Russ: This is The BusinessMakers Show, heard here an online at thebusinessmakers.com, and it's featured guest time on our show this morning and as we announced on the lineup, today we're gonna feature three of our great guests from 2008. Up first, Fred Smith, the founder and still CEO of FedEx. Early on in my discussion with Fred, I asked him to tell us what is FedEx? Is it really a transportation company or is it a information technology company?

Fred: If you took away the 700 planes and the 75,000 vehicles and thousands of facilities, in some measure, the company would go on; but if you took away our incredible information systems and IT capabilities, it would not. The hard assets and the IT capabilities live in hopefully symbiotic harmony most of the time, and certainly our technology leadership over the years has been a big part of the company's growth and success.

Russ: When I go back to that very beginning, it seems you stress more the computerized society than you did the need to distribute products. How does what you saw back in the beginning, the fact that this society was becoming so computerized, how does that kind of stand up to the way things actually evolved?

Fred: In those days, the mainframe was just coming into its own. People were using them to get rid of armies of clerks and administrators in the banking industry, and the government industry and aerospace and so forth; but they all had the common denominator, the machine and its capabilities became integral to the success of both the user and its producer. If you made the decision to put a computer in your bank in a small city in Texas, it was irrelevant to you whether IBM or Burroughs or Sperry Univac in those days, was located 1,000 miles away. That computer had to operate, because if it didn't, you were out of business.

Russ: Right.

Fred: You couldn't call in a few extra clerks to help you sort the checks or help you do the debits and the credits. So, the logistics or the transportation system that existed in those days simply did not provide the kind of nondiscriminatory, fast-cycle support that the automated society needed. You had to be able to get things to that small banker in the middle of Texas to get the computer up and running or back in operation the same way you had to get it to the banker in Chicago. In the fact that there was traditionally good transportation between Chicago and New York and not very good transportation between Amarillo, Texas and New York was irrelevant to both the producer of the computer and the user of the computer. That was the fundamental observation. We're all equipped with our laptops and PDA's and our intellectual capabilities in terms of doing business is eliminated if those go down. So, it did come true to a much greater extent than I ever imagined.

Russ: OK, well much later in the discussion, I really wanted to get Fred Smith's perspective on the global economy. It was discussed in the context that sometimes our government leaders here in the U.S. don't seem to grasp how big and how important it is, so listen to what Fred said about it.

Fred: I think the integration of the world's economies is inexorable. It's humorous to me to watch the political debates and people saying perhaps we could take a time out or a pause or something. Today, with the internet, for the first time in human history you have a ubiquitous, common, low-cost, visual means of communications. You can mitigate between language differences and anybody that sells or sources anything can access the goods of the world via the internet now. When you also recognize that growth industries have been high value added and high technology products that are easily transported by systems like FedEx which will allow you to pickup, transport and deliver within 24 to 48 hours door to door virtually any small shipment, you have a force field for commerce that's just never been seen before. The movement of goods by air represents only about one percent of the tons moved in international trade, but it represents about 40% of the value. If you take out petroleum and agriculture products, it's even greater than that. So, you have products that can be manufactured, easily sourced and sold through this medium of exchange on the internet, and then easily transported; and I think that's going to continue for a long time.

Russ: OK, and I think that's right. I think it's going to continue on for a long, long time. To hear the whole Fred Smith interview, go to thebusinessmakers.com and up in the search box in the top right corner, type in Fred Smith. Up next, Lowry Mays, the founder and former CEO of Clear Channel. You're listening to The BusinessMakers Show, heard here and at thebusinessmakers.com.

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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com, and continuing on with some of our favorites from 2008, my interview with Lowry Mays, the founder and former CEO of Clear Channel Communications, was one of my favorites. Clear Channel grew and grew and grew in communications and the outdoor advertising and even in the live concert industry. Early on in the exchange with Lowry, I wanted to get his perspective from this specific period of time in the history of Clear Channel when the company was being sued by Howard Stern, where Lowry Mays was appearing before a senate investigative committee and being grilled by senator John McCain; and simultaneously he was being blamed for the Dixie Chicks being kicked off all the country and western radio stations. Listen to what he said.

