Back in the sixties, Gordon Lownds was a professional rock musician playing around Toronto and Detroit with a band called Lucifer – so it's somewhat ironic that a lot of old rock and rollers with hearing damage are now his clients.
Mr. Lownds co-founded ListenUP Hearing Healthcare Canada Inc. – the hearing-aid retail chain known as ListenUP! Canada – in 2003, after a friend with a hearing loss complained about poor customer service in the industry.
Started as a private company with two stores, Mr. Lownds has grown the business to 106 locations across Ontario. The Toronto-based company generated revenue of more than $35-million last year and has about 250 employees.
It's now a subsidiary of Denmark-based William Demant Holding A/S, an international hearing-healthcare company, after being sold in 2010. Mr. Lownds, 65, stayed on as president and chief executive officer; he plans to retire at the end of this year but continue with other ventures.
Mr. Lownds was also a co-founder and former CEO of Sleep Country Canada Inc., a national mattress retailer, which was sold to Bain Capital LLC in 1999 for $90-million, an offer that Mr. Lownds says was pretty compelling. (The chain subsequently changed hands again).
He began his business career in 1970 in the warehouse at the now-defunct Consumers Distributing, a catalogue-store chain, and worked his way up to management.
After three years at Hudson's Bay Co., he set out on his own as a management consultant. He became a founding partner with Stephen Gunn of Kenrick Capital, an investment banking firm, before they wound it down and together launched Sleep Country Canada. In 2000, he also financed Red Apple Entertainment Corp., a television production company, which he sold in 2010.
Mr. Lownds holds a bachelor of arts degree in philosophy from York University and an MBA from the University of Toronto. He took the MBA as a mature student in 1983 to "sharpen [his] technical skills in finance and marketing" when he realized he was having to look things up in the library to stay a step ahead of his clients. He was recently named a category winner in the Ernst & Young's Ontario entrepreneur of the year for 2012 awards.
Q: What did it take to launch ListenUP?
A: I did a bunch of industry research, from the manufacturing level down through the distribution, doctors and patients. I took hearing tests at over 50 clinics in the Toronto area to experience first-hand what that was like. Then I rounded up some of the financial partners from my Sleep Country days and said, 'Here's the business plan,' and rolled out the competitors' strategy, industry analysis and financial plan. 'I'm putting a big whack of my dough into it (about $4.5-million ) and I'd be delighted to have you along.'
Q: Do you see the aging population as a steady supply of clients?
A: There's a double-barrelled issue here. One is the aging population and the other is that less than 20 per cent of the people in Canada who have a treatable hearing loss have a hearing aid. So the penetration level is extremely low. Combined, those two elements make the demand prospects very attractive.
Q: What did you learn from your early retail experiences?
A: Retail is detail. And location, location, location. Those are the mantras of the retail industry, and it really is all about getting the details right. In Sleep Country, we designed that business and our processes, marketing and operational activities down to the minutest detail to ensure it was consistent with the overall brand we were trying to present to the consumer. So it's all about managing that level of detail, and knowing that those details matter to the customer and staff.
Q: Is location as critical now that many sales are done online?
A: Depends on what kind of business you're in. For both Sleep Country and ListenUP!, convenience and accessibility are key elements, so locating sufficiently convenient to the customer base matters.
Q: How do you create a culture with 106 locations?
A: The secret is to start small and, as you grow, make sure that the people understand the values and why we exist as a business. As you expand, those people typically move up to management and carry the message forward. Most of our regional managers have been with us from the start.
Q: How much is ListenUp! Canada like Sleep Country Canada?
A: In both industries, the real heart of what I responded to was basically solving a problem for the consumer. I got into the retail sector of the mattress industry because I felt there wasn't a good option for a customer who was buying a mattress at retail. It was split between department stores who did half the business in Canada and small specialty stores. Neither did a particularly good job, so I stepped into that void. Our timing was lucky and we did a good job of simply presenting a more compelling offer for the consumer in a professional way that was value-oriented. If you have to go out and buy a mattress, you might as well make it an ideal experience.
That's consistent [with] what I did in the hearing-aid business. I looked at the industry and thought there was room for someone to come in and do a better job.
Q: Why did you take the CEO role at Sleep Country?
