<p>Morrow Equipment Company Entrepreneurial Interview</p><p>2/13/2004 Jaime Bolme Alan Mui Howie Price Table of Contents Introduction...... 2 Opportunity...... 3 Resources...... 6 Founders...... 7 Conclusion...... 9 Bibliography...... 10 Appendices Figure 1: Morrow Timmons Model...... 11 Figure 2: Morrow Timeline...... 12</p><p>2 Introduction</p><p>How does someone start with a single tower crane and turn it into a high growth business venture? With 23 locations through out North America, Australia, and New </p><p>Zealand Morrow Equipment Company started out with only one crane and a trailer. </p><p>Having grown into a vast empire, Morrow is now the second largest crane dealer in the world. Richard and John Morrow are perfect examples of two entrepreneurially minded brothers who had a vision. We are going to expand on their vision by looking at the opportunity they had in the business, the resources that were available to them, and how the attributes of the founders led to success. </p><p>The Morrow brothers found their opportunity in their teens, while working for their father’s construction business. This early experience in the construction field provided them with knowledge and an experience base to see that there was an opportunity in the building industry, which was in need of a more efficient and economically operating construction crane. </p><p>Their father had owned one tower crane, which he used for his construction company. Tower cranes provide a user with advantages not found in the commonly used mobile diesel cranes that were prevalent in the U.S. at that time. The benefits of a tower crane include their ability to work in confined sites, to give greater working radius, and to operate more economically. </p><p>3 Opportunity</p><p>The brothers’ opportunity came about with the leasing of that one well-used tower crane to a contractor in 1968. When that contractor needed another crane, they quickly acquired a second. This marked the startup of their now multi-million dollar private company. In Figure 1 Morrow Equipment Company is put into the Timmons Model during the start-up and growing phases.</p><p>Between 1968-1974, the Morrow Brothers expanded their rental fleet to thirty tower cranes in anticipation of a projected market increase in demand. These cranes and personnel were acquired and situated around a San Francisco Bay area facility with the understanding that only a few of them would be committed to rental or sales, and that no guarantees would be provided from the local construction trade. In the ensuing months, however, the calculated risk they took was met with great success. Rentals and sales contracts kept the entire fleet mobilized throughout central California, and they further fueled the growth of their company. </p><p>As the Morrow-owned tower cranes appeared at more and more project sites, the construction business was becoming increasingly aware of the advantages of this special crane. In 1974 they became an authorized dealer in the Pacific Northwest for Liebherr, a </p><p>German manufacturer of cranes. This entitled their business to not only rent and lease, but to sell tower cranes in the northwest.</p><p>In that same year, the Arab Oil Embargo led to an opportunity in this market, due to the increased market demand. The high cost of crude oil pushed an U.S. initiative to make the nation’s power generation more self-sufficient. This resulted in U.S. utilities’ ordering the construction of 41 new nuclear power plants in 1974 alone. These </p><p>4 specialized and lucrative contracts to build the plants marked a window of opportunity in the tower crane market. Being one of the three companies that competed for contracts, </p><p>Morrow experienced more than enough demand.</p><p>From this new-found opportunity, the Morrows’ company was able to grow and open up offices in San Francisco, Hawaii, and Houston between 1974-1979. Their service areas marked most areas west of the Mississippi. During this expansion, they not only opened new offices, but also bought out existing competitors in Hawaii and San </p><p>Francisco. This was also due to good timing, since those companies had existing rental fleets, and they wanted to leave the market. Both of the ventures in Hawaii and San </p><p>Francisco had the same calculated risk of not having any committed contracts. In both cases, however, these risks were underlined by the aggressive marketing strategies and solid technical support which were responsible for the Morrows’ success.</p><p>In 1979 Morrow bought the North American franchise from Liebherr, making them exclusive distributors and importers of the Liebherr manufactured line of tower cranes. This joint venture of the union between Morrow and Liebherr basically ensured the maturity of their company. Their fleet had now grown to about 120 cranes and offices quickly developed throughout North America. In the 1980s, the new corporation grew rapidly into the international market with a total fleet of over 250 tower cranes. The previous key dates mentioned above are summarized in Figure 2.