While Lippow Development Co. is officially celebrating its 70thanniversary this year, the Martinez-based family business really began decades earlier, when family patriarch Leo Lippow opened a bike shop outside of Milwaukee, Wis. During the first decade of the 20thcentury, that same bike shop morphed into one of the nation’s first Harley-Davidson dealers.
As company President and CEO Larry Lippow (third-generation owner) remembers, the saga was far more all-American than owning a bike shop that also sold Harleys.
Larry’s grandfather, Leo Lippovaski, was a Polish Jew living in the Russian Empire, a country marked by pogroms and less-violent anti-Semitism at the turn of the 20thcentury. Leo wanted to start a new life in America and saved up enough money to buy passage on a ship for himself and his mother. Together, they sailed into New York Harbor in 1904.
“They came through Ellis Island and brought all of their belongings in one suitcase,” Larry said. Like so many immigrants, the clerk decided that their family name was too foreign for America and changed it to Lippow.
“He just marked his name with an X and when he was done he turned around and saw someone had stolen their suitcase. He and his mother had literally nothing except a few coins in his pocket,” Larry said, noting that the family has passed that story down from generation to generation to remind everyone that what they have was built on the backs of their forebears.
Leo Lippow’s bicycle store outside Milwaukee.
An interior view of the shop.
The new arrivals had relatives in the Milwaukee area and somehow found transportation. When they arrived, Leo soon approached the owner of a nearby bicycle shop (as the Wright Brothers knew, an important business at the time) and made a proposal. If the owner would allow Leo and his mother to live in the back of the shop free of rent, Leo would work for free and only ask to be taught the business.
A year or so later, the bike shop owner decided to sell the business and the property and Leo made another proposal: to buy both and pay the seller over time. The deal was consummated. Leo quickly grew the business by adding Harley-Davidson motorcycles to his inventory. In an effort to promote the sale of motorcycles, Leo formed one of the country’s first motorcycle clubs to go on rides together and to also have motorcycle races.
He also married, and in 1914 the couple’s only son, Sidney, was born. Sidney had lung problems and their doctor suggested the family relocate somewhere warmer. So, Leo took a train to Southern California to investigate the area and experience the warmer climate. He wound up in a bar in Orange County. Over drinks, a man offered to sell Leo a piece of land, and thinking that it would be a good location to build a bike shop, Leo decided to make the purchase.
“The next day or so, somebody offered him twice as much for the land and he took it. That planted a seed that the real estate business in California might not be a bad idea,” Lippow said.
Leo decided to visit other parts of the Golden State before deciding where to settle down, and to pay for his travels bought a few shares in a bus line that eventually became Greyhound. Shareholders could ride for free, so Leo traveled up the coast and a few days later wound up in another bar, this time in Willows, northwest of Sacramento.
“The owner of the Palace Hotel, restaurant, and bar was also the mayor, and he told my grandfather that he wanted to get out of real estate and focus on politics, so that night my grandfather bought the property and the next day he wired for his family in Milwaukee to pack up and move to Willows,” Lippow said.
There was, however, a problem once the family got settled in Willows. As observant Jews, the Lippows wanted to attend temple, but the closest synagogue was in Sacramento, a long and dusty motorcycle ride away. Eventually, they bought the Traveler’s Hotel in Martinez and the Grand Avenue Garage in Oakland. The family moved to Piedmont and became active members in the synagogue in Oakland.
After graduating from Piedmont High School, Sidney was awarded a football scholarship to attend USC. He only attended for two years before Leo wanted Sidney to come home and start working in the family business. Shortly afterwards, the family moved to Martinez to actively participate in the management of the Traveler’s Hotel and other real estate purchased in the Martinez area.
Leo acquired and sold commercial and residential real estate over the following years and the business flourished. Like many entrepreneurs, Leo wanted to keep control and when he finally formed a corporation in 1948 he kept all the voting stock, giving non-voting stock to other family members. When he died in 1961, Sidney inherited the voting shares. Under Sidney’s watch, the family business continued to grow and expanded its holdings throughout Northern California.