A: I'm an entrepreneur and a driver. I like to create and build things. I'm good at hiring people – spotting new talent and coaching them. A lot of my time is spent on attracting the customer, which is a combination of real estate and marketing. I get customers to walk in the door and then the operational side is responsible for converting those folks into happy customers.
Q: Why don't you have a public face for ListenUP! like Christine Magee is for Sleep Country?
A: We felt that in the healthcare world, we didn't need to create an iconic person to lead the charge. We wanted to create an iconic healthcare experience so that's what really drove it. In the case of Sleep Country, Steve and I were very conscious of wanting a female president because 80 per cent of mattress purchases are made by females. We made Christine a partner right out of the gate. She already had a strong career in banking so knew business quite well. We thought creating an iconic person would really break through in terms of the marketing we were trying to do.
In the healthcare sector, the key marketing challenge was to convince more people that treatment for hearing loss is actually available, affordable and easy to access, so the messaging goals were different.
Q: What's been the biggest marketing challenge?
A: Hearing loss is something people don't like to admit they have. It usually takes people seven years after they've started to lose their hearing to accept it and seek treatment. So there's a lot of denial about the problem and stigma attached because it's typically associated with older people. So breaking down those barriers is what's important to us.
That's one of the reasons we took the hearing-aid clinic model out of the third floor of a medical building and put it front and centre in retail. We said, "Look, 10 per cent of the population has hearing loss; you don't have to go through three levels of doctors to get treatment. You can come right to us, we can do the tests and get you a hearing aid in seven to 10 days. There's no need to suffer."
Q: What do you look for when hiring?
A: Our frontline folks are healthcare professionals so they got into this industry because they wanted to help people. The ones who are successful have a lot of personal charisma and confidence. They're proud of their technical knowledge but it really comes down to their people skills.
Q: Why did you major in philosophy?
A: It was the only thing that interested me at the time. The study of philosophy helps me think of the world with a systemic view. Everything is a system and it's an interrelated system. It taught me to think logically and how to present cogent arguments in a compelling, convincing way. That basic training has done as much for me as the MBA that I got years later.
It's a very helpful mental framework in the business world. It's all about understanding what the total system is and how things work. If you can put yourself in the other person's shoes and understand where they're coming from, what motivates them and what their profit model looks like, you're much more effective in negotiating.
Q: What did you get from your MBA?
A: It gave me exactly what I wanted: a hard analytical skill set. But as an entrepreneur, you have to fight the typical MBA mentality because you can analyze to the point where you can talk yourself out of doing anything. So you have to have that entrepreneurial drive and vision and ignore the warnings of all of your analytical friends and accountants.
The biggest advantage in Sleep Country is that I was partnered with a guy who was much more analytical and conservative than I was. Back then, if I had been on my own, I might have self-destructed because I'm way on the left-hand side of being comfortable with risk. By the time I got to Listen UP!, I'd learned to be more tempered in my entrepreneurial views.
Q: What do you want to do next?
A: When I finish with Listen Up! Canada, I'm looking to do some advisory and board of directors work. I'm also interested in coaching and investing in young entrepreneurs.
Q: What advice do you have for serial entrepreneurs?
A: Never assume the next business is exactly the same as the one before. Too many entrepreneurs apply the exact same or very similar strategy in the second or third business without taking the time to fully comprehend the intricacies and subtleties of each different industry.
Q: Any more?
A: When raising money for your next venture, it's logical to go back to the same investors that you made money for previously, but it's key to manage their expectations. Never promise the same kind of upside that you made for them before.
Q: What's your top advice for entrepreneurs starting out?
A: You need to make sure you raise enough capital, and almost no entrepreneur raises enough capital at the outset. The biggest mistake entrepreneurs make is to underestimate how much they need – usually because they overestimate the sales potential and how quickly things will ramp up. It's always better to raise more than you need because, if you have to go to second-round financing, there's dilution because the second money coming means you're desperate and you have to give up more.
The better second-level strategy would be to have investors who can put more money in but, at the outset, get them to agree to do that on the same terms that they put their first money in. So then you're not out looking for brand-new investors.
Q: What's your favourite business book?
A: War in the Boardroom by Al and Laura Reis about the dilemma of marketing people having to deal with operations people – a right-brain versus left-brain situation. It's very common in most companies to have conflict between those two mindsets.