Monday, Aug. 5, was to have been a day of celebration at Butterfield Equities Corp.
President and co-founder Donald Endresen was about to turn 40 and the corporate staff had planned a party.
They were determined to enjoy the day, even though the diversified financial corporation Endresen had founded with his father, David, and a close family friend nine years earlier was awash in red ink, hounded by regulators and split by an internal debate over the Endresens' future.
But at 8:45 a.m. the phone in the president's office rang, bringing an end to any plans for a celebration. While no one at Butterfield knew it then, the call signaled the end of the diverse Endresen empire which ran the gamut from real estate and restaurants to savings and loans and securities.
It was an empire built largely by one man, Donald Endresen, and--as many co-workers and friends now say--was brought down by the same combination of entrepreneurial drive and bullheadedness that enabled it to be built at all.
The call was from the Securities and Exchange Commission's enforcement chief in Washington. The agency, which serves as a corporate watchdog on behalf of the government and the investment community, had heard that Butterfield Equities was anticipating a huge fourth-quarter loss--a loss that would plunge the $800-million Butterfield Savings and Loan Assn. into a deficit position.
Endresen was told that trading in Butterfield's stock had been halted and that the company had to issue a public statement that afternoon disclosing its financial status.
For the next four hours, as the party food piled on the polished rosewood table in the directors meeting room grew cold, Butterfield executives worked feverishly to craft a statement that would satisfy the SEC's demands, meet the approval of the California Department of Savings and Loan and the Federal Home Loan Bank Board and, at the same time, minimize damage to the company's public image.
But the public image that Butterfield wanted to project--a record of fabulous growth and successes--doesn't jibe with insiders' story of how Butterfield grew, and why it died.
That story, pulled together from company documents, interviews with real estate and savings and loan industry professionals, a number of current and former Butterfield insiders, and discussions with Don Endresen, provide a case study of a corporation that grew too big and a manager who couldn't--or wouldn't--recognize that the time had come to change or step aside.
Other entreprenuers have realized their own limitations. Lorraine Mecca, the former teacher who built an idea into a $100-million-a-year computer parts distributorship in five years, recently retired as chairman of her company, Micro D. She said she left because the company no longer could benefit--and could even be hurt--by her entrepreneurial style of management; that it was time to turn over the reins to a more structured, business-oriented management team.
Don Endresen, whose entrepreneurial style was largely successful for making Butterfield S&L one of the fastest-growing and most talked about thrifts in the nation during the early 1980s, could have taken a lesson from Mecca, as even he now admits.
Endresen 'Not Suited'
In an interview Thursday evening--just 24 hours after the Federal Home Loan Bank Board seized control of Butterfield S&L and its subsidiaries--Endresen acknowledged that he is "not suited" to be a manager in such a tightly regulated business as the S&L industry.
"Don knew where we were going and what we were doing, and he knew that he knew best," said one former Butterfield official. The official, who asked not to be identified, said he likes and admires Endresen, but--as did more than a dozen others interviewed for this article--said Endresen's need to be in total control of every aspect of the business was a primary factor in Butterfield's decline.
Randy Grimm, who served as Butterfield S&L's marketing director from January, 1983, until May, 1984, agreed. "This is a case history of a good concept with good resources and good people being destroyed by an entrepreneur who was unwilling or unable to put a solid business plan under it all. Many, many people there have told Endresen he needs a plan, but he won't listen," Grimm said in an interview just six hours before the bank board took control of Butterfield.
Grimm said that when he was hired to establish a marketing unit for Butterfield Equities, the company still was in Brea, with 75 core management people and 275 line employees spread out among nearly a dozen operating divisions housed in four office buildings.
"I had all the support I needed to hire good people," Grimm said, "but I saw a real penchant by management to spend heavily. I was always told not to worry about where the money was coming from, that Don had always found the money somewhere."
That, said an insider still with the company when the S&L was taken over last week, was one of Butterfield's major problems.