Building Texas Business

n this episode of the Building Texas Business Podcast, we dive into the entrepreneurial journey of Summer Craig, founder of Craig Group, a strategic consulting firm. Summer shares how a vacation epiphany led her to start a business while caring for a newborn. Her firm now partners with private equity-backed companies, helping middle-market businesses transition from startups to structured entities ready for expansion. We explore the early challenges of entrepreneurship, including securing initial revenue from clients like Gulf States Toyota. Summer discusses how the COVID-19 pandemic unexpectedly fueled growth in the middle market and healthcare sectors. She emphasizes the importance of building high-quality teams through strategic hiring, focusing on complementary skills and an ownership mentality. Craig Group stands out with its hands-on approach and a patent-pending software platform for sales and marketing forecasting. Summer highlights the significance of creating a flexible work environment that prioritizes excellence and authentic client relationships. Her innovative approach to consulting demonstrates how companies can adapt and thrive in challenging business landscapes. The conversation reveals the delicate balance of cost-saving strategies and necessary investments. Summer shares insights into maintaining a remote work culture built on trust and continuous improvement. We learn about the power of problem-solving, client feedback, and the determination required to transform business challenges into opportunities. SHOW HIGHLIGHTS Summer Craig, founder of Craig Group, shares her entrepreneurial journey that started with an epiphany during a vacation while caring for her newborn.Craig Group focuses on strategic consulting for private equity-backed middle-market companies, helping them transition from successful startups to structured entities.The early days of the business involved securing foundational clients like Gulf States Toyota, with initial revenues critical for startup success.Summer discusses the positive impact of the COVID-19 pandemic on business growth, particularly in the middle market and healthcare sectors.Strategic hiring decisions and fostering a company culture of complementary skills and flexible work environments are highlighted as key to building high-quality teams.Craig Group differentiates itself with a hands-on, results-driven approach and a patent-pending software platform that enhances sales and marketing forecasting.Building trust with elite clients through effective communication and personal interactions is emphasized as crucial for maintaining successful business relationships.The episode underscores the importance of collecting client feedback to ensure service excellence and continuous improvement.Summer uses her passion for mountain climbing as a metaphor for her entrepreneurial journey, highlighting the determination and vision required to navigate business challenges.The conversation concludes with reflections on the importance of strategic growth consulting and the ongoing journey of team building and client success. LINKSShow Notes Previous Episodes About BoyarMiller About Craig Group GUESTS Summer CraigAbout Summer TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode you will meet Summer Craig, founder and CEO of Craig Group. Summer's passion for excellence has helped fuel her company's growth, and she and her team's authentic approach to delivering for clients has formed relationships built on trust. Summer, I want to welcome you to Building Texas Business. Thanks for taking the time to come on the podcast. Summer: Thanks for having me. I'm glad to be here. Chris: So I know there's a lot for us to talk about. I want to start with giving you the opportunity to tell the audience who your company is and what are you known for. Summer: Yeah, absolutely. First of all, I love your podcast. I love what you're doing, telling people's stories, so I'm glad to be here. Chris: Thank you. Summer: Yeah, my story is a unique one, very interesting. It actually started with an actual epiphany that I had. I had a true, you know, entrepreneurial lightning strike moment. That that moment was sitting in Frisco, colorado, on vacation, while rocking my three month old third child, which is never the time that you should start a company. But I but that was my I had an epiphany, and the epiphany really was this that I was always going to work very hard, I was going to outwork the people around me, I was going to outwork my peers and I was in a fantastic role, fantastic job. But I had the epiphany that if I was going to always work that hard, no matter what, I could create more value for myself and for the economy by starting my own firm. And I knew that I needed to start my own firm because of that that, if I'm going to always do this, why not build something instead of working for someone else and creating value for somebody else? So that was the epiphany, and it was a true anxiety ridden, sweat inducing moment when I knew that I was going to start a company, you know, despite having a newborn third child. But fast forward. And you know, we're five and a half years later, and you know, we have a firm of 32 people and it turns out the Epiphany was the right way to go for me, that's a really unique story. Chris: And I'm sure your husband thought it was part of brain fog, but you proved him wrong. Summer: Yeah, actually he's been nothing. I think he said okay, sure, you know a little bit, maybe a little more, thinking like oh, we'll see what, we'll see what actually happens here. Chris: Okay, so. So it sounds like the inspiration for you was I want to do this for myself and build something that's mine. Tell us what it is that you've built. Summer: Yeah, absolutely. So what we've built is we built a strategic consulting firm. So we consult with sponsor-backed typically private equity-backed portfolio companies. We really focus on the middle market, lower middle market. What we do with those companies is we come in at different phases in the hold period even pre, even in LOI and we support top line organic growth. So we've built a system of tools and a system of really smart people and a platform that creates a formulaic way to streamline processes, streamline people, streamline technology for growth in these companies. The solution is really right size for companies that have been really successful but haven't really worked on their operations and growth. So they're selling whatever they're selling widgets, whatever it is but have they truly really looked and said is there anybody else I could sell to? Could I be doing something better? Could I be faster, could I do this more cheaply? They haven't really had to do that, but when the PE sponsors come in, you definitely do have to do that and what we're finding is that in a lot of in-house and PE there is a trend of hiring operating partners, which is a newer trend. So some have expertise on top line growth, but for the most part, that expertise is not in-house. So the PE firms need to go outside of their doors to get support to help these firms grow. Chris: So it sounds like you take a company that's almost been successful, despite themselves. That's right and help them systemize that that's right, so that they can maybe leverage it for more success. Summer: Well, yeah, and I mean I hope some of my clients are listening, but many are in Texas and I'll say it's so impressive, a lot of industrial manufacturing it unbelievably successful, either family businesses or entrepreneur-led businesses. But you're right, they haven't really had to. I'm using, you know, using air quotes here, but try that hard because they've had a great product right they've had a great story. the entrepreneur, the founder, had a really great connected network right, so that gets you to a certain amount of growth. But then when you have, you know, pe dollars coming in who are betting on you, there's a growth mandate and the growth mandate that that activity to grow is not the same as what it takes to start a business, so growth is harder and it takes more structure, and that's exactly right. We come in and say, man, this is awesome, how can we take what's awesome, do more of what's awesome, and let's try to reduce some of the risk that you have in the business, probably because nothing's repeatable, nothing's written down, maybe there's no technology supporting system, so we help them build that structure. Chris: And it helps them go to scale. Summer: That's exactly right. Chris: So let me take you back to the beginning, right after the epiphany. What were some of the first things you remember doing to kind of start the business? And, as you said, you build this thing of your own. What were some of those basic building blocks and things you did? Summer: Yeah, Well, for me personally, it was. The first thing was, you know, pray, look for guidance and then talk to people. So I spoke to a lot of people in my network just saying, hey, I've got this crazy idea, I want to build a firm. And the initial idea, while still very similar to what we do, was really around looking at sales and marketing and being able to tie the two together and prove ROI. So that's the crux of what we do right is show your work, show that this works. And I have a long career of traditional marketing. Marketing and marketing has always struggled to tie themselves to results. And that was really, you know, the core idea, you know, back when I originally founded it. But at the time I was working for Gulf States Toyota best people in the world and I'll never work for another company again. That was the, I think I topped out working for them and being, you know, affiliated with the Friedkin family. They are just salt of the earth. So I was very lucky. At the time when I had my epiphany, I said, well, wouldn't this be great if I built my business plan and I started my company but I already had a client? Wouldn't that just make me feel better? Chris: For those of you listening, it's the ideal thing to do. Summer: It really is the ideal and I think, as an entrepreneur especially somebody that I wanted to do something, but it does mitigate some risk when you first file that paperwork and you know you've got some revenue coming in. So I was lucky enough to have Gulf States Toyota before I actually quit my job, they had agreed to hire my firm, which at the time was me, and we had a great relationship and we ended up entering into a contract where I was consulting with them and I was able to do that the day I officially opened, you know, opened Craig Group and opened my doors, and I think that gave me just a little bit of peace, knowing that there was revenue coming in while I was building all the structure that you have to do, which, honestly, is quite painful. Chris: Right, it's very painful. It's always more work than you even can think. Right, absolutely. Summer: And if you've not done it before, which? Who has? That's something, that's a skill set that you know. I mean, I guess you know lawyers do it all the time. You probably do it all the time, right, setting up entities. But if you I just had this, I you know, probably should have advised, got more advice, but I definitely was able to say, oh well, I can do this, I can. And what state do you incorporate and why, and what do you do, and who do you bring in, and is it all those questions? As an entrepreneur, you have to just do it. Chris: We advise on those issues all the time. I was in a conversation yesterday with someone on the same issues and always tell people look, because as the entrepreneur, the other thing you're doing at the very beginning is trying to save every penny you can, and people will maybe try to do it themselves on the legal side, and I try to counsel people. It's an investment in your business, not an expense, and but try, you have to keep it manageable you're exactly right, exactly right. Summer: And luckily I was at that juncture. It was a small enough entity where I was able to get by with it. I don't cannot today with. I have, you know, a wonderful legal team, but that time, you know, just as an entrepreneur, it's really a pain, it's overwhelming, just to figure out how do I, how do I get you know, a wonderful legal team. But that time, you know, just as an entrepreneur, it's really a pain, it's overwhelming, just to figure out how do I, how do I get you know, get started. But again, I was lucky that I had a client and so I had revenue coming in. It really enabled me to get a lot of things done because you didn't have to worry so much about that. And I remember thinking my first goal was, oh, you know, back half of the year, six months, if I could just, you know, make my salary back right, thinking like, oh, I'll just replace my income. Well, that I quickly got client two, client three, and that I blew past that goal. It was amazing. It was a little bit of a you know it, who you know. I really talked to people and got advice and those ended up being some of my clients eventually, when people that I was asking for advice. So that was great. But it was such a funny little goal, which was okay, because if I can do that, then it's like, okay, I've done something that hasn't been a detriment to my family. I'm adding to the family kitty. Well, we realized like, oh wait, now I can. There's more here. Chris: So I was just thinking as you were answering that question. You said it's been just over five years. Summer: So, given the calendar, that means you started in 2019 and then the world went upside down. Chris: So let's talk about, I mean, every business that starts out. It's going to face some headwinds and obviously this was a pretty big one. But just walk us through some of the challenges you faced and how you managed through that, given that you just had this new business. Summer: Absolutely Well, of course, like you know we. Business. Absolutely Well, of course, like you know we. I was just looking at right before COVID so COVID was in March and February I was just looking at expanding and getting some more office space because I'm hiring people. I was looking at leases. So that was hilarious, right, because the minute COVID hit, you know you don't sign the you don't sign the lease, which was great that we hadn't signed it yet, so that was just a fortuitous that was a God thing, but I will say there's a few good things that came out of COVID. In general, COVID was very good for Craig Group and here's why it was good for Craig Group. I think that middle market businesses that I was working with and we also work with healthcare companies as well, especially healthcare technology, B2B and B2C healthcare I think that what COVID brought to us was that people always did, but then they had to go and find your business online Right, and probably on their phone Right. So if you were not ready with a digital presence and for sales and marketing, so if somebody could not seamlessly buy something from you online or if they couldn't research your product online, you were toast in COVID. Chris: Very true yeah. Summer: And even B2B industrial manufacturing businesses that never cared a day in their life about their website. All of a sudden they need their spec sheets to be posted online because they can't drive over and drop them off in person right? They're not going to trade shows, right? So website, but not just the website, really the content, the interaction. And then how good is your email response? How good is your team on the phone? How good are they at working those leads that just got spotlighted? And on the healthcare side, as you can imagine, about COVID, people are scared to death. At that time, telehealth was nascent. Chris: Right. Summer: Pretty terrible still, kind of, and they realized we have to invest here. Patients don't know how to get in touch with us. Everybody's scared. People aren't coming into the doctor's office or the hospital because everyone's afraid that they're going to get COVID. So the messaging opportunity for what we do, which is growth, really about growth. We no longer had to convince our clients you need to take action, because before pre-COVID, and even either at the same time of COVID, there was also this shift with the markets too. Around PE also said oh wait, this has been like really good times and I actually need to start building organic growth instead of just buying another company and doing roll-ups. So this happened very right after COVID. So those two things we did not. We stopped having to tell people. People would ask us why are you doing growth support? We don't need that, right, and nobody says that now, right, no, there's no argument. So COVID, plus what was happening in kind of the deal-making PE market, which we can, that's another. That was another big change for us, but it just helped people say, oh my gosh, we need help. We need help right now. And that was a huge. It was a huge growth time for us. So we grew significantly in 2020 and 2021. Chris: Stars aligned, it sounds like. Summer: Stars aligned and again, it was just one of those who would have. There would have been no way to know. Chris: Forecast, foresee or plan no way. Summer: The only way that I was able to do is I said we were able to kind of make hay, which was okay. We have a door here, so how can I be really good about scaling in a smart way? So I didn't hire tons of people, I hired slowly. I never wanted to have layoff right, so I was able to say I have an opportunity, let's scale slowly. Due to that growth, we're also bootstrapped. So we were able to fund our whole company out of revenue which, especially at that time, I wasn't going to go fundraise. It was just so we were just. We're really lucky that we were able to build something, grow, but grow in a. We weren't growing too fast that we were getting out over our skis. We were able to service our clients, grow, you know, as needed. Then it ended up being a good time for us to kind of get our feet under us about who we are as a firm. Chris: It's a great segue when you talk about the growth you were seeing from the client revenue side forced you to start building your team. Yes, so let's talk about how you went about. One setting the strategy of not growing too fast, because you can fail when you do that, but really focusing on making sure you're making the right hires and adding to your team in the right way. Summer: Yeah Well, I'll say I don't always make the right hires and I've made so many mistakes. If you said that, we'd know you're lying, yeah if there was a thing that I think I could always do better at, it was being even better at hiring. I mean, to me it's the hardest thing that I think we do as business leaders, as CEOs and entrepreneurs. So that is something that I think you just get better at, but you still fail. So that's hard. I have no secret. I have a few things I've learned on that side, but I will say, on the growth side too. Before that, as a person, I'm just a fiscally conservative person in general, so I think some entrepreneurs can get especially more kind of visionary and I think I for sure hold the vision, but I'm very conservative. But that helped us. I think I've had to almost pull myself off of that, so I almost can be too conservative, right. So that's something that I've had to learn about myself, which is I need a counterweight to say you know, do this. But at that time it worked. It was a good way to scale. So I am conservative there, but I did realize in terms of people, if I was really going to grow and we have this value prop about growing with sponsored backed businesses. I myself while I am married to somebody that works in PE and I know a lot about PE. I never myself worked inside the doors of PE and I really had to have that in my firm in order to just have that credibility, you know, just to. Okay got it right and so I did decide very early on. We're growing, we're having a lot of success. I knew that I had to have somebody else at a partnership level that was going to be able to move us to the next level, and it had to be somebody that did not have my skills. Chris: Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom, and thanks for listening to the show. Summer: So I needed somebody that was very, you know, has a different background than me, had a different skill set than me, and so that was, you know, really a game-changing hire. So we brought on at that time Libby Covington. And again, she comes out of private equity, she was in-house at Cap street but also worked at law firms and then had also operated in-house with the Doggett family, so we had a lot in common in that sense. But I knew what she brought and what I brought were going to be complimentary to the market and that was ended up being true. You know that that was. But it was hard right, deciding to bring in, you know, somebody. It's really hard. Chris: You make it sound really easy. Summer: It's not. Chris: Because a lot of people entrepreneurs, maybe just humans in general we tend, you know people that we're like, so you tend to hire people like you Absolutely. Instead of doing. What you should be doing is what you did. And how do you hire someone that fills you out right the other side of the skill sets that you don't have to make the strong team. So you know, kudos to you for seeing that, and I know of Libby from her days at Cap Street. So so then you bring Libby on and there's 30 other people you've hired in a few years. Summer: That's right, that's right. Well, I have, you know, tricia Eaton. She started with me. She was actually my first employee, trisha Eaton, she started with me, she was actually my first employee. She now is in an operations role for me. She's been with me since day one. You can do anything. She's the person that can do anything. You just give her a problem and she just goes and solves it. So she has just been my right-hand woman and I couldn't do this without her. So we had her, we had Libby and then, quickly, we had to hire some subject matter experts. So me and Libby cannot keep delivering all the work. Patricia can't deliver all the work. So we really had to go and fill out the teams and I focused on hiring high-margin employees. So where could I bill and where could I charge for their expertise? Sure, right. And then if there was employees where we didn't really use them that much or it was really low margin, we would usually go with consultants. So I had a bench of 1099s. And we still do. We've less. So now we still do. And again, that was another way where we scaled more slowly. So it didn't, you know, have to get ahead of ourselves on building. When was it the right to have the full-time versus the part-time. That was also a benefit of COVID. So I think COVID and I'm seeing this today too it really, I think, enabled people to work the way that was better for them, like there was a new definition of work. Chris: For sure. Yeah, and it's being talked about every day. Summer: Of course, and especially in your industry too, in law firms with a very kind of traditional track, and I think there's people that say I want to work and do really good work, but I can't work in this way, and whether it was in the office or not, but even if it was maybe I want to do great work, but I need to do it 30 hours a week because I'm taking care of my aging mother or I want this lifestyle. I will make less money, but I need to work this much time from this location. So we leaned in hard on that Huge value prop for us. So I think that was one of my successes of being able to hire really great talent, because I was able to align with the times, because it was what it was but also to truly say I want your best work. I don't care if you need to live in Miami, right, I don't care. If you're telling me I really have to work 30 hours a week because I have personal responsibilities, I'm like great, give me your best 30 hours a week. To me that's better than any you know 40 plus hours a week person. That isn't maybe the best. Chris: Sure. Summer: Right. So I, we scaled that, we scaled through that way, we also would. We have a and we still do this today. We bring people on and we do a 60 day trial, and so and it's written, it's papered up and it says if this isn't a fit fit, we're going to separate fast. Chris: Yeah, there's a lot of value in that and it does help the saying of hire slow, fire fast, absolutely. So you get a test run at it. Summer: That's right, and sometimes you can't hire slow. Sometimes I wish I could. I've got I don't know four roles we're hiring right now and I need them to be filled yesterday. Chris: Right. Summer: But at least we've learned that we do have to have a trial period and we have to be eyes wide open about it. You know we're and I. Just part of our culture and it's part of our values is we do excellent work. So excellence is part of our culture. But also, if you can't meet that excellence, you will be let go, like we fire people, and it's not a scary thing, it's just. You know we're, we just have no tolerance. You know, and what we talked about we something we say in houses we don't have. Just you know we're, we just have no tolerance. You know, and what we talked about we something we say in house is we don't have middle managers. You know we don't have that. You're, you're, everyone's in the spotlight. It's that ownership mentality that's right and everybody's like that, so everyone's in the spotlight. There's no middle, you know. So you years, I mean there's been lots of not home runs you know, it's been you know there's hills and valleys there with hiring. Chris: Well, that's good for people to hear. Right, You're not always going to get it right. There's ups and downs, just like in life. But if you're, if you have a mission, like like Craig group does and like our firm does, then you know what your why is. And if something veers off from that, then you stay true to the why and then make those hard decisions. Summer: Yeah, and it always is. It's always hard. It's the hardest thing we do. Chris: No doubt. I want to talk a little bit about innovation, because clearly what your company's doing is innovative and for PE firms. But just in your space, how do you go about fostering innovation amongst your team and encouraging it within the company? Summer: Yeah, I mean, I think that it is who we are. Honestly, it has to do with every single person that we hire. Again, even going back to that, we don't have any middle managers mindset, which is there's no medium, there's no mediocrity, we're always how could you have done better? How could we have done something faster? Wait, what tools did we not use this time? So those questions are asked. Every engagement we have, I'll say we're doing something pretty different. We do have a few competitors out there not very many, but we do something unique. I mean, we are consultants, we do consult, but we're certainly not a consulting firm typically. You know, we're not an Accenture right, because? Why? Because our people actually get in and then they actually do the work, Not that we don't do at Accenture, but that's our model, it is what we do. So we're boots on the ground, so we actually do the work. So we're not an agency, but we do some agency work right. So and then on the technology side, we have a software platform. It's patent pending. It's all about forecasting and how do we get better at forecasting sales and marketing? And if we can forecast better, we can then make action and take action more quickly. And so those are the three things we do. And again, we have some competitors, but what we do as a company inherently is pretty innovative, Like we're doing something a little different, Like the skill set is a little different. We move faster, you know. We have a different, you know. So we are doing something different. I think everybody at the firm knows that and they're aware of it, it's just ingrained in your culture, it's just who they are. Chris: They know it, and I've been to your website so I'll tell you it absolutely comes across from your website, which I know is part of the thought that went into design of the website. Right, you show up different Yep, so it seems like that's part of when you're hiring these people you're looking for someone that can fit that. Summer: That's exactly right that DNA that innovative mindset. It's right and something that Libby and I talk about all the time and again, I fail on it. Sometimes I succeed, but we hire and we've really landed on this for Craig Group is we have to hire for people that just figure it out? They just get it done. It's like I don't really care what they're, you know exactly what they know or what they've done. It's like can you solve this problem? Just you know, almost like if you just did a business school case and put it in front of them and said solve it. Chris: Well, I'm curious because I've been reading a lot about this lately and we have some internal debate about it in our recruiting process. Summer: Do you do any kind of role play as part of your process to put them in the position or challenge them to see how they problem solve. You know, we don't do it formally and I think maybe we also thought about doing it formally like a formal case. We do it in an informal way, which is here's a situation that we're in Usually, it's a real, it's a real client situation and we say hey, what do you think about this? And let them, you know, talk it through. Right so we do it as part of our interview process, but we certainly don't have it formalized and I think maybe we should. Chris: I feel like there's a lot of value in it. I've heard people a lot smarter than me talk on it, and you know the question is and it is the question of does that scare a candidate away? And my answer that is well, if it does, and maybe we learned something early on we should have won't find out till a year later. Absolutely. I'm kind of at a mindset. It seems like a good idea. Summer: I think it's great. I would agree wholeheartedly. If somebody's scared of any kind of testing, then that's probably not a good. It's probably not a good choice. Chris: It was not going to be the person that says let me prove to you I can do this, I'll figure this out, right. So just interesting. You know people's mindsets on that so that always leads me, maybe, into the culture of Craig Group. How would you describe it and what are some of the things that you believe you're doing that help foster and allow it to grow? Summer: yeah, yeah, I'd say that our culture again, we you know excellence in our work is really the number one pillar. We have a thing on our on our mission also. This is no bs. What we mean by that is we show up authentically. We're real, we're real people, we're real humans. We have, you know, everybody that I work with either is caretaking for somebody else in their family, whether it be aging parents, children. They're passionate about volunteering and they're doing that. So we are whole humans and whole people and so I believe in like I don't want to if somebody shows up in an inauthentic way, it's like I'm fine, everything's fine, and I have no tolerance. So we have this real culture of authenticity, excellence, absolute excellence in client delivery. So everybody shows up with that. It's our culture, because we talk about it in hiring, we talk about it in our all-hands monthly meetings, we talk about it in the way we behave, which is we meet people where they are today. So it's okay in Craig group to be very authentically who you are. So that's just how I am, that's how I run the company, so, so we have an authentic culture. But what that also means is everyone at the company we're on, we're remote. We do have a lot of people in Houston, but we are remote. But that does require people to communicate with each other, which is are you okay, all right, picking up the phone and saying because you, if we're all going to have no bs and we're going to work hard, you have to know what your team how, what is your team okay? Chris: what's going on in their life? Summer: yeah, might impact their ability to deliver excellence 100, which is like tell me, do you need help? Chris: my follow-up question was going to be you sounded like a remote company. So, yeah, creating the, the connectivity of that culture, especially at that level that you're trying to achieve, has got to be challenging because you're not in person. Summer: It's so hard, it's so hard and again, I think it's. You know, we have a cameras on culture, you know, and everyone's cameras are on. I mean, I spend, we are all on. You know, video calls all day. Which pros and cons. Chris: Right. Summer: But I think that everyone's leaned into that. There know we can't be grumpy about that. We're not, you know, and everyone's also required to do really good work. But part from a training standpoint, and I think we're getting better at this, I think we can keep getting better. We're not perfect, but working asynchronously, which is what remote work is Right. Not everybody knows how to do that. Like you can't assume that everybody just knows how to work asynchronously. It's a skill set. Knowing when to do async work versus when do you need to have an in-person meeting, knowing when those workflows that is not something that I think you can just know. Chris: Sure. Summer: And so we definitely have an expectation that everyone works really efficiently asynchronously, and I love asynchronous work. Personally, I think it's way more efficient than getting in a big meeting full of people all at the same time and wasting everybody's time. But there is also this time to get everybody in the meeting and you know, sit together. But we are doing better at training people about asynchronous expectations. So we use you know, very technology heavy, very tool heavy. So we use a tool. There's a tool called Loom. It's a video tool. Basically, you can explain something really quickly on your own time and then send it to people so then they can go figure out what you're trying to explain to them. even if you couldn't meet in person. We use project management software. Basecamp is the one we use. Other people use Asana, so we use Basecamp, and all of our work is asynchronously matched. And so I think that culture though one thing that does it, we move really fast. So the culture is again with the excellence and you can move fast with async work. Sometimes it slows you down, sure, because you need to just pick up the phone Instead of you know, so you can. And that's a lot of times where I get into things Is, hey, let's stop doing this Call like call each other, you know somebody's not understanding, right, but our culture is really, we move really fast. Our clients have extremely, extremely high expectations. I mean our clients are you know? PE firms. They're, you know, there's no tolerance. Chris: And they're worried about the ROI and they want the growth yesterday. Yes. Summer: Yesterday and they, you know. So we work under that pressure with all of our clients high intensity, high growth. So we're high intensity, high. You know that we match our clients. We're yeah, that's what, that's who we are, and I think it works really well with a remote team. I think we've been able to hire people that want that, that high intensity work. If you don't want it, you can tell and it doesn't work with that. Chris: It shows up real quick, it shows up. Yeah, so you were talking about, you know, your base clients, the PE firms. Let's talk about what are some of the things you found to be successful for you and your company to kind of build and maintain those relationships so that you keep them and you get more. Summer: Yeah, absolutely so. I think it's challenging to, I think, sell anything which we're selling a service, right, but I think it's challenging to sell into. I don't want to put them all in the same basket. So not all PE or independent sponsors are sponsored, because they're not all created equal, right, so that's. I can say that but it is a tight group of people. It's a it's tight knit. It's a small group. I think it's an it's elite. Most people that have those roles are very well educated. They have great experience. I think you really have to be trustworthy, like they are not going to pull in a partner that has not been vetted. You know that, had that, that hasn't really been like. You know this is the real deal. So those relationships are really hard-earned. You know those are not easy to come by. I will say me and Libby both have our own sets of networks. That was enabled, sort of the catalyst. But the only reason why that's been able, we've had success, is because we've had to prove it. And when we prove it, you know, we then can build onto the next one and the next one. And I mean our model would be that we become a partner with the firm and that they bring us in on multiple portfolio companies and that's what happens, right. But it's hard. It's not something that you don't. You know we're not selling. You know something that's not high value, high stakes, and we really are a partner. We're not a, you know, a vendor and that takes a lot of trust. We have to spend a lot of time. Chris: Yeah, it's funny because I can totally relate. Our mindset here at the firm is the same. We want to be as we say this all the time the legal partner to our clients, an extension of the C-suite, not a vendor, not a commodity, but an actual value-added partner. Summer: Yes, that's exactly right. And it's hard to get there. You don't just say that and you know you're like oh, I want to be your growth partner. I want to be a member of your management team. It's like OK, prove it. Chris: Right. Summer: Right, and so I think that we do that. I think our team consistently delivers best in class results and best in class work.

In this episode of the Building Texas Business Podcast, I speak with Amyn Bandali, CEO of Ivy Kids Systems. Amyn shares the story behind Ivy Kids, a premier childcare and education provider founded by his parents. He reflects on how their move to Pearland, Texas, and the challenges they faced finding quality childcare led to the establishment of their first school. Since then, the family business has grown to 20 locations, with 16 more under development. We discuss the decision to franchise the business, the importance of building a culture of empowerment within teams, and Amyn’s philosophy on leadership. He explains how empowering employees with autonomy, transparency, and responsibility has been key to Ivy Kids' success. Amyn also talks about navigating challenges, including the impact of the pandemic, which required the business to pivot toward virtual programs and innovative approaches to childcare. The conversation highlights the critical role of early childhood education in shaping lifelong success, the importance of continuous innovation, and how technology like coding and robotics is being integrated into Ivy Kids’ curriculum. Amyn also shares insights into managing a franchise system and the value of fostering strategic relationships and learning from setbacks. This episode is filled with practical lessons for entrepreneurs and leaders who aspire to create sustainable growth and a strong company culture. SHOW HIGHLIGHTS Amyn Bandali is the CEO of Ivy Kids Systems, a premier childcare brand founded by his parents in Pearland, Texas, offering education from infants to pre-K and afterschool programs.The company was inspired by the founders' personal experience of struggling to find high-quality childcare when they first moved to the United States from Canada.Amyn joined the business in 2015 and initiated the franchising strategy, growing from 5 corporate locations to 20 total locations with 16 more under development.The company emphasizes a culture of empowerment, focusing on giving employees autonomy, transparency, and timely feedback while understanding the "why" behind strategic initiatives.During the COVID-19 pandemic, Ivy Kids pivoted to online learning and alternative programs, generating a million dollars in revenue for franchisees despite significant enrollment drops.The company is innovating its curriculum by incorporating coding, robotics, digital parent assessments, and classroom camera access to enhance early childhood education.Amyn's leadership style prioritizes empowering team members, setting clear visions, and allowing individuals to develop their own key performance indicators (KPIs).The company values continuous learning, participating in franchise associations, mastermind groups, and local business networks to share best practices.Amyn learned a critical leadership lesson during the pandemic about truly empowering his team by trusting them during challenging times.The company's educational philosophy is grounded in research showing the critical importance of early childhood learning in a child's development. LINKSShow Notes Previous Episodes About BoyarMiller About Ivy Kids Systems GUESTS Amyn BandaliAbout Amyn TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: Amyn, I want to welcome you to Building Texas Business. Thanks for agreeing to come on the show. Amyn: Yeah, thank you for having me, Chris. Happy to be here. Chris: So you're the CEO of Ivy Kids Systems. Tell the listeners what Ivy Kids is. What do you do? What are you known for? Amyn: Yeah. So Ivy Kids, we are a premier childcare brand, not just a daycare where parents just come in to pick up and drop off. You know, we provide education and that's from the infant level, so as young as two months old, all the way to our pre-K program, which is five and six year olds. And then we also have an afterschool program as well, where parents pick up and drop off from elementary school. The kids come in for homework help. And we're next year celebrating our 20th anniversary. Chris: Congratulations. That is amazing. Amyn: Yes. So what was the inspiration to get into this primary childcare, education, afterschool learning? Where did that emanate from? Amyn: Yeah. So, you know, a little bit about our history. So Ivy Kids was actually founded by my parents, Allen and Layla. You know, we had moved from Canada to the States or to Houston in 1995, and we lived in Pearland. So, as you're probably aware with Pearland, it experienced massive growth during that time. You know, 518 had one stoplight. Now it's a six-lane highway, it feels like. But you know, my parents, you know, with my brother and I being young children, they found out very hard time finding high quality care for us. You know, we would be in the daycare system, mom and pop childcare, quote unquote, you know, prestigious childcare program, and it was, you know, observation, where there was no learning going on, or my brother and I would, you know, be picked up and we'd have a bump or a bruise, and nobody would be able to point out why. Amyn: My parents being engineers and also having a history of entrepreneurship from their parents and their grandparents, you know, they thought about this industry and they thought, hey, we can do a better job of running high quality schools. So I like to say they reversed engineered the childcare. You know, they put a lot of thought, time and thinking, and over that course of 10 years from when we moved to Pearland, to 2005, we opened our first school, and that was in the Pearland area, and it did really well. So from that, we grew from that one corporate location to then five corporate locations. And then when I joined the business in 2015, and I can talk about the reasons why, but that was when we decided to franchise our brand. And, you know, today we are at 20 locations. We actually just opened our 20th location about a month ago and we have 16 under development right now throughout Texas and the Southeast United States. Chris: And, just curious, I mean, the 20 that exists in the 16 under development, how many of those are franchise versus corporate owned? Amyn: Yeah. So we still own all of the corporate locations today. We are at five corporate locations and we are at 15 franchise locations. You know, I think one of the things that shows maybe a strong brand and, you know, happy franchisees is folks opening their second or third locations. And even though we opened our first school in 2017, you know, that's been one of the great things to see. As a franchisor, you know, seeing folks open their second or third location, looking for sites for that. And that's kind of where we are right now in the evolution of the business, which is really exciting to see. Chris: That sounds exciting. So you're going back to the beginning in listening to the story you were telling about your parents. Yeah. It sounds like a very common entrepreneurial inspirational moment where they see a gap and figure out a way to fill that gap or need, right? And in this case, you know, quality childcare. Amyn: Yeah, absolutely. You know, they saw a lot of great things about this business, which really stand today. And it's, you know, if you do right by that family, you do right by that child, you know, you're having that parent for 10 years from when they're infant to that afterschool program. You know, they saw that childcare is a need, not a want. You know, if you have a dual income family, you have to put your child somewhere where, you know, they'll feel safe where they're learning. And from that they saw a need in building their first Ivy Kids to, well, there's so much research out there about the importance of education at an early age that then, you know, catapults a child into future learning, future success, as opposed to not getting that in the early ages. Chris: And the kind of the downward trajectory of the backing cause. Amyn: Yeah. I mean, there's some amazing studies. There was one that was done about eight years ago by Harvard University that basically said 95 percent of who you are is from the first five years that you were born. You know, everything from what your passions are to your ability to learn. So much of that comes from those first five years. And then if you think about, hey, what is the best return on investment then for my education? It's not necessarily those prestigious universities that does have a high rate of return, but the best ROI actually that a family can spend, that a government could spend is that first five years and getting that part right. Chris: Right. You know, if you're doing that, then you are truly building that foundation. And I think that's one of the drivers for why, you know, why families make a decision. You know, they're looking for, they're seeing the benefits, they're understanding more and more of, you know, the link between high quality learning and how their child is going to do. And they're making a smarter decision now with where they're choosing to enroll their child. Chris: So let's go a little bit, so we understand your parents' inspiration. You alluded to this, but I don't understand what drew you into the business. What were you doing before and what was it that caused you to leave that to step in and kind of take over? Amyn: Yeah. So by the time we had opened our first school, I was in, you know, college or close to college and seeing the business up front, you know, seeing the ability to build your own path, create your own destiny, working in the business from everything, from us assembling the furniture when we were opening our first school, actually laying the grass and the sod down in order for us to get our CEO inspection passed, you know, I was just so enthralled by it. I was so excited about it. The ability of owning something and really charting your destiny. And that really didn't leave me. You know, in college, I also took a job. It was with Student Agencies, which is a business run by undergrads and I did sales there. And that also really excited me too. Amyn: And then, you know, I kind of went the route that a lot of students at Cornell did for undergraduate business, which was pursue finance, look at the business consulting route or the investment banking route. And, you know, I learned a lot going down that path, but I missed being in that small business, you know, really building something that was my own working with a dynamic team and a small team. And, you know, I think building some of that foundation, this amazing opportunity came that was presented by my dad to say, hey, let's franchise the business. You know, we've got something great going. This would be an amazing opportunity for other like-minded people to open their own locations and thrive. Amyn: And I just thought, man, this marries what I did earlier. I've got a bit of foundation for working at larger organizations. You know, maybe there's something there and it turned out to be a good decision. Chris: Very good. That's a great, I love the story and how you were able to, I think it's important. You got an education and you got real world experience outside of that, right? To then bring that into and maybe help professionalize a little bit the company, especially as it was launching into being a franchisor. Amyn: Yeah. So you mentioned, you know, working with the team, let's talk a little bit about, you know, some of the ups and downs that you've experienced and maybe you saw your parents early on experience and building the team around you so that the company can achieve that success. Because if I know anything about hiring, it's an imperfect thing, right? Is that part science, part art? But you do your best to get it right. So tell me, let's talk a little bit about those experiences, you know, what you've learned from that. Amyn: Yeah. I mean, I think, you know, going into small business entrepreneurship, there's very much a feeling of working in the business, you know, being so kind of head down and focusing on, hey, how do we survive today? And, you know, I think when you're joining or launching a new business, which really was the franchising part of our business was a brand new business, you are really thinking in that lens and that mindset. And I always feel like hiring, building an infrastructure, it just allows you to think more long term and that just prolongs the lifespan of your business too. So I think making those right strategic hires as soon as we have that capital, thinking ahead about, hey, where do we want to be in the next 5, 10 years and investing in those people and really giving them the freedom and empowerment, you know, to expand their careers, expand their responsibilities as you're seeing them master their role. Amyn: I think that really helped, you know. So one book that I read early on about a year or two after I joined the business was Traction by Gina Wickman. Sure. You know, the entrepreneurial operating system. I mean, that's something that we do today. And I think that was foundational in how I look at people, helping the assistant. Hey, do we have the right people in the right seats? And then are we creating a culture of empowerment? You know, I think about what attracted me to Ivy Kids and starting this franchising part of the business. And it was this idea of taking ownership, having accountability, you know, maybe having a little bit too much rope. Chris: Right. Right. Amyn: And I just think, hey, at a size that we are, those are probably the people that I'm going to be attracting to. And how can I create that where if I were in their shoes, I'd want to be a part of this business. And I think some of that where, hey, there's alignment on goals, but hey, you have the empowerment and you have the ability to achieve it and how you achieve it and how you get to that final product is up to you. You know, I always feel like that allows you to really grow people, especially when you're smaller, maybe you have that limited capital base, you know, and now you can start thinking strategically about your business and then your business can really grow. Chris: So I love that term culture of empowerment. Let's talk about culture. You know, everyone agrees culture is king, right? And every book you read and each strategy, you know, all those clichés. What have you done to kind of foster and build this culture of empowerment within Ivy Kids? Amyn: You know, I think of myself as a generalist. And I think of myself as, hey, I am not the best person in any department. And I think as you grow as a leader, that is just what naturally happens. You know, you have to build a team of people that are smarter, more experienced. I would say better than you in each of these divisions in each of these areas. Amyn: So I think just thinking, hey, if I'm growing or if the business is growing, I have to increase the skill sets of everything around me and I have to play more of that generalist mindset. And with that, it's let me bring these people on and have and let them be the experts in the subject matter experts of what they're doing now. Amyn: Alignment and vision and where we are and ensuring that, hey, prove to me that you can do this job is still very important. Sure. You know, We still need to have check-ins and make sure that, hey, are we all marching in that direction and where we want to go as a company. But at the end of the day, I do think that people are more passionate if they feel a sense of ownership, if they can look back and see, "Oh, I or my team accomplished this." I'm getting praise for those kinds of things. You know, one of the things that we do, we have quarterly town halls and we do shout outs, and it's a thing that I love. We just had ours on Friday. And, you know, the team gives each other shout outs, but I think when people are empowered and we are able to showcase, you did a great job and this is why, and this is what your team is doing, is getting the company moving forward, is amazing. And that might be harder to create that visibility as a company grows. But it is something that I like to keep on the forefront of my mind because empowering people, it's just like this flywheel of positivity, right? Chris: Right. Amyn: It just, it's like the snowball or flywheel effect. It just grows upon itself. You know, the shout outs that you mentioned, I don't think it can be overstated, the value in just simple recognition. Private recognition is great, but the public recognition amongst someone's peers, I mean, it doesn't replace cash rewards, but some people value it as much or more, right? And I think that you would take the time to do that in a thoughtful way, and I can see where that would inspire your people to do more, right? Or, well, gosh, your coworker got it. I'm going to do something so that the next quarter I get it. And it just, to your point, that flywheel effect, it just creates this atmosphere and culture of wanting to achieve and be successful. ADVERT Hello friends. This is Chris Hanslick, your Building Texas Business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations, and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the BoyerMiller.com and thanks for listening to the show. Amyn: The other thing I heard you say is there's a key piece of autonomy to create the culture of empowerment within Ivy Kids and giving your people the autonomy to go do what they do, what they've been hired to do without being micromanaged. Chris: Yeah, that's exactly right. Amyn: I mean, I always think back to when I first started out, you know, in my career, you know, as an investment banking analyst, you know, you're spending 80, a hundred hours a week, you're working on these pitch decks. You're grinding until 2 a.m. You're working on this project and now all of a sudden you have this package, you deliver it to your managing director and then they go to a meeting and you never hear back. You come up from the dungeon, right? Chris: Exactly. Amyn: And I always was like, hey, you know what, I wonder what that client thought or if that what I did had an effect. And you know, that’s that part where I'm like, well, am I doing that as a leader? And am I these blockages? You know, because people want to learn and people want to be in those meetings. I think everybody wants to be in that meeting and see where their work is leading to. And I just always think, hey, if I were working for me when I was starting off, would I have liked myself as a boss? Chris: Right. Amyn: And that also means, hey, clear vision of where that person is heading. What am I doing right? And what am I not doing well? You know, I think feedback transparency, you know, I really try and instill that criticism is not a negative word, you know, problems are not bad. You know, problems are just identifications of what we can all do better. Chris: Right. Amyn: I like hearing problems to not, you know, and that could be a, you know, what we're doing and just what's going on within the organization. You know, what the way I would phrase what I just heard you say is about, it's about mindset, right? You can view someone's performance from a positive mindset or a negative mindset and say, look, okay, this didn't go well, but that's a learning moment. Let's find the learning as opposed to chastise and criticize and beat someone down. Chris: Yeah, right. And I think, you know, same situations handled, you know, one versus the other can encourage and empower someone to want to do better or discourage them to, you know, put their tail between their legs and maybe leave, even leave your organization when it's not someone you necessarily want to leave. Amyn: Yeah, and this is a thing that comes over time. It comes with empowerment. It comes with, you know, celebrating that publicly. It comes with a culture of positivity. You know, it is also something that I feel like is so important when you are owning a small business, when you're opening a business is separating yourself and your identity and ego in some ways from your business. Chris: Right. Amyn: You know, it's something that I, you know, try and share with our franchisees when they're opening a school and they're having a quality assurance visit or their first, maybe, you know, not ideal interaction with the parent. I mean, there’s a real personal feeling there. It's easier said than done, right? Chris: It is. Amyn: But I, to your point, very important to do. So let's kind of dive into some of those subjects because you start the franchise part of the business, I think you said 2017. So it seems to me you're getting it off the ground. It's going well. And then a global pandemic hit. So let's talk about managing through kind of uncertainty, economic downturn, especially when your business is predicated on kids coming into a public, basically facility and gathering together when that wasn't going on. Amyn: Yeah. I mean, I remember March of 2020, I think our average school enrollment was about 200 children. And I think it went to 40 in two weeks, so very stressful period as you can imagine. You know, and one thing that I learned from the pandemic or from our team and in business is you can really pivot on a dime. You know, and I think that's something that I've taken from me too is we went to online learning, you know, for two, three hours every day we were able to orient the company in that direction. You know, it ended up generating a million dollars of revenue for our franchisees, which was a benefit. You know, we were able to do things like private kindergarten. We were able to do a virtual program for elementary school children. They were able to come in our schools and do the virtual learning from the elementary teacher at our schools, and everybody was separated apart. Chris: Wow. Amyn: So we were able to come up with revenue-generating ideas. We weren't able to make up entirely for the lost revenue due to COVID. But we were able to do some really amazing things and stay in really close communication with our franchisees. Yeah. Because as you know, each city, each state had their own requirements. Chris: Right. Amyn: I think I learned a lot from that, that, hey, if you've got a long-term goal, a long-term plan and things change within your business, that doesn't mean you don't change your goal. You know, you can orient things, you can turn things on a dime. And, you know, although things have returned to normal and in many respects, right? Or pre-COVID, I think the learnings from that have helped our innovation and just saying, hey, let's push a little bit more. Let's try a little bit more. Chris: I love it because I think the lesson there is despite what comes at you, whether it was in your control or not, there's always opportunity. Amyn: So again, it goes back to mindset. I thank you. Okay, get the team, you or your team together and go, okay, where are the opportunities out of this that we probably wouldn't have seen before? And I think, like you said, you see so many people, especially in your industry. Now that kids are back in your facilities, it doesn't take away the opportunities for online learning you can do. Chris: Right. Amyn: And it's just added revenue. Chris: Yeah, that's right. You know, I think, you know, a franchisee, they open and they think, oh man, you know, these problems are just centered around me and oh my gosh, I'm opening a business. And it's luckily now you're around 20 years of experience of us operating, but also imagine those franchisees that had that same feeling and they opened during 2020, 2021, right? Amyn: Where we had to do everything virtual. So, you know, I think, you know, a business owner, you have to be an optimist. You have to look for, hey, what are ways that either I could turn this around or generate some revenue. Growth mindset is just so important. Chris: Yeah, so true. So you mentioned innovation. What are some of the things that you have done or that you may be doing now to kind of foster innovative ideas, innovative thoughts within your team that you can then implement with your franchisees, etc.? Amyn: You know, I think so much of that comes from our goals and seeing, hey, what can we continue to do to further differentiate ourselves as being the leading provider of early childhood education? Right. I mean, you look at our curriculum, you know, we have a lot of, you know, mom and pops that are great, you know, and in varying levels of quality and large franchise organizations too. Right. And what you find is there has not been a great deal of innovation in the curriculum space and in education, you know, so really it's us thinking at things differently, like, hey, just because everybody else is doing the same thing. Chris: Right. Amyn: That grounded in the research of today? Right. Does that relate to the teachers of today? What children need to learn in order to be successful in the elementary school, middle schools in the communities that they're in today. I think just always trying to understand the why, you know, I think why is one of the most important questions that you can ask. And that's really what I do in the meetings is understand, hey, why are we doing this? How are we doing this? You know, I think that generates a lot of thought within our team. Then once we have those strategic tools in place, we have those systems in place. Okay, then what is our cadence to see how we're executing on it and seeing how we're going within that? Amyn: So I always think goal setting at the year, understanding what those rocks are each quarter, but then, hey, just because it's a status quo does not mean that's good enough. You know, so even in our curriculum, implementing coding and robotics, parent assessments that are digital. So you can see every, you know, every month, every two months, exactly what your child's doing in the classroom. Camera access. So as a parent, you can see exactly what's going on in your child's classroom. You know, those are not just tried and true things. Those are things that came from great communication with our parents, a team that is, you know, flexible, forthinking about what they would want to see as a parent and then great execution. Chris: Wow. That's great. So you mentioned robotics. I've got to ask, what are you doing or kind of what's on the horizon as it relates to your curriculum and your delivery of this, your childcare and child education, early childhood education as it relates to AI? Amyn: Yeah, I think that's a great question. You know, I think tools like AI are amazing. You know, there's so much that you can do in regards to communication, idea generation. You know, I think for us is just, hey, when it comes to technology, you know, how do we ensure that children today are well-equipped for their technological future? So when we talk about coding and robotics, it's not just sitting in a computer and coding, you know, for it. It's even from that two or three-year-old level of doing logic puzzles, if-then statements. If I take a certain input and I am bringing code puzzles to it, what do those outputs look like? So it's a great way of them to manipulate in a coding language, but not also spending time in the computer and being in front of a screen too, which also which shows you know, a negative impact due to research for that young and FNH, right? We're making steps towards that direction. We are not diving full ahead, you know, to me, it's one thing to be first in an area, but I'd rather do it best, right? And I'd rather do it where, you know, we're not just testing things on children, but we are providing something that is impactful. That's based on research that we know we can implement really well. And I think you're going to continue to see growth in that area, too. You know, other things is just back to a naturalistic component, having things like gardens in our schools, you know, teaching children, hey, the food does not just come from H-E-B. It comes from the ground, and this is why. So, you know, I think innovation is a big part of it. Chris: That's great stuff. I mean, I can imagine parents get excited about hearing about that fundamental learning that their kids are going to get to experience with you. Amyn: Yeah, absolutely. Building strategic relationships, you know, partnerships and things that you have, you know, obviously relationships with franchisees, but other key, you know, advisors or relationships you have. Let's talk in the context of the value you've seen in that, how you think that's helped grow the business and how you lean on those, you know, from time to time to get you through to the next stage, if you will. Chris: Yeah. I mean, I think you always want to be around people that are adding to your skill set and have exceptional talents in those skill sets. You know, I think about continual learning. Luckily, in franchising, it's an amazing model and way for people to share best practices. You know, the IFA International Franchise Association has amazing resources, especially for emerging franchisors. They have great conferences and that's a great way to share ideas. Amyn: You know, I'm part of a mastermind group of franchisors, 50 to 100 units. And just learning and seeing what best practices that they do. You know, they advocate a lot for transparency within a franchise system. Franchisees sharing what their P&Ls look like. What's going well, what's not going well in the business. And franchisees learning from each other and sharing best practices. You know, that's something that is important. We're implementing more in our business with benchmarking and KPIs and performance groups. Even being part of a local community, you know, I'm part of a Vistage group here in Houston. Chris: That sounds like an amazing asset. Amyn: Yeah, I think that is an amazing asset, going and meeting people in person, seeing their businesses, touring their locations. You know, I think sometimes being an entrepreneur, being a CEO can be a very isolating experience. Chris: For sure. Amyn: You know, all the fingers are pointing at you and all the hard questions come to you too. So being able to learn from others. I mean, learning from mistakes is great. Then you're not making them and they're less costly. So I'm always about trying to learn from other people. Chris: You alluded to one of my favorite questions there. So I always, I like to ask a guest, cause I do, we do learn from mistakes and it is nice if you can learn from someone else's, but has there been a setback or something you would describe, you know, a mistake or, you know, again, learning moment, like I mentioned earlier you've encountered? And let's talk about what that was, but what did you do to overcome it? What was the learning and how did it make you better? Amyn: You know, I think the learning that I encountered is not stepping into the business. And I think my idea of being a generalist came from mistakes, you know, being young and eager, wanting to jump in, hey, I can write this operations manual because I've spent time in the business or, you know, hey, use this marketing plan or this idea because it worked for me. You know, I think the big one was COVID early on. Oh my gosh, I was seeing the business totally transform. I felt the need to be in this. I need to be a wartime, you know, CEO or senior member. I need to be here. I need to be calling the franchisees. And really, our team had great ideas and approaches and they were thinking about the business and their fears around the business in a similar way that I was. Chris: Right. Amyn: Yeah. And the moment I snapped out of it was, hey, this training is great. I mean, but think about X, Y, and Z that the franchisee is going through. And I had my operations person tell me that. And I think it was a, oh my gosh, I've sucked myself into this business. Yes, there was a big change, but I talk about empowering my people. That also means not just when moments are good, but when moments are bad as well. So I think that goes both ways and people and relationships strengthen sometimes when you're giving someone the rope when the business is not going that well. Chris: Right. But I mean, that's powerful. I can certainly see how that was an aha moment for you. And again, for your people, right? That you trusted them enough in those times had to go a long way. Amyn: Yeah, absolutely. I mean, you know, it's kind of like war stories during COVID or the up and down, but, you know, having a kind of a business history and having institutional knowledge, I mean, those are amazing tenants. You know, a franchisee joins, they have now someone on the operations team that's been with you for 20 years. But you're also incorporating, you know, newer people who are excited about the culture that we're trying to build. That's really important. Chris: Yeah. Well, I think you've talked around this, but just to kind of crystallize it, I do want to ask, how would you describe your leadership style and how do you think that's changed or evolved over time? Amyn: That's a really good question. I mean, I would say I like to empower people, you know, I like to set goals and a vision. You know, we have a vision of where we want to be as a company, and I want to understand what people think and how they see us getting there. And I want us, and I'd like to see that individual develop KPIs. What they think are the right metrics. And I want to understand the rationale behind that. And then we'll get together and figure out alignment there. But I like to see how people think. I like to see thinking. I want a demonstration of why they are getting to that problem or what their reasoning is around that problem. Chris: That makes sense. Amyn: Then we check in and I let them do it. I always think about how I, you know, if I was the low man on the totem pole, how empowered would I feel? You know, what are my responsibilities? And I think that attracts, you know, passionate people. Chris: Yeah. Amyn: And that's what I want to see. I want to see passion because I'm giving that responsibility. You know, as you were talking, it made me think. You know, we talked about learning from bad experiences or, you know, maybe learning, seeing something and going, okay, I experienced this, but I don't want to repeat that. And I can't help but think you learned so much as an early analyst and how you were treated. Chris: Yes. Amyn: You go, if I'm ever in a position of leadership, I'm not going to do these things. And it probably serves as a good reminder and a guidepost for you. Chris: Yeah. Amyn: To say, no, you know, remember what I didn't like, and let's do the opposite. Chris: Right. Amyn: Yeah, you learn a lot from great managers and you learn a lot from not so great managers. Yeah. And, you know, I think I had a lot of those on my bucket list and I think a lot of just reflection too. I mean, you know, I really try and take feedback and I really try and understand. Hey, you know, I mean, I've made a lot of mistakes and I think it's just, hey, let me try not to make that same mistake a second time. Chris: Right? Amyn: But you know, the sad truth is you're going to make some more, as will I, and the goal is trying to make the same one twice, right? Chris: That's right. I mean, this has been great. What an exciting business you have going. I want to, before we wrap up, I just always like to ask a few, you know, maybe less serious questions. What was your first job outside of Ivy schools? Amyn: My first job was a company called Student Agencies, in college. I sold ad space on the maps that you'd see around the Ithaca campus and these brochures. And I also helped with marketing promotions. A promotion I actually dressed up in a mascot outfit was a big light bulb because it was for an entrepreneurship idea competition. Chris: That's great. Amyn: So, I was a light bulb for a few weeks around campus. Talk about humility, right? Chris: That's right. And if you sold ad space for a brochure, I have to believe you got used to hearing the word no. Amyn: Oh man, yeah. No is common. No is very common. Chris: Okay, so, grew up in Pearland, you know, Texan as you can get, so do you prefer Tex-Mex or barbecue? Amyn: Oh, Tex-Mex for sure. Chris: Something you missed when you were up in Ithaca, I guess. Amyn: Oh, man, yeah. You didn't see much Tex-Mex over there. Chris: Well, I mean, this has been a great conversation. Congratulations on the success of the family business and where you've taken it, you know, since joining and the franchise side of things. Really appreciate you sharing that story with us and wish you the best success in the future. Amyn: All right. Thank you so much, Chris. I enjoyed it. Special Guest: Amyn Bandali.

