August 8, 2015 marks the 30th anniversary of Dorian International’s acquisition of Drake America Corporation. It was a transformational moment for the company and its founder, my father, Ed Dorian Sr. The acquisition has its origins in my dad’s remarkable personal narrative, a tale of success, failure, and redemption.
The Early Years
Born Edward Zorab Katchadourian, my father was the son of Armenian immigrants who fled Turkey during the early 1920s to escape ethnic persecution. They came to America and settled in northern New Jersey. Born in 1924, young Edward was the second of five children. His father, Daniel Katchadourian, was well educated but spoke only broken English and lacked marketable skills. After a few business failures, Daniel took up work as a commercial painter, but with the onset of the Great Depression, he worked only intermittently and struggled to feed his family. His wife, Satenig, though illiterate, was strong and resourceful, and encouraged her children to stay in school, work hard and dream big. My father excelled academically and, from an early age, worked to help support his family. His experience growing up poor left him determined to make money and build a successful career. Yet with few family resources, it was hard for him to envision a path out of poverty.
He was 17 when the Japanese attacked Pearl Harbor in December, 1941. He enlisted in the Army a year later and eventually saw combat duty with the 97th Infantry Division in Europe, whose advance across Germany hastened Hitler’s retreat during the final months of the World War II. He later was redeployed with his division to Japan, arriving just weeks after the Japanese surrender. After a year of peace-time duty in Japan, he returned home to New Jersey. He credits his time in the military with opening his eyes to the enormous world beyond America’s shores.
His time in the military also gave him an opportunity to attend college under the G.I. Bill, providing him with a college education he otherwise would never have been able to afford. He matriculated at New Jersey’s Seton Hall University, where he graduated Magna Cum Laude with a bachelor’s degree in accounting. With so many former soldiers now looking for jobs, it was a difficult time to look for work. There also weren’t a lot of doors opening then for someone named Katchadourian, prompting him to shorten his name to Dorian. He eventually landed a job as an entry-level payroll clerk at Aramco, the Arabian American Oil Company. Soon after, he married Ethel Chamourian, who would become his lifelong partner. During 18 years with Aramco, he worked his way up the corporate ladder, eventually becoming assistant treasurer. He traveled abroad extensively, living for periods of time in Lebanon, the Netherlands and Saudi Arabia. But Aramco was a big corporate machine, led by engineers. Sensing he had reached a ceiling there, he decided it was time to move on.
Drake America & Export Credit Corporation
While still working for Aramco, he enrolled in an MBA program at New York University’s Stern School of Business, where he attended night classes, and put his resume on the street. His big break came in 1967, when he was hired as president of Drake America Corporation, a British-owned export management company based in New York City. The British owners, a consortium of British merchant banks, liked his blend of financial training and international experience.
He assumed the helm of a company that was modestly successful but complacent. Few of the firm’s executives traveled abroad to solicit business, and the senior managers were expending little effort looking for new lines to represent. He put sales managers on the road and embarked on an aggressive campaign to find new product lines. The business grew quickly.
The British owners, meanwhile, asked him to launch a new export finance venture. They called the new company Export Credit Corporation, or E.C.C. The company extended credit to foreign buyers backed by credit insurance approved by the Export-Import Bank of the United States and the then-affiliated Foreign Credit Insurance Association. The concept proved to be a winning formula, and E.C.C. grew quickly, too.
By 1974, the two firms combined occupied two full floors of a midtown Manhattan office building, where they employed more than 300 people. My father traveled to London for monthly board meetings and enjoyed a good standing with the British board. But as an American, he was an outsider, and when he pushed too stridently for a chance to purchase equity in the New York operation, the board let him go.
Now 50, unemployed with two children in college, my dad opted to start his own New York-based export finance business. He named the company Creditcorp International. To build the equity needed to qualify for bank financing, he invested his life savings and recruited one of his brothers and several business associates to invest in the firm. The experience, and the credibility he had earned as president of Drake America and Export Credit Corporation, helped the firm to secure the necessary bank lines and suppliers. He then hired a staff, put people on the road and began developing the business.
