Waterworks CEO Peter Sallick divides the company’s history into three chapters of monumental growth. Though the company was founded in 1978 by his parents, the kitchen and bath giant’s first growth spurt began in 1993, after he joined the company; with the help of venture capital investment, it soon ballooned from 10 employees and a few million dollars in revenue to 400 employees and $100 million in revenue. “We pretty much formed the basis of the brand we know today, in terms of having our own showroom locations where everything happened, and that was that first big phase,” Sallick tells host Dennis Scully on the latest episode of The Business of Home Podcast.
After Waterworks was forced into bankruptcy following the 2008 financial crisis, Sallick and a group of friends bought out the company’s debt, kicking off phase two: The brand pivoted from suburban markets to urban centers with large design communities, and grew the product offerings to include hospitality and kitchens. This led to the current phase, which began with being acquired by RH in 2016 and the resulting expansion. “I wanted [to find Waterworks] a permanent home without ever thinking again about a transaction for the brand,” he says.
After Waterworks joined RH, CEO Gary Friedman gave Sallick a piece of advice that still sticks with him today: “[He said], ‘I don’t care if you never grow. I want you to have the very best business possible, and I want that business to make sense in terms of its focus, and I want it to be the best in the world that it can possibly be,’” he recalls. The CEO took this to heart and focused his attention on what he saw as the best parts of the business—creating quality products and catering to customers’ needs. Eight years later, Waterworks has doubled in size and tripled its profitability.
“That simple statement, I don’t need you to grow; I need you to be great at what you do, unlocked an enormous amount of value,” says Sallick. “I think about that all the time, and I come back to that conversation and to the way we built the business from there, to remind myself constantly that we have to continue to do that.”
Elsewhere in the episode, Sallick discusses why Waterworks started acquiring stakes in its key strategic factories, what other doors RH has opened for the company, and how he finds the balance between art and engineering.
Crucial insight: For Sallick, the biggest challenge the trade industry faces is letting consumers know it exists through physical touch points. He points to luxury fashion brands like Louis Vuitton and Hermès that have achieved a wider reach in large part through exposing consumers to its products in stores. “I’ve always thought for my whole career that the biggest impediment for trade brands, for design firms, for architecture firms, is that not enough people understand us, not enough people see us, and not enough people have the opportunity to appreciate us,” he says. “None of us are as well exposed as we could be to people who might really benefit and appreciate what we do.” He encourages designers to open up shops as a “public manifestation of their work” to get on the radar of the average consumer. “The visual images that go with press and social media and all can help, but it’s not the same thing as that real kind of moment where you walk into someone’s shop or you have the chance to really touch and feel what could be,” he explains.
Key quote: “Waterworks has a lot of growth engines, and the RH opportunities are part of that. In effect, the stronger that Waterworks is outside of RH, the stronger Waterworks will be within RH, and vice versa. It’s an ecosystem that we’re building here, and the objective is to really reach customers, designers, architects and homeowners who are interested in what we’re doing, in all the places that it makes sense.”
This episode is sponsored by Loloi, Crypton and Rowe. Listen to the show below. If you like what you hear, subscribe on Apple Podcasts or Spotify.
The Thursday Show
BOH executive editor Fred Nicolaus and host Dennis Scully discuss the biggest news in the industry, including last week’s interest rate cut, a card game for design clients, and why a growing number of brands are turning to the trade. Later, designer David Netto and architecture critic Paul Goldberger join the show to talk about their new book on iconic New York architect Rosario Candela.
This episode is sponsored by Hartmann&Forbes and Chelsea House. Listen to the show below. If you like what you hear, subscribe on Apple Podcasts or Spotify.
