Starnet 25th Anniversary: Raising the bar for the commercial flooring market - Apr 2017
By Kim Gavin
Starnet was born during what some would call a dynamic-others a chaotic-time in the commercial flooring industry’s history. The group was formed officially (as the International Marketing Group) in 1992. Then in 1995 through 1996, DuPont, Interface and Shaw Industries all announced plans to vertically integrate the service part of the contract business.
What should a flooring contractor do? Sell out or stay independent? Starnet offered a third approach: build a cooperative group of flooring contractors to align and share best practices and training and to raise industry standards. At the same time, the group would become important to its vendor partners and form true coalitions to help members and vendors go to market.
Starnet, now enjoying 25 years in business, has fulfilled all those goals and more, while the integration efforts by the manufacturers largely failed. Vendors repeatedly cite the group’s strength and professionalism. Members point to the training, best practices and camaraderie that allows them to run their businesses better. All point to stronger business partnerships between vendors, members and customers.
Going forward, the biggest challenge to Starnet is the increase in direct selling, where flooring producers sell product directly to the end user-whose marginal cost savings are, in the opinion of contract dealers and many other stakeholders, nullified by the loss of the contract dealer’s product knowledge and process expertise. These issues, along with the risk of inferior installations from less seasoned contract dealers willing to play this limited role, threaten the reputation of contract dealers as a whole.
Floor Focus recently polled members and vendors to get their take on the group’s first 25 years, with perhaps a glimpse into the future.
M. Frank Higgins & Co., Newington, Connecticut
Years of membership: 5
Joining Starnet helped the com-pany become a better organization as a whole, Cloud tells Floor Focus. Membership has improved vendor relationships. “We meet with our representatives on a regular basis to share leads on projects,” she says. “We also often receive better pricing for products from them to help us be more competitive in a bid. Vendors also offer mill tours for our company leaders and key staff to take part in.”
Another example is education. Cloud and her husband- co-owners of the business-have both attended leadership training workshops. “We have sent three project managers and an estimator to the member development training in Vegas in the past few years, and our controller to the CFO training workshop,” Cloud adds.
“We have also used the vendor webinars to help with improving our staff’s knowledge of flooring products and processes,” Cloud continues. New staff members view training programs posted in the S-Net (the Starnet members-only site), including The Anatomy of a Commercial Flooring Project, Planning a Successful Floor Preparation and Superior Customer Service.
Cloud notes that the Starnet Design Awards offer a great way to showcase projects, installations and the flooring materials used, adding, “We also highlight environmental stewardship, as well as a new award on ‘Dream Team’-vendors and dealers working jointly on projects to benefit one another and the client.”
Involvement is another benefit for Cloud’s company. “We got involved right away in committees for Starnet,” she says. “I am the chair of the Training and Development Committee and my husband, Steve, is on the Vendor Committee, and now the Best Practices committee. Our next generation group attends the Starnet Next Generation programs at these annual meetings, as well as other opportunities throughout the year. Many Starnet companies will host some of the younger team members from other dealers to ‘job shadow’ and truly share best practices and learning opportunities. My son went out to a Starnet dealer in California last fall, and it was a great learning event.”
Vendor rebates provide a monetary boost. “We also empower our own staff to try to use more and more of our Starnet vendors whenever possible to help increase our marketshare with them,” she explains. “This has proved to be very successful.”
Cloud believes that Starnet’s value to the industry is its focus on increasing marketshare with the vendors. The vetting process to become a member allows the group to maintain dealers with a focus on quality installation. “Our vendors know that collectively they will have less issues and claims if a Starnet dealer was involved in a project,” Cloud adds.
Going forward, Cloud sees more of the same success. “We are focused on improving our marketshare in the commercial flooring industry and really showing our collective power,” she says. “Educational opportunities will be expanded. We will expand our partnerships with our vendors and increase our value to the customer.”
DSB+, San Francisco, California
Years of membership: 15
Joining Starnet quickly demonstrated the value of sharing best practices between non-competitive peers to the owners of this company, Patton says. When they joined the group, the cost was not small-around $25,000. The company at that time was doing around $5 million in business. “That was big for us then,” he says.