After graduating from the University of Arizona in 1978, Larry turned down an offer from IBM, decided not to pursue an opportunity to attend law school in Arizona, and came home to the Bay Area and work with his dad, and did so until Sidney died in 1986. The company continued to grow and do well after Sidney’s passing.
“I was under the impression we were a big, happy family. Shortly after my dad died I started getting calls from relatives who said they’d always told dad he should have diversified or done things differently. I finally realized that many of our family members wanted to cash in and do other things,” he said.
With the support of his younger sister, Laura Lippow Babiak, Larry decided to give his family members one opportunity to sell 100 percent of their shares in the family business, but he thought the power of the family story would keep most of them together. So he wrote a book about the company’s first 50 years, had copies made for everyone, and made each promise to read it from front to back and then decide in 60 days if they wanted to sell or stay.
“When the day came, I really thought most would remain as shareholders in the family business, but all sold but my younger sister and me. We went from 25 owners to two. I was devastated,” he said.
The Lippow family today.
But in the long run, it was a good thing because Larry and Laura were able to move in one direction as a team without any distractions from other owners. In an effort to help ensure the continuance of the family business for the future, Larry and Laura implemented two key things learned from their previous experience dealing with discord from family owners. First, create a buy/sell agreement that clearly spells out shares’ values and method of payment over time that will provide the flexibility to allow the family business to continue to operate in the future and at the same time offer shareholders a tool for liquidity should they decide to sell their ownership interest in the family business. Second, appoint outside and independent directors to its Board of Directors to make sure that the company’s policies are created for the benefit of the business first, and not for the benefit of any specific family member.
“When it comes to corporate governance, I find so many family businesses need help. When you mix in family dynamics on top of the business dynamics, it’s very challenging. I’ve discovered many family businesses are very successful in operations and make a lot of money, but as far as succession planning for owners and formal governance the family businesses usually are weak and sometimes quite dysfunctional,” Larry said. “The lack of communication between family members in regards to succession planning and the need for formal governance always amazes me.”
The company. has expanded from the Bay Area to Arizona in recent years, partly because of California’s growing regulatory burdens and high taxes. Larry remains optimistic about the business, noting he and his sister each have two children and have spent much time trying to educate the next generation about the difference between being an owner in the family business and an employee in the family business. In addition, there has been much discussion in the family about promoting the concept of stewardship. Several of the fourth generation have expressed some interest in becoming active in the management of the family business.
Larry said Lippow Development Co. joined FBA because it’s a great platform to remind lawmakers and regulators that family businesses are huge job creators, tax revenue generators, and entrepreneurs who try to remain nimble and flexible to be able to survive for the long term, both in good and bad economic times.
“If our state government would lower the income tax rate and minimize the many other taxes, fees, rules, and regulations, it would help family enterprises to thrive in California, thereby producing many more job opportunities and revenue for the state. It’s already hard enough to be successful in business, but every year it’s more challenging, especially here in California. I’m not sure some legislators appreciate or understand how their actions impact small businesses,” he said.
In the meantime, Larry continues to love the real estate business. The firm recently sold its last apartment complex and now is focused solely on commercial investments.
“When my kids were young and would bring me to class for show and tell, I would be asked what I do in business. I would say I play Monopoly for a living. I try to pass Go and collect $200 as many times as I can and definitely want to stay out of jail because there’s no get-out-of-jail free card in real life,” he said.
Larry looks forward to the future and takes pride in building Lippow Development Co.’s legacy with inclusion of the fourth generation of the Lippow family. At the same time, it is important at all times to educate and remind the family of the previous Lippow generations’ sacrifices made for the family business and the family’s humble beginnings in the United States, and that these values and idea — along with the opportunity to continue to play Monopoly, whether that be in California, Arizona, Nevada, Utah, or Texas — still gets him excited to go to work each and every day.
