Big Ass Fans

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Unconventionals // Season 1 • Episode 1

An interview with Carey Smith about Big Ass Fans and their big ass fans

We're kicking off our first show with Carey Smith, CEO of Big Ass Fans, a company in Lexington, KY that makes, well, big ass industrial and residential fans. It's a company where unconventional goes much deeper than the name - how they manufacture, how they market, how they treat employees and how they see their future are all far from typical.

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Announcer:
Next, on PJA Radio's The Unconventionals.

Carey:
This is like if you had a dream when you were a kid, and I sort of did, that I would love to run a company that had a lot of machines in it, because I was fascinated by that. This is the way that I'd run it. I'd run it the way I want to run it.

Rick:
My first impression when I heard of the company, was I would never work for this company in my life.

Mike:
I run an ad agency, so it's no surprise that the first time I met Big Ass Fans was through an ad, one of those small space New Yorker ads. It got me thinking that to a surprising degree, the conversation that we often have with marketers is about mitigating risk, ironically. The instinct is often, whether it's about the ads they choose, or logos, or color, or even marketing strategy, is to fit in with the rest of the category rather than stand out. I thought, who better to kick off a show called The Unconventionals than a company audacious enough to call themselves Big Ass Fans. I've always thought that the best business stories are not about market domination or scale or shared price. They're about the element of surprise. They happen when an entrepreneur questions basic assumptions or prevailing wisdom. These counter intuitive moments are the stuff of ingenuity. They lead to innovation and change and out-size results. These are the stories we tell on The Unconventionals. I'm Mike O'Toole, your host. Thanks for joining us.

Carey:
My name is Carey Smith, and my title is CBA, which stands for Chief Big Ass here at the company. Yes, indeed, we are the guys that make the Big Ass Fans. We started the company in 1999 and we've been making Big Ass Fans ever since. The largest fan we make is, in fact, the largest fan in the world, and it is 24 feet in diameter, which is a big ass fan. When we started the company, the technology was totally new. Everybody's heard of a ceiling fan, but nobody had really thought about ceiling fans that were larger than your car, and that's what we were doing. Actually, larger than two cars, three ... well, four cars!


What we called the company back then was High-Volume Low-Speed Fan Company, HVLS Fan Company, because that described the fans. What was funny about it was after being in business for about a year, we found that people would inevitably call us on the telephones and we would answer it, "This is the HVLS Fan Company." You would have a pause, and they would say, "But, are you those guys that make the big ass fans?" It was one just right after the other, so it occurred to us that, hey, maybe this has got some legs, because that's the way people refer to us. After about a year and a half, we changed the name, and it's history. It's been very, very well received by I would estimate 95% of the population.


The company is located in Lexington, Kentucky, which is the middle of the bluegrass. We have just about 300 employees, and our revenues this year are going to be close to $100 million.

Speaker 5:
What's Carey like to work with? I love working with Carey! I feel like when he's not in our building, I wonder where he is. If he's not at my desk asking what I'm doing, my day's sort of thrown off.

Carey:
I would say what I do on a daily basis is walk around. I'm sort of a peripatetic manager, and I think anybody here could tell you that I spend more of my day walking around. That's my job, is to just find out, talk to people. I look at myself in some respects as sort of a hyperlink. Some people might see it as micromanagement, but I don't.

Mike:
I'm sitting here with Carey Smith. Carey, I want to talk about the risk of the Big Ass Fans name. Earlier, we talked to Rick Olson, you senior design engineer, and he vividly remembers the first time he heard the name.

Rick:
Honestly, my first impression when I heard of the company was, I would never work for this company in my life. It's just the last thing I would do. I would not work for a company that puts Big Ass Fans on my resume for my next job interview afterwards. I just couldn't face that.

Mike:
Here is a key guy that you were trying to recruit. When you hear those kinds of reactions, I'm sure it made you think twice about the name.

