Runs in the Family: Mark Kauffman (BBA ’84) continues to grow his 81-year-old family business
Mark Kauffman (BBA ’84) continues to grow his 81-year-old family business while giving back to Terry College and his community.
When Mark Kauffman was 7, he rode shotgun with his grandfather to the vast Goodyear Tire and Rubber plant in Akron, Ohio, where factory workers filled their pickup truck with tires that just rolled off the assembly line.
“I touched the tires while they were still warm,” Kauffman recalls in his earliest childhood memory of the family business.
They drove the 20 miles back home to Wooster, Ohio, and delivered the tires to the Texaco station Harry Kauffman founded in 1936, where he would resell them to loyal customers in the town of about 18,000.
By the time he was 12, Mark was doing chores at the station, sweeping and keeping the place clean. By then, his father, John, took over and expanded the business. And when Mark was 13, his cautious and conservative father stunned the family with a shocking, adventurous and visionary announcement: they were moving the business to Atlanta.
“He got tired of the snow,” Mark Kauffman says today at the headquarters of Kauffman Tire in Sandy Springs, just off Georgia 400. “Secondly, we had a retread business in Ohio retreading the tires on baggage carts for Eastern Air Lines, which was headquartered in Atlanta. He set up a warehouse down here to store the retreads and kept coming down here. He was realizing that Atlanta was starting to boom in the early ’70s. It’s probably one of the craziest things he ever did in his life. He packed up his family and moved down here, but 90 percent of his income was still coming out of Wooster, Ohio.
“The idea of moving to a big town was exciting to me.” By 1975, Atlanta was a big-league city on the move. His father couldn’t have timed it better.
Kauffman would attend Dunwoody High School and then head off to the University of Georgia, where he joined Lambda Chi Alpha and majored in accounting at Terry College. He has stayed in touch with his alma mater through the years and this year was the first donor to the college’s new Shareholders’ Society. The announcement of the fund came at a time when he was looking for yet another opportunity to give back, a trait he learned from his father, who died in 2013 and was noted for his charitable giving and community involvement, as well as his business acumen.
“The Shareholder Society really hit a button with me,” Kauffman says. “I can give to the school and they can do what they want with that money. I think it’s important to share back some of the benefits I got out of it.”
After college, he spent a year at Goodyear in a training program set up for some of its dealers to help the next generation learn facets of the business.
“I came back to Atlanta after that, in 1985, and I’ve been here ever since.”
Staying all in the family
At 55, Kauffman is president and CEO of an 81-year-old privately held family business that is still growing like a start-up while remaining fiercely independent in a world of conglomerates gobbling up companies like holiday chocolates. Kauffman Tire now has 63 retail stores in Georgia and Florida, 14 wholesale distribution centers in seven states and an e-commerce site (treaddepot.com) that is merging into the main retail website (http://www.kauffmantire.com). Annual sales are just shy of $400 million and Kauffman is adding six to 10 new stores a year. He added six in 2016. The company has about 1,000 employees — Kauffman calls them “associates” — and he knows or will get to know all of them.
As the third-generation leader of a family business, who is growing it successfully at a rapid pace, Kauffman is a rare bird indeed.
“Research suggests that firms’ greatest risk of failure typically occurs when the founder steps down and is replaced with a new CEO,” says Scott Graffin, an associate professor at Terry and Research Fellow at the Oxford University Centre for Corporate Reputation. “Having three straight CEOs continue to lead a firm to strong performance is highly unusual — especially if all three are from the founding family.”
Tire industry analyst Nick Mitchell agrees. “By the time a family business gets to the third generation, it usually doesn’t end well,” says Mitchell, senior vice president of research for Northcoast Research Holdings, LLC, in Cleveland. “More often than not, you see it run into the ground.”
Kauffman’s on the road one to two days a week, visiting stores and looking for new sites. When he goes to one of his stores, he doesn’t mount a podium and pontificate. He talks to each associate individually. Being on the main stage doesn’t appeal to his quiet nature. “I like to put other people on the pedestal.”
He acknowledges the heavily advertised family name draws customers to the store, but that’s just the start, as he tells his managers. “There’s a lot of trust involved. I can tell any of the managers who work in that store the name will get customers in the door, then you’re the face of that store. How you guys succeed is how you handle yourself. We’re all accountable to one another to make sure we’re doing the best job possible.”
When he’s hiring, he says, “You look at their background, their technical capability, then you look at their personalities. There are a lot of people who can be technical and have that off the charts, but if they don’t have a nice personality, we’re in the people business, and if you don’t want to help people, this is not the right place to be.”
In other words, a nice man is hiring nice people. “What’s missing anymore in the service industry, across all industries, is being nice to people, being courteous. That’s one of those lost deals but it’s still relevant.”
And this is how a regional family-owned business has competed over the years with giant national competitors such as Firestone, Goodyear, and, historically, Sears.
“It’s all about the people,” Kauffman says. “We try to give our associates the best facilities to work in, the best training, and it really comes down to hiring friendly people and delivering what needs to be delivered professionally, on time, and being nice to people.”
Kauffman initiated a policy of “fix flats free” years ago, despite warnings it would cost $300,000 or more in lost revenue. They’ll fix your flat no matter where you bought the tire.
“On the revenue end, it costs us a lot of money but at the end of the day the return we get off that for helping a customer in need, how many tires have been sold off that has far outweighed what we’ve lost in revenue,” he says.
