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Entrepreneurial state of mind: Local executives see challenges as opportunities

Five San Diego executives shared how they navigate in a tumultuous market and keep the spirit of entrepreneurship alive at a recent Daily Transcript roundtable.

“A lot of it stems from the person at the top, for good or for bad,” said Dave Hartman, the president and CEO of San Diego-based synthetic grass provider Easy Turf. “You start out with an entrepreneurial spirit … (and) you’ve got to work hard to maintain what got you there.”

Fred Pierce, president and CEO of Pierce Education Properties, agreed.

The importance of good leadership “applies to every single business and every walk of life,” he said, pointing to the success of the San Francisco 49ers under owner Eddie DeBartolo and the poor performance of the Los Angeles Clippers under Donald Stirling.

The roundtable participants, who are all semifinalists or finalists for Ernst & Young’s San Diego Entrepreneur of the Year, counted themselves among the fortunate few who have seen their companies survive -- even thrive -- despite the difficult market.

Hartman, for example, said EasyTurf has remained profitable despite a weak housing market and consumer lending market that has caused the company’s growth to slow.

EasyTurf inked a deal earlier this month with sports field artificial turf provider FieldTurf, in which EasyTurf will be FieldTurf’s North American distributor for all market segments outside of sports fields.

“The mood that I’m in totally sets the stage for the rest of the company,” Hartman added. “I’m not a volatile person, but all I have to be doing is grumbling under my breath, and it changes the whole tone.”

Roundtable participant Marcus Hompesch agreed that the chief executive’s mindset is key. The president and CEO of Chula Vista-based Profil Institute for Clinical Research said he prefers to focus on success rather than failure, and works to communicate his future goals with his team.

“Be transparent about your vision,” Hompesch said. “Communicate in a way that people want to share your vision and sign up for it and work for it.”

Hompesch added that the Profil Institute has also remained strong because of its ability to hone in specifically on its diabetes research services, rather than spreading itself too thin among a variety of different areas.

For Pierce, diversification has been his strategic choice. Pierce Education Properties both builds and manages student-housing developments. While occupancy has been robust thanks to a countercyclical education sector, the dearth in development funds has prevented him from doing much building.

He added that being a contrarian has also been a boon for his company. Pierce Education Properties started buying underperforming real estate at the height of the market in 2007 and turning them into high-end residences for students, complete with swimming pools, Wii game centers and more.

Since then, income has grown 78 percent on those same properties, and the average occupancy of 69 percent in 2007 is now approaching 100 percent this year, Pierce said.

“It’s not always easy to be a contrarian, but if you can be, it can really pay dividends,” he said.

Bucking the popular trend also worked for Lumedyne Technologies, CEO Brad Chisum said.

He recalled getting criticized in the first half of 2008 for holding too much cash. Now, the company’s capital position allows it to guarantee salaries for two years, pay its suppliers on time and capitalize on cheaper materials.

The executives at the roundtable also agreed that creating a positive culture was important to maintaining an entrepreneurial spirit.

Pierce emphasized rewarding employees for their hard work and cultivating a family atmosphere: giving company ownership to senior managers and significant bonuses to other employees, throwing Christmas parties at his house, organizing a company outing to Petco Park, etc.

“I just believe that if you have an environment in which your successes are shared by everybody at every single level, that creates a culture where everyone loves to come to work,” Pierce said.

Tim Penick, president of San Diego general contractor T.B. Penick & Sons, emphasized collaboration and harnessing all of his employees’ abilities. Creating a culture that is unafraid of change is also important, Penick said -- especially in a depressed industry like construction.

“You’re only as good as your ability to anticipate market changes and develop the expertise to profitably pursue them,” he said. “We sense and smell opportunity to challenge ourselves and take advantage of opportunities.” Still, those at the roundtable see little in the economic recovery to rejoice over. Rising consumer confidence has yet to translate into widespread spending. Credit markets remain sluggish, hindering manufacturing growth and business startups.

Where credit is flowing, it’s a “frenzy,” Pierce said. In the property buying market, cheap financing from Fannie Mae and Freddie Mac and the re-emergence of previously sidelined institutional and private investors have created an enormous amount of competition for properties, he said.

Pierce is hopeful about the U.S. economy’s future, and that access to capital will resume.

“I’m actually a believer in the American entrepreneurial spirit,” he said, noting that expansions usually last longer than contractions. “We can’t stay in that state of mind for too long.”

Roundtable participants

Tim Penick, President

T.B. Penick & Sons Inc.

Marcus Hompesch, President & CEO

Profil Institute for Clinical Research Inc.

Brad Chisum, CEO

Lumedyne Technologies Inc.

Dave Hartman, President & CEO

Easy Turf

Frederick Pierce, President & CEO

Pierce Education Properties

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T.B. Penick & Sons Inc.

Company Website

15435 Innovation Dr. Ste., 100
San Diego, CA 92128

T.B. Penick & Sons Inc. Executive(s):

Tim Penick

  • President

Marc Penick

  • Chief Executive Officer

Greg Lee

  • Executive VP

Byron Klemaske

  • Executive VP

John Boyd

  • Chief Financial Officer

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