</p><p>They are the world’s largest dealer for Liebherr, and the second largest overall dealer in the world. The other biggest player in their business operates in totally different markets such as Europe, the Middle East, and Africa; thus, even with no formal agreement between their two companies, there is no direct competition between them.</p><p>5 There are many reasons why the Morrows have made their opportunity so successful. They entered the market at the right time, with a niche product which doesn’t change much technologically. They founded their venture only a few years after the introduction of the tower crane into the North American market, and were able to change the status quo of the mobile diesel cranes being the standard machine.</p><p>The brothers leadership maintained in their field by providing customers with dedicated service and satisfaction, and a variety of options such as renting, leasing, buying, and buy-backs. By offering rental services, in addition to the standard sales approach, contractors and other crane users could lease a tower crane for a specific job requirement without having the high initial investment cost required by a purchase agreement.</p><p>They also had a mobile fleet in which they are able to coordinate supply and demand; for example, one day they could be in Chicago, and the next day they would be on flat beds being shipped to Florida. This led to the success of the major risk of acquiring these assets with no guaranteed commitment of service.</p><p>Overall, the Morrows had taken an opportunity which started as a two-man single tower crane business, into a successful, mature, global company. They took their small flourishing family operation, and with great determination, built it into the opportunity of a lifetime.</p><p>6 Resources</p><p>The three main resources that Richard and John used to start their venture were </p><p>$10,000, a bank loan, and one crane. The $10,000 was acquired through the brothers’ grandma, the bank loan came from a local Commercial bank in Salem, OR and the crane was obtained from their father’s construction company. The Company today is held privately and has very limited investors. The only person that might be considered an investor was their grandma of which did not participate in the company’s decision making. </p><p>One of the ways that they bootstrapped when they first started their company was by operating out of a trailer about 10 by 20 feet. Richard also dismantled and repaired the cranes as necessary. When the company was up and coming another way they bootstrapped was when they purchased 30 cranes of which were either used or leased prior to the Morrows purchasing them. </p><p>Another major resource that was provided to them was the U.S. operation of </p><p>Liebherr tower cranes when they purchased the North American franchise. This then lead to professional technical help were Liebherr would have a representative come to the </p><p>U.S. and train possible operators and talk to customers. One last resource that Liebherr had a part in was when Liebherr asked Morrow crane to buyout a crane representative in </p><p>Australia and New Zealand. When they followed through with the buyout they ended up hiring the previous owner’s son as a district manager. </p><p>7 Founders</p><p>As you have seen, the opportunity that Richard and John Morrow seized was lucrative. We are now going to take a deeper look into Richard and John’s experiences as founders. John was a better people person and he spent a lot of his time being a salesman and attracting new customers. Richard on the other hand operated cranes and was responsible for all the servicing work on the cranes. Their father was a contractor which also helped them launch their company. In essence, this created a really good team in the beginning because each of their personality skills complimented each other well and the brothers’ benefited from their father’s excellent knowledge in the business. </p><p>Timmons and Spinelli (2003) stress that there are six themes of desirable and acquirable attitudes and behaviors that entrepreneurs possess. These six are: commitment and determination, leadership, opportunity obsession, tolerance of risk and uncertainty, creativity and adaptability, and finally the motivation to excel. We will, in the following, go through each one of these and demonstrate how they apply to the Morrow brothers.</p><p> Commitment and determination - They worked long and hard hours in order to see </p><p> were their business is today. Richard told us that he was working seven days a week, </p><p> from 6 am – 8 pm. That is about a 100+ hour work week.</p><p> Leadership - If the Morrows weren’t able to show anyone else their vision and not be </p><p> able to motivate people the business surely would have floundered.</p><p> Opportunity obsession - They saw an excellent opportunity to enter a niche market </p><p> and they pursued it very heavily. They kept seeing opportunity to take their venture </p><p> further one step at a time, and to let it grow. </p><p>8  Tolerance of risk and uncertainty - There was one point in the starting years were </p><p> they purchased 30 cranes without any customers to rent them to. The Morrows also </p><p> had periods of time where jobs were finishing, and they were uncertain about where </p><p> they would send the cranes next, because they had no prospective projects.