Carey:
It's interesting. Even people that worked for me at the time. We had people quit, not because of the name, but because I guess it seemed like we really were taking a risk. This is beyond the pale, doing something like this. From my perspective, and I think the people that stayed with the company at the time, it seemed natural, because again the guys and gals that were buying our fans, the maintenance directors and plan engineering staffs, that's how they referred to the fans. It made sense. It was a little funny. We could do some funny things with it.


Ofttimes, if you look at any sort of industrial magazines or any sort of thing like that that is industrial trade, it's boring. It's just black and white. We recognized that that group of people was maybe starved for this sort of thing. They certainly appreciated it. Once we started it with the advertising, it really took off, because, again, I think we were talking to the people that, one, suggested the name to us, and secondly, they thought it was funny. It egged us on to do things like that, in that nature. In terms of a risk, it didn't seem risky at all. At all. Now, having said that, of course, there are some people that aren't enamored of the name.

Mike:
I imagine, at least when it started, the city fathers maybe had a few questions for you, or I don't know, architects, or people you do have to influence.

Carey:
That's interesting, because from the city perspective, the only push-back that we got there was, we purchased a building after a couple of years. It was a building where they had stored and sold liquor wholesale, and they painted the wall of the building with an advertisement for bourbon. We said, "Well, we're not selling bourbon. We're not a bourbon company. We'll just replace that sign and we'll get somebody to paint Fanny," which is the ass, the donkey. We did, and it was amazing, the councilmen in town, they were up in arms. "Oh my god, somebody do ... It's right there! It's in our face!" What was funny about it, though, was people slow down. We had people, you'd look at the windows and they were across the street taking pictures. They'd come in, they'd knock on the door, come in. "Oh, I just had to see this. Do you mind if we take a picture out here, out front?" So we did get some push-back there, but in the main it was viewed as very positive.


You mention the architects, and I think the architects, very interesting. They're easy to deal with for the most part from our perspective.

Mike:
What does the name cost you? Do you fee like it costs you anything?

Carey:
I suppose it does, to a certain degree. It's not something that doesn't go through my mind occasionally. Almost all of our PR and all of our marketing and all of our ad, what we do is done in house. Occasionally, you touch bases and you go outside and see if somebody can help us. Inevitably, the people would come in and they would say, "You know, Carey, the first thing you've got to do is you've got to lose that name. You're not going to go any place with it."

Mike:
Those are short conversations, I imagine.

Carey:
They sort of are. At first, you think about it, and you go, "Man, I don't know." Every single time somebody tells us that and we ignore it, because we had had to, we're good. Now, what's interesting about it, we get more people saying ... Well, all of the fans have a little name on them, like the residential fan is called Haiku. When we just put Haiku, we get all sorts of, I mean people call us. "What's the matter? What's going on? Are you guys trying to run away from your name? What's this? I don't get it." That comes a lot, honestly, from architects and designers, because they're just like, "What? What? What's the matter? Something wrong?" Just recently, within the last couple of months, we had to recast everything, because we had played down the Big Ass Fan and played up the Haiku. Well now, it's the other way around. You can find the name Haiku someplace there, but it's big Big Ass Fans.

Mike:
Where does the name lead you? How do you go deeper than the name when you run the business?

Carey:
I think that people, when they first encounter our company, the name is what's attracting them. That's that first thing. They want to come over, if I'm at a show or a conference, they want to come over and say, "Hey, I just wanted to make sure I talked to the guy from Big Ass Fans." It's all name; they don't know anything else about it. If that's as far as it goes, that's all they care about, and that's as far as it goes. I think that what it's done from our perspective is, ultimately it's driven us to be the best that we can possibly be. I think with a name like ours, you've got to do that. You've got to fulfill or make sure that you don't fall into what most people would suggest you would fall into or think you would fall into, which is relying on just the name.


We honestly spend so much more on engineering and R and D. We built a lab that cost us between six and eight million dollars, and it's the only lab in existence where you can test very large fans and other fans. The elevation is sixty feet. The only reason why you would take money and do that, rather than buy an airplane or something, god knows what you would buy, is so that we could get better. We would be better. Quite honestly, we could look at this and we could build fans the way that everybody else builds them, which is you come up with some little design, and you go to China, and they build you a fan. They send it back, and that's the end of it, but that's not what we did. What we did was we built an engineering department, and our engineering department is pretty large. You've talked to some of the people there, and it's very large. The R and D lab is a big lab. We work it all the time. We're driven to be significantly more than the name of the company.