Fast forward 15 years and DSB+ is in the $30 million club, Patton says. He gives Starnet some of the credit for that growth, adding, “The opportunity to learn from people much smarter than us has been a game changer. It’s like tennis. You want to play with someone slightly better than you are to get better.”
Patton says his company has benefited from everything from the group’s sales commissions programs to labor management and financial reporting. “We all report our financials in a blind manner to Starnet to benchmark business,” says Patton. “That has been a great tool as we’ve grown from $5 million to $30 million, and for our goal to grow from $30 million to $75 million.”
Patton credits the twice-yearly meetings with fostering personal relationships with members and vendors around the country. “It’s a big benefit to have,” he says. And focusing on a select group of vendors helps him be more important to a few. “It’s hard to be important to everyone,” he notes.
Having a select group also allows the members to “really develop relationships with people we can then call upon to help us through a tough spot we hadn’t previously dealt with,” Patton says.
For the flooring industry as a whole, Starnet survived the “great consolidation” that took place in the 1990s, Patton notes, and remained a strong organization while the other attempts at consolidation fell apart. “I think it’s brought a level of professionalism that’s appreciated by vendors and customers both,” Patton says. “The Starnet brand stands for people who have been vetted, reached certain milestones and run their businesses in a certain way.”
Patton says today’s general contractors are looking for larger, professionally managed, financially sound and safety-focused subcontractors. “They are looking for partners, not just the low bid,” he adds. “Starnet helped us become one of those companies these people prefer partnering with. Fifteen years ago, we were not. We were a good, little company that didn’t know what we didn’t know.”
What’s next? “I see Starnet growing to twice its size and quadrupling its influence in the business,” Patton says. “Starnet will have a whole lot more meaning and carry so much more weight 25 years from now than it does today.”
Axis Interior Systems, Hamilton, Ohio
Years of membership: 13
Starnet membership offered Axis Interior Systems the strong support of peer flooring contractors across the country, Ansari tells Floor Focus. That means sharing best practices and innovative ideas, including training in all areas from technical to administrative. “Joining Starnet has been one of the best business decisions I have made in my career,” he says.
For the flooring industry as a whole, Ansari believes that the strength of the cooperative has increased the level of quality and service in the industry. He adds, “Best practices and our commitment to the client’s satisfaction has helped the industry develop relationships with owners and end users directly on a national level.”
For the future, Ansari says that one of the group’s most significant efforts is developing the next generation of leaders, including Millennials, to take over the businesses. “This has been a great success for all companies working on a succession plan,” he says. As well, the group continues to work on a host of programs to solve technical issues the industry faces going forward. Ansari adds, “The program developed by Starnet is sophisticated and effective, and has been well received by all members. The results have been extraordinary.”
Senior Account Manager
CI Select, St. Louis, Missouri
Years of membership: 12
Starnet membership gave CI Select stronger relationships with both vendors and other owners, according to Zucker. “Everyone thinks they are the only one with issues, but then you get into a room with 500 people and find out that’s not so,” she says. “It’s also strengthened our relationship with vendor partners, so we go to market together.”
Vendors look at Starnet members differently, she believes, adding that “it makes you more important. You are much bigger as a whole than as a part.” Ultimately, Zucker says joining gave the company the ability to make a bigger presence in the market and to go to market with partners, noting, “We are not a bid house, but a negotiated, client-driven business. Starnet membership helped solidify what our goals were and what our company stood for.”
Membership absolutely helped grow the business and afforded the ability to get into markets it hadn’t been in before. “It’s about scratching each other’s back,” she says.
Zucker contends that Starnet has moved the flooring contractor to another level as a resource to the industry. “To be honest, maybe flooring contractors didn’t have the best reputation,” she says. “Starnet has made people truly respect what we do and value what we bring to the table. We are a huge resource to the market, whether that is to the A&D community, the construction trade or the end user. Starnet has elevated the flooring contractors as a whole in being valued for what we stand for instead of just being two men and a truck.”
For the future, she sees a powerful group of educated people becoming more so, adding, “I’m really honored because I have had luxury of being included in things owners are a part of. We will continue to grow and become a larger and more powerful group.”