In this episode of Building Texas Business, I chat with Renee Morris, Chief Curl Officer at Uncle Funky's Daughter. We explore her path from management consultant to leading a national hair care brand. Renee shares her approach to maintaining business control by relying on personal savings and family support rather than external investors. She discusses forming partnerships with major retailers like Target and Walgreens while building a creative team to drive innovation. I learned how she tackles recruitment challenges and ensures brand visibility at a national level. Looking ahead, Renee explains her vision to expand into skincare and education, and serving communities of color in new ways. SHOW HIGHLIGHTS Renee Morris discusses her journey from management consultant to Chief Curl Officer at Uncle Funky's Daughter, emphasizing her desire to balance career ambitions with family life.We explore Renee's decision to purchase an existing company rather than starting from scratch, leveraging her experience in sales and marketing strategy within the consumer products sector.Renee highlights the importance of having a financial safety net when transitioning to entrepreneurship, sharing her personal experience of not drawing a salary for years and relying on her husband's support.We talk about Renee's strategic decision to avoid third-party investors to maintain control over her business, focusing on conservative growth and solving customer problems.Renee explains her approach to forming strategic partnerships with major retailers like Target and Walgreens, discussing the role of distributors in helping small brands enter national markets.We discuss the challenges of recruiting and nurturing talent, emphasizing the importance of fostering a collaborative environment that encourages innovation and creative thinking.Renee outlines her vision for expanding the brand into adjacent areas such as skincare and education, aiming to serve the community of color more broadly.We explore Renee's leadership style, focusing on adaptability and learning from failures as she considers new business ventures.Renee shares personal insights from her early career and hiring experiences, emphasizing the importance of trusting one's instincts during the recruitment process.We examine the role of social media and influencers in maintaining customer confidence and visibility during brand transitions, particularly when changes are made to product packaging. LINKSShow Notes Previous Episodes About BoyarMiller About Uncle Funky's Daughter GUESTS Renee MorrisAbout Renee TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode you will meet Renee Morris, chief Curl Officer at Uncle Funky's Daughter. Renee shares her passion for helping curly girls solve their hair problems with unique and innovative natural hair products. Renee, I want to thank you for coming on Building Texas Business. It's so glad, happy to have you as a guest. Renee: Thank you, I'm excited to be here. Chris: Okay, so you won the award so far for having the coolest and, I would say, funky, but that would be. Renee: Play on words Right. Chris: But as far as a name for a company, uncle Funky's Daughter, yes. Okay, tell us what is your company known for and what do you do? Renee: So Uncle Funky's Daughter is a hair products company. We're based here in Houston, texas. I bought the company, so the parent company is Rotenmore's Consumer Group. But I bought the brand Uncle Funky's Daughter 10 years ago from a husband and wife team. So Uncle Funky's Daughter curates natural hair products for women, men and children who choose to wear their hair naturally, and so that's shampoos, conditioners, curl definers, moisturizers, stylers, finishers. Shampoos, conditioners, curl definers, moisturizers, stylers, finishers you name it, we make it. We also have a thermal protection line for women who want to blow dry and style their hair with heat, and we're distributed nationally Target, walgreens, kroger, cvs, heb, locally, so you name it, other than Walmart, we're there. Chris: Beauty Easy to find, easy to find, easy to find well, I have to ask this because I have daughters. I mean Sephora or Ulta. Renee: No, Sephora or Ulta. Yet we've been working that line. We can talk about that as part of this deep dive, but we've been working that line and but no land in Sephora or Ulta just yet okay, very good. Chris: So how did you find your way into the hair care product world? Because you didn't start there. Renee: No, I am a former management consultant 20 years management consulting, advising clients multi-billion dollar companies on how to drive revenue growth and through sales and marketing. And I was a mother of three kids. At the time my son was probably three or four, my daughters were two and I was flying back and forth between Houston and New York for a client. And I had this realization that I didn't want to do that as a mom. I needed to be home, but I still wanted to be a career person. So I knew I am not built to be a stay-at-home mother. That is not who I am, and COVID taught me that with isolation. And so what I started deciding was I wanted to figure out what I wanted to do next and I realized I had some options. Right, it's that fork in the road that you go through. You start to look inwardly every time you have that fork in the road and I did that and I said okay, your option A is to go find a company based in Houston and be a VP or senior VP of some operation. Option B is you find a small company and you're like a big fish in a small pond kind of thing. Option C is you just go do your own thing. And after I kind of went through it, I realized I worked for the Coca-Colas, like in GE Capitals of the world, in my past. I didn't want to go work for a big company. I didn't think I wanted to work for a small company because of my personality style, right, um. And so I decided I wanted to go buy something and then or have my own company. And so then the question becomes do you build or do you buy my? I'm a management consultant by heart, so it's always go buy something. Why? Because I can take it, I can fix it and I can grow it. And so then it became all right, well, what are you going to go buy? And so, like most people out there, they're thinking about buying a company. I started reaching out to brokers, I started doing some networking, calling attorneys, people that work on deals, that kind of stuff, just putting my name out there, and I got all the things that you normally get when you're looking to buy a company the gym, the dry cleaner, the storage facility, the gas station, all the things that I didn't want to buy because I didn't have a passion for them. And so, also, for background, my consulting experience in sales and marketing strategy has been predominantly in consumer products. So I know consumer products, I know revenue growth, I know marketing strategy. So I was like okay, so I kept looking and I used this hair product called Uncle Funky's Daughter. I found it when I first moved here in 2000. Like all curly girls out there back then, that was almost 20 years ago, my goodness. But 15 years ago back then there weren't a lot of natural hair products out there for women of color and women of curly hair with curly hair specifically. And so I googled when I first moved here natural hair products, curly hair, houston and Uncle Funky Stoddard came up. I've never heard of this company right. So I go to rice village and buy this product and I start using it. Extra butter, start using it. And for those out there that are, you know, african American descent, you know thick, curly hair, we do this thing called two strand twists to what. I love it. Two strand twist. Chris: Okay. Renee: So, you take your hair and you twist it in like instead, instead of braiding it, you put it in twists, and there are single twists all over my head right. So that's how I would style my hair wear it, rock a two strand twist. Those out there will understand that, look it up and then Google it and then and so that worked on my hair really well. And so, again, for those with tight, curly hair, finding the right hair product that works for your hair is tough. It is not easy, as you know. One of your team members, courtney, was talking about. She's gone through all the products Because you go through this product journey trying to find something that works for you right. So found Extra Butter, worked, loved it, and then I would stop using it while I'm traveling because I would forget it right at home sure. I would go back to some other competitive brand and it didn't work for my hair. So I'm like, okay, uncle Funky's daughter is the only thing that works for my hair. So I go in to get my Uncle Funky's daughter one day, after I, you know, had braids and wash them out. And yada, yada, yada. I'm going in, I'm getting my extra butter and this guy behind the counter who I bought hair products from for the past at this point, five years, says yeah, my wife and I are going through a divorce and I'm like, oh, so I do have an MBA right. I'm not some, you know, trying to sound like a shark, but my MBA said distressed asset might be willing to sell stress asset might be willing to sell. Like literally, that is the voice that went in my head. And so I was like, oh really. So I stood there in that store and I just chatted with him for hours and about the company, you know what, you know personally what he was going through, because divorce, you know, for those that may have gone through it, can be an emotional, you know troubling time. So I was a listening ear. But as I'm listening, I'm also thinking about like, okay, what's the story behind the brand? Is this going to resonate? And I'm also watching people come in and out, right. And so I said, well, if you guys are you guys thinking about selling it? And he gives me a story about you know what's happening with the sell and cell and I said, well, if you're ever thinking about selling it, let me know. So I walk out, I Google, because you know this is horrible to say, but divorces are public right right. Chris: Is it filed in state court? Renee: it's a public record so I'm figuring out what's happening with the divorce and I find out that the company is in receivership. And for those who don't know, because I did not know at the time what a receivership was, a receivership happens when a divorce is happening and the husband and wife aren't operating, behaving appropriately. Chris: Well, they can't agree on the direction of the company and it can be not in a divorce. But basically, owners cannot agree and a court may appoint a receiver to run the company. Renee: Exactly. Thank you, that's why you're the attorney and a court may appoint a receiver to run the company Exactly. Chris: Thank you. That's why you're the attorney. Renee: Have a little experience with that yes, so the judge had appointed this guy to be the receiver. I reached out to the gentleman and I said I'm interested in the sale of Uncle Funky's daughter, if that so happens to be the case. And so the one thing I did learn and you can probably expound on this is oftentimes in a divorce, when the receiver comes in, at that point that receiver is really thinking about how to get rid of this asset. And so those are all the things that I learned during this process, and I was like, okay, so he wants to sell because he wants to get paid and he knows nothing about this business. Chris: He was, you know no offense, no emotional tie to it, for sure no emotional tie. Renee: He's an older white gentleman who knows nothing about black hair products and so I was like, okay, so he doesn't know, he doesn't have an appreciation for the value of the company. And so I reached out and I said, okay, here's a number. You wouldn't believe the number I gave him and he counted with some minor you, some minor adjustment, and we bought this company for less than $100,000. And they had a revenue at the time. When I saw their tax returns, I think it was maybe a million or so that they claimed in revenue. At some point they said, but at least for sure I think our first year of revenue was probably around and it was a partial year. Probably a quarter million dollars is what revenue they generated, and so we really, if you talk about a multiple of sales, we bought it on a tremendous it's a heck of a deal the deal. Okay, I can't find those deals these days. If anybody has one of those deals, you come let me know and so. So that's how we ended up buying this company ten years ago and shortly thereafter, target comes knocking at the door and says, hey, we were having this discussion with the owners about, you know, potentially launching. Would you be interested? And I'm like, absolutely. And it was because they were going through this divorce that they couldn't get over the finish line, right? And so shortly after we buy, we're launching in target. But before I did that, one of the first things I did was because, if you ever, if any, it's probably so old you can't find it. But the label. When I first bought the company, when I was buying it, it was this woman's face with a big afro on the front and it had a cute little 70s vibe on it and it was in this white hdpe bottle which, by the way, those aren't recyclable. So I said first, we need to change this, we got to change the packaging, we got to upgrade the label, we need to make it universally appealing to all curly girls, because if I look at a woman with a big afro, I think tight, curly hair like mine right and our products work across the spectrum from wavy, like Courtney, to really tight, like Renee, and that wasn't representative on the label okay so we redesigned the label, changed the bottle from an HDPE bottle to a PET bottle, which is recyclable, and then just upgraded this packaging to what I consider a sleeker new look. Chris: Very good, Great story, Thank you. So back up a little bit, share a little bit, because so you go from big corporate consulting job some comfort in there probably. You mentioned travel and you did mention the mom aspect playing a role. But let's talk a little bit about actually getting the courage to take that leap out of the big corporate role into. I'm going to buy something that's all on me now to either make it or break it. Yeah, that had to be scary. Renee: It was, and I am fortunate in that. You're right. I had comfort. We have financial security. I had a husband who was, who still is, who's a senior executive in medical devices has nothing to do with anything about consumer products, but you know, we have the luxury for him to say I can carry this load, financial load, and I think that's the big mix, right? I tell people all the time if you're going to take that leap, you got to make sure you've got cash flow, because for not only for your, you know, for the company, but for you personally, right? Because there were several years where my husband called my business a hobby Because I was contributing nothing to the financial plan. Chris: In fact, you were probably taken away. Yeah, I was taken away. Renee: So every year I mean. So I wasn't drawing a salary. I didn't draw a salary for a couple of years after I, I didn't draw a salary until our tax accountant said you have to draw a salary because we're changing you from whatever tax to an S-corp. And I was like oh, wow, really Okay. So what am I going to pay myself? Okay, and then he goes Well, you have, and it has to be reasonable. So for probably three or four years after I bought the company, I didn't draw a salary. I was paying my employees but I wasn't paying myself. And so I think and I say all that to say yes, it takes a leap, but it also takes the ability and the willingness to take that financial hit Right. So were there things that we probably wanted to do as a family that we didn't do? Probably so. Chris: Yeah. Renee: Because I'm growing this brand and was there times I went to my husband like I need another thirty thousand dollars? Probably so. And because one of the things I specifically had chosen is I did not want, and I currently still don't want, to pull in private equity, vc any type of third party investor funding. That is a personal decision I've made and it's because I am a former accountant and I'm extremely financially conservative and I also don't want different incentives to help influence how I run my business, different incentives to help influence how I run my business, and what I mean by that is I personally just didn't want to have a PE company saying you need to do these three things because your multi, your EBITDA needs to look like this and your revenue growth needs to look like that. Right, so I could have we could have easily grown really fast, like a lot of brands do, and grown themselves out of business, or, but I chose the path to grow really conservatively Now, and so I think I say all that to say I think, yes, financially speaking, having the bandwidth to be able to float yourself and your company for a while is critical, and so don't take the leap if you're still, if you're at your job today, living paycheck to paycheck right, you have to have a cushion. Your job today, living paycheck to paycheck right, you have to have a cushion. So what that means is, maybe if you're trying to start the company, then you're running your business while you're living paycheck to paycheck and oh, by the way, you gotta stop living paycheck to paycheck because you got to start to build that cushion, right. So some of the you got to make sacrifices and I think that's the hard thing. Not everyone's willing to make the financial sacrifice that it takes to really run and grow a business without third party support. Now, in today's world, you can go get bc capital funding and you know money is flowing, or at least it was, you know but there, but there's sacrifices, but there's sacrifices with that, and so, yeah, that's great advice, you know. Chris: The other thing that you mentioned, as you were evaluating companies is one of my favorite words when it comes to business is passion. You passed on a ton of things because you weren't passionate about it. Renee: Yeah. Chris: You found something you were passionate about, and I think that's a lesson for people too, right Is? It's not easy to do. As you mentioned. Sacrifices have to be made. So if you're not really passionate about that decision to go be an entrepreneur, start your own business. It's going to be tough. Renee: Yeah, it's going to be tough, and so, because I have to wake up every day, I my passion is really helping people solve problems, and I do that through hair, because hair is a problem in the curly hair community. How do I maintain frizz? How do I keep it under control? How do I keep it healthy so it doesn't break? How do I keep it healthy so it can grow? How do I stop the scalp irritation? There's so many problems that happen in hair and so I what I think about. Like literally yesterday I was with my marketing team and we're talking about a campaign for the next month for products etc. Or really November, and I said, OK, what problem are we helping her solve? And that's literally the way I think about stuff what problem are we helping her solve? Because if we're not helping her solve a problem, then I don't have anything to talk about. Chris: Ok, Right, yeah, it's not going to move off the shelf. Renee: It's not going to move off the shelf thing to talk about. Chris: Okay, right, yeah, it's not going to move off the shelf. It's not going to move off the shelf. So another thing that you kind of alluded to, you went through somewhat. It sounds like a kind of transforming the business that you took over, right? You mentioned the product label and packaging. Let's talk. What else did you, you know, in taking that business over, did you find yourself having to change, and how did you go about making those decisions? Are either prioritizing them and you know we can't do it all- at once yeah, so what walk? us through some of the learning you went through that well, you know what's interesting is. Renee: So it wasn't much of a transformation, but it was. If you think about learning from a marketing standpoint, if you're going to buy a business, especially a consumer product company, and you buy it in today's world where we're so used to knowing who the owner is the first people don't like change. So one of the first things I had to do was convince our current customers that nothing had changed other than the label. The minute your package changes and it looks different, they're like the formulas have changed, it's not the same be the same. It's not the same product. So the first thing I had to do was convince them that this is the same product. In fact, I brought back discontinued SKUs that the receiver had stopped selling because they were slow moving. **Chris: How did you go about convincing the existing customer base? Nothing changed. Renee: So news articles, facebook articles, facebook social ads, like having live conversations, going live on social media all of those were things that I had to go in and dispute or Dubuque being like I was the person respond. There was no team, it was me and one other person. The first person I hired was a social media person. Okay, wasn't a warehouse person, it was a social media person because I knew being the being in the face of the customer was so important. So being live and answering questions online, answering the phone and people would call they will go. I heard that this wasn't the same formula. No, ma'am, it's the same formula. And actually having those, it was me having those live, one-on-one conversations. And so I think really touching the customer and being personal with her was the key to our success in in gaining that confidence. And we also you know this was early in the days of influencers we also had to partner with people to be able to talk about. Like it's the same stuff, guys, this is the bottle. This is the old bottle. This is the new bottle. This is both sides of my hair, no change. Chris: Okay, okay, very smart to especially, like you said, I mean so many people now the social media influencers have such impact on what products get picked up in the mainstream. Advert Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom, and thanks for listening to the show. Chris:So let's move forward a little bit. Part of changing things new products. There's a level. You mentioned your marketing meeting yesterday. What do you do within the company to help kind of foster innovation and inspire your people to be innovative about the products? Renee: That's a tough one because it's hard. Here's the challenge that we have as a small company. As a small company, it's hard for me to afford to pay me like the equivalent of a me right. The woman or a man with the MBA in marketing who's got, you know, 10 years at Coca-Cola. I am oftentimes recruiting talent, that's learning and I'm teaching, as they, you know, grow up in our company and so innovation is really. You know, I'm usually in that meeting asking the provocative question Like do these assets, does this story come together like cohesively, what problems are we helping them solve? Like, I am there helping them think through and push their thinking a little bit forward. We'll sit and we just do brainstorming with, you know, little toys in the room and stuff to play with, but it's really just helping them kind of. All right, just toss some ideas out there. Let's just throw like what is this, what does this mean? What's her brand voice? What does she sound like? What does she look like? Like asking those questions to help them just kind of think outside of the box. Now, if she looks like this, so what kind of tone is she going to have? All right, so what would she say then? Okay, so let's talk about, like how then that manifests itself and how it shows up creatively, and so just helping them kind of drill down to the so what is really kind of the role I like to play. It's the role I'm playing right now because I'm looking for a marketing director. Chris: Okay, yeah, anybody listening out there. Renee: Anybody listening out there? Submit resumes. Chris: So you talked about some major players as partners that you have right, yeah. Target and Walgreens and CVS, et cetera. So let's talk a little bit about that. How did you go about? You kind of you told a little bit about Target, but what have you done and what have you found to be successful? And maybe strategies that weren't successful in forming those relationships, but maybe, even more importantly, fostering and maintaining those relationships. Renee: So forming on the forming side retailers. For those who may or may not know the space, they want to come to you in one of two ways either direct or indirect through a distributor. For a small brand like mine, it's usually hey, I don't want to service direct, I want you to go through a distributor. And usually it's because when you first launch, you're going to be in a handful of their stores not full distribution is what they call it so not in all 1700 Target stores, but I think we started out in a hundred and so we had to go through a third-party distributor, and so that distributor then opened the door to other national retailers for us. So if you're thinking about launching into a national retail partner and you're a small company like mine, your best route to market is finding a distributor that represents your category in a national retailer. So whether that's peanut butter, hair products, lotions, flat tires, whatever, so you have to go and find that distributor. So that was step one. Once we got that relationship, our job is to grow it by driving traffic through the stores and getting that sell through. If it's not generating units per store per week, it gets pulled right. So one person wisely said a retail shelf space is like real estate. Once you buy your home, you don't want to lose it to foreclosure. So once you've got that slot, my job is to defend those two slots. And when I say we're national retailers, we're not like a P&G where P&G dominates the shelf. We've got sometimes two slots, sometimes four, but we're not, we don't have 10. So our slots are really important for us at a retailer and so for me, maintaining the relationship comes back to driving the traffic to the store. But, more importantly, supply chain. So when I talked about growing too fast for some brands and having measured growth, it was very important for me because I understood I came from a consulting company, although I did did sales and marketing most of what we did as an organization was supply chain. I wasn't the supply chain person, but I like to say I knew enough to be dangerous when I bought Uncle Plunky's daughter. So because I understood supply chain, I knew that not, we could not risk. We needed to have safety stock, we need to have inventory levels that look like x, and so that's why I did what I called measured growth. And so you know the distributor may come to me and go. I can get you into Kroger, walmart. Nope, we're going to do one retailer a year, one big guy a year, because I need to make sure I can scale, I need to make sure my contract manufacturers can scale, I need to make sure my team knows what to do and they know how to execute and fulfill the requirements of that specific retailer and so that we are successful. So that was the way that we grew and that's kind of the way we've continued to grow. Chris: That's so smart, that discipline right. It's easier said than done, because you just start a company and you go a couple years not making any money, or what you do make you put back in the company and then you got all these great opportunities. Come at you once. Renee: It's easy to say yes yes, yes, yes and yes, but you can't fulfill those promises, no one will come back. And there are horror stories where brands have been like yes, I'll go into Target, walmart, kroger, heb, cvs and Walgreens all at the same time and they can't meet the demand or they launch and they don't have enough awareness in the consumer market to be able to support and drive the traffic in all of those stores. So you really have to focus on how you're going to grow, where you're going to grow, and how you're going to drive traffic into these markets and into those stores. Chris: I mean any details you can put behind that, just as some examples to make it a little more tangible of things that you did, things that you thought about. Okay, we have to get this right to kind of prove that we can go to the next level. Renee: Yes. So for Target we did a lot of in-store events, so we took Target. So imagine if I was doing replicating this across like five different retailers. But for Target back in the day, for social media was much more organic and less pay-per-play than it is now, right, so we would do like it's a 10-day countdown. You know, to Target we're launching in 10, 9, 8, like on social media, it was like running ads. Then we did a find us in the Target, so we would do these fun games on social media and our followers would have to find us in their local Target and if they found us and they won a gift card, so we were doing anything we could. We would do in-store events where we would just have a table popped up where you can try products, give away products, get coupons, you name it. We were doing it. Gotcha, we were doing events outside the store. Inside the store. I was rogue because I didn't have permission from Target to do this. I mean because that would have cost me tens of thousand dollars, right, Target, I hope you're not listening and so we would literally just grab a camera and kind of come in and we would kind of sneak our little basket through the store down the hall and we would sit in there and the manager would come like, oh, we're just doing some footage, and I would say I just launched and I'm really trying to help my business and they would get it because you know, their local store manager, and so they would allow us to do like a little bit of a, a little bit of a pop-up shop kind of thing, and they would allow it. Now, today they probably wouldn't allow it because we're probably a lot more disciplined, but 15 years ago, 10 years ago, they would allow it and so, yeah, so those are the things that we had to do. So imagine if I was doing that for sally, for walmart, for kro, all in the same year, and I'm still trying to drive the traffic right, because we were still a small brand. Chris: Sure. Renee: I still call us a small brand because you know, if I go to you and I say, have you heard of Uncle Funky's Daughter? And your answer is no, then I'm a small brand, right. If I say you cause, everybody's heard of Clorox, coca-cola, pepsi, all the things, right, lacroix, you name it, they've heard of it, they haven't heard of Uncle Funky's Daughter. And so we're still in constant mode of brand awareness, and so trying to build that brand awareness and drive demand in every retail shelf at the same time would have been a daunting task for a brand like ours. Chris: Sure, do you still have the Rice Village? No, okay, shut that down we shut it down. Renee: I shut it down when I bought the company. That was the condition of the acquisition, because the day that I went and discovered who the owner was of the brand and I was sitting there chatting up the guy, in about a four hour period that I was there, maybe three people walked into that door okay so that you know, my brain said all right, that's a like a revenue killer. I'm not, you're not driving revenue right you need to focus on driving traffic on the retail shelf, and so are. We have no physical retail store now. Will we once again one day, maybe in a different format? Right, because now you, my friends? Other people have said you guys should open up a salon, and I'm like so maybe we'll open up a salon where the products are available and featured, but a retail store exclusively focused on our products will not be in a timeline. Chris: Okay. So there's an example right of an idea from friends. Maybe you thought about it, of branching out from what's core to your business. So far you've said no because you haven't done it. Maybe it's still out there. Why have you not done that? And I guess what could you counsel some listeners if they're faced with that? Or maybe they've done it and trying to make it work Again. That's another danger point, right Before you kind of branch into something different. Renee: So there are two things what I think about. Again. I always go from management consultant first right when I think about my business. I don't think about it personally, right, I think about it objectively. So I can go deep in my vertical or I can go wide horizontally, and I can do both. And so right now, where we are as a brand, honestly, is we need to go deeper in R&D and innovation. So we have not had an opportunity to launch a new product since COVID, and so we're in the process of developing a new product, so that's my primary focus. A new product line so we're developing a new product line, so that's my front focus. New product line so we're developing a new product line, so that's my front focus. Then, as I start to think about adjacency, about how do we take our core and expand and pivot beyond. Do you go to Skin next and stay in consumer products and go into Skin? Do you go in the two places that I'm more actively looking at Skin is out there as a product extension, but that's still core to Uncle Funky's Daughter. Do you go and do you buy another small company within Rote Morris Consumer Group and now you build a portfolio of brands? Because that's, really what I wanted to do when I started Rote Morris Consumer Group. My vision is to have a portfolio of consumer goods brands that meet the needs of the community of color, whether it's beauty, so for beauty. So that could be hair, that could be skin, it could be makeup, it could be a variety of different things that help her solve her problems every day. So that's really the vision. And then I bought this building a couple years ago and we have this wonderful, amazing space, and so and I open up this space I'm looking around. What are we gonna do with the rest of this space? We have this whole first floor, we have a whole second floor that's unoccupied, and even before I bought the building, this idea of building talent and a pipeline of funky junkies is what we call our followers funky junkies yeah that's what we call our followers, our customers. But how do you start to build not only a pipeline of loyal customers but a pipeline of loyal users? And so I started thinking about what if you actually had a trade school? What if you actually started? What if you were the next Paul Mitchell for African-American hair products, right when there's a Paul Mitchell school and you're teaching natural hair instead of you know other treatments that they do, and those exist outside of Texas. There's one that exists in Houston, but not focused on natural hair, but focused on beauty school. And so for those people out there who choose to have a different path in life and not go to college, but they're looking for a vocation or trade school and they want to be a hairstylist or barber, do you create a space for them to be able to do that? So that's the second adjacency. And then the third adjacency is then do you go the other end? So I know how to do hair, I'm learning how to do hair, I've got hair products, I'm doing hair on the other side and that's where the salon comes in. So in all both ends of the spectrum, I am a deep analytical person, so it's understanding what's happening in the market. So in the salon side, you look and you have to figure out and this is for anyone right. You never take a leap in adjacencies just because you think you have the money, the capability, the resources, whatever. You have to understand what's happening in the market because you're not smarter than the whole market. You might be smarter than a couple people in the market, but not the whole market. And so when I look at the hair salon space, I knew of several people in the Houston market that had launched salons and they had failed. They had failed within a three-year cycle and they had failed because the type of offering service offering that they wanted to provide was challenging. And that's the same service offering that we would need to provide as a brand. Chris: Right. Renee: And resources and talent. Going back to this other end of the pipeline I was talking about, in the supply chain, those can be sometimes challenging resources to recruit and retain in a salon side, and so when I do the analysis, it's looking at the risk versus reward. How am I smarter than the next person? How do I learn from those failures and ensure that I can recruit talent where I'm not? I don't have a high degree of turnover. I can create brand consistency. I can create service levels that meet the needs of not only what I want to offer, but what our customers expect. I need to exceed it, and so, because I haven't gotten that magic formula yet, we're leaving the salon right here in the marketplace. Chris: It's still on the drawing board right. Still on the drawing board, I like. I like it well, as it should be, until you figure it out, right? Yeah well, so let's turn a little bit and talk a little more about you yeah in leadership. How would you describe your leadership style? How do you think that's changed or evolved in the last 10 years? Renee: so I am a type a, hardcore type a. I am a driver and I know that about myself. But I also know that one of my weaknesses as a leader is I don't micromanage. What I have learned to evolve because of my consulting background, right In a consulting world you know 20 plus years is how I was trained. I'm a former salesperson. You just go get it done

In this episode of Building Texas Business, I discuss John Marvin's transformative leadership journey as CEO and President of Texas State Optical (TSO). Founded in 1936 by the Rogers brothers, TSO evolved into a franchise operation spearheaded by John starting in the 1990s. Hear John's compelling account of reviving the brand, establishing the franchise association, and guiding the innovative physician-owned business model that has empowered young optometrists for decades. With the evolving eyewear landscape, our conversation analyzes consumer behavior shifts and their implications for strategic competition amid growing online retailers. We also explore the importance of supporting TSO's physician member network through mentorship and partnerships, especially given industry consolidation challenges. SHOW HIGHLIGHTS John D Marvin shares the history of Texas State Optical (TSO), founded by the Rogers brothers in 1936, and its growth into a franchise operation.We discuss how John Marvin revitalized TSO in the 1990s and his journey to becoming the president of the company in 2001.The episode explores the challenges and strategies involved in competing with online retailers in the eyewear industry, emphasizing the importance of convenience and well-stocked dispensaries.John describes the shift in optometry ownership trends, with fewer young optometrists interested in private practice, paralleling broader healthcare industry trends.We examine the strategic importance of building a physician member network to support optometrists and the criteria for network inclusion.The episode delves into leadership principles inspired by John C. Maxwell, highlighting the role of influence, trust, and accountability in effective leadership.John reflects on the transformative impact of setbacks, such as being fired, and how these experiences shape one's leadership journey.We explore the importance of forming strategic vendor partnerships and the role of mutual accountability in maintaining long-lasting business relationships.John emphasizes the need to adapt to industry shifts, including the rise of artificial intelligence, while fostering an innovative mindset among optometrists.The episode concludes with a discussion on the significance of understanding and meeting customer needs through effective consumer research, as a universal business strategy. LINKSShow Notes Previous Episodes About BoyarMiller About Texas State Optical GUESTS John D MarvinAbout John TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode you will meet John Marvin, ceo and President of Texas State Optical. John shares his views on how the fundamentals of leadership boil down to influencing and how having mutual accountability in your business relationships create win situations. John, I want to thank you for taking the time to join me today. It's really been a pleasure to get to know you before we got started here. John: Well, Chris, I appreciate the opportunity to sit down. I always love talking about business. Chris: Well, that's good, that's what we're going to do. So you're the CEO and president of Texas State Optical, or most people know it as TSO. That's right. Tell us a little more detail about what is the company, what does it do and what is it really known for in the market. John: Okay Well, texas State Optical was founded in 1936 by four brothers the Rogers brothers, in Beaumont, texas, and anybody who's been to Beaumont or familiar with Beaumont knows of the impact those four brothers had on that community and then in turn throughout Texas. Two of the brothers were optometrists and they opened pretty traditional optometry practice. And if you'll think about what else was going on in 1936 in Beaumont, it was the oil boom that was just blowing up, and so the one that originally came to Texas from Chicago all four of them were from Chicago called back home and said boys, you need to move down here. We got a big opportunity and they did, and consequently, over the next several years they built a large retail optical chain they called Texas State Optical, and one time in the early 60s it had reached over 300 locations. And one time in the early 60s it had reached over 300 locations and those were in New Mexico, oklahoma, arkansas, louisiana and Texas, and so that went on until, due to some legal issues with the state optometric group, who decided that they didn't want someone in the state running 300 locations, they passed some legislation that limited optometrists to only three locations and so they could subsequently, after a long legal battle had to sell off most of their property, but they kept the core of the business of the optical lab. They kept that and kind of a condition of buying. The practice was that you obligated yourself to continue to purchase items from them. But then in the late 60s the Rogers, having gone through this process of dissolving their ownership in it, decided to turn their attention towards real estate development and at one point they owned 25% of Caesars Palace in Vegas. They just got involved in other things and then consequently in the early 70s they sold the company to a large pharmaceutical company, gd Searle, who then subsequently sold the company in the early 80s to Pearl Vision. Most people are familiar with Pearl Vision, most people are familiar with ProVision and ran that until the late 80s when they sold it to a group of kind of investors who wanted to own it. They didn't really know how to run it than investors. So in I got involved in 1993 doing consumer research for the corporate office. My background at the time I had a company marketing management group and based here in Houston and it was a small marketing management and consumer research group and was doing work in other areas. But picked them up as a client and began to do a lot of consumer study for them and learned about the business. At that time it was somewhat distressed because of the leadership that had taken over from the Pearl Vision taken over from Pearl, and so there was a lot of unrest among the franchisees because at that time TSO was a franchise operation and so I helped them form a franchise association and then kind of on a part-time arrangement took on an executive director position within that while maintaining my consumer study and research stuff. And so that happened until the late nineties, when everyone was planning for the great millennium you know, the 2000 and Y2, right, right. And so we gathered everybody in my conference room over here and how, booty building, and down here in the galleria and they started you know, flip chart sheets, what do we want to accomplish? And blah, blah, blah, and and that the result of that was really, guys, you're not going to get any of this done unless you own it. And so we began to have some discussions about them buying the company, the, the franchisor, and that took about a year to negotiate, and during that process I was asked to come on as the new president and since and then we closed in June of 2001, and since that time I've been the acting and operational by president and CEO of the company, and one of the reasons that it appealed to me was it was the ultimate fixer-upper, because the company had really was kind of loosely held together but had an iconic brand, and so we started opening new locations with Young Optometrist and we're a brand license company. So we knew that the only way we could pick up a new customer, if you would be, if a young OD wanted to open their own practice and then we could help them do that. People that were established at the time and successful weren't interested in converting to a retail trade name, so we did. We opened up about 80 new locations and helped a lot of young ODs live a dream and had put together a whole turnkey system commercial realty contractors the whole nine yards. Chris: That's a fascinating history, you know, to kind of just see it grow so big in the beginning, get broken down and then almost come back together. Yeah with, I guess in 2001 you said, with these individual practice owners or franchisees becoming owners. John: That's, you know, kind of unique, especially for doctors yeah, it was a different approach to it, one of the reasons we can set it as a now. We never incorporated it as a cooperative, we incorporated it as for-profit. We simply chose to run it as a cooperative, which, by its nature of co-op, isn't intended to make money, right? So we could keep the services and the value of what we offer members very high because we priced it at a break-even point, and so it was very appealing to a lot of young ODs who needed that help without any experience knowing what to do. And, of course, we then had a retail trade name that had market appeal. So a lot of them benefited greatly by, as opposed, to, opening up under their own name and unknown in a community. Chris: Yeah, it gives it instant credibility with the brand name right. That's right. What are some of the things I guess that you know since that time in 2001, that you do and your team around you, to kind of help preserve that brand value, to make it marketable and enticing to these doctors. John: Well, part of it is the importance. An optometry practice as a small business has a very defined marketplace of about three radium miles Okay, so one. That's part of that is because there are so many options and the profession is a licensed profession and so there's a little bit of perception by consumers that it's a commodity. In other words, anybody who's got a license will be able to give you a good exam. Consumers at one time back in the 60s and 70s, thought mostly of wherever they got their exams. That's where they purchased their eyewear. Chris: Out of convenience, right Out of convenience. John: That's right. And in the 80s you had a much more proliferation of retail optical chains like LensCrafters and EyeMasters at the time and Pearl Vision, which were creating an awareness among consumers that you know what, I can get my exam in one location and I can buy my eyewear in another location, and so that added to that sense of commodity. And so what we've done is focus on a three mile marketplace. So instead of running one advertising campaign in Houston, we run 50 around each of our locations, and those are largely driven through community involvement, pay-per-click, you know, today pay-per-click In the beginning though, a lot of it was just getting to know your school nurse, getting to know the coaches in the league ball game, and so from a marketing strategy it was always hyper-local standpoint. And so if you go into some neighborhoods, everyone knows the TSO. If you go into an neighborhood where we have no location, maybe not so much, and that was done probably more just from a practical standpoint of cost than it was anything else, because you know Houston and Dallas. Where we're at in San Antonio, they're very expensive media markets and so if you've only got, you know, 20 locations in the DFW market to go in and try to buy television, advertising or something more traditional is prohibited, and so it makes a lot more sense because that's where people live and work. People ask me sometimes how do you go about picking your locations, your real estate stuff? And I said we tend to let Kroger and HEB do that for us. So, wherever they're at, we want to be close because that's a neighborhood. Chris: That's right. You figured they thought there were enough households to support a grocery store. So I like that, you know, uh, you know. There's a lesson there, though, for a business owner, an entrepreneur, in that you don't necessarily have to do all your own organic research if you don't know, aware what's going on, you can, you know, let someone else do some of that and just make sure that their end users look like yours, and that's right. John: They do a tremendous job, both of those companies, at understanding the market before they ever buy land or pour concrete. I'd hate to insult them by not taking advantage of all that good work they do. Chris: They're genius right, they're genius, that's right. You just mentioned, you said 30 different or 50 different marketing campaigns in Houston alone. I mean, how do you go about figuring out you know the right message for the right place? That must take a lot of work. John: Well, not so much I mean because the message in Sugar Land is the same as the message in the Woodlands. I mean people. While we, as as in our profession, try to complicate this, it's pretty simple from a consumer standpoint. They're looking for a place where they can get their eyes checked and buy a pair of glasses. But probably two-thirds of all of our revenue today come from a third-party payer. So that changes kind of the basic consumer behavior dynamic. But by putting out a message that really is focused on that group of people in terms of maximizing the value of those coverage benefits, that becomes real consistent and then it's a matter of just being louder than anybody else. Chris: Sure, while we're on the subject of that consumer and consumer behavior, what are some of the things that you have done over the last 10, 15 years to either combat the online competition, as you mentioned, because people get their eyes examined and they either go online or do something. How are you managing that and what are some of the strategies you found to be successful? John: Well, first of all, consumers are driven, and I think this may be generally true, but certainly our consumers are driven with the priority on convenience, and one of the reasons the online marketing purchase of eyewear is so appealing is its convenience, and oftentimes it's not a price issue as much as it is a convenience issue and assortment and selection. So one of the things that we focus on is to make sure that our retail dispensary that's what we call the retail store aspect of a practice is well inventoried with product and assortment price points, and then the ultimate differentiation is customer service and knowledgeable people, and so if you have selection pricing and knowledgeable people, it's a home run and you don't have to worry about it, because if you can make it convenient for them, then they're not tempted to go online. And because there's a lot of I don't know if you've ever bought a pair of shoes online, but all you need to do is have one bad experience with that and have to turn around, send them back and so forth and so on that people would really prefer to get it locally, where I got my, where they received their exam, and it's kind of hours to lose. So we try to make sure we don't give them a reason to leave. Chris: Yeah Well, it's an interesting analogy with the shoes, because I can relate to that and see that people like to try on shoes but also glasses right. John: What are these going to look? Chris: like, and if you're at a store with a good selection, it's all right there as opposed to ordering one or two online and knowing you're going to be returning something. Advert Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at BoyerMillercom, and thanks for listening to the show. That's right, yes, well, that's it. So let's shift now kind of to this physician member network. What do you look for, if anything, as far as qualifying people to come into the brand, and then how do you help, kind of manage and support once they're in the network, if you will, to make sure that you're doing all you can to help them be successful? John: It's an interesting change we're seeing right now, especially in the last five to 10 years, and that is, the number of young optometrists who have an interest in owning their own practice is going away. Chris: It's really an interesting thing. John: One. It's very similar to what's going on in healthcare in general. You know, I was just talking to some people last week and I said you know when was the last time I asked them? I said do you have children? Yes, do you have a pediatrician? Yes, is that pediatrician private practice? Chris: No. John: It's owned by some big organization like Texas Children's, and what you're seeing in healthcare delivery at the provider level is a consolidation of these organizations and the disappearing of private practice, and we're seeing that now in optometry. And another big dynamic is 85% of all optometry graduates today are female, and in the 80s that number was just the opposite. It was very unusual in the 80s and early 90s to see women in optometry school. I mean they certainly didn't represent the majority. And so with that comes different priorities of practice. You know you don't have the hard-charging young guy who wants to go into small-town Texas and really build up a big practice or even a metro area. You have people that are much more interested in part-time, that I want to be able to step aside, raise my family, then maybe come back later, and so there's a whole different culture among the providers now coming in. So our organization as a business model relies on young optometrists wanting to own their own practice, and if that category is declining we've got to come up with some other plan here to maintain Sure. So one the opportunities we have are less. The vetting process is largely a discussion with very successful people. Our board of directors consists of nine doctors and three outside directors, but the nine doctors are all very successful. And so a young person does approach me and we talk, I want them to speak to one of our successful guys, and then their job is to kind of assess and come back to me and say, John, I don't know if she's ready, I don't know if he can do this, or I think this is a home run, let's go. And with their input and my discussion I've been doing it now long enough that I kind of get a feel for it Then we'll say let's go. And really it's a matter of they own everything. It's a matter of us guiding them through the process and then supporting them with just the knowledge they don't have about building a practice afterwards, and then lots of follow-up and hand-holding. Chris: And it's done. I think you said just as, basically a license agreement where they're licensing the name and brand and they get some support as a result of that as well. John: I mean contractually, I'm not obligated to support anything. Contractually I'm not obligated to support anything. All I'm obligated to do is to keep the value of the brand consistent with what they're paying for it. But I realized that if they're not successful, my brand value suffers. So we do all that we can to support them and help them be successful. Chris: So let's talk a little bit about your internal team. I mean, you've got a team I think you said 12, that's kind of help support you, that support these members. What have you found to be successful as you've gone through maybe trials and tribulations of hiring the right people, making sure you've got the right people in the right seat to kind of support the business and the brand? John: You know, that's a great question, because I, up until about 2015, I took a whole different approach to personnel than I did 2015 and on, and it was like I learned something, and that is I put together a group of really knowledgeable people in terms of their expertise in certain areas, but the quality that I had not paid attention to prior to that was they also had to be connectors. They had to be the kind of people that could say hey, chris, I know somebody you ought to talk to. And so because when a non-doctor walks into a doctor's office, even with the responsibility of helping, they carry a different level of credibility with that doctor than if a doctor told them something. If we go in and say, hey, listen, you need to be open Saturdays, because there's a lot of business on Saturdays, I don't want to do it. But if a doctor tells them, oh man, you got to be open Saturday, they'll listen to it. But if a doctor tells them, oh man, you've got to be open Saturday, they'll listen to it. And so our guys who are in the field, they do tactical training and support for staff, but when a doctor is facing an issue that they know the answer to, they in turn, seek out other leadership in the doctor community to say would you mind giving so-and-so a call Because I think you could help them get through whatever issue they're dealing with. And so that quality and frankly it's, you know it requires someone who doesn't have much of an ego. Sure, because you know I say this all the time like my old friend Ronald Reagan used to say, there's no limit to what you can accomplish if you don't care who gets the credit. Chris: Yeah. John: And so we take that approach, and ours isn't about trying to get a bunch of credit. Ours is about trying to lift up this organization and get these guys successful, and if we're simply a facilitator in information to how to do that, we don't have to be the initial provider of that information. Even if we know it, it comes much better from a colleague, and so that's one of the things that we put a lot of emphasis on is helping the network, help each other. Chris: So you know you were very quick to say 2015. Have you seen a dramatic improvement in the performance of the overall business since making that change and kind of focusing on the connector quality as being an additional important quality in the people you bring on? John: Very much so, because what Texas State Optical was in the beginning was a doctor-owned organization and doctors working with other doctors to help them grow a network and large business. We're trying to replicate that from the standpoint of, especially as the business, the structure we use I mentioned earlier as a cooperative. It requires doctor leadership to be active and engaged in running their own company, their owners of the company, and so, while I have certainly an important role in that, the more doctors that engage in the leadership of the organization, the better it is overall. And since we took that intentional effort in 2015, a couple of things too. We had a kind of an evolution of membership. I mean, we had a lot of our older doctors retire and sell practices, and then we had a whole influx of young doctors, and so we ended up in 2015 with an organization that was significantly different demographically, both age and gender. That was significantly different demographically, both age and gender. But we thought they need mentorship among the leadership in the organization, and so we worked at creating that for them, and it impacts not just clinical I mean, there's also that aspect of it they're learning clinically from friends but operationally, and so it made a big difference Very good. Chris: I know that you have supply agreements with certain labs and other things. Let's talk about some of the things that you found to be successful in maintaining, I guess, forming those kind of key strategic relationships for the business, and maybe some of the things you do to make sure that you foster and keep them strong of the things you do to make sure that you foster and keep them strong. John: Well, in the vendor-doctor community there is a kind of an assumption made by both sides, and one is the doctor assumes that the vendor's got more money than they know how to spend or what they've got all this money to spend, and the vendor assumes the doctor's not going to follow through on all the promises they make. So that's kind of where we start at the table, and so I think it's important and what we've worked at bringing to our relationships is mutual accountability, and we have found our vendor partners to be extremely invested in our success, but at the same time they've got a business to run as well, and so our success with them and that dynamic of that exchange or relationship cannot be at the vendor's expense. It's gotta be the classic cliche win type of thing, but you only get win if you have mutual accountability. And so in every agreement we have, here's what the vendor commits to and here's what the doctor community commits to. And then we have business reviews where we sit down and say here's where we're dropping the ball or here's where you're dropping the ball, and we hold that accountability does a long goes a long way to not only making the relationship productive but also building trust and longevity into those partnerships, because if you're making money with a partner, you don't want it to stop, right, you know? And that goes both ways If you're a doctor making money with a partner, you don't want it to stop, and if money with a partner, you don't want it to stop, and if you're a partner, you don't want to stop. So I found that type of mutual accountability and the willingness to be held accountable is critical to those relationships Very good. Chris: So you know. Talk a little bit about leadership. You've been running this organization for a long time now. How would you describe your leadership style and how do you think that's evolved over time? John: well, I would. I don't know if I've ever been asked to describe it, but I would say it's Maxwellian. Okay, and that means John C Maxwell, who is an author, has written a number of books on leadership and, in my opinion, probably is the most the best leadership author. I'm biased, of course, but I think he is. Forbes Magazine said that a few years ago, but basically his definition of leadership is influence. Nothing more, nothing less. It's just influence. And an example of that is if you walk into a room of people, you're naturally going to notice someone who's exercising influence on others, and it isn't an authoritarian way, it's in a trust and credibility way. And so if you're influencing, you're leading. If you're not, it doesn no matter what title you have. So an example is my when I explained how we use doctors to help influence other doctors. So that's a level of influence that doesn't come because I require somebody to do something. It it occurs because you're able to influence others to to make a difference. So I would. I'm a big believer in that. I'll plug his book. There are 21 Irrefutable Laws of Leadership. It's a classic, and so that's like a Bible. It's my business Bible in terms of leadership style. Chris: I was going to use that word because others and it's fair to plug books, because sometimes I ask people what's a book you would recommend. We hear a lot of good to great from people Sure, jim Collins. But what I love what you said if you're influencing, you're leading, because I say a lot of times a true leader leads without a title. John: Right, you're actually doing things without the title to demonstrate leadership, which is what you're talking about Exactly, and if you do have the title and can influence, it's a home run. It's a home run, yeah. Chris: So you've learned that through lots of trials and tribulations. I think we all learn through mistakes or setbacks Anything you could share with the listeners about a decision made that didn't go the way you thought but you learned from it and that learning kind of catapulted you made you better because of it. Setback, failure whatever word you want to describe Anything you could you care to share in that realm. John: Sure the. So I came to Houston. I was born and raised in Western Kansas and I was in Wichita born and raised in western Kansas, and I was in Wichita, kansas, in 1989, excuse me, in the late 80s, 84, 89 era and I was working for a large ophthalmology practice up there as a marketing administrator and in that role I attended a lot of national meetings in ophthalmology and during that meeting I met an owner of a large Houston ophthalmology and during that meeting I met an owner of a large Houston ophthalmology group who ended up offering me a job and I came to Texas. Due to some marketing challenges we were facing at that practice, I was introduced to Texas State Optical while I was at that practice and then left after about four years, left that practice and went to a consumer research firm here in Stafford and quickly turned around and went to Texas State Optical to see if they would like to buy some insurance I'm not insurance, buy some research and they did so. I ended up doing this large project for them but also ended up doing a ton of work for HLMP. During the time they were prepared to try to go to battle with Enron and this was like early nineties, right, and so everything was going well. And then I get fired from the research thing. Now I moved my family down from Kansas. I've been in the state about five and a half years and I get fired. I've been in the state about five and a half years and I get fired. And that was a big you know. Anytime you've been fired, that kind of devastates you Right, it shakes you up. Chris: Yeah, it does. John: But had that not happened, I wouldn't be doing what I'm doing Right, and so I have learned, and what pulled me through that is faith, Faith in God and faith in myself is faith, faith in God and faith in myself, and I felt like I can do, kind of what. There was a part of it, chris, that was liberating, because that was like, instead of thinking now what am I going to do, I was thinking now what am I going to do. I mean, it was a whole different frame of attitude and that subsequently ended up leading to the position I have today, through working with franchisees at Texas State Optical and so forth. Chris: That's a great story. Thank you for sharing. You bet A lot of people don't want to talk about, especially if they've been fired for something. But to your point on that, these other opportunities would have never presented themselves right, because you likely stayed in the comfort of the job and seeing where that takes you. You know there's so much that can come. John: Actually, I'd gone to that research firm. The owner of it had brought me there with the promise implied I mean not implied, but it wasn't in writing but the idea was that I would take over that firm at some point and it turned out that didn't work out Well you know a lot of what you, I think, describe. Chris: The undertone to that is the mindset you had in the wake of that setback. You know you didn't let it take you down. You're like like you said what am I going to go? Do I got all these opportunities and go? Explore and figure it out. John: So I had about 30 days before the next house payment came, so that you were acting quick, got to be decisive man. Chris: You can't be stewing on decisions forever, for sure, well, that and so you know that leadership, you know is forged and helped you get to where you are today. You know, when you, when you think about applying that mindset and that leadership kind of style, how does it help you kind of navigate the ups and downs of the economic cycles that we've experienced over the last 20 plus years? John: Well, you know, first of all is to understand which of these cycles are cyclical. That's a little redundant, but I mean, what is it we're going through that's cyclical. That you can. You know, business loves a stable and predictable environment. Right Now, the reality is it's ups and downs. But if it's ups and downs within a certain range of up and down, it's stable right, and you can prepare for it Certain tolerances right, yeah certain tolerances. What we've seen, not only in the economy and that's a whole different issue but what we've seen in the profession itself and the consolidation of private practice by private equity that's come into the marketplace, is we're seeing disruption like we haven't seen before. And I was talking to one of our board members doctor board members about it and we were just, you know, he was pointing out all of the things that are kind of out without from under excuse me, out of our control, and as we were talking about it, I had this thought and I told him. I said it's a great time to be alive and that because we're the ones that get to go through this, and in many ways I believe that our profession is going through a transformation that will take probably a 20 year period of time. But 40 years from now, optometry, I don't think, will look anything like it does today, and it's always bumpy to be in the middle of that turbulent transformation. The 80s were very steady, the 90s were pretty steady. It was in starting about 2010, 2000, that things started rapidly changing and then the acceleration with just technology and everything else is just gone, and then you've got now the whole world of artificial intelligence coming into play and it's. I consider it exciting, invigorating, challenging, but I mean what's? The alternative is to be bored right. Chris: Well, if you don't adopt and if you're not using it, you die use it you die, that's right. So I mean, you know, kind of it's a great segue to what are some of the things you do to kind of foster that maybe innovative mindset of how you're going to embrace the technological changes and use them in the business model to further the brand and the business. John: So I there's very little I can do without the support of the doctor, owner, community right. And sometimes there's a lot of indecision, because when you're not sure what to do, you're scared of doing the wrong thing. Chris: Sure, Well, it seems like you got a lot of opinions that out there too, right? John: You got a lot of them, and so what I have to do is to influence them through other people and through information, to get them to a point of being open enough to consider ideas that they might consider kind of sacrilege in some case. For instance, what is real common in most optometry practices today is what's called an autorefractor. It's a machine that people go through and it gives you a prescription, and the prescription is used by the doctor to zero in on where your visual acuity is right. Well, when that first came out, optometrists thought that was the end of the profession. Here's a machine that'll do what I'm doing. Optometrists thought that was the end of the profession. Here's a machine that'll do what I'm doing. And so there's a fear oftentimes of innovation. Right, that you have to assure people that there's a way to use this to our benefit, and that's what we're going through with artificial intelligence right now. One group is scared to death. It's going to replace them. The other group is glad they're old enough, they're probably not going to have to go through with it. And then you're looking for those people who say, hey, how can we utilize this to really to our benefit? Yeah, and once people feel that's safe enough to kind of try. Then the people realize that the fear is misplaced. Chris: So true, right, but it takes education, information and influence, as you said, to get people to get there so that they can adopt it One of the things that I teach my team to say. John: I mean to believe, and I say it all the time is we believe in everybody's right to make a bad decision. So if someone listens to us and they choose not to do what we're recommending and we know it's a good decision what we're recommending and they choose not to, it's their right. You know, I mean everybody's right to waste their own money. So that kind of patience is necessary with a group like ours. In many ways it's like working with a volunteer organization. Chris: Yeah, well, lots of challenges there, I'm sure. Well, john, this has been a great conversation. I really appreciate you sharing everything I want to ask you, I guess, going back to your days, you know, I guess growing up in Kansas what was your first job? John: A drugstore Rexall drugstore and I grew up in a town of 2000 people and my dad was the family physician of the community and so of course in a town like that in western Kansas the doctor and the pharmacist are close relationship. And so I got my first job at a drugstore, working a soda fountain, delivering prescriptions, restocking things. Like that had a blast and that really I learned a lot in that, not just like everybody learns a lot from their first job, but understanding. I was intrigued by Rexall. I don't know how familiar you are with Rexall, but Rexall was a national organization that gave private ownership of drugstores the purchasing power of a large corporate chain, and so my employer was the pharmacist. He owned the drug store and he stood up in the stand in the dais every day counting pills and chatting with people. So that was my first job. Chris: Very good. Well, you've been in Texas now since what the late? John: 80s. Chris: So do you prefer Tex-Mex or barbecue Barbecue? Okay. John: Barbecue Very good. My waistline prefers barbecue. Chris: And last thing if you could take a 30-day sabbatical, where would you go and what would you do? I don't know, Probably nuts. John: I just I've got to be engaged and I mean I don't have to be. I'm not select. I love business and I love the challenge it has. So I'm not I don't. You said earlier in our discussion about you were describing about the law firm. When I was doing consumer research, I did some healthcare work 12 Oaks Hospital was a client and so but I would tell people, is I specialize in a process, not an industry, because the process is the same and I would say that's what I really love about business, because when you boil it down to what I do and what you do and others that run businesses, it's the same process. It's understanding your customer and then directing how your services or products benefit that customer and communicating and the whole marketing scheme of promotion, price, product and place applies to every industry. And so I'd probably do something if I had 30 days. Like I said, I'd go nuts. Chris: Well, but I think what you just said there in the end is you have great insight and learning for business owners and entrepreneurs out there. You're trying to find their way. It's it is figure out what the consumer that you're catering to really wants and then deliver that as efficient as best

