By Marina Krakovsky
If you want a home run, you have to keep going up to bat. That’s one of many lessons from the remarkable career of Joseph M. Segel, the unstoppable entrepreneur who hit two homers more than 20 years apart. When Segel retired in 1993, he was inducted into the Direct Marketing Hall of Fame; later that year, a Forbes magazine profile dubbed him “King of the Startups.”
That’s because in a career spanning over five decades, Segel founded 22 different companies in fields as diverse as publishing, minting, photography, aviation, software, hospitality, television broadcasting, and behavioral modification.
The Franklin Mint was his first big hit. Founded in 1964 to make sterling-silver commemorative medals, the company eventually branched out into other high-quality collectibles, including the award-winning “100 Greatest Books of All Time” series. With Segel at the helm, it also became the only private mint entrusted to produce the official currency for several nations, including the Philippines.
It wasn’t until 1986 that Segel launched his greatest commercial success: QVC (Quality Value Convenience) Network, now a home-shopping behemoth worth about $20 billion. Having trounced more than 20 other televised shopping networks over the years, QVC has three times the annual sales of its predecessor and nearest rival, HSN (Home Shopping Network). Traditional ad-driven networks took serious notice: media mogul and Fox Broadcasting Company founder Barry Diller succeeded Segel as head of QVC, buying most of Segel’s shares in the company. Segel clearly prefers starting businesses to running them.
But thanks to a habit of cultivating his successor shortly after starting a new business, many of his ventures continued to thrive long after he moved on to his next idea. The Philadelphia-based Advertising Specialty Institute, which he started as a Wharton undergrad, has been in business 50 years and is still going strong. Not all his businesses turned a profit. Some ideas were ahead of their time (in-home smoke detectors), never found their intended market (fade-resistant photo frames), or were simply too costly to operate (read on).
Now retired for good, Segel spoke by phone with Wharton Alumni Magazine about some of his ideas — and what he’s learned from putting them into practice.
What’s kept you motivated to keep starting new businesses when you could have retired long ago?
Almost every time I retired, I said, “This is going to be the last time,” but then after a little while I got the itch again to start a new business. However, now at the ripe old age of 75, I don’t get that itch anymore.
What was nagging at you?
Frankly, each time it was based upon the thought that I could make money doing something specific better than others were doing it. If I had $100 million in the bank, I might have stopped earlier. I was well off after Franklin Mint, but I subsequently lost about half my net worth in the Switzerland venture, and that stimulated me to start QVC.
You’re talking about Le Mirador, the five-star hotel on the Swiss Riviera.
My wife and I first owned it from 1970 to 1990, and by the time we put it up for sale it was a break-even operation. We sold it to a Japanese man who at that time was also speculating in Japanese golf courses. But the market for golf courses tanked, and he soon turned from billionaire to bankrupt. We kept going back every July as guests and saw it starting to go downhill.
In 1993, the lawyer who originally represented us was then representing the Japanese owner. We had no interest in going back into the hotel business, but this lawyer caught me off-guard one day, suggesting I make a low-ball offer to reacquire the hotel, and I made an offer that I was sure would be rejected. But it was accepted, and we ended up buying the hotel back for much less than we sold it for.
We planned to invest $10 million dollars to modernize it, but the cost grew to $20 million. At the same time, the Swiss economy was starting to go into a depression, and the exchange rate went in the wrong direction for us. Additionally, the world economy was depressed between 1993 and 1996, so business went down — but costs went up.
How did you know it was time to cut your losses?
I should have bailed out sooner. But I had a personal attachment to Le Mirador. It was a labor of love—an expensive labor of love. On the other hand, Franklin Mint was not a labor of love. I was not a coin collector. The business sprung from a marketing concept, and it grew rapidly and profitably based upon objective business decisions.
At the Franklin Mint, you sold collectibles and limited-edition merchandise. It seems there’s a trade-off: to buyers, there’s scarcity appeal, but most manufacturing thrives on economies of scale. How did you deal with that?
The concept on which I based the Franklin Mint, which got somewhat eroded by later owners, was true limited editions based on date and not quantity. So even though economies of scale weren’t large, we didn’t have any inventory risk. We didn’t give one day of grace: if an order came in after the deadline, the order and check went back. That was a good technique because anybody whose order was returned was very careful to be early next time.
We destroyed the dies after each edition was completed, but the scarcity appeal is a minor part of it. We were very careful not to promote the concept of those products as investments because the more you promote a product that way, the more people will buy it for resale rather than to really build a collection, and that inevitably results in a supply demand imbalance that reduces rather than increases value. Collectibles should not be sold for their investment value, but for their aesthetic and educational value.
You had lots of other marketing ideas at the Franklin Mint. And, of course, you’ve had plenty of ideas for new companies. Where do your ideas come from?
The main way is keeping alert to what’s going on in the world—I at least scan every issue of around 40 magazines and newspapers a month. I can’t identify specifically which ideas came from reading something, but I have a general recollection of periodically spotting a news article about a business concept and thinking it’s something I could do differently or better.
That’s how you got the idea or QVC.
Definitely — I read about HSN, the Home Shopping Network, when they went public in 1986. So I got a copy of the prospectus, and asked somebody in a city where HSN aired to send me a videotape. After viewing the tape, I felt that there were lots of ways to do it better.
Since I had no previous experience in television production, I quickly started assembling a team to produce the best possible televised shopping program, and the rest is history. QVC is now the second-largest TV network in terms of revenues, which will be around $7 billion this year.
A few years ago, after the big tobacco settlement, you started a company called SmokeStoppers International. Last I heard, you were about to get Wall Street backing. What happened?
During the dot-com boom era, I could have easily gone public with SmokeStoppers.com — the underwriter was ready to do it. But we had already launched the Web site and the reaction was weak, so I pulled back. And I’m glad I did because a lot of investors would have been burned. The idea, which was sophisticated but not easy, was to help people stop smoking through behavior modification, with daily Web-based guidance based upon the person’s profile and how the person responds.
I’ve never been a smoker, but it’s now obvious that nicotine gum or patches are a lot easier than accepting behavior modification guidance. The lesson I learned is that people tend to take the line of least resistance, and if there’s an alternative to what you’re selling that’s an easier way to accomplish the same thing, you’re not likely to do well. But if you’re the easier alternative, you’ll do well. QVC made it easier for people to shop than going to the mall. Making things easier for consumers is a pretty good formula.