Inspired by a Good Cause, This Millionaire Came Out of Retirement
“The last thing I need to do is make more money. I have more than I’ll ever need,” says Dal LaMagna, a lifetime entrepreneur who sold his beauty tools business Tweezerman back in 2004 for a reported $57 million and retired as the company’s CEO. “But I was tempted back to work because I felt I still had something to do and prove.”
Not long after he retired from Tweezerman, LaMagna invested in IceStone, LLC, a company based in Brooklyn, New York. The company made countertops out of recycled glass, cement, water and other materials. The company was small, but it was big on its social impact, diverting millions of tons of glass from landfills. IceStone was one of the original B corporations, and it had a roster of socially conscious investors like Ben Cohen of Ben & Jerry’s and Gary Hirschfield of Stony Farm Yoghurt.
Initially IceStone sales were dramatic, but production issues had to be resolved; and by the time they were, the company ran right into the economic meltdown of 2008. By 2011 IceStone was on the verge of shuttering. That’s when LaMagna, at the age of 66, decided to step in. “I had written a book, Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right. It was designed as a blueprint for succeeding at business by practicing responsible capitalism. I thought IceStone was a chance to prove the premise of my book right.” It started with him empowering IceStone’s employees.
LaMagna approached his 80 co-investors with his plan to pay a living wage, hand over 10 percent of the company to the employees, embed them in every level of decision making and teach them how to run the business. Fifty-eight of them put in an additional $1.2 million, and all of them agreed to give the employees ownership and a living wage ($15 per hour). LaMagna agreed that he’d take the helm as president, CEO and CFO to shepherd IceStone back to financial health.
“Some people thought I was crazy and asked if, at my age, I really wanted to come out of retirement,” he says. “I thought if I could replicate at IceStone what I had done at Tweezerman, I would prove the point that it was not a one-time fluke. Empowering employees was a win-win for both the employees and company owners. It would be one way to address wealth inequality in America. Employees get a piece of the ownership of the companies where they work and receive all the benefits. The owners would realize no less—and probably more—profits with significantly less operational responsibility and aggravation for the active owner(s).”
This idea of employee empowerment wasn’t new to LaMagna. At Tweezerman he gave his employees a 20 percent stake in the company; so when he sold it, they not only kept their jobs but also received 20 percent of the capital gains from the sale.
At IceStone LaMagna put employees in decision-making rolls at every level of the company. “IceStone was an LLC with two managing partners—myself and another one of the Investors. The employees elected one of themselves to be the third managing partner. This is a pretty powerful position for the employees, who could decide [when there was] a difference between me and the other partner.”
LaMagna describes how he ran the company: “I was more professorial then dictatorial.”
“Most of the employees at IceStone didn’t realize that the company was losing money. That was because the founders kept raising money from the investors to operate,” said LaMagna. “The employees took responsibility for finding solutions to the problems. Overhead was too high, and they came up with numerous cost-saving ideas. They resolved production and quality issues for the product.
“We were at the door of profitability when Hurricane Sandy slammed it shut,” said LaMagna. IceStone found itself literally under water (five feet), and LaMagna thought it was game over. “I showed up, and our warehouse was flooded, including all of our equipment. We had about $6 million in damages and no flood insurance,” laments LaMagna. “However, the employees were pushing the water out of the factory. They had fabricated squeegees at the ends of booms. They told me that they could fix the factory. They would dismantle everything, rinse off the salt water and replace destroyed parts. I said, ‘Okay, you do that; I’ll try to get us an SBA loan.’
“That was a really important moment for me,” recalls LaMagna. “Point proven. Were it not for our employee partners taking action, we would have shut down. There was no way the investors would put up the $6 million it would have taken to rebuild the factory. We got a $1.8 million SBA loan and then took one year to rebuild everything. All hands were on deck to restore production. No one was laid off.”
Since Hurricane Sandy, IceStone has been trying to get back on its feet. Financially the company is still in the red, and LaMagna says he recently put himself and the employees to another test. He stepped back even further. For six months he put the company in their hands, and he challenged them to come up with new solutions to increase income. He says once again they proved his theory that empowering employees can pay off. “I was really afraid they weren’t going to make some hard choices, but they did,” he says. “They made hard decisions like adding other types of countertops to our product line, subletting all the space we could do without and focusing on our local market.”
LaMagna says thanks to IceStone’s employees and management, he believes the company is now on its way to financial stability. He says he can see a day in the near future when he could retire—again—with a sense of real accomplishment. Then, he said, he’ll write another book.