Andy Shape has never been afraid to go for it.

That was evident when he uprooted from his hometown in Michigan and moved to New England so he could live out a dream of competing in both skiing and Division 1 football in college.

It was apparent when he quit a promising career in public relations in his early 20s to co-found what was then a basement-based start-up promo distributorship.

As co-founder and CEO, Andy Shape has built Stran & Company from a basement start-up to a $64.3-million-in-revenue publicly-traded distributor.

And it was clear in the calculated forward-thinking risks he took in building that distributorship, Quincy, MA-headquartered Stran & Company (asi/337725), into a Top 40 industry powerhouse.

Still, Shape’s combination of guts and entrepreneurial acumen was never more prominent than when the CEO took Stran public in late 2021, listing the company on the Nasdaq stock market. It was one of the boldest moves by a promo company in recent years – an ambitious leap forward that’s come with some mixed results so far, but also potentially massive long-term rewards.

“We felt going public gave us the best chance to go from being a roughly $30 million company to a multi-hundred-million-dollar company,” says Shape, a member of Counselor’s Power 50 list of promo’s most influential people.

While he has about 30 years in promo, Shape’s eyes brighten and he speaks with the sincere excitement of a newly launched start-up founder when he talks about the envisioned future for Stran and promo following the public filing.

“This industry is my identity – it’s who I am professionally and personally,” says Shape. “I believe in our industry – that it’s a very effective advertising tool when done correctly and that we can gain market share from other advertising mediums. I want to create something special that helps elevate our whole space – something that people in promo and beyond can have faith in and invest in.”

For this high-profile strategic risk aimed at both vastly accelerating Stran’s sales and also raising the visibility of promo, Andy Shape is the Counselor 2023 Person of the Year.

‘The Epitome of Leadership’

Stran was at a crossroads.

The company had been in business for about 25 years and had grown revenue to the $25 million to $30 million range. When funds were needed to help fuel growth along the way, Stran used its own capital or took on limited debt.

But in 2019 and 2020, it was becoming apparent to Shape that for Stran to break through to the next level of major growth, significantly more investment was required.

The matter took on added urgency as Stran had to find a way to replace the once-in-a-decade business it had performed for the 2020 U.S. Census. A pre-going-public 2020 acquisition of distributorship Wildman Imprints helped bolster sales, but the reality remained that more cash was needed to lay the foundation for an exponential expansion.

Andy Shape (5th from left) and members of the Stran leadership team at a Nasdaq listing celebration for the company in New York City.

Private equity investment was an option considered and dismissed.

“The PE firms we spoke with weren’t in line with our vision,” Shape says. “All they wanted to know was how we were going to generate a return on investment for them – and how quickly.”

As Shape and Stran leadership considered capital-raising strategies, the prospect of going public emerged as increasingly attractive. Bankers that they consulted with indicated Stran would make a compelling proposition for investors as a micro-cap stock, which are stocks with a market capitalization between $50 million and $300 million.

Former investment banker Jack Audibert, who is currently Stran’s vice president of strategy and growth initiatives, explains that Stran’s appeal existed for a variety of reasons, including that the distributorship had been profitable every year it was in business, that it had an experienced management team headed by industry veteran and co-founder in Shape, and that the firm had demonstrated success growing business organically and through acquisition.

Promo itself was part of the attraction, too.

“At nearly $26 billion, it’s a large market opportunity,” says Audibert. “Investors always want to know that there are ample growth opportunities for a business. Given the fragmented nature of our industry and its large size, investors were intrigued by the potential to continue to grow within the space.”

With the economy booming in the bounce-back from COVID lows, 2021 was a strong year for initial public offerings. In that, the timing boded well for Stran, too.

With such factors under consideration, Stran had to choose a path: Stay the steady course as a private distributorship, or take the chance that came with going public to potentially build something much bigger as a traded company. The decision ultimately lay with Shape. He wasn’t afraid to make it. “There were a lot of elements in our favor and we felt it was a good business move to go for it,” he says.

Those inside Stran supported the decision – in no small part because of Shape’s character.

“Andy is a visionary and a person of the highest integrity and will always do what’s right for the customer and our employees,” says Randy Birney, executive vice president at Stran. “There was never a question in my mind that this would work out.”

