First Coast Success: Daryle Scott, Venus Swimwear
Daryle Scott created as a graduate student what became Jacksonville-based Venus Swimwear 30 years ago.
Scott formed a mail-order company, Titan Bodybuilding, which specialized in making and selling competitive bodybuilding suits.
Scott and his partners then found womenís swimwear was a lucrative market and they built Venus into a $100 million company.
They sold it six years ago, in November 2006, in a leveraged buyout, just before the economy tanked.
Under subsequent ownership, the company faltered and Scott was called back into service. In July 2009, Venus was sold to a German company, bonprix, which continues to run the distribution center in EastPark in South Jacksonville.
This year, sales and profits of the company, now ďVENUSĒ, are expected to surpass those of 2006 and Scott remains on the board.
Scott, 53, was born in Nashville, Tenn. His father worked for AT&T and the family moved frequently. Scott completed high school in Ohio and headed to Florida for college at Stetson University for the weather.
He earned an undergraduate degree in chemistry and then an MBA.
The Daily Record interviewed Scott for ďFirst Coast Success,Ē a regular segment on the award-winning 89.9 FM flagship First Coast Connect program, hosted by Melissa Ross.
The interview is scheduled for broadcast this morning and the replay will be at 8 p.m. on the WJCT Arts Channel or online at www.wjctondemand.org.
The following are edited excerpts from the full transcript.
You recently shared your story at a JAX Chamber Nexus Forum for second-stage companies. Please share how you started the company.
Back in college, I was involved in competitive powerlifting and I had friends that were bodybuilders. My bodybuilding friends were looking for a place to buy competition suits. At that point there was only one person actually manufacturing and selling suits and he wasnít doing a very good job. The idea came to me that maybe we could sell competition suits and do a better job than the one guy that was doing it.
I got four friends together. We each put in $5,000 and the five of us formed a company that was called Titan Bodybuilding. We had some sample suits made. We took photographs in my college dorm room.
The first ad appeared in Muscle & Fitness Magazine in June of 1982, just as I moved to Jacksonville to take a job with IBM. That was the birth of Titan, which morphed two years later into Venus.
How did it morph into Venus and how did you come up with the names Titan and Venus?
I had always been interested in mythology. I got Titan from the bodybuilders. My friends were all these bodybuilders and of course Titans were the gods who ruled Mount Olympus; they were big massive beings, so Titan seemed to fit.
When we found we were selling as many womenís bodybuilding suits as menís, we said, well this really doesnít make a lot of sense because there are 20 male bodybuilders for each female, so how can we be selling so many womenís competition suits? It turned out many of the women were buying our competition suits to wear as bathing suits. We had a lot of customers who were actually not bodybuilders but just women wanting to buy mix-and-match swimwear.
We were the first company to offer any size top with any size bottom. That was a big hit.
Sticking with mythology, I used the name Venus, goddess of beauty and love, to go with the swimwear line. We then ran Venus and the bodybuilding company both for about eight or nine years.
By that point, Venus had so dwarfed Titan in terms of sales and profits that we decided to focus our energies on that. Venus became the company that we really worked on from that point forward.
How did you move from IBM into running Venus full-time?
IBM recruited me from college and moved me to Jacksonville. I had never been to Jacksonville until IBM gave me a job
here. I went to work for them June 1 Downtown in their national accounts division as a systems engineer, and loved it there.
I was running Titan out of my apartment. We had a little 10-by-10 warehouse out on Powers Avenue at Morgan Mini Warehouses, where I kept the inventory.
We turned the spare bedroom of my apartment on Baymeadows Road into the office.
While I would be at work at IBM there would be someone at the apartment answering the phone. We put the toll-free line into that spare bedroom. They would take orders for the business that we would then pack up in the evening after IBM and mail those out to customers the next day. For about six months, I did IBM by day and Titan by evening and by night.
Iíve always found it amusing to relay the fact weíve answered the phones 24 hours since day one. When that phone rang in that spare bedroom at 3 a.m., Iíd wake up, answer the phone, take the order and go back to bed.
It came to be that IBM wanted to send me off to Texas for training for six weeks and I had to make a decision. I really didnít think I could leave Titan behind for six weeks and have it still be functioning when I got back.
I relied on the fact that I was young, fresh out of school with my MBA. I felt if things didnít work out I would be able to land on my feet and be able to find a job someplace else.
