Page 149 - The Way to the Top

All that changed when Ely Callaway walked into my office carrying a
set of golf clubs over his shoulder. I proceeded to listen to his business

plan and then recited all the reasons (which I had prepared before the
meeting) why I couldn’t invest GE’s money in his company. Ely wouldn’t
take no for an answer. He rebutted my points one by one and convinced me
to do some more research on both him and his ideas. The rest is history. I
gave Ely $4 million for a majority interest in Callaway Golf, and Ely went

on to create the world’s number one golf club company from scratch.

He proved to be a marketing genius, attacking a market saturated with
products that were branded differently but all essentially clones of one
another. Right from the beginning, he priced his product at the top of the

line and kept Callaway’s distribution away from the discounters to create
and maintain demand. When I questioned this practice, he told me that
once you establish a perception of a discounted pricing strategy, you can
never change it to a premium-priced brand.

He initiated a “Distinguished Golfers Advisory Board,” consisting of

high-profile, well-known people like Sam Nunn and Jack Welch, whose
only responsibility was to play with his clubs and provide feedback to him
on how the product performed. Of course, having Callaway clubs in the

hands of these distinguished people created visibility for its products and
word-of-mouth advertising for free. Soon Callaway Clubs were featured in
the golf pro shops of some of the country’s most prestigious country clubs.
I could go on and on with story after story about this incredible man but
the biggest lesson I learned was that the most important ingredient for a

successful investment is people. GE didn’t invest in a golf club company.
It invested in Ely Callaway, a man with a vision, a passion to develop it,
and an unwillingness to accept no for an answer. GE’s original $4 million

investment eventually returned hundreds of millions to its pension fund,
and some great personal lessons in business from an extraordinary
entrepreneur.

Another terrific teacher was Dale Frey, a forty-year career GE veteran
for whom I had the privilege of working in three different businesses

representing more than half my total years with GE. He retired from GE as