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The Honolulu Advertiser
Posted on: Sunday, July 1, 2007

Taking the bouquet business big time

By Michelle Kessler
USA Today

ABOUT MCCANN

Title: CEO of www.1-800-Flowers.com

Family: Wife, Marylou; three children, ages 30, 28 and 26

Education: B.S., John Jay College of Criminal Justice

Board seats: Willis Group Holdings (insurance firm); Gruppo Lottomatica (Italian lottery operator).

Hobby: Golf

Recent books read: “Hidden in Plain Sight: How To Find and Execute Your Company’s Next Big Growth Strategy” by Erich Joachimsthaler; “Wild Fire” by Nelson DeMille

Favorite TV show: “Seinfeld”

Quote: “My family life and work life are intertwined.”

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SAN JOSE, Calif. — Second Life doesn't scare Jim McCann.

Sure, the CEO of www.1-800-Flowers.com knew almost nothing about Second Life's virtual world until a young employee pointed it out. McCann is 55, while the average member of that video-game-like online community is a tech-savvy 32-year-old.

But McCann jumped in. He invested more than $50,000 to build a virtual flower shop in Second Life. It opened this month, allowing the site's members to pick up and exchange virtual bouquets. A way to order real flowers within Second Life, to be delivered in the real world, is in the works.

Although several small florists are flourishing on Second Life, 1-800-Flowers.com is the first mainstream florist to open there, Second Life says.

Such a move may seem a little weird for a company like 1-800-Flowers.com, which sells a decidedly low-tech product. But McCann made his reputation by betting on the often-risky cutting edge.

In the 1980s, McCann spent millions on a then-advanced technology — toll-free telephone numbers — turning a tiny chain of flower shops into a nationwide powerhouse. In the early 1990s, he jumped onto the then-small and unproven Internet.

Now it's Second Life, and beyond. McCann is working on upcoming forays into social-networking sites Facebook and MySpace. And he's developing a social network of his own.

"I'm old," he says, "so I'm always asking (younger people), 'What have you seen lately?' "

TAPPING INTO TECH

McCann's tolerance for risk has helped make 1-800-Flowers.com the largest florist on the Internet, according to Nielsen /NetRatings. It has a solid lead over its closest competitor, ProFlowers. McCann's company has a market capitalization of $561 million and 3,700 employees, and had $782 million in revenue in its last fiscal year.

McCann has spun off companion sites, including 1-800-Baskets.com and BloomNet, which sells wholesale florist supplies. He's acquired such companies as candy- and treat-makers Fannie May and the Popcorn Factory.

McCann has hired 1,000 customer service representatives who work from home, staying connected via PC.

But it's McCann's forays into such technologies as Second Life that are easiest to see. Daniel Terdiman, author of the upcoming book "The Entrepreneur's Guide to Second Life," says it's a smart move. Second Life is a great place to generate buzz and even make money if done right, Terdiman says.

The online community McCann has in the works may generate similar interest. He wants it to be what popular engagement site The Knot is to weddings: a site of information and advice for all celebratory occasions. And if customers want to buy flowers, great, he says.

McCann grew up in Queens. After working in a group home for boys, McCann looked for a more lucrative job. In 1976, he bought a small flower shop for about $10,000.

One shop became 30. Then in 1987, a struggling florist in Texas announced it was selling its assets, including the toll-free phone number 1-800-Flowers. McCann pounced, spending about $7 million on the deal. (He sold 10 flower shops to help pay for it.)

"It sounds silly, but that was the new technology then," McCann says.

Soon, McCann was creating a new way to sell flowers — nationwide, 24 hours a day. He struck partnerships with florists across the country to help fill orders.

FIRST RETAILER ON AOL

Then the Internet was born. 1-800-Flowers was the first retailer on AOL, then called America Online. McCann launched a stand-alone Web site in 1995, just as Microsoft released the first version of its Internet Explorer browser.

"It was logical for us. We were always looking for the next emerging technology," he says.

Not all of the moves proved wise. 1-800-Flowers added ".com" to its name and held an initial public stock offering just as the dot-com bubble hit its peak. The stock plummeted a few months later as the bubble burst.

In its latest fiscal year, profit was lower than expected, partly because of overly ambitious advertising. McCann says results are improving since he reeled in costs.

Brother Chris McCann is the company's president; he was paid a $548,000 salary in the past fiscal year. Sister Julie Mulligan designs flowers, earning more than $335,000. Daughter Erin works in marketing. Publicly traded or not, McCann says, "It's a family-run business."

1-800-Flowers.com may find the road ahead tougher. More florists are establishing strong presences online, including ProFlowers and FTD.com. And as the company moves into new businesses, such as candy and gifts, it faces competition from RedEnvelope and others.

But McCann says he's confident he can remain on top by reaching out to customers. "We want to help them with all the events in their lives," he says.