Dennis Scully: Welcome to season two of the Business of Home podcast. I'm your host, Dennis Scully, and I can't wait to share all that we have planned. We'll continue our conversation with industry leaders like Farooq Kathwari of Ethan Allen, emerging entrepreneurs like Anna Bond of Rifle Paper Company, and design innovators and icons like Clodagh, discussing the changes and challenges facing the home industry and interior design community.
Dennis Scully: And if you're just joining us, welcome, and we invite you to catch up on season one, which includes interviews with industry titans like Holly Hunt, John Edelman, Ralph Pucci, and more.
Dennis Scully: This podcast has been sponsored by Fuigo. Discover the workspaces and business tools powering exceptional excellence in interior design. Fuigo's 18,000 square foot Park Avenue studio includes beautiful workspaces, and material and product samples from thousands of top A&D vendors in the world's largest lending material library. Now available to interior designers everywhere, Fuigo's modern project management software was tailored to solve the business needs of groundbreaking designers at Fuigo studio. Visit fuigostudio.com to book a tour. That's F-U-I-G-O-studio.com. And now, on with the show.
Dennis Scully: My guest this week is Farooq Kathwari, the chairman and CEO of Ethan Allen. Farooq, thank you for having us in your beautiful store.
Farooq Kathwari: It's good to be here.
Dennis Scully: Well, it's a pleasure to get to speak with you. I wanted to start with you first coming to the United States. How long ago was that?
Farooq Kathwari: Well, it was a long time back. I was 20 years old. I ended up in New York from a very difficult part of the world, it's war-torn Kashmir.
Dennis Scully: Yes.
Farooq Kathwari: So I was involved ... My family were involved with the conflict. Both sides of my family were involved with arts, crafts, and then also politics. But at age 20, I ended up getting an admission to NYU business school.
Dennis Scully: Right. So how did you apply to NYC business school?
Farooq Kathwari: Again, it's a long, long story. But my father had been separated from us when Kashmir was divided. So half of my family got separated. My father did not come home for 17 years. My mother didn't see two of her children for 10 years. But my father ended up in New York at the World's Fair, because he got the job at the World's Fair. When he was here, he decided on his own that he would apply for me, or at least send me applications. So he sent me applications to Columbia University, to NYU, to City College. And I had no idea, because in Kashmir, I was mostly spending time in sports. I was the captain of the cricket team.
Dennis Scully: Ah, okay.
Farooq Kathwari: And played cricket almost five days a week. I studied English literature and political science while families wanted you to be a doctor or engineer. But somehow, I got admitted. And it was a long story. It was not easy for me to come.
Dennis Scully: To come over from Kashmir.
Farooq Kathwari: To come from Kashmir. My papers were not right. But amazing, how many people helped me.
Dennis Scully: Along the way.
Farooq Kathwari: Along the way. So I came here, and day two, after landing in Queens and having an apartment in Queens, came to NYU, not far from where we are here.
Dennis Scully: Yes, not far at all. And so you began as a student.
Farooq Kathwari: I became a student, an MBA student. And then I needed a job.
Dennis Scully: Right, yes.
Farooq Kathwari: And my father had given me enough money to live for six months. So I had six months ...
Dennis Scully: To get yourself-
Farooq Kathwari: To get myself settled. So I was looking for a job, and I saw an ad in the newspaper. It said, bookkeeper needed. And I asked my class fellows, I said, what's a bookkeeper, because I had never seen any accounting, any books. I had not even seen a calculator. So they said, don't apply.
Dennis Scully: This is not the job for you.
Farooq Kathwari: That's right. But I did. It was on Broadway and Canal Street. It was a small company printing envelopes, and there were two partners, Jesse [Isaacson 00:04:29] and Richard King. I've forgotten millions of names, but Jesse Isaacson, Richard King-
Dennis Scully: So you remember them.
Farooq Kathwari: ... and Abe, who printed, and Sally, who was ... In those days, they called them gal [Friday 00:04:39]. She did everything else.
Dennis Scully: Yes, yes.
Farooq Kathwari: Fortunately for me, I came around lunchtime. So they open up a book and a calculator, which I had not seen. Actually, it was a hand-operated calculator. He said, "Could you foot the books?" So I looked at him and very confidently said, "What's that in English?"
Dennis Scully: Yes.
Farooq Kathwari: He said, "What do you mean, where have you learned?" I said, "In England". The only thing in England I had done was change a plane.
Dennis Scully: But you told him that you had learned in England.
Farooq Kathwari: That's right. But fortunately, it was lunchtime and he said, "I've got to go out. Can you go back or wait?" I said, "I'll wait". So while I was looking at the books, this lady came over whose name was Sally, and she said, "I've been watching you. Do you know anything about bookkeeping?" I said, "Nothing, but I need the job. Can you teach me?" So in 45 minutes, she gave me a tutorial.
Dennis Scully: So Sally gave you lessons.
Farooq Kathwari: Lessons in 45 minutes. What's an accounts receivable book, a disbursement book, how to operate a calculator, told me what footing means. It basically means adding the page.
Dennis Scully: You were adding the page up.
Farooq Kathwari: So when Richard King came back, looked at me, and said, "What do you think?" I said, "Well, I looked at your books." And he said, "What?" But it's okay, you had to be confident. So I got the job. I do not know how I learned, but after three or four months, I was doing well.
Dennis Scully: Okay, fantastic. Good for you.
Farooq Kathwari: I doubled my salary. But I was a full-time student at night.
Dennis Scully: Right, okay.
Farooq Kathwari: But I also learned an early lesson, which was that these two partners were always arguing, always. I was listening to them, they were much older than me. And one day I said to them, I said, "Mr. Isaacson, Mr. King. You have differences. Why don't you tell me? Maybe I'll help you." So they looked at this 20-something and said, "You're going to help us?" I said, "Tell me. I was the captain of a sports team, cricket team. We always had arguments, issues."
Dennis Scully: Right.
Farooq Kathwari: They looked at each other and finally they said on that day, fortunately, they were arguing on how much money they could take out of petty cash. I said, "Well, I'm the bookkeeper. I know you each should take $100 and I should get $15." They looked at me and laughed. "Why you should get $15?" I said, "Because I came up with the solution."
Farooq Kathwari: Well, they agreed to give me $5 more, which was very good. But what I learned was that I can also apply the common sense of finding solutions. So that started my ...
Dennis Scully: Thus began your illustrious career.
Farooq Kathwari: It did. But also my grandfather in Kashmir made a decision in which he decided on his own to send me 12 wicker baskets of arts and crafts, and said sell them. And send us some money, but it will help you in your school.
Dennis Scully: Oh, so this was his way of helping from Kashmir.
