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StumbleuponFrom changing pet food to changing the world
Sunday, July 27, 2008
Clay Mathile is still in the game.
He has taken risks, built a business, made his millions — billions, in fact — and now he has undertaken an entrepreneurship of a different kind.
The Mathile Family Foundation remains involved locally. The new Aileron Center has opened on 114 rolling acres southeast of Tipp City in Miami County's Bethel Twp. On any working day, dozens of professionals can be found there, delving into management principles, exploring the art of strategic planning, learning how to do better what they do each day. Mathile often can be found milling with them at the cafe or on a balcony overlooking the campus lake.
Mathile, 67, hasn't retired to Vail or Nassau. He still calls the Brookville area home. You can find him rubbing elbows with decision-makers at the Dayton Development Coalition or with local educators.
He has sought to change Dayton while remaining
himself.
"You would probably classify me as a social entrepreneur," Mathile offered in a recent interview at Aileron.
Clayton Lee Mathile's story is by now familiar, but it still fascinates: A 39-year-old, bored accountant with a large firm joins a small pet food manufacturer with a promising product and a lot of problems. In time, he buys the firm and takes the company to new heights after more than a decade, changing the industry along the way. When the time comes to move on, he sells the company to a corporate giant, secures his fortune and turns his attention to charitable giving and local causes — including his Center for Entrepreneurial Education, Aileron's predecessor.
Sam Staley, director of urban and land use policy at the Los Angeles-based Reason Foundation, has watched Mathile for years and has compared his particular business ingenuity to NCR founder John Patterson and even the Wright Brothers.
"What makes Clay Mathile stand out among business leaders are a number of different things," Staley said. "One is, of course, his strategic understanding of the way
certain businesses need to position themselves to be effective."
"There is very little that is random, in the way I understand it, in what Clay Mathile does," added Staley, who lives in Bellbrook and is a University of Dayton adjunct instructor of urban economics.
Staley sees a common thread running through Mathile's work as an entrepreneur and his charitable contributions: Drawing revenue from those who may not directly benefit from a product, service or cause.
Whether it's pet food, urban education or local development, Mathile has a knack for seeing the big picture that others sometimes miss, some observers believe.
"The ultimate beneficiary of the product (pet food) is going to be the dog — but the dog's not paying for it," Staley noted.
J.P. Nauseef, former chief executive of the Dayton Development Coalition, said Mathile is a good listener who may not ask detailed questions but does ask questions that inspire those around him to see more broadly.
"It's all about strategic planning," said Nauseef, who worked with Mathile on the coalition's Board of Trustees and Executive Committee. "He lives that — he's an embodiment of it."
Farm foundation
Born in January 1941, growing up on a Portage, Ohio, farm was what it took to help Mathile understand the value of education and hard work. His parents and aunt taught him that there was more than "factory and farm." He graduated from Ohio Northern University in 1962 and took accounting jobs with General Motors and Campbell Soup.
Therein may lie the seeds of what is probably Mathile's most famous aphorism: An entrepreneur is someone who would rather work 16 hours a day for himself than eight hours a day for someone else.
"Most of them do work 16 hours a day to avoid working eight hours for someone else," Mathile said of the entrepreneurial breed. "There's a
certain kind of mentality
and a certain kind of psyche with an entrepreneur. And there's a certain amount of restlessness."
That restlessness led Mathile in 1970 to Paul Iams, a former Procter & Gamble salesman. Iams was struggling to run his pet food business, but after Mathile talked to Iams' customers and saw the effects of his food on a family dog, he took a risk, agreeing to lower pay but greater responsibility.
Said Mathile, "I had three kids. He wasn't going to pay me what I made at Campbell. I took a pay cut. And I had to pay my own insurance."
There's probably no simple explanation of how Mathile took Iams from $500,000 in annual sales in the early 1970s to sales of more than $800 million across the world when he sold the firm to The Procter & Gamble Co. in 1999. Mathile talks at length about tireless marketing, an insistence on quality and investment even during down times and controlling costs.
But there's this attitude, as well:
"I did feel, though, that whatever company I worked for, I owed them one thing: And that was, I earned more money for them than they paid me," he said. "I've always had that attitude."
