The Mountain Man Of Office Gear
Jirka Rysavy, CEO of Corporate Express Inc., doesn't waste time worrying. On Mar. 5, the day his company's stock price plummeted 47%, he calmly wrapped up his day and, as he does each evening, drove his Jeep up a winding road to his mountain hideaway for a few hours of meditation and reflection before turning in for a full night's sleep. "To panic in a crisis is the worst thing you can do," he explains. "When I go to sleep, I just go to sleep."
Rysavy (his name is pronounced YER-ka RIS-a-vee) is hardly your typical CEO. A master dealmaker, he built Corporate Express, an office products and services empire with revenues of $3.2 billion, in a decade. Yet he lives a solitary and ascetic life, meditating up to eight hours a day and communing with wild bears. All of which makes this Czechoslovakian emigre's rise to riches in the hip and affluent enclave of Boulder, Colo., a perfect post-cold-war, New Age rendition of the American Dream.
Flat broke a dozen years ago, Rysavy saw the value of his Corporate Express holdings soar to well over $100 million last year, and today his 3.9% stake is worth some $49 million. The company, based in nearby Broomfield, is the world's largest direct-to-business office-supply company, with 23,000 employees and 10,000 trucks delivering desks, pencils, and coffee beans to clients around the globe, including Hewlett-Packard, Sun Microsystems, and Exxon. By outsourcing its stockrooms to Corporate Express, Rysavy says, a big company can cut procurement costs from an average of $160 to $50 per order and save $20 million to $200 million a year.
But torrid growth has exposed a few cracks in Corporate Express' foundation. The stock plunge came after the company announced that earnings for the year ended Mar. 1 would come in at 43 cents to 45 cents rather than the expected 50 cents a share. After a year in which the company has worked to digest more than 100 acquisitions--a promotional products company, regional stationers, and cleaning and delivery services--other industry players and some investors wonder if Rysavy has lost his touch. "He's buying everything in sight," says Rudolf A. Huyzer, CEO of BT Office Products International Inc. in Buffalo Grove, Ill., a major rival. "That's a risky proposition."
NO GOLF. Rysavy insists Corporate Express will steam ahead with 40% net earnings growth for 1997. For the year ended Mar. 1, net income rose 59%, to $58 million, but Rysavy still has work to do. Operating margins before merger charges dipped from 4% to 3.8%, pushed down by losses in both the company's newly acquired delivery services and expansion overseas.
As his fortunes rise and fall, meanwhile, Rysavy carefully guards his private life. You won't find the bearded, rail-thin Rysavy hanging out at the country club or attending society dinners. "I never touch the golf clubs," he asserts in a thick Czech accent. Instead, he relishes every spare moment in the two-room mountain shed where he lives alone with no running water on 110 acres of high-mountain meadow and forest. With no TV or computer to distract him, he stays up late reading and pondering. In warm weather, he sleeps outside, not far from a family of black bears he says he has befriended. Each morning, he awakes to a strict routine of meditation and vegetarian meals.
An engineer by training, Rysavy investigates and sometimes finances offbeat metaphysical and scientific groups. He recently gave "several million" to Flower of Life, an Arizona meditation group. For a time he helped fund a group studying Kabbalah, the mystical Jewish tradition, and a group that purports to investigate geometric architectural features built by other civilizations on the moon and planets. "I help a lot of people," he says, adding: "I plan to donate most of my money."
His spiritual pursuits also include experiments with Kirlian photography, which ostensibly records human auras. These days, however, Rysavy may need to focus less on his aura and more on Corporate Express' numbers. The earnings shortfall led many momentum investors to flee. From a split-adjusted high of about 30 last June, the stock has fallen to around 9. "We just got rid of it," says an institutional investor who liquidated nearly 2% of the company's shares.
Critics say Corporate Express moved into areas its management doesn't understand. In the past two years, it spent $680 million on same-day delivery businesses, including the nation's two largest, U.S. Delivery Systems Inc. and United TransNet. Rysavy concedes that they have proved difficult to integrate: "We knew they would be trouble, we just didn't know how much trouble."
Rysavy insists he can fix the delivery businesses, and he says his core distribution business is thriving. Customers confirm the savings. At Saturn's Spring Hill (Tenn.) manufacturing plant, Corporate Express supplies everything from desks to pesticides for the lawn. David Kummer, director of purchasing, says Saturn easily saves as much as $150 per order. The savings come from eliminating procurement jobs and storeroom rent and from slimming down and speeding up purchasing.
