Episode 80

Irwin Novack has done what very few CEOs manage to do - last. That speaks to the qualities that drove Kane's Founder Maurice Rothman to pursue a young Novack years after spending only a couple days together. Rothman convinced Novak to move his family down from North Carolina to St. Petersburg and took him under his wing. Once working for Kane's, Novack's role expanded steadily until he eventually took the top spot as C.E.O. But we start our conversation earlier than that...when student Irwin Novack received the call we all dread.

Joining me today on SPx is the President and CEO of Kane’s Furniture, Irwin Novack. Welcome sir.

Thank you, Joe. And thank you for the invitation this afternoon.

I want to go back through the early days, and trace your journey. And see what kind of insights we can extract from your brain. You’ve had a great business career, and quite an interesting one. I want to start by looking at, you had a life change in the early 70s when your father got sick. You ended up – after he passed – going to take over his liquor business.

That is correct.

That was a jolt for many reasons. Obviously, the personal one, but you were thrust into this new entrepreneurial endeavor running a liquor store. Do you remember that as a transformative moment and what came?

Well, I’ll never forget the phone call that I received in February of 1971. I was attending law school in Boston, living with five friends of mine that were in school. We had gone on to graduate school at the University of Massachusetts together. And then grown up in the same hometown of Springfield, Massachusetts. Life was good at that point. Go to school during the day, party at night. What could be better? Then as I alluded to, I received a phone call saying that I needed to come home. And needed to come home immediately. My father had taken ill, and within 24 hours he passed away from pneumonia.

Obviously, it was a life changing experience. It took me down a path that I had never envisioned before that. Candidly, I was in law school. I don’t know that that was my true passion, but that was the path that I was headed. It was the height of the Vietnam War. If you recall 1970, Kent State. We were taking it one day at a time, to be candid with you. Then life changed, and it was no longer one day at a time. I had to make some life-changing decisions. I was also on my own at that time. I was an only child. Had no brothers, no sisters. My mother had passed away when I was 16 years old. Here I was, unto my own.

I decided to remain in law school for the remainder of that year. Then when the school year ended in June of 1971, I moved to Connecticut to run a retail business. My first business adventure, and it was very interesting to say the least. It was a small business. Had a few employees. Every day was a new day.

You said when you went back, you had about 24 hours of time. Did the conversations that happened during that 24 hours influence the choices you made or that didn’t come up?

No, at that point, I really didn’t know what I was going to do. I hadn’t thought that far down the road. Over the next few weeks, months I made some decisions.

I think that, at the end of the day that ended up being your only real true entrepreneurial endeavor. You did it for about four years, before you sold the company. What are your memories of what you loved about that four years, and what you didn’t like about that four years?

There was some of each, as you say. A small business is very difficult. You have a few employees. If they don’t show up for work, you’re up. It’s not like Kane’s where we have close to 1000 employees. And it’s a whole different environment. That’s a negative. You’re sort of strapped down there. The positives were – as I stated earlier – it was my first business adventure. I was a political science major in undergraduate school, which took me to law school. I never had a business course, didn’t know anything about business. It was a real eye opener. I learned a tremendous amount. Shortly after I was in business, I realized I didn’t know much about business.

Therefore, the local university was University of Hartford. I attended school at night, received an MBA with an emphasis in accounting. Because if I was going to be in the business world, I felt I had to know something about business. I had an accountant I worked with, who would come in regularly, and we’d talk. He’d go over balance sheet, P&L. I didn’t comprehend what he was saying. He’d say, “We need to pay the IRS this amount of money. We need to pay the State of Connecticut this amount of money,” and not even know the right questions to ask. It was not the best position to be in. I learned quickly. I gravitated towards accounting. I enjoyed it, and thought this might be something I would like to pursue.

About that same time, somebody wanted to buy the business from me, in 1975. My wife is from Charlotte, North Carolina. We thought, maybe we’d like to move somewhere else whether it be Charlotte or somewhere in the south. My family was in Florida, and things just fall into place. We sold the business. I had an accounting background at that point. I understood a little bit about business, and took a year off. We had no children. Fortunately, we were in good health. And we were able to travel around the country. Travel around the world at that time with no responsibilities to speak of. It was a very conscious decision, and one of the best decisions we ever made.