In this episode of the Building Texas Business Podcast, I interview Kelly Young, CEO of the Coalition for the Homeless in Houston. We explore how Houston has become a national model for reducing homelessness through data-driven strategies and collaborative efforts. Kelly shares insights on effective nonprofit leadership, emphasizing the importance of building solid and accountable teams and fostering diverse thinking. We discuss the critical need for sustainable funding in homeless response systems, moving away from reliance on sporadic disaster funding. Throughout our conversation, we delve into Houston's successes and the ongoing challenges in addressing homelessness. -- SHOW HIGHLIGHTS Chris introduces Kelly Young, CEO of the Coalition for the Homeless in Houston, discussing the organization's role in coordinating the Way Home system.Kelly describes her journey from providing direct services to adopting a systems-thinking approach, emphasizing the importance of data-driven strategies and compliance in managing federal funds.We discuss the structure of the Coalition, including key departments like finance, compliance, outreach, landlord engagement, and housing, as well as its unique position working between city and county governments.Kelly shares insights on building strong, accountable teams in nonprofit leadership, balancing visionary goals with improvisational strategies, and fostering an environment where diverse thinking thrives.We explore the significance of clear communication, especially for introverted thinkers, and the importance of acknowledging mistakes openly to build trust and strengthen teams.Kelly highlights the critical need for sustainable homeless response system funding, discussing the inadequacies of relying on sporadic disaster funding and the necessity of evolving data to better serve those still on the streets.We delve into the business rationale for investing in homeless response systems, emphasizing that it's a financially sound decision that ultimately reduces costs on public health and other services.Kelly explains the success of Houston's model for reducing homelessness, including the collaborative efforts among for-profit, non-profit, and public entities, and the innovative use of disaster funds from Hurricane Harvey and COVID.We address the importance of community engagement and understanding how systems work, as well as addressing severe mental illness and substance abuse issues more effectively.Kelly shares leadership lessons learned through experience, including the importance of passion, data integrity, personal and professional integrity in communication, and fostering a culture of risk-taking and growth. LINKSShow Notes Previous Episodes About BoyarMiller About CFTHhouston GUESTS Kelly YoungAbout Kelly TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Kelly Young, CEO of the Coalition for the Homeless in Houston. Kelly shares several great tips for leaders, including the value of direct communication. She also sheds light on the homeless response system and why Houston is leading the country in reducing homelessness in our community. Kelly, I want to thank you for taking the time to come on Building Texas Business. It's great to see you. Kelly: Lovely to see you and thank you for inviting me. Chris: So you are the CEO of the Coalition for the Homeless in Houston, and so a little bit different guest than normal, but not outside the box for us. Tell us what the Coalition for the Homeless is and what it does. So. Kelly: I like to think of the Coalition for the Homeless is and what it does. So I like to think of the Coalition for the Homeless as a coordinating body over what we call the Way Home, which is a collective of for-profit or non-profit and public entities that come together to resolve the issue of homelessness. Chris: Very good. So how did you get involved in the homeless response system, how long have you been involved and what really inspired you to do this? Kelly: I've actually been interested in helping people figure out better lives for themselves since I was like 12. I mean, I was what was called a people tutor when I was in a middle school, where I actually helped individuals with physical disabilities learn sports. And then I did some tutoring in high school and then I started working in a shelter for abused kids and I worked with kids who were coming out of psychiatric units. Then I worked in domestic and sexual violence. So I think I was always on a path to be a part of something that helped make other people's lives easier for them to be successful. When you do a lot of that direct work, you see the individual impact and the individual failures. When you get to do it on a systems level, you get to decide whether a system will be helpful in helping someone or whether it's setting up people for failure. So I've been in the Way Home system for about 12 years as an individual agency that helped provide direct services. But I'm actually a systems thinker by nature and so I kept going well, why doesn't this work and why doesn't this work? And the whole system here works. My job was to help it work better. So you know, like with any system or any business, you're constantly thinking about the future and what needs to change and what's going to be different coming up, and so I got the perfect opportunity to come in at a time when there is a major shift in many of the pillars of how the work is done, and I get to help design what that's going to look like, and that, to me, is the purpose of work. Chris: Love it. That's great. So, just to give our listeners maybe some context, let's just talk about the size of the organization, the coalition itself and maybe then, and maybe then, the system, participants and members, so they get an idea of what it is, that the organization is that you're running, as well as a system that you're trying to help manage and, as you said, get better and be more successful. Kelly: Well, I think, like any business, we are well-structured in terms of having enough staff to do the things that are core to our business model, and a couple of those things is we have a heavy compliance and finance department. We are nonprofits, are tax status not our business model, and we think of finance and compliance as sort of the heart of the organization. It pumps the blood through because we manage and help support almost 23 million to $40 million with a federal funding which requires us to follow lots of rules and regulation and make sure it's done correctly, not just for us, but also for our partners. We will provide certain types of services if we think that from a systems perspective, it makes sense to have an overlay. So we have an outreach team, we have a landlord engagement team and I can go more into depth about that when I talk about the system and then we have a housing team and those are really to bolster the system, not to replace the system in those jobs. And then we have this second largest department, which is really our data. We're a data-driven organization. 12 years ago, the coalition made a major shift, which was to use data to drive the construct of how the community actually resolves homelessness or deals with homelessness in the community and in that data. What we did was build out our 100 partners who have to agree to be a part of the database and include all that information but also follow some of our guidelines around standards, so that we can bring more and more money in from the federal government but also provide much better services and a quicker response to somebody who falls into homelessness. Chris: Okay, so, and at the coalition, what is it? Roughly 80-ish, I think, employees. Kelly: Yes, we're at 80. And I think we're also unique because we sit between the county and the city. We are trying to manage both of their expectations around homelessness. So sometimes people think of us as quasi-government. We are not. We are a nonprofit. But we sit there so that we can meter both sides what the county and the city wants and they don't have to be trying to work that through. So we always find the best solution for both Harris County, montgomery County and Fort Bend, and then the city of Houston Very good. Chris: So yeah, let's talk a little bit about the system. You know some people may be aware I think you know a lot aren't but just the success of Houston and how Houston has become the model for the country on addressing homelessness, reducing homelessness in our community. You know a lot's been written, most recently about the Houston Chronicle a little over a year ago, new York Times. You know you've been involved and interviewed in those things. Share a little bit for people to kind of understand how successful Houston's been to date. And of course, we can talk more later about the challenges we still face. Kelly: Yeah, I mean, I think one of the things and again, any good business person or anybody who's looking to innovate understands that you first have to know the problem you have and then understand how you want to solve that problem, and for what I think the system did really well over the last 12 years is to build out the right system mechanisms and then the right interventions to use our money to the fullest extent. So what most people don't understand is that for the homeless response system which we oversee, that is mainly funded by federal dollars and so we are under federal guidelines on how we do that, which means we actually cannot interact or help somebody until they are currently on the street and in that then we have to be able to place them in other places, including permanent supportive housing, which is for somebody with a documented disability who's been on the street for a long time. They still will pay part of their rent out of their disability dollars, but we give them a subsidized apartment and appointments to kind of get off the street and going again. I think the other piece that people don't understand is that we only have two systems. We only have rapid rehousing or permanent supportive housing. So our options are very limited, which means you have to be incredibly smart and innovative about how you engage not only the community, the people who need the service, but then the service delivery when we have taken advantage of, which I think is true in Houston. Why I love this city so much is we take disasters and turn them into determination, and so we took both the Hurricane Harvey and COVID and use those additional dollars to build out enough of a safety net, but then also a permanent place for people to live, that we were able to move over the last 11 years, 30,000 people off the street. We reduced homelessness by 60% and I know people are like, well, but I see people on the street, Absolutely, but you don't see the ones we placed in the housing and who moved on with their lives because they're gone. They're doing their lives. Chris: The thing people I think should know is and you can share some details but you know and we know from the research and the data that A lot of what's at the streetlight, those aren't homeless people. Kelly: Right. We also have an issue with people living below the poverty line. So United Way points out and rightfully so, that 40% of the individuals in Houston are $400 away from catastrophe and that means we have a lot of people living on the edge. So if you're unable to get a job or you're unable to work full time, you might see people who are out panhandling to get a job, or you're unable to work full-time, you might see people who are out panhandling. There's also people who take advantage of people who are in those situations and use that as their own mechanism to make money, because they actually place people there and then collect some of their money so that they could go stay in their shelter. So it's an interesting world when you actually find out what's going on in your street corners. Chris: Right, right. Well, I love that Obviously very close to this issue and the system, and so I think it's great to be able to tout the success we're having, as well as you know the challenges we face. You know people talk about the goal of ending homelessness and I love the kind of the phrase that's been adopted is making it rare, brief and non-reoccurring, because, as you said, so many people are living right on the edge. People are going to something's going to happen, people are going to end up homeless, but the question is is there a system there that can rapidly get them into housing and the supportive services they need to recorrect? Kelly: Yeah, absolutely, and I think the important piece of this is looking at equilibrium. So what you want, I don't need to have a lot of additional dollars that are sitting there waiting to do something. I need just-in-time dollars. I need to know that if a downturn has happened in the economy, if there's something happening on the street, return you know, in terms of people falling more readily into homelessness, rents have gone up something else has happened. I want to be able to bolster that very quickly so I can move those individuals off the street within 30 to 45 days. That reduces not only the trauma on that individual but it reduces the trauma on the community and as a community member myself I mean, I live in Midtown, so I often see a lot of individuals I've known for a long time to be on the street and you know what I don't want people to do is to get to the point where they don't care about those individuals anymore because it's disrupting their community. So equilibrium not only benefits the individual, who is facing a really difficult time, and moving them on quickly so it's a blip in their life, not an extension of their life and then also for the community to be able to stay in that caring and compassionate place so that they'll get involved and stay involved in the work of our unhoused neighbors and friends and, quite honestly, brothers and sisters. Chris: So let's turn the page a little bit and talk about you know you came into this organization at the beginning of 2024. Let's talk about what it's like to, you know, step in as a CEO, a new CEO into an organization and some of the how you approach that from a mindset, because I would think you know some of our listeners may find themselves there, may be experiencing it as well. So what was the mindset you kind of took in to make it a smooth transition and so that one you could honor what's been, what was being done by the you know, maybe previous CEO, but you know, make a smooth transition and find a way to put your own mark on the organization moving forward. Kelly: I think one of the best things people can do is first lie to themselves and then tell their truth. The lie you tell yourself is that you know everything's going to change and you list it out and you ready yourself for that. Intellectually, I do think where you probably need to tell your truth is that change is complicated and hard. I think sometimes, when you're in a leadership role, you want to reframe things for other people so that it's easy for them to understand and maybe to jump on board, but you yourself know it's difficult. I mean when you know the financial picture is going to change, the model is going to change, the people are going to change, and those were all true for us. That list sounds great and easy, but it is a constant attention to each small move that you're making and what the long-term impact is. I always describe strategy as visionary and improvisational and I think that's a good balance and that's how I've been able to translate what I think needs to happen in an organization. I mean, obviously you're listening, you know the pillars have sort of changed. You're listening to other people, you're absorbing other people, but I also come in and I'm really clear about how I work and what my accomplishment looks like and how success looks to me, and I drive that home in every single meeting. So people learn to trust that what I'm saying is true. When I make a mistake, I tell everybody straight up. I'm you know it's not falling on my sword. I just think it's important to model that. I think one thing is, for some of us who are more introverted thinkers, one of the hardest things to learn to do is how to over-commun messaging to people. Chris: Because I do so much of it in my head, I have to remember to actually put words to it well, and I mean yeah, go ahead obviously not the right, but I mean I can relate to that because you not only that, there's so many things going on in your brain, right, and you're you like. I just completed this, I got to get to the next thing and it's finding that time to either stop and slow down and communicate before you move on or, you know, remember at some point you need to stop and let people know what's going on through those ears. Advert Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom and thanks for listening to the show. Kelly: Yeah, I always call it the Kelly Young madness or the Kelly Young magic, because it's like some people are good at waiting to see what's going to happen. Other people are like I have no idea what she's doing and we're just going to hope this all works out. And it's my responsibility as a leader to alleviate both of those misunderstandings. Right, because I need people engaged in the process. I'm a big believer that right buck stops with me. I'm going to make the final decision, but very rarely is the final decision my decision. It's everybody else's input. I'll take the accountability, I'll be the one who pushes it through. But if I don't have the buy-in from the group and they can't be settled in some agreement, especially when you're changing from something that has run successfully for a very long time and all the conditions changed and change and you have to let people know it's not, we're not changing because you did something wrong. We're changing because it's time to move forward. That kind of reframing I think is extremely helpful and that stuff. You should know what you're going to say and how you're going to lay that out to your team before you start day one. Chris: Very good. So, speaking of team obviously you just said this in one of your responses that is, while the buck stops with you, you make the final decision. It's rarely your decision. That's because you have a team around you, right, and you're relying on them and you're pushing them, all those things. So let's talk about building a solid team around you. What are some of the things that you look for? Again, this isn't your first time to be CEO of an organization, so I know you've built teams more than once. Let's talk a little bit about that. What are some of the things you look for in the hiring process, in the evaluation of the people that you have when you take over? I think there's a lot that could be learned from that. Kelly: I'm one of those people. I'm a little super nerdy this way and I learned a decision-making model a long time ago called the seven hats, and the idea behind it is that each person at the table wears a different hat, and so you have somebody who's the white hat, which is the emotional and red hat, and they're the naysayer. And as much as I'd rather have everybody just do what I want and like me and do all that. I also know that's a terrible way to run anything, so I work really hard at actually having very different ways of thinking at a leadership level. Sometimes that causes more conflict or contrast in the way we resolve an issue, but I expect people to come and learn professional communication skills, and if you can't, you should go back to school or learn a YouTube. I don't care, because the purpose should be. I need you to be here for what we're here for. I don't like a lot of internal nonsense. I don't like us spending a bunch of time on stuff that doesn't matter, because the kind of work I've always done meant somebody did not get out of a domestic violence situation because we were spending time arguing about who left the coffee pot on. You know I walk past somebody who's on the street who needs to get housed. I don't want to sitting around arguing because somebody thought somebody was rude one day. Like that just can't be in the workplace. I get why it is, but I want people who come ready to do work and actually can define what work means to them. The second thing is always happens in this field. I just want to help people and that to me, is the death nail answer, because my answer, my question back to you is going to be what does that mean and how does that look? Because you wanting to help people doesn't have very much to do with actually serving people. Those are two very different concepts. So I also am very clear about the environment that I want at work and you have a choice Don't sign up and then come in and want to change it, add to it, make it better. But I'm not going to adjust what I think has to happen in an organization to go to the next level, because I typically have taken jobs where I'm right in the middle of a major change and I do know what needs to be functionally happening on a regular basis to make that shift. Chris: So you know that's very insightful and you know the core of what I think you're saying. If you boil it down, is it comes back to very clear, direct communication, setting expectations, et cetera, and then holding people accountable. All of that then leads to culture when you're building these teams. If you think about what you've done in the last nine months at the coalition, how would you describe the culture that you're striving for, that you feel like you have? You know, growing there. Kelly: I have a speech I used to call the mean speech I never thought it was mean, but somebody had called it where I lay out what I learned over the time of my working, in the time that I made some really serious mistakes, and what I learned from those and how they need to interpret that into their new work environment. And so with that, I think what happens in the culture is they actually see me living the story I told and I bring it up over and over again in different pieces. I think storytelling is important for that reason, but I show them what I did that didn't work, so that they have a clear understanding of what I learned from what I didn't do or what I did wrong. So they understand that this is a learning environment, that part of your responsibility is to be curious and to want to understand how to do things better or differently. If you come in and you say to me well, you know, I just need the training and I need this, you will not last well in my organizations, because I expect that you're more interested than that. You have to want to care about data. Data is most important, particularly in nonprofits, because you are telling the future of how most federal dollars are going to be spent in your case notes or in your reports. I talk a lot about gossip and that you can't stop it, but you have a personal and professional integrity line in how you communicate account. You know, for me I run it this way, which is every single dollar that comes in here is somebody else's dollar and somebody else's money, and so there's very little room to make major mistakes or to waste, because that's your money that you're wasting. And if we cannot do it the best, if we cannot show up in ways that people expect, then we should give that money to somebody else. And I tell people don't be miserable. If you don't like working here, you don't like the here, you don't like the work, you don't like the commute, you don't like any of that stuff, oh my gosh, why are you spending your life doing something you don't like Like? Go be happy. Chris: That's so true, right? I mean I think we talk about it. I know in our organization is, if you don't connect with our mission and our passion, it's okay. You know it doesn't make you a bad person, it just means there's a different organization for you where you're going to be happier. And then you should go find that, because we want the people that if they connect with that mission and passion of our organization, then they're going to be living their best self, which opens them up to serve our clients and each other to their fullest potential. Right. Kelly: And I also think we try to be very or I've always tried to be. I'm not interested in telling you how to do your job because you don't want kelly young's opinion of how to do your job. You want your own opinion. I hired somebody who's smart and talented and knows how to do that and you don't want my limited vision of that. But when people also say, well, I don't like to be micromanaged, I'm like, well, I'd be interested in why people feel like they have to micromanage you. So if you are showing up to work and over-communicating and letting people know, I shouldn't have to do that, but I will if you're not able to do that, because I still need to know what's happening. So I often turn some of those things that people say back on them, just so a little self-awareness, and help them understand, because you will not like working for a CEO who will say, who will call you and be like, why does this number not match this number? And it's not because I don't trust you, it's that I need the number to make sense, because I'm about to go tell a bunch of people this number. So it's interesting. I actually really love building culture. I think I do a good job of creating enough openness that people feel like they can participate if they choose to. Chris: Well, you know, one of the things I think has been written a lot about and it's hard, it's a hard skill for some leaders to get to, but you learn so much by, rather than telling is asking questions. And you know, like you said, turn it around on them and ask the questions and then, a lot of times, as they are forced to answer those questions, they realize where to go. Kelly: Yeah, and it's funny because there's a new book out by the gentleman who wrote Sapiens and his new book is called Nexus and I heard him in an interview and I thought this was really interesting because I do think this is an issue with the workplace and maybe some generational conflict. He talks about information and not that. This is new. Talks about information and not. This is new. But information is not truth and part of the problem is that we tend to try to over inform and over educate to get to truth and neither one of those things will actually get you there, because truth is costly, it takes time, it takes energy and I do think we're in an overload of informing people as though that will change or grow somebody's understanding, when really all it did was add more information, not deeper truth. So, you know, I just find that a fascinating and I thought about it in terms of work we do, because I think one of the things the coalition has always done has been a truth teller and in that truth telling right now we're in huge inundation of information because we're going through a lot of change. How do we settle back into our truth? Chris: Interesting, yeah, okay, so you mentioned this and what I can't wait to hear more about. May not have time on this podcast, but your mean speech. You talked about the mistakes and sharing mistakes you made in the learning. And you know, I don't know if you listened to one of these before, but I love asking people you know, tell us about a setback, a mistake you made, but then how you learn from it. Right, and I think you know to your point, when you share those stories with the people in your organization, it humanizes you and allows for that culture of learning, take risk and it's okay to fail, because that's how we learn and get better. So let's you know, can you share an example that either comes out of the mean speech or something else? You know a Kelly Young mistake and how it made Kelly Young better? Kelly: Yeah, and this one was interesting and I think it sort of aligns in particular with people who work directly with people and I was a very benevolent leader at one point. So this is much more of a self-awareness mistake than an actual business mistake, but I think it's important and I was. It's all about, you know, serving, you know, women. Everybody had on their desk, on their computers what did I do today to end domestic or sexual violence? And I was all gung-ho and and I, you know, I was there for the work and, as I said, and we got a new CEO and I thought that I should have been tapped for the CEO position and nobody asked me. And so I was very self-righteous in my understanding of, first of all, well, if you don't let anybody know you're interested, they probably won't ask you. But second of all, just because you've done this job doesn't mean you're actually ready to do that job. And so I was awful. I mean I was awful for about six weeks and I made everybody hear my pain and how hard it was on me and all this kind of stuff. The hardest lesson to learn in all that was that for all my bravado and my great messaging and whatnot, I really wasn't there for the mission in that moment. I was really there for my ego. And if we are not self-aware enough to understand when you are using ego to sell people on a version of yourself that you think will make them like you better or follow you better, but it's not true because you haven't done enough self-work, I spent six weeks wasting time, I mean, and I find I left, I went and found a different job and that was the best thing for me to do. But in that one moment when you realize that you are a liar to yourself and to other people and you decide you're not going to do that anymore Best moment of my professional career, because I never made a decision ever again around benevolence or around pretending that rhetoric was more important than what I really could show up and do. So I didn't like that and I hate sharing that story because it sounds awful. I sound like a horrible human being, but I think most of us have that moment. Chris: What a powerful story. No, I mean I think to your point. I mean it doesn't make you powerful, think to your point. I mean it doesn't make you powerful, a horrible person. But that's a difficult thing for us as humans to face right, to really look in the mirror that deeply and call ourselves out and, more importantly then, actually do what it takes to change. Kelly: Yeah, and for me, what I learned is that if I really want to lead, lead it is not pretending you can't play at leading, it is a commitment. It's hard, it's lonely, it's complex and you have to build in ways where your mind just stops thinking, because I'm a little bit of an overthinker and you have to do that self-awareness all the time. You're in check, all the time when you're a leader. Chris: Yeah, everyone's watching, right. So that's, I mean, I think, to your point where basically you can't fake it. It's because so many people are watching every move, whether it's internal to your organization or external partners, you'll get exposed really fast. Kelly: Right, and then you lose their trust so they won't show up for you when you need them to and at the end of the day, whatever it is that you because I think about innovators and I have a gentleman I know who helped work on some incubation around medical devices. Well, some people are like, oh well, you work with homeless and it must be so rewarding. I'm like I actually think it'd be pretty cool to make medical devices that make people's lives better. I don't have that talent, but you know. So it doesn't really matter what is at the center of your passion and your mission. I worry when we tell people you know you fake it till you make it, because in leadership you really can't do that. You need to sit down and learn it. You need to know your truth. It goes back to that. You can inform me about all these things about being a leader, but until I know the truth about being a leader, I'm going to waste time and I'm a hyper efficiency person. So for me it's like if I can do it in two steps, I'd rather do that than 15. So I really don't faking. It would be way too easy for me to just practice all the time, so I have to not allow myself some of those, those things, cause I yeah, I'd rather be out riding my bike, only because it's only because it's been a long week. Chris: I get you, I get you. You need that release too. Finding a way to you know release as a leader is equally as important. Yes absolutely so. Let's turn the conversation back around to homelessness Talk a little bit. You know, maybe, where we are, but what the future looks like. You've mentioned a couple of times, you know, facing new challenges in this world of homeless response. Let's talk a little bit about that. I know we have, you know, world Homeless Day coming up. You know, share a little bit about that, but I just wanted you know our listeners to know a little bit about you know, maybe, how they can get involved and how they can help in this issue. Kelly: Yeah, I think you know. I think we have done such an incredible job of getting people into some type of permanent solution, so we're in decent shape there. But it was, as the Chronicle said, it's duct tape and determination. When you have to rely on funding that comes from disasters or pandemics, that is a terrible planning model and not very fiscally sound. So I think a couple of things for us. One is broadening our perspective in this phase we're kind of calling it phase four, and I think it's important to realize that systems should always have phases or pivot points, because systems die when they don't read themselves and make sure they're on the right track is kind of an overhaul of our data. What is our data telling us, but what is it, more importantly, not telling us? What do we need to know about who is still on the street? What do we need to know about our funding sources and what's available? We know that we're gonna run out of funding because of COVID by 2025. I'm going to make the argument over and over again that we are not. Homelessness used to be able to be resolved by people coming together and kind of helping a family or helping an individual. We've had so many other systems end up feeding people into homelessness, that we actually need a system response, and that includes system funding, which typically aligns with some type of consistent, regular money that's funding the system, so we never have to be out of balance again, and that's one of the things we're working on. The second is we've actually been going out and doing community mapping to help people understand community is not given, it's built. So if you want a different kind of community that you live in, you're going to have to get engaged and that's one of the ways that you can volunteer. So maybe you have a church, that you're in a neighborhood that people get fed, but the food containers and stuff get left all over the street or there's whatever. Well, you could complain about the trash, or you could complain the city doesn't pick up the trash, or you all could start a walking group. Everybody needs exercise, so you have choices in how you decide to engage in your community. I do think becoming much more aware and understanding how the system works and doesn't work resolves a lot of people's frustration about seeing somebody on the street. We also have to have much better interventions for individuals who are severely mentally ill and have substance use issues. We have housed a lot of people who apartments and appointments works really well, for we have some individuals who just cannot make good decisions to care for themselves, and we're going to have to address that and I think that's one of those things where people don't understand you said this earlier right now the way the homeless response system is set up. Chris: The federal dollars are all housing, coming from the housing side, and yet what we face and what you know, you and and your team know that we face is a very severe mental illness issue and kind of what's the hardest to serve, yet no dollars from the mental health side of the equation. Kelly: Right and certainly not at the level it needs to be in. Including residential care, additional beds and substance use is even far worse funded and I understand people are like, well, I don't want to. You know that's. People just need to figure out how to get their lives together, I agree. But you're making a choice then. You're either deciding we're not going to help somebody so they'll get where you want them to go, or you'll leave them on the street so they won't go where they're going to go. So you know again, these are choices that we are making. I am so happy to live in a city and a county that is as generous as it is. I mean, houston is one of the, I think, premier cities for the purpose of the fact that people actually care, kind, friendly, smart, innovative. I think the other piece for us is really having to get more upstream. That 40% scares me. That is devastating to a system you want to right-size or actually shrink Like. I don't want you to have me on a call 10 years from now and I've grown the homeless response system by three sizes Like somebody should fire me. That's not-. Chris: Work yourself out of a job. Kelly: Right, exactly, and so right-sizing ours, with the right amount of funding and then really pushing upstream to figure out how healthcare doesn't release people back onto the street with serious illnesses. Re-entry that's dealt with. Somebody who's hit a hard time can quickly get rehoused because we're helping for a few months. That's just being good neighbors, right. So I think that's pretty easy for people. We have a lot of work ahead of us, but I have the world's smartest team and the people who built this system and have watched over it the last 12 years. We're only gonna figure out the right and have watched over it the last 12 years. You know we're only going to figure out

