The Russos balance mom-and-pop ideals with cutting-edge sales strategies
One morning earlier this year, a first-time visitor's reaction on entering Russo Marine in Medford, Mass., was a familiar one.
Larry Russo Sr. and his wife, Bee, say they often get that reaction when customers first enter the 42,000-square-foot facility that houses a 50-boat showroom.
A lot has changed since 1940, when John Russo opened Russo's Auto and Marine. At first, John repaired auto and marine engines - sometimes converting engines from wrecked cars into marine engines, building boats for them and selling them. This was where he and his wife, Sandy, worked and taught their son Larry the ropes of an industry in its infancy.
Since the 1970s, Larry Russo Sr. has been running the dealership started by his father nearly seven decades ago. He and Bee and their two sons, Larry Jr. and Alex, have grown it into a large operation that includes three locations (one on Boston Harbor and another in Rhode Island, in addition to Medford). Each generation has brought something new, and each family member has put his or her own special touch into growing the business that now captures 50 percent of the greater Boston market. For years, the family has taken leadership roles in the direction of the industry as a whole.
"We have the utmost respect for the Russo family and what they've done for the boating industry and the leadership they've put together in Northeast boating," says Bill Irwin, owner of another venerable business, the 89-year-old Irwin Marine on Lake Winnipesaukee in New Hampshire.
A Sea Ray shakeout
"One thing that was positive in adding the Northeast territory was cultivating this relationship with this industry icon," says Doug Nettles, a regional manager for Boston Whaler, a brand Russo has been selling since 1972.
"Junior is in the trenches doing the day-to-day, and Senior is much more the visionary," Nettles says. "Alex does the nuts and bolts, and his wife is at the front desk. You're looking at a mom-and-pop in the truest sense, but there's nothing mom-and-pop about them. They are a very sophisticated operation."
The Medford dealership opened in May 2004, less than two years before Russo Marine jumped at an unexpected opportunity to pick up Sea Ray. Until then, Russo Marine had sold seven boat brands, three brands of outboards, and dealt with five engine companies.
"Our business was crazy," says Larry Jr. "The Sea Ray opportunity has been huge because it shook off all those other brands."
That was one reason Russo Marine turned to Brunswick (Sea Ray's parent company). For many years, Larry Sr. supported independent builders, in part because his father had always taught him not to put all his eggs in one basket. But times changed. Russo now sells only Sea Ray and Boston Whaler boats and Mercury, MerCruiser and Volvo Penta engines.
"We were suicidal, and we didn't know it," says Larry Sr. "We were trying to be all things to all people. We had 12 major relationships with different companies we were managing, and every one of them spoke a different language. We were about insane."
That made it difficult to deliver quality to the customer, he says, and valuable time was being gobbled up on administrative work, managing all the different warranty claim forms, order forms, Web sites and more. Dealing with two Brunswick brands makes logistics much simpler.
"It's made our employees' lives so much easier, especially our poor service and parts people," says Larry Jr. "It was almost to the point that it was impossible to keep good people here, because it was just mad. Units and dollars were climbing and peaked in 2006, really, and it was just a huge stress on the whole company. We really have it in its ideal position now; it's just unfortunate that the market is fighting us."
Russo Marine and Sea Ray are a powerful combination, says Sea Ray spokesman Rob Noyes. "If you look at the size of the Boston market for the categories in which we compete, it's shockingly small," says Noyes. He says that's true of many coastal metropolitan markets, despite the seemingly classic combination of people, money and water.
"[Russo] certainly is leading the market," says Noyes. "It's been a great, great marriage for Sea Ray and Russo Marine."
When it comes to marketing, Russo is extremely aggressive, says Kevin Roggenbuck, owner of Lake Union Sea Ray in Seattle. "When he got the opportunity to be a Sea Ray dealer, he jumped on it, which is what any sane boat dealer would do," says Roggenbuck.