And so, the nitty-gritty work really began.

Shape and other leadership team members had to pour time (and money for things like legal, accounting and auditing) into developing a nearly 200-page S-1 Form report. That’s the registration that’s filed with the Securities & Exchange Commission when a company first goes public – basically a soup-to-nuts of everything about a firm. “Think about the hardest RFP you’ve ever done and then times it by 10 – that’s the S-1,” says Birney, noting it took eight months to complete.

“I want to create something special that helps elevate our whole space – something that people in promo and beyond can have faith in and invest in.” – Andy Shape, Stran

The hard work was rewarded handsomely. With the S-1 in order, Stran listed on the Nasdaq in November 2021. During the IPO, Stran raised $20.7 million. In a private placement to institutional investors that followed shortly thereafter, the company raised an additional $21.7 million.

“We would’ve never successfully filed our S-1 and gone public without Andy’s leadership and guidance,” says Birney. “He kept the team on point and challenged us, but ultimately held himself accountable through the entire process that culminated in Stran raising over $40 million. This is the epitome of leadership.”

Sales Growth & Acquisitions

Of course, listing on the Nasdaq wasn’t the end-goal; it was the beginning. And as Stran quickly learned, there’s no hiding when you’re publicly traded.

Financials are what they are and must be reported accurately to the public to be in conformance with law. Since going public, Stran has had both encouraging positives and persistent challenges to share.

First, the positives, which include strong sales growth, acquisitions and talent additions.

In its initial full year as a public company in 2022, Stran reported in an SEC filing that revenue grew 48.5% year over year to $58.95 million. Stran acquired three distributorships during that time, and the filing only includes the revenue of those companies from the point after the acquisitions closed. If those companies’ full-year pre-and post-acquisition sales are factored in, Stran’s revenue was $64.25 million in 2022, a 35.8% increase over what the firm had reported to Counselor for 2021. (A similar dynamic in 2021 led to a difference between Stran’s SEC-filed sales number and what the firm shared with Counselor for that year’s revenue).

Certainly, the company’s three acquisitions in 2022 spoke to Shape’s ambitions for Stran. Fueled by capital that came with going public, the CEO led Stran to purchase distributorships Premier Business Services, GAP Promotions (asi/199882) and Trend Brand Solutions (asi/346428). The run continued with this year’s Q2 acquisition of T.R. Miller Co. Inc. (asi/272250) – a branded merchandise provider with a 47-year history.

Far from a voracious spending spree, all the moves were of strategic value.

“When Andy and I were first introduced, it was like having a beer with an old friend. Andy is an authentic leader who pulls the team into his long-term vision.” – Mike Krauser, Trend Brand Solutions and Stran

Trend Brand, based in Houston, is a platform from which Stran can expand in the South, while Premier is headquartered in the metro area of New York City, the media/finance capital of the country. GAP’s business in the beverage market is robust and aligns excellently with Stran. In addition to having household name clients like Liberty Mutual and Grubhub, T.R. Miller operates a 20,000-square-foot decoration, fulfillment and distribution center, which Stran expects will help enhance operational and fulfillment capabilities.

Shape’s leadership qualities, success record and longevity in the industry were key reasons executives at the acquired companies wanted to join Stran.

“I was impressed that Andy and his team were able to scale and realize their success,” says GAP founder Gayle Piraino, now a vice president at Stran. “Andy is strategic, not afraid to step up and take risks, but he also knows how to adjust and adapt a plan when needed. He will do everything in his power to be successful.”

“When Andy and I were first introduced, it was like having a beer with an old friend,” says Mike Krauser, former Trend Brand CEO and a current vice president of sales with Stran. “We were naturally aligned on several major topics, including industry growth trends. Andy is an authentic leader who pulls the team into his long-term vision.”

Krauser says the driving force to join Stran was the desire to get bigger to “stay relevant to our clients and to suppliers” – something that’s already happening.

“In addition to strengthening our supplier relationships, Stran’s capabilities and culture of teamwork radiated through our Houston team to our long-term clients,” says Krauser. “As soon as the acquisition closed, we began winning new business inside existing clients due to the expanded reach of Stran.”