That attitude came to the fore in 1974 when Paul Iams was considering whether to shut down the company. Mathile talked over the situation with his wife, Mary.
"I went back (to Iams), and I said, 'I believe in this company. I think this can be a better business. Are you willing to sell me some equity? Are
you willing to sell me half the company?"
What followed were weekends of loading the family station wagon with product and driving to marketing shows, days and nights of changing the dog food to pellet form and updating the packaging. Manufacturing expansions also were part of the equation.
The result: Iams rose from $1 million in sales in 1975, $4 million in 1977 to $10 million in 1980.
Crossroads
In the late 1990s, seeing that Iams needed a partner with deep resources to take the business forward, Mathile had a decision to make. He consulted with Paul Iams.
It's not lost on Mathile that the P&G sale in effect brought the Iams story full circle. After all, Iams himself was a former P&G employee.
"Before I sold the company, Mary and I flew out and talked to Paul," Mathile recalled. "We got his blessing."
It appears Mathile chose well when he chose P&G to take the Iams and Eukanuba brands forward in August 1999. Before the sale, Iams ranked fifth among major pet food brands with about 5.7 percent of the market and $800 million in sales. By April 2004, Iams was the nation's top pet food brand with about 10.4 percent of the market and $1.6 billion in sales.
That growth appears to have continued, albeit with a significant bump in the road last year. In its 2007 annual report, P&G identified Iams and Eukanuba among its "billion-dollar brands," and said those brands comprise 12 percent of the North American market. Net sales in P&G's "snacks, coffee and pet care" segment grew 4 percent over 2006, reaching $4.5 billion.
P&G admitted, however, that pet care volume was down "mid-single digits"
versus 2006 due to "strong competitive activity" and a voluntary recall of some Iams and Eukanuba wet pet foods due to the "discovery" that there were "contaminated materials" at a supplier.
Mathile acknowledges that the episode pained him. But he also credits P&G's response, which included a product recall.
"I will say this for P&G: P&G stepped up. They were the first company to do a recall. They got pasted by everybody. The rest of the industry did nothing."
A course for leaders
Today, Mathile's focus is
on Aileron and his family
foundation.
If there was a beginning to Aileron, and its predecessor, the Center for Entrepreneurial Education, it may lie with an American Management Association four-day course Mathile and his wife Mary took in Carefree, Ariz., in 1982.
At the time, Mathile was 41. His company was in debt, and he was uncertain about the future. He owned Iams, but he had never been a CEO with sole responsibility before.
"You know, I was scared to death," he said.
His wife told him, "You're going to have to learn to run the company."
Research led him to the AMA course. The principles revealed there dovetailed with his own instincts about how companies should be managed, he quickly found.
"It was really about the fact that management is a profession — and it has its own basic principles," Mathile said. "And if you apply those principles, you have a higher degree of success."
Those principles included planning for the situation he wanted to see "five years out."
Said Mathile, "Here's where I am today. Here's where I want to be five years from now. What's it going to take?"
He had his principal managers participate in the course, too. Even then, in the early 1980s, it started to occur to Mathile that, if Iams did prosper, these were ideas he could share with others.
A conversation with a
veterinarian in Kansas at
the time helped nudge him in that direction. "I remember him saying, 'You know, you put so much energy in pet food. What are you doing for people?' "
The center was founded in 1996 without a truly stable home.
"We started with strategic planning first, but then realized that people really needed to step back first and understand professional management," said Joni Fedders, Aileron president since 2004.
In a sense, Mathile has returned to the farm: Ground was broken on a former family farm off Wildcat Road for the $30 million, nearly 72,000-square-foot Aileron facility in August 2005.
The days of offering Aileron courses "all over," in Fedders' words, were finished.
"In people like Clay Mathile, there is a drive and an ambition to change the world that most of us don't have," said Reason's Staley.
Advice from an entrepreneur
"There are so many reasons why you would quit. There are so many reasons why an entrepreneur would quit. But you can't have that in your mentality. You can't think that way."
"It goes without saying: But you have to have a very supportive spouse. And I had a very supportive spouse. She believed in me all the way, supported me 100 percent, never complained when I was gone."