In this episode of Building Texas Business, I learned how a missed home run sparked the creation of Rivalry Tech from co-founder Aaron Canopy. He conveyed the early challenges of building their platform from the ground up and initial launches at Rice University football games. Aaron discussed their pivotal strategic partnership with Aramark, which led to expansion into major league venues like the Mets, setting them up for scalable growth. I also discovered how the company used the COVID-19 pandemic to refine its software and form industry relationships. Additionally, the importance of building a dynamic culture centered around transparency, open communication, and employee empowerment was highlighted. Strategic collaborations with Comcast Business assisted in entering new verticals. Aaron provides insightful entrepreneurial lessons through strategic partnerships on values like self-funding phases, team building, and innovation. SHOW HIGHLIGHTS In this episode, I interview Aaron Knape, CEO and co-founder of Rivalry Tech, about his journey from a missed World Series home run to founding a successful food delivery technology company for sports and entertainment venues.Aaron discusses the initial inspiration for Rivalry Tech, which came when his partner, Marshall Law, missed a crucial home run while waiting in line for food during a 2017 World Series game.Aaron and Marshall, neither of whom were tech experts, navigated numerous challenges in the early days, including finding the right tech talent and building a minimum viable product with the help of Craig Zekonty, a former Rice MBA classmate.The episode explores how Rivalry Tech started at Rice University football games and eventually expanded to other venues, including a significant partnership with the New York Mets.Aaron shares how the COVID-19 pandemic allowed Rivalry Tech to focus on fortifying their software and establishing key industry relationships, ultimately positioning themselves for scalable growth.The importance of strategic partnerships is highlighted, including collaborations with Aramark and Comcast Business, which have helped Rivalry Tech expand into new verticals like healthcare and hospitality.Aaron emphasizes the significance of company culture at Rivalry Tech, which includes transparency, open communication, and fostering an environment where employees feel empowered to voice their ideas and criticisms.The episode delves into the lessons learned from strategic partnerships, including the necessity of validating customer needs before development and anticipating market trends.Aaron discusses his philosophy on hiring, emphasizing the "hire slow, fire medium fast" approach and the value of team loyalty during tough times.The episode concludes with a glimpse into Aaron's personal life, including his preference for Tex-Mex over barbecue and what he would do on a 30-day sabbatical. LINKSShow Notes Previous Episodes About BoyarMiller About Rivalry Tech GUESTS Aaron KnapeAbout Aaron TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Aaron Canopy, CEO and co-founder of Rivalry Tech. Aaron tells a fascinating story about how missing a home run during the World Series led to he and his partner creating a successful technology company in the food delivery industry. Aaron, thanks again for taking time. Welcome to Building Texas Business. Aaron: Yeah, great to be here. Thanks for having me, Chris so let's talk about Rival would use to order the food. And it's our software and it's our hardware that's back in the kitchen, that lets the people back there get that food out faster. So, known for sports and entertainment, we're now in healthcare, fast food, restaurants, hotels, resorts, casinos, wow. Chris: So kind of like the Amazon Prime of food delivery. I think so yeah, it is, I like that. So what was the inspiration to start the company? Aaron: Yeah, so my partner Marshall Law. Actually his full name is Jesse James Marshall Law no way, no joke. Chris: Yeah, that's his real name. Aaron: Parents are comedians. They must have been. Yeah, they're awesome. But he was at Astros-Dodgers World Series back in 2017, sitting out in the left field and ran up to get a hot dog and a Coke with his two boys, and while he was up there waiting in line for 20, 25 minutes, yuli Gurriel just hits a bomb and it's right over his seats and you can go back to the highlight reel and you can see Marshall's empty seats. So he's crushed, right, he's devastated, and that's the whole reason you go to an Astros game to see moments like that. But it was even worse that it was right over his seats. So he texts me that night and says man, we've got to fix this. We've got to like why is there no app for food delivery in a stadium? And so that's when Rivalry Tech was born. Back then we called it seats, but that's when it was born. Chris: Oh, we don't, yeah. So a lot of people start companies where they see gaps in a process or something. Aaron: Yeah. Chris: But that was pretty remarkable. I mean literally leaving the stadium. He sends you a text about this. Aaron: He did and he was adamant. You know my being, you know, skeptic in general. I was like, well, either it's already being done or it's not efficient to do in a stadium. And he said, well, it's got to be done somewhere, so we're going to do it. It's going to be you and me, and he's very charismatic. So he convinced me to join up with him and we started the company a couple months later, Wow so walk us through that then what was it? Chris: you know what was it like and kind of what were the missteps taken to kind of start from scratch on this kind of idea that born out of frustration. Aaron: Yeah, yeah, you know that neither of us are tech founders, right? Neither of us are tech guys. So we had another hurdle to cross. You know, marshall had done some internet research and found you could build an app for $3,000. And we laugh to this day we look at the millions of dollars we've spent on the platform. So we might have been a little fooled into thinking it was going to be easier than it has been. But we started by, you know, trying to understand what the real need was, trying to just kind of map it out. And then we had to find a tech guy who was going to build this for us, right, because Houston's got a lot of tech talent now, a lot more than it did seven years ago when we started the company. But seven years ago it was tough and all the tech talent was being utilized by oil and gas and healthcare. You know, it's not like the West Coast where you've got a lot of talent. So we set out to find tech talent and that's where I went to. One of my old rice MBA classmates got in Craig's a canty who I knew had been a developer in his past life. He had his own successful company called Pino's Palate that he had built and grown and scaled, and so I said, hey, help me find a tech guy. And so we looked for two, three months and finally Craig comes to me and he says I found him, it's me. So great. Aaron: So Craig got back into startup life and that was probably one of the best things that happened to us, because he's very organized, very methodical and he's not just a coder, he's an architect, and so we got really lucky early on that we weren't like a typical tech startup where we're just writing code and it's kind of all thrown together. We were building enterprise grade, minimum viable product in the early days, right. So we kind of had a leg up in those early days and Craig is also co-founder, so he joined the company, really helped us get it off the ground. And then we went to work. We went to work and started out at Rice University football with our wives handing out flyers, our kids and brothers and friends were delivering the food into the stands and I was running a laptop just manually assigning orders and it was definitely a minimum viable product back at the time. But Rice had faith in us and we did them right and delivered a good first product and we learned a lot from that experience. Wow. Chris: So yeah, and it's grown from there. Aaron: We've grown from there. We then went, we got the Skeeters now the Space Cowboys to sign up with us, right, and then we had our big break. Then we got really lucky. We're building software the whole time, we're learning from Rice and Skeeters. And we had really good opportunity to be put in front of one of our old mutual friends, jamie Roots oh, sure, and president of the Texans at the time, and it was at a pitch event and it was funny. I'd never met Jamie. I didn't know him prior to this and he was sitting in my chair at my table at some point and I didn't recognize him. And I walked up to grab my bottle of water and Marshall's wife, melissa, knows him and she said, hey, aaron, this is Jamie. And I'm like, hey, what's up man? And she goes no, this is Jamie Roots. And I'm like, oh. And so we had a great 15-minute conversation and he said, man, I really like what I'm hearing. I like your ethos, I like the aggressiveness. We have an issue with the fan experience at NRG Stadium. I want you to come down and meet with Aramark and let's give it a go. So he got us into the stadium and I remember walking in and meeting with Aramark and Jamie and I won't name names. But the Aramark guy walks in the in the boardroom and he sits down and he goes mobile ordering is BS. It'll never work at scale and in stadiums. And I thought, man, we're done, yeah, we're toast. And Marshall leans across the table and says, well, that's because you're doing it wrong. So we got a kick out of that. They gave us a shot and we did well. We had a few thousand seats we were serving. We showed them that it could be done logistically, we could make money off of it and that we had a good product. So from there we started to scale and and built a really good relationship with Aramark, one we maintain to this day. And you know the sports side. We work with them at other pro stadiums. We work with them at Minute Maid. Right now we work with them at Fenway Park. The Boston Red Sox, the New York Mets. Those are some key Aramark partnerships with us. Chris: Wow, that's a great story, fortuitous, like most, if you're working hard and you get that lucky break and take advantage of it. The combination of hard work and luck sometimes is a really good thing. Aaron: It is. It helps, and we were astute enough at the time to understand that there is a bigger problem. The bigger problem wasn't that a fan wanted a beer or a hot dog in their seat their seat. It's that the operators the arrow marks of the world were having trouble keeping up with that unfettered convenience. We'll call it right, okay. All of a sudden, you go from lines, which naturally throttle your demand, to cell phones and everybody can order as much as they want, whenever they want, and they all expect it to show up in two minutes. So we learned that the operational challenges were the real problem and that's where we turned our focus. So now, when you look at our platform, it's not just about delivering food, it's about streamlining that entire process. Yeah, if the kitchen can't keep up, then it doesn't matter. Right? That's exactly right. Yeah, that's exactly right. So building in the controls, the throttles, the reporting, the communication, all that stuff's baked into our platform. Chris: So a couple of things that come to mind as you talk about what sounds like a lot of focus in Energy One on product development, software and then trying to prove the concept. What did you all do to try to finance that? Did you have to go out and raise money? Were you doing it yourself? Because most startups and entrepreneurs face that conundrum and there's a number of different ways to handle it. Aaron: What did y'all do at Robbery, at the beginning we were self-funded, we were self-financed, we were bootstrapping it. I had a good job. I was president of a manufacturing company. Marshall has like three, four other companies, he's a serial entrepreneur and Craig was running Pino's Pallet. So we all had good jobs and we were able to fund the beginning parts of the company and ultimately it got to a point where really two things happened. One, I was spending more than 40, 50 hours a week on rivalry tech, and we saw that we were getting enough traction that it needed full-time focus, and so as a group we decided, okay, it was time for one of us to leave, and that was me. So I left my job and we financed a salary to get it going and do some fundraising, and we raised our first round of funding from Venture Capital probably about a year into operations, when we really wanted to start scaling, and that was interesting as well. That was a fun experience, but now that's how we got it started Just a lot of sweat, blood, tears and a lot of our own money. Chris: Yeah, that's a common theme for anyone kind of starting something from the ground up. Aaron: Yeah it is, and it's interesting when you do it that way, and I'll give credit to know when you have an idea and you want to start a company. You've got about a thousand ideas. Here's what it should be, and Craig was really good at saying, ok, but we can only afford to build three of those things out of the thousand things. What are the three things we really need to prove? What's going to help us get to that next round of funding or what's going to help us get that next customer? And it's not all the super convenient stuff right. It's not about sending you a text message when you're within a mile of the stadium. That's not going to generate revenue. So we really had to spend time and figure out what are the most most important things to build, and that's how we got the first version of the platform out right. We just wanted to prove that, a people would use it. B people would spend money to use it. And C we could help the customers make more money. And that was it right. So that's how you get to a platform where you have to have your kids deliver food. Chris: I'm sure that was great. Yeah, they enjoyed that a bit. They did, they had a blast. So then you know, the next, I guess, issue you face, I'm guessing is, as that success is coming, you've got to start building your team to service the customers that you're bringing in. Yeah, how did y'all go about doing that and kind of going through adding key people in the right spots at the right time? Aaron: You know that was a really interesting journey for us. You know, at the beginning we knew it was mostly about tech, like we had to build the technology and the software. We did hire an operations guy in January of 2020. It was a great time to hire a field ops guy, no-transcript. And so you know, at that stage we were really trying to figure out where we scale and how we scale, and we got to go hire all these operations, people et cetera. But then something happened in March of 2020 that changed the course of live sports and entertainment. Just a little bit. Chris: Right. Well, our good friend Jamie. I remember him saying at the time it's a terrible time to be in the mass gathering business. Aaron: That's exactly right. So you know, when COVID shut everything down, it was really funny we were actually in an investor meeting. It was, I think it was March 11th, 2020. And we're talking about raising a series A and we're going to raise some more money, and then the phones kind of start buzzing and vibrating and everyone's looking down and they're like, oh man, the rodeo just canceled and or just shut down. And then a few minutes later it was like, oh, the Rockets have postponed, you know, their season already. And or no, it was the Astros. I'm sorry, the Astros postponed their season, start dating all of this. And so we said, okay, well, maybe we shouldn't have this investment meeting right now. And that really kind of set the stage for, quite honestly, was a better growth phase for us, and I actually give COVID not that it deserves any, but I give it credit for turning us into the company we are today. We took COVID and took that time to build the software we really wanted to build, if that makes sense. So, rather than splitting resources you know we had precious resources at the time rather than splitting it between operations and marketing and all the other things you're normally spending money on, we put it all into tech and by then we had established a good relationship with Aramark. We had established a good relationship with the teams like the Texans, like the Astros, and we had established a good relationship with Major League Baseball through some of our other connections at Aramark. And so we just spent all that time in isolation talking to these other people who were in isolation. So, mlb, they became really good, almost friends, and said here's what hasn't been built, here's why you don't see it at every stadium. And we listened, and so we somehow managed to raise almost $2 million during COVID throughout 2020 and just put it all towards the software Wow. And so we were able to come out of 2020 better funded, but also with a product that MLB signed off on it we launched at the New York Mets in 2021, coming out of COVID. So that really helped us allocate those tech resources and then we could start. And, if you think about it, covid also gave us a really nice kind of gradual increase in activity with operations. So we hired one ops guy, because ballparks are only at 10% capacity, sure, and they were at 30, then 50, and then 100. So we were able to scale. It was a lot better runway than just getting hit with it all at once yeah, I guess it makes sense right. Chris: You were able to kind of that hiring process that we kind of started talking about you were able to ease into that right and not have to throw a lot of investment at it because of exactly the ramp up exactly and we were able to take our time and find good people. Aaron: You know, culture is huge for us. Startup life is a grind. Startup life in live sports and entertainment is probably worse because it's a lot of nights, it's a lot of weekends. It's going to happen, whether you want it to or not, you know. I mean, the schedule is the schedule and so we had to find those people who, you know, kind of thrive on that life. They like going and the insanity and the chaos around. You know, trying to serve food to 80,000 people, you know, on any given Sunday. Chris: Oh, I can't imagine right. The other thing, though, that you know, I hear from your lessons and the advantages you took during, you know, kind of the COVID shutdown, if you will, was you really and this applies at any time but the importance and value that you gain by listening to your customer? And we have what were the issues, what did they like, what would they change if they could? And then you were one listening and you took that back to the developers or maybe they were in the meeting too to make those adaptations and modifications. Aaron: Yeah, yeah, exactly. It really helped highlight a lot of those bigger challenges right, where we got to understand, okay, well, we did have the good fortune of working through Texan season in 2019 and we saw the issues, and then COVID just allowed us to sit face-to-face from the customer when they weren't distracted, when Aramark and the Texans weren't distracted by the season. They're just sitting at home literally and let's talk through it and we're going to build it for you guys. So, yeah, it really helped put a magnifying glass in without the chaos, and that made all the difference, right, because we have a lot of competitors who just build on the fly and they're just trying to build and learn and they're getting beat up every day and that, and they're getting beat up every day and that's the advantage we have. Chris: That's great. Advert Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermiller.com, and thanks for listening to the show. Chris: Well, you mentioned culture, and I definitely don't want to gloss over that. Couldn't agree more. I mean, culture is everything. What have you done at Robbery to build the culture that you appear to be proud of, and how would you describe that culture? Aaron: with grit. I mean a lot of people use that term as part of their core values, but for us it's. We really make sure, whoever sitting across the table, they know that this isn't an eight-to-five job, that this is going to be some nights and weekends and you may have a thought at 2 am and you know Marshall and I talk at 2 am all the time. We don't expect that from everybody, but hey, just know that you don't have to answer that 2 you in text, but if you want to, that's okay. But we've got a really fun culture. I mean, look, first of all, we're doing a lot of fun things. I mean whether we're at sports or, you know, I mean resorts. We do the Margaritaville up in Conroe. I mean there's worse places to go to have to do work, right. I mean we even enjoy going down to the hospitals. We're at Methodist in the Med Center. We've got some robotics stuff. It's just a lot of fun. And it's really fun to go into areas where, you know, people aren't using a lot of technology on the food and beverage side, and so we really focus just on people who are creative and they like to question and they like to come up with answers or solutions, you know we don't have. We try not to have any of those barriers where they feel like they can't approach me with an idea or criticism or feedback. You know, I think part of our success has been allowing everybody in the company to have a voice and there's no such thing as a stupid idea or a bad idea. You never know where it's going to go right, and so you know we like that everybody can feel safe just throwing it out there, right, I mean? And we've had some crazy ideas come across the come across the whiteboard, and some of them have gone on to become parts of the product and some we've tucked away and some we've giggled at and erased, you know yeah. And then we've got definitely a culture of you know, just a very candid culture, right? I'm trying to think of what the phrase is, but our candor is very important. So, you know, we have a lot of meetings where we'll share ideas and opinions and then we'll fight about those ideas and opinions and voices will get raised and pulses will increase and language will be thrown around. But at the end of the day, everybody does it respectfully and you can scream and yell at your partner all you want, but we always make up and we realize it's coming from a place of trying to better the company. Chris: Yeah, Sounds like transparency, but also in a safe environment, right. Aaron: It is. Chris: Yeah, the other thing that sounds like you've created within that culture is one that fosters innovation you talked about. People are encouraged to bring their ideas to the table. Yeah, their ideas to the table? Yeah, how? I mean? Are there things that are meetings you have to, or challenges you present to people so that they know that innovation is respected and welcomed? Aaron: Yeah, we do. I mean we have weekly meetings where we kind of go through everything from the tech roadmap to the operational roadmap to sales and marketing, and we just talk through what we're seeing in the market, try to identify the gaps, right. So we're really trying to teach everybody in the company look for those gaps. Where are we seeing, you know, areas where there's no solutions? And so I mean we love whiteboards. I mean if I could have every surface in the office be whiteboard, it would be whiteboard. I mean, put it up on the whiteboard and go and let's start playing with it. And we've gone through some sessions where we've covered a whole room and come up with new ideas or better ways to execute. Right, I mean we're dealing with, you know, a stadium or a hospital. They're not simple organisms, they're very complex. And then when you get back into the food and beverage service side and fragmented technology stacks that they're using in the back and how do you tie it all together? And then you got to pull in the different stakeholders the hospitals, the aramarks, the employees. It becomes a lot of moving pieces and within that is opportunity, yeah, and so we spend a lot of time just talking through you know where and how can we do this? Chris: so let's let's talk a little bit about you. Know you start in sports missing the home run of the World Series. You mentioned this and alluded to it earlier. You've grown in sports. While you still do. That's not your primary area. Tell us a little bit about you. Know how you moved into health care, as an example. Aaron: And what are some? Chris: of the innovative things that you're actually doing, that when people show up, you know hopefully not at a hospital, but at a resort or or something that they could see to know that this is your technology in play. Aaron: Yeah, so sports and entertainment was our focus market for a very long time and we realized that the needs existed everywhere. Right, the problem that we were solving wasn't just at large stadiums, so large operators like Aramark, they operate in a whole host of other industries, right, like we talked about hospitality or leisure hospitals, etc. And so we knew we wanted to expand into those other verticals at some point. And we got really lucky again where and you can obviously tell Aramark's been a great partner throughout all this Right, they called us out of the headquarters up in Philly and it was really funny. I'd gotten to know the guy well and he says, hey, great job in sports, you've solved a lot of issues for us. You've built a great platform. Can you do it in other business verticals? Could you do it in health care? And we said, absolutely, yeah, we've been wanting to for a long time. What are you looking for? And he goes well, we've got a customer down in Houston and you can hear the papers kind of flipping through. You ever heard of MD Anderson? Yeah, yes, I've heard of MD Anderson. He goes. Yeah, they have a need down there. We want you to go look at it, and so worked through some of that. But what ended up happening is we actually got in front of Houston Methodist and their innovation team is really great, really employee focused, really patient focused. But they wanted us to focus on putting in our mobile platform for the employees because you think about it a doctor or a nurse, 30-minute lunch breaks you don't want them waiting in line for 15, 20 minutes, right. So we saw that as our opening. We knew we wanted to expand here. We have a customer pulling us into this other market, right. So that's how we got started. We built the platform for hospitals at first, but the really cool thing about it is that that same platform applies to every other market in the world, right? Sports is unique. It's a four-hour event, five-hour event. You turn it on, you turn it off. A day or two, a couple days a week, depending on a baseball home stand football once a week, exactly, but a hospital, a hotel, fast food, I mean 365 days a year, sometimes 24 hours a day. So we built this new platform for them. And let's use Houston Methodist as an example. So we've got our mobile at all. And let's use Houston Methodist as an example. So we've got our mobile at all eight of their locations in Houston. We have our kiosks at all eight of their locations, so you can walk up to a coffee shop, order a coffee at one of our kiosks and the barista will make it. You don't have to wait in line and then we're doing some really fun stuff. So, like in the Med Center, we are integrated with a big robot made by ABB Robotics, and this thing makes your food from fresh ingredients to. It actually cooks it, it puts it in a bowl and puts it in a locker for you. That robot didn't have any way to communicate with the guest or for the guest to communicate with the food preparation system, right, which normally is a person behind a counter you talk to Right, and it didn't have any way to communicate with Aramark in the back. Hey, here's the reporting for the day. Here's what I've made. Well, we do all of that, and so we essentially said look, just let's and to oversimplify, just run a line from the robot into our platform and we'll take care of the rest. And that's what we we did. So you can order food from our app and the robot will make your food. It'll tell you when it's ready. It'll tell you what locker it's in. You walk up and you scan a little code we give you, and your locker just opens up, and then we do all the reporting for the customer at the end of the night as well, so they can see what you know delivery or make times were, etc. Now we're getting into delivery. Robotics have the just, so we're controlling that order fulfillment process again from the very beginning to the very end, right, Whether it's a human or a robot. So it's pretty fascinating. Chris: Sounds like I'm still trying to wrap my head around a robot cooking in the kitchen. Yeah, it's pretty cool. Aaron: It's their induction cookers. They look like concrete mixers and so it's tossing these, this pasta or this chicken, and like a concrete mixer and it's cooking it. So it's pretty neat. That's amazing. Chris: So you know clearly. You mentioned AeroMark several times and, based on the story, I can see that they're a key strategic partner for you, as are some others. What are some of the advice you could give others about how to cultivate those relationships that are so central to your business? Aaron: So I mean, Aramark was an obvious one for us in the early days because they were the gatekeeper to a lot of our stadiums. And the other part of that is we knew we didn't want to go door to door knocking on different stadiums' doors. They are in hundreds of stadiums, so build for one major customer, make them happy and they'll sell for you and they'll take you along right, and they'll take us along. That's exactly right. So we were very intent and strategic on a relationship like that and we've worked with Aramark's competitors as well. We work with a lot of them and it's that same mentality, right. But then, you know, we started looking for other partnerships and this was a really interesting one where Comcast Business, comcast Sports Tech, has, or Comcast Business has, a sports tech accelerator and we were asked to join a couple of years ago and we thought we might have been a little too big. We said, well, we've grown, we don't know that we need a tech accelerator. But they said, look, we're trying to give our partners in the space some more developed platforms and their partners are like PGA Tour, wwe, nascar, and so we signed up with. But we were very upfront with them. We said sports is not our focus market anymore. We want to work with Comcast business and they came back to us and said absolutely We'll intro you to the mothership big Comcast, join our sports tech accelerator. So we did, and great relationships out of that right We've. We now work with PGA Tour. We've got some agreements with them, working with them in a few locations, but Comcast Sports Tech did exactly what they said they would and I'll respect them forever for this, because you never know, right, like, do they really have any pull with the mothership Whatever? And so we are now fully ingrained in the Comcast business and what's called Comcast Smart Solutions, where they sell internet right, they sell connectivity and it's a commodity, but what they're using us for and a few other companies are where the value add wrappers right. So we're working with an NHL team. Right now Comcast is going to provide the Wi-Fi, the access points, but hey, guess what NHL team? We also provide mobile kiosk back of house software. There's other companies doing digital signage, iot, and so now they've got this whole ecosystem that they're taking out to their customers and we work with them, not just pro sports, but major franchise chains with 30,000 restaurants, more major hospitals, hotel chains with thousands of hotels, and so now we start going in and we've got this really strong partnership with a major player. And they had a lot of people knocking on the door and we just took the same approach Build, listen to them first, build what they want, build what their customers want, and they'll take you wherever you want to go. So that's great. It's not without its challenges, right. It's a slow process. You're building something for a multi-billion dollar company like a Comcast or an Aramark. You don't get sales overnight. You've got to dig in and you've got to understand that it's going to take time and investment. But when that flywheel gets spinning it's sure hard to slow down. Chris: Yeah, that's great, yeah, but you're right. I mean we talk about it. It doesn't happen overnight. You've talked maybe a little bit about it, but I think we also learned. I'm sure there were some mistakes made, setbacks that you and your team learned from. That also helped you later become as successful as you have been 100%. Anything that comes to mind that stands out as one of the bigger ones. Yeah. Aaron: You know, in software it can be challenging because people, customers, will just say, hey, I want this, I want it to do this, and the proper answer is do you really need it? Do you really need it to do that Other than a? Chris: programmer going sure, I can do that, yeah, and they will right. Aaron: And you could spend all the money you want. And I remember this isn't a major mistake, fortunately. But I remember we were at an NFL team and it was a customer and they said we want the ability for the app to, or the users to, pay with cash. And we're like why do you want to pay with cash? We're digital, we don't need, and they're like we have to have it. You have to have the ability to say this was a cash payment and then reconcile the end of the night. And we were like and this was a week before the season, and so we hired a couple of extra developers, we spent I don't know 50 grand to add this cache functionality. And we go back a week later and we're proud of it and we're like check it out, and you know what the team said oh man, we decided afterwards we didn't need it anyway. I wanted to strangle them. Aaron: I was going man, we jumped through hoops. You could have told us, right, yeah, you could have told us, like, when you decided you made the decision, but here we go and we built it. So you know, in the early days of a company you're really eager to please and you do have to kind of take a step back and say, look, we can't build it all, you'll go broke or you'll build need and you'll never use. That goofy function is still sitting out there somewhere attached to our platform, right just turned off, yeah like an appendix right. We don't need it and it's just there forever. That's probably one of the biggest things we learned in the early days. You know we've learned as well that I mean you've got to keep your head on a swivel for new developments in the market. You've always got to be looking at what's coming down the pipeline. You know we probably erred a little bit and not getting into kiosks earlier. When COVID hit, we thought no one's going to, no one wants a kiosk, they don't want to touch anything. Right, remember the early days we were fogging everything and the reality is kiosks are probably the biggest thing out there right now and it's a natural extension of our platform. We had the time to do it and we're getting in the game and getting in the game a good way and you know, to be fair, it's we're not worried about that first mover advantage. We've got a lot of mistakes from our competitors that we're learning from and gaining ground very quickly. But you do learn to start looking farther down the road. Right, we were maybe looking a year down the road. You've got to be looking two years down the road. What's really coming down? So now, if you look at what we're focused on biometrics, computer vision there's a lot of components that are on our roadmap or on our current integrations that we're building, that you won't even recognize our platform six months from now. Chris: Wow, that sounds pretty cool. Yeah, it's fun. So while we have some time, let's turn and talk a little bit about leadership. As you said, you kind of were the first to really step in full time. You were running a company before. How would you describe your leadership style and why do you think that style has been successful in helping Ravelry grow to the company? It's been. Aaron: Yeah, we like to hire people who take a lot of initiative on their own, who aren't afraid to go out and do something and maybe make a mistake and try it again. So you know, in the startup world or in the tech world there's a and this applies to a lot of places but you know it's hire slow and fire fast. And we hire slow and we'll fire like medium fast. You can't make everybody think they're going to get fired for making a mistake. My leadership style I'm not a micromanager. I very much. When we hire people, I say look, I'm not going to give you a book to tell you how to do your job. We're going to write this book together because we're breaking new ground every day and we're learning something new every day and I'm not going to pretend to know everything. So I'm hiring you because you're smarter than me. Hopefully. You're known for what you do and do it well. And if I'm going to teach you anything, it's going to be how this company operates and where you can find your best fit and your best purpose. You know, if it's a salesperson, where and how do they make their best fit as a salesperson. You know, if it's a salesperson, where and how do they make their best fit as a salesperson. So you know, that's been my style it's give them some autonomy, give them some ability to go out and make it their own and if you hire slow, you've got a good feel for the person, you know what they're going to be capable of and if you're comfortable with them. So that's how I've tried to lead the company. We've got you know, it hasn't

In this episode of Building Texas Business, I learned valuable lessons from Patrick Terry, founder of the popular Austin-based restaurant chain P Terry's Burger Stand. Patrick explains how the company's success has been centered around its commitment to natural ingredients, competitive pricing, and exceptional customer and employee care. We explored the challenges of maintaining price discipline amidst rising costs and inflation, including during the COVID-19 pandemic. Patrick also shared insights from his origin story, hiring practices that bring on passionate individuals, and the importance of company culture. He also touched on the strategic considerations that underpin P Terry's expansion plans into new markets like Houston and the employee support programs in place. SHOW HIGHLIGHTS I discussed the inception of P Terry's Burger Stand in 2005 with founder Patrick Terry, focusing on their strategy of using high-quality, natural ingredients at competitive prices to differentiate from fast food giants like McDonald's and Starbucks.Patrick emphasized the importance of customer feedback and employee well-being in ensuring operational efficiency and customer satisfaction, without relying heavily on marketing or advertising.We explored the challenges of maintaining pricing discipline amidst inflation and supply chain disruptions, particularly during the COVID-19 pandemic, and how P Terry's managed to outperform competitors with consistent pricing strategies.Patrick shared the origin story of P Terry's, highlighting their commitment to quality food and a strategic hiring process that prioritizes employees' passion for the restaurant business.The unique approach to food preparation at P Terry's through their own commissary was discussed, showcasing how it helps maintain quality and cost control, along with their plans for expansion into Houston.We delved into the significance of company culture and employee care, including P Terry's innovative non-interest loan program for staff in financial need, as a means to foster loyalty and engagement.Patrick recounted the emotional journey of running the business, his brief hiatus from leadership in 2019, and the decision to reengage with renewed vigor, underscoring the importance of leadership in maintaining company culture.The strategic expansion from Austin to San Antonio and the considerations involved, such as logistical feasibility and location selection based on cost and accessibility, were discussed.We highlighted the balance between choosing affordable locations and ensuring they are accessible to customers, using demographic trends and growth areas to inform business decisions.Patrick shared personal anecdotes, including his early entrepreneurial ventures and the cultural philosophy at P Terry's, emphasizing the importance of setting high standards and leading by example. LINKSShow Notes Previous Episodes About BoyarMiller About P.Terry's GUESTS Patrick TerryAbout Patrick TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode you will meet Patrick Terry, founder and owner of P Terry's Burger Stand. Patrick attributes the success of P Terry's to two fundamental strategies First, work hard and listen to your customer. And second, take care of your people and they will take care of your customer. Patrick, I want to thank you for coming on Texas building Texas business and it's just a pleasure to have you on as a guest. Patrick: Well, thanks, I'm honored to be here. I really am. Chris: So I think the first place to start is for you just to tell us, those that don't know of P Terry's, what is P Terry's and kind of. What are you known for? Patrick: Well, so my wife and I started P Terry's 2005. So we'll be celebrating our 20th anniversary next month, next year, and the idea behind it we sell we're a quick service hamburger stand, and the idea behind it was if we were going to compete with, you know, the giants in the industry the McDonald's and the Burger Kings and the Jack in the Boxes and the Chick-fil-A's you know everybody. You know we're going to have to find a way to be different and you know I talk about so often. People want to get into business and they find a retail store or a restaurant or a concept that they like and they go across the street and pretty much do the same thing as the guy that they liked. And when you do that, all you've done in a best case scenario, is you take half his business. It's pretty hard to take all of his business. If you're going to do the same thing, then you're going up against the fact that he's established. Clearly he's doing okay because you liked it and he's there. And so I think that's the biggest mistake new business owners and entrepreneurs make is they like a yogurt stand and they go across the street and they do the same yogurt stand. And so, all that said we were going to be different, and where we were going to be different was that we were going to offer the quality beef and the food that we serve is really that of an upscale restaurant, to be honest and we were going to do it through a drive-thru and a dine-in at a fast food restaurant, but we weren't. Because of that, we weren't, of course, able to charge any more than the fast food guy across the street, so what we were trying to do was make ourselves bulletproof. We were going to offer a quality product that you couldn't get at a fast food restaurant at a price that was the same as the guy across the street that wasn't serving that quality food. And obviously, if you're able to pull that off, it's a huge advantage. And by doing so what we did, we established right away that we were going to look for a fair profit, and that was what it was going to be. And so if I could sell an order of French fries and I might be able to get $2.50 for that order of French fries, I looked at the cost and I'm thinking well, actually, my overall cost of goods, I only have to sell those franchise at $2.15. We have very low overhead. We have a small office with a G&A under 6% and we work hard and we work smart and we don't spend money on marketing or advertising. We don't have that luxury. We don't pay, of course, any franchise fees because we own the business. And so we were able to pull it off. And so we serve a black Angus, all natural beef, and what that means is it's antibiotic free, it's hormone free, it's a vegetarian fed, it's a pure beef. I mean it really is a great product. We serve the same thing with a hormone-free chicken. And you know, our buns don't have high fructose corn syrup. Our potatoes come from Idaho and they're fresh and they're cooked in a canola oil which doesn't have any hydrogenated oils. I mean, we literally just went down the line and said, okay, this is what we're going to do. Now we're going to have to make it work and by keeping our costs down and, frankly, working really hard, really hard with a lot of smart people, we were able to pull it off. We opened up our 34th store two weeks ago in Cibolo, outside of San Antonio, and, as you know, we're on our way to Houston. We have our first Houston location in Richmond I believe it is in October, and we're going to have five. We plan for five Houston locations. One of the other things that we do that makes this unique is that we have our own commissary. We cook we do a lot of cooking and for our restaurants ourselves, so we bake our own banana bread, we bake our own cookies from scratch, we make our own veggie burgers from scratch. We take chicken breast all chicken breast, boneless, skinless breast and we actually grind it into a patty for a chicken burger and for our chicken bites. And all that's done in the commissary by our own staff. We share the offices, share a space with the commissary, and every morning three or four trucks go out and deliver that product to the stands, and so we're able to keep our costs down by doing that as well. We pretty much just take charge of everything we do, yeah and that's what separated us. Chris: Well, it sounds like what I'm hearing is a very focused, you know thought into what you wanted this business to be and I guess what you didn't want it to be. So you know what I heard you talk about is, you know, obviously very cost conscious, so that you could be profitable, but also singular, focused on this. You know premium quality food at a lower price point and you know really it sounds like in the beginning, very focused on what profit margins would look like, what your cost of goods would be. Before you even opened a store it seems like. Patrick: Yeah, and I don't want to make it sound like we're smarter than we are, because a lot of that stuff just you know fortunately just works itself out. Now where it got tricky is when COVID hit and the supply chain issues and the inflation that we've seen and where we've benefited from that is by having always done what we've done in the last 19 years and everyone's read about. You know the McDonald's Big Mac combo meal. It's for $16 in Idaho and you know McDonald's are great operators. So I got nothing bad to say. But every time you take a price increase if you're not looking over your shoulder when you do that if you're not conscious of? am I really doing everything I can before I go up on this price? Patrick: way I can make this a nickel instead of a diamond. Unless you've done that from the start, you find yourself taking price increases to cover up mistakes or issues of the day, and it becomes this band-aid that's very hard to take off, right. Chris: We've seen that in your industry right, where the classic pass it on to the consumer, and then in the fast food wars just over the recent months, the consumers rebelling. Patrick: Absolutely, absolutely. And so when you know Starbucks and McDonald's show, you know negative comp store sales, last quarter, for the first time since you know COVID hit, we were up 8% in our compor sales. And because, frankly, when you take our strategy and you stick with it and the hard part is sticking with it it's really easy to look around and go, man, that guy over there he's getting six bucks for that burger and I'm only getting five. I could probably go up a quarter and that's the illusion, right, you get into that game and there's a mind game and if you're able to keep pushing that off and, trust me, it's a hell of a lot easier going up a quarter. When you're able to pull that off, then you don't go down that rabbit hole and find yourself in a situation where so many of our competitors have found themselves. I mean, I look around and see what similar pricing is, I mean what similar menu items are and what the pricing of our competitors are, and I'm astounded. I mean there are some of our competitors are 20 percent higher than we are on their menu, and you know we're all serving food out of a drive-thru and so it's a dangerous game. It really is. And so I think that I think you've hit on it exactly the way it is, it's a discipline and it's every day. Chris: Yeah, well, that's what Jim Collins talks about in Good to Great. You know, discipline, people with disciplined thought and disciplined action is how you get from good to great. Yeah, so let me, let me take you back, cause I mean I love the thought that went into to the concept from the beginning, but what inspired you to, in 2005, open up a hamburger stand? Patrick: Well, thank you for asking. It's almost embarrassing, I apparently. When I finally did it, a score of my friends contacted me to remind me how much I had been boring them for so many years that I had always wanted to open up a hamburger stand. And do not ask me where that came from. I have no idea, other than to say that I love the idea of serving a hamburger, french fries and a milkshake. I just, I just think that's glorious and I know that's probably way over the top, but there's something so satisfying and it's probably because it's my favorite meal that I just can't get past it. So I had always wanted to do it and I had a particular location that I had in mind and I lost it five years earlier and it sat empty for five years and finally it became available, and so that's when we opened up at Lamar and Barton Springs in Austin. Chris: I love that. Well, I mean. So, like, like any good entrepreneur, in my view, you followed your passion, your favorite meal, something that you have a passion about doing. Patrick: Let me tell you, if you don't love this business, you better not get in it, because it is consuming, it's all consuming. And so you know I look around. When I used to, you know, when I would hire somebody, I would remind them that if they didn't really love the restaurant business or what we do every day, you are not going to be happy, and if you do love it, you're going to be very happy, because we're drinking out of a fire hose here pretty much every day. Chris: Let's talk a little bit about hiring, because I think that's really regardless of the industry, really regardless of the industry. I mean, companies are made of people and you've got to get the right people to help, you know, maybe bring your vision to light, your strategies to life. What have you done over the years to make sure that you are making that right hire decision? I assume it's evolved over time and I think there's at least a couple of pieces. I'd love to maybe hear how it was starting out, but oh, yeah, it was. I know that coming out of COVID it had to be even more challenging, because people wouldn't even come to work. Patrick: Right. Well, when we first opened, the first day we opened, my wife Kathy was there and she had no restaurant experience. I had some and I put her through it. It was. You know, it was very difficult, and she likes to tell the story that she looked around the very first day and realized that there was no way we were going to do this by ourselves. And so the first three years we were in the stands every day. I mean, I worked every day, morning to night, and by doing that I got to know, obviously, everything that it took to run the stand, every position. But I also got to see the people that were there and I was able to separate the ones that were working out and the ones that weren't. And I was not a good hire at first. There is this you know, boy, it's easy to take what you think is the simple route and just put a body in place and, man, if it's the wrong body, everyone's miserable, and so it took me a while. I just had a certain, but I was not going to give in. I had a certain level of employee or stand or team member that I was, that I had envisioned, and so I wasn't going to lower the bar. And so the first three years were really difficult because a lot of people you bring in had other unfortunately had other fast food experience and they brought a lot of bad habits with them. And so you know, it's one of those deals when you hire somebody, frankly, they either have to be scared of you or they have to like you, and I'm not the guy that they're going to be scared of. That's just not the role I want to play. It's not the business I want to run. We're not always going to agree, but my hope is that we like and respect each other and respect each other. The other thing is what we learned being there every day is we learned so? Many of our employees' lives are completely different than mine. You know I've been around for a long time. I had some money in the bank. You know I had a college education, I had a career before this, so it's really easy to live in your bubble and not recognize it, and so I tell this story a lot. We had an employee, vinny and this was 18 years ago and, by the way, I'm proud to say Vinny still works for us, as do a lot of those people in those first few years. They're still with us and Vinny's truck broke down and I had worked all day and I didn't want to do his job that night, so I convinced him just to get in a cab and I would pay for the cab. And then when Vinny got there, I said what's going on with the truck? And he said well, it's going to cost $150 to get fixed and I don't have $150. So I handed him $150 and I said pay me when you can, because I need you here and I need your truck fixed Now if I'm in a corporate office, then he probably loses his job because he didn't show up. Right, right, I don't answer the phone, we don't have that conversation. So then I've lost an employee that I've had for 18 years. But, more importantly, I understand the position they're in, and so the very first thing we did from that is we created a non-interest loan program for all of our employees. So if you walk in to my office right now or you don't even have to do that you tell your manager, and the manager is going to make a phone call and you say I'm behind in my rent or I have a, you know, whatever it is, you're going to get a loan, and if it's under, if it's five hundred dollars or under, we don't even ask, we just you get it. If it's more than that, we want to know what's going on, you know. And so what we did is we made hiring easier. This is a really hard thing to do every day. The last thing I need to do is make it more difficult. So so we started by taking care of our people better than most, and they told their friends, they told their relatives, and so they understood that this is a two-way street and I'm going to take care of you, but you have to take care of me and, of course, the way you take care of me is you take care of the customer. Advert: Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyMillercom. And thanks for listening to the show. Chris: That's great. I mean the idea and I think it's true in any organization. If the people that work for you think that you genuinely care about them as a person, not just that they get the job done, you're going to create loyalty and engagement with that employee. Naturally, hearing your story leads me to the question about culture. Let's talk about that. How would you describe the culture at P Terry's? Obviously, the fundamental philosophy you just described, I would assume, is some of the foundational elements of the culture that you're trying to build or have built. So what can you share about that? Patrick: Well, I'll tell you the obvious. You and your listeners already know this culture is the most important thing. There's nothing even close to second when it comes to running your business. The culture that you establish speaks for who you are, not only to your employees, but to your customers. Speaks for who you are, not only to your employees, but to your customers. There's nothing more important. I can't even think of number two. I'll tell you an interesting story very quickly. I hope it's real. I had a person call me and want to visit with me about the business, and they had a very successful online clothing company and they were about to open up stores for the first time. Everything they had always sold was online, and he asked me what it took to open the store and take care of the employees for the very first time. Right, this is all of a sudden. It's not a click, it's a conversation, and I probably talked for 15 or 20 minutes about everything we do every day for our employees. I thought I really thought his head was going to explode. I mean, he. It was so beyond the realm for him. And I get it right. This is like, and what I was trying to explain to him was you're, you may be selling the same item, but you've got an entirely different business model now. I mean, now you have, for the very first time, you have a person representing you selling that product to someone. And boy, you better get that right. And so that's really what it boils down to is understanding what we do every day and what our people do, and the culture has to be led by me. You know, I read a great line a couple of weeks ago. Somebody said to the person running the company, what's your job? And he said my job is to be right. And so when you accept that as your job and, by the way, I don't do it by myself, oh my Lord, not even close right, I mean, I've got all. I got these people around me that are just terrific, and but I certainly go to them and we certainly talk about everything. But the first thing that this has to be established is I'm here and I answer my phone and if, if you're in the hospital, I need to be there and make sure everything's okay. If you have a family member that has an issue, if there's something I can do, I got to do it. And then you have to understand everyone has to understand that there's a bar set and no one goes below the bar, and I can never go below the bar, obviously, and so it's really for me and for P Terry's, it's really by example, and if you know, dogs and kids can spot a phony a mile away. And so if you're not sincere in what you're trying to do and what you believe in and I've had some people that work for me that I could tell immediately you know you're faking it and you know you just don't feel the same way the rest of us do, and nobody wants to be in that position. So you're not happy here and I'm not happy with you here, so let's just shake hands and walk away from each other. So there's a lot of that going on, but the culture and what we do every day, the first thing we do is we just take care of our people and then we count on them to take care of the customer. Chris: Yeah, Some of what you're saying there I've heard others speak to. We certainly have that philosophy here in the business we run in this firm and that is we say we hire and fire from culture. Right, you have to know what the culture is. You have to look for the people the best you can through interview processes and hire from culture. More importantly, when you figure out someone's, you know you set the standard and you can't go below it. But if you see someone that's consistently going below it or faking it, then you've got to move fast and they need to be out of the organization. And it doesn't have to be harsh to your point. Chris: They're not happy, no one's happy. They're going to be happier somewhere else that has a different set of standards that connect with them. But you've established your standards. You've tied behavior that you can demonstrate is consistent with that that comes from the top down, and then everyone can be on the same page. Patrick: And it has to be. It's almost like, you know, being in the middle of an orchestra. You know we're all playing the song and we've all got a part to play, and if one of us, you know, drops the violin, it's not going to feel sound the same. Yeah, so true. Chris: So you know, reading up on, you know the goings on at P Terry's. I want to kind of turn the conversation a little bit to the last maybe I guess it's been four or five years you did something that is not easy for a founder to do in 2019. You decided to step down as CEO of you know, your proverbial baby let's talk about that. Obviously not the first time an entrepreneur has done that and kind of handed reins over. What led to that decision and how was it for you to kind of transition out of the CEO role? Patrick: Well, if it's okay, I want to step back a couple more years before that and talk about something that it really doesn't make the papers very often. That, and talk about something that it really doesn't make the papers very often. We had at one point I had just kind of hit a wall. I was exhausted. I was working with a kind of a person that I had next to me that was, you know, my right hand man. It was just it was. We had been going at such a pace for so long. You know, my wife and I have funded, had funded this business all by ourselves. The entire time we borrowed money but we didn't have any other investors, so everything kind of fell on us every day and the idea came up that maybe we should sell because this is just exhausting. And we did a dog and pony show and had a half a dozen legitimate buyers and we got a wonderful offer. You know, as I said to the person when I turned him down, you offered me enough money to go live on an island and I've got two little girls. I don't get to live on an island even if I wanted to. So I appreciate the offer very much and I think what I was doing when I did it, and it was sincere, I wasn't trying to waste anybody's time. But I think after the offer came in and my wife and I both agreed that we didn't want to do that. This is not how we wanted our legacy to end. I think I was looking for validation. I had never been validated for the work I had done, other than you know that the we were allowed to expand. Our business was good, our customers were very appreciative, but from an industry standpoint, I didn't know what we had created. I really didn't. I'm not the guy that I'm terrible at networking. I don't go to. I don't go to meetings, I don't go to conventions, I just I really it's not my deal, I really just work. And so I got that validation and then I made a decision that the next decision we made was do we want to leave Central Texas? You know the Austin area, and I had never done that. And so I thought well, I got some great advice one time that I don't want to learn something that somebody else has already learned, that I don't want to learn something that somebody else has already learned, and so I chose to bring somebody in with the experience of having done that, and Todd came in. Todd Korver came in. He had a great resume, same moral compass that we have here, a really good guy. And what I was finding was that, no matter what, I'm still here, and there are certain things that I'm just comfortable with, that, if I'm going to be alive and still owning the business, that it's important to me that we do every day. And so it wasn't that Todd did a bad job. It's just that I looked around and said, you know, there's stuff going on that I think we can do a little differently. Maybe we can do it better. I don't know, because I don't have all the answers, but I think I'm more comfortable in the front seat than I am in the back. The departure was amicable, he's a good guy. He's got a great job here in Austin. He's going to do very well there. But I just found that if I'm going to be in the office every day, you know I might as well do what I really want to do, and so that led to me coming back, and so, you know, I think it also gave me a new energy that I hadn't had because Todd did some heavy lifting for four years, and so we kind of have come back with the vengeance. We got the idea four days after Christmas that maybe we should really take a serious look at serving chicken bites. We compete against everybody in the business and Chick-fil-A is, you know, the leader, and so a lot of our customers had told us hey, the only fight in our family. You know, my kid wants a chicken bite at Chick-fil-A and I want a hamburger or a chicken burger from P Terry's. And so, you know, the 29th of December we had this conversation and the 16th of March they were for sale in our stores. We made them out of our own kitchen and we created them and, you know, worked on sauces and stuff, and so we've really been going very fast at that. But that you know, and I found that I'm just much more happier if I'm going to, if I'm going to be around, if it's going to still be my company. I'm just happier being the guy that's running it. Chris: I understand. Well, it had to be difficult, especially so it sounds like you stepped out of the CEO seat but stayed, I guess, involved in the company. That had to be challenging, right, it was one thing if you kind of, like you said, go to some Island or just complete a separate business, but and I, you know, I did my best. Patrick: I didn't think it was fair to, you know, be in Todd's office every day pounding the desk, going why aren't we doing this, why can't you do this? I, you know, I let him run the company because that was the only fair thing to do, but I was in the office next door and so you know, you're right, I'm not on an island and so, yeah, at some point it just was like easier for me just to do it. Chris: So let's let's talk a little bit about the expansion. You mentioned that you had expanded beyond kind of the Austin area into kind of San Antonio. You just mentioned a store in that area your plans to come to Houston you mentioned just a minute ago, and ultimately five stores, what? I want to talk about maybe have you share, is kind of what goes into that thinking of the strategy, of when it's right to kind of take those steps which I would assume are, you know, somewhat trepidatious. Patrick: Yo, absolutely, and what we found is that we were interested to see in the challenge. Absolutely, and what we found is that we were interested to see in the challenge. And you know we really had established ourselves in central Texas. We have a lot of stores here, you know we're. I mean I have there's Lamar Boulevard in Austin. I have three stores on Lamar Boulevard, you know, and about three miles apart. So we're pretty inundated and I just wanted to see, I believe that our concept traveled outside of Austin. I believe that our concept really works most places and I wanted to see what we could do. And so San Antonio made the most sense because of our commissary and our delivery, so we can be in San Antonio in just over an hour. And that made it. And, by the way, we just went down, you know, i-35 and we opened a store in Kyle and one in San Marcus and one in New Braunfels and then into San Antonio and so so from a logistics standpoint it made sense, but it was really kind of a challenge. Now, I don't, you know, there is something I truly believe in and you know I have to tell you real quickly, I spoke at a UT, at the MBA program, one time it was a wonderful class, and the professor called me after the class and he said I got to tell you the students loved it and I thank you for coming. And I said well, I appreciate that. And he said but I got to tell you I'm probably not going to be inviting you back. And I said totally fine, can you ask, can you tell me why? And he said well, there's nowhere on the syllabus that just says work hard and listen to your customers. And I said okay, well, I get it, cause that's, frankly, all I know to do, to the God's honest truth is that's all I need, that's all I know what to do. And so you know we take. What I was getting to is, at some point you take a leap of faith and you've listened to the people around you and at some point, obviously, you're the one that has to make the final decision. And then you, just you know, you trust your experience over all these years and you know you make the jump. You just make the jump. Chris: So I guess just you know, since I live in Houston, what was it about Houston that makes you think that you know again the concept travels? Why the first location in Richmond? What are some of the things there that you know, you and your team see and are excited about that you and your team see and are excited about. Patrick: So we picked that part of Houston because we could drive from Austin again for our commissary until at some point we will hopefully have a satellite commissary in Houston. But a lot of it is the loops are of interest. There's a lot of growth there, there's a lot of room for expansion and, frankly, when you get in the middle of all of your fair city it gets very expensive. So you kind of go to the loops because the land is cheaper and the leases are cheaper. So there's definitely some of that. I'm just being very honest about it. I mean, there's some great locations but I can't spend $300,000 a year on a ground lease, you know it doesn't, I think it's a well. Chris: the transparency is what we're after here, and I think, again, kind of for a listener to go look, you may have some great ideas, but be smart about that expansion. It goes back to the first thing you said. You've been mindful in this business of controlling cost, and obviously I can speak to it. You're picking locations where the population's growing, so that's not a bad thing either. Right, your demographics must line up with the things that you know makes a store successful. Patrick: And at the same time and I've got a competitor across the street from me, across the highway from me, in San Marcos, and you know he picked a really bad location and my assumption is he picked it because it was cheap. So you know there's a balance here, right? You know you got the land for $60,000 a year and the reason is because nobody can get to it, so you got to be careful about that. You know, I had a friend of mine come to me. He and his wife came to me years ago and said I think we're going to get into the restaurant business. And I said why? And he said, well, we're going to sell, I think we're going to sell sandwiches. And I said what are you going to do that? And he said, well, people have to eat. And I said yeah, but they don't have to eat at your restaurant. And unfortunately, you know there is. You know, you just have to look at this stuff so realistically. And that balance of, yeah, I'd love to be in that location, but it's a wonderful location, but it costs me so much. All I'm going to do is sell burgers and, you know, not make any money, that's right, I get to pay the landlord to sell burgers, right? Yeah, that's exactly what it is. That boy, that's a tough. That's a tough way to spend your day. Chris: Well, patrick, thank you so much for sharing the story and the ups and downs, but I'm looking forward to having a burger once you get here you said you did it in Austin, obviously, and it is as good as you described. I want to turn a little bit to just a little personal side of things. Obviously, you've said a couple of times you just know how to work hard. What was your first job, even as a kid? Patrick: So I had a lemonade, a Kool-Aid, stand in front of my, in front of our house I was probably five or six and my dad was, and my parents were always there and always had suggestions and my dad came up to me and he said you need to put the because we lived in West Texas. I grew up in Abilene and you think your summers are hot, so my dad said you need to put the temperature on the. On your poster and and I said so I wrote it's 102, kool-aid, five cents. And you know the car stopped and it was such a great idea and so I always had that influence. I said that was my probably my first inroad. I remember in seventh grade I started selling candy bars there was no you know, costco or Walmart or anything back then or Sam's to the grocery store and buy a little six-pack of Hershey's. My mom would go and take me and I started selling so many candy bars at the 10.30 break that I was messing up the senior store at noon and the superintendent called me in and told me to stop. So that's funny, all right. Chris: So this is a question I ask everyone, and I'm incredibly intrigued to get your answer, because you're the self-described hamburger guy. Right, I got to know do you prefer Tex-Mex or barbecue? Patrick: Oh, I'll go to Tex-Mex all day, okay. Chris: I'll go to Tex-Mex. Patrick: And I love barbecue, don't get me wrong. But I got to tell you if I can have chicken enchiladas with the verde sauce and a side of rice and beans. I am doing just fine. Chris: Okay, so it's your second favorite meal. Patrick: it sounds like yeah, absolutely, my poor children. I'll tell you this real quick. I know you want to wind it down. My daughter is 16 now and when she was 10, she went on a water ski camp and she spent the day. And she got in the car and she said I said what'd you have for lunch? And she said they served these submarine sandwiches. And I said, oh, what'd you get? And she said a meatball sandwich. And I said, oh, that's great. And I said you don't seem like you're in a good mood. And she said I didn't know those existed because my poor children eat P Terry's every day. So that's, you know, that's it's a family deal. I love it. Chris: It reminds me of the story of you know, it was in a movie a while back right when the parents try to tell convince the kids that yogurt was vanilla ice cream exactly. Patrick, thanks again. Really enjoyed meeting you and hearing your story. Congratulations on the success and best of luck as you expand and move into the Houston market. Patrick: I appreciate it Well. I'd love to meet you one day and grab a burger. Chris: Let's do it, in fact, let's stay in touch on when that Richmond store is open, and I'll be there. Patrick: Absolutely, absolutely, and I'll even buy. Chris: What do you think? That's a heck of a deal. Very good, well, thanks again. Patrick: Thank you, I enjoyed it very much.

