Tom Panaggio has enjoyed an entrepreneurial career spanning thirty years. In this time, he has co-founded two immensely successful direct marketing companies as well as authoring the highly popular The Risk Advantage.
Tom’s first business, Direct Mail Express, now employs over 400 people, whilst his second business, Response Mail Express, was sold to equity fund Huron Capital Partners. As a result of his consistent successes Tom is well placed to advise on starting a business, as he does to stunning effect in this interview with The Real-Life Startup Series.
Tell us a little bit about yourself and your background.
The original family business is basketball. I was born and raised in Rochester, NY and my father was a basketball coach. I had 3 brothers and we lived for the game. And looking back now it’s amazing how much sports prepared me for business. There are so many parallels when I think about strategy, preparation, quality of personnel, being able to adapt and make changes as the situations warrants. So basketball really was a fundamental foundation for my success. It also fueled a competitive desire to win. And in business the first key to success is having an “I want to win” attitude. We don’t just want to participate, we must want to win.
I graduated with a marketing degree from St Bonaventure University and became a commodities broker a month afterward. It was my first exposure to understanding that there were people in this world with a lot of money. In college you learn to survive on $7.00 a week and now I was asking people to send me thousands of dollars, which they would, like it was no big deal.Tom Panaggio
However living in the cold and snow of upstate New York all my life became unbearable. I just hated it. My brother Mike had moved to Florida and was involved in the Timeshare Resort industry. He asked me if I wanted to do something in Daytona Beach and I jumped at the chance. So in February 1983 I packed up and headed to the warmth and sunshine of Florida.
Why did you start your own business?
One of the techniques that Timeshare Resorts used to get prospects into their resort was giving away gifts. Take a tour of the Timeshare and listen to a 90 minute sales presentation and you got a set of cookware or a video game or some other gift. At the time we were selling these gifts to resorts and we figured if we could get more people into the resorts taking tours we would sell more gifts. So we started to provide the Timeshare Resorts with turnkey direct mail programs that increased the number of prospects and therefore needed more gifts. Brilliant strategy but honestly something that seemed pretty obvious to us.
How long did you consider starting a business before doing so?
Not very long. It took us a few months to get organized but we hit the ground running fairly quickly. Spending too much time on planning is a sign you aren’t willing to embrace the risk of entrepreneurship. We have always had a Ready, Fire, Aim philosophy. The hardest part is always the Firing part and if you spend too much time on the planning you never get to the firing.
So you jumped straight in?
Jumped right in. Getting the aim right is the gradual process part. As the market changes you have to re-aim, change, pivot, re-adjust. In fact this is what we fundamentally did in the very beginning of our business, using incentives with turnkey direct mail programs to generate leads, is what we have done for over 30 years. The markets and some of the methodologies have changed due to economic and technological reasons, but the core of what we do remains the same.
What measures did you enact to minimise risk?
Ironically we took the opposite approach. We embraced risk. See, risk is opportunity’s soul mate. Where there is risk there is always opportunity. Greatness isn’t achieved by avoiding risk. Success comes when you recognize a worthy risk and then have the courage to embrace it. Remember what I said about having the desire to win. In sports you cannot win by avoiding risk and the same holds true for entrepreneurs. And do not confuse risk with stupidity.
Is there any software you utilise to make running a business easier?
We had a number of software systems that helped run our business, from graphic design solutions to a integrated business management system that helped us manage workflow and track jobs.
What resources did you utilise to help you start your business?
Not to sound cocky but I really can’t think of any. I think leaning on my basketball and athletic training was more instrumental than anything else. Sadly I was not a great reader of business books or taking educational courses so we just managed by instinct. I didn’t even reference my college business courses either. And honestly I don’t think this is unusual for many entrepreneurs, we have a dream we want fulfilled and we put our heads down and just go.
How has running your own business changed your life?
Besides having menial jobs as a teenager I have only worked for someone else a total of 5 years, my first 2 years out of college as a commodities broker and 3 years when we sold one of our direct mail businesses and I stayed on as CEO. And they were the worst 5 years of my life. Other than that I worked for no one. I really learned about life, dealing with people, success, failure, happiness, and the importance of embracing risk to succeed. I just can’t imagine what I would be like had I taken the easy way out and went to work for some big corporation.
When starting your business what were some of the initial problems you encountered & how did you overcome these?
I think, for us, the biggest problem we had was finding the right people. It took us a few years to realize that if you hire the right people, not necessarily the most qualified but those who fit the company’s personality and who understood our mission, that success can come much quicker.
Having the right team chemistry, working together, knowing one’s role, is far more powerful than any other component in an organization.
What are the most crucial lessons you have learned along the way?
Long-term success means having the courage to embrace risk each and every day. Since opportunity is connected to risk you can’t separate them. If you want opportunity in life you must accept the risk.
Second lesson is don’t stop marketing your business, ever. Marketing creates opportunities to sell and is a long-term investment that will pay dividends. Too often business leaders see marketing as an expense and want to cut it to the bone. That is crazy.
Be known for something. Have an expertise, a specialty, which customers instantly recognize as the reason they want to do business with you. General practitioners make the least impact in a market place. It’s the specialists who prosper because their market is well defined.
Entrepreneurs cannot be so enamored with trying to be all things to all people.
Is there anything you would have done differently?
Probably. Wouldn’t we all if we had the chance to rewind the tape and do it over. However it is what it is. I guess if pressed for an answer I would say that we strayed from our core on a number of occasions and that wasted time and resources. You have to be happy with what you have done because there really is no users guide to life or business.
What’s the best advice you have received so far?
Hire people who are smarter than you. At first I thought this was a condescending remark but in reality it is the golden rule of management. As a business leader you need to surround yourself with the very best and if you are it then your team will always be beholden to you. That only creates a stagnant company afraid to innovate, change or keep pursuing excellence. Plus what happens to a company if the leader gets hit by a bus? If the leader is the driving force and he is gone the company dies and everything you worked for is of no value.
In your opinion, what’s been your greatest success story so far? How did it come about?
Our greatest success story was being the dominant market leader in one of our business units. We absolutely dominated the financial services lead generation market space and have for over 20 years. It came about because we found a niche, created a marketing program that worked for our clients, scaled it, and marketed it so aggressively that competitors could never catch us. Because we had the courage to embrace the risk of marketing and did it so consistently anyone who wanted to challenge us would have to have spent 4 times what we did to catch us. And, of course, no one was willing to do that even after 20 years.
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