Partnership, the root of success
The Roots co-founders look back at 42 years of building a business
Michael Budman and Don Green, founders of Roots, say they have never had a disagreement about money in the 42 years since they launched their first product, at a small store on Yonge St. in 1973.
“It’s chemistry,” says Budman, explaining the unique relationship he has shared with Green since they were kids together in Detroit.
Partnerships can implode; think David Radler testifying against longtime business partner Conrad Black, or the feuding brothers of the McCain empire’s second generation.
Heirs are sometimes subjected to harsh criticism; Galen G. Weston, executive chairman and president of Loblaw Companies Ltd., has not had an easy ride.
Budman and Green want none of that, and they don’t want it for their heirs. Their five children — Budman has two and Green has three — now age 24 to 33, are gainfully employed in fields of their own choosing.
Budman and Green announced this week that they sold a majority interest in their company to a privateequity firm, Searchlight Capital Partners LP.
“No one can call us quitters after 43 years,” says Green, in an interview in the showroom of the Roots leather factory in Toronto. Purses are still stitched together by seamstresses at sewing machines and boots are made by shoemakers at lathes.
Searchlight has offices in Toronto, New York and London and will take Roots “farther than we are capable of or have the finances for,” says Green.
“Don and I do not believe in debt,” says Budman.
Searchlight wants to expand in Canada, the U.S., Asia and Europe. They particularly like U.S. border states. They also like Nordic countries with weather similar to Canada and where rustic luxury is understood and embraced.
Budman, 69, and Green, 66, may not have argued about money, but there have been some interesting moments in the partnership.
Like the day in 2004 that Budman took a sledgehammer out of the trunk of his car.
They were on their way to a meeting with professional managers who wanted to close the Toronto factory and move production to Bangladesh.
“What are you planning to do?” Green asked.
Budman said he wanted to lay the sledgehammer down on the table to make the point that he would not destroy the Toronto factory by letting production go overseas.
“Don and I have decided to tough it out, it doesn’t matter what you think,” Budman told the managers.
“(Outsourcing) was so against our philosophy. We were always about improving, not taking away pennies here and there. It made no sense to us,” Green adds.
Production stayed in Toronto. Although some Roots apparel is now manufactured abroad, leather goods continue to be made in Toronto.
Roots sales have been growing in the high double-digits for three years in a row, Budman and Green say, and the company is robustly profitable. It’s what helped attract the offer from Searchlight.
Because Roots is a private company its financial details are not available.
The value of the deal has not been disclosed.
Coach Inc., a competitor who built a reputation on finely crafted leather goods made in New York City, is struggling to restore the brand’s cachet after a period of over growth.
Green and Budman believe they have unique products in a world where so much is made offshore.
They say that while an increase in the price of leather has led some companies to source cheaper raw materials, Roots has not done so.
“Frankly, I got excited about nothing I saw in the luxury stores in Italy last week,” says Green, who was in Milan and Rome. “That wasn’t always true.” There are other reasons the men are wedded to the idea of manufacturing in Canada. Both men had strong relationships with their fathers, who were also entrepreneurs.
Budman’s father, Albert Budman, was in the home improvement business. Green’s father, Irwin Green, was an auto parts manufacturer in Detroit.
The sign over the doorway leading onto the Roots leather factory floor reads: Irwin Green Manufacturing Plant.
Irwin Green told his son and Budman that they would have more flexibility if they controlled the manufacturing process as well as their retail locations. Today they can turn out a sample in a matter of hours, or launch a new product line within a month.
Budman’s mother, Helen, was in sales at the couture shop at Saks Fifth Avenue in Detroit, where she attended the Ford family. Even after retirement she would be called back to dress them. She instilled in her son a profound appreciation for quality over quantity.
Albert Budman gave the young entrepreneurs another piece of advice: “Never ever have an opening without a celebrity.” It stuck. During opening week in 1973, comedians Dan Aykroyd, Bill Murray, Martin Short and Gilda Radner shopped the store. Drake has been a big supporter.
This year, Roots partnered with Josh Donaldson as the Blue Jays slugged their way through the American League East.
Other celebrities and leaders who have appeared in Roots clothing include Wayne Gretzky, Chris Hadfield, David Bowie, the late Pierre Trudeau and more recently, his son, prime minister-designate Justin Trudeau.
On the day of the interview, a sumptuous one-of-a-kind white leather jacket is on its way to R&B singer the Weeknd.
Green leaves the interview after an hour, headed to Jamaica, another country the two men discovered and came to love in their younger years.
While their children were growing up, their families summered in Algonquin Park at cottages, without the personal electronic devices children are rarely without today. There were no nannies. Both men married women who worked at the first store and who continue to work in the business. Both marriages have lasted more than 30 years.
During the interview, Budman’s wife, Diane Bald, an architect and the design director at Roots, pops in and out. She, too, marvels at the partnership, pointing out that one of the reasons the two men and their families get along so well is that everyone has their strengths.
“They’re like Ted Lindsay and Gordie Howe,” says Bald, referring to the Detroit Red Wings players who were stars when her husband and his partner were growing up. Both players had a distinct style and character on the ice.
“Life in business isn’t all roses,” says Green. “We have kept the big picture in mind.”