We were just living week to week. We earned enough money from ad one to buy ad two, ad two to buy ad three. There was never any other real investment capital in the business, but I had a background with my MBA and it was a good time to take a risk, so much to the chagrin of my parents, I quit IBM to focus it this little bodybuilding company. Hindsightís 20/20 but it was a good decision.
How did Venus grow then?
We began by running display ads in national magazines. We had ads in Cosmopolitan and Glamour. From those display ads came a catalog. The first catalog was actually a two-page brochure where we sold maybe eight suits. Then the second catalog was four pages and then 12 pages.
Venus grew over the years and we began to rent mailing lists and mail out an increasing number of catalogs to customers and potential customers throughout the U.S. and Canada. Venus grew quite rapidly.
Our big stumbling block was the fact that we were still seasonal. Venus would go gangbusters from January, when women would start thinking about vacation and spring break and start thinking about swimwear, and we would come almost to a dead halt once we got past July and August and the fall/winter season arrived.
So we did two things concurrently. We began looking for a company that we could acquire that might have a heavy fall/winter business so that we could sort of plug in the hole, and we also decided to try our hand at apparel and began to sell other items besides just swimwear. We began to sell jeans and dresses.
In 1999 we came across a company known as WinterSilks that had just recently declared bankruptcy. They had been through their own leveraged buyout (and) had not been able to service the debt that was put on the company after the buyout.
They were forced into bankruptcy and in less than about 30 days, we were able to acquire that company out of bankruptcy. We kept in place in Wisconsin the team of (President) Chris Vig and his staff that were central to the main functions of WinterSilks ó the design of catalogs, the selection of the products, the ordering of the products from Asia.
The overlap worked perfectly and made us a lot more profitable.
In addition, the apparel began to gain a foothold and began to sell quite well. Those things combined allowed the business to grow very rapidly and in 2006, it seemed like a good time to consider a sale, and actually we were approached by a number of people wanting to buy the business.
The company was sold to Golden Gate Capital, who back then was in the process of accumulating a lot of catalog companies. The idea was with a lot of catalog companies together, the synergies of being able to buy paper together, to complete printing contracts as a group together, would make all of us more profitable.
That might have worked fine if not for the economy going into the tank soon after the sale.
How big was the operation in Jacksonville at the time of the sale?
When we sold the business, company sales were right at $100 million and the profits were in the 10 percent range, so we were doing quite well.
WinterSilks accounted for about a third of our sales and Venus about two-thirds of our sales.
We built a building in EastPark in 1994. We added on to that same building another 60,000 square feet when we acquired WinterSilks so that we could house the inventory for both companies in one building. EastPark has been a great home for us.
We sold concurrently Venus, the manufacturing plants, as well as WinterSilks, all in one bundle to Golden Gate and WinterSilks was then subsequently sold to another party, leaving in Jacksonville just Venus.
By that time the (Venus) apparel had basically equaled swimwear in sales, so we had solved our own seasonality issue without the need for Winter Silks.
How many employees did you have in Jacksonville and how many are here now?
We had about 300 in 2006, and by coincidence, there are about 300 now. Weíve grown back and actually this year Venus will be larger than it was when we sold in 2006.
But a lot of orders now come over the Internet whereas it was a smaller percentage of orders coming in over the Internet just before the sale. We donít have a need for as many phone operators as we had in pre-Internet days.
What happens in Jacksonville? Where are your manufacturing plants?
In Jacksonville we handle all of the marketing. Everything related to the Venus operation is based in Jacksonville, except for an office in Boca, which houses our executive vice president, a great guy that we hired from Victoriaís Secret, (former merchandising executive) Brian Ruskin, and thatís where we have our headquarters for the fashion division.
Every order for the business flows into Jacksonville and every order for the business is shipped out of the Jacksonville warehouse and facility. We receive all the finished goods in Jacksonville, do all the order-taking, do all the fulfillment, all the marketing, all of the creative is done out of there.
We also have in Jacksonville a swimwear manufacturing plant that is part of the same facility. That has about 50 employees. They manufacture swimwear for us at that plant. There is also a facility in upper-state New York for manufacturing swimwear.
We source domestically about two-thirds of the swimwear that we sell. The other one-third we import from a number of overseas vendors, and then on the apparel side the vast majority of the apparel is imported, principally from Asia.
Who designs the swimwear and the clothes?