In this episode of Building Texas Business, I sit down with serial entrepreneur Steve Reynolds for his perspectives on innovation in corporate travel tech. As CSO of Embers Inc., Steve shares his journey developing TripBam, an early pioneer utilizing algorithms and robotics to optimize hotel rates. He explains TripBam's strategic transformation from consumer to enterprise software, strengthening the company and positioning it for seamless integration under Embers. Steve offers valuable lessons on championing passion within high-performing teams. The importance of actively engaging customers and development staff to creativity solve problems is emphasized. We discuss the challenges of maintaining innovation at scale versus smaller startups. Steve's experiences navigating acquisitions and a turbulent industry offer cautionary advice. A theme emerges—embracing flexibility positions leaders to overcome challenges and achieve lasting impact. SHOW HIGHLIGHTS In this episode, I spoke with Steve Reynolds, Chief Strategy Officer at Emburse Inc., about his journey in corporate travel technology and entrepreneurship.Steve discussed the origins and evolution of TripBam, a platform he founded that uses algorithms and robotics for hotel rate monitoring, which eventually pivoted from a consumer-focused to a B2B model.Steve shared insights on navigating the challenges posed by the COVID-19 pandemic, emphasizing the strategic decisions that helped TripBam emerge stronger, including cost optimizations and product enhancements.We explored the importance of fostering a passionate and innovative team, highlighting the value of listening to customers and involving development teams directly in problem-solving.Steve explained the critical difference between passionate programmers and those who are merely formally trained, and how assembling a team that shares the company's vision and offering equity can drive success.The episode delved into strategies for managing company growth and financial stability, such as quick decision-making in right-sizing staff and optimizing operational costs through cloud environments.We discussed the benefits of subscription-based pricing models over transaction-based ones, particularly during economic downturns, and how this approach helped maintain cash flow during the pandemic.Steve reflected on the evolution of workplace environments and leadership styles, noting the shift from rigid, traditional settings to more flexible, results-oriented cultures.We talked about the challenges of maintaining innovation in large companies, contrasting startup environments with big company mindsets, and the importance of hiring the right people for each setting.Finally, Steve shared his thoughts on the future of the travel industry and the innovative approaches that have set new standards in modern practices. LINKSShow Notes Previous Episodes About BoyarMiller About Emburse GUESTS Steve ReynoldsAbout Steve TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode you will meet Steve Reynolds, chief Strategy Officer for Emburse Inc. Steve has built his career in corporate travel technology and in starting various companies over the four-decade career. Steve looks for opportunities to be disruptive. Steve, thanks for coming on the podcast. It's a pleasure to meet you and appreciate you taking the time. Steve: You bet Chris Glad to be here. Chris: So you know there's a lot that I'd love to get into with you. I know that you know currently you're with a company called M-Burst Travel, but that you started a company before that called TripBam. Tell us a little bit about, I guess, those companies and what they do. What is the business they're known for? Steve: Okay, and just to back up a little bit further, I guess what you could call a serial entrepreneur. Tripbam was my third or fourth venture kind of lost count, but I've been in the corporate travel tech space for 40 some odd years. And TripBam when we started 10 years ago, we recognized that hotel rates change a lot more often than people actually realize. If you were to create some robotics that went out and grabbed the rate at a particular hotel for a certain date in the future, you'd see that rate changes just about every hour and what we found is if you just keep watching it, eventually it's going to drop, especially as you get closer to check-in. So we created some algorithms, robotics, whatever you want to call it that said okay, I've got a rate of $2.99 at the Grand Hyatt in New York. I'm arriving on the first and departing on the third. I want you to just let me know when it drops and if it does, I want you to rebook it for me If everything is the same room, same bed, same cancel policy, blah, blah, blah. So that's what we did. We originally invented it for the consumer market. We put out a website and we got mentions in the Wall Street Journal and USA Today and so on. But sort of my corporate travel buddies called up and said, hey, Steve, we really need you to apply this to corporate travel. And they started writing some pretty significant checks. We followed the money, we pivoted and went all B2B at that point. And so the company grew 40% year over year for the first six years, cashflow positive within just a couple of months. I mean it was great. It was great. And then COVID came along and kind of took our knees out from under us for a bit. Chris: COVID kind of wiped out the fundamental business model for at least a little bit. Steve: At least for a little bit. But fortunately a lot of our customers were paying us subscription fees rather than transaction fees, so we were to stay afloat. We got through COVID and we actually came out on the backside of COVID in a much stronger position, both financially and you name it, because we were able to do a lot of just cost improvements, right-sizing the organization. We kind of got a little bit ahead of our skis, I think, in some areas and created some new products, just all kinds of things, pushed everything out to the cloud and such that dramatically reduced our costs and just were firing all cylinders. Chris: And then we worked out a deal with Emburse in July last year to buy the company. Okay, how does I guess what TripBand does fit within the Emburse excuse me, overall, maybe suite of products or company strategy. Steve: Yeah. So Emburse provides travel and expense to the largest of companies, to the smallest of companies, and what I mean by that? Everybody. When you go, you have kind of a booking tool to start with. Most folks are familiar with Concur. We have our own. The reservation gets created. It then needs to be watched, monitored, audited, improved upon. That's kind of where we fit in. So before the money is spent we actually see if we can actually do better than what the traveler did on their own. Travelers are not going to check the hotel rate every day. They're not going to check their airfare every hour. They're not potentially going to book the preferred property within a particular city. We fix all that before the money's actually spent. We then push all that to mobile. So you've got a companion app in your pocket where the traveler gets a ton of destination content specific to that company. So I'm going to New York, I'm staying at headquarters, what hotel should I stay in? I need to go take a client to dinner, what restaurants do you recommend? All kinds of other stuff, including safety and security perspective and so on. Then the data is all captured and fed into an expense report so that your expense report if the traveler is compliant. It's kind of pre-created and pre-approved, so the traveler in a lot of cases doesn't have to do anything and if they're compliant all the way throughout, they could actually kind of be paid as soon as their plane hits the ground. Then it all feeds into reporting and analytics so that we can improve your travel program, identify additional savings opportunities, find some fraud issues, detect all kinds of other stuff that might be a problem. We also offer a card product if you don't have one, and that's kind of the travel plus expense ecosystem that we provide. Chris: That's fascinating. I obviously wasn't aware that something like that existed, but I can see how large companies with a lot of employees traveling could see the benefit and realize a lot of savings from those services. Steve: Yeah, when you combine travel with expense, some kind of magic happens in that we have enough data and insight to be able to start pre-filling out that expense report. Otherwise, all we're counting on is card transactions and receipts, and that's really not going to do the trick. But if we can get that card information augmented with the receipt scanning and everything else that we do now, we can really do a nice job of pre-filling out that expense report. So really all you have to do is add mileage, hit, click and you're submitted. Chris: So you mentioned that you've been in this industry for 40 plus years. I'm curious how did you first get started in the corporate travel tech space 40 years ago? Steve: It was just by happenstance, I guess you could say. I was originally started as a programmer for Texas Instruments, got accepted into their executive program, which meant I could go off and get an MBA and then come back to TI, but quickly realized that the consulting firms were paying a lot more. So I ended up with Ernst Winnie, at the time with Ernst Young and my first assignment was with a travel agency in Houston, Texas, called LifeGo Travel, which doesn't exist anymore. The owner of that company hired us to come in and build some technology. It really put him on the map and he got tired of paying the bills and seeing the hourly checks that we were charging. And so he approached and said, hey, you know, do you want to come work for us? And I'm like, well, that never thought about working for a travel agency. That doesn't sound all that exciting. But he said look what if we created a company, We'll spin it off and we'll give you some equity. And I'm like, okay, now you're talking. So we left, we started up a company called Competitive Technologies and all of it was bought by American Express Travel two years later. Chris: Oh, wow. So unquestionably you had a little bit of an entrepreneurial spirit going way back then to see an opportunity. Put you in it. Steve: And a lot of it is just kind of, I guess, my personal. I don't do well at big companies. I really struggle because I get so frustrated at just the lack of progress or the lack of innovation or the speed at which things happen, so I tend to sort of find an excuse to hit the exit button, usually within a year or two. Chris: Right. So you said something in that response that I want to talk to you about, and that's innovation. I think that's there's such a common theme, I think, with entrepreneurs about. You know, and innovation can mean so many things. What do you think that you've done, as you've built several companies, as you mentioned, to create or foster and nurture a spirit and environment of innovation? Steve: You know a lot of it is just becoming a really good listener to the buyer, to whoever the customer is. And then when they say things, there are certain kernels that are aspects of what they say that you just go oh, wait a minute, okay, can we go back to that? That sounds important. You know this level of frustration. Why does that frustrate you? And if you have engineering and development in the room when those things are said, oftentimes some real magic starts to happen and we just the creativity, the innovation just comes out naturally as wow, we can solve that problem. That's not that hard, you know, let's go do that. So that's on the B2B side. That's kind of the formula, that conversation. Something falls out as far as a new feature, product, something like that, that we can start working on the B2C side. Chris: Go ahead. Well, it sounds like there's a function there of asking the right questions and really listening. Steve: Well, and just most big companies or companies they try to protect the dev engineering. They're like oh, we're not going to let you talk to customers. You guys sit over here in the back room and we'll come to you with sort of a priority or roadmap of what we think is needed. And I feel like that's just the wrong way to do it. You've got to get the dev and the engineers and the programmers in the room to hear the story, otherwise you get this telephone tag of what actually gets built isn't quite what the customer wants or was even asking for. And for most companies that's really hard. I don't know why, but they just. It's like we can't allow that to happen, but that's just not the way I operate. Chris: Well, I mean, it makes sense that people you're asking to solve the problem probably need to hear what the problem is firsthand, right? Steve: Exactly. And then it's oftentimes the dev guys are like they're coming up with much more creative solutions. If you just hand them a requirement sheet or spec sheet, they're like, oh okay, this is going to take a month. But when they're involved with the client and they actually hear what the true problem is, oftentimes they're like, oh, I can knock this out overnight, I'll have a solution to you by tomorrow. It's just a night and day sort of sense of urgency or sort of the emotion around creating the solution. They're bought in. At that point, when they hear it directly from the client, they can be the hero. Chris: Well, when you think about kind of that and getting the right developers and the right kind of team together, what have you found to be successful as far as what to look for in building the right team and then keeping the team together? Steve: Yeah. So fortunately for me I mean through all of these different companies that I've started I've been able to kind of get the band back together multiple times. A because I, you know, I'm a big believer in sharing the equity. You know, let's get everybody, if not equity, at least options, so that when there is an exit, everybody benefits, and they've all seen that so far today, knock on wood, I haven't had an unsuccessful exit where we've had to, you know, turn out the lights or whatever. My shareholders have all made money, you know, typically around 5x to 10x on their investment, which has been great. So it's easy to get the bad back together. But what I also have found out is there are certain programmers that are passionate about programming and others that are just taught programming, and there's a night and day difference on the result. If they're passionate about it, the results come out quick. I get creative solutions that nobody would think of. They're usually extremely low cost and it's just so much better than if I have someone that's college taught. I'm doing this because it's a paycheck and I took this degree because that's what somebody told me to and I was good enough to get a B in college on all my programming courses, but at the end of the day, if their heart's not in it and they're spending their time, you know, just on the side weekends and nights learning new stuff, they're not going to be very good. So give me one or two of those that are passionate and I'll put them against 10 to 20 of those that are school taught and will kick their ass every time. Chris: So yeah, well again, I think that transcends all industries and disciplines, the key being passion. Right, I think you, as the leader, are the one that has to start with the passion and then find people that share that passion to get to where you're talking about, where there's that flow within the organization. Steve: Yeah, I think development's a little bit different. I mean, you're not going to find anybody super excited about accounting or I don't know the other aspects of it, but with development there's guys that just get so into it. You know they're programming on the side. They get into hackathons, they want to prove that you know they're smarter than the guy next to them and just constantly looking for the next challenge and just coming up with those creative solutions. I don't know of any other discipline that really has that level of it, but there might be. I mean, I could be wrong. Chris: So, just going back and maybe not the first venture where you and the travel agency in Houston started, but maybe I'm just curious to know as you began some of these startups, maybe sharing some of the lessons learned through some of the challenges you found in starting that venture, whether it be raising capital as an example, or any other challenges that may come about, but I think that capital raise can be one in the startup that some entrepreneurs find daunting and maybe can't solve and never get anything off the ground. Steve: Yeah Well, I think, first off, just wait as long as possible to raise capital. You know most of them kind of build an MVP which just kind of barely works and then go out and try to raise money on it. And whenever you go down that path you just end up way undervaluing what you have. And I know people get in certain situations where they just need to have a check, you know, or it's you know, lights out. But if you can wait until you actually have a client actually generating revenue, actually having positive cash flow, whatever, and then you can show someone, look, we just need to add fuel to the fire here. This is not about keeping the lights on, this is about generating growth You're going to have a dramatically better outcome. The other thing I found out is when you take the big check too early, you start making really stupid decisions. You start hiring attorneys that are expensive, you hire a CFO before you need it, you have a head of HR, all kinds of stuff and overhead that's just not necessary and over time it makes you less and less nimble because you're so worried about payroll, you know, and less focused on just delivering a product that has a you know, a bunch of value. Keep your day job, keep working nights and weekends, wait as long as possible. I mean, I always said, look, cash is like oxygen. If you run out you're going to die. So hang on to it with both hands first. I mean beg, borrow and steal from friends and family and whatever to just get stuff. If you need a contract, go out on the web and search for a capolar plate contract. It'll be good enough to get you started. Or find someone that's a buddy, that's a lawyer, that's willing to do some pro bono work in return, maybe for a little bit of equity stuff like that. Just hang on to that cash as much as you can, for as long as you can. Chris: Well, I think there's a lot there that someone can learn from. Obviously, speaking as a chairman of a law firm, I can't endorse legal Zoom for the startup, but I understand your point. We talk to clients a lot about especially know, especially in the startup phase. Maybe you know helping them get going, but you know and being smart about how they spend their money. But make it an investment in getting at least a sound structure and they may not need right the full-blown set of legal documents, but I can promise you I've seen people start on legal Zoom and wish they hadn't, you know, a couple of years later when things were getting a little tight. But I understand your point there. But conserving cash is important to get off the ground. Steve: Yeah, I mean you don't need to come right out of the gate being in an Inc. You know and incorporated in Delaware and pay all the fees, whatever to make that happen. I mean, just start out as a low-cost LLC and then, when you're ready to sort of raise capital and become a real company, you know you use part of that capital to convert at that time. Chris: So you had mentioned earlier, you know just, I guess, going back to kind of trip BAM COVID having, at least initially, a pretty profound impact but then turning it into a positive, and I'm kind of want to take you back to that time and you maybe dig in a little bit deeper. I think it's a beautiful lesson of something where you know a lot of people just throwing up their hands because travel stopped, et cetera, which decimates your business specifically to you. But then you said we actually learned from that and became a better, stronger company because of it. And you've mentioned right-sizing, the organization stuff. But could you share a little more detail and some stories from that our listeners can learn from if and when their business faces something similar? Steve: Yeah, I think, first off, being fairly quick. You know you can always hire people back, you know. But if you keep them on the payroll and you start burning up cash just way too fast or you're starting to trend towards in the red, you just got to pull the trigger. Nobody wants to, nobody likes to do it, but it's really nobody's fault. It's just something as an executive or CEO you have to do, or a founder. So that's one. Second is, as companies grow, you kind of make stupid mistakes along the way. You get kind of inefficient. You don't anticipate the level of growth that might have been reality. So going back and saying, all right, take a step back, let's catch our breath. You know, what should we have done to kind of handle the scale better? And so, for example, just moving everything to a cloud environment, you know, putting it out to bid, switching from one cloud provider to another, whatever it is, you know you can just generate or reduce your costs dramatically. You know, rather quickly, if you just focus the time on it. Everybody gets so white hot, focused on growth and the next client and the revenue they forget to look at the rear view mirror about. You know there was a lot of costs we could have taken out, you know, which could generate even more cash going forward. Advert: Hello friends. This is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations, and business leaders. Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at BoyerMiller. com and thanks for listening to the show. So we pulled the trigger pretty quick. We right-sized the staff. We had a pretty good and, fortunately for us, this is the other. We kind of lucked into this. Our customers, for whatever reason, decided they wanted to pay a subscription fee rather than maybe a percentage of the savings or a transaction fee, to where what they were going to spend would fluctuate month over month. By paying a subscription fee, they could budget it and they were going to get a better return on investment. So we did most of our deals that way and thank God we did, because when COVID and everything went into toilet in April of 2020, we still had cash coming in the door. So we were actually stayed cashflow positive because we kind of right-sized the staff fairly quickly. And then, coming out of COVID, as the revenue started to ramp back up and our sales started to continue, we were just on a much better platform that would scale after it because it was just all right-sized and efficient and whatever, and at the same time we added new products. So we had a two-year kind of all right, just keep the lights on, market will come back around. We added an air reshopping solution. We added a bunch of analytics to audit contracts and to benchmark performance, so that we had a whole bunch more to sell coming out of COVID than going in, and so that caused another year of kind of explosive growth as a result. Chris: That's great. So, yeah, obviously part of that is give some deep thought to how you price what your product right. So that subscription-based versus transaction for you sounds like a very. Maybe it didn't seem as meaningful at the time you made it, but it turned out to be. Steve: You know that's a tough one If the ROI of your product is pretty clear, like reshopping. If you've got a rate of $2.99, I drop it to $ to $250. I've got $49 per night in savings If you pay me a couple of bucks. Okay, here's the ROI. And we could run some pilots and all kinds of stuff to prove that out. So that makes it really simple and we try to hit look, I need a ROI that when they take it to their boss the guy that's doing the budgets, you know, won't cause all kinds of frustration and concern. So four to one is usually the minimum. A lot of our customers, the larger ones, are getting eight to one, 10 to one, you know. So you could say like you've probably underpriced it. But that's okay, you know we'll claw back some of that. You know, over time when it's a product that's the ROI is a bit fuzzier. You just got to somehow convince the client that this is the potential savings. They're going to guesstimate and then from there work backwards to a price which kind of gets you back to that four to one ROI. So if I think I'm going to save you five bucks a transaction, I'm probably going to charge you a dollar to $1.50 is what I'm going to aim for. Again, to get to that four to one kind of savings estimate for Relagate. Again to get to that four to one kind of savings estimate. Chris: So part of that goes, I think, in building that customer base, really focusing on strong relationships. Talk a little bit about that and what you've done, because it sounds like over the course of the various businesses, you've done a good job of creating some very good partnerships and alliances. What are some of the things you think that have helped you foster that and keep those for so many years? Steve: I think one is you know you got to under promise and over deliver. So if they're going to sign up, you know, don't make them look bad or stupid to their boss. The other one is identifying the influencers in the market. So I'm sure every industry has some individuals that are kind of on the bleeding edge, willing to try new things. And if they do and it works, they've got the microphone or the megaphone to tell a whole bunch of others. So fortunately for me, I've been able to identify who those influencers are. I've got a reputation for just delivering as promised. So when they sign up they have confidence and then they tell their peers and a lot of our sales in the large enterprise market are peer-to-peer networking. It's not from email campaigns or other stuff that we do. Chris: The kind of part of that, the old adage of just do what you say you committed to do when you said you committed to do it right. Steve: It's just delivering as promised. Don't sell me a can of goods and all this great wonderful thing. And then when the reality is just not there, you know, don't make them look stupid. You know that's the key one. I mean, these are after 40 years they become. We have some pretty tight relationships with these folks and I want them to keep their job and we want them all promoted and moving on to the next big role, because when that happens they just take us with them and we just keep getting bigger and bigger. Chris: So you mentioned that about kind of keeping this, your words, the band back together. You've been able to do that, hiring some of the right people and incentivizing the right way. Any insights into. You know what people could think about when they're looking at their team one, trying to, I guess, evaluate whether they have the right people and then finding the right ways to incentivize them to kind of keep that core group together. Steve: To me it's if they feel like they're a part of a team and they understand the value they're providing to the customer and they see that customer's appreciation. You know they're in the conversation with the client, you know, and that's easy to do at a small company, because who else are they going to talk to? Right, you got to bring the dev and engineering. But when you start layering and bifurcating and have people you know in engineering back there in the back room, kind of stuff that don't talk to clients, that's when it gets a lot harder. But when you get them into the conversation and that sense of this is my company, this is my reputation. I'm a part of something here, you know, that's growing and doing well and whatever. It's not that hard, it's really not that difficult at all. It's just everybody wants to be appreciated and feel like they're, you know, part of a team. So that's the formula, right, I mean I could throw money at them. But I ask my employees I mean I am not the guy that's writing big checks to hire people right? I'm like look, we're going to pay a reasonable salary. You know this is not, you're not going to be broke, but you know we're in it for the long term game, and so we want to keep the cash in the company so that we don't have to go do another capital raise which is going to dilute all of us, and so your equity just keeps getting smaller, you know, over time, and the guys that actually make the money, or the investors this needs to be a collaborative team effort so they get that. Chris: I think that transparent communications is key right. So they again they understand their role on the team, they understand what the goal of the organization is and how they can help further that. Steve: You know it's always been kind of fire slow, fire quick as well. You know the people, everybody makes hiring mistakes. It happens all the time. And you know when you hire someone within like a couple of days you're like this is not feeling right. You know, don't let it just sit, don't let it be two years later when you actually kind of work them out. You have to kind of pull the trigger fairly quick because it messes up the whole culture of the company. Oftentimes, especially at a small company, it can create some real problems. Chris: Yeah, I mean that may be the most sage advice and, I think, maybe the most consistent that I hear from entrepreneurs and business owners. It's been my own experience too, that that kind of fire, you know, don't be slow to fire when you know you made a mistake and it's the hardest, maybe one of the hardest ones to do because you're dealing with people. I spoke to someone yesterday and they were like hired, someone had some uncertainty and literally what I learned was to trust my gut because on day one that they started in a conversation went oh my God, this is a huge mistake. Tried to play it out, tried to make it work and guess what? It didn't. Steve: Yeah, the thing is I don't believe resumes anymore and I don't believe LinkedIn pages at all, especially when it comes to higher dev and engineering. It's just anybody can put whatever language they want and say they've got a ton of experience. You've got to figure out a way to validate Most of our hires. There's kind of referrals and peer-to-peer sort of networking. If I find someone, I can usually find someone they know, especially in the Dallas market where we are, that's worked with them at a prior company. That sort of thing and do some back-channel checking is what really pays off for us. And we know the rock stars. We know the rock stars. We know the rock stars, but they're not that hard to kind of pick out. It's the ones that are kind of questionable. That you know. You just got to do your homework and don't count on the resume. Chris: That's a really good point. It's a hard thing to do, though, and it may be easier in programmers. But, to you know, I totally agree with resumes, and profiles can be, you know, massaged, but it's sifting through and kind of through the smoke to really get to what's behind the curtain. Steve: Yeah, yeah, yeah, I mean. And Zoom calls, I mean people hire on Zoom calls or whatever. Like dude, you got to get them in the office face to face, go to lunch, have a couple of face to face interactions before you actually bring this person on board. You know, make them pass a coding test or something. You know something tangible. Don't just look, they're very nice people. You know they all have a. You know look great on a phone call or Zoom call, whatever, but that doesn't cut it. Chris: Yeah, I mean no substitute for personal interaction and seeing how people show up. Right. Steve: Yeah, the other thing is, since we're, you know, on a startup mode where everybody's looking at kind of the potential for equity, I'm like, look, if you're as great as you are, why don't you come on board for a month on a contract basis? Let's see how it works out, you know, and we'll go from there All right, and you really get a feel for someone and how well they're going to. We try it, we like to try it, before we buy. Let's put it that way. That's one way to do it. Chris: just talk about you know specific kind of leadership styles and and how you would describe your leadership style, and maybe how you would describe it today versus maybe 20 years ago as you you were emerging as a leader, and how you think it's changed oh, my god, it's night and day. Steve: so first company way back when. Maybe it comes as a surprise or not, but it was a coat and tie environment. Okay, guys, we've got to put on the ties and whatever. That was just so stupid. Checking office hours and all that crap and tracking vacation time just seems so silly. Now, if you can get the job done, I don't care what you wear, I don't care what you look like, I don't care what you wear, I don't care what you look like, I don't care where you do the work, I don't care if you have to take vacation on a pretty regular basis for whatever reason. I don't care if you're going off and disappearing to watch your kid play soccer, I do not care anymore. Just here's the job. Here's kind of an expectation. You know, as long as I understand, you're trying hard to get it done as quick as possible. We are good. You know, it's kind of a thing. So all that other stuff was just noise. That was just stupid, anyway it's. I mean back when I started in this, I mean programming and development and all that and the whole tech world was fairly new, so nobody knew what they were doing or how to manage these folks and it evolved over time, but fairly quickly. I mean, by company two, ties were gone. By company three, office was gone. I mean I've been virtual for 25 years. Unfortunately, we had offices but we just I think they were a waste of money but we did it for optics more than anything. Chris: Yeah, so it sounds like more kind of a traditional and somewhat of a command and control, starting out to now a little more, much more flexible and providing autonomy as long as people deliver on the expectations that they're communicated with. Steve: Which comes down to you just hire the right people, right, if you can get kind of get that sense for what the kind of folks that are going to do well. So, for example, if I see, if you can get kind of get that sense for what are the kind of folks that are going to do well. So, for example, if I see that you've got you spent 20 years at a really big company, you are not going to do well at a startup. I could guarantee you You're used to other people doing work for you. You know you're just kind of the sit back in your office and sort of you know, tell folks what to do. That ain't going to happen. You need to get your hands dirty. You might have to write code. You got to do PowerPoints, you got to do Word docs all that stuff yourself. Big company folks just tend to lose that ability, let's say, or it's beneath them and that's not going to work. Chris: Yeah, I mean it's almost. Yeah, that's not in my role. Mentality versus everything is in everyone's role. Mentality, right, it's almost. Yeah, that's not in my role. Mentality versus everything is in everyone's role. Mentality right, it's about getting a job done, no matter what it takes. Steve: And I think that drives me crazy at a big company because, you know, unfortunately for others, I tend to poke my nose into others' lanes and I get told a lot Steve, stay in your lane. Nothing bugs me more, you know, than to hear that. But that's the big company way. Chris: So you've gone through a few companies and you're now, I guess, inside of a larger company. Now Are you finding it easy to kind of have that mentality of flexible leadership and innovative environment? Steve: In the new company? Yes, I would have to say no, it's kind of as I expected. You know, with other acquisitions you start. You know, this kind of here's how it happens. However, embers, I believe, is trying hard to carve out a role where I can exist, let's put it that way. So my title right now is Chief Strategy Officer, and it's a bit nebulous, kind of by design. I can sort of make it what I want and as a result of being chief strategy officer, I can get outside of my lane and people can question it. I'm like everybody needs strategy. That's my title, I'm going to get in your lane, kind of stuff you know. So I tend to kind of bounce around to lots of different projects, objectives so on. I kind of help make sure that it's cohesive, you know, across this travel and expense story, you know. But at the same time I don't have a lot of direct reports, which is great. That usually doesn't go too well either. So so far, so good. Chris: Fingers crossed, that's great, yeah, we we kind of covered kind of the challenges of COVID If you think back prior to that, any other challenges along the way with the first two or three companies, everybody, yeah, yeah, I think people some of those are the best lessons we learned or some of the challenges we go through. I'm just curious to know any kind of lessons from a challenge that you could share with the listeners that might help them when they face something similar. Steve: Oh my God. I mean everybody's made mistakes and if they got lucky along the way and if they don't admit that they're lying, I mean some of the bigger ones. 9-11, we had a solution that was processing about 80% of all corporate travel reservations made in the US. 9-11 hit and we went to zero within about 24 hours, so that was kind of a gut check. Fortunately, travel bounced back fairly quickly, but it made us take a step back and realize how nimble we were If something like that were going to happen again. So that's one, and you know, and there's all the kind of day-to-day stuff. I mean there's fraud, there's employee HR

In this episode of Building Texas Business, I sit down with Rob Holmes of Texas Capital Bank. Rob shares the bank’s dramatic turnaround story since he became President and CEO in 2021 amid challenges, including a failed merger. Rob explains how Texas Capital improved its standing through strategic moves like fortifying capital levels and attracting talent from global institutions. We explore Texas Capital’s community focus through initiatives increasing volunteerism and launching a charitable foundation. Rob highlights how their junior program brings diverse talent while nurturing a vibrant culture. Wrapping up, Rob discusses maintaining liquidity amid regional banking stress, their strong capital position, and diversification that sets them apart. SHOW HIGHLIGHTS Rob and I discuss the transformation of Texas Capital under Rob's leadership since 2021, highlighting the strategic moves that improved the bank's financial standing and attracted top-tier talent.Rob explains how Texas Capital's strong capital position and strategic diversification helped it navigate the regional banking stress of 2023.We explore Texas Capital’s commitment to community engagement, including extensive volunteer hours, the founding of a new charitable foundation, and various philanthropic activities across Texas.Rob elaborates on the bank’s innovative junior program, which has attracted diverse and talented professionals to Texas Capital.We discuss the importance of maintaining a respectful, collaborative workplace culture and the value of in-office collaboration for fostering a strong, healthy culture and achieving better customer outcomes.Rob shares insights on the challenges facing the banking industry, such as regulatory inconsistencies, the inverted yield curve, technology integration, and commercial real estate risks.We discuss Texas Capital's strategic initiatives to expand services, including public finance and equity research in oil and gas.Rob reflects on the lessons he has learned from his career, emphasizing the importance of candor, transparency, and servant leadership.Rob recounts personal anecdotes about his first jobs and leisure pursuits, offering a glimpse into his personal life and leadership style.We touch on the role of media in shaping perceptions of regional banks and the distinct advantages of regional banks in serving local communities and businesses. LINKSShow Notes Previous Episodes About BoyarMiller About Texas Capital GUESTS Rob HolmesAbout Rob TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Rob Holmes, President and CEO of Texas Capital. Rob shares an inspiring story on how Texas Capital has rebuilt itself and become the first full-service financial services institution headquartered in Texas. Rob, I want to thank you for joining me here on Building Texas Business. Welcome to the show. Thank you very much. Let's start. I know you're the CEO Building Texas Business. Welcome to the show. Thank you very much. Let's start. I know you're the CEO of Texas Capital. Tell the listeners a little bit about what Texas Capital is and the type of services it provides here in Texas. Rob: Great. Well, thank you very much for having me. So Texas Capital had a very proud founding in the late 90s by Texas business people to found a bank to serve Texas businesses with local decision making. After all, the banks failed in the late 80s and they had a very proud run and 05 went public and did very well. Then about the mid teens we kind of started going a little sideways and by the time I got there the bank needed to be kind of rebuilt and so we had a failed merger with a bank about a third our size and that tells you anything, and really because of COVID. But after that they needed new leadership and so what we did was we started over and we went fast. So we raised a perpetual deferred deal with sub-debt securitization, got out of a line of business correspondent banking that attracted a lot of capital and improved the capital by about 270 basis points in about eight weeks, and that's my bet as we run the bank very conservatively. We also brought in a lot of new talent. So the entire operating committee is new. We have a new junior program we can get into that later. But then we started on the journey to build and this is kind of interesting. I think you'll find it interesting. We're the first full service financial services firm ever to be headquartered in Texas and if you think about it it makes perfect sense. So in the 80s you had Glass-Steagall and stuff. You had a lot of big banks. They failed. They were replaced by larger institutions from out of state that saw this as a very attractive market. But the in-market banks never went into the full service direction. So regional banks are made from community banks and they get bigger and they didn't have the products and services. They just had NIM banks, if you will Sure. Chris: Well, that's an impressive thing to have a claim to being the only one headquartered in Texas. I would not have thought that, you know, given some of the other Texas yeah. So I mean you're not kidding when you said a full restart just a few years ago. Rob: Full restart. So we have think about who we're able to attract, and this says more about Texas than Texas Capital. But the woman that runs treasury services for us ran treasury services for JPMorgan Chase globally. Our chief risk officer was the head of risk for JPMorgan's investment bank and then chief risk officer was the head of risk for JP Morgan's investment bank and then chief risk officer for the commercial bank and then head of risk for real estate globally. Our head of ops was a head of ops and tech for Stan O'Neill at Merrill Lynch. The CEO Started in the mailroom, ended up reporting as CEO head of ops and tech for Merrill Lynch. I think he can do it here and that so and that just kind of it keeps going. Our CHRO came from Cilindes and our CIO has an impressive background. Our head of commercial banking all of them had bigger jobs at much larger institutions. Chris: Yeah, what that tells me, Rob, is that those people saw a bright future in the business climate in Texas to make those kind of moves to join you and the Dallas headquarters. Rob: There's no doubt about it and, by the way, I wouldn't have tried this anywhere else, I mean for sure. So, as you know, texas is eighth largest economy in the world, second largest workforce, youngest workforce, fastest growing. We've created 46,. We've created more jobs in 46 last 48 months, so it's a very attractive place to be overall? Chris: What was it about just speaking to you? I know you joined in 2021, that based on the career you had built to that moment where you saw this as the right opportunity for you. Rob: I was very happy where I was. So I was primarily in the investment bank at JPMorgan Chase, but my last 10 years I ran the large corporate bank and the commercial bank ended up taking that to 22 countries. So I ran that business. Globally it was over $180 billion in assets. It was a third treasury, a third lending and a third investment banking. Great business, great people. But when this bank kind of went sideways, I had two or three people call me and say, hey, I'm thinking about this, would you come run it? And it surprised me. I'm like, why are you calling me? But then I started looking at it and, like you, I'm from Texas. I commuted to New York for 25 of the 31 years that I worked for JP Morgan. But people kind of said, why don't you come home and build something special with where you're from? And that, through more and more dialogue, became very appealing to me and I did not know and shame on me that as bad a shape as a bank was when we got there. But it ended up being a blessing because you know like today it'd be very difficult to do what we did. I mean to have a board, investor base, regulators, constituents. Let you reinvest. We reinvested over a third of our non-interest expense and then more, and we said to the investor community and the board and others that we're going to have negative operating leverage for about a year and a half. That'd be very hard to do in this climate, right? And so the other thing we had to do became a blessing because you had to do it all at once, and so I'm glad that's behind us. Today the bank is. It used to have just mono banking, like a community or regional bank. Today we have segmentation, so you have business banking for small businesses, middle market banking for a little larger businesses, a little more sophistication, and then we have a corporate banking group like a money center bank. And when you have a corporate banking group you have to have industry expertise. So we have energy, diversified FIG, government, not-for-profit healthcare, tmt and mortgage, so we have the industry expertise of any money center bank right here in Texas. And then we have private wealth and then we rebuilt all of treasury. So it's a brand new bank. We have a new payments platform, new lockbox, new card, new merchant, new digital onboarding that we came up with. And so we people say the banks can't compete on technology like with the big bank, but we can because we have one platform. Those big banks have many platforms because they're a combination of many banks. We can go in that if you want. And then we have one platform. Those big banks have many platforms because they're a combination of many banks. We can go in that if you want. And then we have, as I said, private wealth, investment banking, and we can go into as many of those areas as you want. Chris: So you basically built it like you said. As businesses are coming to Texas, you're ready to serve whatever need they have. Rob: For sure. So we want to be very relevant to our clients and we are a one-stop shop, so you won't outgrow us. We were a top 10 arranger of bank debt for middle market companies in the years. We've done about $110 billion of notional trades in about 18 months. Wow, it's profitable. Chris: So what's your vision for the future, then for Texas Capital, and kind of, how are you working to achieve? Rob: that it's actually pretty simple. It's maturing the platform that we built. So we are the number one lender to Texas-based businesses of any Texas-based bank. Now that's new. We've had tremendous success. Business owners and decision makers love the local decision making. They love the fact that when they hire us, they're getting a very talented, experienced MD working for them instead of maybe the money center bank, whatever, a VP or something assigned to it. They just like the local decision making, local access. But the go forward strategy is People ask me this all the time what's next? And they think that we have a big bang answer. The big bang answer is delighting clients and banking the best clients in our markets, and we've always said, or I've always said we'll be defined by our clients, and so we have been blessed to have clients be attracted to the strategy and platform. So we're going to just do more of what we've done. Chris: So what I like about that strategy is the simplicity. I think there's a lesson there for entrepreneurs and other business owners in what you've done in the last few years, and that to me is get the foundation right and your core right Correct, and then do the fundamentals really well. Right, it's blocking and tackling is what you're doing. Rob: It's executing now for sure. And I had one CEO of a very renowned New York financial firm ask him to come see me. They had heard about what we were doing and he wanted to understand it because we actually we took what he would say was the very best person from his sales and trading floor who had been there 18 years. He didn't understand how we could attract that person because that person drove a U-Haul to Dallas with his wife and kids before we were even open. And he said tell me your strategy. And I went through it and, to be honest with you, I was hoping he would like it because I was pretty long the strategy. And so he did. And I said what do you think? He said I think y'all are going to be very successful. And this was early on. And I said why is that? He said do you have a differentiated strategy with differentiated talent in a differentiated market? And I think that's true. But then he said what do you think? And I said well, our talent's really. This is back in 21. Now we've done all these things, but I said that the talent is really good, but we've got to do everything with this jersey on now and delight our clients with TCB jersey, not another jersey. And he said look, rob, do it once, it'll be hard, do it three times, you'll be good. The fifth time you're an expert and I kind of he kind of and he's pretty renowned. It was a pretty simple lesson but it's kind of true. And now we have done it and we are good at what we're doing. But we still can mature the platform, that treasury platform we talked about. It's literally second to none. We're doing open banking for clients. We're doing a digital onboarding. You can open a commercial account tomorrow at a money center bank. That take eight weeks or six weeks. But that platform to scale to get the most out of it, I mean we could run it without any more investment for five years. So we got to scale the business and, by the way, it's happening. So that treasury platform is it's called P times V, price times volume that's how many transactions are going through the factory or warehouse financial transactions. That's usually for a bank it's a 2% business at best. It grows the economy, it grows the GDP. We're going 17%, quarter over quarter, year, quarter after quarter. That's remarkable Because of new clients moving to the platform. So it is scaling but we just need to continue to do that Right. Chris: So you talked about the platform a couple of times. What type of I guess technology or emerging technologies do you see having the biggest impact in the banking industry over the next, say, three to five years? Rob: I think real-time payments, I think open banking, and people don't really understand what open banking is. What open banking is? It's actually very simple, so think well, here's, here's one simple way. Part of it is you don't have to leave your internal financial platform to go to our platform. We'll put an API on yours and so you can just push a button and be into our system and send ACH or wire or what. So I think AI, I think open banking and I think real-time payments. Okay. Chris: Well, I can speak from experience, as we transitioned to Texas Capital a year ago and, to your point of the ease of that transition and being able to deal with decision makers made it seamless. Good Well thank you. It's been a great relationship for us, for sure. Rob: Good Well thank you. Chris: What you're saying is true, Well, thank you. It's been a great relationship for us for sure. Good, Well, thank you. I can attest to that. What you're saying is true, Well, thank you. Let's talk a little bit about where you see corporate leadership whether that's your C-suite or just the company as it exists and community impact. What type of initiatives is Texas Capital working on to be a meaningful member of the community? Rob: Yeah, well, that's a. Thank you very much for the for the easy pitch. So I think we do. We bat way above our weight in community impact. So we do tens of thousands of hours of employee volunteer in the community. We, as part of this transformation, when we were investing in the platform, we took time to also found our first foundation. We never had a foundation before. So we have a foundation and we do volunteer hours and we just were part of the group that bought Opal Lear Newhouse. We were the first one to open a branch in West Dallas. We gave the founding seed money for Southern Gateway in Dallas. We're big supporters of Rodeo here in Houston. Last year I think we sponsored the opening night, so I think you're going to see us pretty much all over the state of Texas in terms of giving and more than just money but time, resources, expertise to philanthropies. We hosted a great event about three weeks ago. People came from all over the country and it was for veterans and we had veteran not-for-profits and we had veteran-owned businesses and we just brought them together and talked about issues and how they could work together and synergies between the two and advancing veterans on a go-forward basis, and the people that came would just blow you away and the feedback of it. I happened to be out of town on a three-day weekend afterwards out of the country and somebody approached me and I didn't know them and they didn't know me, but I guess they'd seen my picture or something and they thanked me for having that veteran event. Wow, and so it had a far, far impact. It will do things like that. We have a nonprofit event in every city, getting nonprofits together, helping them learn how to raise money and trade best practices, and we do that and we'll do that in every city during the summer. So you know, our giving is good, Our volunteer hours are fantastic, Our sharing of expertise is good. Our investment in the community is great, Good. Chris: Let's circle back to because that kind of made me think of team building, right, so you talked about basically a wholesale change with the team around you. What are some of the things that you look for to make sure you're you know, through that recruiting and hiring process, that you're getting the right person for the position? Rob: Yep, so this is a great question and this was the key to what we've done so far and how we're going to reach our 25 goals. So in September of 21, when we announced a strategic plan, which was pretty dramatic, we said we're not going to achieve our financial goals until 25. With that came a lot of change and a lot of talent. So 80% of the people at the firm are new since I got there. That's 80% of over 2,000 people. So that's a lot of change, managing through a lot of change through a transformation, through a regional quote, unquote regional banking practice that I'd love to talk about, regional banking practice, regional banking stress that I'd love to talk about transformation. So there's a lot going on there, both internally and externally, that we had to manage through. And what we did is we started at the top and the bottom, so we put new leadership with new skill sets and new expectations and new goals of banking the best clients in our markets instead of just being a bank, etc. And we also started a junior program. It was the first junior program in the history of the bank. Chris: You mentioned that earlier, so tell us a little more about the junior program. Rob: It's awesome If you have a kid and they want to get into finance and they don't want to go to New York but they want to work at a great financial services firm to have them join us. So we post in. So I got there in January of 21. It so I got there in January 21. It's COVID Nobody's in the office. We'd just been through this internal stress with the failed merger, new CEO, the whole bit. I said we need a junior program. We posted 60 positions. We got 800 applications. We hired 60-something. A third of those had their masters. That wasn't required. The average GPA was over 374. So people love what we're doing right. The next year there's over 2,000 applicants and our junior program is great. And, by the way, I helped build one in the investment bank in my last firm and one in the commercial bank in my last firm. I thought they were both very good. This one's awesome. So you come in, you go through four or five months of training and then you go into your line of business. But we probably hired you after your internship the summer before, if that makes sense. Sure, the program has some of the diverse classes I've ever seen in banking and we didn't do that. This may be controversial. We do that on purpose. We did that because we hired the best people Exactly and they're the most diverse classes, and so we're really excited about that. And then the attrition rate there isn't nearly what we thought it would be. We built it for a higher attrition rate because those kids usually leave a large percentage after third year. Sure. They're not leaving. Rob: They like it, so that's been kind of fun. It's a good problem, right, it's a great problem and we'll use all of them. And, by the way, after that change you should just know the attrition stuff has dramatically slowed as the transformation slowed. We got all the talented people in place that we needed so we are ahead of corporate America, finance and Texas companies for attrition and excited about that in the new culture here. ADVERT Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Business law firm that works with entrepreneurs, corporations and business leaders. Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom and thanks for listening to the show. Chris: Well that you know that low attrition rate leads to what you talked about earlier better customer experience, more stability. Rob: We need stability. Chris: Everybody needs stability. Yeah, for sure. Okay, so you mentioned regional banking stress. Tell me what you're referring to about that. Rob: Yeah, last spring of 23,. Eb failed, first Republic and the like. We were fortunate. So, november of 22, we sold a business to Truist for $3.5 billion with a very big premium on it. With the sale of that we became if you compare us to any $100 billion bank or above in the country or any Texas public bank we have the third most capital and I think in the next quarters we'll have the second most but third and we're number one in equity tangible common equity assets. So we're the least levered. We have third most capital. Our highly liquid assets are like 29% our cash and securities. Our AOCI problem, which is the mark on the bond portfolio. Banks are struggling with that. We're very good there. So our capital, our liquidity, et cetera, was very strong. So we didn't experience outflows of deposits or anything. What we did experience was a rotation, like every bank in the country, from non-interest-bearing deposits to interest-bearing deposits. So all banks if you want to call this cost of goods sold went up. But the regional banks for us the reason I wanted to come back and talk about that people call it a regional banking crisis. It was not. It had to do with certain banks were of the size that they define regional banks that had the wrong strategy, the wrong concentrations, and they failed, right. That's not because they're regional banks, right, they just happen to be that size. By the way, credit Suisse failed too. It is a global bank, right. So you know, I think this is sometimes where the media gets the message wrong and puts fear into the market, and they love it, and they love it and so I'm really proud of what the regional banks do and how they serve their clients in market and their local communities, giving back to their communities, being Main Street lenders, and I'm really proud of. You know how we do that. I think I told you before we went on the air. We're the number one lender of Texas-based businesses, of any Texas-based bank. That's a big deal because these money center banks they may be in the state or super regionals in the state or even regionals in the state but, if they decide, oh you know what, it's not okay to bank an energy company, they don't Well, guess what? We have those decisions here. We don't have somebody else deciding our social norms. Chris: Right, right, that's a great selling point. Going back to the kind of the junior program and this new team, let's talk about culture, I mean. So how would you define the culture at Texas Capitol and kind of, what do you think you've done to kind of foster that and what do you see as necessary to keep it growing? I think? Rob: the culture is transparent, curious, candid and relentless dissatisfaction, as my general counsel calls it. So, look, we've made a lot of change. We'll continue to make a lot of change. We just hired somebody to run public finance for us. We didn't have that before. Lot of change we just hired somebody to run public finance for us. We didn't have that before. We started into the foray of public equity, research and oil and gas. We're going to keep growing and building, doing things that serve our clients and our clients' needs. But the one thing that we kind of talk about a lot is and I'll say it little softer is you know just no jerks allowed. You could talk about, you can talk about Ivy League. You know culture and they have you know big words, but the simple thing is like we're gonna treat people with respect, period. Right now. You can be tough and you can be hard, but you gotta be fair, right, and you gotta be polite. And you know you can be hard but you've got to be fair and you've got to be polite and you can have high expectations while being compassionate. So we have high expectations, we are moving fast, but we do treat people with respect and we like working with one another and that's been part of the fun is, we've been in office because we think that's how you build a career and not a job, and that's how you collaborate to serve your client and that's what's best for our clients and best for employees. And we like being with one another. We don't want to work remote from a beach and not share life's experiences with our colleagues. Chris: Yeah, couldn't agree more. I mean, we got back to the office in May of 2020. I believe, and my partners here, you're a part of an organization for a reason. Organizations are a group of people together, right, correct, and we learn from each other. We can collaborate in a customer service-related industry. Like you and I are in the customer does better when we're collaborating to serve them, you and I are in the customer does better when we're collaborating to serve them, and we do that when we're together. Yep Hands down, no question. And we've been like you. We've been in office in person for a while now and you read as much as I do for the last six, seven months. You just see the pendulum swinging back because the other organizations are realizing they're losing customer satisfaction, they're losing engagement with their people. You can't have a culture if you're not together. In my view, or you can. Actually, you can have a culture. It's just not a healthy one in my view. Yeah, it's really bad, that's right. Rob: So, look, looking back, it seems like a really easy decision and, by the way, I was back in the office in 2022. But at this room, I didn't get there until January 21. Nobody's back in the office. You meant 22 as well. Yes, I did. I did. Excuse me, I did, but you know I got here in 21. We went back to office Memorial Day the Tuesday after Memorial Day of 21. And it was a harder decision then. It seems easy now Because, like even the day before, there was rumors of everybody in our ops organization that they were going to protest and walk out. You know at 901 and we decided, we made a conscious decision that this is what they're going to do and we wanted the people that wanted to be in the office right, and we may lose some people, and that's fine, and it would be harder in the short term, but the people that would be attracted to the platform and the business and us would be people that wanted careers, not jobs, and, by definition, those are the better employees, right, and I think those people attract those people and that's how we were able to transform so much while other people were sitting at home. Chris: Yeah. Now to your point. I mean, if you have a long-term strategy right, then you're willing to go through some short-term pain to get the right people that are going to help you achieve that For sure. A little bit about just your thoughts on what are some of the biggest challenges you think facing the banking industry as we sit here today and maybe for the foreseeable future. Obviously, for the last couple of years, every month everybody's watching the Fed, so that may be part of the answer. But just what do you see as the challenges? Rob: Yeah, so there's plenty for most industries though, too. So one is, and this is an excuse, but it is a challenge. The regulatory body needs to come together and be consistent and apply things consistently. That'd be helpful. We have an inverted yield curve now for the longest time, one of the longest periods in history, you know the two years four, seven something. The 10 years four two something. That makes banking very hard for a lot of technical reasons we can go into. For most banks, technology is a problem. Most banks are an aggregation of multiple banks. They're not like us that has one technology platform. That's, by the way, brand new and totally modern. Banks have not been willing to. It's been a cost cutting game because a lot of banks this is why our strategy is so good NIM banks. So net interest margin, which is loan only, the model of taking a deposit and making a loan and achieving a return above your cost of capital through cycle, I think is very difficult and that's why we supplemented our platform. You know loans, investment banking, private wealth. You know all the different things we do for a client so that we can achieve that return, because a lot of the banks to have that return would have to maybe make a riskier loan to get a higher spread or what have you? So I think the NIM banking model to get a higher spread or what have you? So I think the NIM banking model especially after spring of 23, is hard. I think the technology spend is hard. I think there's a lot of banks that have too much commercial real estate. So our commercial real estate is a very small percentage of our total capital. Regulators want you to be maybe 250 or 300%. There's a lot of banks that are 400. That's too much, yeah. And when you have that much commercial real estate, remember a lot of its construction loans, and so the construction loans. You made that decision today and you're funding it in two years. So you're going to you're that that concentration, because those paydowns are, you know, like a five-year low and commercial real estate is going to keep growing. So banks marginal loan the dollar to make the next loan. The cost just went up, so they're going to slow down their lending while the commercial real estate gets absorbed. They can't be relevant to their clients with anything other than the loan product and if they're not doing that, they're going to slow down their growth and slow down lending. They can't be relevant to their clients with anything other than the loan product, and if they're not doing that, they're going to slow down their growth and slow down lending. They don't have the margin to spend on technology. Chris: And those are some of the problems. Yeah, there's cascades, right, totally. Let's turn a little bit to just kind of you and leadership. How would you describe your leadership style today and maybe how you feel like it's evolved over your career? Rob: I think you've got to do what you want other people to do. So I'm in Houston today. We're seeing six clients we talk all the time about it's about the client, not us. Ops exists to serve a client, technology exists to serve a client. It's not for the bank. And so we have become pretty client obsessed at Texas Capital, delivering the best outcomes for our clients. I mean, like the one deal I think I told you about, we sole managed the largest debt deal in the country last year. The largest sole managed debt deal in the country last year. That's after a money center bank failed doing it. We gave the client the best advice, knowing they'd probably go with the other bank. They did. The other bank failed them. They came back to us and we did it. Now we have a client for life. So give the client the right advice, do the right thing for the client, but your people have to see you do what you want them to do. So I'm with clients. We are aggressively serving clients, but we've managed the place very conservatively. And then I think candor and transparency is really important. Chris: I think those are great qualities, anything that you could point to. I always think people I'll speak for myself, but I think I hear it in others as well a setback or failure that you encountered, that you learned from, that made you better as a leader, as a business person, anything that comes to mind, that where you look back and go, wow, that was transformational. Because of that, how long do you have? Rob: No, I think we talked about junior program, one that always comes to mind because there's early on the program of what early on my career was. When I was a junior, you know, I talked to that junior class a lot and one of the things I tell them is be careful, because you know, building your brand sometimes is too easy, like you know, if you do something great, like I had some successes early on as being a good client guy, then I was the client guy, but also my brand that I got early on was, as a junior was I wasn't very good at details and as a junior an analyst associate your only job was details Right, and so I learned the hard way that maybe I needed to focus on the details. Now I would suggest that the people that work with me think I'm too focused on the details. But that's because I learned the hard way as a junior and people corrected me Right and I'm not sure if they corrected me the wrong way or right way. That was the old days, but they certainly made an impression. So I think that was one of the things I learned is details matter and details are important, and I learned it as a junior and that stayed with me throughout my career. The other one was one I think is interesting is later on, when we were talking about a promotion, one of my bosses told me that I think this is really important for people to know, because I think it's true. He said rob, I don't it, my vote doesn't matter. The vote that matters is everybody else on the floor that works with you, because I'm not promoting you unless they want you promoted, right and so I do think that you know that's a pretty good lesson too. Chris: Yeah, kind of well servant the well, servant leadership, for sure, and that kind of team mentality For sure, team mentality. And I've said forever, I think the lessons you remember the most are the ones you learned the hard way. For sure, so the details right. Chris: So he's like I'm not going to let that happen again. For sure, that's great. Well, I appreciate you sharing those up, but I think it's a great quality leadership to have that vulnerability and humility about you for sure. So I'm going to kind of move away from the business stuff. Okay, to wrap things up, I want to know what was your first job, my? Rob: first job was uh bagging groceries and stocking grocery shelves in high school I did the same thing, did you? Chris: yeah, uh, it was hot and yeah, I tell people we had to wear like black pants. Oh, yeah, these kids get to wear shorts. Now I'm like this is going easy on them. Rob: Yeah, I think one day one of the guys got mad at me because they made me restack all the remember when people used to return the glass bottles. Yeah, and it was in a cage in the back of the alley of the grocery store. It was about 110. And nobody had organized them for about three months and I got fine job. Chris: Very good. All right, you're born and raised in Texas, so do you prefer Tex-Mex or barbecue? Rob: Both Like a brisket taco. Yeah, that's pretty good. Yeah, yeah, I like that All right. And last thing if you could take a 30-day sabbatical, where would you go and what would you do? I'd probably spend half of it fly fishing in Montana and half of it quail hunting in South Texas. There you go, Just not this time of year. Not this time of year. That's right. Chris: Rob, I want to thank you for taking the time. I mean, I had no idea the details behind the transformation at Texas Capital and obviously what you and your team are doing and have done is nothing short of remarkable. So thanks for sharing that. Rob: Well, thank you, I think you know. We think Texas does deserve its own full-service financial services firm. Chris: Well, I'm glad you're delivering it. Thank you, take care. And there we have it another great episode. Don't forget to check out the show notes at boyermiller.com forward slash podcast and you can find out more about all the ways our firm can help you at Boyermiller.com. That's it for this episode. Have a great week and we'll talk to you next time. Special Guest: Rob Holmes.