Mike:
Big Ass Fans, in a way, you're making a promise that you want to fulfill. It almost sets up an expectation, the way you're talking about it.

Carey:
I think it does. I think you're right. It does in the way that it piques interest, but piquing interest, that's not building a business. That's nothing. Anybody can do that. You're an exhibitionist, you can pique interest. This is much more than that. It's given us the opportunity to build a company that is ... There's almost 300 people here. To build a company that is substantial, that people ... Honest to gosh, you can go any place in the world, and I'm not saying everybody or every place, but it's amazing how many people know who we are, and what we do, and have heard of us. It's allowed us to do that. I think that part of that maybe it starts with the name, but it's not-

Mike:
It doesn't stop there.

Carey:
It can't.

Announcer:
You're listening to PJA Radio's The Unconventionals. Check out our Facebook page: facebook.com/pjaradio. We have photos and videos from our visit to Big Ass Fans, including a look at the largest fan in the world. Our academic sponsor for The Unconventionals is the Center on Global Brand Leadership at Columbia Business School, which turns the research of academia's foremost thinkers on branding into practical tools and insights for real world application. For more information, visit globalbrands.org.

Mike:
Welcome back to the Unconventionals. If I'm honest, before I met the company, I think I expected Big Ass Fans to be kind of a one note, sort of a fun gesture, but after spending a day in Lexington, Kentucky with Carey and his team, the truth is, Big Ass Fans is way more than a funny name. It's a promise or a commitment, a statement of purpose for a way of running a different kind of company. Unconventional runs deep at Big Ass Fans. Carey wouldn't probably put it this way, but I began to think of a litany of bold, big ass values. Big ass R and D strategy, big ass product design, and definitely a big ass approach to his employees.

Carey:
We have very, very low turnover, and I mean all over the company. Most people would assume in your production company, you would have a lot of turnover. We'd lose almost nobody. One of the things we do, one of the things that I think helps with that or at least encourages that is the fact that we have perfect attendance programming and perfect attendance lunches. Once a month, we have a lunch, and we have it catered, bring it in. All the guys in the company and all the gals in the company go to lunch, and then we hand out checks for perfect attendance.

Speaker 6:
When you show up to work everyday on time, and you don't have to leave early, you don't call in, if you do that 30 days straight within a month's time, it's an incentive to earn a hundred dollars. Then if you do that two months in a row, it's a second hundred dollars. The third month in a row that you do it, 90 days straight, it's a two hundred dollar bonus. Then at the end of the year, if you have perfect attendance throughout the year, you also get an additional, larger bonus. So the potential to make extra money throughout the year is phenomenal.

Carey:
I think it's up right now, it's several thousands of dollars. In a sense, it's expensive, but in another sense, it makes sure everybody gets to work on time, everybody looks forward to it, and there's a payoff for doing just that.

Speaker 6:
Everybody loves it. Nobody wants to leave early. Everybody wants to get here on time. If they're a minute late, they're kicking themselves.

Carey:
Though it is several thousands of dollars, it's not that expensive. I think it creates the sort of esprit de corps that we're looking for as well.

Mike:
If you think about your approach to your people here, it isn't typical mid-size manufacturer. Can you talk about that a little bit.

Carey:
This is a closely held company. This is a private company. It's not a publicly traded company. We're not driven by the need to, I'll cross myself when I say this, make money. I mean, we do make money, but we're not driven by that. That doesn't define us, and making the quarter, making what the analysts project that we're going to make, that doesn't define us. That's not the way we look at life. It allows you to do an awful lot of things. It allows you, I think, to get to know people, because I know all these people, except the ones we hired just last week. I know these people. It's more of a personal thing. There's a tie between us, and I think that's important.


