FAMILY BUSINESS: Perhaps Anna Waronker was destined to go into the business end of music. The former singer of That Dog is the daughter of DreamWorks Records executive and former Warner Bros. Records President Lenny Waronker, whose father, Si, owned the old Liberty Records label. But rather than team up with her dad, Anna Waronker has partnered with her sister-in-law--Go-Go's guitarist Charlotte Caffey--to start a new label.

    Called Five Foot Two Records (for their height), the label will be distributed by independent Oglio Records and will debut in early summer with Waronker's first solo album, which features some Waronker-Chaffey collaborations.

    "I've observed the music business from almost every angle," says Waronker, 29. "And with Charlotte going out with the Go-Go's again in recent years, we came to the conclusion that we had to be in control of our own fate."

    Waronker and Caffey are related by their marriages to, respectively, Steve and Jeff McDonald of Redd Kross. "It really is family," says Caffey, 48. "Anna and I started writing together and it was so easy it was scary." Caffey says she had been getting bored by new music she was hearing, but found herself excited by Waronker's demo recordings, as well as some she heard by Kim Shattuck of the band the Muffs. She realized this music would not be a comfortable fit in the major-label world.

    Plans include an anthology of Redd Kross' music , a new Muffs album and, in 2003, to mark her 50th birthday, Caffey is hoping to compile a collection of unreleased songs from her 25 years of songwriting.

    And yes, Waronker did go to her father for advice about starting the label. He was very supportive, but not on the same wavelength. "He said, 'Well, do you have any hits?'" she says. "I said, 'No.' He said, 'Do you have $10 million?' 'No.' And then I realized that we were in different worlds."