In our latest installment of the SBC’s monthly small business spotlight, we speak with Steve Rice, founder and senior principal of architectural firm Rice Fergus Miller in Bremerton, Washington. In a recent interview with business writer Susan Caminiti, Rice talks about the firm’s early days, why he brought on partners Dave Fergus and Mike Miller, and how sustainability plays a big role for the company and its clients.
SC: You started the firm by yourself in 1987. Can you explain what led to that decision?
SR: I went to work for a medium-sized firm in Seattle in the early 1980s and worked there for five years. I remember the day I interviewed at the firm the fellow who would become my boss asked me what I wanted to do with my career and my answer was that I wanted to have my own firm. And he said, ‘You’re hired.’ I think he wanted to surround himself with people who he could tell were ambitious, and he felt that I would work hard and be a good employee. And while I worked at that firm, I met Dave Fergus.
SC: Did you know from the beginning you wanted to be in business with him?
SR: When I met him we had completely different responsibilities, but then someone went on vacation and we were assigned to work together on a project. During that time we got to know each other a little better and discovered that we had a similar passion for the work we were doing and how we viewed things.
At the five-year mark, I was given an opportunity by a client to do a project in Bremerton, where I was living. And I thought, well, if I’m going to start my own business I might as well do it here where I live and where there’s not a lot of competition. I convinced my aunt and uncle to lend me $10,000. I knew they had invested in my cousin Bill Gates’s company when he founded Microsoft. I do know they did far better with their investment with Bill than they did with me, although I did pay them back in two years at nine-percent interest.
SR: We actually had a handshake deal: If at some point I accumulated more work than I could handle, then I would call him up and he would leave where he was and join me. In the three years it took me to get to that point, we had dinner at least once a month getting to know each other a little more and building a level of trust. Once I had enough work, I had to figure out how to value my firm. I read a few things and then spoke to my banker. There was nothing scientific about it—as an architect you don’t really learn about business. Eventually I came up with a value for the company and told him he was going to have to write me a check for half of it—$20,000—which at the time seemed like an enormous amount of money.
SC: How did the firm progress after that?
SR: We were a generalist firm and we did every kind of design and project we could get our hands on. We said no to nobody. If we had a business plan, we probably would have talked ourselves into being highly selective with clients and actually run ourselves out of business. But our thinking was that we’re in this small town and as we get more visible, we’re probably going to be asked to do more things. We figured the best business model was: say yes to the client and then do the best job that we can. With that strategy we grew pretty steadily over the next five or six years.
SC: Any speed bumps along the way?
SR: In 1993 to 1994 we lost some projects and had a hard time winning new ones. Part of it was the economy and part was our strategy. We borrowed money for a marketing campaign and went into debt. Over this two-year period, I felt really stressed. My wife and I had three young kids at the time and the business was $45,000 in debt. I could not understand how we were going to get out of it.
SR: We tried getting bigger projects, more work, and just meeting more people. Dave and I said we’re either going to die or turn this around, but I don’t think we ever really considered the idea of the business going under. We had more faith in ourselves. We really emphasized excellent customer service with our clients and it showed. And slowly things turned around.
SC: When did you bring on your third partner, Mike Miller?
SR: He came on in 2002 and this decision was a lot more intentional and strategic. When we started getting work again around 1995, Dave landed a project to design a fire station in our community. He liked the people and the project and was really good at it. After that he did another fire station and then another, and pretty soon he didn’t want to design anything else. This is what he wanted to do with his career and it became our first area of expertise—Fire & Emergency Services—and a recipe for growing the firm.
Around the same time I was talking to Mike. We went to college together at the University of Washington and I kept in touch with him. Mike was working for a huge firm in Seattle and was looking to leave. He had developed a specialty in healthcare and senior housing and we weren't doing anything in this area, so this was another area of expertise for us. Over the next few years Mike starting attracting clients like crazy and we more than doubled the size of the firm. Today, we have 45 employees and work on anywhere from 60 to 75 projects at any given time.
SC: You emphasize sustainability in your client work and in your new headquarters in Bremerton. Why is that so important?
SR: We view sustainability pretty broadly. We bought an old Sears Automotive Center for our new headquarters and, when we did, we not only wanted to prove to ourselves what was possible in terms of energy efficiency and water usage, but also to prove to our clients what could be possible in their own projects. I guess you can say we wanted to lead by example. We designed the headquarters with this simple floor plan that works for us during the day, but at night we can use the space for community events for up to 250 people. Since 2011, when we finished the renovation, we’ve held about 45 evening events for community groups and even some of our clients. We could have talked about sustainability with the community, or we could actually show what it is in action through our building, and we felt that having people here and experiencing it for themselves was the best way.
This interview has been condensed and edited for clarity.