General Manager, Commercial Sales
Years of partnership: 14
Dal-Tile and Starnet have been partners for longer than Hunsicker has been with the company. “The partnership does a lot of things for us,” she tells Floor Focus. “First and foremost, it aligns us with the top contractors in the industry. They represent quality, a commitment to education and all the things we look for in a partner.”
Starnet has changed the commercial game because it has instituted a high standard of quality, Hunsicker says. She has formally been associated with Starnet for almost a decade. “They have established a standard of business to live up to,” she adds. “We see the group also building camaraderie, establishing best practices and providing education that establishes those high standards. That elevates everybody.”
The current business climate is good, Hunsicker says, noting, “Hospitality is stellar, with major brands rolling out new projects.” She also reports that healthcare is picking up and education is steady. Multifamily is something of a question mark, due to financing issues, but as a whole the market is doing well. “We are also seeing major projects the likes of which we haven’t seen the last few years. Malls, airports, stadiums-all these massive projects-that bodes well for the market,” she adds.
Hunsicker thinks Starnet will continue to have the same success it has had the last 25 years, because the group’s efforts have raised the bar for the entire industry and will keep doing so. “We are seeing diversification of the customer from an influencing or decision-making standpoint,” she explains. “We have to evolve with that.”
Mark Bischoff, Vice President of Sales
Years of partnership: 23
Tarkett’s Johnsonite division joined the Starnet vendor family in 1994 before being purchased by the larger firm. Likewise, Tarkett’s Tandus and Centiva divisions were also members independently before the acquisitions. Starnet has been and remains instrumental to the company’s success, Bischoff says.
In the early days, joining Starnet was validation that a company had arrived as a competitive manufacturer on a national level, and it was also a “strong incentive to deploy nationally.” Bischoff added that Johnsonite’s team back then was new to the flooring industry, having come out of the commercial office furniture business, and new to the idea of wholesale distribution and service providers versus the manufacturer-takes-full-responsibility model.
“The Starnet relationship was critical for management to understand the value of independent service partners and how to link the distribution channels to serve the market more effectively,” Bischoff says. Furthermore, Starnet members helped the company understand how to “create networks of loyal partners that delivered far more value than we could have created by controlling the route to market ourselves,” he adds.
In his mind, Starnet has been a “platform for innovation” for the commercial market. The cooperative model has pulled the industry along by deploying ideas from outside the industry. “They have also been a bridge for many of the manufacturers during consolidation of the soft surface business and more recently the hard surface and resilient business,” he notes.
Starnet members have always led the industry in providing more product categories from one dealer. “The cooperative model ended the carpet workroom model and accelerated the move to the full service/all surface model many use today,” he says. “That evolution might have taken longer and had far more casualties if the Starnet cooperative had not spread that full-service practice rapidly.”
The group has also taken the lead in promoting the diversity of leadership through women like Lori Dowling and Jeanne Matson, past and current executive directors, respectively. “Their point of view is more aligned to the values of the architectural and design community, and sets a more profitable example for the industry,” he adds.
Going forward, Bischoff sees that innovation will come from the service businesses, like Starnet, and through technologies in manufacturing and materials. He adds, “Starnet will become increasingly important to expose end users to new products and new technology, and in helping clients feel more comfortable with solutions that are not ‘off the shelf.’ And members will be the bridge between this collaborative real-time process and the risk-averse stakeholders: general contractors, construction managers and real estate developers.”
Bischoff sees bidding as specified being replaced by the process of budgeting a solution. In this future, manufacturers and service providers will work collaboratively with design professionals and general trades to deliver a solution. He adds, “It will not be easy at first, but as Starnet has shown over the years, they will adapt and deliver for the end user a high value solution, combining products and services that will stand the test of time.”
Jack Ganley, President
Years of partnership: 25
Mannington signed up as a vendor partner for Starnet when the organization formed in 1992, Ganley says. “At Mannington, we believe the foundation of our business is relationships,” he adds. “Starnet is all about relationships; many of the partners we have found there have turned into lifelong friendships.” And while there are ebbs and flows in the economy, business cycles and performance, strong relationships with good business partners are critical for a company to “survive and thrive, in good times and bad.”
He believes that Starnet has significantly changed the commercial flooring industry by raising the level of professionalism in the contractor community.