Lopping off the other brands probably wasn't an easy thing, speculates Phil Keeter, president of the Marine Retailers Association of America. "When he saw the opportunity to be a Sea Ray dealer, he was able to make that leap and tell the other builders he was unable to do business with them anymore," Keeter says. "It takes a pretty good head to do that. Look how big he is now. He is one of the larger independent Sea Ray dealers now. As other people are stumbling, he capitalizes on it."
The brands are the reason Russo Marine's business is off only 20 percent when the rest of the industry is down about 45 percent, says Larry Sr.
Learning the ropes
Larry Sr. is lovingly appreciative when he talks about the business lessons he learned from his father, who died in 1994, and his mother, who retired from the family business in 1999 at the age of 88.
"She was at the back end; he was at the front," Larry says.
Sandy was a creature of habit who loved coming to the family business each day, keeping everybody well-fed and keeping the books by hand, even after the dealership had implemented the Dockmaster computer system in 1992 (Larry Jr.'s doing). John Russo was a self-taught renaissance man who had a background in construction and a passion for photography - he had his own darkroom - a man who could envision and build just about anything, recalls Larry Sr.
After about a decade, John began to focus solely on boats. The business was only a few feet from the Russo home, giving a young Larry Sr. plenty of opportunity to spend time there.
In 1959, John built his own facility on four acres on the Mystic River - a boatyard, marina and eventually a dealership. He designed and built everything, from the docks to the pile driver to the pump he used to dredge the river bed. And he managed to sell boats and run a business at the same time, says Larry Sr.
"If you can imagine it, you can build it" - that was his credo, says Larry Sr. That sentiment stuck with the son.
While giving a tour of the Medford dealership, Larry Sr. describes how he converted a former Grossman's (an early home-improvement store chain) into a marine facility. "When we bought it, it was just four walls - a box," he says.
Now he points out details like the classroom for customers attending the dealership's free boating seminars. The classroom doubles as the space to which boats are brought for pickup. Potential boat buyers can see the tutorial take place through a 16-by-16 retractable glass door. The new boats are illuminated by six halogen accent lights to make them pop, a trick Larry Sr. learned from a visit to a nearby Saturn car dealership.
"I've never had an original idea in my life; I'm just a really good imitator," he says.
When the contractor hired to create signs for Russo Marine found a gigantic 10-by-30-foot backlit sign left over from the Grossman days, he told Larry Sr. to find some old pictures to put in. Larry concedes his first reaction was to tell the contractor to throw it away. But recognizing the potential, he dug up some early Recreational Boating and Fishing Foundation promotional material and used 80 8-foot tube lights to illuminate it. One side depicts a little girl at the edge of a fishing boat, with the words: "Take me boating ... because my wedding will be sooner than you think." The other side shows a little boy on a boat and the words: "Take me fishing ... You can think about work later." Beneath it sits a Boston Whaler with a fishing pole.
The overall effect "pulls at your heartstrings," Keeter says.
The office space is sectioned off at the north end of the building near the front desk, where Bee is often found answering phones and greeting people when they enter. Next to her is Alex's office, followed by a row of open administrative desk spaces and then Larry Jr.'s office. Though the two sons have private offices with walls, Bee can look through aligning windows from the front desk and see whether the boys are there. Behind that are the sales cubes, which also have the lined-up windows so each can see who is at his or her desk.
The contractor had a tough time carrying out the alignment, but Larry Sr. was relentless; he wanted everyone to know at a glance where the others were. It's also good for making faces at each other, Alex jokes.
"Larry has an amazing capacity to look at what other people are doing and figure out how to apply it to his business," says Keeter.
Nettles uses words like "palatial" and "grand" to describe the facility.
The outside-the-box thinking has served Larry Sr. well. He is one of the few boat dealers who have taken items other than boats in trade to get a deal done - from precious stones to RVs and motorcycles to an unrestored amphibious vehicle taken as a trade-in for a used 17-foot Boston Whaler in 1989. When it's not being shown off at events, the amphibious vehicle serves as a conversation piece in the showroom.
