Building a business

The Alumni Medal is the highest honor the University bestows on a graduate. The following graduates were recognized for accomplishments in their professions, exemplary family and personal lives, contributions to their communities, and dedication to the University: Nancy Cunningham Benacci ’77; Tony Coyne ’82; Jack Kahl ’62; Chuck Kyle ’73, ’79G; and Bob Maynard ’58.

Jack Kahl’s ’62 success with Manco and Duct Tape involved working with Sam Walton

By John Walsh

As I walk through the spacious yet comfortable home of Jack Kahl ’62, I can’t help but think, “Duct tape built this magnificent place.” The home, built in 2000, sits on the shore of Lake Erie and offers several panoramic views of the lake. The view on this particularly cold day in early March is stark and icy. I sit with Kahl at his large, round kitchen table, and he starts our conversation by telling me about his wife’s eating habits. She’s a vegan. He tried the diet but is back to eating meat and dairy, although a lot less of it than he used to. I ask him to tell me the details of his success story – one that involves determination, hard work, discipline, risk, and Sam Walton, the founder of Walmart who was one of the wealthiest yet most down- to-earth men in the world.

“Sam was the best motivator,” Kahl says. “He’s right there with Vince Lombardi. He set high standards and then turned you loose. Then he observed. He’d push you as far as you thought you could go.”

Kahl

But we were getting ahead of ourselves. Kahl’s story begins with selling insurance during his senior year at John Carroll, something he knew wasn’t for him a few months into the job. He scored extremely high on a sales aptitude test, and after looking at the results, the owner of the company asked him to promise he would stay at least a year because he knew the graduate of St. Edward High School in Lakewood, Ohio, would leave because he was destined for better things.

About six months into the job, Kahl called on Melvin Anderson, a former 3M employee
who was selling duct tape out of the back of his car. Anderson wanted Kahl to work for him, but Kahl declined and told him he was committed to the insurance company for six more months. When that time passed, Kahl returned to see Anderson, who still wanted Kahl to work for him. Kahl agreed, and Anderson paid him $50 more a month than he was making on his draw with the insurance company. He earned $500 a year in 1962-63. The annual revenue of Anderson’s tape business at the time was $83,000.

Anderson gave Kahl carte blanche, so he expanded the sales territory throughout Ohio, hired a student from West Tech High School to type orders, and continued with inside and outside sales for the next four years.

But by 1971, Kahl intended to resign from Manco (which was called the Melvin Anderson Co. at the time) because of a significant disagreement about pay. He agreed to stay for six weeks while Anderson found his replacement so the employees wouldn’t be negatively affected. At the time, Kahl had three kids and just built a new home in North Olmsted, a Cleveland suburb.

“I needed to quit my job; however, there were 14 people at Manco who depended on me,” he says.

Kahl walked into the office the next day, a Friday, and felt empty inside as he looked at those 14 co-workers. The following week, before he attempted to resign, Anderson asked him to make an offer to buy the company. So Kahl took the $10,000 he had in the bank – some of which was set aside to buy furniture and carpeting for his new house, as well as a sewing machine for his wife – and made a down payment on the company, which he bought for $192,000.

For the next five years, Kahl – who helped endow The John J. Kahl Sr. Chair in Entrepreneurship in the Boler School of Business – worked diligently and didn’t take many risks. In 1976, he made the last payment on the business and celebrated with his employees at a beer-and-pizza joint in Lakewood, Ohio.

The following year, Kahl’s success grew exponentially after meeting a buyer from Walmart. He was attending a lumberyard trade show in Dallas and made a commitment to be at the four-day show from beginning to end, which wasn’t an industry policy at that time. The show ended at 5:00, but 20 minutes before close, when hardly anyone was around, Gary Broach, a buyer from Walmart, approached the Manco booth looking for promotional, seasonal goods. But Broach had to meet others, so he told Kahl to wait for him, which he did. Broach returned at 5:25 and was surprised to see Kahl still there. Broach asked about the cost of the tape, and Kahl told him one roll cost $1. Broach responded, saying he wanted to buy 88,000 rolls. It was Manco’s biggest order to date.