Sometimes, a family business is owned by several families along the way. Such is the case with Pini Ace Hardware in Novato, which is celebrating its 100thanniversary this year.
Charles Young, surrounded by sons Tom, Russ. and David
Russ Young, Pini’s CFO and treasurer and a member of the third generation of his family to own and operate the landmark hardware store, said the business started in 1918 when Henry Pini, a Swiss immigrant, opened a general store in the Marin County community. The store initially sold dry goods and groceries, but soon added hardware. A few years later, the store moved down the street and expanded to sell hay, grain, feed, coal, clothes, hardware, and groceries, along with fresh meat, chicken and eggs.
In 1929, Pini built a modern store and became one of the largest employers in town. But shortly after he died in 1942, his widow, Mary, sold the business and the rights to use the name to three local men, who jointly owned it until 1968, when Russ’ grandparents – Ben and Ellarene Young – and the Saunders family partnered to buy it. Charles Young and Steve Saunders purchased the business from their parents in 1983 and the Young family bought out the Saunders’ interest in 2015. Today Charles and his three sons – Tom, Russ, and David – are the owners.
Like many retail businesses, Pini competes with big-box stores that can offer larger selections and often lower prices. But being a family business is an important asset if you’re David taking on Goliath.
“We can provide customer service but they’re too big to do that,” Young said. They can’t provide the personal attention we can.
“We’ve been really lucky so far. People have embraced our store. We’re community-oriented and at one with the town. And we have better relations with our staff. We’re kind of a big family. We care about our employees and we want them to be happy in their job. We don’t have huge corporation rules.”
Pini has one manager who has been with the company for more than 45 years and several others who have worked there between 15 and 20 years.
And as Young said, the family is deeply involved in the community. They hold a number of sales events each year, participate in events with the Chamber of Commerce and other organizations, and are involved in fundraisers for schools and youth groups.
One of the highlights of the year is the store’s participation in the annual Fourth of July Parade, when family members and staff – and even some customers – march and do routines while swinging plungers. He said one year they decided not to participate and customers let them know in the months to come that they expected them back in the next parade.
Charles Young remains involved with the business and works a few days a week. Russ said he’s very business-savvy and gives his sons great advice on how to handle things. Older brother Tom is the COO and handles inventory, while younger brother David manages the sales staff and ensures they have the training and skills to keep the floor running smoothly.
While the brothers “bleed retail,” like many children they struck out on their own for a few years, managing drug and variety stores and in Russ’ case owning his own business for a few years before joining the family business permanently. Now, the fourth generation is already involved, with Russ’ nephew running the front office. And younger brother David has five children so there’s hope there as well.
The family joined FBA earlier this year in part to promote the importance of family businesses.
“I don’t think people understand what family businesses bring to the table and how important they are to the community. How many of the big boxes are involved in local organizations, with local banks? Consumers love the giant warehouse floors, but I don’t think they understand how much more family businesses give back to their communities,” he said.
He said the legislation proposed by Sen. Scott Wiener, D-San Francisco, last year that would have created a state estate tax – defeated after FBA created a broad-based coalition to oppose it – is a good example of legislation that would have really hurt family businesses.
“FBA is beneficial to keep people aware that family businesses are important cornerstones of the economy and the communities we live in.”
Elliot Eisenberg, Ph.D. | GraphsandLaughs, LLC | April 2018
Elliot Eisenberg
During every business cycle, economies experience job losses followed by subsequent job gains such that, in time, all job losses are made up, and then some. Between January 2008 and February 2010, almost nine million jobs were lost, but by January 2013 the number of employed Americans had almost fully recovered. The typical good news story, right? Not so fast; the educational attainment of the persons employed in the “recovered” jobs were dramatically different than those in the “lost” jobs. This has profound social and economic implications.