Farooq Kathwari: That's right. But first, I had to decide where to keep the baskets. Second is, where do I sell them? And again, our class at business school had received a lecture from Marvin Traub. He used to be a CEO of Bloomingdale's, well-known.
Dennis Scully: Sure, sure.
Farooq Kathwari: So I said, I'll call him. So I called his office maybe seven days, eight days. First they said he's not available. But finally nine days later, they said, okay. Come on in.
Farooq Kathwari: I went in. He got in one of his merchants, looked at these great art, papier-mâché, wood carving things that I had. He said, "We like it, that's great." Well, Bloomingdale's became my customer, and I was in the business of arts and crafts.
Dennis Scully: Look at that.
Farooq Kathwari: And then I said, at Bloomingdale's, and why not Modern Tailors? Why not others?
Dennis Scully: Right.
Farooq Kathwari: So I started selling it to others part-time. I was going to school full-time, I was still working in the accounting firm.
Dennis Scully: You were still a bookkeeper.
Farooq Kathwari: I was still bookkeeping. Now, about nine or ten months later, Richard King, who had come to like me ... He said, "NYU business school is on Wall Street. That's where it used to be." He said, "Why don't you go get a job on Wall Street?" I said, "I'm studying marketing." That's what I was studying.
Dennis Scully: Right.
Farooq Kathwari: He said, "Doesn't matter. Go there and get a job close to your school." And I asked, what should I tell them? He said, "Tell them you're a financial analyst." So anyway, I walked in the first building on Wall Street, walked up the floors, and I got a job with Bear Stearns as a junior financial analyst when I was still at school, still selling my ...
Dennis Scully: Still selling your baskets.
Farooq Kathwari: And a year later, I was approached by a new company founded by the Rothschilds. The portfolio manager needed somebody to help him, and they asked me as a junior analyst to help the portfolio manager while I'm still going to school and selling my arts and crafts.
Dennis Scully: These were the days.
Farooq Kathwari: These were the days. But you see, people help you. And it was there that one of my associates who knew I was selling arts and crafts said, "You know, I know the chairman and founder of Ethan Allen."
Dennis Scully: Oh, here we go. Okay.
Farooq Kathwari: "Would you like to meet with him?" Of course, I did not know Ethan Allen headquarters were at Lexington Avenue here.
Dennis Scully: Oh, okay. So that day, they were here [crosstalk 00:09:45].
Farooq Kathwari: Yeah, Lexington and 33rd Street. So I went to see, and Nate Ancell, who was the founder, the chairman, very well-known ... So I went to see him, and he brought in one of his, again, merchants. "This young man is from Kashmir. Do we get anything from there?" They said, yes, we get this cool fabric, hand-embroidered, it never comes on time, always a problem.
Dennis Scully: The worst vendor that we have.
Farooq Kathwari: So he said, "You can help." I said, absolutely. I had no idea, but I got in the fabric business with Ethan Allen. And after that, I said if Ethan Allen ... It was a process-
Dennis Scully: Sure, sure, sure.
Farooq Kathwari: It was not easy to-
Dennis Scully: I'm trying to keep up with this fast-moving career of yours. So you were no longer doing the bookkeeping.
Farooq Kathwari: No, after the bookkeeping, I was working-
Dennis Scully: So you'd gone to Bear Stearns.
Farooq Kathwari: And after that, the Rothschilds.
Dennis Scully: Then you went to the Rothschilds.
Farooq Kathwari: I was still there, at the Rothschilds.
Dennis Scully: Okay, you were still working with the Rothschilds.
Farooq Kathwari: And this was all part-time, the fabric business.
Dennis Scully: Got it. And you were going to school.
Farooq Kathwari: I was going to school.
Dennis Scully: Okay. Getting your MBA.
Farooq Kathwari: That's right.
Dennis Scully: Right, okay.
Farooq Kathwari: And it was there that I started this process, and by the end of the ... I was still at school, and a year later when I was almost completing my MBA, I was made the chief financial officer of the Rothschild company. Think of it, my knowledge of that bookkeeping led me to-
Dennis Scully: Unbelievable. A man who didn't know how to work a calculator five minutes ago, and now he's suddenly ...
Farooq Kathwari: Five years later. And it was there that Nate Ancell again called me a year back, and said, "You know, my merchants tell me we're having trouble getting rugs from Romania and India. Can you help?" I said, absolutely.
Dennis Scully: I'm your man.
Farooq Kathwari: I had no idea where Romania was. I had no idea where the rugs from India were coming.
Dennis Scully: You must be an incredible actor. How do you even keep a straight face while you're telling people these things?
Farooq Kathwari: Yeah, you have to keep a straight face. Yeah, right.
Dennis Scully: So you said yes, I'll take that on.
Farooq Kathwari: But the difference is this. You have to say yes, but then you have to do it.
Dennis Scully: Right. So you figure it out.
Farooq Kathwari: You have to figure it out. And I did. I took a week off from my work, went to India, Romania, no. But by that time, I thought Romania would not be there. At the place, I was able to find good sources, and became a source of rugs to Ethan Allen, to Bloomingdale's, to Modern Tailors, and to a few others. And a year or so goes by. I came to know Nate Ancell, and he liked me, I think. And he said-
Dennis Scully: This is the founder of Ethan Allen.
Farooq Kathwari: The founder of Ethan Allen. Ethan Allen at that time, this was 1973, was moving from Manhattan to Danbury.
Dennis Scully: To Danbury, Connecticut, which is where the headquarters is today.
Farooq Kathwari: That's right. And he then said to me, he said, "Why don't you join Ethan Allen? You're a merchant, you're a marketing person. You're still working in finance." So I thought about it and I said, "No, how about a partnership?" By that time, Ethan Allen was a manufacturer of furniture, well-known, had about close to 30 manufacturing plants in America, sold its products to its Ethan Allen dealers, who purchased furniture from Ethan Allen, but also purchased lamps and accessories and pictures from others.
Farooq Kathwari: So I said, I'll give up my job, we'll set up a joint venture, and my company will develop all these other products that these dealers need, like lamps, lighting, textiles.
Dennis Scully: So everything besides the furniture itself, you would supply.
Farooq Kathwari: And even some furniture, from Italy and others.
Dennis Scully: Okay, got it.
Farooq Kathwari: And after some discussions, he agreed. So I gave up my job, we set up a joint venture called KEA International. Kathwari Ethan Allen.
Dennis Scully: Okay, got it.
Farooq Kathwari: And I took his office, because he that same year moved to Danbury. He gave me his office, a big, huge penthouse on Lexington.
Dennis Scully: Fantastic.
