spencer hays, an american original

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An American originalWilliam P. Barrett, 12.01.97

NEW YORK - FOLKS ARE ALWAYS misspelling Spencer Hays lastname. They insist on adding an e between the y and the s. His highschool yearbook in Texas got it wrong more than 40 years ago; morerecently the Washington Post, trade publications, business databasesand even Hays own executives have spelled his last name as Hayes.

So what does Hays do? Rather than risking embarrassing people bycorrecting them, he tolerates both spellings: In the Nashville, Tenn.phone book he is listed both as Spencer Hayes and Spencer Hays.

Its a small thing, but it shows how careful Spencer Hays is to avoidhurting peoples feelings. At 61 he has parlayed this sensitivity into astring of highly successful businesses with estimated annual revenuesof $600 million and a personal fortune of maybe $400 million.

Hays companies -- none alone big enough to make our list -- sell,among other things, mens suits, books and health insurance. Whatmany of these businesses have in common is this: They sell directly toconsumers. What makes them so successful is Hays keen peoplesense. He knows how to motivate salespeople and teach them to reachout to the customers. A business is a reflection of the skills and attitudeof the people in the business, says the bushy-eyebrowed Hays. Youcant build a business -- you build people. People build a business.

Hays has figured out how to leverage his own keen sense of selling byimparting it to others. His biggest outfit is the Tom James Co., whichessentially invented the business of selling expensive suits to men intheir offices or homes. His best-known company nationally is OxxfordClothes Inc., the celebrated maker of handmade, off-the-rack suitsstarting at $2,000.

In publishing, Hays is majority owner of the Southwestern/GreatAmerican Co., a 140-year-old Nashville concern. It recruits collegestudents to sell books on commission door-to-door during summers. HisAthlon Sports Communications, Inc. is the nations largest publisher ofsports annuals. He also has insurance, financial planning and realestate businesses.

Note that much of this involves selling things directly to the public -- notthrough retailers or distributors. Says Hays longtime friend William E.Tucker, Texas Christian University chancellor: What Spencer sells is nota product, but people on themselves.

Hays describes the key to his management style as: People want to beled, not managed. He means by personal example. Associates recallhow Hays would sometimes travel on the road for a week with a keysalesperson who was experiencing a slump, working at reestablishingmorale. Ralph Mosley, now chairman and chief executive ofSouthwestern, remembers the time in the 1970s that Hays left his familyon Easter weekend and flew from Nashville to Indiana to work out aprinting problem that an underling might have handled.

Another way Hays leads is by giving people who work for him a sense ofownership. Many of his employees, even below managerial levels, havestock. Beyond that he has let them know that they, rather than his wifeor two daughters, will inherit the businesses when he dies. He has takenout sufficient life insurance to pay expected estate taxes.

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out sufficient life insurance to pay expected estate taxes.

Unencumbered, the businesses will then be owned by the people whobuilt them.

Hays has also bankrolled ex-Southwestern salespeople with a goodidea. Stan Ellis, a Houston financial consultant who sold books for sevensummers, went to Hays in the early 1980s proposing a company thatwould offer estate planning services to a wealthy clientele. Thus wasborn First Meridian -- with Hays putting up most of the backing buttaking only a minority stake. With revenues of $4 million, the company issmall but lucrative.

Labor relations are less than ideal in the garment trade, but Hays hasbuilt loyalty right down to the people who cut the cloth and assemble thegarments. Spencer Hays is a very decent man, almost spiritual, saysJay Mazur, president of Unite, the big clothing workers union with about3,000 members working at Hays-owned companies.

He has saved a lot of union jobs. Hays has done this by acquiring well-regarded but financially troubled clothing manufacturers at bargainprices and by using his sales skills to stoke revenues and buildemployment. Says Hays: We have a vision that one thing we owesociety is job security.

Unlike a lot of self-made people, Hays has never ceased to sympathizewith ordinary people. Born into a poor family in Ardmore, Okla. andreared by his mother and grandmother, Hays came of age in nearbyGainesville, Tex., 75 miles north of Dallas in the Red River tornado belt.He wasnt a big guy -- just 5-foot-10 -- but he became a star basketballplayer in high school. The same yearbook that mangled his nameoffered this prescient inscription: What a fine and manly fellow is thisgentleman of fame; in everything he enters, full well he plays the game.

Hays won a basketball scholarship to Fort Worths Texas ChristianUniversity, where two important things happened to him: He saw his firstOxxford suit in a local mens clothing store and was immediately smitten;and during his freshman year he married his high school sweetheart, amove that necessitated a higher cash flow.

Thats what brought him to Southwestern/Great American. Dating backto 1856, Southwestern hired college students to sell a book line, thenheaded by bibles, in towns across the country. Selling came naturally toHays. He remembers when he was 7 and his grandmother was trying tosell a litter of puppies. She put pretty pink ribbons around their necks sothey would stand out, Hays recalls. It worked.

Then and now, Southwestern had a distinctive culture. Would-besalespeople undergo a one-week crash course -- a combined boot campand pep rally -- that hammers home basic principles of selling andcharacter- building. Some of the timeless rules: Work six days a week.Dont spend more than 20 minutes with a prospect. Keep on moving.Have faith in your product. Surmount rejection with eternal hope:Convince yourself that the next stop may produce the days bestcustomer.

