The Flower Power of Family

David Gardner: Jim, you have called your business a family business in the past. Your brother Christopher, I believe, is president of the company.

Jim McCann: He is not very good, but yes, he is the president.

David Gardner: Well, who adds more value to the company, you or Christopher?

Jim McCann: He does, by a lot, but don't tell him I said that, David. I have a lot of family in the business. I have a sister, Julie, who I mentioned, who is one of our premier floral designers. She just wrote a book with me called A Year Full of Flowers, which means I got to pay for it and do all the grunt work and she did all the talent parts. So I have a couple of kids in the business.

When you grow up in the flower business, retail flower shop, everyone in the family works. If you want to be invited for Thanksgiving dinner, you are delivering flowers the day before. That has been the culture of our company. So I think it has provided us with a bit of a special culture in that there are so many family members in and around, not just my family but other families whose family members come and help us out every holiday time.

You can never have enough good, talented people, and who better to trust and count on than family? When my mom was alive, she was in charge of payroll. Who better to have in charge of payroll than your mom?

David Gardner: So "family business" is a phrase that has very positive connotations for you, Jim McCann?

Jim McCann: I think so.

David Gardner: Jim, I think a lot of people; well, we have all bought and received flowers over the course of our lives, and we have maybe heard 1-800-Flowers (Nasdaq: FLWS  ) , certainly FTD (NYSE: FTD  ) , but we probably don't have a real sense of the dynamics of the industry. What is the market share, as far as you can see, domestically for your company versus, let's say, FTD?

Jim McCann: Well, it is a very fragmented and fairly large industry. We believe what the Society of American Florists and Department of Commerce tells us in that it is an $18-20 billion business, and here we are a $650 million company, so we have a very, very small market share. I guess our market share in terms of dollar revenues is about two or three times what our nearest competitor is.

David Gardner: Does your business model differ significantly from FTD?

Jim McCann: Yes, in one respect. We are a consumer company, and a biggest chunk of their revenue and their profits, I believe, come from their B-to-B business. That is, pretty much every florist is a member of FTD, and they pay them fees and charges and communication and they buy advertising from them. We have a very small network called Bloom net. But increasingly, that is a very profitable business. So increasingly, you will see us compete on equal footing with those other competitors by beginning to leverage our capabilities with our much smaller but much more intense networks. So yes, we are 100% consumer, and they are something on the order of 50-50, I would guess. You will see us flex our capabilities with our much smaller, but much more intense, network.

David Gardner: Jim, let's close with our game Buy, Sell, or Hold. You have played it before. I will be asking you about things happening in your world and ask you if they were stocks, which they are not, would you be buying, selling or holding and a sentence or two about why. Let's kick it off with giving diamonds instead of flowers on Valentine's Day. Buy, sell, or hold?

Jim McCann: I would make that a hold in the sense that I think diamonds are a wonderful thing to give, but what better place to give a diamond engagement ring than in the middle of a rose bouquet?

David Gardner: Giving your significant other a houseplant for Valentine's Day? Buy, sell, or hold?

Jim McCann: Good idea. I would say it is a buy, but you also have to buy a couch because that is where you are going to be sleeping.

David Gardner:(Laughs.) They are an organic part of life, but some people see them as a negative. Buy, sell, or hold weeds?

Jim McCann: Sell. It costs us a lot of money and the production of our greenhouses to keep those suckers under control.

David Gardner: Don't you need weeds in some senses to make you appreciate flowers?

Jim McCann: Only in life, not in the greenhouse.

David Gardner: Last one for you, Jim McCann. Buy, sell, or hold flower power?

Jim McCann: Buy, baby! What better way to express yourself and connect so when your loved one, let's say it is your bride, and she is working at that wonderful technology company in Virginia and on the Thursday before Valentine's weekend, a big, beautiful dozen roses appears at her desk. She is going to be your princess in that office, and everyone all day is going to come up to her and say, "Who sent you those? Don't tell me that no-good husband of yours actually broke down and did the right thing? Maybe he is not a frog after all. Perhaps he is actually a prince."

David Gardner:(Laughing.) Jim McCann is the chairman and CEO of 1-800-Flowers.com. Jim, thanks for joining us on The Motley Fool Radio Show.

Jim McCann: Great to be with you, David. Let's not be a frog this year.

David Gardner: Thank you, Jim. That was really fun, as always.

Jim McCann: Thanks.

David Gardner: Congratulations; good luck.

Want to read this interview in its entirety? Check out:

David Gardner is co-founder of The Motley Fool and is the advisor of Motley Fool Rule Breakers. The Motley Fool isinvestors writing for investors.


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