Farooq Kathwari: And we started the process. And that's the KEA International, my first venture was to set up an office in Italy, because at that time, Italy was the main source of products of the home. Not China or India or anywhere else.
Dennis Scully: Right, okay [crosstalk 00:13:50].
Farooq Kathwari: So we set up an office in Italy, in Florence, in Italy. And I used to go there four or five times a year. And then came more products from Portugal and India, and a few years later, to China. And that business [inaudible 00:14:08] seven or eight years, and at that time, Ethan Allen, which was a public company, was purchased by a company, a conglomerate, that wanted to get into the furniture business, called Interco of St. Louis.
Dennis Scully: Interco, right.
Farooq Kathwari: So they decided to get into the furniture business, and the first company they purchased was Ethan Allen. And Nate Ancell and Ted Baumritter, they owned a fair share. This was for them also a way of-
Dennis Scully: Cashing out.
Farooq Kathwari: Cashing out.
Dennis Scully: Sure.
Farooq Kathwari: That was the way this was done, while the conglomerates used to buy these companies, and then they would allow the people to keep on running them.
Dennis Scully: Right. And we should say that this was a time that conglomerates were very popular and everyone thought you had to be a great big company with lots of different divisions, right?
Farooq Kathwari: That's right. It was-
Dennis Scully: It was a model.
Farooq Kathwari: It was the so-called ITT model-
Dennis Scully: Exactly, yes.
Farooq Kathwari: ... where they purchased all kinds of companies. So it was at that time, he then said to me that I believe that it makes sense for you to come to Ethan Allen and let us buy your interest. We had a lot of discussion. In fact, I went to his office, we talked. And I thought that I didn't want to go 'cause I was operating my business out of Westchester. My first building was a bowling alley that we purchased where we did all kinds of assembly of products. I still own that building. And then I purchased a building in Passaic, New Jersey, which we still own. And I didn't want to go. I had little children, lived close to home. And so I thought that the best way for him to tell me not to come was something that he would, say, not agree to.
Farooq Kathwari: I said the only reason I would come here would be to take your job. He looked at me. He said, "You want my job?" I said, "I don't want your job. But if I have to come here, that's what I would have to do."
Dennis Scully: Right.
Farooq Kathwari: Well, anyway, he agreed. I thought he would not agree, and then I became president of Ethan Allen when I was in my 30s.
Dennis Scully: So you took over.
Farooq Kathwari: And all of a sudden I oversaw about 40 vice presidents, very knowledgeable in every different field. And here he asks me to become president of the company.
Dennis Scully: So there were 40 vice presidents at the time? So how big was Ethan Allen at the time?
Farooq Kathwari: Well, at that time, until the sales, it did $150 million. But that was a lot of money in that time.
Dennis Scully: In those days, yeah.
Farooq Kathwari: But it was a structured company with 30 manufacturing plants, 100 management people in the field selling it to the dealers. So it was a very traditional company.
Dennis Scully: And at the time, was it very much the colonial furniture image that we have in our minds?
Farooq Kathwari: Oh, absolutely. Ethan Allen was an early American colonial company, which of course in the '40s, '50s, even '60s, was the predominant style. That's what Americans wanted.
Dennis Scully: Right.
Farooq Kathwari: So Ethan Allen was right for its time. But by '70s, things were changing. If you take a look at most middle America ... purchase their clothing from Sears and Penney's and others. Then comes Gap, comes The Limited, comes changes ... Fashion started to change. Automobiles used to be made by General Motors, Ford, Chrysler. Well, they were all big. And then come the Japanese and the change of style of automobiles. So styles were no changing.
Farooq Kathwari: And throughout history, there's a pattern of change in style. It first starts with what you wear. Then it goes to your transportation. Then it goes to home. This is something that has gone for thousands of years, nothing new.
Dennis Scully: Right.
Farooq Kathwari: So clothing was changing. Transportation was changing, and it was then coming into the homes. So Ethan Allen was very much a traditional colonial company and doing well.
Dennis Scully: Right. At the time you took over, doing well, and it was what people thought American furniture-
Farooq Kathwari: Reasonably well. It was not really growing, but reasonably well. But the styles were starting to change. And then this Interco that purchased Ethan Allen ... They purchased two other major companies, Broyhill and Lane, and became the largest furniture company in the United States in terms of the manufacturing, sourcing side.
Dennis Scully: Right, between those three brands, right. Okay.
Farooq Kathwari: And this was now in the mid '80s. And in the late '80s, they came under a hostile takeover.
Dennis Scully: Interco.
Farooq Kathwari: Interco did. And those days, to fight a hostile ... One of the ways was to get a lot of debt, give it as a dividend, and the [inaudible 00:19:02] would maybe go away. And that's what they did.
Farooq Kathwari: And I saw an opportunity. I said, these folks are going to be in trouble, and maybe I should do something of buying Ethan Allen. Now, because of my connections in the past on Wall Street, they helped. So I put together a ... So I went to them, and I took Nate Ancell with me, who had retired but was still ... with the company.
Dennis Scully: Okay, okay. So the original founder was still loosely involved.
Farooq Kathwari: He was. He had an office there, he was not involved ... He didn't have any ... But he was chairman emeritus.
Dennis Scully: Got it, okay.
Farooq Kathwari: But he was still there.
Dennis Scully: Right.
Farooq Kathwari: So he said, let's you and I go.
Dennis Scully: So you met him and you went to see investors.
Farooq Kathwari: No, no, not investors. We went to St. Louis where Interco was headquartered, and we told them we'd like to buy the company. They said, no, not for sale. Now, Nate Ancell was a character. He said, "What do mean, not for sale? We want to buy it, you have to sell it." They said, "Okay, we own it. You better go back."
Farooq Kathwari: So we came back. Then they thought about it, and a week or so later, they said to me that ... We've decided to select Ethan Allen, and set up a ridiculous price of $600 million and said, we cannot sell it to you without having an auction with your management. And your job is to sell the company. You can buy the company, and we can sell it in four weeks, and the price is $600 million. It was sort of ridiculous.
Dennis Scully: Yes, it sounds ridiculous.
Farooq Kathwari: It was ridiculous, and the price, [inaudible 00:20:32] how we were going to get that. The banks were not ready to even think of loaning even if the money was less. So I had met Jack Welch of GE, was a major, major institution, GE Capital. I called him up. So that guy called Marvin Traub, and got started. I called him up.
Dennis Scully: Called him up.
Farooq Kathwari: And he said, "You know what's interesting? You talk to Gary Wendt," who was the CEO of GE Capital. At that time, GE Capital was bigger than banks.
Dennis Scully: It was huge.
Farooq Kathwari: It was huge. So I met Gary Wendt. I met his other associate. And amazing, that in three weeks' time, they approved $550 million in cash.
