The Filefax Story: Gaining the Courage to Become an Entrepreneur

Forty-year-old Curtis Dadian, CEO of Filefax, a space and storage management company founded in 1983, never necessarily wanted to be an entrepreneur.  “Opportunity seemed to knock on my door,” he notes.  But Dadian obviously has a knack for it, growing Filefax’srevenue by 20% percent in just a few years from $2.9 million in 2004 to $3.45 million in 2006, spread over just 10 employees. 

Poway, California-based Filefax is a distributor of products made by Spacesaver, a manufacturer of high-density mobile storage systems, most notably the tall rolling filing shelves lining numerous businesses, law offices, healthcare facilities, and government buildings.  Such filing shelves can save space because they can be rolled right up against each other like packed sardines.

Dadian credits the University of San Diego’s Master of Science in Executive Leadership (MSEL) program at the University of San Diego, where he graduated in 2001, for giving him the courage to purchase Filefax in 2003. “MSEL is one of the key reasons why I’m doing what I’m doing,” says Dadian. “MSEL put the challenge out there.  The program created consideration and thought towards leadership.  I think a lot of us go through our days and tasks without really thinking about what kind of leadership duties we are taking on.  We just do what we do.  In the MSEL program, it’s almost impossible not to look closely at what you’re doing from a leadership standpoint.”

Dadian needed all the courage he could muster up in order to acquire Filefax since it required his cobbling together down payment funds from home equity loans and personal savings.  The previous owner financed the remaining undisclosed purchase price by carrying a four-year note.  Dadian ads, “I wasn’t in a position to go out and acquire the amount of bank financing that I needed to buy the company, but the seller’s note allowed the deal to work.”

In addition to the risk associated with the financing situation, Dadian left a company called TAB, a competitor of Spacesaver, where he had been working for the past 10 years. Most recently Dadian was TAB’s regional manager and had been a corporate person his whole life. Transitioning to an entrepreneurial organization was a big shift. “MSEL required me to ask myself, ‘Am I doing what I think I am capable of doing?’ and ‘Am I doing what I want to do?’ Before buying Filefax, I think my conclusion was ‘no’ to both questions, and that easily pushed me towards taking a pretty big financial risk,” he says. “I credit or blame, MSEL for doing what I’m doing today,” he adds jokingly.

When Dadian first purchased Filefax, he recruited team members, trained them, created a new office space, and built a showroom. He and his team also tried to figure out how to market more effectively. “Right before I arrived, the business was run very conservatively,” he says.  “Not a lot was spent on salespeople in terms of commissions and there was little marketing.  But paying commissions aggressively, marketing heavily, and developing a showroom all cost money.”  All of these changes were in an effort to drive long-term growth but added expenses and led to lower profitability.  But Dadian emphasizes, “These costs were necessary for long-term investment.” Additionally, Dadian states that he gained the strong benefit of two key employees that stayed on thru the change of ownership and who remain with Filefax today.  He values their growing loyalty to the organization.

One of the key changes he made when he first arrived was to change the company’s product line, a change that sent ripples throughout the industry.  Filefax had originally distributed TAB products, the fiercest competitor of Spacesaver.  “On the first day of owning Filefax, I dropped the TAB line and picked up its major competitor. This was big news in our little industry,” he explains.

TAB had been going through various management issues, and Dadian had already been thinking about leaving TAB when the Filefax opportunity first came up.  “Instead of TAB being a publicly traded, well-focused, highly respected industry leader, it became one of a handful of companies owned by a small investor group led by an individual whose primary objective was to increase profits at any cost, no matter how steep, in my opinion,” notes Dadian.  “That philosophy wasn’t in line with where I wanted to go.”

On top of TAB’s internal troubles, the company had intentions of acquiring Filefax and potentially having Dadian as a branch manager.  But Dadian wanted to build Filefax the way he wanted to build it, by following his guiding principles: People before profit; trust, accountability, and honesty; sense of urgency; service; focus; complete work; knowledge; and sound business practice. Through acting on these principles, Dadian believed Filefax he could add value for customers, exceed vendor expectations, motivate employees and build a foundation for a sustainable future.

Thus he called up Spacesaver and earned the right to exclusively distribute Spacesaver products in the San Diego area, meaning if someone in San Diego wants a Spacesaver product, they have to go to Filefax to get it.  Spacesaver has 59 other distributors like Filefax across the country.

 “This was a big shift from a vendor standpoint and a branding standpoint—we moved from being a records management solutions provider to a space planning solutions provider covering everything from records centers to supply rooms, libraries, inventory storage areas and even weapons and other gear at military bases when we moved to Spacesaver.  Our business became broader,” adds Dadian.  Despite the big changes, Dadian is happy with the decision to change products.  According to Dadian, Spacesaver has more systems out there nationally than all of its competitors combined.  Having the Spacesaver brand gives Filefax much more credibility, instant name recognition, and specifications for new clients.      

But despite all of Dadian’s successes, being an entrepreneur and business owner is not for the faint-hearted or the time-starved.  “On the outside, people might look and think I made a great decision. Buying Filefax allowed my family to do things we wouldn’t otherwise have done, but there have been some costs that are pretty steep,” admits Dadian.  During the first two years, he worked 80 to 90 hours a week, hours rivaling notoriously treacherous industries like investment banking.  These days, he works less, but still logs in long hours each week. 

On top of the demanding schedule was his early and current role as jack-of-all-trades, a common issue in entrepreneurialenvironments.  “Our small team had to manage everything from accounting processes, order management processes, IT infrastructure, customer relationship management implementation to handle sales cycles and the sales pipeline.  Everyone needs to be committed to continuous learning. I had to make sure I had the right people in these positions,” notes Dadian. “We’re big enough to have issues, but we’re not big enough to have dedicated IT staff, facilities manager, or an accounting department.”

In the end, despite all the hardship related to being an entrepreneur, Dadian enjoys the fruits of his labor. “I love the adrenaline rush of my job.  I also love being able to think of something on Sunday night and implement it on Monday morning.  That’s pretty exciting.  The downside, of course, is that because opportunities are right in front of you, if you’re not capitalizing on them seven days a week, you feel like you’re not doing your job,” he says. “Every once in a while the idea of a job where I can plug in on Monday and unplug on Friday sounds kind of appealing.  But I wouldn’t choose to do that today. In the end, I’m glad that I’m doing what I’m doing.”

As Dadian reflects on the past few years running Filefax, he is excited by all of the progress he and his company have made.  But characteristic of the prior USD tennis star is a sense of endless competitive spirit.  “We’re just scratching the surface,” he says.  “We see this as a $10 to $15 million dollar business once we figure out how to do it.  We need to operationally function better than we do today.”  Patience is something Dadian has learned over the years too: “I thought that I could get this place straightened out and going in the right direction overnight, but it all takes time and patience.” 

Dadian and his team have big plans for the future as Filefax grows. It is his hope that Filefax will be a business of choice by creating opportunities for others by retaining and growing team members - whether they be employees, contractors, or vendors.