Perhaps the most important: Make the law of averages work in yourfavor by making lots of calls. You get enough marbles rolling, saysHays, and a certain number get to the other side. Hays devoured suchbooks as Dale Carnegies How to Win Friends and Influence People, buthe didnt really need them; he just kept thinking about grandma and thepuppies. He regards doorbell-pushing as a great character-builder: Ifyou can sell door-to-door, he says, you can do anything.

Upon graduation from TCU in 1959 -- after a lackluster basketball career-- Hays joined Southwestern and within a few years was virtually runningthe company. His ability to motivate people, to make them believe inthemselves, was just what this business required. The companybranched out from selling bibles to peddling reference books, cookbooksand childrens books. With separate sales forces it would later expandinto other kinds of selling, including fundraising services, hospitalflooring and even cancer insurance. Wanting to hold onto him,Southwesterns owners let him buy 12% of the firm for $50,000, payableover time. The business grew and grew.

In 1969 publicly traded Times Mirror Co., owner of the Los AngelesTimes, purchased Southwestern for $17 million of stock -- $2 milliongoing to Hays. One of its chief assets: Spencer Hays. He soon becameSouthwesterns president.































But Hays chafed under big public-company control and in 1982persuaded Times Mirror to sell back Southwestern, then a $30-million-a-year company, to a group of company officials he headed. In thecircumstances many entrepreneurs would have gone public to raisemoney and lessen personal risk. But Hays reputation for moneymakingwas so strong -- and his confidence so great -- that almost all of the $27million repurchase price was borrowed.

Had he taken Southwestern public or brought in venture capitalists atthe time of his LBO of the firm, Hays feels that the presence of outsideowners would have changed the nature of the companys relationshipwith its employees. For one thing he could not have been so liberal withdispensing stock to workers. People have to be rewarded, he sayssimply.

The debt was paid off within four years, and Southwesterns revenueshave risen to about $150 million.

Hays says he got into the clothing business because he had come tounderstand how important a good appearance was to salespeople. Ifyou dress well, he says, You feel a little better and walk a little taller allday. But busy businesspeople dont have much time to shop. Why notsell custom-made mens suits office-to-office the way you sell booksdoor-to-door? Since the suits wouldnt be made until the orders were in,inventory costs would be low and profitability high.

Thus was born in 1966 the Tom James Co. -- named after the son ofone of Hays former Sunday school teachers. Southwestern wasntinterested, but let Hays run the business on the side. He hired ex-Southwestern student sales personnel. As the business prospered, hebegan buying up suppliers. With the garment trade moving offshore, alot of old companies were for sale, and Hays could buy them cheaplyand, at the same time, earn the gratitude of the union by saving jobs.

Tom James Co. bought English American Tailoring, H. Freeman Sons,Oritsky Suit Co. and Individual Shirts Inc., all companies with well-known labels. Some make clothes for Tom James, others sell to thetrade.

Hays-owned companies now do $350 million a year, and the business isgrowing 30% a year in an industry that is growing at a fraction of that.

Hays had long wanted to buy Oxxford, but had failed twice. Finally in1994 he succeeded. Over the previous decade Oxxfords sales haddropped by a third as younger American businessmen flocked to Italiandesigners.

The Chicago-based company had gone through several recent owners,was losing big money and faced extinction.

Oxxfords revenues are up by a third, to perhaps $45 million, since Haysbought it. He recently persuaded 92-year-old Stanley Marcus, thelegendary retired chairman of Neiman Marcus, to make an investmentand join the Oxxford board. Trying to modernize Oxxfords creakymarketing, Hays produced two videos showing department storesalesmen how to sell an Oxxford suit.

During an interview with FORBES, Hays was more than happy todemonstrate selling points. There are 850 hand-sewn stitches in eachcollar, so it lies flat, he intones, using the jacket he was wearing as anexample. There are 1,350 stitches in the lapel, so it doesnt buckle. Thepockets are constructed in such a way that if you put something bulky inthem, they bulge in and dont bulge out.

Nor does Hays demeanor. Roger DiSilvestro is the chief executive ofAthlon Sports Communications, which every year sells 1.1 million copiesof such once-a-year sports books as Southeastern Conference Previewand National College Preview. DiSilvestro says that only once in his 21years of working for Hays did the boss become visibly angry with him.

Reporting on a disappointing year at Athlon, DiSilvestro said, We triedour best.

Recalls DiSilvestro, He said, If you did your best, how are you going todo better next time? He wasnt mad at the results, but only at mydescription of our efforts.

Hays role in running these diverse businesses can best be described asmanagement by walking -- or telephoning -- around. He borrows emptyrooms at his various businesses to serve as a temporary office.




















rooms at his various businesses to serve as a temporary office.

When traveling on business, he flies coach. When it comes to business,Im just cheap, he says. But not in his personal life. Hays is a greatbeliever in enjoying what you have. His recently purchased apartment inManhattan, where he and his wife of 41 years spend much of their time,displays originals by Matisse, Carrier-Belleuse, Degas and Gauguin. Buthe hasnt forgotten his adopted state or the college that gave him hisstart: Hays and his wife recently gave $2 million to Texas ChristianUniversity, on whose board he has sat for a decade, to build a theater.

Spencer Hays is an American original.

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