Dennis Scully: Unbelievable.
Farooq Kathwari: Those were crazy times, would not happen.
Dennis Scully: Those were crazy times.
Farooq Kathwari: That we would buy the company at 90% debt.
Dennis Scully: Unbelievable.
Farooq Kathwari: So anyway, we made the bid. It went to a bidding process, lots of fights. And Interco, they should've accepted our money. They didn't. And they thought they would even get more. And, well, six or seven months later while they were still negotiating, markets turned. And we were then able to buy the company at $350 million, while we were going to offer them $500 million six months before. We would have most likely never made it, even at $550 million, it was ... But anyway, we were able to-
Dennis Scully: But you bought it.
Farooq Kathwari: We bought the company.
Dennis Scully: Okay.
Farooq Kathwari: And then the challenge started, which is ... Now we had to make sure that we had enough cash coming in to pay the interest and grow the business.
Dennis Scully: And you had very high interest rates, right?
Farooq Kathwari: We had interest rates up to 18%.
Dennis Scully: 18%.
Farooq Kathwari: Right. I had brought in, after that time game ... I had a great group of people. I had as my partners ... was Chemical Bank, which is JP Morgan.
Dennis Scully: Sure.
Farooq Kathwari: Sandy White was running Smith [Bonney 00:22:28]. They became a partner. So I knew all these-
Farooq Kathwari: [crosstalk 00:22:32] all became good partners.
Dennis Scully: Okay.
Farooq Kathwari: But 18% interest.
Dennis Scully: Yeah, that's a lot of [crosstalk 00:22:39].
Farooq Kathwari: As long as ... [crosstalk 00:22:39] up to 18%. But we had to now change the company. If we did not make changes ... So this is now 1992.
Dennis Scully: Okay. So this is the first major change that you make to the company.
Farooq Kathwari: 1989 is when we purchased the company. So between 1989 and 1992, we changed 50% of the product line. We even changed the looks of our stores from colonial to what we are today, a little bit more modern. And we had to convince at that time, all 95% of the stores that are operated by individual families. So we had to convince all of them to change the storefronts, take on the new products, and they all did. We had a great relationship with them.
Farooq Kathwari: It did not happen right away. I had worked with them for many years, and for the next 10 years or so, we were able to bring in products, new products. We had to ... We spent a lot of money on advertising, and we generated $2 billion of free cash.
Dennis Scully: Unbelievable.
Farooq Kathwari: So we paid that debt back.
Dennis Scully: Okay. So you pulled that off. So you paid down the 18% notes and everything.
Farooq Kathwari: Yes. On top of it, over the years, we bought 40% of our company back. We invested $1 billion in capital expenditures. And then around that time, in the late '90s, many of these families who had been with the company for 30-40 years, started retiring. And many of the second generation, third generation, were doing other things.
Dennis Scully: They didn't want the business.
Farooq Kathwari: They didn't want to. In some cases, they did.
Dennis Scully: Okay.
Farooq Kathwari: And fortunately, it all didn't happen right away. But now in the last 25 years or so, we now have ... We operate 70% of the 200 stores or design centers that we have in North America.
Dennis Scully: Are now company owned.
Farooq Kathwari: They're company owned, right. And the challenge was, who's going to run them? So we decided that the best person to run something is somebody who has the passion. I wouldn't be doing whatever I do if I didn't have passion. And in our business ... was the business of design. So interior desires have the passion. So we said, we are going to take interior designers and make them entrepreneurs.
Dennis Scully: Interesting, okay.
Farooq Kathwari: So we decided that how, and ... So today, we have 200 management in our retail division. You are sitting in one of them.
Dennis Scully: Sure.
Farooq Kathwari: 90% of them came from the ranks, running the business. Interior designers became project managers, design center managers, district managers, vice presidents. So that was one element of the business that we've had to work, and today, as I said, we have a strong team of people. Of course, it just so happens 90% of them are women because of the interior design.
Dennis Scully: So were you specifically trying to hire interior designers to come and work for the company, and then you knew that you could train them to become managers and project managers and all of that?
Farooq Kathwari: Well, we had already started right from the '80s, a great focus on interior design. So we already had interior design. We changed the business from salespeople to interior design.
Dennis Scully: And so that was part of the big change that you made to the business.
Farooq Kathwari: That's right.
Dennis Scully: Going from salespeople to design professionals.
Farooq Kathwari: That's right. That had already been done. The company always had good, knowledgeable people, some of them interior designers, but not everybody. But our objective was that everybody who deals with a client has an interior design background. So we had to bring in people. Today we have 1,500 interior designers, about 1,200 of them or so in North America, 300 internationally, and 95% of them have a strong interior design background. So I would say that we are the leading and maybe the largest interior design company-
Dennis Scully: Interior design firm? See, that's interesting, because interior designers will push back on that and say that they're not really interior designers, right? So they're people that work in stores that help people pick our fabrics or lights. So what's your response to that?
Farooq Kathwari: Well, it's ... The response is that these are interior designers, and where they have the ...
Dennis Scully: Are they trained? Are they trained interior designers? Did many of them work in interior design before they came here?
Farooq Kathwari: Oh, absolutely. In fact, they're trained ... Most of them have gone to school in interior design or arts. And many of them were professional interior designers who come to join us, members of ASID.
Dennis Scully: Okay.
Farooq Kathwari: So I would say 90% of our people who are working in our design centers have a professional educational background in design.
Dennis Scully: Okay.
Farooq Kathwari: Maybe 10% may not have, and 90% do.
Dennis Scully: Okay.
Farooq Kathwari: And so as I said, now, the difference between them and the folks who work outside is that our interior designers basically have to work with what we have. They cannot go out with a client and buy other products.
Dennis Scully: Right.
Farooq Kathwari: That's why we have to have comprehensive product programs that are relevant, that people can utilize, and the right interior designers work with clients. Now, they also help the clients if they want to do ... For instance, we don't sell kitchen cabinets. We don't sell tiles. They help them, but we don't sell them.
Dennis Scully: Right. So will they actually help them specify kitchen cabinets or bathroom tiles, or will they point them in the right direction of a showroom that can help them?
Farooq Kathwari: They would point them in the right direction, because if there's any sort of liability, they're not in that business.
Dennis Scully: Right.
Farooq Kathwari: So I think that our business model today is that we are one of the few vertically integrated companies left. When I started, we had 30 manufacturing plants. But at that time, there were no products coming in from China or Vietnam. It was all United States. Then the next challenge we had to face with was the challenge of sourcing. But before I do that, let me go back to interior design.
