Closing in on our second decade at Heath, we have great reason to share what two non-ceramicists were thinking 17 years ago, when taking on a 50-year-old ceramics company. There's that, and then, and what we're thinking now, in 2020.
What follows reveals who we are and what keeps us going. No short read, settle in. With gratitude.
The year was 2003, the day was Monday, the time was 5pm (or was it 5am?—at some point, it was all the same). After our first day in the Sausalito factory, then our only location, we looked at one another and said, “Woah, we just might spend the rest of our lives on this project.” Never ones to pick the easy route, turns out, we were on to something.
Our intention was to make Heath viable again; to do so with design intent and integrity, and to make the business sustainable for the long term. Heath had fluctuated between great success and near-death, and we knew the long game was the only success we were interested in. So we set up shop, put stakes in the ground, and went to work.
Given it's never a bad idea to reassert one's intentions, here's some of what made our perspective on business utopian for its time:
When we thought about craftsmanship and making products, we said, if we’re going to do it, we must do it well. All products would continue being made here, at home, with no corners cut. It didn’t matter so much the medium—ceramics, textiles, furniture—so long as craft and integrity were carried through from intention to outcome. This is how two non-ceramicists came to own a ceramics company.
We craved working for the very type of business we set about making.
When we thought about the enormity of adopting a company from the 40s, we insisted that Edith & Brian’s legacy continue. We saw business as a tool: to be sustained responsibly, to benefit employees, and to contribute positively to the community.
The year is 2020, the day is Friday, the time is noon (we know this now!). After 17 years at Heath, we’re still people, real, transparent, and not a corporation. We’ve adapted, and evolved, but never changed course. We make decisions on our terms, for the long term. With that, we’ve built a vertical business that’s some combination of slow, sustainable, and progressive. We are responsible for the impact our business has, and that challenges what most of us are taught about success—grow fast, maximize profits, and sell (your business or your soul).
We’d like to tell you about a book from our holiday reading list that included a couple of paragraphs on the difference between contracts and commitments. Second Mountain by David Brooks, in part, sparked this letter, having put something we’ve felt for a long time into words that we hadn’t used before. It’s worth noting, the book contents are not directly tied to business, but our interpretation of them is.
A contract is about meeting one’s own interests. In this way, a contract may sound like this: Heath makes a mug. Heath sells a mug. Heath makes money. End of story. Except it’s not.
A commitment is about the way we define our relationship to society. In this way, a commitment sounds like: Heath makes money. Heath invests money into equipment that reduces its solid waste to landfill, moving it closer to a zero waste business.
By asking, how does a decision relate to society, we go beyond the contract to the impact contracts have on a commitment over time. Said another way: making money is the means to an end, not an end unto itself.
A business exists to produce great work, to nurture and sustain the community who works there, and to leave the world better for having been here.
Entering the first quarter of a new year, and planning for what's ahead, these distinctions become especially relevant—as running Heath is about maintaining an intuitive balance of contracts that enable our commitments. With that...
Our 2020 Commitments:
1. We will favor sound, long-term financial choices for good, keeping out of the fray and business's thirst for short-term revenue.
While positive profit and growth is essential, we’ve never been comfortable with the convention that this two-headed monster defines how valuable or successful a company you are. After all, we're not here to impress.
Since 2003, we’ve run a profitable business, except for years one and two when we were donating printers and drill presses from home. By profitable, we mean more or less in the 7% range, providing our team with a comfortable footing, which has always been our goal.
So, what happens when we spend more on non-essential stuff, as we did in 2005 when we became an early adopter of a 100% plastics-free packaging system? By doing what’s right we look worse on our P&L, but are we less successful?
Fast and big simply can't sustain itself for the long-term. Something must give-way and, more often than not, the impact falls on society.
We’re incredibly proud that later in 2020 Heath will be entirely debt free, giving us even more freedom to choose our future.
Why are these topics so relevant today? When we opened Heath SF in 2012, the time felt interesting and synergistic—craft-based businesses like ours and the tech industry growing-up together. Eight years later, it feels quite different. Tech has grown exponentially, a discrepancy we feel most when hiring. Despite the solid business that we are, more and more it feels we compete against companies that pay 50% more. With the cost of living in the Bay Area going nowhere but up, it’s our job to take care of our backbone, all 215 employees (to date).
Going forward then, we’ll be looking to grow a bit more than usual, filling some gaps that will enable the commitments we’re talking about. This year, along with a few others, we’ll be hiring our first Chief Operating Officer to manage our day-to-day contracts, so the two of us can focus on the company's long term commitments. (Are you our COO? Know someone? Let us know at email@example.com)
2. We will influence craft, design, and creativity, by leading in small-scale, craft-based manufacturing.
This is our DNA, our passion from the get-go, and the reason we got into this business in the first place. We watched a legacy of craft and manufacturing leave the US, and not only in ceramics. Our first years at Heath were bittersweet. We had the opportunity to buy much-needed equipment at auction from great American potteries going out of business after centuries.
We like to believe that building upon Heath’s 70+ year history, our careful efforts and slow business mentality have had an influence on the resurgence of craft-based manufacturing and so many craftspeople carrying on meaningful work. Craft, design and creativity will always be driving forces in the way we move forward—not only in the ceramic product we make, but in any material or venture we embark on.
3. We will pay as much attention to our employees as we do our customers.
Recently, we took our first steps in becoming Employee Owned, with 8% of Heath now owned by the very people working here. Being Employee Owned goes beyond financials, building a culture with an ownership mindset. Knowing that we’re all individuals, Employee Ownership builds a stronger community, period.
A chance conversation last summer left us stuck on, “What if we put as much attention on our employees as we do on our customers”? It sounds so obvious, but ultimately this simple phrase connected, and focused, many dots that had been floating around us for years. By focusing on programs that simultaneously train and educate the way we work at Heath, and add value to employees’ lives outside, our impact goes beyond our company to one on society, as well. One such example is financial literacy, which we hope we’re instilling when teaching our employees Transparent Finance. This program is exactly as it sounds—our books are open to everyone who works here.
4. We will lead in Zero Waste, and work towards 100% renewable energy.
Another big topic we can’t ignore. From the get-go, manufacturing our own product was a way for us to take responsibility for the impact of our actions. Over the last couple of years we’ve made huge progress in our Zero Waste to Landfill efforts, not least because we have dedicated staff focused on this hugely important ongoing project (another cost that’s not necessary, rather it’s just the right thing to do).
There's no out of sight, out of mind when you manufacture in the community in which you live.
Over the last year alone we achieved a 90% diversion rate of our San Francisco facility’s waste from landfill, through conscious re-use, materials choices, and waste management programs. It’s an impressive number, even if we weren’t a manufacturer.
Many years ago our founder, Edith Heath, set a vision that someday we would fire ceramics using the energy of the sun. In 10-15 years, or much less we hope, Heath will be making dinnerware using 100% renewable energy.
Manufacturing, especially, needs to continue in this direction, and someone must start thinking about how to make it a reality—our hand is up! Have talent in this area? Want to help? Email us at firstname.lastname@example.org.
And, if you're still reading...
A sincere thank you for your support. If we’ve informed and inspired you, we’ve done our job. If we’ve helped you love Heath even more—no complaints here!
Thank you, again. We look forward to sharing more about our commitments as the year progresses.