As for the dramatic plunge in his net worth, Rysavy appears unfazed. "What do I care? It has no impact on operations," he says over vegetables and rice at his favorite Indian restaurant. "But even if I lost it all," he adds, "I started with nothing. Look, it's not as if I have this deep belief in office products."
Indeed, his deepest belief seems to be in his own abilities. Certainly, his empire-building would be the envy of any Harvard B-school graduate. That it's the work of a man who grew up under a communist regime, then wandered the globe until he was 30 before hiring on at a print shop for $3.35 an hour, makes it all the more remarkable.
Growing up, Rysavy excelled in math and track. As a high hurdler for the Czech national track team, he enjoyed the rare privilege of traveling to the West. A 1974 injury ended his Olympic dreams and profoundly altered his life. In physical therapy, he learned a form of meditation called relaxation-activation training. "We were supposed to do it twice a week," Rysavy says. "I did it for hours every day. It was better than drugs, better than sex. And I was 19!"
Using his track connections to get extended exit visas, he took off to see the world. With a backpack and a bedroll, he circled the globe twice, hitchhiking through 40 countries, picking up odd jobs and sleeping in public parks.
His years-long odyssey, interrupted by stints in Prague studying engineering, ended in 1984 in Boulder. He was passing through after visiting New Mexico and Arkansas, where he had been prospecting for crystals. Recalls Rysavy: "I just took my pack out of my friend's pickup and said, `I'm staying."' Then, Boulder's Pearl Street Mall was a counterculture haven, and Rysavy fit right in. But he was no slacker. In six months, he saved $600 and started Transecon (short for Transformational Economy) to distribute environmental products. He began devouring financial news, filing articles in cereal boxes. "I never wanted to be a businessman until I got here," he says. "In Czechoslovakia, it was considered illegal enrichment."
Rysavy found he was a natural wheeler-dealer. With a partner, he opened a shop called Traders of the Lost Art to sell crafts from the Third World. He sank $30,000 from Transecon into a health-food store called Crystal Market. Then he crossed Pearl Street and offered to buy a money-losing stationery store. He paid $100 in cash and assumed the owner's $15,000 in debts.
Rysavy decided he could make the business profitable by closing down the store and small-business accounts and focusing on big corporate clients. In a year, he expanded sales eightfold, to $2 million, and turned a healthy profit. He had found his mission. One day, he sat his 11 employees down on the floor and delivered a sermon on becoming "the IBM of office-supply companies," recalls former employee Beth Byerlein, adding: "His brilliance was penetrating."
To ramp up quickly, in 1988 Rysavy persuaded First Interstate Bank to finance most of the $7.8 million purchase of a money-losing stationery division of Denver-based NBI. He put up $300,000 from his health-food venture. He later finessed similar deals in Seattle and San Jose, Calif., then Boston, Los Angeles, and Miami. In each city, he quickly shuttered poorly managed retail operations and focused on corporate clients.
To link his growing network, he brought to the U.S. a boyhood pal, Pavel Bouska, who had become a software engineer in Germany. The two devised a catalog of 5,000 items, instead of the 25,000 most suppliers offer. By buying fewer items and buying in bulk, they could hammer down prices. Bouska created a software system that imposed tight inventory controls. In 1993, Rysavy hired Robert King, a Texas beauty-supply and pharmaceutical distributor, to head operations. "He seemed a bit offbeat," King concedes. "But Jirka is very disciplined and focused. Most founders could not do what he did--totally turn over day-to-day operations to me."
By the time Corporate Express went public in 1994, it had reached $621 million in sales. Revenues leapt to $1.9 billion in 1995 and reached $3.2 billion for the fiscal year ended Mar. 1.
Rysavy figures he has lots more growth ahead, since he has just begun to tap into a fragmented $400 billion global market. Despite the troubles with his delivery services, he is pushing into more new areas. Last year, the company acquired a software-distribution company, ASAP Software Express Inc., and it's expanding aggressively abroad. Wall Street, which Rysavy claims "doesn't understand what we do," already has a bad case of the jitters. But he's undeterred. "I'm not doing this for the money," Rysavy says. That, no doubt, could be unnerving news for Corporate Express investors. Perhaps they, too, should take up meditation.