Because the thought process was, “When will we ever have this amount of time again?” and when we’ll be in this physical condition to do it. We thought, “Probably way down the road, and who knows if we’ll physically be able to do this?” we took advantage of it. It was a great decision. It was a great year. During that year, I decided that I’d like to work in public accounting. It was something I enjoyed in school, and felt that this was a potential career. I interviewed, back then it was the Big Eight. I think today it’s the Big Three or the Big Five. There are not many large accounting firms left. I ultimately went to work with Haskins & Sells in Charlotte, North Carolina. I was on the audit staff there for four years, and most enjoyable.

When you decided to exit the retail business, because it wasn’t any one specific driver. It was just the right time. A mix of, “Maybe we’d like to try something different. Maybe we’d like to live somewhere different, and we have an offer on the table.” It wasn’t any one specific driver. It was sort of a confluence of smaller drivers.

I would agree with that statement. I would also tell you my philosophy, and I would advocate this for young people. I believe in looking forward, and not looking in the rearview mirror. When I made the decision to go into the retail business and leave law school, my thought process was, “If this doesn’t work out, I can always go back to law school.” When I left the liquor business, and went into public accounting, same thought process, “If it doesn’t work out, I can always go back into the retail business.” When I left public accounting, and went into the furniture business, same exact thought process. It’s worked for me, but nothing ventured, nothing gained. You have to look forward and keep driving.

Another way to say that might be, “Don’t let the past to much shackle your potential future options,” because you feel like you need to keep on… A lot of people feel like, “Hey, I’ve started to build this trajectory. And if I abandon it and pivot, I’ll lose the ground that I’ve gained.” But for you, you’ve been able to say, “I see the opportunity here. And I can make a big pivot.”

I would agree with that statement to a certain degree. But it’s really funny, when I look at the landscape today, because I started at Kane’s Furniture in June of 1980. It’s 41 years plus, and I’m not looking at future opportunities and haven’t been obviously. Whereas today you see people in the workforce that if they’re somewhere for three-four years, that’s an extended period of time in their mind. And they keep moving on. I wouldn’t go to the point to say, “You have to look at the next opportunity.” If it presents itself, that’s fine. Don’t turn it down, because you’re successful doing what you’re doing. Because you may be successful in the next venture, but stability is a great thing.

True, and when you took the year off, was that the intention when you started? What were your plans and hopes for that year?

It was our intention to take a year off, figure out where we want to live, number one. And chart our future path and enjoy life. We did all of those things. So, it was great.

You mentioned some international travel over there.

Sure, we travelled overseas. We traveled extensively in this country. We went out west. Camped out for a little while, until we realized camping wasn’t for us. And camping became the nearest Marriott, but it was great. 1975, I was a youngster at that point.

I would say that’s almost a pivoting in and of itself. A lot of times, people want a career trajectory. A little bit different, being an entrepreneur, but not wanting to lose that momentum. That was an unusual wisdom to take the year off, and appreciate that for what it was.

Correct.

With your wife’s family in North Carolina, it made sense to head in that direction. And you were able to secure the job there. Then Mori Rothman came into your life through a weird happenstance. Can you tell us how that began?

My wife Patty is from Charlotte, North Carolina. My mother in law is from Ashville, North Carolina? During the year that we were travelling, we obviously went to North Carolina to visit family. We were at a function one evening, and the Rothmans were there. I didn’t meet, but Patty had a conversation that evening with Thelma Rothman which he later relayed to me. After visiting North Carolina, our plan was to go to Palm Beach, Florida where most of my family resided. We were driving. As I said, we had nothing but time. A couple of days later, Patty mentioned to me her conversation with Thelma, where Thelma had said to her, “Listen, if you want to stop in Tampa – on your way to Palm Beach – we’d love to have you.” She asked me what I thought, and I said, “That’d be great!”

