Pair pieces together: tabletop powerhouse
How two Harvard Business School grads doubled Ancient Mosaic's business in five years – and why they are still growing
By Chris Gigley -- Casual Living, 8/1/2009 12:00:00 AM
Paul Knutson and Tim Capron have proven they have a good sense for business. They're doing it again at Ancient Mosaic Studios, a company still growing as many U.S. businesses are just trying to stay afloat.
Their well-rounded business backgrounds may be a big reason why.
Knutson and Capron each have a perspective that's much broader than the outdoor market. Knutson worked in the music business. He ran Rounder Records, a label whose catalog of artists include bluegrass/country singer Alison Kraus. Capron was a consultant at Cambridge Associates, a firm that helps colleges and universities manage endowments.
Both attended Harvard Business School in the mid 1990s and met when they collaborated with a handful of other classmates to create an online auction site they eventually sold to Amazon. Capron and Knutson wanted to do it again. They set up a private equity shop in New York and proceeded to look at hundreds of small businesses to possibly buy. Ancient Mosaic was one of the few that caught their attention.
“A husband and wife founded the business about 12 years before, and the product was clearly best-in-class and had a great customer base,” Knutson said. “They weren't overly concentrated with any one customer, and while there had been dabs of competition from overseas, they'd been able to differentiate their business successfully — largely because of service and quality.”
Knutson said the company was a “well-oiled machine” with plenty of growth potential. Still, a producer of high-end stone tabletops seemed like an odd pairing for a couple of guys who made a killing during the Internet boom.
“We weren't wedded to technology,” Capron said. “Paul came out of the music business and before I worked in consulting I'd been a musician, so we both have creative pasts. We felt we were suited to run the thing better than some of our classmates who ended up in banking.”
On Oct. 4, 2004, they bought Ancient Mosaic and plunged headfirst into the outdoor living business. They began by expanding the company's distribution. First up was the design trade.
“The prior owners would go to the Chicago Casual Market and that was it,” Capron said. “Whatever business came out of it was the business they got. They had a few designer accounts only because the designers found them in Chicago.”
Capron and Knutson started showing at the bi-annual High Point Market, NeoCon in Chicago and the HD Expo in Las Vegas. Those efforts paid off immediately, and designers have since become a major part of the business.
“We're a full custom shop with quick turnaround, so it's a natural fit for designers who are looking to add value for their clients,” Knutson said.
The company offered custom sizes and colors long before he and Capron took over. Now they offer more shapes, such as octagons and bowed rectangles, and have a custom edge program.
“At High Point, designers come in and see what we have and get goose bumps on their arms,” Knutson said.
In July 2007, the pair acquired Atlanta-based Piage & Pieta Art Stone and further increased their reach in the casual market. The scenario was remarkably similar to their Ancient Mosaic deal. At that point, Piage & Pieta was a 20-year-old company with a best-in-class reputation in table bases, urns, vases, pedestals and planters, all made from proprietary cast stone.
Now, with the breadth the Piage & Pieta deal has given them, the company is going after the contract business, and doing it without forsaking its business with retailers. Capron said the company is in the middle of efforts to expand its reach with dealers beyond strongholds in Florida, Southern California and Arizona.
“[New England and the Midwest] are a little more challenging for us because many dealers there have been duped so many times by imported stone tabletops that fell apart after the first winter,” Knutson said. “We thought it would be easier to penetrate those markets and it hasn't. But we're making progress.”
In the meantime, Knutson said the company's rep force is working closer than ever with its existing customer base to help them remain vital throughout 2009.
“I think we have been helpful to the dealers in terms of keeping them in the high end part of the market,” Capron said. “If you have a customer who can spend $5,000 to $6,000 on a patio set, you want to get all that sale. We help with that.”
Dealers have also been a big help to Ancient Mosaic.
“Design starts with listening to our dealers and designers,” Capron said. “Many of our dealers are designers who have a great eye and we learn from them. We don't hunker down in room and dream stuff up. We start with what are we being asked for and what's missing in the marketplace. From there, we try to put together a release that will fill that need and be a logical extension of what we already do.”
What they're hearing now is compelling the company to mix up the materials it uses. For instance, Knutson and Capron are working with the same copper coating material used on the golden dome of the Bellagio in Las Vegas. It has also added hand-painted Spanish tiles to its line.
The next frontier may be in a category Knutson and Capron are coining – premium faux.
“We took some of our best-selling Ancient Mosaic designs and made molds from the actual tables to make the faux stone tabletop,” Capron said. “Every grout line shows up in the faux stone piece. We do a two-part staining process to give it the appearance of travertine.”
“That's just starting and it's a large market,” Knutson said. “We've been making inroads with the design channel, and it's growing fast even today. Then there's contract work, major channel development work and product extensions.”
Their business may have come a long way since they bought it five years ago, but Capron and Knutson think they still have a long way to go. And there's certainly no reason to doubt their business sense.