Editor's note: As an ongoing series, one of Styleforum's resident footwear experts, Nick V. of B. Nelson Shoes in NY, will be compiling interviews with shoe industry insiders, including company owners, designers, and other personalities. First up is Paul Grangaard, CEO and President of Allen Edmonds. Check out Nick's other interviews: William Church, Joesph Cheaney & Sons Shoes Mr. Grangaard holding the Allen Edmonds Strand model. Nick V.: Hi Paul, thanks for talking with me and Styleforum. Tell us about your background. Paul Grangaard: I grew up in suburban Minneapolis, went to college in California where I met people from all around the country, and also had the good luck to study in Florence, Italy my junior year. In Italy, I was infected with the artisan-leather bug and a life-long interest in architecture, art history, and design. As an economics major, though, I worked in Chicago for the First National Bank of Chicago right out of college and went to business school for an MBA at night. I was transferred to Germany for three years by the bank, where I observed a lot about fashion in Europe—as Yogi Berra would say—"just by watching." My wife and I came back to Minneapolis in 1986, started a family, and began 20 more years of work in corporate finance and investments. My industry focus was on restaurants and consumer companies. What was your position at Goldner, Hawn, Johnson & Morrison? I was a partner focused on private equity investments in consumer and health care companies. I was heavily involved in two portfolio companies—Westlake Hardware, headquartered in Kansas City, and Allen Edmonds. What made you to decide to become CEO of Allen Edmonds? Our existing CEO at AE was in his late 30s and resigned when he decided he would like to run a different company. I was a board member from the time of the acquisition and had recently become the partner at Goldner Hawn most responsible for the investment in the company, so I jumped in as "Interim CEO." I meshed well with the leadership team, really enjoyed the company and the business, and had some ideas of how we could move forward that both the team and the other board members agreed with. I asked them to consider making me "no longer interim" and they agreed, although they told me I needed to make a full commitment to the company. I've never looked back. When Goldner Hawn acquired AE, what was the planned strategy for AE? The strategy was to build stronger relationships with our loyal core customers, build a broader and more enticing product portfolio, and open our own branded stores to take better responsibility for the brand and counteract the decline in large independent shoe stores. What was it that made AE an attractive acquisition? The strength of the brand and the extremely loyal customer base, the made-in-USA manufacturing, the potential for growth through all channels of distribution. There is a common line of thinking that when an investment firm acquires a company, they will cut costs to reduce expenses and pare everything down in order to increase the bottom line. This in order to satisfy returns expected by private equity investors. I read in the case of Goldner Hawn and AE the plan was to focus on growing the business instead. Your comments? Some large and high-profile leveraged buyouts are built entirely on "financial engineering" whereby costs are cut, divisions may be sold, cashflow is increased, and the LBO debt is paid off quickly. In contrast, the Allen Edmonds situation was a "Grow BO," meaning that the investment would be successful only if the company was able to grow its business significantly, to "go to the next level" through new products, market channels, new and improved partnerships, and brand strengthening. Unfortunately, the prevailing view of investment firms has been set mainly by the big guys doing the huge deals. What smaller firms do is more akin to what private company owners have done across the history of capitalism—take both financial and business risks in order to build a business. How would you describe the state of AE at the time of your acquisition? The company had a great history and heritage, an incredibly loyal customer base, a strong branded image, hundreds of exemplary employees and, on the other hand, serious product portfolio shortcomings that were eroding its customer base materially. Specifically, in an attempt to find a secure place in "business casual" and "fashion forward" world, AE had discontinued several of its bestselling styles. The styles that replaced them were untested and ultimately just didn't stack up to their forebears and really didn't address "business casual" either. And now? We're in the midst of a record year. Our re-introduction of Timeless Classics styles has been extremely well received, both by our long-time customers and by new customers following the recent trends toward authentic great American styling. The new leathers and colors we've introduced (like our walnut and our Rough Collection) have been top sellers for us. We've also successfully expanded into casual and golf shoes, which has broadened our appeal. How many employees did AE have at the time of the acquisition? What was the yearly production? 