"When the guy told me what he had, I had to fight to keep the excitement out of my voice," recalls Larry Sr. He asked the man what condition it was in, and when he learned it was all original, he nonchalantly told the man he'd take a look. At the time, the amphibious vehicle was worth about $8,000.
"What do you think that boat [the old Whaler] is worth today?" asks Larry Sr. "Nothing. And what do you think this is worth? I've watched them go for sale at classic car auctions for $40,000 or $50,000."
But it's not for sale. The Russos have too much fun tearing down the launch ramp and watching people's faces as they hurtle into the water. When they pull through the water to a boat show or other event - in a car - "we lead the nightly news," Larry Sr. says. "You can't buy that kind of publicity."
Surviving by evolving
When the Russos make decisions, they don't seem to look back. Alex had been in charge of accessories at Russo Marine's former Medford facility on the same street. While the 10,000-square-foot showroom had room for only three boats, Alex oversaw a large accessories and parts section. Those got scaled back in 2003 when people began shopping the Internet and mega-stores such as West Marine and BoatU.S.
Instead, the family decided to concentrate resources on growing its own loan business, which had a high margin and low overhead. Half of the accessory space was converted into office space for the finance operation. That proved to be a good move; in its heyday, Russo Marine's loan business had three locations with 11 employees. Now only two employees operate from one location.
That business shrunk tremendously with the exodus of lenders from the industry, Larry Jr. says. The refinance end also has dried up, with plummeting boat values and stricter lending criteria.
"How many dealerships would be bold enough to go out and form their own financial thing?" asks Keeter. "Most dealers can't do that, but that was a huge profit center for them, and it's what helped them grow."
At age 38, this is the second economic downturn Larry Jr. has been through. When he graduated in 1992 from Merrimack College in North Andover, Mass., (after studying accounting and finance), the boom of the late 1980s had collapsed, the industry was trying to cope with the federal luxury tax on boats, and the family was figuring out what it had to do to survive. Larry Jr. concentrated on making each segment of the business - parts, service, sales - an individual profit center that could stand alone, and he streamlined everything with the new computer system.
"In any industry, if we continue to do business today like we did five years ago, we're not going to be around," says Seattle dealer Roggenbuck, who has sold Sea Rays for 20 years and shares a growth mentality with the Russos. He has expanded to five locations in the last year, capitalizing on the exit of others.
Larry Sr. fought for his family business when government - not economic conditions - threatened to shut it down in 1970. The state of Massachusetts had decided to develop the land next to the Mystic River in the '70s and told occupants they would have to take a small buyout under an eminent domain proceeding.
"Bee and I were married, Larry's on the way, and the state is taking away our property and putting my dad out of business," Larry Sr. recalls. "He was 60."
Larry Sr., then just 23, found some property on Mystic Avenue (the same street on which Russo Marine is located today) and started over from scratch. "A couple of years after that, my father decided to make me president," Larry Sr. says. "Now he had grandkids, and he wanted to spend time with them."
It's those 70 years of ups and downs that keeps the family on its game during a recession, Nettles says.
A time for energy
At the New England Boat Show last February, Russo outsold others two to one. It wasn't just him; Bee worked the front of the booth, and Alex and Larry Jr. worked the floor.
"In these trying times, there are some that are losing their edge," says Boston Whaler's Nettles. "They're more caught up in the doom and gloom, and it's a self-fulfilling prophecy. The Russos know it's a tougher customer - that's a fact - so they just work that much harder."
During a particularly slow period of the show, Larry Jr. mimicked a bored salesman's stout position with hands on his hips. The salesman grinned and quickly shifted to a more inviting posture. "We call that the soldier stance," says Larry Sr., laughing.