Within a few years, the company was financing exports to a wide variety of markets in Europe, Asia and the Middle East. One of the firm’s fastest growing markets was Iran. Under the leadership of Shah Reza Pahlevi, a notoriously pro-Western ruler, Iran was investing heavily in infrastructure and industry, and the market had a seemingly insatiable appetite for US-manufactured products. Iran quickly became Creditcorp’s largest single market. Fresh out of college, I worked for the company in 1977 and 1978, twice traveling on business to Iran, before leaving to attend graduate school. My time at Creditcorp turned out to be a great apprenticeship for my career to follow in international trade.
In a sudden and unexpected turn of events, Shah Reza Pahlevi’s regime was overthrown in late 1979 by Islamic revolutionaries, and the Iranian market collapsed. Ed Sr. was in Iran with an associate in October 1979, trying to collect receivables, just weeks before protestors stormed the U.S. Embassy in Tehran, taking 52 U.S. diplomats and other citizens hostage. All of the loans Creditcorp extended to Iranian importers were backed by credit insurance, but the deductible losses alone were enough to decimate Creditcorp’s equity base. In need of new financing, my dad sold the company to a large Spanish bank. The bank offered him a contract to stay on to run the company, but determined to remain his own man, he opted out.
The Start of Something New
It was 1980. He was 57 now, with no staff and few resources, but he was determined to give entrepreneurship another go. He decided to start an export management company based on the model of his old company, Drake America. He called the new firm Dorian International. He focused initially on selling foodservice equipment in the Middle East. I joined the company part-time in May, 1982, full-time nine months later. By then my dad had recruited two salesmen, an accountant, and a couple of sales administrators. I signed on as a field sales manager, too. Over the next couple of years, my dad, the other two sales managers and I traveled abroad extensively in search of new business. The early 80’s were the tail-end of an infrastructure boom in the Middle East, and we had some notable early success. But by 1985, a glut in the world oil market began to slow our sales to the Middle East. Concerned about the future, my father started looking around for other export companies to buy.
It was at about that time that he received a call from a representative of the Midland Bank of England, then sole owners of Drake America. The representative said the bank was on a campaign to divest all its non-banking subsidiaries, and it was his job to sell Drake. He wondered whether we would be interested. Ed Sr. knew Drake was doing the same work we were doing—representing US manufacturers internationally–albeit in different product categories: hardware, automotive and industrial. He also knew that Drake operated globally, and that a merger would enable us to immediately expand our global footprint. He gave the bank rep an emphatic “yes. ” The rep flew to New York to negotiate the terms of the sale. A week later, we acquired Drake America.
A Minnow Swallows a Whale
The acquisition was extraordinary for two reasons: first, because Drake did five times more sales and employed five times as many people as Dorian International (As one observer commented, it was like a minnow swallowing a whale); and second, my father and I had just acquired the company that 11 year earlier had fired him.
If we paused to celebrate, the celebration was short-lived, as the acquisition was fraught with challenges and risk. Drake had been losing money and hemorrhaging cash for five years. Without the bank’s resources to absorb continued losses, we had to work quickly. We eliminated a number of staff positions, consolidated several departments, closed three costly foreign sales offices, terminated a generous employee pension plan, and consolidated Drake and Dorian offices in White Plains, a New York City suburb.
The changes produced much needed cost-savings, but they produced some negative consequences too. A number of veteran staff members left, taking manufacturer client relationships with them. Other manufacturers, distressed by the changes, terminated their agreements with us. The move out of New York City caused a number of other long-time staff members to resign. Within a year, more than half of Drake’s staff had turned over and more than half its revenues had disappeared.
