afraid of them?HARMAN: The person who is going to sign up with us will be knowledgeable or at least have the practical knowledge that this is a good decision to make. Our clients know their products and services better than anyone. They live and breathe that. We're good at the online channels. Let us be the experts that drive that.
Do you think it's only a matter of time before e-commerce supplants brick-and-mortar businesses as the dominant avenue for shopping?HARMAN: It will be a while before it dominates. You see double-digit growth, but there will always be a spot for brick-and-mortar. They can work hand-in-hand. Look at Apple. It has sold directly to the consumer. They sell online and have brick-and-mortar, but Target is doing quite well selling the iPad right now.
True, but at the same time Blockbuster is rapidly giving way to Netflix.HARMAN: There will be certain business models that can't sustain.
DOWNER: Look at
Moosejaw. Yeah, they keep their doors open but a lot of their revenue is driven online. Its stores are there to keep its product in stock.
HARMAN: And its a great showcase for its products. Its stores are really a showroom. That's another way brick-and-mortars will go. They're going to have to be creative to survive.
Something that sticks in my mind is that America's consumer culture is built on shopping, feeling it and buying it. Something clicking to buy something can't do. Will that keep brick-and-mortar relevant?DOWNER: That's probably true, but look at
Zappos. Even I have thought twice about buying shoes online not knowing how they're going to fit. But I do it all the time now. I buy shoes and they're here the next day. I try them on and 9 times out of 10 they're great and I am wearing them. They're making it so easy on you.
Path of least resistance does come into play.DOWNER. Yes, Sears is now offering people the ability to buy something online and they will bring it out to your car. There are different ways the brick-and-mortars will be able to work with their online counterparts.
Josh Linkner of ePrize is a big fan of creativity. He likes to say we have moved on from the Information Age thanks to the recession and into the Age of Creativity where imagination, original ideas and new thinking are the currency of success. You guys definitely don't lack in the creativity department, so what do you think of his point of view?DOWNER: The word creative is so overused and yet the way he's using it's interesting. Our programmers are some of the most creative people here in the way they solve problems. Creative people who solve problems are the most attractive right now. Josh hit the nail on the head.
What is something you guys would like to see in downtown Rochester that another city center utilizes?DOWNER: The
Grand Rapids ArtPrize. It brings in people, art, culture. As far as a creative outlet, that's incredible.
You are now King of Rochester. How would you make that happen?DOWNER: How did that come to bear in Grand Rapids? It's money. I'm not saying it has to be that way, but that's what enabled it.
Brand Labs has its roots in generations of family business. With the recession spurring a new crop of entrepreneurs, do you think working in a small family business will supplant corporate jobs as the safer career path?DOWNER: We have definitely seen a turn. There is no longer getting into GM and working there for 30 years. We're past that. It certainly isn't easy to get a family business up and running, but its a much more viable career path.
HARMAN: There is no magic bullet. The reality of it is it takes time to be successful, whether it's a family business or something on your own.
DOWNER: One of the things we have encouraged everybody here to do is start their own e-commerce company. For us, in order for our employees to work with our clients they need to be able to feel their pain.
Do you ever fear you'll lose valuable team members?HARMAN: I'd love to see it. Those people would potentially be great partners.
So they're more valuable as peers?DOWNER: I would argue that it keeps our employees here happy. There aren't a lot of places you could have a job and be encouraged to start your own business. It's just a great added benefit.
Harman, professionally you grew up in your family's plastics company, however, you chose to start your own firm. Why build your own car when you can already drive the family sedan?HARMAN: It's what I always wanted to do.
DOWNER: Harman Corp is an established company. Brand Labs is new, fresh. It's just ours. Its a way of creating our own thing.
HARMAN: And I have always loved technology. Ever since I was a kid with my
Commodore computer. I always want to know how we can leverage technology to make a better business.
Downer, you didn't have the entrepreneurial family background that Harman did when you started Brand Labs. Was making the leap into running your own business harder for you because of that?DOWNER: It's large. When you don't have the background it's a leap of faith. We are so passionate about what we're doing that it was an easy leap.
Jon Zemke is the News Editor for Metromode and its sister publication Concentrate. He is also the Managing Editor of SEMichiganStartup.com. He conducted and condensed this interview. His last feature was Going Mobile: Q&A with Henry Balanon of Bickbot.