I don't think personally that I could be involved with a company that did it any other way, and that's that honest to gosh truth when you get right down to the bottom of it. I guess when you get right down to the bottom of it, this is like if you had a dream when you were a kid, and I sort of did, that I would love to run a company that had a lot of machines in it, because I was fascinated by that. This is the way that I'd run it. I'd run it the way I want to run it, and the way I want to run it is, I want everybody to have ... I don't mean a good time. Everybody's working, this is work, but that it's not a bad place to work, that you don't have a bunch of silly rules.


When I was going to school, I worked in manufacturing plants in the summertime, and it was just totally ridiculous, just demeaning. Everybody, everything was demeaning. That's not the way we are, and we don't have to be that way. I don't have to make any numbers, and that's the way we run things. So, maybe it is different, but I have no doubts that there are other companies in the country that run just this way.

Mike:
Carey, we're just coming out of the Great Recession, and that was a tough time for our industry, for every industry from manufacturing for sure. How did you guys fare?

Carey:
I think overall we did quite well. I think that because since the recession we've been able to grow the business at over 30% per year over every year. I think a lot of that, at least from our perspective, can be traced to the way we approached it, because we saw, as I'm sure a lot of other business saw, we saw a slowdown coming on. We saw it a quarter ago, or a quarter before it occurred, so we had the opportunity to do a little planning. Our planning was that we were going to try to increase revenue in areas where we had the opportunity, but additionally, we had to reassure the people that worked for us that we were all in this together.


We talk about this sometimes as the company not being a family, we're not that close, but as the company being more of a tribe. As a tribe, you have to look out for everybody in the tribe, in essence. What we said was, "Fine, this is what's going to happen." I got everybody together, and I said, "It's going to get tough. It looks like it's going to get tough." Everybody in the company knew us for giving big raises, because we had a problem with ... the standard raise around here for the longest time was 10%. 10%, that's what you got, but I told them that we're not going to be able to do that. This is going to get tough, and the bonuses, which we give every year, we always have, based on the profitability of the firm, we're going to have to watch that, because we may not get any bonuses.


I told them the commitment that we're going to make is we're not going to lay anybody off, because we can't lay anybody off because they're part of the group. That's what it amounts to. It would be virtually impossible for me to layoff people, because then I know a lot of these people. I know almost all of these people, and I know their wives and their kids, and that's just not something that we can do, so we didn't. The business went down, the revenues went down about 10%, which is much, much better than other manufacturers who had suffered much more than we.


As I said, we were able to grow ourselves out of that, but I think the fact that we didn't have any layoffs, that allowed us ... When a lot of other companies right now are looking for signals to rehire those people that they laid off, we were already in the running blocks. We were ready to go, and so when we saw the recovery ... you can see business starting to pick up, people starting to put more goods in their budget, we had our complement of people, and we had people that had been trained, and we were able to just take off. I quite honestly think that if everybody had approached it or if more companies had approached it in the fashion that we did that the slow recovery, we wouldn't be plagued with it right now.

Mike:
It does occur to me that there is a way to run a business. There's a narrative that dominates about how to run a business, and if your revenue drops 10%, you're going to cut head count. That's just part of how you do it. If you're in the manufacturing business, you follow the cheapest wages wherever they might exist in the world, and you don't do it that way. You've got a different narrative that's operating here.

Carey:
No, and I think we may. I think the key to this is we are focused on providing and manufacturing and developing the best products that we possibly and we do that as a group. We look out for the group. Additionally, I think the fact that we are a privately held company has a lot to do with this, because if we were publicly traded and we had to react to what the analysts were suggesting that we were going to make per share next quarter, then our narrative would be completely different. We would be driven to those numbers, and we're not drive to any numbers. We have a much, much, much longer horizon.


As a matter of fact, the way we look at this is this is what we call the 200-year company, the 200-year plan, and that is that when you start thinking in those terms, when you start thinking that you're ... We're trying to build a company that's going to be not just for this generation or the next generation or the next generation, you have to think about things in a different way. It alters the way you look at things. The last thing that you're going to be concerned about is profit, quarter-to-quarter. That's just not something that's going to occur.