The savvy acquisitions have helped beef up sales, but Stran has been growing revenue organically too. Higher spending from existing clients helped produce a 17.7% year-over-year organic sales expansion in Q1 2023, for instance.

The rising sales and acquisitions come as Shape has made significant strides in adding top executive talent to Stran. To name a couple: Steve Paradiso, a longtime leader of some of the biggest companies in promo – including his recent role as the CEO of Top 40 distributor ePromos (asi/188515) – joined Stran as chief of staff in December 2021. Sheila Johnsoy, who has some 20 years industry experience, including time as ePromos’ chief revenue officer, signed on with Stran in March 2022 as chief operating officer.

“Overall,” says Shape, “we have developed and executed a business growth strategy resulting in increased awareness of Stran, a strong customer base, and a national footprint that we believe positions us to rapidly capture market share.”

‘Not A Time To Be Too Conservative’

For all the positives, there’s been a sizeable thorn in the side of the Stran success story: The company generally hasn’t been profitable since going public.

For full-year 2022, Stran sustained a loss of $788,441, or -$0.04 per share. Despite a nearly 29% year-over-year topline revenue rise in Q1 2023, Stran posted a quarterly loss of $694,538, or -$0.04 per share. The company’s stock price – which had an initial public offering price of under $10 in fall 2021 – dipped below $2 in June 2022 and hasn’t been above it since.

Shape notes that prior to becoming public, Stran had 27 straight years of profitable performance. Since stock trading started, however, a variety of costs that are rooted in building what Shape describes as the infrastructure necessary to support huge growth and allow Stran to be a much larger company have sunk earnings.

Those cost anchors include integration expenses tied to acquisitions, implementing a new ERP system and undertaking aggressive lead generation activities. Ongoing costs associated with being a public company and higher purchase prices have also cut into profitability.

Nonetheless, Shape and the Stran team aren’t worried. There’s a longer play in action, Shape says, and he believes it will pay off fantastically for the distributorship and its investors. Top-line revenue growth will continue, Shape asserts, and while there’s not a definite time frame for sustained profitability, he’s confident it will come.

“Now is not a time to be too conservative: To build the company we want to build, we have to invest in people, process, technology and acquisitions,” says Shape. “In the near-term, that’s led to a lack of profitability. But over the long haul, it’s setting us up to be more profitable than we’ve ever been. I’m the second largest shareholder in the company. What’s good for shareholders is good for me. The benefits of our approach are going to far outweigh the short-term negatives.”

A Success Story Still Being Written

If the best predictor of future performance is past performance, then it may well be smart to bet that Shape is right about Stran’s upward trajectory. After all, he has a track record of building big.

As a young man, Shape could’ve stayed on a more conservative career track and remained in a public relations job. However, he and college friend Andrew Stranberg (hence the “Stran” company name) decided to go into business for themselves. The young go-getters constructed their company from nothing, beginning by selling holiday greeting cards door-to-door and ultimately offering clients other branded products, too.

“We’d walk all over downtown Boston and stop in at different places looking for business,” says Shape.

Before long, the pair’s headquarters went from Stranberg’s parents’ basement to an apartment to an office/warehouse above an automotive repair shop. In 1999, Stran was ahead of its time when it launched a web store for a client – something the firm has been doing ever since. Momentum continued to swell with the addition of talent and sales increases. Fast-forward to the present, and Stran is a company with more than 130 employees, with locations in New England, New York and Houston.

Stranberg, a serial entrepreneur/investor, is executive chairman of Stran, but hasn’t been involved in the day-to-day business for years. He and Shape remain good friends. Stran, these days, is Shape’s show.

Jeffrey Nanus, CEO of supplier AAA Innovations (asi/30023), met Shape in the ’90s when he and Stranberg were at the start of their promo journey, still operating out of a modest walk-up.

“It’s exciting to watch your friends achieve more and more success, and while Stran today bears no resemblance to its humble beginning, Andy is still the same great guy I met when I dragged my umbrella samples up the narrow stairs of that walk-up so many years ago,” says Nanus. “I remember thinking even then that Andy and Andrew were focused, driven and going to find a way to be very successful.”

Nanus’ prognostication has turned into a prophecy fulfilled. If Shape has anything to say about it, the story is far from finished.