On the swimwear side, the executive vice president is Jodi Randolph. Jodi was one of the original founders of Venus back in 1982. She and I went to Stetson University together down in DeLand. Jodi leads a design team that handles all things swimwear-related.
On the fashion side itís not exactly the same thing as swimwear. With swimwear theyíre really, truly designing from scratch, making up fabrics, making up patterns, all from A to Z.
Jodi and her team actually make their own patterns; they sew their own sample suits that go to photo shoots before the suits go into production.
On the fashion side, that team creates a tech pack that is often sent to more than one overseas supplier to create the appropriate prototypes that are then sent back to Florida for review.
Then Brian and his team are in charge of deciding what to carry from hundreds and hundreds of things that they actually design.
Of all things designed in swimwear or fashion, only a portion of it actually makes it into the marketplace.
You talked a lot at the chamber event about communications with employees. Will you share that?
One of the keys to our success at Venus, up until the time that I sold and even today, is the employees. This was not a one-man show. I could not have done any of this, anything close to all this by myself. So I relied on my team, the managers, the senior people, all the way down to the people taking or packing the orders. Those are the people that actual were in touch with the customers. The people that were on the phones, the people that would create the package that would arrive at the customerís door.
We did a couple of things that might have been a little unique for us prior to the time that I sold the business. We would have three or four or five meetings over the course of three days and all of the employees were invited to attend one or any of those meetings. We would share with the employees the complete financial situation of the company, what had happened in the previous six months, the plans for the next six months and we would answer any question the employees would have.
They might have great suggestions or questions about why you donít carry a size 2, or a size 0, or a size 14, or a size 16. Or they might have a question about why the TV in the break room had a fuzzy picture. Regardless of the question, I was there for the employees and was there to answer their questions. Myself and my senior staff always maintained an open-door policy. We would always see any employee at any time for any reason.
We really tried our best even as we grew to keep it like a family more so than maybe a corporate enterprise. We grew up together. This began as a very small business with just a handful of employees and it was fun to watch it grow.
Elisa Lowry, who is currently the COO of the operation, was the first person we hired to answer the phones. Many people that remain at Venus today and that were there up through the time when the business was sold grew up with the business and were instrumental in the success of the business.
What prompted the sale?
Thatís a really good question. And I guess itís a hard one to answer because I didnít see the writing on the wall for where the economy was going, so the sale certainly wasnít prompted by foreseeing those problems.
It was prompted principally because I had spent 26 years of my life pretty much doing nothing but working. Certainly I had some fun the last 10 to 15 years, but it had grown to the point where it was more work than it was fun. I still enjoyed it, still loved it, still loved Venus and its employees, but as we got to be so large it by necessity became more corporate.
I donít think many entrepreneurs enjoy that stage as much as they enjoy the smaller stage when you can really run around and have your hand in everything. You end up being more just a manager as opposed to just a doer.
I find doing to be more fulfilling than managing, even though managing is what is necessary at a certain stage.
We had a number of people calling us, wanting to buy the business, so thatís what made us seriously consider maybe now is the time to sell. We had had three years of back-to-back record sales and profits.
Whether itís a stock that you own in Apple, or a stock that you own in Venus, you want to try and sell at a peak, on an uptrend, as opposed to the reverse of that.
We, the owners, had given what we call performance shares to a lot of the senior employees, so there were actually 22 people I believe at the time of the sale who had some stake in the sale. We ended up calling a lunch meeting, bringing everybody together, explaining to them the entire situation, about where we were, about what the offer on the table was, about what it looked like, about what that meant to each one.
Then we had a ballot box where people could all vote. Even though I owned over 50 percent and could have forced the sale despite the vote, I really felt that these people were my family and so I wanted the family to decide what we were going to do with our business.
The vote was 21 in favor of the sale, and one person who just couldnít decide and ended up abstaining from voting, but zero no votes. That made me feel really good. We all know that once we sell and give up control, then you give up control and someone else owns the business and no matter what you plan, the ultimate decisions about the business will be by the other people.
We made the decision to sell and in hindsight the timing couldnít have been more ideal. When the economy had a downturn, Iím sure that if we had not sold, Venus would have survived because we ran the company as close to being a debt-free organization as possible.
I think we would have survived it, but I think it would have been very, very, very difficult to do so. In hindsight, it was the perfect time to sell the business.
What happened next?
