Risky business: Running a family company

Only one in three family businesses succeeds in making it from the first to the second generation. How have local family companies Nordstrom, Uwajimaya, The Seattle Times, Wilcox Farms and a handful of others made it to their fourth and fifth generations?

“Hands down it’s harder to sustain a family business than to start one,” says Frank Blethen, publisher of The Seattle Times, which his great-grandfather started in 1896.

Alden Blethen grew up back east as an indentured servant, used education to get out of poverty, built a successful newspaper business in the Midwest and then lost it all in a fire. He had nothing when he moved to Seattle.

“When he showed up here he was 50 years old, flat broke, contemplating suicide because he had a couple of life insurance policies and he thought he was worth more to his family dead than alive,” says Blethen. “He borrowed some money from relatives and bought the printing presses of a defunct weekly, struggled for a few years and then the Gold Rush hit.”

Two generations of Blethens ran the newspaper after Alden, and before Frank. He admits, some of them weren’t very good as managers or fathers.

“They were absolutely committed to family ownership and stewardship. They were terrible managers and professionals,” says Blethen. “They weren’t particularly good parents. I had a wonderful mother but she divorced my dad when I was six and raised me. One of the common bonds for my generation was the fact that we all had crappy dads.”

Frank wanted to get to know his father, Frank Blethen Sr. At the age of 22 he decided to give the family business a try for one year. He’s been there ever since. Around 2015, he plans to turn The Seattle Times over to the fifth generation. Frank’s son Ryan Blethen, currently the associate publisher and editorial page editor, is in line to be the next publisher.

Ryan’s family and career paths are different from his father’s. He has a good relationship with his dad, and he’s always thought he’d work at the Times some day.

“I think because I never felt any pressure it was easier to want to come here. Basically doing it on your own terms,” says Ryan Blethen. “I think when people are forced into a business usually, even if you like it, you end up resenting it because you were made to do it.”

Now he has a different kind of pressure. Keeping the business going, and growing. No one wants to be in the generation that lost a 100 plus year old company. There are 11 Blethens in the fifth generation, and Ryan says his generation might face the biggest challenges yet.

“The fourth generation had some pretty good decades where the company made a lot of money. Everybody got a newspaper. My generation is not going to have the luxury of that,” Ryan says. “I don’t think we’re ever going to be too comfortable.”

In order for any business to continue from one generation to the next, parents have to be willing to let go of their baby – not the kids, the company. For more stories about companies that have made successful transitions for decades, listen to my podcast about local family-owned businesses .

Having a family name doesn’t guarantee success in the family business, you still have to work for it.

Nordstrom is a huge name in Seattle and most people who live here know the retail company started as a little shoe store downtown. Founded by John W. Nordstrom and his business partner Carl Wallin.

Nordstrom is now on its fourth generation running the company. Even with the name Nordstrom it wasn’t always easy having a job there. Bruce Nordstrom is with the company’s third generation. Nordstrom tells the UW alumni magazine, Columns, he started with Nordstrom when he was 9 years old. World War II had just begun and he was working in the stockroom for 25 cents an hour. Good money in those days, he thought. Then he heard one of the secretaries talking about how his father, Everett Nordstrom actually paid Bruce’s salary out of his own pocket. He took that to mean he wasn’t worth 25 cents an hour.

Bruce ended up being instrumental in growing the company, now with about 52-thousand employees around the country. Nordstrom reported fiscal 2011 revenue of $9.7 billion. Bruce’s sons, the fourth generation, run the company today.

What’s the secret to making a family business work?

Nordstrom says in their case family members running the company in each generation have shared a deep respect for one another and have always worked as hard as they could.

There are 5.5 million family businesses in the United States, according to Business Week, and 35 of Fortune 500 companies are family-controlled. The largest family owned business in the US is Wal-Mart. You could have guess that.

The oldest family owned business operating in the America is the Zildjian Cymbal Company of Norwood, Massachusetts. Founded in 1623 in Constantinople, it moved to the U.S. in 1929. The family has successfully passed the company down to Zildjian heirs for fifteen generations. Impressive, when you consider, the average life span of a family-owned business is 24 years.

Frank Blethen photo, top right, courtesy The Seattle Times

Bruce Nordstrom, lower left, courtesy Columns Magazine. Photo by Kerry Dahlen