While total employment was virtually unchanged in January 2008 and January 2013, millions of workers without college degrees lost jobs and never regained them. For example, the number of employed Americans with less than a high school diploma fell by roughly 1.6 million; the number of high school graduates with jobs fell by about 2.8 million; and the number employed with some college, but no B.A. fell by 225,000. Over that same five years, the number of college-educated Americans with jobs increased by more than 4.3 million!
In the next five years of the expansion, years 2013 through 2017, job growth improved: 10.7 million jobs were created. While every educational group saw gains, the distribution was again severely skewed towards those with more education. Those with less than a high school diploma picked up 744,000 jobs, those with a high school diploma added 720,000 jobs, and employees with some college saw employment gains of 1.6 million. However, college graduates scooped up 7.6 million jobs, or 71% of all new employment, despite being just 36.5% of the labor force in January 2013.
In short, college graduates gained twice as many jobs as predicted by their share of total jobs in January 2013. And that percentage was already meaningfully higher than the 33.6% that it was on December 2007, the eve of the Great Recession. As a result, the share of jobs held by the other three educational groupings declined. It fell by a whopping 22% for those with less than a high school diploma, 11% for those with a high school diploma, and by just 4% for those with some college (and this includes those with two-year degrees). More education clearly mitigates these negative employment trends.
What is so troubling is that Americans without college degrees, who currently comprise 60% of the labor force, lose employment opportunities regardless of where we are in the business cycle. Worse, many of the less-educated men who lose their jobs drop out of the labor force, depriving the economy of millions of workers. At the same time, the national unemployment rate is at a generational low, and employers are desperate for skilled labor. We will soon reach a point where GDP slows simply because of a lack of available workers.
Even though a college education is immensely helpful, pushi
ng all high schoolers to go is a disservice. Worse, telling those that do not go to college that they are failures just compounds the problem. As a result, more students go to college than ever before, but only 57% of college freshmen complete their degree within six years; many never finish. College should be seen as one option among many.
Another approach is to increase the number of apprenticeship programs. At present, just 0.3% of the total US workforce is in a registered apprentice program, while in Germany it’s almost 4%, 12 times higher! These jobs pay well, and their graduates are far more likely to be fully employed.
The nature of work is changing, and new jobs increasingly demand better skilled workers. Earning nothing more than a high school diploma all but guarantees low wages and long spells of unemployment. While college is an excellent solution, stigmatizing those that do not go is harmful. To that end, giving high school graduates who are not interested in college a wider variety of ways to gain vocational skills and demonstrate employability is critical.
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70-word economics and policy blog can be seen at www.econ70.com. You can subscribe and have the blog delivered directly to your email by visiting the website or by texting the word “BOWTIE” to 22828.
Recognize need to be part of only statewide group focusing solely on family businesses
Five more companies have recently joined the Family Business Association of California, the only statewide organization that solely focuses on the impacts of new laws and regulations on family businesses.
Joining the Association during the first quarter of the year were Pini Hardware, a 100-year-old retailer based in Novato; Shubert’s Ice Cream and Candy, a Chico-based store marking its 80th anniversary this year; Peter Boysen Realty of Linden, established in 1979; Rediger Labor Law, a Sacramento firm founded in 1999; and Hemphill Solutions, a Carlsbad-based commercial real estate consulting and engagement firm established in 2001.
Pini Hardware: The company was established as a small grocery in 1918 by Swiss immigrant Henry Pini. The Young family became the third family to own Pini’s when they purchased what was by then a hardware store in 1968. The second- and third-generation of Youngs now own and manage the business. Russ Young, the CFO and treasurer, said like most family businesses, the company is deeply involved in Novato.
“We are a community-based business and are heavily involved in local events and give back to our community and schools. Some of the events we do are a Christmas Tree lighting, Scream on the Green on Halloween, and School Fuel, a fundraiser for public schools. And we pride ourselves on being one of the last full-service hardware stores around,” he said.
