He joined Ethan Allen in 1980 after supplying the company with lighting and other home accessories from his import business for years. He became president in 1985 and chairman and CEO in 1987. In 1989, Kathwari formed a group to buy Ethan Allen and took the company public in 1993.
One of Kathwari's first challenges was getting all dealers to pay the same price for Ethan Allen furniture, no matter how near or far a store was to the manufacturing plants in Vermont and North Carolina. At the time, West Coast dealers were paying up to 10% more. When some East Coast independent dealers, concerned about the loss of a price advantage, called a meeting to confront him, he says, he listened to them, then said: "I'm going to run this company, not you."
Other big changes followed, including persuading longtime dealers to sell only Ethan Allen furniture, that it was time to expand beyond colonial/Early American styles, and that the twice-yearly sales at which 70% of business was done had to go.
Between 1986 and 1989, 90% of senior management left the company. "I needed to change the culture," says Kathwari.
At company offices, Kathwari greets most employees by name. He has a spirited chat with 92-year-old customer service representative Ruth Ashby, for whom he recently threw a birthday party.
Kathwari's hard-nosed but collaborative style was apparent when former Vermont governor Howard Dean met him in the mid-1990s to discuss Ethan Allen's plans to close its oldest and biggest plant, located in Beecher Falls, Vt. The plant provided the only manufacturing work in an economically needy area, so the state offered Ethan Allen tax and electrical rate relief to stay. He was "surprised and pleased" that Kathwari wasn't like a lot of executives, who would have just "closed it and moved on."
"He was tough, fair and very decent in the negotiations," says Dean, now head of the Democratic National Committee. "He clearly has a bottom line but is easy to talk with, a person who just puts it all on the table."
When he's not at his house here, Kathwari is often at his 200-acre apple farm in Livingston, N.Y. It was there that the Kashmir Study Group he formed in 1996 hammered out what's known as the "Livingston Proposal."
Signed in 1998 by a group of former diplomats, academics and U.S. politicians, it is a framework for discussions between Indian and Pakistani negotiators sparring about control of the region.
Kathwari says the work helped him recover after his oldest son, a college student raised in the USA, was killed in 1992 in a mortar attack in Afghanistan.
Evidence of Kathwari's leadership emerged early, says Howard Schaffer, a former ambassador to Bangladesh who was working in the U.S. Embassy in New Delhi when he met Kathwari. Huge protests broke out in the Indian-held portion of Kashmir after a sacred relic was stolen in the winter of 1963, Schaffer says, and law and order broke down. When a reporter for the Washington Star and Schaffer showed up separately, Kathwari -- then "known for his prowess on the cricket field more than for anything else," Schaffer says -- introduced them to leaders involved in the uprising against the Indian authority so they could get their side. Schaffer says Kathwari emerged as a leader in the call for reforms in Kashmir, a mantle he still wears today.
"It was hard for me to believe that such a young man could act as effectively as he did," says Schaffer. "It was obvious to me that he enjoyed widespread respect from his fellow Kashmiris, including many much older and more experienced than he."
By showing Americans what was really going on in Kashmir, Kathwari angered Indians in control of the region. At about the time the government made it clear he was no longer welcome, Kathwari's father was urging him to move to New York, which Schaffer helped him do.
Adds Schaffer: "The rest, as they say, is history."