In this episode of Building Texas Business, I sit down with Chantell Preston, CEO of Facilities Management Group. She takes us through her journey of transforming the healthcare industry - from an unexpected start managing facilities to founding Mentis Neuro Rehabilitation. Chantell's strategic moves in positioning her company through the pandemic era offer key leadership lessons. We discuss her transition in fostering trust and respect amongst staff, vital for a positive culture, especially in difficult times. Her reflections on setbacks emphasize emotional readiness for both failures and leadership burdens. Wrapping up on a lighter note of future dreams, from travel adventures to family time, Chantell offers a well-rounded portrait of an impactful leader. SHOW HIGHLIGHTS Chantell Preston shares her unexpected entry into the healthcare industry and how it led to her role in developing numerous healthcare facilities across Texas.We discuss Chantell's experience founding and successfully exiting Mentis Neuro Rehabilitation, a company focused on traumatic brain injury patients.Chantell explains her strategic decisions and leadership style transformation during the COVID-19 pandemic, emphasizing the shift from an authoritarian to a collaborative approach.We explore the importance of trust, respect, and open communication in maintaining a positive team culture, especially during challenging times.Chantell recounts the lessons learned from entrepreneurial setbacks, including the emotional toll of difficult business decisions and the significance of building strong relationships.We discuss the tactical choices made to support frontline workers and expand service lines during the COVID-19 pandemic.Chantell reflects on her evolution from a closed-off, authoritative leader to a compassionate and empathetic one, inspired by her business partner's example.We talk about the challenges and liberation of breaking societal norms as a female leader and the importance of achieving work-life integration.Chantell shares her personal dreams of travel and family time, highlighting the difficulty of balancing a busy work schedule with personal aspirations.We discuss the advice Chantell gives to young entrepreneurs, emphasizing the importance of focus, having a supportive team, and being ready to pivot when necessary. LINKSShow Notes Previous Episodes About BoyarMiller About Facilities Management Group GUESTS Chantell PrestonAbout Chantell TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Chantell Preston, CEO of Facilities Management Group. Chantell is a self-described risk taker who emphasizes the importance of establishing trust and respect in building a strong company culture. Chantell, I want to thank you for coming on Building Texas Business. I appreciate you taking the time. Chantell: Thanks, Chris. I appreciate you inviting me to come on. Chris: So let's just kick this off by telling us a little bit about Facilities Management Group, the company you're currently CEO of. Chantell: Sure, so Facilities Management Group. We're really a platform company. We own and operate healthcare facilities throughout Texas. Initially, when I took it on, we had a hospital in Las Vegas, but we divested that and sold that to a local system there, and so now our main facilities are here in the Texas market. Chris: Okay, and I know this isn't your first venture in the healthcare space Tell us a little bit about how you got involved or found yourself being an executive in the healthcare industry. Chantell: Sure, it's kind of an interesting story, chris. I don't think any of us know when we graduate from college where we're going to end up in life, and I can truly tell you I never thought it would be health care. So you know, straight out of school I got a great opportunity to go to work for a small company that was developing ambulatory surgery centers. Didn't know anything about ambulatory surgery centers but I knew the folks that were in the organization. So took the leap of faith and I just wanted to learn every aspect. I felt like if? How could I go out and sell things if I didn't realize or understand how they were operated? So took the opportunity to really dive into the health care and learn both the development aspect as well as the operational aspect. Best thing I ever did. From there just kind of soared, I became very niched in regards to building healthcare facilities. I've built over 65 hospitals in my career, whether they're LTACs, rehabs, full acute care hospitals, linear accelerators. So I just kind of found a niche. I really enjoyed watching something from concept to operations. However, I got to a certain point in my life I decided I didn't want to be a consultant forever. So my previous partner and I started a company called Atlantic Health Group. We were going to be a surgery center company. We realized the market was saturated at that point, so we started a company called Mentis Neuro Rehabilitation. Mentis was assisted living rehabilitation for traumatic brain injury patients. To be honest, we really didn't know much about it when we started. We built an amazing team to operate the company for us and then we realized how much need there was for traumatic brain injury patients, so we continued down that path. I continued to build facilities to generate revenue, to build Mentus, so we didn't have to raise huge capital. So we bootstrapped everything together and we took Mentus from concept to exit in 2015. Chris: Wow. Chantell: So we exited the mid-market. And then comes back to what are you going to do with your life from there? So I really stayed for about a year and realized that just my heart wasn't in it anymore. Things changed. We built such an amazing culture, so really focused on what was the next phase of my life. That's when I ended up taking over facilities management group. One of my partners that was operating the entity got ill and so I stepped up and said I'll take over, and that's when we really developed Facilities Management Group. At that point, we had a lot of individual facilities running independently of each other and we wanted to build a platform company that we could have some synergistic services across all facilities. So that was 2018. And so that was a great ride. I learned a lot. Six months after I took over, covid hit so you can only imagine what happens with the hospital industry when that happens? Chris: Yeah, I'm sure there's. We'll get into that because there has to be a lot of good stories there, but I can't help but notice that, as you told, that is, you talked about being thrown in cold, knowing nothing about the industry healthcare that is but then you found yourself evaluating opportunities for surgical centers and then the mental health, brain injury type of facilities that you mentioned. I want to talk about what type of processes did you go through, and or with your partners, to evaluate the opportunities when you're like, okay, what's next or what else can we do? What are some of the things that you found to be valuable and useful in going through that process, as well as maybe some of the things you wish you hadn't done? Chantell: Sure, Great question, chris. You know, as we all go through our career, we, you know, we try to evaluate things. Everybody looks at things very differently and you know you probably say I'm a calculated risk taker. So, again, I wanted to be able to find a path where, you know, my number one was I wanted to help people. You know, I think most of us get into health care because we have this naivety that we really, you know we can make a change in the world, and I think we do, just maybe different than what we anticipate when we go in. So I think it's really about when I would look at each of the opportunities that came up. You know, again started at a small company and I wanted to learn as much as I could, and then I got recruited from there. Once I found a niche for myself, I didn't really have to go looking for jobs. People would come to me, but then it was like, okay, I learned some hard knocks at the same time as to going to work for folks, because they throw a lot of money at you or they say, oh, we're going to create this amazing environment, and then you get in and you realize this is not really a productive place for me to be and in those situations you just try to take, learn everything you can, you know, gain as much experience and knowledge, because I look at everything as a stepping stone to the next place. So when we, you know, when we started Atlantic, it was kind of an interesting scenario because I had a ton of development partners that I had already established that I was working for as an independent consultant. I didn't really want to be a consultant forever. I wanted to build something, I wanted to have some security. So I actually talked my partner, my business partner, into leaving his organization because he had a skill set that I didn't have. So he was really more around the finance side of things, operationally, and I was really more the development aspect. And so you know, and I was really more the development aspect, and so you know, I think it's really important when people look at their careers, a everything in life is a stepping stone to the next thing. I mean, you have to look at it that way. What can I get out of this particular situation to advance my overall objectives later? Chris: Sure. Chantell: But also who you're getting in bed with and I speak a lot to entrepreneurs. It's really important to pick your partners wisely. And when you say your partners, you know I tell people it's like a marriage. Oh well, we're best friends. We're never going to, you know, get sideways with each other. Well, it is important that when you're going into a partnership, you know even a company is what's it going to look like if we got divorced? I look at everything as it's kind of like a marriage. Chris: No, no, Look, I advise clients all the time into the same thing. You know, be careful, Don't do 50-50 unless you have a good deadline provision. But it is they are. I can attest from being on the litigation side of these things. They are truly business divorces when they go south, and we always tell people it's better to invest up front to getting your documents right. You don't want to think you and your best friends could ever go south, but there's a reason. There's a bunch of law firms and lawyers that stay busy because that's what happens. Chantell: Right, and I was fortunate not to go through that. To be honest, it was just, I was very cognizant and I think when I was younger I didn't realize the value I brought. So I felt like safety was in numbers, right, and sometimes we create an environment around us because it makes us feel protected and then at the end of the day you go, wait a minute, what about me? And so you know again, lessons learned. You know, we also have a tendency, you know, adhd. We're all entrepreneurs. We like to do lots of different things. You know a few mistakes that we made along the way was we started getting into things that we didn't know too much about, because it was the shiny penny oh this is great, let's go do this and then, oh my God, we would either lose a ton of money. You know a lot of headaches. We didn't stay focused on our core business and it kind of school of hard knocks a little bit. It took us a little bit of time to realize that, hey, we need to solely focus on, you know, our core business, mentis, and let's stop messing around with all this other stuff that seems like it's fun and exciting. Let's stay focused on our core business until we reach. You know what we were hoping to accomplish. Chris: That's great advice. The discipline of staying focused on your core and what you do best can't be overstated. So many people lose their way because of the distractions, and you're right. They end up costing more money than you expected and taking more of your time away, and it takes it away from your core, so then it suffers. Chantell: That's right, and people don't realize. You know, time is the one thing we'll never get back in life, and so if you're looking and focusing your attention on something else, what are you losing at your core business? And I see a lot of entrepreneurs and a lot of people oh, I want to go do this and this. Again, we did it Not successful, but we did it. And so now, when I'm looking at things and where do I want to go next, it's where do I want to spend my time, knowing that if I spread myself too thin or too many things, I won't be as successful as I want to be. Chris: Yeah, that's great advice. I hope people are taking notes on that. So let's go back. You kind of left us a minute ago taking over the reins at FMG, right before COVID hits. Obviously, you have to manage through that in the healthcare space. Take us back to that time. What were some of the things that you learned, having to manage through such an uncertain period of time? Chantell: When I took over FMG there was a couple things that identified very quickly. Again, they were all running as independent facilities and there was no collaboration and really the culture there was no culture. You know, in my previous organization with Mentis and a lot of the companies I've been involved with, culture was huge. You know, you wanted people to want to be there and fortunately we were able to quickly build a culture that we felt and it was actually proven true through COVID that people wanted to be there. You know I was very visible in our facilities. I wanted people to know me, I wanted to hear what they had to say. As a new CEO coming in, you know, tell me how can we help you do your job more effectively? How can we help you be happier? You know, looking at things in a different perspective, other than you need to be here nine to five every day, do exactly what we want, right? You know, when COVID hit, the uncertainty of everything I mean we were. Some of my facilities were emergency rooms at the time, some of them were hospitals. You know we had limited staff, we had limited services. You know, when COVID hit it was really interesting because with the unknown of nobody really understanding the magnitude of what was happening. It was decisions on a day to day basis. Right, you know, everything was a crisis every single day. It was a very time for me, as a leader, to figure out how could I continue to hold on to this culture that we had built so we didn't lose staff, right? So, but also giving our staff the ability to take a break every once in a while, even though we didn't really have folks to fill in for them, in for them. So it was a time that we really had to bond together. And again, me being in our facilities during that time, even though I really couldn't do much to help, but at least showing my face, saying hey, I'm here with you and I'm standing beside you, especially on some of those hard decisions, I think made a big difference for our success. Chris: Yeah, you raised an interesting point there because first of all, I mean I it's been four years and maybe the memories start to fade but health care frontline workers, right, that was ground zero for the response. So I can only imagine the taxing environment for your employees. Most CEOs can be there shoulder to shoulder with their employees and maybe actually get in, you know, step in on the manufacturing line or pick up something and help out in the shop, and if you're not a licensed physician or a PA or a nurse, you can't right, you couldn't do the work, you could just be there to encourage them. Chantell: That had to be a challenge. You know you're right, because we just want to jump in and help and but there was a lot of things that what I could do and again you know, spirits high, helping clean, I mean there was, you know, again it wasn't above anybody. We had to kind of all throw hands in, all hands on deck, to help out in any aspect. And so we did what we could to try to motivate and try to help give people some breaks and give them the resources that they needed, and that was a big thing. That we did was just trying to get the resources that they needed, and so it was a trying time, but again we came across. You know, as a CEO, I wanted to be able to expand our service lines because we knew what was coming. And you know, after we got kind of settled in and we realized this was going to be a longer, a longer path than we thought, we converted all of our ERs into hospitals so we could provide additional service lines. So there was things that we could do on the strategic and on the management side where we weren't necessarily in the trenches, but yet it provided our staff some amazing resources that they needed. Chris: So you talked about culture and how important it is. It doesn't have to necessarily be at FMG, but just in your role as a leader. What are some of the things that you have done to try to build that positive, sounds like collegial team environment type of culture at the various organizations you've been? I mean, is it kind of the same playbook every time, or you know? If so, what is it? And if it's changed, how do you adapt? Funny question I'm just going to. I'll give you a quick story. You know? If so, what is it? And if it's changed? Chantell: how do you adapt? Funny question. I'm just going to give you a quick story. You know there's a lot of people that have been with me for the last 10, over 10 years, so they've seen me kind of develop as a better leader as I've gotten a little bit older. So in my old days, I have to tell you I was probably very authoritarian, very dictatorship it's my way, no way. And leadership, it's my way, no way. And then, as I've gotten a little bit older and through you know my role at FMG I realized I can't continue to lead like this. This is not how to get the most productivity out of my staff, and so I changed a lot in regards to how to build a culture. And so now you know people will tell you these are the four principles I use authenticity, I want to build trust and respect. You know again, you know I'm going to be very direct with individuals. I don't beat around the bush and I think anybody that knows me knows that. Collaboration I want people to have the ability to have a say. I want them to take ownership. You know used to as my way. You know we're going to do things my way. Now it's let talk about it Because, in today's world, I want my staff members they're there for a reason and that's to come together in a path or a process that everyone feels like is going to be beneficial to the organization. Now, it doesn't mean I won't give them my thoughts, but again, that collaboration and that belonging, I want them to feel like they're part of the team. Whether you and I both know, in an organization everyone's valuable and I want everyone to realize how valuable each member is and where they fit within that organization. Authenticity, trust, collaboration yeah, those are communication too, you know. Chris: Oh, for sure. Chantell: We used to be like we wouldn't tell anybody anything, you know, just say here's our goals, to go do them. Now we really talk about why you know and really have those hard conversations about this is you know the company. And when we went through COVID I know everybody's tired of hearing the COVID stories, but when we went through COVID, you know we would tell them hey, this is why we're doing this. And it wasn't just oh, they're causing us all these headaches. You know they're pushing stuff down. No, it was. We're doing it because of X, y and Z, and that made people appreciate it a little bit more, versus us just shoving things down. Chris: Yeah. Chantell: And so I think communication is a big one as well. Chris: Couldn't agree more. I mean, I think you know, at the end of the day, all those things sound really good and are important, but if you're not communicating effectively, it won't matter. That's right. So, something that occurred to me, I want you to talk a little bit about being innovative, because I know for sure at FMG, because I just know enough about the story that in the middle of all that y'all did some pretty innovative things that other competitors of yours weren't doing. That required some really quick on the fly decisions to get some innovative things going. So tell us about that. It helped the patients and it helped your facility. Chantell: Sure, you know, one of the perks of dealing with a smaller organization is we can make quick decisions. So when all of this was happening, you know we did have to get innovative in regards to how we were running tests, how we were treating the patients, what we were doing when we couldn't find patients higher level of care. So there was a lot of innovation that we did, you know, whether it was streamlining our processes, whether it was, you know, the equipment that we were bringing in to try to mitigate certain things. I mean, there was a lot of stuff that we did that if we weren't going through that time, we probably wouldn't have been forced to do so quickly, if that makes sense. And so there was some stuff that we tried to do in regards to you know, I'm trying to think of some specifics. A lot of it's around the labs and the testing side of making sure that our patients are being treated in-house versus having to send things out. I mean, we just tried to do everything we could to control our own destiny. Advert Hello friends, this is Chris Hanslik, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermiller.com, and thanks for listening to the show. Chris: Well, for example, I know one of the things you did was very quickly developed an app so patients could schedule an appointment that you didn't have before. Chantell: Yeah, that's correct. We tried to do some things so people would mitigate being around other, you know, possibly infected COVID people. So, yes, we did do some things to try to limit exposure during that time, just because, again, we didn't know what was going to happen long-term. Chris: So I guess one thing that people may not know about you that we want to talk about is, in addition to this professional you know journey you've described, you do a lot and have done and continue to do a lot where you advise other entrepreneurs. I want to ask you a little bit what are some of the kind of the key nuggets of advice that you tend to provide, and maybe what are some of the mistakes you see young entrepreneurs making that you try to correct before what still can be corrected, I guess Sure, it's kind of interesting. Chantell: The world has changed a lot in regards to entrepreneurship. You know, in our day it was just work your ass off. You know 24-7 and just try to climb the ladder. You know now, with some things that have happened, you know, with technology, sometimes they have this misperception that it's just going to be easy, it's going to be rainbows and unicorns all the time. It's not. There was many nights we'd sit at the bar going, holy shit, how are we going to make payroll? So I mean again, I think it's bringing that true realism back into their world of hey, you're not going to go get a CPT code for a device that doesn't exist in six months. It just doesn't work like that. And I think sometimes these young entrepreneurs are given almost bad counsel because they think that things are just so easy. Well, so-and-so did it, so I can do it. I see that a lot. I do get the opportunity to speak to some of the entrepreneurship classes up at UT and I do probably focus more on the negatives versus the positives, because I've always learned more from my failures and my successes. Some of the things of hey look, be focused. You know you don't have to have everything figured out, but have a pretty good path of where you're headed. You know, and surround yourself with the folks that are going to build you up, not break you down. You know, as an investor as well. I look at who's the team. If you've got a good jockey, I'm going to go ahead and support you. Having that right team in place is so critical and you want it to be more than just one individual. You know you want to make sure if they get hit by a bus, somebody else is right there ready to take the company. So I think that there's just little things that you know. I would probably give some insight to the entrepreneurs of you know, again, you're going to have good times and bad times. The bad times will come and go. But again, being willing to pivot If something's not working, don't wait too long to pivot or to reevaluate maybe certain aspects of the organization. Chris: Okay, so you brought it up, but I was going to. You said you learn more from your failures than successes, so tell us a story it's story time now, chantel a failure or setback that you've encountered, experience that you survived because you're sitting here today, and what that learning was and how it made you better. Chantell: So we talked a little bit earlier about how we got a little bit outside of our wheelhouse of oh, let's go do some different things, because we, you know, have been very successful at what we were doing. We were trying to purchase a hospital group out of bankruptcy. We thought, oh, how hard can this be? We can run organizations, we can run ASCs. Why can't we do this? It was a very eye-opening experience because when we got in there, we hadn't really had a path forward as to what we were going to do or how we were going to do it. It was just like, oh, we'll figure it out as we go. We also didn't think about other things that could come in and really impact us that we couldn't control. So we had purchased, we were in the process of purchasing this group, they were in bankruptcy, and then we had a flood. Well, we had just finished remodeling a hospital here in town. The flood came in. It flooded the hospital. At that point we were kind of at a place where there was not much more we could do. It was a horrible time to have to tell all those individuals that worked so hard with us that we were going to have to let them all go and you know lessons learned. You know there was positives in there because I remember the day we were getting ready to tell these poor individuals we were going to fire them the night before. You know we probably drank too much and you know it was a very emotional situation because I'd worked hand in hand with these individuals for so long. Chris: Sure. Chantell: And I remember having to tell them in tears I mean, you know, I know we're not supposed to be emotional, but these are these people's livelihoods. I was emotional, I you know I was not in a great place and I remember, after that happened, one of the the janitors came up to me and she said don't worry, chantel, we're going to be okay. But are you going to be okay? Chris: Oh, wow. Chantell: And I realized, you know, even through this failure, we had built such great relationships with these individuals and made them feel valued in so many ways that you know again, that's probably a really good example of learning myself of how important it is for relationships you know and building that trust as a leader. Chris: Well, to what to point you made just a minute ago. There is emotion in business. For sure, people try to carve it out and maybe for decades that's been the mentality, but it's ignored the reality that there's emotion in business and you're affecting people's lives when you are hiring them and when you're firing them. So you know people that lose sight of that are missing the boat, and I think how you manage the emotion in the business is one thing, but don't make the mistake of thinking it's not there. Chantell: No for sure, and you know, again, my old days I would have never showed, you know, a whole lot of emotion. I will tell you, though, being authentic with people just builds more trust. And look, some people say I'm very challenging to work with. You know, because I'm very specific, I'm very direct, but you know where you stand with me at all times, you know, and I had a situation last year where I had to let someone go, and it was. I mean, I really love this person as an individual, but this just wasn't the right place for them, and I tried very hard to mentor, to get him to that place, and I just couldn't, and it was very emotional to have to say, hey look, this is not, you know, the best place for you. The greatest return was six months later. They contacted me and said thank you so much. The best thing you ever did was have that conversation, and now I found a place where I love I'm being respected, and so, again, I think we all have emotion. It's as you mentioned, it's how you use it. It's okay for people to realize that you're human. I mean you know I'm human, I mean, and so I have emotions, and there's people I like and, again, you are impacting their lives and they're impacting yours. Chris: For sure, and I mean I have a number of stories similar to the one you just shared, where you run into an employment situation that's not working. You, knowing that it's not working, have to make a decision, expend a ton of emotional energy over it, worried about it. My experience has been, I think I can say, almost every time, despite that hard conversation, that person ends up in a better place because it's where they were meant to be. And we say this all the time. We're not trying to be the largest organization. We just want to be the best for those that fit with our mission and what we're passionate about and our values. And doesn't mean we're right for everybody and that doesn't make people a bad person. Chantell: That's right. Chris: There there's another organization where they're going to fit. Chantell: And and, and she did say to me she goes thank you, because I always knew where I stood with you and thank you for always being very direct. You know and that's the other thing people hide from those conversations. I'd rather have those conversations, you know, leading up to it. Look, here's the expectations. Let's talk about how you can get there, and I'm always happy to mentor and advise, but at some point you have to say, hey, look, this just isn't the right place. Chris: Right. Chantell: And so, and that's OK too. Chris: So let's talk a little bit about as you built these companies. You've had to have key stakeholders and relationships with them that are part of the success, that's vendors, customers. Let's talk about what are some of the things that you've learned that have helped to kind of build, nurture and grow those types of strategic relationships, if you will. Chantell: Sure, most of the people that I still work with, I've worked with for many years and I think you know I tell people all the time my integrity is the only thing that I really is mine in this world. My kids have everything else, but my integrity is mine. I think it's really being fair with people. You know I'm loyal to a fault, but I'm also again, I don't want to say high maintenance, but I have great expectations of people as well. And so if you look at a lot of the vendors, you know, again, they've been with me forever because I'm very loyal to them, I'm very fair, I'm very direct and they're good to me. Chris: Right. Chantell: You know, and I think as I've gotten older I had never realized the importance of relationships and how you have to be very intentional with giving and taking Right Right. But I also know with my vendors, they do a great job for me. I'm going to, I want to give them out to everybody else. I mean, I'm going to drive business their direction. And so I think that you know, with the stakeholders, a lot of people make a mistake of. You know everyone's got to win. You know that's just the reality. There's an abundance for everyone in life. You know, one of my best friends is a direct competitor of us. We laugh all the time. We can't be friends in public, but we can be friends behind closed door. But there's an abundance for everyone in life and so if you treat people like that and you're fair, I think you know you win, everyone wins. Chris: Everyone wins, and that's the thing I think finding the way where everyone can win, sure, and there's the value in kind of reciprocity, right, when someone does treat you well, that you obviously should treat them well in return. But have that be a lesson how you should be treating others that you're coming into contact with, right, absolutely, absolutely. So you mentioned this earlier because I like to talk about leadership style and you've kind of alluded to some of your evolution. Any more you can share kind of on how you view your style, how you feel like it's evolved and maybe some of the things that have helped you make those steps to kind of grow from the command and control to the more collaborative leader. Chantell: I think self-awareness, I think when we're younger, we think we're invincible and we do no wrong. I think self-awareness, I think when we're younger, we think we're invincible and we do no wrong. I think self-awareness has been critical for me, just for personal growth, right. So I also realized, you know, I wasn't getting the most out of the people and I realized that how I came in impacted everybody around me, if that makes sense. Chris: Sure. Chantell: So when I walk in and I'm closed off, everyone's going to scatter. If I walk in and I'm in a great mood and I say hello to everybody, your energy that you put out, you get back. And so I think, as I've gone through my career path, I've realized that, getting more and really I had a great partner, business partner, that he would talk to everyone. I wondered how he got anything done some days because he was just the most jovial guy that loved everyone and he would sit and listen to people for hours and I used to say I don't know how you do this. Isn't this driving you crazy? You know, I just I want, I don't want to know what time it is, I want to know, yeah, I want to know what time it is. I don't want to know how to build the clock. And I realized how much everyone respected him because he not only cared about them on the job, he cared about the whole person. Right, and people felt that. And I finally asked him one day. I said can you teach me how to be like that? Because I want people to realize I do care. I may not come across and show it, and so I that's how I kind of evolved, of taking that time and realizing ten minutes out of my day of sitting down and really focusing and being present with people, how much more they wanted to be there, how much more productive they were, and so it's really again being the leader that you have to establish boundaries. I'm not saying you, you know, let everybody circumvent their ladder, but having the ability to really show how much you care for those individuals and also what's going to put them in a position to be a better employee, right, right. And look, I went through a big thing with my team about working from home. Okay, I hate working from home, ok. Chris: I hate working from home. I'm just going to tell you that I like the collaboration. I like everyone in the office. You know that you're in good company. There was literally an article in the online Houston Business Journal this morning about that topic and how everything is swinging back to five days a week in the office. Chantell: That's right, and it was a big fight in my office about that and I finally said, okay, let's compromise, because I realized that some of them were driving an hour both ways, okay. So Mondays and Fridays we have home days. Tuesday, wednesday, thursday, we're all in the office. So again, I met them where they wanted to be and how could they be most effective. And I realized, having that time at home, where they didn't have 5,000 people walking in their offices every day, they were more productive. And so again it's you know. You know you asked me a specific question about how I've changed. I mean, I've really come, you know, 180 in regards to who I was many years ago versus how I am now. Chris: Well, and what I hear you saying is there was an evolution and development in your leadership style that started to focus on and demonstrate humility and empathy, absolutely, you know, going back to kind of the work remote thing. I think those things, what you've got going on, can be successful because you have to start with why are we here? It's the why around the company, and we have to all agree that the company has to survive in order for any of us to have any benefits. That's right, right and so what's that going to take? And then where can there be some compromise around? You can't sacrifice productivity and you can't sacrifice delivery of services or you won't have the business. Right and right. It's really to me, getting clear around that, communicating, that we talk about communication with clarity and really everyone understanding the why absolutely, and I'll just we'll talk about the elephant in the room also being female, I mean. Chantell: So in my younger days I thought in order for me to gain respect, I had to be that authoritative bitch. You know. Basically Because that's what society told me, you know in order for me to be able to play in a man's world, I had to really be that person. You know, as my career, and I got to a point where I didn't need anybody's approval or permission. You know, I realized, got to a point where I didn't need anybody's approval or permission I realized, wait a minute, I can be my authentic self. I can be compassionate, I can be empathetic and I can still be a damn good leader at the same time. Chris: That had to be liberating. Chantell: It was very liberating, and I try to instill this with a lot of the women that I talk to now. It's okay to be who we are. Let's use our innate qualities that make us such great individuals in our professional lives. You know, and I mean again, people say I'm aggressive. That's okay, I'll take it and I can be, but it enables me to also utilize

In this episode of Building Texas Business, I chat with Mike Snavely, CEO of Phunware. Mike details Phunware's evolution from a mobile development agency into a thriving SaaS company delivering high-ROI apps to hotels and healthcare providers. Hear how shifting culture from rigid control to empowering autonomous teams with accountability revived success. Key strategic maneuvers included trimming the workforce judiciously and securing capital patiently. Timely decisions breathe new life into businesses' surfaces repeatedly. We delve into crafting a trusting, candid culture. Difficult conversations are promptly addressed and failures learned foster innovation and resilience. I share that I founded such an environment at a former startup. Mike's unique hobby of creatively mapping dream destinations blends work wisdom with life's pleasures, crafting an episode uplifting attendees' strategies and spirits. SHOW HIGHLIGHTS Mike Snavely explains the evolution of Phunware from a mobile solution development agency to a SaaS company that specializes in customized mobile apps for hotels and healthcare institutions.We discuss the strategic decisions and cultural shifts necessary during the transition to new leadership at Phunware, including capital injection and reshaping the balance sheet for growth.Mike highlights the move from a command-and-control culture to one that champions autonomy and accountability, emphasizing the importance of empowering team leaders.We explore the significance of building a leadership team grounded in trust, accountability, autonomy, and candor, and how these principles contribute to a positive organizational culture.Mike shares his personal career journey, detailing his long-standing experience in mobile technology and his eventual rise to the CEO position at Phunware.We examine how Phunware fosters a culture of appreciation and collaboration through a Slack channel called Momentum, which recognizes and celebrates employee contributions.Mike talks about balancing professional obligations with personal passions, including the importance of prioritizing family and maintaining a positive trajectory in both areas.We discuss the importance of in-person engagement for building and maintaining key relationships with stakeholders, despite the trend toward virtual interactions.Mike reflects on past experiences and learnings, including the value of having prompt and honest conversations to avoid delays in decision-making and mitigate potential failures.We delve into Mike's hobby of pinning dream travel destinations on Google Maps and how this practice turns travel planning into an immersive and memorable adventure. LINKSShow Notes Previous Episodes About BoyarMiller About Phunware GUESTS Mike SnavelyAbout Mike TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In today's episode, you will meet Mike Snavely, ceo of Funware. In building and maintaining key relationships with your stakeholders, mike shares his opinions on why there is no substitute for being in person to engage on a human level. Mike, I want to welcome you to Building Texas Business and thank you for taking time to come on the show with me. Glad to be here. Thanks for the invitation. So, as the CEO of Funware, let's start by just orienting the listeners to what is Funware and tell us what the company's known for. Mike: Sure so. Funware is a 15-year-old publicly traded company based in Austin, Texas. We build mobile experiences that help hotels and healthcare institutions engage their guests and patients while they're on premises in ways that drive satisfaction and monetization. Chris: Very interesting. So you said the company started I guess in the early 2000s. Mike: Then it would have been in 2009. The company started. It was private for the first 11 or so years of its existence and then we went public via SPAC transaction in 2000. I believe it was 20. Chris: Okay, and it sounds like a fairly niched focus for the company. How did it come to be that the company, I guess, was so focused on kind of those two industries and providing that type of, I guess, service to those customers? Mike: Well, originally it wasn't. So over 15 years, you might imagine, there's been an evolution in the focus of the company, and so the company in 2009 was really more of a mobile solution development agency. So some of the biggest brands you know in the world really selected Funware back in the timeframe to build some of their first mobile apps in the app store. So companies like Fox, the NFL, the Sochi Olympics, wwe, a number of airports and so on were spending a lot of money to build their first mobile application and then to develop their first mobile audience. For lots of reasons and that was two years after the iPhone was introduced. It was actually before the iPad was introduced and so obviously there's a lot of evolution of consumer expectations when it comes to engaging on mobile, and those brands were spending a lot of money in the early comes to engaging on mobile, and those brands were spending a lot of money in the early days to build their first mobile presences. That's evolved over time, and so agencies are really not, they really don't drive the valuation that a SaaS company does, and so we've, over time, evolved into becoming a SaaS company. So we license our technologies. We'll essentially build an app, configuring it for the customer, launch it into the app store and then generate license fees off that app for as long as it exists and is available for download. That's a much better valuation model because typically when our customers get involved with us they stick around. Our retention rate is very high because we drive a positive ROI. So we've kind of followed the evolution of mobile from really high investment work for hire, boutique agency-like development all the way through today where we charge between 50 and $150,000 a year for a given property, whether it's a hotel or a hospital, to have their own mobile app in the app store, to have their own brand in front of their users or guests and then ultimately to develop that one-on-one relationship with that guest or patient in a way that drives repeat business and satisfaction and additional monetization. Chris: That's fascinating. Now you mentioned retention rate. What do you which obviously is very important for success of a company, especially like yours what do you attribute that successful retention rate to? Mike: Well, we do good work and I can make available to you a list and you could even put it in the podcast if you'd like of the apps that we build, or some of the apps that we build. They're beautiful apps. So, number one, we do really high-quality work that all of our customers are proud to have their name on. And then, number two, we drive ROI, plain and simple. For a dollar they put into our solutions, they get between $5 and $50 back, depending on who they are and the specifics of their business. And you know, if I could give you a machine that would, you put a dollar bill in, you get a five or a 50 back out. You would say how many dollar bills can I put in there? Chris: Yeah, no, no, kidding, right Well. I mean, but fundamentally, you mentioned at least you know two fundamental things that is key to customer retention. That's one provide good service. If you're in the service industry, it starts with providing good service and I think an outcome of that is your customer sees a valuable return on the investment for your service. Those are not unique to software but for any kind of service type business right, exactly, that's right. Let's talk a little bit about your. So you're the CEO. The company was founded by others than yourself. How did you come, I guess, to work at Funware and I know just a little bit that you've had this is like your second stint there but give us a little background on your connection to the company and how it was you became the CEO. Mike: Yeah, sure enough. So I've really made a career of pursuing technology trends. So I'm kind of an old guy so I've been in business for a long time. But I started off in offline marketing technologies, sending out snail mail and running telephone centers. Then I evolved into social marketing with a startup in Austin, texas. I then got into mobile and I've been in mobile really kind of on and off ever since. Mobile's a big deal because you've got a device that knows who you are and knows where you are, you tell it all your secrets. It really is an indispensable. It's become an indispensable tool. And so I've really made kind of a career over the last shoot 15 years at this point in mobile. And so I was originally with my first stint in mobile was with a little mobile application development boutique in Austin called Mutual Mobile. That was 2008, 9, 10, 11 timeframe Did something else and then I was recruited to come to Funware by somebody who had worked for me at Mutual Mobile and I said look, we're building out this platform company. We're very interested in having somebody who can really help to drive revenues. Would you be interested in joining? So that in 14, I joined Funware for the first time and I came to run the software business. So I was responsible for all revenues for the software business of Funware from 14 through 16 or so, got to know the company, got to really understand the technologies Actually, a number of the people who were there then are still with the company. Then I went off, worked at a Silicon Valley startup and did a couple of other things, couple of other things. And then, when the founding CEO left in 23, they hired a guy that I had worked with at Mutual Mobile back in the day as the new CEO and he said look, mike, I know that you're great at building businesses on the revenue side. Would you like to come and be my CRO, as I'm CEO of Funware? And he said I'll make it worth your while. So I said no a couple of times and then eventually I said yes. Well, this was September of last year that I rejoined the company and 30 days in the board said look, you know, what we really need is somebody with sales DNA at CEO. Let's try that again. Easy for me to say CEO role. So, mike, would you like to step in as CEO? So I actually I had a buddy who brought me back to be a CRO and then wound up taking this job. We're still friends, we still talk all the time and he was very supportive of that move. But a long story short, I think that the company for a time kind of lost its way in the simple fact of selling, servicing accounts and driving revenues, and that's something I've had the good fortune to develop pretty good skill at, and so now I'm the CEO and I'm going to tell you I think the E in CEO stands for extra. Everything about it is extra, but it really is the best job I've ever had and I'm really enjoying it. I still spend a lot of time working with customers, selling, identifying strategic partnerships and that kind of thing, because I enjoy it, I feel like I'm good at it and it's absolutely critical to positioning the company for growth and valuation, which is exactly my job. Chris: There you go, so let's talk a little bit about that. What are some of the things that you do to build and maintain relationships with those partners, customers, strategic relationships that you think someone listening might learn? Mike: from. Well, it's funny, there's been a real trend away from in-person, and so you and I are meeting today on Zoom. Our business, funware, is essentially 100% virtual at this point, and what I find is there's no substitute for hopping on a plane and going to see somebody, breaking bread with them, getting to know them as a person, understanding what it is they're trying to accomplish, what their hopes and dreams are, what their fears are. Once you get to that point and really just kind of understanding them as a person, and then exposing yourself as a person and say, look, you know, this is what I'm trying to accomplish, mr and Ms, partner or prospect, and really kind of, you know, engaging on a human level, which you know is a whole lot easier for sitting across the desk from somebody, and that's that to me, is is where I spend a lot of my time. I do invest a lot of time in in person, you know, spending time with customers, prospects, partners and the rest of it, and I really just don't think there's much of a substitute for that. Chris: Couldn't agree more. I think that's how, really, until the pandemic, it's how business got done in person. I don't think anything's changed here. I think, especially these days, I think it says so much more that you take the time to do that when you could otherwise, yeah, do a Teams or Zoom call or whatever, and just the human interaction I mean. As humans, I think we're meant to be together, right and interact, and I think that just fosters the relationship. So great advice there. Keeping on that kind of theme you've come back in not in an easy economic time, so let's talk a little bit about managing through kind of some economic uncertain, rising interest rates and all the stuff that's out there in the news. Let's talk about kind of what are some of the things you've done to stay focused and keep your people focused on driving the business forward? Mike: Sure enough. Well, there are some benefits and some drawbacks to being a public and trading company. Of course One is access to the capital markets. That's a benefit, and we certainly have the ability to draw capital out of the markets in ways that don't require us to be as susceptible to excuse me, the interest rate environment, but that doesn't mean that our customers aren't susceptible to that environment. And so we've had to do some things. Selling into hospitality and healthcare, I mean, we're typically selling into pretty big organizations and they have a little bit of a buffer, I suppose, from the ebbs and flows of the economy, particularly when you look at luxury hospitality. I mean, COVID aside, luxury hospitality has really been on a growth tear because of the generation of a lot of wealth on the part of a lot of people and they're wanting to spend it on high-quality experiences. But that doesn't mean that we don't have to be creative from time to time when it comes to pricing a deal or generating terms that are acceptable to the customer. They can digest, they can maybe capitalize the expense as opposed to turning into an OPEX expense and that kind of thing, and certainly we've had to be creative there. When I first took on the CEO role. The company was having a little bit of financial trouble and you could read in our public filings all about it. But, long story short, we were having problems with access to capital and I had to work with my CFO and others you know capital partners to really inject some capital into the company from the market in ways that allowed us, you know, the ability to move forward without paying a lot of interest, frankly. So we were able to kind of reshape the balance sheet in a way that puts us in a great spot for growth today Smaller companies I can only imagine what it must be like if you're dealing with debt financing, distinct from capital financing, and what some of the challenges there must be. We had to make some hard decisions in connection with the recapitalization of the company that had to do with people, in large part because that's our number one expense and those are hard things to do, and I spent many a sleepless night, you know, because I had to do some of those things. But the fact of the matter is that most companies don't cut fast enough and they don't cut deep enough because of those reasons, and it feels terrible, but preserving the company and giving ourselves the ability to go forward and thrive is really kind of the job for the shareholders. Chris: Yeah, and yeah, I agree. I think, regardless of the size of the company, making those people decisions are extremely difficult because, again, we went back to in person and it's human and these people have been with you typically and but it's what they say, right, it is when you have to make the hard cuts, you have to cut muscle and those can be challenging decisions. On the flip side of that, sure, as you come into the CEO role, you are either have or still in the process of building your team. What are some of the things that you do? Processes maybe you've created to help you identify the right people to surround yourself with to further the mission and strategies of the company. Mike: Well, there are two non-delegable duties that the CEO has, in my belief. Number one it's setting the strategy of the company. So we're going to be a SaaS company serving these markets, we're going to drive toward these margins, we're going to deliver in this way, and these are the things that are important for the strategy of the business. Number two is the culture of the business, and so I can't hire somebody to give me a culture. I've got to work with the company to create the culture that we want, and so I'll give you a little bit of a story there. So I have a lot of respect for the fellows who founded the company, a lot of respect for them, because they built something that I now have the good fortune to run and take to the next level. But there was a lot of. They were literally army guys, and there was a lot of army DNA in the company. Now that there's nothing wrong with that, there's nothing at all wrong with that, and the company was successful for a number of years, but and the culture that was built was one of command and control, because that's what the army is Right. Chris: Well, it's not. I'll just interrupt it. That's also not atypical of kind of startup mentality. Right, it's dominant kind of leadership. Got to get it done, got to get this off the ground. Mike: Yep, dominant leadership plus the military background equaled very much a command and control structure, a bit of a cult of personality around the founding CEO, and all of that, you know, paid great dividends. For a long time, I could not be any more different from the founding CEO. I'm not an army guy, you know. And so one of the first things I did when I took on the job is I said look, you know, you know if you're the vice president of sales or you're the vice president of, you know of product or delivery or deployments or whatever it is. You're the CEO of your own business and I'm not going to tell you what to do. I'm going to give you an objective and I'm going to give you the flexibility and the support to go and achieve that objective. You need people. You get people. You need investment. You get investment. But your accountability is to go and run your portion of the business as if you were the CEO. I'm not going to micromanage the decisions at all. I'm going to empower you to do the right thing number one for the customer, because then that ultimately becomes the right thing for the company over many observations and so that was a transition that some people are still working through. Frankly, in leadership roles within the company. It's sometimes people get comfortable being told what to do and we just we don't do that anymore. And you know a couple of people have left as a result of that. They did not have that comfort and that's okay because it's not the right job for them anymore. But most people have really embraced the opportunity of agency and empowerment and the ability to kind of run their own part of the business. ADVERT Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom. And thanks for listening to the show. Chris: Yeah, I mean, there's a lot to unpack there, but clearly what you're talking about in my terms are giving people autonomy, but with accountability, which I think is the right way to go. However, organizations evolve over time, just like people. So I think we talk about command and control in the early days. That, for most companies, may make sense, but where this company is now and size and scale, you couldn't do that because there's too much going on and you have to then hire the right people, and the people that work for the company in the first few years may not work, you know, 10 years, 15 years later, because different skill sets needed, right, so it sounds like you've got your hands around that pretty well. Mike: Well, you know, it's always a work in progress, and so one of the one of the accelerants to adopting a new cultural tone is bringing in people, you know right. So I brought in a couple of guys and they are both guys, I'm afraid, who I had worked with a number of times in the past, who I knew kind of got the way that we wanted to run the railroad and who are are the kind of guys who just roll up their sleeves every day and make the most of the day. And, you know, those guys are not only in leadership roles within the company but they're also, you know, setting a tone for the others they work with most closely day to day, and I absolutely think it's working. Chris: That's great. So kind of sum that conversation up for us how would you define the culture of Funware today? Mike: I'd say that we're kind of a restart up, but with all the good elements of a startup, and what I mean by that is that we had a revenue profile that grew, grew and then it kind of dropped off. For some reason I wasn't here, and we're in the process of growing back up and we're getting in the right people who are interested in not only doing great work and serving the customers really well and building a terrific product, but also ones who are embracing the autonomy and the accountability that we're providing to them, and I couldn't be any more pleased with the reception that I'm getting. Chris: Anything special that you've kind of put in place to kind of help foster that type of culture so that you can perpetuate it and see it grow. Mike: Well, we tend to recognize the behaviors that we're looking for, and here's what I mean by that. So you know, somebody will just do a thing right and they'll do it. They'll achieve an accomplishment, whatever that accomplishment may be, and we'll talk. We've got a Slack channel. Slack is a tool we use all day long, every day, and we have a Slack channel called Momentum, and the Momentum channel is really about recognizing the contributions that a person makes, and the deal is that if you put something in Momentum, you've got to recognize somebody else. So you say, hey, a great thing happened, you got to recognize somebody else. So you say, hey, a great thing happened. And I want to thank Bob over here for his contribution to the thing, because Bob, you know, contributed in a way that if he hadn't done that, you know we might not have gotten the outcome that we're looking for. You know that that's something that you see traffic in every single day, that's great. Chris: We obviously I can relate to that we do something similar here at the firm Every single day. That's great, I can relate to that. We do something similar here at the firm, not necessarily on a specific channel, but it's kind of become part of our culture to. We call them core value kudos and it's about recognizing other people not yourself, obviously in efforts that they made and tying them to our mission and values, so that the behaviors and the values marry up right. And then people. It makes it tangible that I want to thank or, you know, congratulate someone for doing X, Y and Z which demonstrated this value in action. Mike: That's terrific. Yeah, I've been in companies that have done that. I think that's something that I may need to reincorporate into my bag of tricks there, for sure that have done that. I think that's something that I may need to reincorporate into my bag of tricks there for sure. Chris: So you know along those lines your software company. I always am interested to know what are you doing to kind of promote or foster creativity and innovation within the company? Mike: Well, some of the things that you know it's interesting, I'm going to I'll give you maybe a little bit longer answer you might be looking for, but there is, and it's really important to kind of separate the day-to-day from the long-term vision. And what I mean by that is that I'm, let's say, a developer and today I have to fix a bug, and I just have to fix the bug because the bug exists and it's in the way of something happening and it's not my favorite part of the job, I'm quite confident of that. Not my favorite part of the job, I'm quite confident of that. Not my favorite part of the job to fix a bug. But there is some long range stuff that I'm really excited about. A big part of what we do is indoor wayfinding and hyperlocal marketing offers, and there are lots and lots of innovations that we're looking at right now, and so we identify people who are interested in innovation. We put together both formal processes for them to say, okay, you're on the R&D team and you're going to be doing this work, but we also give them informal opportunities. Hey, look, I want you to go to Denver to our customer with Gaylord Rockies and I want you to actually go into the physical space that we're trying to map, and I want you to help me figure out a better way to do it. And so that's two things. It's number one, solving a strategic problem for the business, but it's also kind of getting them out of their, since we're all virtual, it's getting them out of their own office, sending them to Denver, take an extra day, engage the customer, do great work, but also enjoy yourself a little bit. So we try to give people an opportunity to get out of the context within which they're working sitting in my home office squashing bugs and get out into the real world where our solutions are deployed in ways that are not only sort of fun but also problem solving. Chris: So you've been in some leadership roles throughout your career, obviously CEO now. How would you describe your leadership style and how do you think it's evolved over the last few years? Mike: Well, I try to work with people. I try to work as best I can. You can't always do that right, but you can absolutely make the investment of time to get to know them, and so I walk into this job. I've got a CFO that I just met very recently, and I had a chief legal officer that I met just recently, and I had a chief operating officer that I had known actually for some time and one of those guys wound up leaving that I had known actually for some time and you know, one of those guys wound up leaving. But you know the other two guys that I had just met. I made it a real point of going to where they were, sitting down with them breaking bread, understanding who they are, what they were trying to accomplish, why they were at the company in the first place and all the rest of it, because it was important for me to understand whether I could trust and whether it was appropriate to invest in these guys. Right and absolutely it was. By the way, I had a couple of gaps in my leadership team and what I did was find people that I'd worked with in the past and I said, look, are you willing to come and work for me again, and the answer in every case was absolutely so, and that's not because I'm the greatest guy in the world or because I gave him a zillion dollars or anything like that. It's because we have, over the years, established a working cadence that's founded on this idea of trust and accountability, autonomy of action and really candor of discussion. There's nothing that the leadership team and I don't discuss in detail and with candor. We're not afraid to tell our truths to each other. We've created what I think is a safe space for us to really talk about what's on our mind and what concerns or challenges we have, or if somebody is all wet, you know, and and that kind of. That kind of culture. The executive table, I think, filters down to the rest of the business in ways that help support the culture we're trying to build. Chris: Yeah, and I was gonna say it sounds like it's a culture of safety to have the hard conversations, but that those conversations are done in a respectful way. Mike: Yeah. Chris: I don't know if there's no better way to do it Right, and it's okay to fail. Mike: And I got to tell you, I used to race, I used to race cars a long time ago and you know, if you don't crash, you're not driving fast enough and so it's okay. It's okay to crash every once in a while because that means you're pushing the envelope, You're trying to get, you know, you're trying to get to the edge of the performance envelope and that's positive. Chris: Yeah, no, let's talk about that, cause I I there. There's always learning, and so I think there's. You know, when you have setbacks or failures, you can learn from them and it can make you better. Don't let it define you. So can you give us an example of more than not the car racing, because crashing is easy to understand as a failure, but in the business world, as a leader something that you felt a failure of yours, a bad decision, a setback that you absolutely grew from, and it's made you better today. Mike: Yeah, sure enough, I think that my greatest learnings are not being decisive enough and not acting quickly enough. And so you know, let's say, for example, I'll give you the example of last company I worked for before. Well, yes, I'll give you that example. So I was working at an AI video startup in Madison, Wisconsin. It was essentially a unit of a publicly traded company that I won't name, but your viewers can certainly look it up. And, long story short, that company is now bankrupt and I don't fault any of the. I don't fault the CEO of that company, which was not me, by the way, in that, but I fault myself. Yeah, exactly, it wasn't me. I didn't bankrupt the company. This was a guy I had worked with before were pretty small, and so what I said was I need this much to make this happen. I was given about half that much and I didn't adequately reset the expectations on how long it was going to take to get that thing done, slash. I should have had probably more pointed discussion about is this worth doing at all, and I didn't do that. And the long story short is that company is now bankrupt for lots of reasons, but the thing that I that my not being as aggressive as I felt like I should have been was a contributor to that. I think it was a small contributor, but you know all that to say that it didn't help. Chris: And so I kind of trace it. I would say the learning for you is kind of having the hard conversations faster right and that's the kind of culture that's terrifically important for me. Mike: So that informs the culture I'm building at Funware, which is like, if this ain't going to work, I just need you to tell me, and I might disagree and I might argue with you, but I will absolutely hear you. I might argue with you, but I will absolutely hear you. It's going to be super important for us to just trust each other enough to be able to have the discussion about you know, without fear. I guess is where I'm coming from. Chris: I understand that, so let's talk a little bit about you know these are important jobs that you've held over the last few years, and as is the current one. I don't like using the term work-life balance, but how do you? Manage work and personal life to try to keep them both going in a positive direction. Mike: Well, I spend a lot of time with my kids. I really, yeah, my daughter. So I'm here in Ohio, I'm spending time with my father and mother, but my daughter came along, my older daughter came along, she's out of school already. I'm going to go next week pick up my younger daughter in boarding school in Colorado, drive her down to Big Bend, where she has never been, and then, you know, spend time with her over the summer. So I mean, it's really about being deliberate about that and working from anywhere, candidly, in my opinion, helps. There's no expectation. I'm going to the office, I'm going to be there during the business day on Monday through Friday, and what I kind of joke is that I mean, I work a lot, no question about it, but I work around my life as opposed to work, as opposed to planning my life around my work, to planning my life around my work. So I might work, you know, 60 hours a week, but that's not going to be five times 12. That's going to be, you know, kind of eight-ish times seven. I'll work every day a little bit, but I'm certainly going to put my kids first and that's just the way it is. Chris: Well, I can identify with that. I think everyone has to find their own way and each job and role requires different things. In different stages of life require different things. So I think that's what people you know should stay focused on, individually as well as the companies to try to make sure you have good people. You don't want to lose them for those types of reasons. People you don't want to lose them for those types of reasons. Yeah, so, mike, this has been a great conversation. Before we wrap up, I just want to kind of get a little bit more less or a little less serious about things. Tell us what was your first job as a kid? Mike: It'd be funny, you should ask. So I'm back in rural Ohio where I grew up. Right now, at my parents' house, as I mentioned earlier, my first job was was am I allowed to say shit on your podcast? Of course, the texas my first, my first job was shoveling hog shit. Chris: Shoveling hog shit for minimum wage and I was nothing that wants to make you go to college and get a degree than that right. Mike: well, the funny thing is that I wound up raising hogs to pay for college. So it was fine to shovel the hog shit, but I was like, if I was fine to shovel the hog shit, but I was like, if I'm going to shovel the hog shit, I'm going to do it for more than $3.35 an hour. I'm going to do it in exchange for a college education. So that's not exactly that way, but that's a big part of how I kind of got off the farm and moving ahead. Chris: I love that, okay, well, yeah, obviously, as we now know, you're from Ohio, but you spent enough time in Texas for me to ask you this question Do you prefer Tex-Mex or barbecue? Mike: I love Tex-Mex. I would eat Tex-Mex every day of the week All right. And sometimes I do. I do love barbecue, but the thing is that the best barbecue is something I don't want to wait in line for and I don't want to drive a long ways. If I happen to be by La Barbecue or Franklin's a little bit over their great barbecue a little bit overhyped, or if I want a great barbecue, I'll just treat it as a destination thing. I'll go down to Lockhart or something like that, but I can get absolutely terrific Tex-Mex around the corner from my house every day of the week. Chris: Yes, it was one good thing. You know, I think we living in Texas both are abundant right. Mike: But you're right. Chris: The marquee barbecue, you know, is tucked away in some places. All right, so my last thing is if you could do a 30 day sabbatical, where would you go? What would you do? Mike: Well, I got a bunch of customers who have really beautiful beach resorts so I might go to one of those. Chris: You might go break bread with them there. Mike: Break bread with the customers at the most beautiful resorts in the world. That would be one thing I might do. There are a lot of places around the world that I'd love to see, so I've got a Google Maps layer that has little flags. There are probably 800 flags on that map and I add some every week. Places that I like to go around the world. Sometimes they're restaurants that I read about. Sometimes they're beautiful. You know natural features, like you know mountain ranges, the Painted Mountains in the Andes, or you know beautiful lake I've never been to Crater Lake, things like that so what I'd probably do is find 30 days worth of those pins in an area that I can consume within that 30-day period and I'd just go knock it out. Chris: I love that. I like the concept of keeping track of the pins. Yep. Mike: And there's too many on the map that you know I'll be dead and gone before I get to see all of them. But you know, it is kind of a it's a memory bank for things that have caught my interest and that I do want to experience at some point, if I can pull it off. Chris: Love it. Love it Well, mike, thanks so much for taking the time to be a guest on the show. Really enjoyed hearing your story, and the things y'all are doing at Funware sound really fun, exciting and innovative. Mike: Thanks a lot. Special Guest: Mike Snavely.