</p><p> Creativity and adaptability - The market that they entered into was only foreseeable </p><p> on the East coast. Tower Cranes on the West coast were never seen in construction </p><p> practices. They adapted the market to include these more efficient cranes into </p><p> everyday construction practices.</p><p> Motivation to excel - They had the drive everyday to do the best possible work and </p><p> work to their hardest potential. This would also relate to working around 100 hours a </p><p> week. They also didn’t fall hostage to the mousetrap fallacy.</p><p>The ethics of the company’s founders would be what society would deem honorable. They were very hard working individuals and they always did exactly what they said they were going to do. They consistently put the customer first. If they guaranteed that something would be done a certain way, they would go out of their own way to complete it as agreed. There was a point in the interview were we questioned their ethics, inquiring of Richard, “What was your biggest problem that you had to confront with your business?” His response was “If some of the larger companies we were doing business with found out how small our company was they probably wouldn’t have done business with us.” We still hold this with high regard because the larger companies seemed to never ask the size of the company: They must have been most concerned with whether the job could get done. </p><p>9 Due to the amount of time and energy that the business took to start, Richard had to make some personal sacrifices. The extent of these sacrifices was found to have taken effect on his family life; working about 14 hours a day, seven days a week, doesn’t really give one a lot of time to spend with the family. He also stated that sometimes he was gone on business trips for two to three weeks at a time. He told us a few good stories about his family life when starting the company.</p><p>There was this one point when he was traveling so much for business that his family had to move before he was able to return home. So, when he arrived back home, he found nothing in the house and he had forgotten were his family moved to. Another story that he shared with us was about a time when he went to Mexico with his family for a vacation. His children were 8 and 9 years of age, and this was the first time that he realized he was missing out on his children growing up. He didn’t have access to phones, so this was the first real time he spent with his family without work getting involved. He then found his priorities in life, and made himself spend more time with his family. </p><p>Conclusion</p><p>Through out the paper, we have discussed the factors which made the Morrow brothers successful entrepreneurs. They saw an opportunity, and took calculated risks, creating a successful business with an initial investment of only $10,000, a trailer, and one crane. </p><p>Richard and John Morrow have proven that hard work and dedication to one’s vision can go a long way. The most important point that we all learned from Richard Morrow was </p><p>“Never lose sight of your goals, priorities, and loved ones in life.”</p><p>10 Bibliography</p><p>Morrow, Richard. Morrow Equipment Company. Personal Interview. January 21, 2004 Timmons and Spinelli. (2004). New Venture Creation: Entrepreneurship for the 21 st Century. Singapore: McGraw-Hill.</p><p>11 Morrow Timmons Model At start-up</p><p>Communication Opportunity Unique $10,000 from venture Resources grandma Competitors? Business Plan Bank loans Fits and Gaps - Team and resources Exogenous Ambiguity - Figure out where to forces take it next Creativity Leadership</p><p>Capital market Team context Family Uncertainty</p><p>Founders</p><p>Growing Company Communication Resources Opportunity Sole Grown to be Access to distributor of 2nd largest in major funds Liebherr market Business Plan Fits and Gaps cranes - Comfortable to Ambiguity where they are Exogenous - Moving towards forces mature company Creativity Leadership</p><p>Team Built great management team Capital market Uncertainty context</p><p>Founders</p><p>Morrow Timeline</p><p>12 1968 Leased out first tower crane (Startup)</p><p>1969 Grew rental fleet to 30 tower cranes based out of San Francisco</p><p>1968-74 Acquisition of a construction equipment company in Hawaii Additional 40 cranes acquired making a total of 70 tower cranes Office opens in Houston</p><p>1973 Arab Oil Embargo results in US utilities ordering 41 nuclear power plants</p><p>1974 Acquires franchise right to distribute Liebherr cranes in the Pacific NW</p><p>1978 Market area now included the entire western US</p><p>1979 Gains the sole distributorship rights of Liebherr for North America Total rental fleet grows to 120 cranes Branch offices open in Washington D.C., Detroit, and Atlanta</p><p>Early 80s Morrow purchased 110 Liebherr tower cranes making fleet a total of 250 Expands offices to Tampa Bay, Denver, and Chicago</p><p>Mid 80s Expands operations to New Zealand and Australia</p><p>1990s Continued growing and gaining market share</p><p>Currently Operates 23 offices in United States, Canada, Mexico, Australia, and New Zealand.</p><p>13</p>