Farooq Kathwari: When we took over these locations, stores, we call them design centers, from our independents ... The issue was that most of them had been set up in the 1960s. Some even the 1950s. And the last 10 years, a lot of those locations are not that relevant locations. So our challenge was to first take them and then to relocate them. 60% of these 150 that we took over, we relocated them.
Farooq Kathwari: For instance, this one, over here. We used to have one over on 33rd Street in Manhattan. At one time, we had one on 18th Street and 5th Avenue. At that time, it was not a good location. Today, that's a fantastic location. But it was closed.
Dennis Scully: Yeah.
Farooq Kathwari: So we have been relocating. Right now, there are about five or six under construction or relocation. We are right now in the process of relocating in Albany, NY, where the independent family retired after 60 years. We took it over last year. We are now in the process of relocating one in Cedar Rapids, Iowa. We are relocating one in Denver. We are relocating one in southern California. This is a constant process. So keep in mind, we operate 150, and 60%+, we have relocated them in the last 10-12 years.
Dennis Scully: Right. So that's part of the relevancy process. That's part of staying current with the times, and where people are shopping and where they're looking for ... Even this location that we're speaking now, this nomad area, has become a very popular destination for furniture, for restaurants.
Farooq Kathwari: Yes, this is, and this is what is taking place, where 25-30 years back, it would be a suburban location, freestanding, and the largest store. Now, today, with technology and more knowledgeable interior designers, we don't need a larger space. If you don't have knowledgeable interior designers, then your salespeople ... They can only sell if they have it on the floor.
Dennis Scully: Oh, okay. So that's an interesting connection. So a talented designer can explain to a client without the client actually having to see it in person.
Farooq Kathwari: Absolutely. Now, 20 years back, that was not the case. And those folks were selling at the mass level, are selling ... If they don't show it, they don't sell it. In our case, we have opened up different sizes. For instance, we have opened up in Water Mill in the Hamptons, a 3,000 square foot ... There are two interior designers that do a great job. We opened one in the suburbs of Orlando, a 1,500 square foot, but with interior designers today with technology, and also the fact that right now, a lot of our products are available in 3-D. They're available in augmented reality.
Farooq Kathwari: So space is less. This one is half the space we would have normally had 10 years back. But today, we are able to operate because of technology.
Dennis Scully: We're going to take a quick break for a word from our sponsor, but we'll be right back.
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Dennis Scully: I want to talk about the role that technology is playing in the furniture industry in general, but I know that it's something that you have put in the forefront of the efforts that you're making as a leader of Ethan Allen.
Farooq Kathwari: New technology ... Today, you have to combine technology and personal service. For instance, in the last one year, about ... almost 600 of our interior designers are now chatting online with clients. With [enrollment 00:33:38], with a 3-D, with augmented reality ... We have today to make sure that we are relevant, because relevancy is tremendously important. Relevancy affects every element of our business. Being a vertically integrated company, the relevancy of our manufacturing ... We manufacture 70% of all the furniture you see here, in our own workshops in North America. 25-30 years back, we had 30 plants in the United States. And today, out of 30 plants, we have 9 plants. Seven of them in the United States, two major ones ... In the last 10 years, we opened one in Mexico and one in Honduras. And we are shipping from Mexico and Honduras and the United States ... 70-80% of the projects we sell in China.
Farooq Kathwari: So vertical integration for us starts at every level. So manufacturing, we've had to bring in technology. 20 years back, a plant that was not right up to its highest level could work. Today you can't. You're competing with manufacturing in China, in Vietnam, in every country of the world. So our seven plants in the United States, and two in Mexico, just have a tremendous amount of technology because we have to compete with the world.
Farooq Kathwari: Same thing in technology has impacted every element of our business. For instance, the sofa that you are sitting on. 15 years back, this sofa was made with what is called in this industry sticks, by parts, wooden parts. Some people still make it that way. We had a million square feet of space dedicated to making parts. Today, all of that has been replaced with 50,000 square feet, with CNC computer-operated machines that make all the parts for this one sofa in less than five minutes.
Dennis Scully: Unbelievable.
Farooq Kathwari: The fabric that you see over there has ... All our fabrics are matched, which ... A lot of folks don't do it. But we used to cut it all by hand. Today with laser cutting machines, we are programming that this fabric will have applied to every sofa chair that we have, and it has to be programmed. And this fabric will be cut by our laser-cutting machines in less than 5-7 minutes, and be absolutely accurate. Otherwise, how do you compete in the world? So technology and personal service, from manufacturing to retail, is important.
Farooq Kathwari: Then we also did something that was unheard of in the late '80s. In the late '80s, our retailers, independent retailers, did like the car companies do, even the highest brands. They have three ads in the newspaper that say, come and get it from me. Ethan Allen, dealers did the same thing too, and I felt, no, we have an opportunity of creating a national brand. But most of our factories were on the East Coast, and by the time we delivered to Texas and the West Coast, the prices could be 10%, 15%, 20% higher.
Farooq Kathwari: So we decided that we will deliver our products at one cost nationally in the '80s, late '80s.
Dennis Scully: And that was unheard of at the time.
Farooq Kathwari: Unheard of, even today it's easier to ship something ... A piece of glass, but furniture, and deliver it with white-glove service to a consumer's home nationally at one price. We did that, and that had become a great advantage, because white-glove service, personal service, is critical to our business. And that's what we do.
Dennis Scully: And so part of the huge investment that you've made was to keep your manufacturing here in the United States or in North America, as you point out, because that was, you felt, critically important to the success of the whole operation.
Farooq Kathwari: It did, because of the fact that our business is that of providing interior design service and not providing, not selling it as a commodity. Every item that you see is individually made. I was recently asked to speak at a big conference in Columbus, Ohio, where we toured a Honda plant, four million square feet, and they were producing a car in two colors every 60 seconds. So I was also asked to talk about what we are doing and the difference.
Farooq Kathwari: And I said to them, all there, 100 CEOs, I said, if you go to our plant in North Carolina, you'll see 1,000 items going through our plant, every one being different, because we are not making 10 of these. We're making one at a time.
Dennis Scully: One at a time.
Farooq Kathwari: But it's got to be also efficient. So technology, personal service, and customization is tremendously important.
Dennis Scully: And one of the things that you've always been passionate about, and with all of the different careers that we've talked about earlier, really marketing, international marketing, was one of the things that you studied. And marketing was always a passion for you, yes?
Farooq Kathwari: It was and still is. And even the marketing is always ... I define marketing being something that we do at all levels.
Dennis Scully: Right.
Farooq Kathwari: Internal marketing is as critical as external marketing. So if my team members are not motivated ... We have 3,500 directly working at Ethan Allen. If they're not motivated, it's hard to motivate customers. So internal marketing, which means, how do we treat people internally? How do we treat our customers? All of that is critical, so I believe that constant focus on internal marketing and external marketing is critical.
