09/16/96 REINVENTING THE HOUSE THAT DAD BUILT

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REINVENTING THE HOUSE THAT DAD BUILT
Michel Kazan's hair-cutting empire is waning. The I-way lures son Roman
The metamorphosis of Michel Kazan Townhouse of Beauty, home of the bouffant, to Kazan Corp., on-ramp to the Internet, technically began two years ago. But scholars and psychologists who study the minds of entrepreneurs could argue that it actually started 20 years ago, when the fiercely independent beautician sired a son.
When Roman Kazan was born, his father's elegant townhouse on Manhattan's Upper East Side was a swanky beauty parlor that lured the likes of Jacqueline Kennedy and Greta Garbo, and also served as national headquarters for a chain of three dozen Michel Kazan salons. On the black-and-white checkered linoleum that spanned the fifth floor, secretaries at steel desks calculated several million dollars in sales on clunky adding machines, cut hundreds of paychecks, and clipped mentions of Michel Kazan from Vogue Magazine and Mademoiselle.
Now, the adding machines on the steel desks have been crowded out by high-powered computers. A shelf once full of beauty supplies holds 100 modems, linking 2,000 customers to the Internet. For $19.95 a month, Kazan Corp. lets people mingle with millions without worrying about their hair. Its three employees and their president spend an afternoon lull discussing the thrill of skateboarding in torrential rains down the most perilous hill in Central Park.
How did a name brought from Paris with the bouffant in the 1950s take such a leap? The answer goes to the heart of what makes an entrepreneur. Although their work is worlds apart, the Kazans' shared drive to create a business reflects a pattern in families of founders. ``One factor that's consistent among entrepreneurs is a parent who owned a business,'' says Nancy B. Upton, director of entrepreneurship at Baylor University in Waco, Tex. ``The family becomes a little economic incubator.''
EARLY START. The Kazans also fit the bill in personality. Studies have shown that entrepreneurs tend to have more energy, a greater tolerance for uncertainty, and less anxiety in situations most people would consider risky. They strive for independence and self-control. ``I don't want to work for anyone,'' says Roman Kazan, adding that he recently rejected a $100,000-a-year job at a major computer company. ``I am proud Roman is working for himself,'' says his 75-year-old father, a small Frenchman with a thick brown mustache. ``He is a creator, like me.''
Roman was born on Thomas Edison's birthday, and his passion for invention surfaced early. ``When he was four, he wanted to invent a machine that would give people a hairstyle,'' says his mother, Marysia, a 50-year-old Polish immigrant. By age 9, he was concocting ways to feed his electronics habit. The first was a Lexington Avenue lemonade stand with a sugar-free drink for diabetics. He earned $40 a week. ``I bought remote-controlled cars and Nintendo games,'' he says.
That year, his parents gave him his first computer. By 1987, when he was 11, Roman was running his own Internet bulletin board. Soon, he wanted to sell access to the Net, but his parents wouldn't back him. ``We thought it was just a 14-year-old fantasizing,'' his mother says.
Instead, while his father adorned people with pageboys, Roman began importing computer parts from Taiwan and Hong Kong. He ran ads on the bulletin board, and trusting computer-nerd customers advanced him $10,000. A Chinese friend came to his house at 2 a.m. to call Asia and arrange for the shipment of hundreds of computer components. Roman had to wire the money first, which was a feat because he had no bank account. When he finally sent the funds, he suffered insomnia for weeks, fearing that the suppliers would stiff him.
STUCK IN CUSTOMS. The shipment did arrive, but he was so unfamiliar with import procedures--and his face had changed so much in the four years since his passport photo was taken--that he had to wrangle with the U.S. Customs Service for four full days. Then, he says: ``I begged a friend with a car to move the parts to my house.'' There, he packed them in boxes taken from his neighbors' garbage and shipped them to customers. In two years, he raised $60,000. Every penny went into modems, a computer, and high-speed telephone lines linking him directly to the Internet. Again, he reached out to the people on his bulletin board.
His father, meanwhile, had stopped cutting hair (except Roman's) and was focusing entirely on managing the chain of three dozen salons, which were stationed inside Bonwit Teller stores. In 1990, the department-store chain went out of business, taking the salons with it. Michel Kazan fell ill, and many hairdressers at his flagship store fled. What remains of his war on ugliness is the original salon on the third floor of the townhouse, an often barren row of sinks and chairs and private rooms where stars once got coiffed in private. When the two remaining stylists aren't primping a clutch of diehard clients, the only sound is the ticking of a plastic clock on the empty showcases that once stocked Kazan's line of hair-care products.
It was the beginning of the end--but only for the first generation. Although many family companies fail upon succession, Upton says, the name usually lives on. ``The original business often integrates into what the children are interested in.'' Roman never had an interest in hairstyling, which was fine with Michel Kazan, because he never had an interest in passing his business along. In fact, he regularly spurns offers for his name. ``A creative mind is a singular mind,'' Kazan says.
Roman's is proving to be a creative mind, too. In 1994, before his 18th birthday, Kazan Corp. rolled out one of the country's first Internet-access services. It was called Escape. ``He quickly became a reputable, low-cost service provider,'' says Stacy Horn, who runs East Coast Hang Out (ECHO), an Internet salon, and once shared the podium with Roman at a conference. ``He was so shy and nervous, it was disarming. Everybody loved him. How could you resist that?''
CRUNCH TIME. Back then, he had few rivals. Now, Internet-access providers number in the thousands and include giants such as AT&T and MCI Communications Corp. ``It's going to be difficult for the little guys to survive,'' says Jerry Michalsi, managing editor of the newsletter Release 1.0. ``Most are planning exit strategies.''
To stay afloat, Roman says he is working on new software and plans to open a storefront where the public can come for training. But it's tricky to turn his big ideas into action when he still lacks the financial history to get a credit card--and recoils from investors. ``They come all the time, in business suits, two or three people, taller than me,'' Roman says. A $500,000 offer recently sent him into the corner office his father maintains. Without hesitation, Michel said exactly what Roman knew he would say. ``I told him, `Never take a partner. You lose independence.'''
It was the only business advice his father ever gave him. ``Roman is a free spirit,'' says the elder Kazan --and he figures his son will run the business just as he would, anyway. Roman, after all, may not share his father's goal--``making people more beautiful without cutting their faces''--but he does have his entrepreneurial blood. ``Roman's a futureman, just like me,'' Michel Kazan says. ``Everything in life goes forward, forward, forward.'' And now, in the Townhouse of Beauty, that means more than leaping from bouffant to bubble, from Grecian boy to bob.
By I. Jeanne Dugan in New York