Dal LaMagna: The rise of the Tweezerman
Nobody ever accused Dal LaMagna of thinking small. As a child he wanted to be both Pope — and a millionaire. After numerous failed ventures, LaMagna (rhymes with “lasagna”) got a splinter of an idea that he built into Tweezerman, a maker of beauty tools with $50 million in annual revenues. (It’s now owned by Zwilling J.A. Henckels.) LaMagna, 67, remains engaged in policy (he ran unsuccessfully for Congress) and commerce: He’s now the CEO of IceStone, which makes countertops out of recycled glass and cement. His story:
I grew up in Queens, N.Y., in a family of five kids and went to Catholic schools. My father was a fireman and longshoreman, working two or three jobs to support us. Every year the elementary school would raffle off a donated Cadillac to raise funds. The prize for most chances sold was a Schwinn Racer. My parents couldn’t afford to buy me a bicycle, so in third grade, I sold 48 books [of raffle tickets] to get the bike, and won it. That was the start of my career.
I didn’t ever want to be a guy who’d go to work and get paid by the hour. I wanted to make a difference in the world, and I thought being a millionaire would allow me to do that. So I applied to the business schools at Harvard, Columbia, and Stanford universities and got accepted by Harvard and Columbia. My background was more in the direction of the Willy Loman school of business than an Ivy League citadel, so going to Harvard really expanded my view of things.
During my undergrad and MBA years I started more than a dozen businesses, each of which imploded. I converted drive-in movie theaters to drive-in discotheques, but it rained 11 times in a row, and the business failed. I opened a waterbed store in Harvard Square, but the landlady evicted us because she was afraid the beds would leak. When I graduated from Harvard in 1971, I wanted to be a movie producer to influence opinions in society. So I spent 10 years trying to put together a film project and ended up in Venice Beach, Calif.
It was 1979, and I was running an ice cream parlor there. One day I was sunbathing au naturel with two women who were sisters on the rooftop of their apartment building next door when one sister’s boyfriend showed up. Next thing I know, he was with her, and I ended up with the other sister on the redwood deck. When I went home, I had splinters all over my butt. Redwood doesn’t dissolve; it infects. So I went to a drugstore and asked for needle-pointed tweezers, but couldn’t find any. That gave me the idea to sell splinter tweezers.
At that point I had bounced from one business to another, and by age 32, I was $150,000 in debt and had failed at everything I’d tried. So I moved back to New York and got a minimum-wage job working for an electronics company. I saw people on the assembly line picking up diodes with needlepoint tweezers. There was my product idea! So I decided to market electronic industrial tweezers as splinter tweezers to hardware stores and lumberyards.
I started with $500, and my father, who had retired as a longshoreman, decided to invest in the idea. Over the next few years my dad lent me $180,000, and I paid him 12% interest on it. My dad also played the lottery, hoping to make $1 million one day. At some point I converted half of the $180,000 he’d lent me to stock. When I sold the company, his stock was worth $1 million, which made me really happy.
Back then I found about 20 manufacturers of tweezers in Europe. I decided on Dumont in Switzerland, which made tweezers for doctors, and persuaded them to sell to me.
Packaging was expensive, so I went to the guys who made the package molds and got 100 blister packs for free, hand-glued the blisters onto cards, and went to the lumberyards. The tweezers sold for $10, and people bought them. But it wasn’t something I could make a living with. My brother’s ex-girlfriend worked in a beauty salon and said, “If you can get me tweezers that are not pointed and not so sharp, I could sell them to my customers.”
So I found some diamond tweezers, put them in standard-size tubes, and on Saturdays went around to beauty salons on Long Island. I’d sell $150 worth a day, and at that point I had a successful business. There was no overhead. The tweezers cost $4, and they sold for $10, so there was always a profit.
The first year, the company made $80,000. The second year, we made $180,000; the third year, $350,000. After that the annual revenue steadily grew 20% a year.
In 1982, I was selling my Precision Eyebrow Tweezers in tubes to cosmetologists and thought I should put my name on them and become a grooming company. So I sold Dal LaMagna Grooming tweezers for a while, until I walked into a beauty salon and someone yelled, “Tweezerman is here!” I immediately changed the name to Tweezerman and started to hire sales representatives. By 1984, Tweezerman was grossing nearly $1 million annually, and would surpass that million-dollar mark the next year. But we still had problems with cash flow.
Back then credit card companies would send us credit cards, and I took every credit card I got. At the peak I had 45 cards. I’d use the cash advance to meet payroll and pay the bills. I ended up with $180,000 in credit card debt, and the interest rate was 12% to 16%. Around 1986, I went to Chase Manhattan Bank, and they lent me $180,000 to pay off the credit cards. Why did they give me that loan? There were times I’d make $80,000 to $90,000 on a weekend from a trade show, and I always deposited it in the bank. I never kept the cash and never lied about anything. So the banker said, “You’re competent, and you’re honest. Most people would have pocketed that cash.”
I sold similar tweezers, packaged differently, to different distribution channels. There was Tweezerman Professional for Sally Beauty Supply (SBH), Spa Tweezerman for Bed, Bath & Beyond (BBBY) and the department stores, and Tweezerman Limited for the chain drugstores, like Walgreens (WAG) and CVS (CVS).
The challenge for me was to be patient. I had to discipline myself to sell just tweezers before I expanded to other beauty tools. As the years passed, we made a cuticle nipper, eyelash comb, haircutting scissors — any grooming tool you can think of. We ended up with about 200 SKUs. No one could deliver the quality at the prices I was delivering it.
In 2004 we were doing $32 million in sales. I was against the war in Iraq, funding antiwar movies, and was a political activist. I had no interest in being Tweezerman for the rest of my life. I started approaching people who might be interested in buying us, with four conditions: They couldn’t lay anyone off; they couldn’t move the company, which would cause people to lose their jobs; they had to continue our practice of responsible capitalism, which meant things like paying people a living wage; and the purchase price had to be at least $40 million.
Zwilling J.A. Henckels agreed and offered $57 million. So I sold the company to them, and stayed on Tweezerman’s board until 2013. Now I’m no longer involved in the company.
When I sold Tweezerman, I started to invest in businesses that would have an impact in the world. I gave $50,000 to IceStone, a company that makes countertops out of recycled glass and cement, which are both green and beautiful. Over the last few years I put more money in, and I am now IceStone’s president, CEO, and COO. I’ve gone from being a guy who wanted to turn the company around and sell it to being the guy who wants to turn IceStone into a green building-products company and build it, like I did with Tweezerman.
It took a lot of failures to get to success. I think anyone can be a millionaire if you set your mind to it. It takes focus, perseverance, and collaboration. You get more from collaborating with people than competing with them. If you’re only in business to make money, you’ll lead a very hollow life.
Don’t fear failure. Fear success — because when you succeed, you’re going to be living your dream 24 hours a day. So make sure it’s what you really want.
Empower employees. I created an employee stock-ownership plan. After Hurricane Sandy flooded every piece of equipment at IceStone, employees took it upon themselves to repair everything instead of replacing it. We saved $4 million.
Invest in what matters to employees. I told folks, “Anything you can find that the company doesn’t need, I’ll put that savings toward health care.” People gave up their company-owned cellphones, and now people who make more pay proportionately more for health care, which ranges from $40 a month for the factory workers to $140 a month for managers, and everyone has coverage.
This story is from the January 13, 2014 issue of Fortune.