Dennis Scully: Okay. And on that same subject, and you and I were just talking earlier about the reports that your managers give to you. So you ask your managers to inform you every week on five key issues, correct?
Farooq Kathwari: That's right, and this we've done for many years, and I like everything five.
Dennis Scully: Five.
Farooq Kathwari: Because you've got five fingers, and my feeling is that if you don't get a new hand, the chance is going to slip away. So five is a good number.
Dennis Scully: Okay. So you've got your five points, so let's talk about them.
Farooq Kathwari: The five important areas that we are discussing, that we discuss every week ... The first is talent and leadership. I believe without leadership and talent, nothing much is going to happen.
Dennis Scully: Right. So is this the recruiting efforts that are going on in each market, is this how people are developing their staff? What are you looking to hear?
Farooq Kathwari: In the case of talent, is it from recruiting to training to moderating to making sure that the talent is not only watching new talent. It's more important to make sure your talent that you have is motivated. So talent means acquiring, training, motivating, and keeping them.
Dennis Scully: Okay.
Farooq Kathwari: Second is marketing.
Dennis Scully: Marketing, here we go.
Farooq Kathwari: And the marketing is important, and the marketing is many different ways. I define marketing as internal marketing and external marketing. So our team members have to, every week, say what they've done on internal marketing. Sometimes it's a sentence, sometimes it's more. And just keep in mind, it's 50 people who report every ... Those folks don't technically report to me, but they send a copy of their report to me as they send it to the person they report to. So they talk about marketing in terms of what steps are they taking, how are we working at a national level of marketing, at the craftsman's level?
Farooq Kathwari: Third is service. Service is at every level. Our manufacturing has to talk about service. We run a saw mill in Vermont. Each day, we go out in the forest and we get lumber. Now, that service that the saw mill has to provide is very different than the service that is provided, say, at the retail. But everyone talks about service that they have to do, because everybody in our company, I believe everybody that we deal with is a customer. Internal or external, it's a customer. So in that case, we talk about service. We talk. Service means manufacturing, infrastructure. Service means white-glove service.
Farooq Kathwari: Then we talk about technology, 'cause technology today is in every element. So we look at technology in manufacturing, we look at technology in retail, we look at technology ... So they talk about what they are doing.
Farooq Kathwari: And then the fifth one is social responsibility. Everybody has to talk about what they have done to make sure they're socially responsible in their operations, from ... depends, again, at different levels. We run manufacturing, we have to make sure that we are socially responsible in the way we manufacture. We have to be socially responsible in the way we treat waste. Socially responsible, for instance, to give you an example ... 10 years back, I went to Mexico. At that time, it was very hard to find people to cut and sew the sofa. So people started going to China and other countries. I said, no, we want to do it ourselves.
Farooq Kathwari: So imagine a state called Guanajuato, which is in the middle of Mexico, a beautiful state. We had a small plant run by an American, a former Air Force officer who had gone there with his family and running this little plant. So I walked around. We needed something, but what I liked about it was the people that worked for him were smiling. Many times, I go to plants and people keep their heads down, don't even look up. I don't like it. They were smiling, they were talking.
Farooq Kathwari: So I said to [Jim 00:44:11], I said, "Okay. We agree to buy it." But I said, "I want you to make sure you treat these people well." Then I asked him a question. I said, "What environmental and safety standards do you follow?" They said, "We follow the Mexican law." I said, "No, you're going to follow the US law." Even though I know people go to Mexico to-
Dennis Scully: Sure, to avoid the US laws.
Farooq Kathwari: I said, "No, that's what you're going to follow." We did.
Dennis Scully: Okay.
Farooq Kathwari: We have about 1,100 people there. Started with 90. They are motivated. We have ... All this is cut in Mexico, what you're sitting on. They work hard, they do a great job. And today, they're shipping every week, a lot of containers to China, from Mexico.
Farooq Kathwari: Same thing in Honduras. We did the same thing in terms of ... Now, short-term, it does cost you money. But long-term, motivated people and less turnover is more, is better than having people leave you, people don't produce quality. So we have benefited a great deal. So social responsibility at every level is important.
Dennis Scully: Okay. So let's talk about some of Ethan Allen's challenges today. So we're in a very challenging environment in retail in general. The furniture industry particularly challenged in many ways. Online technology has dramatically changed the business, and I know that you've period with Amazon in a small way, and you're on their platform. Has that been a successful partnership? Have you seen meaningful revenue from that?
Farooq Kathwari: I think just talking in the broader sense about the challenges, certainly, there are a lot of challenges. I have seen in the few decades major, major changes. In the last 20 years, we have been confronted with a change in what I call globalization, that hit our industry. Before that, it had hit textiles and apparel and shoes and others. It came to us.
Farooq Kathwari: About 20 years back, almost 70% of furniture was made in the United States. And 10, 12, 14 years later, 70% have gone offshore. So we were now impacted with globalization, which meant all of a sudden we had to close a lot of plants in the United States.
Dennis Scully: Right.
Farooq Kathwari: Secondly, the pricing of the products coming from overseas was much less. So deflation hit our industry in the last 10-12 years, where the prices today are lower than they were 10-12 years back. So when you think of the price of a sofa today being lower than they were 10-12 years back, we had to confront with inflation. Our costs haven't gone down. Medical costs, employee costs, everything else.
Farooq Kathwari: So globalization also had an impact on deflation, and then it also changed the nature of retailing. It changed manufacturing. Most manufacturers left. All decided, making products overseas. It also had the change in the retailing. Most furniture, 20-25 years back, was sold by family businesses, stores all over the country. They started closing. They could no longer compete, as happened in hardware, electronics. When Walmart came in, they changed the groceries. When Home Depot and Lowe's came in, it changed the hardware business. And when these large commodity boxes came in the furniture, thousands of furniture stores ran out of business. So we had a complete shift.
Farooq Kathwari: And here, we're still standing. We had to confront the impact of globalization, the deflation, and the fact that the whole retailing was changing. We have mass retailers all over the country today. And so with that in mind, we had to be confronted with all these challenges.
Farooq Kathwari: And then comes the internet. So technology. So all of these things are there, so we had to confront with this, and we also said, how do we manage all of this? We must experiment also. So I knew the first one actually was with Disney. We had gone to Disneyland and I saw little kids, how they were watching things. So I knew Mr. Bob Iger, I met him, I called him up and he immediately sent his key people up to Danbury and decided that we would establish an Ethan Allen Disney magical home. And this was our first venture outside Ethan Allen. We had never collaborated with anybody. And it's been a good ... Not a major one, but a good experiment, because we don't sell it to anybody else. We control it.
