For Rick Zomnir, work hasn’t been work at all.
“My philosophy is, if I’ve got to go to work, I want to have fun,” says Zomnir.
Zomnir has followed that philosophy for most of his career, abandoning one profession to proceed on a markedly different, and for him, more interesting track.
And the fun isn’t about to end. At 56, Zomnir is ready to take on his next challenge — after he takes about six months, as he puts it, “to decompress.”
Zomnir is stepping aside as president and CEO of 250-employee Strategic Energy, the energy consultancy and competitive retail energy supplier he co-founded in 1987. He is giving up the reins as part of an acquisition agreement with Great Plains Energy Inc., a 2,400-employee public company based in Kansas City, Mo., that racked up 2003 sales of $2.1 billion. Zomnir will remain a shareholder — he retains one share of Strategic Energy stock — and he sits on its four-member management committee and will have a hand in picking his successor.
After entering the law as his first career choice, Zomnir soon decided that it wasn’t for him and that he didn’t want to waste time and energy working in a field that didn’t excite him.
“I realized early on that I didn’t have a passion for the law, and that I never liked doing things that I really didn’t enjoy and have a passion for,” he says.
Zomnir found that business did spark his interest, particularly the energy business, and that led him down a path to reaping the rewards available to entrepreneurs in deregulated energy markets. For Zomnir and Strategic Energy, success has come out of recognizing opportunity in a changing market, a culture that demands and rewards performance and a passion for building a business.
“A lawyer can’t help you”
Early in his law career, a client presented Zomnir with a case that he hoped the young lawyer could help him resolve. Zomnir reviewed it and concluded that it wasn’t a problem he could remedy.
“I went back to the client with the senior partner and said, ‘You don’t need a lawyer, you need somebody that understands the energy business because a lawyer can’t help you,'” says Zomnir.
The client encouraged him to investigate the energy business, and Zomnir, lacking interest in law practice and holding an undergraduate degree in economics, took the cue. He began to study the energy industry, and by 1987, he and his law partners at Babst Calland Clements & Zomnir had formed a consulting group to help large power users negotiate deals to save on their energy costs. The consulting arm was spun off, with Zomnir at its head, in 1991.
“I got more and more involved in the energy business, and realized that I didn’t like the law at all,” he says. “I liked the business side of the way the energy business worked.”
In the mid-1980s, when the natural gas industry began to deregulate, Zomnir saw parallels between the gas industry and the electricity markets that led him to believe the electric power industry would ultimately undergo deregulation as well.
“I saw that gas had deregulated in 1985, and I had been part of that process as a consultant, and I saw that it made a lot of sense for the electric markets to deregulate. If you looked at the dynamics in gas, they could be applied to (electric) power,” says Zomnir. “Even though the dynamics are different, the fundamentals are still the same.”
And he believed that Strategic Energy was positioned and prepared particularly well to take advantage of a deregulated electricity market.
“There was a point in the mid-’90s when I really felt that if the electric market deregulated, that I and some other people here who were in the business at the time understood it better than anyone in the country, and if it deregulated, we had a vision of how we could help end users save money,” Zomnir says.
When Congress passed legislation in 1992 that paved the way for electricity deregulation, Zomnir and his partners hatched a plan that they believed would put them in the game early. They concluded that if they could negotiate contracts on behalf of large customers – government entities, retailers, manufacturers, for example – they could aggregate the demand and purchase power in large quantities at low prices. The whole process would be managed through a real-time energy management center that would continuously monitor the power market to find the lowest price available to meet customer demand.
Zomnir and his partners borrowed the money with personal guarantees to build an energy management center in Two Gateway Center.
“We were borrowing $50,000 a week to build that energy management center when there was no market,” Zomnir says.
While he says he was confident that he and his partners had an accurate view of the future of deregulated electric markets and how they would work, the move was nonetheless scary.
“There is that moment in time when you realize, you know, I’m about to step off the cliff here,” he says.
And there was no shortage of naysayers giving the scheme little chance of succeeding.
“You run into a lot of people who say you are going to fail,” says Zomnir.
The center went online in 1997, and by 1999, Strategic Energy had revenue of $63 million. Today, it has more than 50,000 commercial and industrial customers. In 2003, it posted $1.1 billion in sales and $78 million in net income. This year, Strategic Energy began negotiating contracts for clients in Maryland, the 10th state where it does business.
Zomnir expects an additional 16 states to deregulate their electric markets over the next five years, a change that will offer Strategic Energy additional opportunities for growth and an expectation by Zomnir that the company will double in size during that period.
Culture of performance
Zomnir’s notion of the key to success — working hard at something that you love — has shaped the culture at Strategic Energy into one that values and rewards performance and weeds out those who don’t meet the standards. The company has a stock option plan that offers incentives to those who perform well, and sets achievement goals that assure that laggards don’t stay on for long.
While the complexities of dealing with changing markets and building a business in an essentially new industry poses its challenges, Zomnir says that human resources issues have been the toughest to deal with over Strategic Energy’s history. Part of the problem, he concedes, is that it is hard to identify people who will display the same level of commitment to the job and the company that he himself maintains.
“We have a very aggressive performance review program, and if you’re not doing well, you’re put on a performance improvement plan, and if you flunk it, you’re gone,” Zomnir says.
Holding to those high standards has a cost – the company experiences employee turnover of between 10 percent and 20 percent a year.
But for those who perform, the rewards are based on merit and can be substantial. Zomnir, the father of four daughters, points out that women have done particularly well in the company, taking leadership roles. Women hold several key positions at Strategic Energy, including seats on the management committee. Additionally, Strategic Energy’s general counsel, chief information officer and vice president of human resources are women.
“It’s been fun to create an environment here where women are empowered,” says Zomnir.
Not surprisingly, while he’s not sure what’s next in his professional life, it’s pretty clear that whatever Zomnir decides to do, it will be for love, not for money.
Says Zomnir: “I want to find something I can be passionate about.”
And, no doubt, have some fun with. How to reach: Strategic Energy, www.sel.com