The economy ran into its difficulties. We had a typical LBO (leveraged buyout) situation and we had a large amount of debt to service, where we had a large payment due each and every month, and Venus fell behind on the payments.
In 2008, the bank called the loan and then basically put the company into what might have been bankruptcy, but it went through a receivership process and then the bank employed me to find a new buyer.
Through the help of the current president of the company, a great, brilliant, smart man named Jim Brewster, who had previous dealings with bonprix, I was able to work with him, through him and with the people at bonprix.
Venus used to send products over to bonprix that they would then sell in their own markets throughout Europe and pay us a royalty on our styles that sold within their markets.
With that relationship, they had some knowledge of us; the people of bonprix knew of Jim. Jim agreed to come on board as president and CEO because I was very clear that I didnít want to. I had sold for a reason, to be able to spend some time traveling and enjoying life, and what I didnít want to do was, at that point, become president, CEO yet again and be tied down for yet another X number of years.
Jim agreed to be president and CEO and bonprix bought the assets of the business from the bank and they have been off to the races ever since.
The economy turned right after they purchased and Iím thrilled to be on the board of directors still and thrilled to see them doing so well.
What was that like for you, having grown the company, having made it successful and then selling it and seeing what happened? What did you go through?
Selling it was exciting. I donít have children, but Iím going to guess itís like sending your kids off to college and then watching them leave home, so selling it was a little bit difficult in that regard.
Venus was my child, my family, my baby, if you will, and I will say without question that when we ran into difficult times and ran into the situation with the bank that that, without any doubt, was the most stressful time of my life.
It wasnít pleasant, it wasnít enjoyable, it wasnít fun. The only good thing about it was that it had a happy ending. But it took a lot of work to get here and I definitely donít want to go through something like that again. Obviously we didnít anticipate that.
But we went through that along with a lot of other people and the good news though, for the employees, for the company and for me watching my child grow up, is that theyíre off and just doing fantastic now.
What was your association with the company right after the sale?
After we sold in November 2006, I had a one-year contract. I had planned to retire at the end of the one year but by the time we got to the end of 2007, it was obvious the company was in difficulty. I decided to stay on to try to help the company through the difficult times, and I stayed on up until the time when the bank called the loan.
Thereís a whole bunch of issues that went on with that, but I resigned concurrent with that happening and then stayed gone until the bank employed me to find a buyer. I wasnít at that point operating the business. I was really just asked to try and find a buyer and so my job then was focused on purely getting the right person to the table and that ended up being bonprix.
Once bonprix took over, I assumed a role as a member of the board of directors. Itís a board of directors role as opposed to a functioning 10-hour-a-day role like it used to be, so it works out perfectly.
How are you spending your time?
Iím spending a lot of my time these days traveling. I was told by a number of people before I sold and soon thereafter that youíre going to get bored and youíre going to be doing something else. Iím thrilled to say that they were mistaken and I am able to fill every single day and have zero desire to go back and try to make magic happen a second time.
What advice do you have for people who might want to start a business? Or for people who are in business right now?
If you want to start a business, it depends on a number of things. Obviously youíve got to have an idea thatís going to work. If youíre going to start a business, for most people, itís easier if you do it sooner versus later.
I believe had I been in a situation where I was married and had children, I would not have been able to take the risk of quitting IBM, a stable job with a pension, with health insurance and all those things, to go strike out on my own.
I speak a lot to the students at Stetson University. I tell them that itís important to do these types of things earlier in life.
Itís all-consuming when you start a business from scratch. Even if youíre sleeping, youíre dreaming about it. Itís a 24-hour-a-day job and it is just absolutely all-consuming.
What was the biggest lesson you learned?
The one that I learned ó and I donít know that I didnít know but I had to experience it ó is just how much as a business grows, it relies on the people. I am forever thankful for the employees that I had working for me, for their dedication to both myself and to the company.
It was a relief to be able to hand decisions to other people knowing that they would treat it and care for it just as much as I would had the decision been in my hands.
What else would you like to share?
I was reluctant moving to Jacksonville. I had never been here before. This was not the place that I wanted to be. When I knew IBM was going to give me a job offer, I asked them to locate me in Boca or Atlanta. But the job they offered me was in Jacksonville. And I just want to say that I am now thrilled to be here and Jacksonville has grown up around me from the time I came.
Jacksonville is a very different city today than it was in 1982. I am very thrilled with the type of city Jacksonville is becoming and I am happy to call this my home.