Never met the people, didn’t know them at all. Spent a few days at their house, and is really the first time I’d ever met them. One day, I went to the Kane’s offices with Mori, and I was talking with him. And he said to me, “Here’s the keys to my car. How about going to Clearwater. We just built the store there. Take a look and tell me what you think.” I did it, and I came back and he said, “What do you think?” I said, “The store looks great. It’s beautiful. You should be proud of it. Very well done.” He then said to me, “Which did you like better, the upholstery or the case goods?” I looked at him – I’m sure, with a blank stare. I had no idea what he was talking about. I didn’t know a sofa from a love seat, never mind, case goods from upholstery.

As I’ve told the story before, 41 years later in the furniture business, some of my friends today would still say the same thing. That I don’t know upholstery from case goods. They may not be all wrong. But I very candidly said to him, “I don’t understand what you’re saying. I don’t know upholstery from case goods.” He explained it to me, and I guess it resonated with him that I was candid instead of giving him some answer that wouldn’t have made sense. I told him, “I have no idea.” We left Tampa a couple of days later, went on to Palm Beach. And ultimately, made the decision to live in Charlotte. That was the only time I had seen Mori Rothman. Hadn’t heard from him subsequent to that visit. In the fall of 1979, my phone rang, and he was calling me saying he’d like to get together, and talk about some things. We did and he said, “I’d like you to come to Florida. I had good vibes from the minute I met you. You just didn’t have any real business experience.”

“You mentioned you were going in public accounting. I felt that would be invaluable experience. You’ve been at it four years. I’d like you to come down here, and work with me. And I’ll teach you the business.” My initial reaction is, “I don’t want to do this. Really, we’re happy in North Carolina. During that time, our oldest two children were born. The accounting business was good. Everything was good. There was no reason to move on. If you knew Mori, he wasn’t the type of individual that took rejection kindly. He was very persistent. We went back and forth for months and months. We came to Tampa to visit. Ultimately – as I explained to you initially – my philosophy was, “Never look in the rearview window.” And I said yes, and 41 years later, here we are.

Wow, and I should add context Mori Rothman founder of Kane too.

Correct.

Didn’t mention that.

Mori and his wife Thelma, co-founders.

That’s right, Thelma is very active in the business, even past Mori’s passing. So, you must have made an impression, right?

Good or bad.

Obviously, the candidness was good. A couple of days, you had time to bake in with him. I didn’t realize. So, you hadn’t communicated with him in the number of years. So, there was the one meeting. Then the phone call four years later…

Correct.

Wow, and so how do you unpack that? What happened in those four days that made him remember you, four years later? And he seemed to pursue you quite a bit as well.

I have no idea. I never asked that question. He just said, “I had a good feeling. I felt we bonded, and you had no business experience. Once, you received that business experience, I knew you were someone that I wanted to come into my business.”

With that statement, he is pursuing you, because of you, right? It’s not a specific skill you had at that point. Because you didn’t have one according to him, or you were on the verge of getting more of those. What was the context? What was the, “I want you to come in, because I feel this way about you. You’d be good for the company?” Was it a leadership track? Did you always have the feeling that you would be moving in that direction, and he was grooming you for something like that, or was it to do a specific task?

We had talked about that, the future. Obviously, it was a long-range plan. But my experience was in accounting and finance. I had a limited amount of experience in selling etcetera. I went in, and initially I was in the accounting department, operations department. That’s what I was involved in. Gradually, my role grew. That was the intent from the beginning. Fortunately, it worked out for both of us. Life is a two-way street. If it’s a one-way street it doesn’t work. It was great for them. It was great for me. It was great for my family. It’s been an amazing 40 plus years.

That’s fantastic. And as you grew within the company, do you remember the areas that came under your purview first? Then as you ended up ultimately at the top executive role – the areas of the company that were last to come under.

Yes, like I stated accounting operations was my initial entrée into the business. Because that’s where I had the most experience. I should state – when I was in public accounting for four years with Haskins & Sells in Charlotte – we had the largest audit practice in the Carolinas. We had a flourishing business. I was exposed to a lot of New York stock exchange companies; Duke Energy which is here in St. Petersburg today. I worked at [17:09] Account, they’re headquartered in Charlotte. Back then, the textile business was flourishing in the Carolinas Skin & Mills, Springs Mills.  I was on all those accounts. It was an incredible experience where I was dealing with people at the highest levels and huge corporations in my 20s. Where would I ever get that exposure? It was great. I certainly had some business background. As time went by at Kane’s, my role obviously increased and went into more and more areas. Optimally, it all came under my jurisdiction so to speak.