Dealers have to have energy now more than ever, says Noyes. "You have to wake up every day and go find the opportunities and make the most of them," says Noyes. "There isn't any industry that's easy right now, but the marine industry is certainly challenged, and you've got to be energized, go after it and do it for all the right reasons."
Russo Marine has had to lay off employees, and those who remain have had to do more, says Bee. The layoffs have been difficult - the Russos refer to employees as family - but they can also see the positives that belt-tightening produces. They have learned how to trim expenses and recognize what is truly essential to the business and what isn't.
The downturn gives them a chance to catch their breath after growing for the last five years. Larry Sr. sees it as an opportunity to really focus on details. Bee views it as a chance to see where the business is headed.
"Those of us who survive this will have such an advantage because we will have shed underperforming manufacturers and underperforming retailers that were constantly taking market share from us simply because they were there," says Larry Sr. "If they're not there anymore, they're going to come here. Not in an unfriendly way, but, in a way, that says we've earned this opportunity."
Growing up Russo
Alex and Bee make major contributions to the family business, even if they aren't as visible. "Dad's on the front end, Alex is on the back end, and there's me in the middle," says Larry Jr. "Mom, she is the family glue."
Alex describes his path through the business as a curvy line, compared to Larry Jr.'s more direct journey. "Alex, like me, has never worked a day outside the family business," says Larry Sr.
While Larry Jr. emerged from college knowing he was a "numbers guy," Alex worked at Russo Marine during his years majoring in business administration at the University of Massachusetts. When he emerged, he initially gravitated to parts and accessories, working with a veteran sales manager. When that manager retired, Alex took the helm. Later, he moved into service and eventually became service director, handling all the parts, accessories and ordering while managing a service team of 20 in two locations, as well as another 10 or 12 subcontractors, says Larry Sr.
After about eight years, the company got so big that Alex was called on to manage human resources, information technology and all the behind-the-scenes functions that had previously been piecemealed out to various departments. "That has been a huge help," says Larry Jr.
Bee, whose background is in art and teaching, entered the family business creating signs and painting names on boats. She remembers hanging upside down to do a few that were already in the water. In 1987, when Sandy began putting in half-days, she came in each day to eat lunch with her mother-in-law, catch up on the day, and do the paperwork and reception work for the second half of the day. Now she's often the first person a customer encounters.
Larry Jr. is general manager and says if he wasn't doing that he probably would be in investment banking. Both sons say they never considered doing anything but this, though Bee points out that each had alternatives.
"Yeah, we had our choice of what we could do: We could do sales or parts or management," Alex quips. "I don't think it was spoken, but I've always known if you don't like this business, you don't have to do it. But it's a fun place to work. You're with family, and the employees - they are also like family."
Alex's children, girls ages 3 and 5 and a 9-year-old son, and Larry Jr.'s 8- and 10-year-old sons all love to play in the dealership, but there's no pressure for them to take the reins when the time comes.
"I don't say to my kids, 'This is what you're gonna do.' I've always said, 'If this is what you want to do, that's great, and if it's not, that's fine, too,' " says Larry Jr. "They've gotta like it. I'm not saying that I love every day that I'm here, but you couldn't survive in this business if you didn't like it, because it's too crazy, especially in a seasonal environment."
Both sons remember the fun they had as kids at the dealership. "It was always coming here as a kid and goofing around with my brother and parents and grandparents," says Larry Jr. "They would give us odd jobs to do, like 'Go clean this boat, and I'll give you two bucks.' So you start to learn the value of work and money.
"My boys are like my brother and I were: They come here, and it's a big playground," he adds. "We don't have them working yet; they're a little young. We give them a rag and say go clean the boat, and, of course, it looks worse than when they started, but I still give them a dollar."
When Larry Jr. and Alex were older, they began getting jobs like painting boat bottoms. Their grandparents all but stopped working when the boys entered so they could focus all of their attention on them.
