Colorado Biz Magazine

Somehow it's fitting: The same year Jake Jabs' American Furniture Warehouse celebrates 30 years in business, more restrictive bankruptcy guidelines have been signed into law.

Fitting, because if there's one thing the plain-talking Jabs detests, it's bankruptcy as a business strategy - bankruptcy as an escape hatch to debts owed. In 75 colorful years, Jabs has competed in rodeos atop bucking broncos, served in the military, toured as a country-western musician and, of course, built one of the largest independent furniture outlets in the country - and one of the largest private companies in Colorado.

But the flamboyant showmanship that Jabs has displayed in his TV ads for the past 30 years belies the fact that he has adhered to simple principals laid down by his parents, Russian immigrant sharecroppers in Montana, who showed their eight children the satisfaction that came from working hard together, and taught them to look warily upon indebtedness.

Twice in his retailing career, bankruptcy looked like the best solution to financial woes for Jabs. In the 1970s he liquidated his furniture at Mediterranean Galleries in Denver to pay off creditors rather than declare bankruptcy. And in 1985, he again eschewed bankruptcy, instead closing five of his nine American Furniture Warehouse stores and selling merchandise for cost - 50 percent off - until he could pay the bank $1 million he owed.

He hasn't borrowed from a bank since, and American Furniture Warehouse has grown back to a 10-store empire projected to generate revenues of $350 million this year. "I think bankruptcy laws should go away," says Jabs, who still puts in 60 hours a week and wears running shoes to work. "You see it in the furniture business. You know, one bankrupt guy buys out another bankrupt guy, and all of a sudden it's huge dollars and they're ripping off the creditor and suppliers with big money, which hurts everybody.

"People should be held accountable for not making real-world decisions, like Qwest and those guys are doing - just playing games with the numbers," Jabs continues. "Make 'em step up to the plate and liquidate or sell out."

Jabs no doubt was influenced by his father, who grew up in Poland, was drafted into the Russian Red Army and worked as an interpreter for the Russians until he made his way to the U.S. after World War I. Jabs himself had no choice but to pursue a livelihood away from his family's farm in Montana because there wasn't room for eight offspring to make a living on the property. Jabs says his father could have expanded the farm, but he repeatedly refused to buy land that he couldn't pay for up-front.

"He could have bought that 40 acres over here, and that 80 over here and that 160 acres over here," Jabs says. "But he would have had to borrow money, and he wouldn't borrow money."

Jabs has built American Furniture Warehouse with a handful of old-fashioned principles - some born from common sense, some uniquely Jabs'. Among them:

Don't set goals. "I don't have any goals for my employees, either," he says. "If I set a goal for my salesmen, the first thing that would happen is, they would start overselling. If I were to say, 'You've got to sell $50,000 (of furniture) a month,' well, let's say near the end of the month he's only sold 40, and if he doesn't sell 50 he's going to get reviewed or written up. So then he'll start lying and cheating and overselling."

Beware of high-producing salesmen. "Sometimes the salesmen who are happy making $40,000 or $50,000 a year are your better salesmen, because they explain the product to customers, they explain how it's delivered," Jabs says. "You don't get merchandise back because they take the time to go over the product and not oversell, whereas the high roller is a lot of times the one who causes you the problems if customers bring something back because they have buyer's remorse. So we don't have any quotas for any salesmen or any of my store managers. Probably the only persons I really ever fire in the company are salesmen who are overselling."

It's not the money. "I think one reason I've been successful is that money was never a driving force to me. Never," Jabs says. "So I always sold furniture cheap, gave people a bargain. I never tried to sell to rich people, I guess. There's an old saying, 'The rich will make you poor, and the poor will make you rich.' And so I cater to the masses, more or less."

Work is a virtue. "I see people who don't want to work, and I don't get it," Jabs says. "They're not happy. I think people are happier working." That's why, at 75, Jabs has no plans to curtail his 60-hour work weeks, traveling overseas to buy new wares, and selling at prices the masses can afford.