Our timing, however, proved fortuitous. In September 1985, the world’s leading economic powers collaborated to lower the value of the U.S. dollar, making US exports much more competitively priced. With Drake re-organized and back to break-even by early 1987, we were poised to grow.
And grow we did. Fueled by economic expansion in Asia and Latin America, we grew rapidly over the next ten years. Much of the growth came from new line acquisition, which was the part of the business my dad loved most. He was committed to the notion that new lines were the lifeblood of our business, and he spent most of his energy working at it. He had little interest or patience for the operational side of the business. He was externally focused, with a bias toward action.
Ready, Fire, Aim
When preparing to attend trade shows, we often talked about the new lines we would look to acquire and how we would prioritize our visits to these companies at the show. We typically agreed to set time aside on day two or three of the show to make these calls. But when we arrived at the show, he invariably wandered off the first hour of the show to pitch a line we had never discussed, and before long, he would have our entire sales force—otherwise deployed at the booths of our clients—redeployed to help him pitch our services to the new client prospect whose booth he had discovered just hours before.
This type of selling wasn’t always successful—he got thrown out of the booth by many manufacturers he called on—but he loved the challenge of cold calling, and he was good at it, with more than a few successes to his credit. After working with my dad for a few years, I hung a poster on the wall of his office that read, simply, “Ready, Fire, Aim.”
When he wasn’t looking for new lines, my dad was looking for talent. He liked hiring recent college grads who spoke a foreign language and demonstrated an interest in international business. He liked their youthful energy and enthusiasm and willingness to take direction. While there were some notable recruiting successes, the hiring strategy ultimately proved costly. The younger hires often stayed just long enough to gain the experience they needed to attract the next job offer. Throughout the 1990’s, we turned over 30% of our staff annually. The rapid turnover required us to spend enormous resources recruiting, hiring and training new people. The turnover also made many of our manufacturer clients uncomfortable; more than a few of them terminated their relationships with us, citing staff turnover as the reason.
We eventually moved to a strategy of filling field sales positions with mid-career professionals. We had to pay more for experience, and the folks we hired often brought their own ways of doing things, but the approach has yielded better results and much greater staff continuity.
The anecdote about different recruiting strategies highlights just one of the many differences my dad and I had during the 20+ years we ran the business together. A product of his generation, Ed Sr. practiced command-control leadership, with power concentrated at the top. With a larger-than-life personality, he relied heavily on his instincts, his street smarts and personal magnetism. I am by nature more strategic and inclusive, more inclined to evaluate an opportunity, solicit input and build consensus before committing resources and taking action. But we agreed on most of the big things—the value of field sales coverage, the need to look constantly for new lines, the importance of attracting and retaining talent—and we made a good team.
A Lion in Winter
Though slowed by age and two knee replacement surgeries, Ed Sr. was still working part-time in 2007, when he was diagnosed with a partially torn aorta, a condition that if not diagnosed would have killed him. The surgery was initially declared a success, but while my dad was still recovering in intensive care, a soucher broke, and he suffered massive internal bleeding. A second, emergency surgery saved his life. Since then, he suffered, but recovered from, a stroke, was treated for Non-Hodgkin’s lymphoma, and more recently for multiple myeloma. Now 91, his short-term memory is largely gone. Like a lion in winter, he spends most of his days now quietly at home, almost always with Ethel, now 90 herself, under round-the-clock care.
Though he is no longer part of the company—he sold his equity to me in 2008—my dad still frequently asks for updates on the business and takes pride in the company’s continued success. Though he doesn’t say it, we know he also takes pride in knowing that his pro-active approach to business-building and his entrepreneurial spirit lives on at Dorian Drake, too.
Ed Dorian Jr.
White Plains, NY
August 6, 2015
Thank You All!
Thank you to all those friends and colleagues who have asked about Ed Dorian Sr. Hopefully, this blog post sheds some historical perspective on Ed Sr. and Dorian Drake International.
Feel free to leave a comment or question below.