Farooq Kathwari: The second one I said was, let's experiment with Amazon coming in, and also, I called on Mr. Jeff Bezos, who I'd met, and he immediately said yes.
Dennis Scully: You've got a great Rolodex. I love that you can just call all these CEOs.
Farooq Kathwari: I'm lucky, fortunately. And the reason, I chaired the National Retail Federation for a number of years, so I've come to know a lot of these ... In fact, I once gave award to Mr. Bezos.
Dennis Scully: Okay. So you called Mr. Bezos and you said, let's do business.
Farooq Kathwari: [crosstalk 00:49:43] they said yes. So we agreed to set up ... But it had to be done in a manner that we felt comfortable with, and they were fine with it. So we established an Ethan Allen design studio on their site, but we would control it. We would sell the product. And the experiment has been okay. And what we have done is we have established the studio, and what we are finding is people do ... Today, people who are buying anything do also tend to go to Amazon to see. So they do go to the Amazon site, and then they can buy if they want to, although we supply the product. We don't sell at Amazon. Or they come to our site, or come to Ethan Allen.
Dennis Scully: Right. So it's exactly the same as any of your storefronts around the country, it's just on Amazon's website.
Farooq Kathwari: That's right, yeah.
Dennis Scully: And have you seen a pickup in your web traffic? Have you seen a pickup in volume? What's your sense of how that's been for you?
Farooq Kathwari: I think the sense is that it has helped our web traffic, because today people ... We knew it already, that many people who came to our site had also gone to Amazon to see if we are there, and many people who came to our site went after to Amazon to see if we are there. So what they see is that there's no difference, because our prices are the same, service is the same, and if they buy, we still service it through our retail network, and we still involve our interior designers. Even all our business that we do online, we compensate our interior designers for even the business they may not have done themselves, because we want them to see that they can have those customers.
Dennis Scully: To reach out to those customers that came online and develop a relationship.
Farooq Kathwari: That's right, yeah. So all our designers ... And if they themselves have not interacted, we then put the money in the pool for each design center for the designers, because I want them to be part of this, not to feel there's an enemy.
Dennis Scully: Right. So when you look at the competitive landscape, when you look at Wayfair or Restoration Hardware ... Restoration Hardware opening a 90,000 square foot showroom here in New York. What do you think Ethan Allen can do to compete on that landscape?
Farooq Kathwari: Well, every organization has their own method of reaching people, and own strategies. Our strategy is really to be a very ... very strong in a number of areas. First is we have to have a product that's very, very relevant. In fact, in the last three years, with all the new products that's just come in, 70% of the products, we have changed.
Dennis Scully: So 70% of the product that's in here now is within the last three years.
Farooq Kathwari: That's right. Now, that's a lot of change. But it also is relevant, because today people are interested in what I would call the new model. It's classic, but with a modern attitude. That's what people ... That's what our designs are inspired with, that's what we are developing. So you have to be relevant in your offerings.
Farooq Kathwari: Second, quality. We say every detail matters. So every detail in the stitching and the quality is critical. That's what differentiates us. Third is our interior design service. We are the leading interior designers. And fourth is when you buy it, the service that we provide. All those things give us a competitive advantage so that we can compete with all these names that you have mentioned.
Dennis Scully: And so can you compete ... Again, I go back to a Wayfair, for example, just because that stock has done incredibly well in the past few years. It's up several hundred percent, despite the lack of actual bottom line earnings, as you well know. But nonetheless, volume has grown dramatically, and they report 40% growth practical every quarter, and obviously, more and more, they're getting traction, selling larger items online. Is that an area that you can compete in with Ethan Allen?
Farooq Kathwari: Yeah, absolutely, because what have they done? They've taken the business from the button stores, chain stores. This business, somebody was doing it before. We were not doing most of that business. So that business was being done by very large chains. A lot of those are in trouble because of the fact that ... Today, look at even Amazon. If you're just selling a commodity and an item and you can buy it online, why would you go to a store today? People don't unless you have a differentiated product and a great service, it's hard to compete.
Farooq Kathwari: So in their case, I think that what we have been impacted ... Obviously, there is some impact, but competition is competition. But what has happened is to a great degree, that product line that all the things they're selling are sold by others now. They're selling it much cheaper because they're not making any profits. So it is competition, certainly we take is seriously. But it is a different kind of a competition.
Farooq Kathwari: Interestingly, the competition at the level of products and the quality we have does decline tremendously. Recently, HHG, which owns some of the great brands in this country, from Drexel to Thomasville to Broyhill and Lane, and others, had bankrupt.
Dennis Scully: Sure, yeah.
Farooq Kathwari: They're out of business. This was our main competitor. So interestingly, at a better of quality, we have less competition than we had 20 years back. At the mass level, there is competition, but that competition is always there, when they used to go to chains and stores and buy it.
Dennis Scully: So you feel that that's not your customer. The customer that's going to Wayfair is not the Ethan Allen customer?
Farooq Kathwari: No, I don't say that. I think today ... I know that change has taken place and that all of us are ... We are today buying products from different companies much more than we ever did. There used to be a time that if you were an Ethan Allen customer, you would say buying anything [inaudible 00:56:35] was not ... That's not the case. Today people are mixing, people are going to Neiman Marcus and going to Target.
Farooq Kathwari: So, yes. The customer's tastes and environment have changed. They are much more eclectic in the way they buy. Yes, so it is competition. But that competition was always there, a little bit more today because ... not of them, but because of the change in people's attitudes of what they are going to buy. They are much more today compatible in buying and mixing than you were 10 years back.
Dennis Scully: Okay, okay. Several years ago, you were successful in fighting off an aggressive investor who had accumulated a portion of the stock and wanted to make some changes and was ultimately unsuccessful in getting seats on the board. I think this was 2015, as you know. The stock is back down at multiyear lows, the annual meeting is coming up in just a few weeks. Are you feeling pressure about the stock price? Are you feeling pressure about your own position and where you are with the company? How do you feel?
Farooq Kathwari: Well, certainly, obviously our stock price is lower ... does not reflect what our position is, where we are. We've invested a great deal in a number of investments which did impact our earnings. No, I don't feel ... There's always pressure, we could always do better. But I don't feel the pressure that somehow we've got to do something that's crazy. But at the time, there was this attempt. I told them it's a free country. If you folks want to buy it, go ahead. That's what I told them. But they didn't.
Dennis Scully: Yeah, yeah. In the end, they were unsuccessful.
Farooq Kathwari: Right.
Dennis Scully: And you own a fair portion of the stock yourself, still.