Marketing the tire business
Although Kauffman has run marathons in the past, he’s not doing the long distances any more. He gets up at 5:30 each morning and hits a local gym two to three times a week and still runs a bit.
His quiet exterior hides a deep-seated passion for the business his grandfather started. Most weeks, when he hits the road, he likes to drive, piloting through Georgia and Florida. The man who has spent his life around tires acknowledges one of his industry’s biggest challenges is producing a tire tough enough to survive against today’s crumbling American infrastructure, epitomized by potholes on roads and highways.
“The potholes are winning,” Kauffman says. “I’ve lost four tires to potholes.”
He tries different tires on his own car and won’t declare a favorite. As for his customers, the most popular brands at the moment are Goodyear, Cooper and Toyo, from a Japanese company with a plant in White, Ga. The quality of tires has improved tremendously over the years, he says, and has closed the gap between brands.
Kauffman finds Terry College prepared him for every aspect of running his business, well beyond his accounting major: marketing for selling in stores and through advertising, management for running the business and dealing with employees, and real estate for finding locations for new stores.
More than 30 years after graduating, he looks back and says, “The thing that sort of resonated with me was marketing. I didn’t really understand it until I took the course and it intrigued me.” He advises Terry’s current students to expose themselves to as many of the disciplines as possible “to figure out what really hits your hot button.”
“You need to be accountable to yourself the very best you can in school because it will pay dividends down the road,” he says.
Today, marketing is vital as his strategy going forward targets a key new demographic with advertising on the Internet, TV, billboards, radio and social media. He was an early adopter of the Internet and says it has paid off over the years.
He advertises heavily in conjunction with sports teams: the Braves, Falcons and Hawks in Atlanta and the Tampa Bay Rays, Bucs and Lightning, offering discounts on tires if the teams succeed. He only uses print advertising in small, rural areas where the local paper is still the only game in town. He long ago quit taking the paper at home, but uses the Atlanta Journal-Constitution app daily.
“The question is, how do you go after the Millennials? How do you connect? You hear a lot of things about the Millennials — they don’t really want cars, they want to live, work and play in the same area. And I think over time that will change. As they decide to have kids, they will want to move. Cars, to me, are going to be around for a quite a while. I don’t see any earth-shattering move yet until we get hovercraft or something like that. Not in my lifetime. It’s still making a connection with Millennials and how to do it properly.”
Importance of giving back
One great legacy John Kauffman passed on to Mark is an intrinsic desire to give back to the communities they serve and he does so in many ways. He gives to Children’s Healthcare of Atlanta, the Junior Achievement Discovery Center, Habitat for Humanity, his Methodist Church, and other charities.
“I learned about giving back from my dad,” he says. “He also taught me humility, which is something I really want to espouse.”
One of Kauffman’s long-time friends and fraternity brothers, Sherwood McDuffie (BBA ’84), recalls Kauffman gave his father’s eulogy in 2013 and emphasized how his dad had instilled in him the importance of giving back and helping the needy.
McDuffie, senior vice president of commercial banking for SunTrust Bank’s Atlanta Division, has known Kauffman since 1980 and still stays in touch with him.
“Mark was always a real guy and he’s the same guy since he’s assumed the reins of his long-time family business,” McDuffie says. “He’s real down to earth and one of the most loyal people you’ll find.”
Kauffman has merged his philanthropic streak with practicality by forging his way into education. Two years ago, the company created a partnership with South Atlanta High School in a low-income area of southeast Atlanta to open the Kauffman Tire Automotive Basic Maintenance and Light Repair Lab. As soon as it was announced, the program was swamped with 120 applications from students eager to learn a trade.
“Our partnership with Kauffman Tire enables us to create and establish an actual career pathway from public education to well-paying jobs and careers,” said Atlanta Public Schools Superintendent Meria J. Carstarphen. Students who complete the course work can earn the Automotive Service Excellence industry credential.
Kauffman Tire also has a partnership with South Georgia Technical College in Americus that provides a 10-week program in automotive technology. South Georgia Tech has invested $1.5 million into a new building for the program, which can train up to 40 students at a time. Kauffman Tire covers the cost of on-campus housing and meals, plus any tuition costs not covered by Pell Grants or the HOPE Scholarship. Graduates receive certification as automotive chassis and climate control specialists.
Kauffman didn’t marry until his 40s — “until he found a gem of a lady,” McDuffie says. Kauffman and Andrea married in 2005 at Sea Island. They have a son, 10, and daughter, 8. Kauffman happily spends many of his afternoon hours taking them to their sports activities.
When the question of succession arises, he smiles and says at 55, he has a long way to go. It is a major issue in family businesses. The PriceWaterhouseCooper 2017 U.S. Family Business Survey said it had seen “an ongoing blind spot regarding succession planning and the requisite good governance that should underlie it. This disconnect speaks to the overall theme of this year’s survey report — the missing middle, e.g., the medium-term strategic planning needed to help ensure the family business thrives in the future.”
Kauffman Tire seems to have transcended that concern.
Kauffman’s brother-in-law, Tom Money, is vice president of the wholesale division. Kauffman has three sisters, but says their kids haven’t expressed an interest in the business. But he does note that his son “likes to go down to the warehouse and see the tires” in South Atlanta.
Kauffman’s legacy is deeply engrained. On a trip back to Ohio, he drove to Wooster to see the site of his grandfather’s original Texaco station. He was grateful it was still standing and had been converted into a pizza parlor. He talked with the owner and sent him a picture of the station from the 1930s to hang in the restaurant.
And how was the pizza?
“It was great,” he says.