“Family businesses, big or small, are the cornerstone of this nation. We are what keep the economy strong and growing, and family businesses have been mistreated and misunderstood by today’s society and our local, state, and federal government for far too long. It is time for a change, which is one of the reasons that we joined the FBA to see how we can help make that change.”
Shubert’s Ice Cream & Candy: Leonard C. Shubert left Montana in 1938 at the age of 54 to find a location in California for an ice cream store. Highway 99 led him to Chico and he decided it was the right place. The company has been in the same location since it opened and even still uses one of Leonard Shubert’s original ice cream-making machines. In 2008, as the store was marking its 70th anniversary, it was named one of the two best ice cream stores in the country by ABC’s Good Morning America.
Kasey Reynolds and her brother, Nathan Pulliam, are the fourth-generation owners of the store. Like many sons and daughters of a family business owner, Reynolds at first wasn’t interested in staying at home. “I did go off and do corporate America for a while and it made me appreciate what we have in a family business,” she said.
She joined FBA because she believes small businesses need a bigger voice. “I decided I needed to get involved and do what I can to preserve family businesses for the future,” she said. She also announced in January that she will be a candidate for the Chico City Council this year.
Peter Boysen Realty: The Linden-based firm was founded in 1979 and now has 10 agents, including Peter and Rance Boysen, Peter’s son. As is often the case, for many years while growing up Rance wasn’t interested in joining his dad’s company.
“I never wanted to be in real estate. I said ‘never’ many times growing up,” he recalled. But after a few years as a farm manager after graduating from Cal Poly San Luis Obispo in 1997, he reconsidered. “I wanted to be more than just an employee. I wasn’t having fun. My Dad said he could use some help,” and he soon discovered he enjoyed the new career.
He decided to join FBA after hearing the Association’s Chairman, Ken Monroe, owner of Holt of California, talk on a podcast about the challenges facing family businesses. “I got to thinking, you know – we are a small family business. I think it’s important to do what can be done to help family businesses succeed. Family businesses should be helped in whatever way possible.”
Rediger Labor Law: Attorney Robert Rediger had been a successful labor and employment law attorney for nearly 20 years when he decided to start his own firm in 1999 – and he has since inspired a second generation of family members to join the firm. The firm focuses on traditional labor law, employment law, and related litigation, including defending companies against wage- and-hour class-action lawsuits.
He said daughters Candice and Arielle and son Justin decided on their own to join the firm after graduating from UC Berkeley and from three different law schools. “They said, ‘you’re always excited about your profession and enjoy your job.’ They studied a variety of different areas in law school, but found they enjoyed labor and employment law. When they graduated, I said ‘our firm could use some excellent attorneys,’” he recalled.
Advantages a family firm have include being able to trust people you’re working with and the opportunity to discuss ideas and brainstorm legal strategies with each other outside of the workplace. “Family businesses are also more solid and stable,” he added. “They’re often more conscientious because they have the family’s reputation on the line.”
Hemphill Solutions: The firm was established in 2001 and advises independent businesses on the real estate component of their enterprises, helping clients develop real estate solutions that save costs, reduce liabilities, and maximize operational flexibility.
Ralph Hemphill has more than 30 years’ experience in real estate and private equity and is the firm’s senior advisor while his wife, Katherine, is the broker/manager. He said they joined FBA to share expertise with other family business owners about issues they face.
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About the Family Business Association of California (FBA): Founded in 2012, the Family Business Association of California is the only organization working exclusively at the Capitol to educate lawmakers and regulators about the importance of family businesses to the state’s economy and to their communities – and to advocate positions on legislation and regulations. For more information, visit www.myfba.org.
When Jim Dobbas incorporated his business, he figured doing so on April 1, 1968, was fitting.
“It was April Fool’s Day, but I didn’t care because I didn’t think I was going to make it anyway,” he recalled with a chuckle. Fortunately for California’s railroads, his pessimism was ill-founded.
