A conversation with a leader

Wednesday, December 22, 2004 at 1:00am

SmartDM was founded in 1995 as DataMark, a small direct marketing agency doing non-profit fundraising. Today, SmartDM works with over 50 customers, including four National Hockey League and two Major League Baseball teams, hotel and casino companies and Vanderbilt University, as their direct marketing partner.

Home town: Nashville

Date of Birth: May 9, 1968

Education: Vanderbilt University, B.A. in English

First Job: Congressional Page in United States House of Representatives

Dream Job, after this one: Entrepreneur

Last Charitable Act: I do a little work with the Faith in Family Medical Clinic next to Baptist Hospital that specializes in providing care to the working poor. I just helped raise money for them.

Inside Info
NAME: Rich Maradik
COMPANY: Smart DM
TITLE: Chief Executive and co-founder Questions:

1. How do you prepare to make a tough decision?

I talk to a lot of people very close to me: my wife, business partners, board members. I have two signs in my office. The first says "How is this better for our customers and employees?" The second sign says "What does this have to do with creating value for our shareholders?" I put myself in an unemotional place after listening to everybody and make the decision along those two lines.

2. Business is loaded with risk. How do you balance risk with potential reward?

Business is changing. It used to be, the more set in your [business] model you were, the better the business was. Now, if you're not willing to blow that model up every so often, then you're probably going to be left behind. Generally, you don't take a risk of any consequence unless there's a very high upside. It's very easy to find high risk with low upside, but you have to look hard for those high upsides.

What happened to Arthur Andersen will keep even the CEO of the biggest company in town up at night. Here's a well-established firm of deep experience and Enron takes the firm down. So one thing that happened in a very isolated area of the corporation doesn't just hurt the company from an earnings perspective or put it in a crisis, it took the whole company down.

3. Who do you turn to for advice?

Two people: my wife and my business partner and co-founder, Jay Graves, because they know me the best and have my best interests at heart.

4. How do you instill your organization's values into daily operations?

Hire good people. There are a lot of things an organization can do with its training processes, but when you boil it down [to the best way to instill values], it is to hire good people, who are predisposed to think like you from a value standpoint.

5. What's the last thing you do before leaving?

Return e-mails for the day.

6. How do you know when to ask for help on problem or task?

When I'm too emotional in dealing with something or it's too personal and it pushes my buttons.

7. How do you balance work and family?

Anyone who tells you they have it solved is either deluded or lying. It is a daily juggling act and a struggle. The way I do it is by realizing I have a limit for the amount of passion I can have in my life. I can only be passionate and dedicated to being the best at a few things and it's only my work and my family. There's really not room for anything else in my life so I try to minimize everything else and some days the family gets more than the business or the other way around. But, they are always No. 1 and No. 2 on my list.

8. Describe an ethical dilemma you've faced and how you resolved it?

Way back in the early days of our business, we took our eye off the ball and got into a negative cash-flow situation. At that point, there were four considerations: the long-term viability of the business, paying employees, paying our vendors and paying the founders. All four couldn't be done at the same time so we did the first three and the rest is history.

The reason I call that an ethical dilemma is because I think that's where a lot of businesses get into trouble. They start telling lies, robbing Peter to pay Paul and not looking people in the eye. Starting a business is like having a child; its welfare should come before yours and that's where people can make bad ethical decisions.

9. If you could change one decision you've made in business, which one and why?

Not to stray from our core competency. Every time that we've launched something tangentially related, but not in our core business, it has failed and threatened the health of the business. We tried to start an Internet fulfillment business in the late '90s and a permission e-mail network in early 2000, both of which took a lot of resources and money and in the end have nothing to do with our value today.

10. What's been your best effort to inspire those around you?

Demonstrate passion. You don't have to be brightest, smartest or even the best, but if you are passionate and dedicated it will inspire the people around you.

11. Where did you learn your most useful business lesson?

There's a guy in this town called David K. (Pat) Wilson. He was chairman of the Vanderbilt University Board of Trust and I got to know him at my previous job raising money for Vanderbilt and for the Republican Party in Tennessee. We've kept up a relationship, he's in his 80s now, and early on he taught me how to balance having drive with humility. That's a tough lesson to learn and I didn't get it right away. But over the years, I've come to realize it's the best business lesson you can learn.

12. What best measures success in business? Name three examples.

Everyone will want to tell you it's not about money, but that's the ugly secret: It has to be about the money. That's what I hated about the dot-com era: when you asked someone about their business you'd leave and not know what they did. When the day is done, I think the net income of a business is a great measure of how successful it is.

The next is "What have you done to grow the people around you? And, have you seen them do well personally and professionally both inside and outside your organization?" A great local example of that is HCA Inc. and it's not an easy thing to do.

Lastly, "What do your customers think about the jobs you did for them? Are they evangelical about your work?" The obvious example is Southwest Airlines and Dell Computers. In our industry, there is a company called Acxiom that has done a fabulous job of that.

13. How do you unwind?

I work out five days a week early in the morning at 5 a.m. for about two hours. That's my relaxation time.

14. In your opinion, what's your biggest waste of time?

Trying to [personally] control things you can't control.

15. What was your hardest decision?

Shutting down the Internet business we started and had pumped a lot of money into after it became clear it wasn't going to return capital at necessary rates. We didn't shut it down partially. It was completely closed. That was hard; because, we had millions of dollars tied into it that we would have to find ways to get back in other areas of our business. We had emotion tied to it and it was making some money.

16. How do you keep employees happy?

By not taking ourselves too seriously and showing that all our hard work is about our job and our clients. Most importantly, whether its good news or bad, to provide 100 percent honesty at all times. Employees have to know you're shooting straight with them.

17. Who as your greatest influence in grade school?

My sister. She essentially became deaf after getting spinal meningitis and I watched her go through those struggles and grow out of them with resilience. She is a very inspiring person who has overcome a lot to become a very successful and happy individual.

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