“I’m so happy I could fly home without a plane – I could flap my arms to get home,” Kahl told Broach, who responded: “You’re a guy we want to do business with.”

Through Broach, Kahl met different Walmart buyers. After several visits to Walmart’s headquarters in Bentonville, Ark., Kahl met Joe Craig, a seasonal buyer. Kahl told Craig he thought Walmart was unique. Craig responded: “Oh, yeah?” and he took Kahl in the bowels of Walmart to show him otherwise.

Craig led Kahl into a room the size of a gymnasium that housed boxes stacked against the walls that contained returned merchandise slips worth millions of dollars. Walmart was growing so fast it couldn’t keep up with the returned merchandise. The two were walking back up an aisle to return to work, and Craig said, “I’ll introduce you to Mr. Sam.” Sam Walton asked Kahl, “Who are you young man, and what are you selling us?” Kahl replied, “Weatherstripping and duct tape.” Walton responded, “What does a farmer do with duct tape? Everything. It’s the bailing wire of the 20th century. So never ship us anything but your best grade of tape.” Then he was up the aisle and gone.

Throughout the years, Kahl and Walton developed a close friendship because they had similar interests, including a love of reading. Kahl read books while traveling on airplanes and sitting in lobbies waiting to meet with buyers. One day in Walmart’s Bentonville headquarters, Walton said to him, “If you share with me the best ideas from what you’re reading, I’ll do the same.”

For 10 years, Walton said he was going to visit Kahl, but Kahl knew that was unlikely. Walmart had a strict policy not to visit vendors because Walton didn’t have the time. But one day in 1991, that changed. Sick with bone marrow cancer and leukemia, Walton flew to Ohio in his own plane to meet Kahl and Manco employees – about six months before dying in April 1992.

“He wouldn’t let me pick him up at the airport because he knew I was busy,” Kahl says. “He showed up at the office in a 14-year- old, dented Chevy Vega driven by one of the aircraft mechanics.”

Walton arrived, shook hands with Kahl, and suggested they go to Wendy’s for lunch before meeting the employees – those on the factory floor before the executives – who were excited to meet him. Kahl told Walton he ordered a meat tray and they could eat lunch in the office.

“I hope you didn’t pay too much for that,” Walton said. “Lunch will be cheaper for us than if we all went to Wendy’s,” Kahl responded.

While on Manco’s factory floor, Walton saw a large 10-by-20-foot sign that read, “If you’re not proud of it, don’t ship it.” The sign meant that if workers wouldn’t ship the product to a friend or family member, it wasn’t worth shipping.

“It was our way of implementing quality control,” Kahl says.

After seeing the sign, Walton wanted to use similar signs at Walmart to remind people not to ship damaged products to stores because it wasted time and money. Walton’s two-hour visit to Manco was cut short because he left his much-needed medicine on the plane and needed to take it. From Westlake, Ohio, he flew to Sandusky, Ohio, to visit one of the many Walmart stores.

In 2000, Kahl sold Manco – which is the only three-time vendor of the year winner in Walmart history – to the Henkel Group, a German company, for $116 million.

As I look at the walls of Kahl’s home office, I see examples of the close, meaningful relationship he had with Walton. Framed letters that Walton wrote to Kahl complement a large oil painting of the Walmart founder that hangs in a corner of the office next to his desk.

Toward the end of our lengthy conversation (well, it was more like listening to a captivating story), Kahl reflected on his success with Manco, which he acknowledges was a small company competing against the much larger 3M: “They ignored us for years. Then, in 1990, one of their executives said to me, ‘We should have put you out years ago,’ and I said, ‘Well, it’s too late now.’” JCU

To watch a video about Kahl, click here.


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