In this episode of Building Texas Business, I sit down with Amanda Hanks Bayles, the 100th president of the Junior League of Houston. Amanda shares her remarkable journey within this organization, which is dedicated to empowering women and bettering local communities. She reflects on 11 years of involvement, emphasizing the value of mentorship and smooth leadership transitions. Amanda provides keen insight into balancing leadership roles as a volunteer and professional. She discusses integrating volunteer experiences into her career at Plains All-American Pipeline and the support of employers. Wrapping up, Amanda offers practical advice on embracing change and maintaining balance. Through this insightful conversation, examples from her path illuminate strategies for cultivating leadership abilities with heart wherever one's journey may lead. SHOW HIGHLIGHTS Amanda Hanks Bayles, as the 100th president of the Junior League of Houston, emphasizes the organization's commitment to promoting voluntarism and developing the leadership skills of women.We explore the structure of the Junior League of Houston, highlighting the executive committee and board of directors, as well as the 4,500 total members, including 1,400 active volunteers.Amanda discusses her 11-year journey within the Junior League, focusing on the importance of saying yes to opportunities and the value of annual leadership transitions for continuous personal development.We touch on the challenges of balancing leadership roles in volunteer organizations with professional careers, and the supportive role played by employers like Plains All-American.Amanda shares insights into leadership development, particularly the importance of owning mistakes and learning to communicate effectively within a large organization.The conversation includes how the Junior League’s Leadership Institute Training Program and the Outside Board Representative Program prepare members for impactful roles on nonprofit boards.We discuss the impact of the COVID-19 pandemic on the Junior League, noting how virtual meetings have enhanced inclusivity and the organization's ability to address mental health issues in the community.Amanda offers practical advice for business leaders and aspiring entrepreneurs, emphasizing the need to embrace change and balance professional and personal commitments.The episode touches on Amanda's personal journey, from her first job to her educational path, and her love for Tex-Mex cuisine and the Houston Livestock Show and Rodeo.Amanda's story serves as an inspiration for women leaders, showcasing the potential for growth through volunteerism and community service. LINKSShow Notes Previous Episodes About BoyarMiller About Junior League Of Houston GUESTS Amanda Hanks BaylesAbout Amanda TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Amanda Hanks-Bales, President of the Junior League of Houston. Amanda shares insights on how the Junior League works to build a better community by being grounded in gratitude. Okay, Amanda, welcome to Building Texas Business. I want to thank you for coming on the podcast. Amanda: Thank you for having me. It's great to be here. Chris: So you are currently, among other things, you're the 100th president of the Junior League of Houston, and so I want to kind of focus a little bit around that organization, tell us what the Junior League is and what it does. Amanda: Absolutely. The Junior League of Houston is a nonprofit organization. We are dedicated to promoting voluntarism through developing women and then unleashing our trained volunteers into the Houston community through effective action and leadership, and that's really our bread and butter. We focus on training generation after generation of outstanding women to then go out and tackle our community's greatest issues and hurdles, and we've done a great job at overcoming some of those things. Chris: When was the Junior League of Houston founded it? Amanda: was founded in 1925. So we are vastly approaching our centennial celebration, which we are very excited about and, in true Junior League form, we've been planning it for about five years. So we're ready to stop the planning process and to start executing. Chris: That's great. So what inspired you? To get involved in the beginning. Amanda: Yeah, I joined about 11 years ago. I really was just looking for a way to give back. I had a really great job and had some spare time and was trying to find what my passion projects would be with that spare time. And the Houston Junior League really gave me an opportunity to one meet a ton of women both in my relative age range and then other generations, and then it also really gave me a great introduction to the nonprofit landscape here in Houston, and so through my years of membership I've been introduced to. I think we partner with 32 community agencies that we send volunteers to, but we also award what we call our community assistance grants to, you know, 15-ish nonprofits every year, and it's a great introduction to all of the really incredible things that are happening here in Houston. Chris: That's great. So then you know, so you get involved as a member. 11 years ago, Then what was the inspiration? To kind of make the bigger commitment and get into leadership. Amanda: Yeah, that's. I wish I knew the specific event. You kind of just get called and asked to step up, and it's learning to say yes instead of no is probably what launched my trajectory in the Junior League of Houston. I'm going back through all of the roles I've had. I like to call the Junior League life on steroids, because we do an annual turnover, the junior league life on steroids because we do an annual turnover. So it's you get new co-workers every year, you get a new league boss every year and you can completely change what you're doing in a matter of months, and so it's just a really cool way to develop yourself and especially your leadership skills. Chris: Well, that sounds challenging in and of itself, that kind of annual turnover. So what, I guess? What has your experience been and what have you tried to do in your term as president to make that as smooth of transition over time for the benefit of the organization? Amanda: Yeah, well, we again, in true junior league form. We have lots of. We have a sheet of paper that we call our chronological and it is your job duties for whatever leadership role you take on, and those get updated annually and passed on. So there's definitely a process there for us to document. I like to say the best day on a league job is when you get your successor, because you're then not I no longer felt alone. It was then someone I could loop into something to then say like, hey, what do you think about this? Or I'm leaning towards us doing one event instead of two. Give me your thoughts and it's. It actually becomes a really great mentorship or friendship bond between your predecessors and successors, because I think we all remember feeling like, oh gee, what did I get myself into? And then having the women around us support us and prove that we can handle whatever role we take on. Chris: Very good. So how many in the leadership team then at the junior league? Amanda: So hard question. We have an executive committee that's comprised of about seven members total, including myself, and they oversee kind of each of our bigger areas within the league. And then our board of directors is 23 members strong. That includes some of the executive committee and as well as some other directors in charge of some other key areas that we do. But beyond that, you know, we have a head active role, which are the actives in a community placement or a tea room placement who are really working with our first year members and making sure they have a good year. And I honestly think in some ways I learned more as my time as a head active with that one-on-one interaction than I have in some of my higher level with finger quotation roles. So I would say we have close to 250 total leadership roles. Those obviously span the gamut of what type of leadership you're interested in. Chris: So you said 250, maybe total leadership. What's the total membership? Amanda: Total membership, we have about 4,500 members. Of those 4,500, we have about 1,400 who are active members, and those are the ladies who are signing up to volunteer at least 60 hours a year in our community or here at the Junior League of Houston. So the remainder of our membership are what we call our sustainer members of Houston. So the remainder of our membership are what we call our sustainer members and they are the women who have served their time as active members and choose to stay a part of our organization to continue to build the next generation. Chris: Yeah so that's a sizable organization by anybody's definition. Tell me a little bit about, I guess, what you have done in those senior leadership roles and as president to effectively lead the organization. What are some of the skills or things that you have learned along the way that you've implemented to make sure that everything is running smoothly and efficiently? Amanda: Geez, the list is long, so I would say Top two or three maybe. Back to the list of or the league being lifelong steroids. Moving up the ranks to get to president, I really got to work with some incredible women and pick what I liked about each of them that made them a fantastic leader, and so I really went into this year saying you know, so-and-so was a great motivator. She always knew how to start a meeting and make us feel valued, and so I really focused on expressing gratitude, because the other challenge with being a president of the Junior League of Houston is you are not. We have eliminated salaries, right, so everyone is there out of the goodness of their hearts, and trying to figure out how to motivate people when a paycheck is not in the equation is an interesting formula to come up with, and so I really have always focused on understanding people, what makes them tick, what drives them, and trying to individualize that on whichever leader or member I'm talking to, to get them to either create the results we're wanting in a fundraising event or, to, you know, make sure that they feel like they're supported in a way that can continue to help them feel like they can move up in the organization. Chris: So I think you kind of referenced something that's very important for any leader or an aspiring leader, and that is be aware of your surroundings and learn from others. Like you said, you kind of saw others and what they did. Like you said, you kind of saw others and what they did and you get to pick and choose what you think might work or might fit for you and mold yourself from a number of different sources, and I think any smart leader should be aware of that and should try to emulate that. Amanda: Absolutely, and that's been the true blessing of my time at the Junior League is having the annual turnover. I think it's our blessing, and our curse is the ability to work with so many women so quickly and to really use that chance to hone my own skills as to the type of leader I wanted to be. Chris: So you mentioned. It's a great segue because you said how you're not getting a paycheck, nor are any of the other members or leaders at the junior league, but you do have a day job where you do get a paycheck. Amanda: I do. Chris: Right, so you're an in-house lawyer at Plains All-American right, I am. So let's talk about first. There's a couple of things we can, I think, cover. But just how do you maintain that balance of making sure you're doing and meeting your commitments for All-American while also meeting your commitments to the Junior League? Amanda: Yes, and that is a huge balance to try to manage. Try to manage. I am very blessed to work at a place that, when I told them about this opportunity that was given to me at the Junior League, they immediately saw the experience I would receive and the skill set I would be able to develop and they saw immense value in that, and so for that I am immensely grateful to Plains for their support and my direct supervisors for understanding, like some days there are random days I need to take a vacation because I have a long list of junior league things to do, and they have accommodated that beyond my expectations. The balance I just I don't know, I don't like the phrase work-life balance because I think if it's important to you, you find a way to integrate it into your life. Chris: I couldn't agree more. Amanda: So there have been weeks that have been work-heavy and I've had to put Junior League on hold, and then there have been weeks that have been league-heavy and I've had to ask for grace at my office and my co-workers have all been very cooperative of it or supportive of it. So it's been a really great experience on all ends. Chris: Well, I think it was beneficial for you, but also wise of Plains All-American, to see the value in some skills that you could develop, that they maybe couldn't provide that same opportunity but would receive the benefit because you take what you learn in the leadership roles of junior league and apply them in your day job. Amanda: Right. Chris: And, I'm sure, in all aspects of your life. Amanda: Oh, yes, absolutely. But to your point, I have been for several years now intrinsically involved in managing, you know, close to $40 million budget for the junior league, and really not just administering it but having to be responsible and report out to various stakeholders about that budget, and that's something that that gate hasn't opened at my professional career yet. And so there's just been a really great way to supplement and enhance some of the skills that I know I will need at some point in the future at work, and then the Junior League has been a really great resource for that. Chris: Yeah, how has it translated into the rest of balancing or lessons you've learned? That kind of make you better in all aspects of your life. Amanda: Yeah, I will say I reached a point where a mentor of mine at the Junior League told me as soon as you realize that the job's a lot less about the to-do list and a lot more about the people, the better you'll do. And from that I realized that I was extending grace to a lot of people on my teams or volunteers I was talking with who were struggling, and you know the work-life balance we all try to find, and I realized that I wasn't necessarily extending the same grace to myself. And so I will say being having to act on all capacities for a year plus, both professionally and with the junior league, has been a masterclass in how to be graceful with yourself and be proud of what you're done, what you're doing and not focus on what you haven't done. Chris: That's a very astute observation and something that I think everyone could benefit from keeping in mind, because it doesn't come natural to us. Amanda: No, no, we're our worst critics, unfortunately. Chris: Now I also understand that Junior League, in addition to doing great work in the community, also, I guess, has some training available to your members to help them develop the skills to be in leadership positions and serve on boards. Tell us about that. Amanda: Yeah, we do. We have. We call it our Leadership Institute Training Program and it's a comprehensive program for our up-and-coming league leaders to introduce them to all the facets of the operations of the junior league and help them get better on board for future league experience. And then we have a program called our Outside Board Representative Program and those are agencies, nonprofits that we work with, where we place a junior league member as a non-voting member on their board, with where we place a Junior League member as a non-voting member on their board, and some are very well established nonprofits are up and coming. We have about 35 of them and the terms for our outside board representatives run from, I think, two to three years. And what's really great about that is we let the nonprofit tell us what they need. Do they need help with with governance? Do they want someone that you know was trained heavily in robert's rules of order? We will try to place a member there that can help them with that. And sometimes they say we need a lawyer, or sometimes they say we need someone who can help us with communications, and so it's a really cool. It's ended up being a really cool network of just nonprofits out in the Houston community that then all of our members come back and tell us about. And then we started having some meetings with the executive directors of all of those nonprofits and just to have the conversation of what's fundraising doing this year. How are you motivating your people, those types of conversations? So it's a really awesome way to get the junior league experience and kind of launch you into what I call the next phase of finding your passion and making a difference. ADVERT: Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom. And thanks for listening to the show. Chris: That's great. So you know. Obviously you've developed along the way. I want to ask you about, and whether it's in your professional career, as you've grown and moved up the ranks, or at the junior league, think about some challenges or setbacks that you've encountered. Maybe a mistake, but did you overcame it and learn from it, and it made you a better leader today because of that. Amanda: Oh, I mean absolutely, and I think that's another thing. That's what's great about spending time. The time I've spent at the Junior League is it taught me how to handle a mistake right To own it right up front and say I think I screwed something up, I missed this, and then say here are my steps to fix it. And I think you have to live through that a couple times to realize you need to say and here's my plan to fix it. Chris: Right. Amanda: And then owning up to the mistake isn't quite as bad as you think it will be. So, yes, I mean, there were times I remember I mailed a donor packet to the wrong donor and that poor vice president that was in charge for me was not happy. I apologized profusely and got to write a thank you slash, I'm sorry. Note to the donor and it ended up being perfectly fine. I think everyone understands mistakes happen, but it's certainly again a training ground to give you a chance to figure out how you want to respond when a situation like that comes up. Chris: I think you're so right Mistakes are going to happen. I think it's what you do when they do occur. That is kind of the test right, and owning up and not turning away or running from it or leaving it to someone else to fix but be a part of the fix shows determination to just own up to it. Right, absolutely. And those are all important skills because the odd chance that was your first mistake, we know won't be the last, right, it's very true. So that's good. Thanks for sharing that. I know some people don't like sharing the mistakes and challenges, but I think there's so much learning in that, absolutely. It's going back just to kind of the ins and outs of the role as president with this large organization. What I mean? I have to believe communication is key. So what are some of the things that you do to make sure that communication is not only clear but consistent, so that people stay on the same page? Amanda: Yes, and we actually have a person on our board whose sole responsibility is communication, so she helps me immensely in the messaging and it's one of those things you think you only need to say it once and you realize you need to say it three or seven times and all it takes is one email response where someone interpreted what you were saying differently to go oh, I really messed that message up. I think I have lived in a world of trying to be transparent and wanting people to understand my logic and my reasoning when something's changing or a decision's being made, and then just being open to the why of whatever is being communicated and also including that in my communications, especially to our board members. Chris: And I think that, at least for that group, has fostered a really great collaborative environment for us. That's great. I think you know transparency, clear communication, is so important. I also know that if you're communicating things out to that many people, there's going to be a few that just don't get it or don't read it the way you intended right. Amanda: So it's just, it's inevitable, absolutely. Let's talk a little bit, I mean any organization has a culture. Chris: Right, You've got one at Plains All-American and the Junior League has a culture. How would you describe the culture at the Junior League as a organization and what have you done to try to continue to foster and build upon that? Amanda: Yeah, that's a great question. I have always found our culture is rich in traditions. We have almost 100 years of trying to build a better community. That's our tagline, and what I have found to be most impactful in that culture is when we take a moment to express gratitude, and so each president's given the opportunity to develop an annual theme, and my theme this year was grounded in gratitude, and I quoted it was a Warren Buffett quote that and I'm going to butcher it on the spot, but it is essentially those who plant the acorn aren't intending to sit in the shade of the tree that grows, and so I really think what the Junior League has done really good at is we've created women who are not afraid to plant an acorn and then know that they're not going to reap the benefits of it. Someone who comes behind them 20, 30, 100 years later are the ones that will reap that reward. Chris: Kind of that attitude of pay it forward. Yes, that's very inspiring and noble. So what so sounds like a very collaborative and supportive culture? Absolutely, I want to talk a little bit. Maybe you know, outside of culture, just in the ins and outs of running this organization. What is a junior league doing with technology to help serve the mission, further the mission or anything innovative that the organization's trying to do to keep the organization current and move it into the next generation? Amanda: Yeah, gosh, that's a question we try to answer all the time. Covid forced us to change a lot of things from a member experience perspective and we've shifted some of our meetings to the virtual space, which I really think created an inclusive environment. Because if someone's being asked to attend a one-hour meeting and they were being asked to drive to and from our building, you're looking at a two, two-and-a-half three-hour commitment right there. And then I at one point realized the number of women who were having to line up child care so that they can make that meeting. So then the added burden of expense and just making your day-to-day work right. Sure that our leadership after COVID, when we realized that we really could communicate some of our meetings and our trainings in that capacity in a virtual manner, embraced it. Our trainings in that capacity in a virtual manner, embraced it. And so our approach has really been like, if you are in a situation where you need to line up childcare and you need to, you know, take three hours off of work to make a time with the junior league work. We wanted them to be spending their time in the Houston community, and so I really think that's been a pivotal shift for us where, like. Yes, our meetings and our, our trainings are important, but what's more important is us getting our volunteers out in the community yeah and so it's. It's been in. A change is interesting, right. People react to change in various ways. It's challenging right. Chris: So I mean a lot of what I hear you saying is you're there's been a focus, at least two things. One how do we use technology to increase our member engagement? But what I'm interpreting what I've heard you say is that's been grounded in a focus on how does this help further our mission and help our members further the mission and that is your guiding light Absolutely, and that's true, it should be true for any organization. Right, when you're making these tough decisions or navigating through difficult times. Right, any other examples of technology or innovation where you think things that you're trying to implement. Amanda: Things that we're trying to implement. We always try to be at the forefront of issues as they come out in the community. I love talking to some of our sustaining members who were part of our organization in the 80s and 90s, because they will talk about what the Junior League of Houston did to start helping and assist children with HIV, which was a very taboo topic back then, and so our membership is really focused on mental health and what we can do to support those struggling with mental health in our community, and so we are continuing to find new ways to either train our own volunteers to spot mental health issues and the appropriate steps to move that forward, and then we're continuing to try to find places. It's a tricky placement, right, because you borderline healthcare and need someone with certain certifications, but to find a way to interweave our members so that we feel like we're giving appropriate energy and resources to a really important topic. Chris: Yeah, to find that intersection of what those organizations may need and then where you can help. So obviously you've talked a couple times about the annual transition of leadership. Let's talk a little bit about, maybe, what has been your experience and what are you trying to do as you're about to transition out to kind of prepare the organization for that change in leadership again, so that to keep it as smooth as possible yeah, I always say you need mentors and sponsors, right, and you need people who are supporting you, who are the phone of friends, that you come and you say like I don't know how to do this, please help me. Amanda: And then there are the people behind the scenes who are saying you need to do this, you can do this, and I think I really have tried to one do that to all of the people on my team and then encourage them to do that for their teams, because I think once you realize you have women speaking up for you saying like, oh, amanda, she's great, she can do this, your confidence level increases and then you're not afraid to ask the questions, because what happens in the annual turnover is you go. Oh, no one told me about that one thing right that wasn't an issue last year, but it's suddenly an issue this year, and how do I address it? So I really think, creating the environment of there's no dumb question. How can we support you? Tell me how I can help. What can I do for you to make your job easier? Or what can I do to you to help get you the clarity you need to feel like you can move forward? And to your point earlier, that's a culture thing. Right like that goes back to that supportive culture right, it's a safe place. Chris: Right, that's got to be key to one. Furthering an organization for as long as it's been around right, but continuing that flow of solid leadership, right, um, I think that's. I think that's important for any business to try to create that environment where people feel safe in asking questions, asking for help and not feeling like they're going to be criticized for doing so. Amanda: Absolutely. Chris: You're basically running, would you say, a $40 million business. You obviously have an important role at Plains All-American Plains All-American. What is some advice you might offer to someone that is a business owner leading a business now or maybe an aspiring entrepreneur about? You know from your experience what you've learned, to just pass on a couple of key things that might help them in their journey. Amanda: Yeah, I mean first I would say yes, when someone calls you with a wonky idea and you don't always feel like you need to say no, embrace change, embrace different. And then I would say and this is probably me looking in hindsight, since I'm coming up on the end of my term as president is set expectations and it's, I think that's, I mean, it's universal and can apply to anyone, right, your team, your staff, but then also, like yourself and your family, and you know, I tried to make a commitment to my husband that I would try to not do Junior League on Sundays, and that would be the day where I wasn't answering emails or on the phone. And so to really, as you're taking on something new, to create the boundaries for everything that's gonna be impacted by a decision. And then I succeeded and I didn't succeed at the same time. Chris: Well, that's okay, right, I mean, I think it's really. I mean you're so spot-on, set expectations of yourself, of your team, hold people accountable right, set boundaries, but know that no one's perfect. And I think it's about awareness. So, just as you said, you weren't perfect at it, but you were aware when you didn't. And then you're like okay. Amanda: And to be able to have the follow-up conversation when something isn't right with someone on your team. Like I thought, our goal was this we seem to be straying from it. What's going on? And that goes back to what my mentor told me it's normally there's something with the person and not the job. Right, there's something underlying that's causing a shift in that expectation. So to circle back or, you know, confront those expectations months in or years in, it's definitely something's worth it. Chris: Yeah, I agree. So what about you as a leader? How would you describe your leadership style? Amanda: I would describe my leadership style as what is it? I would say I love rolling my sleeves up and getting into the trenches. I just I don't. I think we I preached on this to my board servant leadership, Like I will never ask someone to do something that I'm not willing to do myself. And if you need help, say you need help and I will be there right alongside you helping. If it's stuffing envelopes, if it's planting trees, whatever it is, and it's just that's. I think that's just who I am as a person and that's who I've seen some of my favorite leaders be over time, or the people who are there who focus on. We're here for a greater cause, we're here for the common good, and let's find a way to accomplish it together. Chris: Very good Anything that you would point to over the last few years that you've done to help grow and develop as a leader Books, mentors, conferences, anything like that. Amanda: Yeah. So we had a time management coach come and speak to us at our board this year and I I would tell you I before talked her name is Anna dearman Cornick. She is fantastic and before I would tell you, I thought time management was a bunch of hooey and like who has time for time management, essentially. But some of the tidbits she gave were eye-opening and it again, I mean, probably goes back to the expectation she was big on you schedule time for the important stuff you can't miss, whether it's, you know, personal relationship, your health, your faith, whatever that is, and then you find a way to make the other stuff happen around the really important matters. And it was a good perspective check for me hearing it. So it's, I do like time management now that I've been won over to the side of time management. Chris: She won you over to change your perspective and your mindset. Very good. So just kind of wrapping things up, I mean, give you a chance. If someone out there listened to this and was interested in joining the Junior League, what should they do? Amanda: Yeah, you can go to our website. It is JLH for Junior League of Houston, jlh.org. There is a join how to join section which you can look at, and then there are links to take you. We have a admissions process that runs once a year. It opens up September ish and runs through January, so it's fall to winter time, and then we can help you with all of the steps of filling out your application and getting you on board. It's a really great way to enhance your network and find all of the fantastic things that are happening in the Houston community and be a part of it. Chris: Great. Well, Amanda, let's turn away from the business side of things and tell us what was your first job. Amanda: My first job, gosh, it was. I worked at the Gap and I was I don't even know what my title was I would fold jeans. Chris: Everyone came in and messed them up, even know what my title was I would fold jeans. Amanda: Everyone that came in and messed them up. I never realized how people, how messy. People were in dressing rooms until I was the one having to fold it all after. It changes your behavior now right, Absolutely. Chris: So okay, native Houstonian right. Amanda: I am a native Houstonian, grew up in the Klein Champions area. I moved away for college, which was at the University of Texas at Austin, and then I did my law school and MBA at Texas Tech. So the move from Austin to Lubbock was an interesting one. I didn't know that tumbleweeds were real until I lived in Lubbock and then I quickly came home. I miss the great Houston community so much, so happy to call it home now. Chris: Very good. So do you prefer Tex-Mex or barbecue? Amanda: Oh, tex-mex, all right. Chris: And tell us one of your favorite hobbies or pastimes when you're not working at Plains All-American or volunteering with the Junior League. Amanda: I truly love the Houston livestock show and rodeo and luckily my husband is from Louisiana and I onboarded him into loving the rodeo, but we can go every night and just watch the rodeo itself or the exhibits. That's a fun time of year here in Houston. We're big fans of it. Chris: That's a good one. No, it's a true Houston treasure. Amanda: Absolutely. Chris: Well, Amanda, I want to thank you again for coming on the show and taking time to be with us today and share your story and that of the Junior League. So congratulations to all y'all are doing for our community. Amanda: Thank you so much and thank you for having me. Special Guest: Amanda Hanks Bayles.