Farooq Kathwari: I do. I'm the largest individual stockholder, yeah.
Dennis Scully: And would you ... I know that one of the things that's on the agenda is the poison pill discussion. Are you-
Farooq Kathwari: We don't have a poison pill.
Dennis Scully: You don't have a poison pill and you don't plan to put that in place to ...
Farooq Kathwari: Well, you can never say what you'll do in the future. But the fact, I've always said, I told them it's a free country. If the stockholders decide that they want to have somebody take over the company, it's their right.
Dennis Scully: Right. What do you want? What do you ultimately want to have happen for Ethan Allen, and ultimately for you? You've been running this company for quite some time, as you point out.
Farooq Kathwari: Well, I want the company to be successful. I want the people who are associated with me for a long, long time, they're very dedicated. I want to make sure that they do well. But I want to make sure that the company's progressive, the company does things that are right in terms of growing the business. End of the day, obviously, we have to grow the business. We have been confronted with all the things we've talked about. There are lots of challenges. I talked about deflation. We have to grow 7-8% a year just to stay even. Not easy.
Dennis Scully: No.
Farooq Kathwari: Those companies that have grown a lot, they've made no money. We make good money, we have no debt, we have the highest dividend rate in our industry-
Dennis Scully: I was going to say, you have practical a 4% dividend right now.
Farooq Kathwari: That's right. So we do all those things. So if you're a long-term stockholder, you should be happy. Now, our stock price should do better, and I think it'll go up as we improve our sales and earnings.
Dennis Scully: Yes.
Farooq Kathwari: So we have that opportunity.
Dennis Scully: Do you feel that Wall Street doesn't appreciate all that you're doing? Is that your perception? Because it's had a rough time when other stocks have been doing well in the sector.
Farooq Kathwari: Some of them, not necessarily all. In fact, some of the stocks are down because Wall Street has become more and more a trading. They are basically looking at the top line to create the [inaudible 01:00:43], not if you're making any money. They don't care, which is silly. End of the day, you've gotta make money. You've gotta give dividends, you've gotta be strong. They don't care about it, but I do care. So it's not a big thing. I don't pay much attention to it, even though I'm one of the largest stockholders.
Dennis Scully: Yes, even though you're the largest individual shareholder. [crosstalk 01:01:02]
Farooq Kathwari: Yeah, but [crosstalk 01:01:02], because I'm not there for short-term. I'm there for long-term. It should do well.
Dennis Scully: Now, you have a lot of titles and you wear a lot of hats at this company. Do you have a successor in place or in mind? Do you think about the day that you would turn control over to someone else in the organization?
Farooq Kathwari: Always. We always think about the fact of ... What did I say? Our first thing is talent and leadership. So, yeah. We have a lot of talented people, we are a company that cannot be run by one person. Certainly, I'm leading it. But we've got lots of talented people, and it's a very complicated business. We run manufacturing, we run retail, we run marketing, we develop the ... We do a lot of things. We just don't have three people who go out, some overseas, and buy the products and sell them. So we have a lot of talent, and certainly, we are always thinking about succession at every level.
Dennis Scully: Right. But you don't have any immediate plans to change your role.
Farooq Kathwari: Not yet.
Dennis Scully: Not yet.
Farooq Kathwari: I'm involved with a lot of other non ... I'm involved with a number of humanitarian causes, many of them, because I view that's the right thing to do, and that gives me a balance also in running Ethan Allen. And in fact, I'm right now involved with a task force that has just been mandated by Congress, and this is the next [9/11 01:02:33] commission. This is also co-chaired by Governor Kean of New Jersey and [crosstalk 01:02:41] Hamilton.
Dennis Scully: Oh yeah.
Farooq Kathwari: And just established this year. And this commission is to look at what they say are fragile states. And what could be done to help the fragile states, which is unfortunately most of Africa, most of the Middle East. And this commission includes people bipartisan, from the former national security advisors to former secretaries of states, and 15 members, and I'm one of them. And interestingly, and I have gone to the main meetings, I talked about the five things that we discuss every week, and I said to them, to all these very, very knowledgeable and distinguished people that as far as I'm concerned, those fragile states should think about the five things we do. The first one is leadership and governance. If you don't have good leaders who also believe in governance, nothing's going to happen. If they're corrupt, how are they going to help their people?
Farooq Kathwari: So I'm involved ... So this is a new assignment this year that I've been working on with this commission, yeah.
Dennis Scully: Okay, okay. Good for you. So this is occupying some of your time and your thought as well [crosstalk 01:03:48]-
Dennis Scully: ... to the rest of the world.
Farooq Kathwari: It's not now.
Dennis Scully: Always.
Farooq Kathwari: I have chaired an organization called Refugees International, I'm on the board of the International Rescue Committee, which is the largest organization relating to people who have been displaced. I'm on the advisory board of the New York Stock Exchange. So I do both sides. But I'm involved in all these things because I [inaudible 01:04:10] in more than one business. If on the other hand, all I was thinking of was going and buying other companies, and then trying to take care of the problems of those companies, I would have no time. That's not what we do. We have one enterprise, and I want to do it right.
Dennis Scully: Right. So what's next for Ethan Allen? What's the next thing that you're going to be telling us about with Ethan Allen?
Farooq Kathwari: That we have grown.
Dennis Scully: That you're growing.
Farooq Kathwari: That we are growing, that we continue to have strong talent, all the things I talked about. I think all the things we have done, really, we have positioned us for growth.
Dennis Scully: So what you're saying is that the changes that you've made are about to start paying off and showing dividends, if you will.
Farooq Kathwari: Absolutely.
Dennis Scully: And we're going to see that in the coming quarters.
Farooq Kathwari: With all the things that we have done, we are poised to grow in a tough environment.
Dennis Scully: In a very tough environment. Okay. So you believe that Ethan Allen can still be relevant in today's market, and that we're going to see that in the coming quarters.
Farooq Kathwari: Absolutely. We are more relevant today than we have been, and we are more relevant than a lot of folks in our industry.
Dennis Scully: Okay. Well, that's a strong message, and I think that's a good place to wrap up. So thank you very much, I thoroughly enjoyed this conversation.
Farooq Kathwari: Wonderful. It's good to be here and good to talk to you.
Dennis Scully: A pleasure. My guest has been Farooq Kathwari, the chairman and CEO of Ethan Allen.
Dennis Scully: Thank you again for joining us. The show is Business of Home, and I'm Dennis Scully. If you like what you hear, please feel free to subscribe, tell a friend about the show, and most of all, leave us a review on iTunes. Thank you again to our sponsor and our producers. You can find us at businessofhome.com, or on Facebook, or Instagram. We'll see you next week.