Lowry: Well it was a interesting period to go through certainly, and anytime you build a company as we did, you're likely to run into the old saying of "big is bad." The bigger we got, the more influence we seemed to have, and the bigger target we became in terms of people that took what we were doing really out of context and suggesting that we had a bearing in bad for radio (bad being too big). I guess the main question that arose was after we got into the entertainment business, some of the entertainers said that we were discriminating against their play on the radio for reasons that affected the entertainment company, not the radio company, which was of course not true; but they had their congressmen create some heat for us and it did cause some hearings on capital hill which we went through very well and I think, turned a small amount of public opinion that might have been against us, in the end to our benefit.

Russ: Well I think it's kind of interesting when you look and read the press in that era, it sounded like you were the giant and controlled everything, but what was the highest level in the radio business of market share that you attained?

Lowry: Well it was very small because there are 10,000 radio stations in the United States and we have at the high water mark, 1,300, which is not a significant part of the market. I always thought we were the best because we performed very well and to me, that's where you attain excellence: is being the best at providing content to your listeners and most of all, by selling those listeners to the advertisers. So, you don't grow big just by making acquisitions. You grow big by internal growth which provides an opportunity for you to make acquisitions. We were able to consolidate an industry that was so far flung with small owners.

Russ: Later on in the discussion with Lowry, I knew that he had had a very unique upbringing and I also knew that family in general was very important to him and it played a huge role in all of his business success. I was discussing this with him and I told him that I understood that he was born into a family shortly after the depression had begun. Listen to what he has to say about that and family in general.

Lowry: That's correct. I was born in 1935 and I was right in the middle of the depression. My mother ran a beauty shop and my father was a salesman for a steel company; and he grew up on a farm north of Dallas and she grew up on a farm in Oklahoma, so it was a very humble beginning. On the other hand, I was rewarded by having a very good initial education in Dallas. I had a tragic thing happen when my father was killed when I was 12 and my mother then got into the real estate business and actually helped put me through college. It was a humble beginning and something I'm very proud of.

Russ: Boy, it sounds like work ethic was extremely important in your family.

Lowry: It was. I had always had, by necessity, a very strong work ethic; and to this day, my sons ask me how did you instill that in us because we think that's the most important thing you passed on to us because we want to do that to our children. So, yes, it's very important and I think without it, there's no success available.

Russ: Well, this dads and sons thing I think is unique how it's been a part of your life. You talked about your selling in steel, but apparently it sounded like he was doing that fairly successfully in a period of time when not too many dads had jobs.

Lowry: Yeah, he was very successful. He was sales manager of a company called Sheffield Steel Company which was in Dallas, and he was very successful at what he did.

Russ: For those of our listeners who don't know this, what Lowry did along the way as the company grew, his two sons, Mark and Randall, played and are continuing to play key roles in the company. Was that an obvious decision for you along the way?

Lowry: I would say that that was always a goal of mine to have them in what I considered a family business in order that I could pass that on to them and their families. So I wanted to make sure they had the right kinds of educational skills to prepare them for ultimate entrepreneurship and business management that I hoped they would succeed to. An interesting story that happened some I guess it was 20 years ago, but 20 years after I got out of the Harvard Business School, I was with the dean who I'd invited to a board of regents meeting at Texas A&M really to just give a business 101 class to the board of regents because they were so non-business oriented.

Russ: This was the dean from Harvard?

Lowry: Yeah, the dean from Harvard.

Russ: OK.

Lowry: I ask him, I said, "You know, I really need some help in my business and I would really like to hire my oldest son to come back and help me."

Russ: Because he was in the radio business already.

Lowry: Because he had finished business school at Columbia and he had stayed in New York and went to work for ABC Radio Networks, so I thought that would be perfect. It would be a great time and I would bring him in as treasurer of the company and he could help me. The dean said, "Don't even remotely think about that because it will be bad for him and bad for you." And I thought to myself, well I won't even ask you about my second son who's at Harvard Business School now and is moving on to Goldman Sachs, otherwise you'd tell me, "Don't be crazy" twice.

Russ: [laughs] And it's worked out very well for you.

Lowry: It's worked out very well.

