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Column by John P. Dilts, Managing Director, Keiretsu Forum Westlake Village Chapter
Don Esters: Profile of an Experienced Mentor
For Westlake Village Keiretsu Forum Member Don Esters, guiding entrepreneurs has become a passion. His past experience gained in running a billion-dollar company doesn’t hurt when it comes to advising start-up CEOs about what is possible.
“I am not a teacher, but a mentor - there is a difference. People call to bounce ideas off me, but I don’t tell them which specific steps to take. They need to learn that on their own,” says Esters. He learned the importance of having a mentor early on in his career. “I had the benefit of having different mentors throughout my life who appreciated my skills,” he recalls. “But in those times when I didn’t have a mentor, life was much more difficult.” Don admits that his path hasn’t always been an easy one.
A product of New York City, Esters began his career as an accountant working for the firm that later became known as Ernst & Young. However, he eventually realized that accounting work was not his true calling: “Entrepreneurs are generally very intuitive people,” he says. “They are action-oriented and able to go with just a concept. That is the way I am, for better or worse.” According to Esters, being an accountant did not fit his personality because of the regimented environment and focus on bureaucracy. He nevertheless values the accounting skills he developed during that period of his career.
Don left public accounting to become CFO of Harman International Industries, a company focused on manufacturing audio and video systems which eventually owned such well-known brands as JBL, Infinity and Harman Kardon. In 1979, Harman International was acquired by Beatrice Foods, a food and manufacturing conglomerate. The Manufacturing Division was comprised of 75 companies from a variety of industries in both the industrial and consumer sectors. Following the acquisition, Esters became VP of Operations of the Manufacturing Division.
The company’s founder, Sidney Harman, had left the company to become the Secretary of Commerce under President Jimmy Carter following the acquisition. However, in 1981, Harman reentered the private sector and bought his company back from Beatrice, taking Esters with him. Don became President of the newly independent company.
Esters approached his new leadership position with enthusiasm and vision, overseeing the purchase of a small company in Indiana focused on OEM manufacturing of branded audio systems for the large auto companies. He and his team exponentially increased sales from this line of business from $10 million to hundreds of millions of dollars in revenue. Total sales at Harman while Esters was president went from $80 million in 1981 to $850 million 12 years later. During his time with Harman, Esters had to think like an entrepreneur in building the company to ensure its success.
In evaluating an entrepreneur’s abilities today, Don looks for specific attributes based on his past experience. “I look for self-starters and decision-makers who can focus on moving ahead,” he explains. “They need to have the dogged determination to overcome obstacles and to ignore the people who say they won’t make it.”
Since exiting Harman, Esters began investing in start-ups and advising CEOs along the way. These portfolio companies included Intellisys which created display graphics video products and other LCD displays for high-tech companies. With Don’s mentoring, the company grew from $15 million to $175 million in sales within just five years. Intellisys was poised to go public in the late 90’s and his ownership in the company would have personally netted him a whopping $40 million payout according to the projected numbers from the deal. Unfortunately, Intellisys became a casualty of the technology industry downturn in 2000. As a result of a dispute between the company’s VCs and its lenders, Intellisys was forced to sell off its assets for a mere fraction of their former value. Looking back, Esters learned some hard lessons when the Intellisys deal collapsed. He suggests that “being in the right industry at the right time plays a big part in the success or failure of any venture.”
Don has since invested in Westlake-based Dupuis Group to become a major shareholder and Chairman of the brand development and design company which services Fortune 500 companies. He mentors the company’s CEO and works closely as an advisor with other portfolio companies in order to help strengthen their management. When advising executives, he explains that “it is important to create the right mix of personalities and skill sets within the team. Many entrepreneurs can get things started but do not have the right kind of personality to run a larger company.” He recalls: “At Harman, we routinely underwent psychological profiling tests to identify the different personality traits and individual strengths among our executives. The goal was to bring together complementary temperaments and skill sets within the group.” With start-ups, Esters believes that there is a similar need to assess the management skills of the entrepreneur and acknowledge that the company may need to bring in professional managers when the organization has matured to a certain level.
Many entrepreneurs are threatened by this reality, but Don sees this as a necessary adjustment on the path to a company’s success in certain cases. That is not to say that all entrepreneurs will need to be transitioned. In fact, Esters’ philosophy has always been to mentor and empower others in order to make them more self-reliant. “At Harman, if a respected manager came to me with an idea that he wanted to champion, 75 percent of the decision of whether to go with it was already made,” he points out, acknowledging that the personal conviction of a manager often increases the chances for success of the project. He applies this same approach when mentoring entrepreneurs: “You have to trust in people whom you mentor and give them your support to make it happen. You need to encourage them to go out and make decisions.” He adds, “Hopefully they will learn from their mistakes and they will eventually succeed.”
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