Entrepreneurs Find Youth Has Its Advantages
Dressed in a gray suit and toting a black attache case, Mike Klein still looks like an 18-year-old kid rather than an aspiring real estate magnate.
Although he recently purchased a 140-unit apartment complex and has negotiated several other deals, he says many people--especially bankers--have a hard time taking him seriously at first.
And, the recent publicity about Barry Minkow, a 22-year-old convicted swindler hasn’t helped.
“I honestly think Minkow has screwed it up for others,” said Klein, referring to the founder of ZZZZ Best Carpet Cleaning Co. who started the company as a teen-ager. Minkow, who was convicted of bilking customers and clients out of $26 million, is scheduled to be sentenced Monday in federal court on 57 fraud charges.
Being young and in business has definite drawbacks for Klein and other youthful entrepreneurs. They say they have to work harder to be taken seriously by bankers, suppliers, employees and customers.
But, they say, being young has its advantages as well. They have the energy and enthusiasm to build a business before spouses and children enter their lives. And, they say it really doesn’t matter how old you are if you have a good idea for a business.
At first, Klein says, his tenants would knock on his door and ask to see his father. So, he would explain that he, not his father, owned the Santa Maria apartment complex.
“I’m probably less threatening than the stereotypical, burly landlord,” said Klein, who is renovating the 25-year-old buildings in the complex. “Plus, the previous owners ran the complex down and didn’t follow through on the promises they made.”
Although, at 21, Marcie Lestz doesn’t look as young as Klein, she still surprises people when they learn that she is president and owner of Lee’s Hoagie House, a Glendale-based restaurant chain specializing in Philadelphia-style submarine sandwiches.
After working for Bullocks Wilshire as a customer service representative, she joined the family-owned business to launch its West Coast restaurant operation.
Lestz, who still lives with her parents, started out as a secretary and worked her way up to learn every aspect of the business.
“My Uncle Seymour always wanted to see me run this operation,” Lestz said. Her uncle opened the first Hoagie House in Philadelphia in 1953. Today, friends and relatives operate 24 restaurants in the Philadelphia area.
To maintain the quality of the sandwiches sold in California and New Mexico, Lestz imports special shaved beef steak and hot cherry peppers from the East Coast.
So far, Lestz’ biggest problem was dealing with a company attorney who refused to treat her seriously and with respect. When it became impossible to work with him, she found a new attorney. “If someone is going to give you a hard time about your age, don’t deal with them,” Lestz advises. “There are others who will be happy to help you.”
And, she said, she is not shy about asking for help. When she had difficulty understanding the various types of insurance policies required for a restaurant, she called her insurance agent and asked him to give her an hourlong, crash course on insurance matters.
“Don’t be afraid to make mistakes, but don’t be afraid to say I don’t understand--teach me,” she advises.
Since 1987, Lestz has opened company-owned stores in Los Angeles, Orange and Hollywood. She has also sold seven franchises for $175,000 each. Except for daily workouts at a gym, she said, she has little time for anything but running the business. One day this week, she worked from 8 a.m. until 10 p.m.
“Lee’s is on my mind 24 hours a day, 365 day a year,” said Lestz, taking a break from making sandwiches in the restaurant at Pico and La Cienega Boulevards.
After working at Bullocks Wilshire, running a chain of sandwich shops is not exactly a glamorous job. Once, she refused to let a new restaurant open because she was horrified by its condition. “So I spent the day scrubbing the bathroom walls,” she said.
While it is difficult to judge Lestz’ age by looking at her, Mike Klein definitely looks like a teen-ager and uses his youth to his advantage.
“I’m in a fantastic position to learn because people aren’t threatened by me,” Klein said.
Before striking out on his own, he spent about six months working for G. D. Webb Construction Inc., a Los Angeles development firm.
“We hired him to get involved in land acquisition,” said Jerry Webb, the owner. “He digs for information well, he’s cheerful, he’s bright.”
Webb said Klein helped him acquire a 22-acre parcel in Malibu before moving to Santa Maria to manage his own apartment complex.
“I think he’s got the drive and ability to be successful,” Webb said. “He doesn’t leave many stones unturned.”
Klein said he reads several business and real estate publications each day, searching for deals. When he had trouble obtaining traditional bank financing to buy the complex, he found another way to do the deal. He purchased the ailing partnership which owned the building.
Although he puts his net worth at about $10 million, he said he was was recently denied a $100,000 bank line of credit.
The loan officer told Klein he did not have adequate collateral to secure the credit line. Klein believes that he was denied because of his youth and his lack of a financial track record.
He lacks a credit history because he spent the past 2 1/2 years racing through the University of California at Santa Barbara. In June, when he was only 17, he graduated with a degree in international relations and business.
But Klein was a seasoned businessman before studying the subject in school. At 9 years old, with $75 in savings, Klein started his first business--selling goat’s milk to his neighbors in Santa Barbara. Soon, he began breeding and selling goats to 4-H Clubs and Mexican restaurants. When caring for goats lost its appeal, Klein took a break for a few years. Then he began selling molded plastic and other materials to local surfboard shops. He sold that business when he was accepted to college--at age 15.
Klein and Lestz, among the thousands of youthful entrepreneurs, both encourage their peers to take risks and start their own small businesses.
“I have nothing to lose,” said Klein, with a smile. “I’m young and if I lose everything, I can probably make it back in two years.”