Russ: Well, that's probably be an understatement. It's worked out very well for Lowry Mays and Clear Channel Communications; and that wraps up this review with Lowry Mays, but you can hear the whole interview. Just go to thebusinessmakers.com and up in the right hand search box, type in Lowry, L-O-W-R-Y Mays, M-A-Y-S. It's a great interview. We'll be back with more of our favorites from 2008 after this. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.

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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com, and continuing on with some of our favorites from 2008, next I want to share parts of the discussion I had with Farouk Shami, founder and Chairman of the Board of Farouk Systems group, a very successful company in the salon products industry. I knew that Farouk had a very interesting childhood growing up somewhere and I wanted him to tell us about that first, so I asked him, "Where did you grow up and what was your life like when you were a young person?"

Farouk: Well I was born in the Middle East, in particular in Palestine in the suburbs of Jerusalem. I went to school and finished high school there at the American French Boys School; and after high school I packed my luggage and I came to finish my graduate degree in education. You know, to be an English teacher. And while I'm school I needed to work; I washed dishes, I was a waiter, and then I was attracted to an industry called hair dressing.

Russ: Hair dressing?

Farouk: Yes.

Russ: OK.

Farouk: I though I'll do it. That's a better way to pay for my school working with lovely ladies, American ladies, you know.

Russ: I understand.

Farouk: Do their hair, I get paid, and I paid my school tuition.

Russ: So I knew that Farouk had built an extremely successful company in sort of a unique industry, so I really wanted to know what interested him in hair care and salons in general, and this is what he said.

Farouk: Well, I never thought I would take it as a profession. I thought of it as a step just only as to pay my tuition to finish my PhD.

Russ: OK.

Farouk: You know, as my two brothers had their PhD's and I'd finish cutting my scissors. What really attracted me about the profession is the artistic part of it. I love art. I like to paint. Really, I specialized actually in hair color which is the most artistic part of it you know. It's living art on a living human being and really that's what keeps me going. There's physics, there's chemistry in that profession and I really took it very seriously. I just adopted that and it became my love and my life, my style of life you know, and it's my hobby too.

Russ: OK, well for those listeners who've not heard of Farouk Systems Group, before we go much further I have to let you in on a little secret. Farouk Systems Group these days has an annual revenue stream of over a billion dollars. That's a billion with a "B" and apparently along the way you started getting more and more and more interested in the products you were using in the same ways to improve them. Would that be accurate?

Farouk: Actually, Russ, I could say that necessity was the mother of invention.

Russ: OK.

Farouk: As a haircolor artist, I won the state championship and the world championship as a hair colorist, I became allergic to ammonia.

Russ: OK, and ammonia was pretty important in all the hair color products.

Farouk: Yes, all manufacturers told me, "You have to have ammonia in hair color" and the doctor said you cannot work behind a chair anymore.

Russ: Uh oh.

Farouk: So that was the challenge: give up or zero on you know.

Russ: OK.

Farouk: So I really started researching a lot of study in color, chemistry in color, you know, physics of color; all aspects of hair color. And I was able in no time to replace ammonia with monoethynolamine, which is an ingredient that comes from corn and wheat and it's natural; no fumes, no nothing of that. It doesn't have the smell. Really I found out that so many hairdressers are suffering from the same. Long exposure to ammonia may cause asthma and emphysema. I wanted to free the hairdresser and their client from harmful chemicals, hazardous chemicals, and so and so. I was able to invent and patent the first ammonia-free hair color in the world. I use natural, organic pigment to cancel opposite colors in the hair, and I was able to achieve highlights that are natural, long lasting, without adding any harsh chemicals. Now, it was very simple. It was just finding a way and getting out to the closed circuit of chemists. From there, I continued in how can we improve services. So I came up with the Silk story which is about the hair and skin. It's made out of 19 amino acids. You find the same amino acids in natural, pure silk. So I came up with the product called BioSilk Silk Therapy...

Russ: OK.

Farouk: ...and for the last 16, 17 years it being voted as number one product in the United States of America and many countries.

Russ: Well, and Farouk has had quite a few very successful products. To hear the entire interview, just go to thebusinessmakers.com and the upper right hand corner type in Farouk Shami, that's F-A-R-O-U-K space Shami, S-H-A-M-I. It is a great interview. That wraps up this review of 2008 interviews. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.