"There isn't a job in the place [the sons] couldn't do," Bee boasts, which Larry Sr. says is crucial for them to fully appreciate the business.
It was similar to Larry Sr.'s upbringing, though he says his parents always expected he would take over. As an only child, he spent most of his time with adults at the dealership. "I was one of those people who was just soaking it all in," he recalls. "My father was also the kind of guy who wanted me by his side all the time. He was always telling me how things were made and why."
Bee, whose father was a customer of Russo's, also spent time there as a child. On their first date in the ninth grade, Bee dug out an old promotional pin - a miniature Evinrude outboard - and wore it. "Larry just about fell over laughing," she remembers.
The family is quick to laugh, but they have no illusions about family business. "One thing you have to learn early on, there is a distinction between business and family," Bee says.
"There are some days we don't even talk," Alex says.
They also give each other room for ideas and credit for them, and that has helped avoid pitfalls of some family businesses, Keeter says. "Most family dealerships that have sons or daughters coming up in the business, unless the moms or dads are pretty open, they suppress the kids and don't let them have the authority they need to have," he says. "Larry saw the opportunity to let Larry Jr. and Alex take over and run certain segments of it ... and that left Larry free to not worry about day-to-day things. Larry was confident in their ability and stepped out of the way and let it happen."
Larry Sr. says there were plenty of disagreements between him and his father. "We fought about everything," he says. "Everything. But in a productive way that got things accomplished."
The Russos have been invaluable contributors to the industry, says Thom Dammrich, president of the National Marine Manufacturers Association. "No question, he is a giver," Dammrich says.
Larry Sr. thinks highly of Dammrich and Keeter, too, calling them instrumental in creating an industry-wide Grow Boating movement. Dammrich's tenure, beginning in 1999, was a key factor because he brought a voice of diplomacy to traditionally strained relations between dealers and manufacturers, he says.
In the early 1980s, Larry Sr. was president of the Massachusetts Marine Trades Association, of which his father was a founding member. (John Russo also helped found the New England Marine Trades Association.) In the late '80s, he served as president of the MRAA, and later served on RBFF's board of directors.
"I always found him to be someone who looks out for the best interests of the industry first, as opposed to just what it could do for him," says Keeter, who has known Larry Sr. for about 25 years. "That's not to say he wasn't concerned about how it would affect him; he's just a broad-picture sort of guy."
Larry Sr. also chaired the task force that created the Dealer Certification program as part of the Grow Boating initiative. The certification program is intended to create an industry standard similar to those outlined in specific branded master dealer programs. "Larry's not the kind of guy to wait for things to happen. He's the kind of guy who goes out and makes things happen," says Dammrich. "From an association point of view, from an industry point-of-view, the more Larry Russos we have, the better off we'll be."
Larry Sr. has a reputation for candor. "He's a New Englander, and he's pretty dogmatic in his views, yet he has the ability to be very diplomatic when the time comes," says Keeter.
Larry Sr. has also been the leader in getting together area Sea Ray dealers to create a better consumer experience, an unusual situation that has grown out of trust and respect, says Irwin, the New Hampshire dealer. "We work weekly on certain situations that come up in the boating needs of the customers," he says. "Basically, we help each other out. If somebody needs a boat ... and we have it, it's theirs. We work very closely on that."
They also combine efforts to make sure they have the best booths at boat shows. "Four Sea Ray dealers join forces and just clobber the competition," says Larry Sr.
"I don't think it's that common in the industry; we just have a strong relationship," says Irwin. "And Sea Ray keeps on telling us that this tradition that we have will hopefully follow suit in the industry with many other dealers.
"Most important, they're very good friends. The whole family and all their employees have been very respectful, and we'll do anything we can for them ... not just the Russos but their employees too," Irwin says. "We can pool resources - boats, marketing, ideas, manpower and money - and you just have the look that when people walk into that booth, they can say, 'Wow!' "
This article originally appeared in the September 2009 issue.