Kansas Senate candidate got started in lights

AP News
|
Posted: Oct 16, 2014 1:33 PM
Kansas Senate candidate got started in lights

TOPEKA, Kan. (AP) — Greg Orman was fresh out of college, just four months into his first job as a management consultant, when he got a phone call from his father in Kansas asking whether it was worth it to install energy-efficient lighting in his furniture store.

Yes, the son responded, after crunching the numbers. Then he started a business to sell the same idea to others.

Starting from scratch in 1992, Orman built Environmental Lighting Concepts into a multi-million-dollar business with 120 employees within four years.

The lighting company is where Orman first tested the business acumen that he now touts in his campaign as an independent challenger to Republican U.S. Sen. Pat Roberts of Kansas. It's where Orman made his first $1 million and began accumulating wealth. And it's where he started a pattern of developing, expanding and then selling businesses for a profit.

Orman now is at the center of one of the nation's most unusual and pivotal U.S. Senate races as Republicans try to wrest control of the chamber away from Democrats. Roberts' Democratic opponent has dropped out, leaving Orman as the main alternative. If he unseats the three-term senator, Orman could be in a politically powerful position — free to side either with Democrats or Republicans on key votes in a closely divided Senate.

"Greg is a very driven individual," said Mike Newcome, who was among the first salesmen Orman hired at his lighting business. "He's always wanted to do something big and have an impact."

But Orman didn't start big.

He couldn't afford to immediately quit his first job at McKinsey & Co. to start a lighting business. So he reached out to a cousin and a guy he had met during a high school internship at a bank in his home town of Mankato, Minnesota.

"He was like, 'Do you want to be part of this, because it's going to be a big business?'" said Mark Schroeder, who somewhat reluctantly left the bank to help Orman launch the lighting company.

Schroeder worked for months with no pay, instead earning "sweat equity" in Environmental Lighting Concepts. Orman, though still in debt from his economics degree at Princeton University, used his paycheck from McKinsey to help finance their new company.

Newcome, another recent college graduate, was hired as a salesman about a year later, after a sunrise Saturday interview in which he was intimidated and awed by Orman's intellect.

"This guy had a plan and a vision," Newcome said. "I was nowhere near that level of understanding of what that guy was planning for this company, but I just shook my head and said, 'Wow, it sounds fantastic.'"

Newcome worked out of a cubicle in multi-tenant strip-mall in suburban Minneapolis and, at least initially, was paid only after Orman first got a paycheck from his other job. Orman, meanwhile, seemed to work around the clock — sometimes leaving phone messages at 4 a.m. to make sure Newcome was focusing on particular details.

Orman's business model was built on persuading commercial building owners that they could save money within several years by investing in new energy-efficient lighting fixtures. In many cases, customers were able to finance the improvements through an electric company, which in turn paid Environmental Lighting Concepts.

Orman said he and his partners invested about $30,000 during a rugged start-up. Business was so slow that his salesmen suggested a $50,000 advertising campaign, Orman told The Associated Press. Instead, he said the young company opted for a "50-cent solution" by doing a better job of "educating customers" about their products. Sales began to soar. Newcome said he was rewarded with three Rolex watches for personally posting annual sales over $1 million.

"It's one of the things in business that I've always sort of preached, which is, money doesn't solve every problem. Thinking does," Orman said. "That was sort of my first example."

Orman eventually left McKinsey & Co. to focus full-time on his own firm. As it grew, Environmental Lighting Concepts opened several additional branches, including in the Kansas City area. That caught the attention of Kansas City Power & Light Co., a publicly traded utility that was looking to gain a foothold outside of its traditional retail power sales.

A KCP&L subsidiary bought a 70 percent stake in Environmental Lighting Concepts in 1996. Orman made more than $1 million on the sale, though he hasn't said exactly how much. The deal put him in a position to make a lot more.

The utility merged Environmental Lighting Concepts with another company that installed ventilation systems. Orman was put in charge of the utility's KLT Energy Services, where he founded an electrical contracting business called Nationwide Electric and oversaw numerous other mergers and acquisitions. Nationwide Electric was sold to a Canadian company for nearly $79 million in 1999.

In 2002, KCP&L's parent company merged the remnant of Environmental Lighting Concepts into one of its other subsidiaries. Filings with the U.S. Securities and Exchange Commission show Orman received $10.1 million in company stock and got paid more than $4.7 million — a sizable return for a sliver of a company that started with nothing a decade earlier.

Orman has continued to expand his business investments. He now lists leadership roles in 15 firms, including ones focused on real estate, medical research and boxing equipment. A Senate disclosure form puts his net worth between $21.5 million and $86 million.

___

Lieb reported from Jefferson City, Missouri.

Follow David A. Lieb at: https://twitter.com/DavidALieb

Follow John Hanna at: https://twitter.com/apjdhanna