Below is a book review of Robert Luddy’s “Entrepreneurial Life: The Path from Startup to Market Leader.” The review first appeared in the March print edition of NC Capitol Connection. Luddy will be one of the many speakers at the Civitas 2018 Conservative Leadership Conference. Tickets are still available for the April event.
Robert Luddy only had $1,300 to launch his business and knew that what he didn’t have in capital to start out with would have to be made up with sweat. In business, of course, that is commonly referred to as “sweat equity.” The lesson of hard work and persistence is one of the main overarching themes of Luddy’s book “Entrepreneurial Life.”
CaptiveAire Systems, headquartered in Raleigh, is the fruit of those efforts. Luddy founded the company in 1976 and continues to serve as president. CaptiveAire is now the largest manufacturer of commercial kitchen ventilation systems in the United States. One of the chief attributes of an entrepreneur is the ability to look into the future; to figure out and predict the market even before the consumer makes demands. Creating demand through innovation is essential according to Luddy. A big part of Luddy’s success too has been honing that skill over a lifetime. “Conventional thinkers are abundant; excellent leaders who reject the status quo are scarce,” writes Luddy.
Like many in business though, success is far from guaranteed. It took nearly eight years before Luddy’s business could be considered stable. That character building process of cutting costs, constant innovation, and aggressively seeking sales was ultimately critical to the long-term success of CaptiveAire Systems. Luddy credits his early contract with the restaurant franchise Golden Corral for helping sustain the business through its humbler beginnings. Early in the life of his company, extraordinary measures were needed just to make payroll. Luddy offers up stories like that one as well as entrepreneurial advice from decades of overseeing phenomenal growth as founder and president.
When he noticed the company was losing money in the early 1980s, he stepped back in to take over the sales team, dramatically raising cash flow and putting the company back on track. “Today, CaptiveAire has one hundred sales offices and over 220 sales personnel covering most of North America,” writes Luddy. “Our twenty-five-year sales growth has averaged at thirteen percent each year in spite of some setbacks and recessions.” He credits this success not only to constant innovation but dynamic relationships with customers to help realize and stay ahead of market trends and the competition. Today CaptiveAire has over 1,200 employees spread throughout the United States. Luddy opened plants closer to customers and constantly improved the assembly line process to stay ahead of the completion.
Luddy gives homage to figures like American founder Benjamin Franklin and his parents for instilling in him a passion for innovation and learning. He held a myriad of jobs from a young age and dabbled in the stock market, learning valuable lessons about savings and investing. “The early acquired education, work ethic, and understanding of the value of money helped form me into an entrepreneur.”
There is little doubt his innovative nature and his call to distinguish the entrepreneur from the bureaucrat, or his propensity to shed stagnant thinking has shaped Bob Luddy’s lifelong commitment to education as well. Luddy, a former chairman of the board of the Civitas Institute, has launched Franklin Charter Academy, Thales Academy, St. Thomas More Academy and has more schools on the drawing boards. “Over time, these entrepreneurial schools have helped change the education debate in North Carolina,” says Luddy. Currently, over 4,000 students in the Raleigh area are enrolled in Luddy schools and he credits that success to the lessons learned through constant innovation at CaptiveAire.
“Entrepreneurial Life” is not only a valuable resource for the aspiring entrepreneur, but it’s a reminder that there is no replacement for the timeless value of hard work and perseverance. Luddy reminds the reader too that intangibles such as integrity, humility, and lifelong learning are just as essential for lasting success — not only in the marketplace — but in life too.
Question: Did you use sweat equity as a business model when you first started? If so, with how many people and how long did it take you to move from sweat equity to pay salaries?