When you think about the audit experience, and how valuable that was. What was the breakdown between the technical aspects that you learned versus the executive presence? Then I know that building a culture is important to you. As you look back on that audit experience, which aspects were the most impactful?

They’re all important. I don’t think you can single out one area. I say this all the time. Any business is only as good as its people. I can come up with ideas, theories, but I can’t execute them. It’s a team effort. You need everybody to execute the plan and be in the same playbook. I learnt a lot from these companies that I was involved with. Just business strategic knowledge from speaking with some of the executives at these companies. Plus, also observing the culture of the companies, and the operations. Like I say, “It’s invaluable. I would recommend it to everyone.”

During your leadership tenure at Kane’s, you arguably had to lead through more change, in the 2000s than maybe the first 50 years before that. Mainly, that comes with the advent of the internet, online shopping, the Wayfarers of the world and things like that. Can you think back to – as an organization, as the internet grew, and competition grew – how you embraced changed?

I’d go back even further than that. In my first two years at Kane’s, I probably undertook two of the largest undertakings in my 41 years. Most people don’t know this, but from 1972 to 1982 Kane’s was a publicly held company. Stock was traded on the Nasdaq Exchange. Shortly after I got there, we made the determination that we were going to take the company private. It was 1980, Jimmy Carter was President. Interest rates were 20%. The economy wasn’t so great, especially in the home furnishings industry. The IPO for the Kane’s stock in 1972 was $9 a share. In 1981, it was trading at $5.50 a share. The book value was $12 a share. We went to the market place at $9 a share. We were hugely successful and receiving most of the shares back. Obviously, we paid pretty large premium. I organized all of that. Put it together, worked with the appropriate people. We’ve been private ever since.

The second thing I did – and when I say I, it’s a team effort that I headed up – is – it was the very early stages of computerization in 1980. Kane’s was not computerized. Inventory was on cards. There was no inventory system. I travelled the country, looking at various computer systems. And purchased a system which was designed from the furniture business by the Levitz Family, Levitz Furniture back then. Some of the people had spun off, formed this computer company. They were in San Diego, California. We were their second user in the United States. Went on to the be the largest software system in the furniture industry. But those were two huge undertakings within a couple of years. Everything you said Joe is true about the subsequent transformation, to the internet, to a lot of things – 2007-2008, the recession. We’ve been through a lot.

I’m curious, the conversations surrounding taking Kane’s private again, was that a value play? What were the main drivers for doing that?

Once again, no single factor. Just a lot of different things factored into the decision.

That’s great. I know that Mori was a huge influence on your life, and Thelma too. As you sit here today in 2021, you’re looking back. Can you just tell what his impact was on you?

As I said, after our family moved to Florida, and I started working at Kane’s, he took me under his wing. He taught me the furniture business. He was a brilliant business man, very sharp guy, great friend, father-like figure, mentor and a tough boss. He was all business. People that knew him would tell you, he was all business. That’s fine with me. We worked hand in hand. He ultimately backed away and gave me more and more responsibility. It was a great relationship. I owe a tremendous amount to him. I wouldn’t be the person I am today. I wouldn’t be where I am today without him. He passed away several years ago. Thelma got more involved. We formed an incredible relationship – a very special relationship. Prior to Mori’s passing it was more the two of us. Then after he was gone, I became extremely close to her. I have a special place for her. She was the special person, as people would tell you. I wish she was here today. She didn’t come to the office that often, but when she did, she’d come in my office and we’d just sit and talk for hours about whatever. Just a great individual, irreplaceable. It’s a void that I have today

As you transition into the sole visionary for Kane’s – for the most part – has it been a pretty contiguous vision? Can you think of any adjustments or pivots you’ve made to the vision since Mori’s passing?

I’m a sports fan, as you probably know.

I do.