From a single truck hired out to haul heavy loads, Jim Dobbas Inc. has grown to be a premier heavy equipment contractor, specializing in emergency and derailment response service for class 1 railroads such as the Union Pacific and Burlington Northern Santa Fe. From its yard in Newcastle, northeast of Sacramento, the company now serves Northern California, northern Nevada and southern Oregon.
Three generations of the Dobbas family - from left, Jim, Dillon, and Don.
Don Dobbas, the second-generation president, said railroad-related work makes up about 80 percent of the company’s business, with the rest outside transportation and heavy equipment hauling. A crew of about 40 employees man the fleet of excavators, loaders, dozers, trucks and trailers, and other heavy equipment.
That’s a far cry from the beginning. The family emigrated to the region in 1855 and owned dairies, but Jim was fascinated with trucks since he was a young boy. While still a student at Placer High School in Auburn, Jim bought a 1932 Ford school bus hoping to get it running in auto shop. When that didn’t work out, he bought a running 1931 Chevy truck and then after graduating bought a new Chevy two-ton truck.
Before starting his own company, he was a dispatcher for another company and finally decided to go out on his own.
“Then, I had one truck and no employees, and I didn’t want any. I was going to run that truck until I died,” he said. But a former coworker had other ideas. He kept pestering Jim for a job and finally Jim bought an old truck with no motor for $500 and the new employee soon got it running. That driver started in 1969 and stayed with Dobbas until he retired – and still drops by from time to time to see how things are going.
The company got its big break in 1973, when a train containing 21 freight cars, each carrying 330 bombs and bound for Vietnam, exploded in the massive Roseville rail yard, then owned by the Southern Pacific Railroad. Hot brakes caused by the descent from the Sierra had caused some of the cars’ wooden floors to catch fire.
Jim, now 87, was at home in Auburn when he heard the bombs going off at about 7 a.m. He learned what was happening from a Fire Department radio in his pickup and called SP’s division engineer, who told him to get all the heavy equipment he could and head for Roseville.
His crews stacked the twisted debris and broken tracks in a side area and helped the railroad install new track. “We cleaned up the yard and they were running trains in seven days,” he said.
Jim and Don, who took over as president in 1990 and assumed ownership in 2000, attributed the company’s success and longevity to excellent employees and sheer tenacity.
“It was just going at it every day, answering the phone and saying yes,” Don said. “Working for the railroad you don’t know what that call is going to be. It’s not like bidding a contracting job. Sometimes you’re working seven days straight in bad weather. It takes special people to do it.”
Jim Dobbas crews lifting a tank car.
The jobs often entail bringing the heavy equipment in on rail as close as possible, pulling up the cars, and lifting them back onto good sections of track – one car at a time. The worst derailment they had to deal with was 94 loaded cars in Cajon Pass north of San Bernardino.
Like many second-generation family business owners, Don got his start by going along with his dad on jobs when he was 7 and 8 years old. He worked during summers while in high school and then started full-time as a laborer, equipment operator, and driver after graduating from high school in 1979.
“I never really had the urge to do something different,” Don said. “I was comfortable with it and it was fun – there was no way I was going to be in an office job back then.”
His son, Dillon, is now working as an equipment operator but like many next-gen family members, isn’t sure yet if he wants to make the company his career.
Like many California business owners, the Dobbases say doing business here is always a challenge. The state’s strict environmental regulators – the California Air Resources Board and the Water Quality Control Board in particular – can be difficult to work with.
“The scariest thing is the environmental movement. The smallest mistake – a broken hydraulic line that leaks oil into a river – could cost us the entire company,” Jim said.
Don said family businesses have unique interests unlike other companies, especially inheritance taxes. And, of course, finding family members interested in working for the business and eventually taking over. That’s where FBA has been very helpful, he said.
“Family businesses are different. They have different challenges than a big (public) corporation. For us to have a voice at the Capitol is very important and FBA is there to keep an eye on all the legislation that add more burdens to business,” he said. “That’s invaluable.”
For another perspective, read the article about the Dobbas family business in the Auburn Journal.