“They recruit, hire and train the best people at all levels-sales, installation and project management,” he notes. “Starnet members help end users, designers, and flooring manufacturers feel confident that projects will proceed with minimal problems.”
Ganley says that Starnet’s focus on bringing young talent into the organization-with the group’s NexGen programs-will contribute to future success. “Strategies like this, along with stronger interdependence with vendor partners, will bring continued growth and success for the next 25 years!” he says.
Robert L. Dalton
Director of Customer Operations & Commercial Excellence
Years of partnership: 20
Ardex, one of the original manufacturer partners, and Starnet have had a strong working relationship that continues to grow, according to Dalton. “We were one of the original manufacturers that understood the value of developing relationships with this important group of contractors,” he says.
For Ardex, the partnership has been defined by the intention of both groups to build the relationship with benefits in mind. “We have worked on a number of initiatives over the years, including industry training, field support, marketing and product development,” he says. “We attribute our joint success to these activities and are always looking for ways to deepen the relationship.”
In Dalton’s mind, the impact Starnet has had on the commercial market has been significant for a couple of reasons, noting, “Starnet has maintained its entrepreneurial roots and has impacted the overall flooring industry with the involvement of its members and the strength of its vendor partners. In every market where Starnet members are located, they are looked at as valuable businesses and resources for the construction industry.”
Going forward, Dalton sees the group’s future as bright as its first 25 years. “It has been an exciting partnership between Ardex and Starnet, and we are looking forward to many more years to come,” Dalton says. “As Starnet continues to be an industry leader and educational proponent, the next 25 years will see the association continue to grow and expand.”
I have been asked many times over the years about Starnet and why it is important to so many flooring contractors. It really is quite simple. Starnet brings together some of the most successful commercial dealers from the U.S. and Canada. Besides the wonderful training programs, leadership programs, technology support and marketing help, it really is the networking and sharing of best practices that is the most valuable aspect of being part of the Starnet family.
For me personally, Starnet has been a huge part of my success over the last 25 years. I was on the original board of directors and was honored to have served five years as chairman during the late ’90s. Starnet’s growth and success have paralleled my success. The common thread has been one simple truth: whatever you are facing or whatever you are challenged with, always do the right thing! That is the one thing I have been most proud of when I reflect on Starnet’s success.
Bonitz has been blessed during my career leading the company. The key was focusing on the little things, constantly improving and doing whatever it takes to make sure our customers got the service and value they deserved. We also had great success because we have been fair in our dealings with our vendor partners. We wanted our vendors to be successful and profitable when they partnered with us. It is a formula that really works!
Nothing was more challenging than the vertical integration, or what some called the “Distribution Evolution.” Monroe Schneider and Associates (MSA) had made some waves by purchasing dealers across the country in 1993, 1994 and 1995. MSA had close ties to Dupont. To thaw this move, Shaw decided to purchase flooring contractors. I will never forget the day when the board of directors of Starnet was meeting in Atlanta, and John Bell with Bell Mann made an announcement right after lunch that he had just sold his business to Shaw and was resigning from the board. Shaw at the time was the largest vendor partner in the Starnet network. Shortly thereafter, Interface entered the arms race, and DuPont joined them by purchasing dealers beginning in the later part of 1996.
Starnet lost 80% of its members within an eight-month period. I took over the chairmanship of Starnet in the latter part of 1996, and everyone questioned whether or not the network would survive the loss of so many members. We also lost key vendor partners in Shaw and Interface, therefore losing most of our rebate dollars. Needless to say, it looked grim. It appeared we had one foot in the grave.
There was a core group of flooring contractors and a small but dedicated board of directors that stood tall and stayed together to help Starnet survive. There was only one year that rebates were not paid to members! During the next couple of years, Starnet started growing its membership again and new vendors were added.
Yes, it was challenging, and yes, there were a lot of people expecting Starnet to fail, but it goes to show that a group of entrepreneurs can accomplish great things.
- Harold Chapman
Chairman Emeritus Starnet
Former CEO/President Bonitz
Copyright 2017 Floor Focus
Related Topics:Interface, Starnet, Shaw Industries Group, Inc., Tarkett, Lumber Liquidators, Daltile, Mannington Mills, The International Surface Event (TISE)