I equate it to sports. You have a game plan, but you’re always on your toes. And you call audibles. You adjust with the times. I’ve never been a person that looks day to day. I look more long term. I know some of my friends in business, they’d call in. They look for the numbers every day. That’s just not my style. I’ve never done that, because on one day being good or not so good, I’m not going to change what I do. We have a plan, which like I say, we call audibles, we modify it, we move in different directions. For an example, I guess it’s six-seven years ago now. I saw a large opportunity in the outdoor furniture business. We studied it, and ultimately, proceeded to enter into that field. We’ve now incorporated outdoor furniture into our assortment in Kane’s. It is evolving. Since COVID, the internet has gotten larger and larger in furniture. It’s become much more important to our business. We’ve devoted a lot of time, energy, and dollars to it. We’ve seen the results from that. The business has exploded. So yes, if you stay the same, you’re falling behind. It’s always evolving.

One of the oft repeated life overviews is learn, earn and return. You talked about some big learning that you did, different degrees and educational tasks. Obviously, you’ve done your share of earning. But the last couple of decades, you’ve been very active in returning as well. Can you talk a little bit about your philanthropic philosophy, and some of your favorite projects?

Yes, the community has been good to me. I believe in giving back to the community. The Rothmans also had that same philosophy. So, it was pretty easy to learn from them. I’ve been the boards of several not for profit organizations, have been for several years. One of them that I devote a lot of time to, and I’m very passionate about is the Pinellas Education Foundation. I’m a past chairman there, still actively involved. I feel we do a tremendous amount of work in the community. Work very closely with the Pinellas School District. Work closely with Mike Gregor who’s a friend, superintendent in schools. We’ve made lots of strides. We work hand in hand, and it’s great. Most of my not for profit work has been devoted to children. Not exclusively, but most of it. I have three children of my own. I’m passionate about children. What could be better than education?

I’ve been involved for 20 plus years, with the education foundation. And I’m still very involved. I’m also on the board of directors, and involved with an organization called Starting Right Now, which is for homeless children. Vicki Sokolik who’s from Tampa founded the organization. I just feel like we do incredible work in helping people with need. Tremendous organization, we’ve been involved since the beginning. They have two campuses, one in Pinellas, one in Hillsborough to house homeless high school children. They get tutoring there. It’s their life. You hear so many stories. It’s incredible, Joe. It’s amazing. It makes you feel good that you’re doing something for people like that.

When Vinny Lecavalier was playing for the Lightning here, and was the captain of the team, we started Vinny’s Foundation. We gave multimillions of dollars to Johns Hopkins, All Children’s Hospital. Founded the cancer wing there. Vinny and I used to go to the hospital on a regular basis. It’s all about children. It was great. I’m also involved in the board of the Dali Museum presently, which doesn’t have to do with children and PCA – Positive Coaches Alliance and some other things. What goes around comes around. Like I said to you initially, it’s a two-way street. It’s got to work both ways. You need to give back.

A lot of good work in there. Thank you for doing that. I got a couple of sports anecdotes out of you, because you mentioned a couple of things there. Sort of small, but mighty. The free pizza for 10 strike outs. What’s the back story on that?

No, it’s just a form of marketing for us. It’s an area we weren’t in before I became involved in Kane’s. I saw it as an opportunity. We’ve been involved with all the sports teams in our market. From the Rays, to the Boks, to the Lightning, to the Magic in Orlando as well as USF, UCF etcetera. It’s a way to drive business. You will notice that we don’t just put up a sign in any arena like a lot of people do. There’s a contest attached to it. So, we can measure our response. Yes, it’s being a good community citizen, corporate citizen. But it’s also about driving business. There needs to be an ROI or we’re going to be moving on. We have a great relationship with all the sports teams. It’s been good for us. It’s another avenue of marketing that worked.

I’ve been to the playoff games, the world series games. I’ve heard some loud cheering, but I would tell you, if you had asked me, nine strikeouts or people turn [29:37] when there’s two strikes and nine strikeouts or the World Series. I think it’s a coin flip at that point. People are getting pretty excited about the free pizza.

