by Lee Smith
When the time came for the heir apparent, David, to go to work for his father, Arnold, all was tense in the kingdom. "I told David that he would haveto push me off my throne," says Arnold, proprietor and ruler of Arnold Katz Photography, a Manhattan photo studio just treading water in terms of profits. "I wasn't going to just give it to him." Father and son argued and screamed at each other about creativity and concepts. David wanted to take the business into the 21st century, but his dad scoffed at his ideas. David walked around with a knot in his stomach. Arnold popped antacids.
Now, close to three years later, all is peaceable and much more profitable in the Katz realm. Arnold, 63, founder of the company, happily acknowledges that David, 25, has raised the business to a new level by investing in digital photography, a technology that allows photos to be transmitted to a computer and placed on Websites. Defying expectations, father and son share the throne with great respect and affection for each other. "It's wonderful," says a grateful Marsha Katz, Arnold's wife and David's mother. "David no longer has to kill his father to have an important place in the business."
The story of Arnold Katz Photography exemplifies a major transformation that is realigning power in family businesses throughout the country and doing so at a greater rate than ever before. Many of the heirs-in-waiting who are impatient to take over the shop are members of Generation X, that cohort of Americans between the ages of 18 and 33.
The war between the Katzes was a classic battle over a founder's refusal to recognize that the world was changing and that his business had to adapt or die. Beginning 40 years ago, Arnold built a successful studio, one where he took pictures of books, cosmetics, and glassware for catalogs and other promotional and advertising publications. He took the pictures on film and developed them in a darkroom, a procedure that has not changed much in more than 100 years.
Meanwhile, his son David was growing up, fascinated with computers and not much interested in cameras. After graduating in 1995, David went to work at the studio and hated it. "There's a class system in photography, and I had to serve an apprenticeship," he explains. "I was a messenger." David quit and went to work elsewhere, eventually for a competitor. Having gained respect and experience outside, David returned to Katz Photography a little more than a year later. But relations with his father were even worse because it was still unclear what his role in his dad's business would be. Before, he was a disgruntled apprentice. Now, he was a disgruntled journeyman who could back up his opinions with knowledge.
What saved the relationship was David's love for digital photography, in which a small video camera is trained on the object to be photographed and the image is transmitted electronically to a computer. The process is much faster than developing film in a darkroom, and inside the computer the image can be manipulated to change shape and color and be surrounded with a background of the computer operator's invention. Arnold resisted David's pleas to invest in the new technology because he was reluctant to abandon an old one that he understood.
But clients were beginning to demand digital technology, partly because it was fast and saved the expense of reshooting when what came out of the lab was less than expected. In addition, the digital photos could be used on Websites. Arnold isn't sure whether he would have invested in digital had he not had David, the computer whiz, at his side. "I was thinking about buying a digital just to show clients how bad it was,"
Arnold recalls. He not only told David to buy digital equipment, but he also told him to spend as much as he wanted.
"I went crazy when he told me that," says David. "It took away all my excuses. If he had restricted my budget, I could have explained any failure by saying, 'Well, if we had bought more computer memory, we could have done the job.'" David spent $100,000 for two digital cameras and computer power, a huge expenditure by Katz's standards. A typical film camera costs only $4,000.
The great experiment has paid off very well: Clients are delighted with the pictures. Partly because digital is so much faster, the studio has been able to take on more work. Revenues have increased from $500,000 a year in 1997 to $750,000 today. At the same time, expenses have declined by $60,000 because of savings in film, lab costs, and part-time help. Arnold, still president, is more comfortable than David at chatting up the customers, and he can operate the digital camera about as well as David can. But only David (now vice president) can make the computer perform the magic of special effects. As Arnold beams with pride, David says: "I can make a background of water for the product in the picture. I can make lightning." He sure can.
For the first time ever, the studio closed for a week of vacation this summer. It was, of course, son David's idea. "At first, I was steamed up about it," says Arnold. "For 40 years I never closed down because when things were going well, I didn't want to stop, and when things weren't going well, I didn't want to miss an opportunity. Then I thought about it and called David and said, 'Look, this isn't your problem. This is my problem.'" When the time comes for Gen Xers to yield to their children, let's hope they'll do it as graciously.