Now, you do get into other scenarios when you have to think about distribution of the company and the sharing of the wealth, but you have to think that way if you're thinking in terms of driving the company several hundred years in the future. You have to.

Mike:
So, you're not driven because you're not a publicly held company by making your quarter. What drives you?

Carey:
I think that, and it's not just me, but it's everybody involved with the company, we have an opportunity to do something, to drive something, to make something bigger than ourselves. You don't get the opportunity to do that all the time. I always tell, when I go to colleges and talk to the students, I tell them that you will see two or three, if you're lucky maybe four, opportunities. That's all you see. It's not like you're bombarded with opportunities. You won't touch the first one, because you figure they're going to come all the time. The second one you miss. By gum, you shouldn't miss the third one, and when you catch ahold of it, you should drive it and drive it all the way.


I always talk to people, they want to know, why don't you sell the company, do something else? It's like, there's no way, man. That's just not what we're about. We're going to drive this, and I don't just mean me. When I use we, I mean the group, all of us, are going to drive this as far as we can drive it. The commitment to that, I think, attracts other people that can help you do that. It becomes hopefully a self-fulfilling prophecy.

Mike:
I appreciate the different between the quarterly public company mindset, versus privately held, but in my experience, so many business people are driven by fear and risk-avoidance, so what advice do you have for them? I understand that not everybody's in a private company and they have fewer freedoms then, but still, if fear or risk-avoidance becomes the dominant decision-making criterion, you've gotten off the track. What advice do you have for people, based on your success?

Carey:
That's difficult, because I do have sympathy with people that are forced to a number. I really, really do. It's easy for me to say, "Well, you shouldn't do that, because I don't have to do it," but it's different for other companies. I think that maybe it starts out simply. Maybe it starts out by recognizing or accepting the fact that there's more to life than making the quarter. There's more to life than taking your start-up company and going and getting two million dollars from a VC or a PE. There's more to life than just cashing that check. There's more to life than that. Building a company gives you an opportunity to develop meaning, for not only yourself but for a large number of people in the community. I think it would be very difficult for me to suggest to other people whose situations I don't know ...

Mike:
Yeah, yeah. One thing, and this is not ... it feels very true based on what I've heard from you today, but it's a slightly different point. You've just made one point, but another point that would make based on learning about you guys that any business can learn from is figure out what makes you different and don't be afraid of taking a stand, you know?

Carey:
I think you're exactly right. I think that's a good point, and when you ask, the name of the company, how does that drive this ...I think you're exactly right, because what it does is and what it did a long time ago was it made us think about, well, what is it? When the first person or the first large company told us, "Well, we're not going to use that, because of your name. We're not going to use your product." We had to think about that. It was a big deal, but it also made us think about why is that we're doing what we're doing. Why do we want to do this? It's not just an individual. If we were thinking about money, maybe short term we would have thought, "You know, you're right. Jiminy Cricket, people may not like us for that. Maybe we ought to change the name."


If you're thinking in the short run, that's the way you're thinking, but my advice would be that you think ... We thought in terms of decades even when we started the company, and if you don't think that way, you're going to get tripped up. You're just going to get tripped up. People are always telling you things to do. People are always telling us what we ought to be doing, but you have to be true to yourself. You have to be true to your company, to your people.

Mike:
Carey, this has been a great conversation. I really appreciate your time and your thoughts.

Carey:
We loved to have you guys in here, and thank you very much.

Mike:
This is The Unconventionals. We're on the hunt for people had the vision to see something no one else saw, and the courage to build a business on it. If you have a great story, we want to hear about it. I'm Mike O'Toole. Thanks for listening.

Announcer:
The Unconventionals is written and produced by Mike O'Toole, with Reid Mangan. Post-production and technical direction by Reid Mangan. Promotion and distribution by Greg Straface and Weil. Our creative director is Aaron DaSilva. Our executive producer is Phil Johnson for PJA Advertising and Marketing. I'm [dra-fil-a lay-he 00:28:35]. To learn more about The Unconventionals, visit pjaradio.com.