10. How many employees are there presently? Present yearly production? We had about 600 employees in 2006. Now we have about 750. We'll make over 500,000 pairs of shoes in 2011 versus about 400,000 then. During the prolonged economic downturn, you managed to steadily grow your business. What are the key factors you attribute that to? Three words X2: product, product, product, and service, service, service. It's all about serving and sometimes thrilling customers with great products and, at Allen Edmonds, those products are priced to provide superior value from the outset and over the long life of the shoes. Recrafting is a big part of our relationship with our customers. Also, we never stopped acting like we were a growth company—we never cut into the meat, we never laid off so many people that we lost skills and hard-to-replace shoemaking expertise, and we never acted like we could cut our way to prosperity. Instead, we set our mind on growing our way out—through products, customer service, stores, improved relationships, and brand building. And by staying committed to an enlivened corporate culture. What are the most important things you have learned since becoming the CEO and President of AE? It's a huge list. I've relearned many business lessons about the importance of great partnerships—internal and external. For example: about the advantages that working with real pros can bring; about shoe construction, leathers and styling; about the imperative of understanding competitive positioning; about the power of loyal customer relationships; and about the power of a positive corporate culture among dedicated employees, driven to succeed. Describe your theory of relationships regarding price-points, quality, and quantity of the AE line. We want our shoes to be the best made at every price point. Nobody makes shoes with our leathers and the Goodyear welted construction process for the pricing we offer. As for quality, it's part of my earlier answer—it's all about product. And superior quality is the prerequisite to winning with great product. How is AE expanding into the global market? Stay tuned. We're in conversations right now about a major push outside the U.S. We're taking "Made in USA" on the road. How is that expansion being received? Eagerly, it seems. How important is customer input to you? Customer input is absolutely essential. We work all the channels so we can to listen to our customers, including the online style communities like this one. These next four weeks, my leadership team and I will be in our stores coast-to-coast, holding wine and cheese receptions and meeting customers. I was in Charlotte, a new store market for us, last night. How would you describe your customer service personnel and policies? The people are salt-of-the-earth folks in our Port Washington headquarters. They work right in the headquarters offices between my cube and the factory, so I walk by their desks and hear them on the phone several times a day. They take their customers and their business very seriously, but they don't take themselves seriously. They're so genuine. Our policy is simple—the best and most personalized customer service out there. I get complimentary emails and comments about them all the time. Your comments on quality control? See above. We've increased our QC staffing with a new, high level role and 20 people since I came here. How would you describe the morale in the factory? Excellent. We do a lot together—summer picnic, holiday lunch, raffle drawings, quarterly town hall updates. The people work hard and take great pride in doing their jobs well. Describe your market. Past, present, and future. Past—business dress shoes. Current—all men's dress and casual shoes, and golf shoes. Future—extended range of leather products and men's apparel, building upon our strong heritage, knowledge of the AE man and customer trust. What makes AE distinct from its competitors? It depends on the competitor. Value, quality, materials, pricing, service, styling, people, made in USA, recrafting capability... are all involved in a constellation of differentiators, depending on the competitor. How would you describe AE's influence in the market? We'll be a leader more and more as we get better at reading the market, and as styles continue their trend toward classic American authenticity. Describe the perfect image you would like the AE customer to have of the company. I want them to feel they know Allen Edmonds like they know their friends, to understand who we are, what we're good at, and what our personality is. I want them to respect our fashion taste, our commitment to serving them with great products and outstanding people, and a willingness to try new things with us. Rumors tend to fly. Have you heard some rumors that you would like to correct? I think there were several about the time of our change in ownership about us taking the company offshore and down quality. With all that we've done in the past few years product-wise and the 140 new people on our production line since mid-2010, I think we've cleared up the rumors. AE ten years from now? One good thing about being a private company is you can call plays in the huddle and not broadcast them on the scoreboard. We've got a vision that we're excited about at AE—one that's centered on great products, superior value for our customers, made in USA, and American classics. Your hobbies? Music, golf, history, baseball. Favorite pastime? Any time spent with the family. If you had the opportunity to select three dinner quests, past or present, who would they be? My wife, Ronald Reagan and FDR. I'd like to hear what those two great presidents think of our current problems, the polarized situation in Washington, the "rise of the rest" internationally and how we can reach our country's long-term goals. Thanks for asking, Nick! Thanks for sharing, Paul!