I’ll tell you a little funny story. I’m close friends with all the guys at the Rays. Sometimes, I’m at a game and I’ll receive a text from Matt or Brian or someone saying, “We’re losing six to nothing but we have nine strikeouts. And all the people care about is the pizza and they’re going wild. Something’s wrong here.” It resonates. It works. It’s incredible how many thousands upon thousands of people come through our doors to redeem their coupons. It’s a win-win.

But you never thought about getting in the pizza business though.

Not today.

And going from the small to the bigger engagement. You had an ownership stake in the Lightning for a while, a couple of years. Can you talk about how that came on your radar? How you got in? And then ultimately, why you passed it along to Vinik?

Yeah, interesting story. I have a friend, Canadian friend for well over 30 years now, who is in the furniture business in Canada. Owned the largest furniture chain in Canada. He was also a sportsman. He subsequently sold this business. Sold it a couple of times actually, and moved to southern California. One day, my phone rang and it was Bill Camry. I didn’t think anything of it, because we talked on a regular basis. We’re very close friends. After a short conversation, he says to me, “I need to talk some business with you.” I said, “Sure Bill, what’s up?” he says, “I know Kane’s is involved with the Lightning. How would you like to be a part owner of the team?” I said, “What are you talking about?” he said to me, “Somebody I know here – in Southern California – has the rights to buy the Lightning and would like some local ownership. So, I thought of you.” He said, “Our sons skate together.” Bill had a son at that time that was in the NHL.

My first two questions were very straightforward. I said, “Are you going to be part of the ownership group, because if you’re in, I’m in?” he said, “No, I’m not for two reasons, “It’s too far. I’m in California. It’s all the way across the country. I just wouldn’t be there.” He said, “Number two, I feel it’s somewhat of a conflict of interest, because Mike’s playing in the league on a different team.” At that point I said to him, “If you’re not interested, I’m probably not interested.” That was the end of the conversation. Next thing I know, my phone rings again and somebody from southern California who says, “Bill Camry gave me your name. I’m taking the Redeye tonight. I’ll be in your office tomorrow.” This gentleman shows up in my office. We have a conversation. He was a very good salesperson. Ultimately, myself and a few of my friends join the group and we purchase the Lightning as limited partners in the transaction with the general partner who is from California. It lasted for a few years.

It was in the most difficult of times – during the recession in 2007-2008. I always tell the story, the two best things we did in no set order were, in the two years we owned the team, we drafted Steven Stamkos and Victor Hedman who are the backbone of the team. And we sold it to Jeff Vinik who is a pillar of the community. It was a win-win. That was my ownership story in professional sports, very interesting. I’m still tied in with all the teams, and know the people. It’s a passion of mine. I enjoy sports.

Wonderful, you could finish up talking a little bit about legacy. You’re still going strong, obviously. But when you look back at the legacy that Mori left – even with you personally, and what you’re doing now – what are the things that you most enjoy and want to be remembered for most enjoying?

There’s obviously, good times and not so good times. There are things you enjoy and things you don’t enjoy so much. But I have a passion about going to work every day. I enjoy it. It’s not work if you love it. That’s the way I feel. Mori had an incredible work ethic. I think I share that passion and that work ethic. People would tell you, I never ask anybody to do anything that I wouldn’t do. And work as hard as anybody there. Hopefully, provide good leadership to the team as I stated earlier. I’m only as good as the people around me. It’s a total team effort. We’re all in it together. It’s passion.

I’ve made incredible friends in the industry from all over the country, all over the world. It’s a global economy, friends I’ll keep forever. One of my closest friends in the industry was the CEO, Chairman in the board of La-Z-Boy. He just retired in April. We started together. We still keep up. We’ll always keep up. It’s things like that that drive you. The humanistic aspect of the business. It’s great, and obviously with social media, I don’t need to tell you, because you’re involved in it. The world has changed. It’s not as it was 30 years ago. You’re continually under the microscope. It’s a challenge, but challenges are good. We’ll move forward.

Awesome, we appreciate you being under the SPx microscope. Hopefully, it wasn’t too bad.

It was a pleasure talking with you. Once again, thank you for the invitation. I appreciate it. Glad to know you.