In this episode of Building Texas Business, I welcomed Jen Sudduth, CEO of Sudduth Search, for an insightful discussion on her journey in the executive search industry. Jen shared her story of transitioning from Taylor Winfield to launching her boutique firm focused on transformative growth companies. I learned how Sudduth Search crafts a supportive work culture that prioritizes both productivity and well-being. Our dialogue also uncovered nuances around balancing work responsibilities with life's pleasures. As we wrapped up, Jen reflected on life lessons from mentorship to her commitment to the Special Olympics community SHOW HIGHLIGHTS Jen Sudduth shares her transition from Taylor Winfield to founding Sudduth Search, focusing on middle market private equity and emphasizing the need for leaders who can drive change.We explore the importance of having a business and marketing strategy before starting a venture, as well as considering when to hire based on company growth and values alignment.Strategies for maintaining work-life balance in recruitment are discussed, including setting boundaries and fostering a culture that supports employee well-being alongside business success.The episode delves into the comprehensive selection process for executive search, particularly for pivotal roles such as CFOs, and the role of retained search firms in this process.Jen reflects on the role of empathy in leadership and the importance of mentorship, drawing from her own experiences and her involvement with the Special Olympics.Personal joys, such as a preference for Tex-Mex cuisine and planning for sabbatical destinations like Maine and Santa Fe, are shared as part of achieving a joyful living.The conversation covers the initial opportunistic hiring during COVID and the shift towards a more strategic hiring approach to raise the team's overall expertise.Chris and Jen discuss the benefits of leaving a company the right way, honoring agreements, and how transparency can lead to unexpected opportunities.Jen advises on the importance of planning for success, not just the startup phase, by having operational projections and growth strategies in place.The episode also touches on Jen's past experience as Director of Talent at a consultancy, highlighting how internal hiring insights can improve external recruitment advice. LINKSShow Notes Previous Episodes About BoyarMiller About Sudduth search GUESTS Jen SudduthAbout Jen TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In today's episode, you will meet Jen Sudduth, co-founder and CEO of Sudduth Search, a boutique executive search firm. Jen's advice to aspiring entrepreneurs is to be intentional and purposeful in your business planning, and don't forget to plan for success. Okay, jen, first off, welcome to Building Texas Business. Thanks for being here. Jen: Thank you. Chris: So I'm excited to have this conversation with you today. I want to start by just allowing you to introduce yourself and tell us what your company, Sudduth Search, is known for. Jen: Sure. So we are a seven-person boutique executive search firm, but I think what we do is a little bit unique. We work with the middle market private equity. Probably 75% of our clients are private equity backed. The other are public, private you name it individually owned, it doesn't matter. I think the common denominator with all of them is that all of the companies are going through some sort of transformation, and most of the time that's growth. It could have been that they raised capital. That's a trigger to bring us in and go and replace some of your leadership team. Could be some of our bigger companies going through some sort of culture change. We did 10 positions for a Blackstone-backed company and basically they wanted to pull from outside of their industry and they didn't know how to do that, and so we helped them come up with a concept of how to do that completely, you know, changed their recruiting processes from how they were doing them before, and then they brought in a whole new culture and that's what they wanted. They wanted a different culture than they had before. So it's just, it doesn't matter what the trigger is, but it's usually some sort of change, transformation. You need a leader that can drive that change right. You need someone that is fearless. A lot of times that can come in, and they're you. You know they can make things happen. Right and that's where we play most of the time. Chris: Well, what I find interesting about that is how laser focused it is what inspired you to kind of start a search firm that was so focused on that kind of niche industry. Jen: So I've actually done it for over 20 years and the firm I was with before was called Taylor Winfield. I only bring that up because a lot of people know Taylor Winfield. I started with Taylor Winfield and kind of worked my way up and that's what they focused on. They were more. You know that was 2000, so there was a lot of venture money out there, there was Silicon Valley and they worked a lot in California we did. I was just a lowly junior recruiter back then and that's where I learned the business and that's where I kind of learned that world. And it's not for everyone, both as a candidate and as a recruiter, because sometimes candidates will go well, what are they going to sell? Am I going to still have a job? I'm like, well, you're really not, you're not right for this, because that's not the mentality that we look for in a candidate. But so that's how I got my start and that's how I learned it. And then when I started this up my practice five years ago, I kind of I don't do a whole lot of venture. I have a few here and there. Usually they're a little bit more mature as a company. I think. As I've aged I'm not as patient with the venture. I think they've got a great thing going. But it's just a different world and I think sometimes those, the people that are willing to go and do something really earlier stage, are not the same people that I'm looking for the middle market series, b series, c type folks. So so that's how I had got into. It was really that's kind of what I've done my whole career. Chris: Gotcha. Well, I know that you started this company Suddeth Search around five years ago. Jen: Exactly. Chris: So you had to make some decision to leave and just start fresh on your own. Let's talk about that a little bit. What drove that decision? Jen: So the company that I worked for was actually owned by and I don't usually say this, so you're getting new information here by my stepmother, connie Adair, and I bring that up because she's fully retired now. She's been retired for about two years. But she brought me into the business, not as a multi-generational business. I had to earn my keep, earn my way Right, just like everyone else. She was very big on treating me like everyone else. Chris: The benefit for you that she did that. Jen: Absolutely and I learned from the best. She was really known as one of the best in the industry so I kind of got to see that world and that process. But she sold to private equity and it was a private equity roll up. Like some of them, it didn't go really well. The integration piece was a little rough. Chris: Not unique in that regard, right and I got no benefit from it. Jen: To be quite honest. I stuck around to try to support her and she did well. And then she got another bite of the apple and I tried for two years. I wasn't a big company person and I realized if I can make this kind of money for someone else, I should be doing it for myself. And so I kind of did it because I could, and she fully supported me. She knew that retirement was on the horizon and so when I told her she said you know, I think you should go for it. So that's what I did. Chris: That's great. Well, I mean good to have that encouragement for someone that you were close with but considered to be a trusted mentor Absolutely. So got to be a little bit trepidatious to just start out on your own, even though you know what you're doing and you, I think you can't do that unless you have confidence that it's going to work and confidence that it will work isn't a guarantee that it will Absolutely. But you know what were some of the things you did to kind of set yourself up in those early days of starting your own company, to try to pave the path towards success. Jen: So I will start with the fact that I had a very strict non-compete. I did not get any clients from the company or from her, and I am a devout follower of non-competes. Chris: Well, it's funny, you say that you bring that, yeah, you know, now we devise people, I mean literally every day, on both sides of those, and right because because they exist and obviously you know there's a lot of buzz recently because the ftc came out with the rule to ban them, uh, which is, you know, probably not going to take effect because lawsuits have already been filed to challenge it. Jen: But it's going to be interesting to see how that plays out yeah in the next, over the next few years, I think yeah, and not to say I don't think some non-competes go overboard. I have heard some ludicrous non-competes as I'm interviewing, so sure, I do think a lot of them go overboard. I think the fdc is in the is moving in the right direction with some of them, because I think they're a little too restrictive. Chris: But that's not your question yeah, and even as the rule's written, it doesn't apply to executives, so it wouldn't change your world. Jen: It wouldn't, and I'd been there a long time. Everything I got was under their umbrella. So what I did do was I planned for a long time. I've owned businesses before and so I had a business plan, I had a marketing plan, I had a strategy. The other advantage I had was that I had been I've been asked to be on the board of ACG and so that was a. I knew that was going to be great PR. It's gonna be great relationships there. That's how I met Steve Kasten here at the Boyer Miller and a few others, and so I knew that was coming. But it was pretty far out. You know my tenure had just started. Didn't know I was gonna be president, but I knew that was gonna be on the. I'd have a lot of visibility. So that helped quite a bit. I think that was one factor. Fun story unrelated to your question the day before I quit, the day before my last day, I gave like four months notice and they knew I was leaving. I was unwinding. I had some really big searches, so I was unwinding those and finishing those up for clients, kind of on the bench, but just doing that. So the day of the last day of employment I get a call from that client that I just mentioned wanted to change their culture Blackstone Back Company. He said I got 10 searches for you, jim. I said, well, I can't do them, I'm leaving, today is my last day. And he's well, I'm not doing it without you. And so I called the company and I said here's what's happening. Would you, would we, can we do a fee split? Didn't know that was coming, but that was really great cash flow. And they said yes, and so we worked out a fee split. I continued I worked with that client and then they brought in their team, but it was great cash flow right out of the gates. And and then they brought in their team, but it was great cash flow right out of the gates. And then I developed brand new clients from that point on. But I knew the industry. I think the industry knew me. Chris: So even if it wasn't somebody, I'd worked before, I had a plan and I went after those people. That's a really cool story to hear and there's a lesson. There's probably many lessons, but one that just struck me right between the eyes is the lesson in leaving the right way, when you leave a company versus leaving the wrong way and you just laid out a roadmap for the listeners. If you're thinking about leaving, you left the right way, honoring your agreements, and then, with the transparency to get the slug of business for your new business, for your new company, because you went to them and said here's the deal, because you've done everything else right. It's good to hear that. I guess they could have not honored that, but they did the right thing in my mind too, yeah, by saying yeah, it'd be fair to share this and, by the way, we should. Customer comes first. That's what they want. Let's make them happy. Jen: So customer comes first. That's what they want. Let's make them happy. So, yeah, and I completely agree and I try to tell people and I know there's exceptions, I know there's bosses that are just difficult and if they know you're even looking there, you're gone. I know that happens, but I think majority of the time people are reasonable and if you come to them and sometimes I'll have friends come to me and say I'm thinking about making a change- Grass is greener Right and I'm like I know they're in a great situation. I'm like have you had a really difficult conversation with your boss before you leave, before you start thinking about? Have you told them that you're unhappy You've been there? Chris: 14 years or you've been there seven years. Jen: Have you talked about it? And usually the answer is no, and so I try to encourage them to say go talk to them first and then if it's still you know, in a month you still feel like it's just not fulfilling then talk about leaving. Yeah, but you need to give them a chance. Chris: It's great advice. People unfortunately right. It's kind of human nature to avoid the difficult, uncomfortable conversation, or at least I'll say this, the ones we perceive have it that they're going to be difficult or uncomfortable. And to your point, I think, a lot of times if you actually have the courage to go have it, they usually aren't as difficult or uncomfortable as you work them up in your mind to be. Jen: Absolutely. Chris: And you know I can speak. You know as well as you can. If you give your employer, where you've been otherwise happy for a while, the chance to have that conversation most people if there's a tweak or two that would keep you there, it's probably going to save the company a ton of money. To consider that. Jen: And it might benefit the company. Talk to them about. You know I'd really like to do more sales. You know I'd really like to take on bigger projects. You know what We've been looking for someone that wants to take on bigger projects. You just never know what the company needs. Chris: So we can go back. You mentioned, and just for the listeners ACG Association of Corporate Growth. Jen: Yes. Chris: Indice Group industry in the kind of M&A, a lot of private equity. So sounds like part of that marketing plan was to plug yourself in to the right kind of networking system where you would meet people and build relationships. Jen: That's correct. Yeah, yeah, and I eventually was asked to be president I don't know if you know that and so it was a lot of it was a lot of visibility as well. That's half the battle. Chris: Yes. Jen: Because there's a lot of top of mind search firms out there. Yeah, getting top of mind and helping them see that. I understand private equity, I understand what their challenges are. I understand what they're trying to achieve. I understand how capital's raised. You know I've got the knowledge base to be able to convey that to candidates and to help find the right one that's going to fit that. So I think that helped a lot and it's it was educational for me. You know, going to conferences, hearing panels speak. I know a lot about a lot or a little about a lot. Chris: Let me rephrase that I shouldn't admit that, but it's true, but it does. Jen: It's real educational to hear those conversations and to hear what's happening in the market. You know from your peers that are in the organization. Chris: A couple other takeaways from what you said. That I hope people listening caught is that you had a plan before you did this right, absolutely. You sat down and put it to paper a business plan, a marketing plan, a strategy. Look, I think those are so important and can be overlooked. When people say, look, I'm just going to go chase this dream, that's great because you need the inspiration, but you also need some substance behind it, because if you eventually do go to and most will go to a bank or an investor or something, they're going to be asking about that. So you better be prepared. Jen: Absolutely. Chris: So one of the things and you and I were talking about this, I guess before we got the recording going, and that is you know about this, I guess before we got the recording going, and that is you know, you now have seven employees. Let's talk a little bit about you know. I think there's a few conversations. One is what was it that triggered you each time to make the decision Now it's time to take on an employee or another employee, because those are big investments and then how did you go about making sure they were the right fit? Jen: Yeah. So it was growth that predicated the need. That was the part I didn't plan was when am I going to hire what? You know what? At what point do we need to bring on another person? At what point do we need to bring on a junior person, et cetera, et cetera. I didn't plan that piece of it and I probably should have, but it was really just my bandwidth and being able to do what I needed to do. You know, we were super busy during COVID, which sounds really strange, but I had some. I had that one big client that was still going. I had just so, if you think about I had been in business for about a year and so that year I had been really busy doing marketing and business development and getting out there and making relationships, and so it just it paid off and I think a lot of those people one of my biggest clients I don't know if you know Dave Marchese, he'd be a good guest. Let's do it. He called me out of the blue in the middle of COVID and we had met like five years prior, but he had seen my posts and my marketing and my emails and so he said I can't go out. I'm not going to go out and interview five interview candidates, but we're in the or excuse me search firms because we're in the middle of COVID. So what you got Jen, and so I took it on, and we've probably done 15 different positions over three or four years. Wow, so he's one of our biggest clients. So there that, I think the prior relationships definitely helped us make it. You asked about employees, though. Chris: Yes, well, before we go there. Yeah, one of the things you so interesting. You said I didn't plan for growth. Yeah, probably should have. Jen: Yeah. Chris: So, looking back, what do you think you could have done in that regard that you might offer as advice to someone that you know is maybe about to do something similar that you did five years ago? You know, what have you learned? Looking back, to say I would have, if I was going to do it again, I would plan for growth in this way. Jen: Plan for success. I think I was so focused on how am I going to get there that I didn't say if, when I get there, if when I get there, how am I going to get to the next level? I never did that. I never said, okay, I can handle 12 searches, or whatever it is, at different in different phases. So if I get 14, what do I do? At what point do I, you know? Do I need to start hiring when I get to 9 searches, whatever it? So maybe it was a revenue. I think I should have projected and said, because I've been in the business a while, I know how many searches I can do by myself or with a team, and so I think that would have been very helpful to do kind of like an FB&A analysis, but on the operational side. Chris: Right, Very helpful, that's very helpful. Okay, so now let's go back to kind of set a search. You starting to decide I've hit the point, I can't do this all, I've got to bring someone on. Yeah, you know how did you go about sourcing. I know obviously you've probably had a lot of contacts, but you know just the whole process of how you interviewed to make sure they were going to be a good fit for your company. Jen: So my first hire, I got really lucky because she was a neighbor, a friend who got laid off during COVID and so we brought her on just to do some of this data pushing type stuff. She made phone calls, cold calls, she's fearless, and then she grew into being a really good recruiter. After that first hire it was, oh my God, I can't handle this. I just need a body that can help do, a professional person that can do all this. After that hire I was much more purposeful. After that it was we want experience. We want, you know, degree Now she was degreed. But we want degreed individuals that understand the business world, that understand you know degree Now she was degreed. But we want degreed individuals that understand the business world, that understand, you know. I think every time I made another hire I kind of elevated my expectations. Chris: Right. Jen: And not to say the first hire was. She was a phenomenal employee, but I think every time after that I was much more purposeful about how I, who I wanted to hire and what my expectations of them were. Chris: Yeah, that makes sense to me and you're right, it's not a condemnation of the earlier hires. It's if you're doing things right, I believe you're always learning and your processes can always get better, and it doesn't mean you didn't make bad hires before, but you can get more intentionality around the decisions you're making and I think that's part of growth and when you're a one person show or two because my husband did join me about six months in it's harder to attract talent you know, Now we're about to make an offer to a pretty senior person and we had a really good slate of people that were interested, that were like, yeah, I want to join a boutique firm, I want to do what you're doing. Jen: So it changes too. Advert: Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom. And thanks for listening to the show. Well, that's validating. So you've gone through this process of sourcing people for your company, right, and what have you? What has that process and the learning? Jen: through that done to help you better advise your clients or vet candidates for them. What else about that I'm actually gonna go back to. So I took about five years. I left the executive search world and went to a consultancy and they I was director of talent. We tripled in size in about five years time and then they sold to Accenture about two years after I left. When I left, I think oil and gas was zero. The barrel, the barrel. Chris: I remember that yeah. Jen: So they made a strong comeback and then eventually sold. But being on the inside like that was the best education I could get, because it was. This is what happens when you make a really bad hire. This is what happens to the entire company when you make a really good hire. And we weren't huge I think we ended up being about a hundred but but it was really helpful to me to see. I also learned you know really short tenures on people's resume. There's a reason you know, I know there's reasons that people have to leave jobs absolutely there's good reasons, but when it's over and over and over, and then you hire that person because you're desperate for a data manager or whatever it is. You're desperate for that skill. You're going to find out why they can't stay in a job longer. I learned a lot being on the inside, you know, and I think that job is really what taught me kind of the hard knocks of making a mishire. Chris: Right. Well, I think you're to your point, right, it's if you look there are red flags, pay attention to them, and I know from our we're not perfect either in this business that I have, and you know sometimes you can convince yourself to overlook a red flag here or there, and more times than not you shouldn't. Right, there's exceptions to every rule, but we don't want to run a business based on exceptions necessarily You've got to be purposeful about those hires is really what it taught me. Jen: You know very purposeful. Chris: So just to kind of come back to Sutter's search a little bit so you have seven, about to have eight, and you talked about doing a search for a client where it was a culture change. Let's talk about culture at Sutter Search. What are you, as the kind of co-founder and CEO, doing to try to cultivate a culture? How would you describe it? And what are you doing to kind of, you know, foster it and breathe life into it? Jen: Yeah, it's hard with seven people, eight people, you know, to kind of create that, because you're like oh, we're just eight people, but they need it. Employees need training, they need to be developed, they need to evolve, they need to expand and grow, and so we actually started EOS at the beginning of this year. Are you familiar with entrepreneurial operating system? Chris: Yes. Jen: I think I don't know if Allie was the one that told me about it, but you know I've heard a lot of business owners that have done it, and so we actually started it and I think it's been evolutionary and I'm not selling it, I don't sell anything they do but it has really helped us be very purposeful about what we're doing for our employees, and so my one of our other managing directors is. She's in charge of kind of the HR and training, and so we have a weekly training every single week and it's sometimes it's heavier than others, but we have a weekly training every week and one of the employees actually gives it, so they have to go out and learn themselves and then they come and teach the rest of us. I try to. I'm a big advocate in the old school headhunting world is just dog eat, dog work, and so when I started my firm I was like I don't want to be that way. We're not working 12-hour days, we're not working both coasts, we're going to have a great and I hate to use the words work-life balance because I know it's overused. Chris: That's right. Jen: But we are, we're going to edit that part out. I'm kidding it is overused, but I think in some aspects it's important because you're a better employee if you take your vacation, if you didn't have to work until 9 pm the night before, if your managing director isn't calling you at 6 in the morning because she happens to be on the East Coast that is not the culture that we have. I'm always telling them you're going on vacation. Who's taking your emails? You're going on vacation. Who's taking your emails? You're going on vacation. Who's taking your calls? Did you put your out of? We require out of office messages to be turned on and I'm just, I'm always preaching that. I really think it's important to separate yourself and give your brain a break, because what we do is very, it's very repetitive, it's very. You know you may, if you have ten searches, that you have four candidates at least on what we usually have a hundred, but you have four finalists going through to offer yeah you think about the ups and downs every single day. Chris: It's a lot well, I mean, to your point, what you're doing, I mean, has to be stressful because you're affecting people's lives. Absolutely right, you got four candidates and or maybe see this as a great opportunity and are very hopeful, and you got a, a client, that needs to fill a hole and every day they don't have that whole field, they're losing money. So I can get that yeah to your point, the work-life balance and we could do a whole podcast on that. But I think what my experience has shown, or at least what I feel like I've learned through that, is our work-life balance is different at different times of our career. So it's hard to institutionalize that when everyone's at different stages. We try to use the term more like professional development. Developing our people to be great professionals means you tend to your business, but you tend to you have a life as well and you got to figure out how to manage both in a healthy way, knowing that the way it works for me now is totally different than it was 15 years ago right and that's okay because everything changes and we have new employees here that are going through totally different life stuff than I go through now. but how do we help give them the tools, the training to manage that and still be successful both in the office and in their personal life? Jen: Yeah, and we do we have different? Everybody kind of has a different work methodology. I shouldn't say hours, it's more like hours, you know a 20-something. They like to kind of work late in the day and have their workouts in the morning or whatever. Like everybody's kind of different. And then Hazel and I are about the same age and we like to not be disturbed until 8.30 or something. You know, like we like to go do our thing in the morning and work out and whatever. Read the paper and everybody's a little different, but we are very understanding of each other's different lifestyles. Right To your point. Chris: The key there comes to communication right. Yeah absolutely Absolutely, and so do you have. What is it that you're using as such to make sure those conversations are happening? Yeah, so that people understand how each other works differently, but together you can work for success. Jen: Yeah, we talk about it when they're hired. I say I'm not going to track your hours unless your productivity is not working Right, and then we're going to talk about it. Do you have too of a workload? Or, let's be honest, are you not working enough? You know, because last week you didn't have very many searches. This week you've got a lot. So if I need you to work till six, you gotta admit that last week you didn't have to. And they're very honest with me. A lot of times they'll say, hey, not going to be online until 10 or so, but I'm going to be working late or whatever. Or I stayed up for four hours last night sourcing. So you know I'll be available on phone but I'm not online. Perfectly okay, and we're very flexible that way. It's a little hard sometimes. You know, I'm always like are you working? I'm on the back of my brain and then I have to call myself and go. Of course they are, it's not producing. Chris: So that comes down to two fundamentals no matter what industry, communication, yeah, and what you're willing to do is have what some people might feel like is the harder conversation or uncomfortable conversation, but you approach it with kind of support and transparency. Jen: Yeah. Chris: The other thing. It comes down to productivity. Jen: Yeah, right. Chris: Absolutely. If we're running a business, we're running a for-profit business. We have to be productive to make the business go. So you can't lose sight of that. Some people, I fear at times the extracurriculars overweigh what we do to make our money and what is our. You go into the. This is what fuels our economic engine. We can't lose sight of that. It won't matter how many out-of policies or things we do, we won't have a business to support it. Jen: So it's finding a balance there, right? Yeah, I'd say the common denominator with all my employees is they thrive on success. They thrive on accomplishing things. They're not going to just shut things off if they're not done and they haven't accomplished what they set out to accomplish. They're very driven that way. That's a common denominator. Chris: Very good. So a little bit about your business. So you were saying you know, middle market focused, we're kind of approaching mid-year 2024, which is like just blows my mind that we're, you know, that far into the year already. But you know there are businesses out there that either use services like yourself or maybe contemplating that, and I know, at least in your world there's at least two different ways to go about it Retain, searches or kind of the contingency model. Can you just share maybe a little bit about what each is, the differences, pros and cons, and maybe flow into what a company should consider going one versus the other? Jen: Yeah. So I want to make it clear that I am not pro or con. Either way, I think there's a contingency, there's absolutely a place for it. I have several friends that are in the contingency recruiting world and they say I will never be in the retained world. So there is a place for it and I think if you have a large number of hires, you have a position or a company that is attractive to candidates and you want to get all the resumes you can get and then choose because they want to come to you, that's great. You can use contingency. What we do is a consultancy. So if you're a middle market working with a middle market firm right now, it's a downhole tool. Cfo position this position is critical that they get it right because they have big plans. I'm not going to tell you what those big plans are. They're private equity backed and they have big plans and it's going to happen, but if they don't have a financial expert that can devote time and devote, then it's not going to happen. And so it's critical, and in that situation you absolutely need to find the best person that you can find, and you need to interview a lot of people to make sure that you are choosing the right person, and so that's what we're doing. That's where we come in, and it doesn't have to be a CFO role. We can do. We do VPs and we do directors sure directors but we're going to look at 150 people that we know could do this job, and then we're going to reach out to every one of them and then we're going to interview 20 or 30. I'm going to interview half of those and then I'm going to present and rank the top. So it's not like we're going out and finding five people that are qualified and handing them to you. We're going out and finding 10 times that many maybe not 10 times, but a lot more than that and then finding you the best and ranking those for you to interview. So if it's a critical hire for your company to succeed, I would absolutely recommend retained, because they should be a retained firm, should be a consultancy, they should help you find that person. Chris: So that's really helpful, and hearing you describe it makes the difference very clear for me. I hope for the listeners and what I hear is you're doing a lot more upfront work on the retained side and I guess, as a consumer of these services, you should expect that your retained firm will do a lot more upfront work and vetting the best clients to bring to you. Jen: Yeah, absolutely. And the other thing I think that's important for my clients to know is our database is completely open. Our kimono is open. Is that a bad thing to say? Chris: No, we don't have video, so we're good. Jen: They can see everything we're doing, when we're doing, how we're doing. It's not a we'll talk to you in a month or two and we'll give you three great people. There's no magic thing that happens like that. It's a database they can go in. They can be like ooh, I know that guy and not going to work. Chris: Right, whatever reason, work right, whatever reason. So through, I guess, an online portal that you give them access to. Jen: okay and so it's a process to get to the fine. We meet once a week and I say here's why we chose, here's why we interview these people. What do you think? And a lot of times I'll say you know what? That company doesn't hire well, or they might be an acquisition on the horizon with that company. We can't talk to their people, so we have weekly conversations that get us closer and closer to the best person. And so it's a process, it's a very thorough process that gets us there. But that's 15, 30 minutes a week from our client, that's it. Chris: Okay, Well, they have to be invested, especially in these that are so critical. The positions to fill the client has to be invested. That's right and I like the somewhat. Maybe it's not. It sounds innovative to me that you are creating that opportunity for them to vet and see what's going on whenever they want. Right, but have those weekly check-ins. You know, it sounds like a kind of a white glove service, if you will. Jen: Yeah, and I think a lot of times people are scared, overtained. They're like what if it doesn't? What if you don't find someone? I'm like never happened in the history of 23 years, because we're talking to you and if we're not finding the right people, we're going to pivot, we're going to merge, we're going to figure out why is that happening. Is it the company reputation? Is it our pitch? Is it the way we're describing it? I mean, we're going after the wrong people. We will figure it out. We always fill the positions. Chris: Right Always, because you're invested in it. Right, right, it's not which. Jen: Because it's and it's not a. Here's three resumes, let me know. Chris: Right. Jen: That's not how it works. I got it. Chris: That makes sense. So a little bit, I just want to ask you're obviously, you know, leading this company. What, what would you or how would you describe your leadership style and how would you say that maybe has evolved over time based on your experience? Jen: So I would describe my leadership style as real. It's too real. I like to be pretty open with my employees and I have weekly calls with almost all of them I shouldn't say almost all of them. My fellow managing director we talk almost every day, so I don't have a weekly calls with almost all of them, I shouldn't say almost all of them. My fellow managing director we talk almost every day, so I don't have a weekly call with her. But the others, who I may not speak with, I have weekly calls. We talk about what's happening, what's going well, what is their workload like? I ask them what was the most challenging? Because we all work remote, so that's the other thing. We don't see each other every day right and I'll say what was the most challenging thing and what are you most proud of. And sometimes I had no idea. They're like oh well, I met that candidate at that event. I went to one of my. One of my employees told me that I'm like, I had no idea. Like you went to this networking event and happened to meet

In this episode of Building Texas Business, we delve into the remarkable journey of Jason Hayes and his family's business, Top Coat Fabrication. Despite the tumultuous nature of the markets, they managed to emerge as an industrial leader, a testament to their resilience and adaptability. He shares Top Coat's blueprint for navigating change while excelling in oil, gas, and petrochemicals. Intentional culture-building through staff gatherings and challenges instilled trust and community, cornerstones of Top Coat's prosperity. In conclusion, his journey to company president wove together personal learning, workplace achievements, nurturing customer bonds, and proactive growth to create the powerhouse that Top Coat is today. SHOW HIGHLIGHTS Jason Hayes discusses the transformation of Top Coat Fabrication from its sandblasting roots to becoming an influential player in the oil, gas, and petrochemical industries.We explore Jason's early involvement with the family business, starting straight out of high school and eventually becoming president, as he emphasizes the value of hands-on experience.Jason shares how Top Coat navigated the challenges of the oil industry's downturns and how strategic diversification into fabrication opened new opportunities in the petrochemical sector.Jason and I delve into the pivotal moment in 2010 when Jason embraced intentional leadership and continuous learning, transforming his personal and professional outlook.Jason highlights the cultural shift within Top Coat, illustrating how he cultivates a positive work environment through team-building exercises and weekly staff meetings.We discuss the significance of building strong customer relationships, with Jason explaining his personal approach to post-project follow-ups and the search for honest feedback.Jason reflects on the importance of networking and trusted advisors, detailing how open communication within the leadership team is essential for resolving conflicts and fostering growth.We delve into Jason's leadership style, his efforts to understand team members' goals, and his commitment to maintaining a balance between work and family life.Jason explains the importance of hiring for culture fit, noting that while skills are necessary, alignment with the company's ethos is crucial for long-term success.Personal anecdotes are shared, including Jason's love for Tex-Mex, his first job experiences, and his aspirations to travel more with his family. LINKSShow Notes Previous Episodes About BoyarMiller About Top Coat Fabrication GUESTS Jason HayesAbout Jason TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Jason Hayes, president of Top Coat Fabrication. Jason is the second generation of leadership in a family-owned business and tells how he went from hope to learning to be more intentional about growth. Jason I want to welcome you to. Building Texas Business. Thanks for taking time to come on the show. Absolutely Glad to be here. So I think the best place to start is just tell us a little bit about Topcoat. What is the business and what? Jason: does it do? Okay, we're an industrial fabricator, so we fabricate oil and gas and petrochemical equipment, a lot of welding, piping, structural steel, pressure vessels pretty much anything you see when you drive by chemical plants. That's the type of stuff that we fabricate. Chris: Okay, and y'all been in business. Now for what? 40 plus years, 40 plus years. Jason: This is our 44th year. I think it started in 1980. Okay, yes, it started as a sandblasting and painting company, and that's how they got the name Top Coat. Chris: Oh, okay, that makes sense. And so started by your father, I believe. Mom and dad, okay, still 100% owners. Very good, so what was the I guess, the inspiration that had them start Top Coat to begin with? Jason: I think honestly, if I remember the story right, my dad was working for a contractor down in Freeport and I don't remember the whole story but he didn't get treated right so he got let go or whatever happened. So he decided he was going to start his own thing. So he did they and they started this blasting and painting and it just kind of took off. His work ethic combined with everything else and industry in our area, so there was a lot of oil and gas in our area at that time. Mobile had a big shore base down there, so his contacts led to him doing some blasting painting for mobile and then they asked him if he could do some work offshore on their platforms, because they have platforms out there. So that that led to that part of the business and it just kind of started growing a little bit from there so it's interesting. Chris: So many people that I've talked to have you know unique stories, but there's a there, there's some that have a common theme that it's kind of, out of that hardship or disappointment or something, they decide to go on their own and do it their own way. It sounds like that was the case for your dad. Jason: Yeah, absolutely. I don't know exactly what drove it, you know, but yeah, that's what led to it. Chris: Tell us a little bit then you know how did that lead to. You know what the company is today as it relates to you know the focus and the mission and the purpose of the company. How has those early days influenced where you are today, some 44 years later? Jason: Well, let me give you a little bit of history about that. So when he started working offshore for Mobile at some point, he was just doing sandblasting and painting, well, on a project. They had asked him if he had any welders or knew any welders, because they needed some welding done out there. So he said yes, as a matter of fact, I do so. Welders because they needed some welding done out there. So he said, yes, matter of fact, I do so that he started hiring welders and doing construction on the platforms as well. So the offshore oil and gas was our bread and butter for many years, 20 plus years at least. So that even when I came on board in 98, that was our biggest business was oil and gas offshore construction. We'd send crews to the platforms and do maintenance and platform installations, platform removals, kind of everything in between. So that was great. The downside was, you know, when oil and gas is great, it's great, but it's dead, very cyclical too, right Big time. So we had a lot of struggles and I didn't see any other struggles that they saw. My mom and dad went through so many downturns that it was everything they could do to survive, but they did Well. Then, after the BP spill, macondo incident. Then the government really cracked down on offshore industry. So pretty much all the platforms we used to work on started coming out of the water. So all the stuff that we used to do existed no more. So that's when we really had to decide and make a big pivot in the business and say you know what we've been doing? A little bit of fabrication that supports the oil and gas, the offshore let's, let's focus on that. We have the knowledge base, we had some experience in it. Let's let's focus on that. So we literally changed the name to top coat fabrication and we didn't do anything off-site anymore. We focused strictly on fabrication and we would ship our stuff, you know, kind of all over. So it opened another big door to us for the petrochemical industry, because down in our area, you know, we've had Dow Chemical, all these chemical plants right in our back door. But it was almost like we swore we'll never work for the plants, we'll never work in the plants, just because it has that stigma of okay, once you get in, you know your foot in Dow, you know it's, it can be great. But then they people say they own you or you know whatever, and so we never did. Well then now with just the fabrication, that's when we started reaching out to these chemical plants and started really digging in and started doing a lot of work for them. So, and then, another big blessing was not too long after that, we got approached by a big company that had property next to us, had a, a facility, and then they wanted to buy our facility for an expansion. So we were on the water, we were on the intercoastal canal because we had crew boats coming in and out. We did a lot of dock services, so none of that existed anymore. So this was just a huge place that we didn't need, so that we used that to actually buy a piece of property, built a brand new shop where we're at now, a brand new facility. We built it the way we wanted. That was, you know, based on fabrication. So that's where we still are. Chris: Okay, that's great. So you know, I guess, a good lesson in the adage of don't put all your eggs in one basket. Yeah, y'all learned to diversify pretty quickly, right? Yes, yeah, exactly. Jason: So now you know we still do oil and gas work, but it's fabrication. We do a lot of stuff for West Texas oil and gas and we ship our stuff out there. We do a ton for the petrochemical industry right in our back door. We're getting into commercial building fabrication now not the buildings themselves but the structural components that go into them. We're looking into the offshore wind generation, solar, anywhere. We can do our fabrication in different industries for that exact reason to diversify. Chris: It's a good lesson right for people out there that you know. Start a business, maybe with that one big customer, that focus. It can be good when times are good, but you got to think about you know what. If this goes away, what else do we have? That is a compliment to it. It's a big liability yeah, if you don't, yeah, it ain't no different than what you were saying if, if you got too far in with someone like Dow, that'd be no different than you know, kind of that singular focus. So let's talk a little bit. How did you get involved and kind of come up through the business? Because you're now the president, I definitely want to talk a little bit once I hear kind of the back story about at some point there was a transition in leadership, so I definitely want to dive into that. Sure. Jason: So right out of high school I worked for Topcoat for the summer between high school and college and I went off to college that next semester. I went to Texas A&M. I was in mechanical engineering program. I wasn't ready for college, so I was there for two semesters and then they suggested that I leave. So I left. After that I came home and started working in 98 at some point and started at the bottom, started as a helper. The summer before college I was just a weed eater. We had this huge facility on the shore basin. I literally just weeded it all summer pretty much. So then when I came back I was a helper, just doing whatever you know in the shop around the facility. At one point we also made a realization or my dad did, because I had nothing to do with management then, but he made a realization that we needed somebody that would take care of the safety. We always had good safety records and good practices, but we needed somebody that could take charge of the program. Right? So I got volunteered to be the safety man. There you go. So I did that for a few years. They call that voluntold. Chris: Yes. Jason: I was being polite, you're exactly right. So I did that for a couple years and then I don't remember how the transition it was kind of a slow transition into just kind of taking more of the reins of the management. So at some point I can't tell you when, but he named me as the general manager. Okay, so he was the president, I was the general manager and then so I had, you know, a couple of people that kind of reported directly to me and then all the work happened underneath them. So that, and that was the case for a pretty good while. And I mean I'll be brutally honest that I was not into leadership back then. I wanted to be the top dog, right, I wanted to be the guy in charge, but leadership as I understand it now was not in my repertoire. Chris: Yeah, well, I mean, it's easy to want to be the guy, yeah, but there's a lot that goes with it that not everyone understands. Right To do it, the right way To do it right? Yeah, I knew nothing about leading people. Well, what have you done to try to help educate yourself, get some experience to become a better leader? Jason: I think it started with a desire wanting to be better. When you hit that point in 2010, I hit a really low point in my life. That's when I turned my life over to God and became a Christian. It just really changed the way I was thinking. So that kind of led me into leading my family and at some point, you know, I started reading books, I started learning more, listening to podcasts, and that just literally flowed into work. Okay, there's a realization. Okay, now I need to be a better leader at work. And what does that look like? So I started going to conferences, reading books, listening, just consuming as much content as I could, yeah, and then just slowly started putting things into practice at work, which was awkward, you know, at times when you try to bring some new thought processes and stuff to the team where it's never been before. You know, this is the way we've always done it type of mentality, and I was the same way. Chris: So it's a struggle, it's a beautiful story. It's an easy trap to fall into, right For people. Well, we were just doing it this way, because we've always done it that way. That is a eventually that becomes a death sentence for a company because no one will. Eventually that becomes a death sentence for a company because no one will innovate or think differently. And so I definitely applaud you for coming to that point. And you know, and as you know, now it's a, it's an everyday. You know you got to keep learning and keep growing, yeah for sure. So let's go back to the kind of the transition, because at some point you become president I don't know what your dad's title is now, but you kind of take over the reins. Let's talk about how did that decision kind of come about? And then how did y'all manage through the transition where you became kind of the. Jason: It was gradually happening already, so my dad is still the CEO now and he was like saying he was the president back then and it was just I, I probably just. It was a combination of me taking more and taking more initiative and him being able to release more right. So there wasn't anything set like, okay, I'm going to give you more, I need you to take more. Chris: It was just kind of I started pulling and he started giving well the given parts, probably the hardest of those two, oh, I'm sure'm sure, allowing himself to let go and trust. How did y'all manage the communication within the company? Did you just let it happen by kind of osmosis? The actual? Jason: leadership just happened. So I've worked really closely with most of my leadership team for gosh I guess 16 or 17 years now several of them and so it just happened. We started really clicking together, growing. A lot of us have the same kind of mentality we want to get better personally, we want to get better in the business. We're, all you know, looking at the big picture type of thing. But the actual transition from me to GM to president, I didn't even know about it. So we have a staff meeting every Monday with the entire company. We have breakfast and I typically show some type of motivational video, tell the whole staff a few things that might be going on within the business. And in one of those meetings my mom shows up. And my mom, she just doesn't. She's never been involved in the business since I've been there. She's part owner but never been involved in it, and so she's. So you know, I said hi to her before I'm going to the meeting and I didn't think anything about it. Well, during that meeting my dad gets up and says okay, I want to announce that jason is now the president of the business and I'm he. I don't think he said this, but he was stepping up to the ceo. So it was like a we both kind of moved up okay. But he mentioned, you know, that he just that he just wanted to. He knew I was passionate about it, I was passionate about the business, passionate about the people, and he knew I wanted to take it to new places. So he named me president. So nobody knew, not me, not anybody else, it just happened one day oh, we don't. So it was a cool honor and you know it didn't change much. It didn't change much because the structure was already there. Yeah, it was just a matter of a title really then. But I think I started taking it even more serious then. Chris: Makes sense. So I guess we talk about as it exists today. Then you're still working with your dad, but more the responsibility for the day-to-day falls on you, Right? Yes, definitely. Jason: He's there almost every day. I mean he's there every day that he's around. If he's not, you know, gone out of town or something, he's there. He's typically in his shorts and flip flops or you know shorts and shoes and fishing shirt. But he is there, which is great to have him. I'm honored to be able to work with him. He still lets me pretty much do what I want. I mean trusts me. Chris: So one of the things I noticed in getting ready to meet you today was on your website, the company's website. You're very big on your people and your culture, so let's talk a little bit about how you would describe the culture at Top Coat and what are some of the things you think you've done to help kind of build to get to that type of culture. Jason: The culture is amazing at Top Coat and that's my passion. My passion is the culture. That's one of the biggest things I think spend most time thinking about. One of the first things I did was start having a just a like a weekly meeting with my, the leadership team. We started doing that, I would bet, six or eight years ago, Just a weekly meeting. We didn't really have any structure, I just wanted us to meet, put our heads together and talk about things going on. So that was the first thing I started. And then, after that, we started the full staff meetings. After we moved to our new place, we actually had a place we could meet, but we started having our full staff meetings once a week too, and we kind of used that as a transition. I don't remember how it came about, but we started doing a type of physical challenge where every Monday after our staff meeting, we'd have some kind of challenge where it would be, we'd do push-ups, we'd do dead hangs. We've done just about everything you could imagine. Some of them are physical, some of them are not, but we do that and it's we literally make the people pay. If you want to play five bucks, Everybody puts in five bucks and wants to do it. Winner takes all, unless it's a team sport. You know, we've done tug of war, We've done dodgeball tournaments and little things like that. It just creates like maybe 15, 20 minutes of fun and there's trash talking from all the you know, the audience and everything else. But it's that's just a tiny layer that just it just adds a little bit of fun into the workday. It makes it a little more human, right? Yes, and that's one of the biggest things my dad fought me on at the very beginning was doing these. You know his mentality was you know, think about what that's costing the company. You know you have this entire crew shut down for 30 minutes additional. What do you think that's costing us? And I wrapped my head around it and I thought about it and I understood. But at the same time I tried to make him understand. I think it's way more valuable to spend that time and spend that money on this time, because I think overall it's going to be well worth it. Chris: Yeah, kudos to you for that, because it's easy to look at the black and white and ensure there's a cost to that. But I think you're right when you evaluate it holistically. If you're creating engagement and fostering that environment where everyone kind of knows each other better and feels more like a team, I think the returns are exponential. Right, you can't necessarily put dollars on it, but you probably can't look at lack of turnover, maybe better productivity once they're back at work. So I think to your point it was it's a wise investment to making your people yeah, I agree, and I mean to this day. Jason: If you look on our LinkedIn page or Facebook, when I put up videos of the challenge that we do, that's even on LinkedIn. Those are the posts that get so many comments, so many shares. It's people connect with it and so many people say, man, I wish we did that at our place, or I wish my company would do stuff like that. And it's like it's those little things that people I don't know if they don't think about them or they just don't think it's worth it, but for us it's been kind of a game changer. Advert Hello friends, this is Chris Hanslick, your Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom. And thanks for listening to the show. Chris: So one of the things you mentioned kind of as the company's evolved is, you know this diversification into fabrication and doing other lines of business. What are some of the things you do as the president of the company to kind of create those relationships with the new customers, new vendors, and maintain those strong relationships? Jason: We have a sales team that does a lot of the actual interaction. But most of our customers I'll know their name, I'll know their contact information and I'm the one that reaches out to them personally. For if we're going to do it, then let's say we sponsor a lot of golf tournaments, you know skeet shooting teams for fundraisers and that sort of thing, and I'm the one that normally reaches out to the people and ask them if they want to you know, participate with us. We had an industry night a couple of weeks ago and I call all the what the customers that I know and have the contact information. I'm the one that calls them and I also do customer follow-ups. With every project that we do that ships out, I do a customer follow-up call with everyone. I call them personally, just as me, thanking them, number one for their business and then number two just seeing if there's anything we can do to improve that I love. Chris: And I'll tell you we tried here and we're not consistent with it. Love, and I'll tell you we tried here and we were not consistent with it, but that kind of what I would call customer survey, satisfaction survey. So you've got it baked into your routine to do it on every order. Jason: That's amazing, I learned that from Mattress Mac. Okay, we bought some furniture from him and I think twice now, and every time sometime afterwards he calls personally and just thanks us for his business. Oh we darn. Chris: Yeah, Well, I think it's a great lesson for people you know that are listening to this and have their own business. That personal touch and that follow-up can go so far in creating that customer loyalty Right. So that's amazing. I guess you report back to your people on what you learned from that so that's amazing. Jason: I guess you report back to your people what you learned from that. Yeah, so we have a Teams, our Teams folder that we open up every day or every week in our leadership meeting and I keep the spreadsheets in there so we review it every week. Any ones that I call, you know, I'll be honest, I'll let them build up, because our project coordinator sends me. Every time we ship one out, he sends me the contact, you know, until I know what the project was, who the contact name is and so forth. And I will, all honesty, I let them build up because sometimes I'll procrastinate doing it, you know, because I'm like, oh, it's one more thing I gotta do, right, right. But then after I do, let's say, just the day before yesterday I called six, six clients and every time I do it I'm so glad that I did because I feel better, I'm sure you know, I feel better because I let them know, number one I that I them. Number two we're trying to ask them if there's anything that we can do to improve and be better. We want to know and I don't think. I think it's so uncommon that people don't people say they want feedback. But I think they want the five-star rating Right. They don't want the honesty, they just want okay, how many five stars can we get? Chris: Yeah, they want the high google rating, right right which it feels good to get that. Jason: But we're not going to get any better if, especially if there's a client that's not happy about something, some most of them aren't going to come and just out and tell us, hey, so and so went wrong. But if I ask, is there anything we could do to better, that's when they're going to say, as a matter of fact, there is. Yeah, I haven't got that yet, but we will sure you will. I mean, that's the point, that's what I want. Chris: I think that's great. You know, sitting here thinking I need to do more of that. You know that, as I told you before we came on, I learned from all the guests and I've at least learned that from you today. I think that's wise advice. Jason: And it has to come from the top. If my project coordinator is talking to the clients, you know 24 seven7. It's not going to be the same Right. Chris: That's right. So let's talk a little bit. I mean, it's been up and down in the economy the last few years. What have you experienced at Top Coat kind of as it relates to the last four or five years and kind of the you know turbulent environment, and what are some of the things you've done to kind of manage through? Jason: that We've stayed pretty steady the last several years. Now. Last year ended up being our best year in history revenue-wise. Revenue and profit-wise. Several stars aligned for that, some great projects from some longtime customers. But the few years before that we were okay, we were steady, right, and that's. I think that's one thing that Vistage taught me is to be proactive. I'd sit back for years and say, man, I hope this company grows, I hope this company grows. And then, with you know, the Vistage group and just everything that I've been involved in so far with that has just really taught me that you have to be intentional, you have to, we have to make it happen. So we going to grow, how are we going to make this happen? So that's where the big focus is now. I mean we since I've been there, you know, 26 years we've had some horrible years. I mean when we first take great story, when we first built our new facility beautiful shop, beautiful, everything we had no work, zero. We got down, I believe seven people in the company completely, and I remember just like it was. Yesterday we're having my staff meeting, so it's a small group, but I'm kind of telling them look, we literally had 75 grand in the bank and we said this is all the money we had left. We had all this money from selling our property, but we'd spent on this new facility and we had some money, but it had just dwindled down to nothing because the work had died, and so that was in 16, I think 2016, 2017. Okay, so I'm telling the whole team look, guys, I don't know what we're going to do. We're going to figure this out, but I really don't know what I do, what we're going to do. And then, literally during that meeting, our phone, our office phone, rang. There was nobody in the office, so I turned around and I answered the phone. Quick, five-minute conversation. It was a guy driving by our facility. He was an inspector for Chevron, phillips and Sweeney and he said I'm leaving the shop and I'm the inspector and I can't stand Something along the lines of I can't stand working with these guys. They keep lying to me, I need to find another shop and I've just been driving by your place. I want to see if I can come talk to you about doing some fabrication work for us. That led to us doing $2 million to $3 million a year for them almost every year since. Oh, wow, and so that was. It was like that was. Since I've been in the business, that was the lowest point that I felt, because I was really feeling that pressure of what am I going to do? What am I going to do? And there was no strategy to this. It was like it was a God moment of having him drive by all this stuff at the same time by having a new facility help? yes, absolutely if we had not been there, he never would have driven by our place, because where we were before nobody drove by right, so nobody knew so so that's it. Chris: I mean well, that's an incredible deal. So 2016 is seven employees, $75,000 in the bank. How did you end 2023? How many employees and what was your revenue? Jason: 2023,. We had $22 million in revenue and for most of the year we were probably around close to 100 employees. Wow. Chris: That's an amazing turnaround, congratulations. Appreciate it yeah, congratulations, appreciate it. So, yeah, I like what you said earlier, when it was you were hoping to grow and you've learned to go think about how to grow and be intentional, because that otherwise you hear there's another cliche hope's not a strategy, right? So sounds like you mentioned vistage, so you're a vistage member, that sounds like, and other vistage members, including myself. I know how valuable it can be to grow as a leader, but then how you think about your business. Jason: Sure, absolutely yeah. And, like I was telling you earlier, the network that you meet the people, the different people in every area of business yourself for legal, whether it's taxes, insurance, whatever has to do with business. There's people that I'm connected with, literally one-on-one, that I can call, I can sit down with. Most of them will just meet me for lunch. If I need to bounce an idea off of them. That's the biggest thing. Chris: Something I tell people that have businesses all the time is you've got to build a solid network of trusted advisors that you can reach out to, whether it's a banker, insurance person, accountant, lawyer, another entrepreneur or business owner right, that you can just reach out to, because even when you're having a bad day and maybe they can you know, hey, I've been there before, so you'll feel, because a lot of times you feel alone. What are some of the things I guess, as you've evolved as a leader that you've found to kind of whether it's a particular book or conference you go to that have really been valuable to you to kind of grow as a leader? Jason: I can't think of a specific book, but I think, the mentality of giving your people the tools that they need to do what they have inside their head. You know, I think so many times I've learned that even our leadership team at work they have so many ideas and great ways to do different things, but they don't always let them out. So I think creating number one, creating a safe place, like our leadership meetings that we have every Wednesday morning, that's a safe place. Whether it's a conflict that we have, whether it's an issue that they've been holding in, whatever it may be, that is the place where we draw those things out and we squash them or whatever we need to do. To me, that's probably been the biggest thing. Chris: It's a hard thing to do, but you're so right that safe place where people feel like they can share without being judged or criticized is unique, I think, but so important. Jason: And it's so simple, but we're all humans, especially at work. Yeah, and it's so simple, but we're all humans, especially at work. I'm sure we all swallow a whole lot more at work than we do anywhere else, because maybe we're afraid of our job, we're afraid of whatever. But I think it's been really good for us. We've solved so many issues just because we've created the structure for it. Chris: So one of the things I like to ask folks that come on is can you tell us a setback you've encountered in your professional life? Maybe it's your personal life, but something that sets you back. But you learned so much and you grew from it that you're better off because of it today. Man. Jason: I know there's plenty of them. Chris: That's what most people say. Jason: Yeah, there's plenty of them. Chris: I'm just trying to think what would come to mind, maybe something right after you kind of took over being either general manager or president at Topco, maybe something in those early days. Jason: I think one of the real struggles is it's not a moment but learning the business finances. You know I struggle a lot with okay, we need this piece of equipment to get better, we should just go buy it. Well, my dad has the finances and the history of the accounting behind it and I've struggled because he and I butted heads quite a bit on things I think would be a good investment and things he thinks wouldn't be a good investment. So that's become something we both had to work on. Really, I mean, I lean on him a lot for his knowledge and different things when we're purchasing, making big purchases or expanding our facility, whatever we're doing. But I think having those conversations was probably some of the toughest things we've had to do. Gotcha, and it's just like anything else, it's just like with the leadership team. It's creating a space that we can have those. I mean, he and I have worked together for literally 26 years, so we work well together and we communicate fine together. But it's me getting up the courage to ask those questions too. That's been a struggle. Chris: So what I hear you saying in that and I think it's a natural struggle for people in leadership because, like you said, from day one, you wanted to be the top dog. Sure, it's having the humility to ask your father or mentor someone that you don't know or don't know enough, right. Sure, so that takes a lot of humility, yeah, for you, and I think it's also a blessing that you have the courage to use it. Jason: Is you have a built-in, you know, advisor, mentor, right there, you know, letting you grow and being there to kind of guide you along the way yeah, and I don't utilize them as much as I should, but every time we have a conversation like this, it reminds me how much I should I, how much I do and should you know, put more value in that another thing that you mentioned was mentioned was y'all can butt heads. Chris: So what have y'all done? Because I guarantee I've had other people that have done what you've done on the show, that have taken over a family business. I guarantee there's people who are going to listen to this, that are doing that or see that in their future when you get to that place of how will you and your dad communicate on big issues. If you all kind of got it agreed upon, let's do this in private and really hash it out and not let other people see what's going on. I mean, is that something that's one that you all kind of have a practice of doing? If so, how does that work? Jason: Yeah, definitely. I mean, he's in our leadership meeting. He sits in our leadership meetings pretty much every week. He's pretty quiet, you know, off to the side, he's just mainly listening, but there's plenty of times where I'll you know if I have an issue with something he said, or vice versa. He'll either come to my office and shut the. I always, I constantly, have to remind myself that this is his baby. This whole company is. I've had a lot to do with the growth and where we're at in you know the current state, but at the end of the day, this is his and he. He created it and I'm just a part of it. Yeah, so I have to constantly remind myself of that. And then he I mean, he tells me multiple times that you know I'm doing a good job of running it. So he's constantly having to remind himself that he gave me the authority and the power to run it. But it's definitely a team effort. Chris: I think it would have to be. The other thing that comes to mind again, kind of unique to family-owned business and second generation of leadership of that family-owned business is how well do you and your dad do at leaving the issues at the office versus trickling over to the Thanksgiving table or anything like that? Jason: Yeah, he's probably better at that than I am, but even I don't know. From the time I was born, he and I have had an absolutely solid relationship always. He was gone a lot when I was growing up for many years because he was doing a lot of offshore work. So he was gone a lot when I was growing up for many years because he was doing a lot of offshore work. So he was gone a lot, but we always had just a top-notch relationship. Yeah, so I think without that it would have been a hundred times worse. Yeah, but I don't think I can't remember a single time where any tension between me and him ever stayed very long period, but certainly much less made it out the door. Yeah, yeah, we could have this tough discussion and then say, all right, let's go get some lunch yeah, you know that's good here and you know. Chris: The other thing is, I think when you're an entrepreneur and you own this business, you live and breathe it, so you you're going to be thinking about it when you're at home and those conversations could come up versus, just as natural, when they happen at the office right it. Jason: It always has. Yeah, I mean, whether we're at my house, his house, it's typically something with work is going to come up and we're going to talk about it. Chris: It just happens. So let me ask you this just about your own personal leadership style. How would you describe your leadership style today? How do you think it's evolved or developed over the last several years? Jason: I would say my style is to. This is just off the cuff, but I would say my style is to help anybody that I'm leading, make sure they have the tools to do what they need to do. You know I'm really passionate about I haven't been extremely proactive about mentoring all of my leadership team, but I want to know their goals, not just professionally but personally too, and I think a lot about like, what can I do to help them succeed? If the person is going after what they were put on this earth to do and I can be a part of that and help guide them to that, I think that is the ultimate definition of success when it

In this episode of Building Texas Business, I sit down with Wes Cummins, CEO of Applied Digital, for an inside look at the company's revolutionary trajectory. Wes takes us behind the scenes of Applied Digital's evolution from Bitcoin mining infrastructure to leading the charge in specialized cloud and high-performance computing. Our discussion also tackles the grit of entrepreneurship. Wes reflects on Applied Digital's resilience amid regulatory shifts, sharing lessons from his upbringing on perseverance and hard work. As the company grows, so does its specialized workforce, prompting insights on fostering talent retention and aligning culture with business goals. Overall, Wes offers a compelling narrative of continuous innovation through adversity, partnership and calculated risk-taking. SHOW HIGHLIGHTS Wes Cummins discusses the origin of Applied Digital, beginning with infrastructure for Bitcoin mining and pivoting to high-performance computing and specialized cloud services.We examine the company's strategic response to China's crackdown on Bitcoin mining and how this external challenge spurred a significant shift in Applied Digital's business model.I reflect on my own experiences with business pivots and emphasize the importance of seeking opportunities amidst market disruptions and regulatory changes.Wes shares insights from his upbringing on a family farm, including the values of hard work and resilience, and how these qualities have influenced his entrepreneurial journey.We talk about the rapid growth of Applied Digital, expanding from three to approximately 200 employees, and the operational challenges associated with scaling up.Wes outlines the importance of building a specialized team with the right skills, highlighting the role of strong human resources and recruiting in managing rapid company growth.The conversation delves into the significance of company culture in driving employee motivation, retention, and the cultivation of a spirit of empowerment and ownership.We discuss the energy challenges in powering AI technology, the use of renewable energy sources, and the potential of nuclear power to meet the increasing demand for data center capacity.Wes considers the future of Texas businesses within the energy grid, including the financial and infrastructural challenges of meeting the needs of hyperscalers.Finally, Wes and I touch on personal leadership styles, the evolution from micromanagement to autonomy, and the value of mentorship in fostering a productive work environment. LINKSShow Notes Previous Episodes About BoyarMiller About Applied Digital GUESTS Wes CumminsAbout Wes TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Wes Cummins, ceo of Applied Digital. Wes's company is building the next generation of digital infrastructure in the United States. He shares his thoughts on how building a strong company culture starts by providing opportunities for growth to your employees. All right, wes, I want to welcome you to Building Texas Business and thanks for taking time to come on the show. Wes: Chris, thanks for having me. I'm happy to be here. Chris: So let's start by just you introducing yourself. I'll at least say I know you're the CEO and founder of Applied Digital. Tell us a little bit about Applied Digital. What is that company and what is it known for? Wes: Sure. So. Applied Digital is a company that is building next generation digital infrastructure, and the company started by building infrastructure for Bitcoin mining back in 2021. Crypto mining, where a lot of the hash rate about 70% of the hash rate was in China at the time had to go elsewhere in the world. A lot of that came to the US. We assembled a team that had experience in the sector which there wasn't a lot of people in the US that had experience, given. I think it was sub 5% of the hash rate was actually in the US at the time Assembled a team, secured power sites because it takes a large amount of electricity and built data centers, which is the digital infrastructure for Bitcoin. We don't mine Bitcoin ourselves. We never have. We provide a data center service for Bitcoin miners, and the original business idea around that was anyone can be a Bitcoin miner if they come to us, so you need to have money to buy the miners, the servers, and you come to us and sign a contract. We put it in our facility, we run it for you and Bitcoin just starts hitting your wallet and you're a Bitcoin miner. So that was the original business idea. What it ended up being was we signed a few industrial scale Bitcoin miners that filled up all of our facilities Our largest customer being Marathon Digital, which I believe is the largest Bitcoin miner in the world and so that we built about 500 megawatts of data center capacity in about 24 months for Bitcoin mining. And then, in 2022, we started looking at what other products or services can we offer on our sites and with our assets, and what we landed on was high-performance computing, and at the time, high-performance computing was more of a niche market. That went after, like geotech analysis for oil and gas, aerospace design, automotive design, drug discovery, graphics rendering, and high-performance computing is typically GPU-based, typically requires significantly more power in a single rack, so much, much higher power density than traditional data centers. So we designed that in 22, started building it at the end of 22, our first facility, and then, in October of 22, we put a software layer in place to run a cloud service out of our facility, and we started running that cloud service in December of 22. Out of our facility and we started running that cloud service in December of 22. And the customers were initially small, mostly universities that were doing research, machine learning, deep learning out of that facility, and we put the cloud service in place to be our own first customer and our new style of data center, to show the data center work, and then we could lease out the data center capacity. And then, as everyone knows, the world has changed since December 22,. Really, it was when ChatGPT hit the scene, so everyone got their first taste of generative AI at a wide scale and what it does. And then, in March of 23, nvidia introduced the H100 GPU, which was their next big data center GPU upgrade from the A100. And it turned out that the data center we were building was kind of a perfect fit for the new NVIDIA gear and we were out marketing that and we landed our first actually cloud service customer in May of 20 character AI. And so we've leaned. Now we've done two things. We've leaned into the cloud services business and signed more contracts and more customers. There we're basically we own the compute and we provide a very specialized cloud service that's GPU based. And then the other thing we're doing is we went back and initially we were going to build five or 10 megawatt facilities on these sites and now we're back to building hundreds of megawatts of high performance computing, high power, density, data center capacity, mostly right now in North Dakota. But we, you know, this is a new kind of a new world on digital infrastructure and we can talk about that a lot more, but that's really what our company does is next generation digital infrastructure. Chris: That's an incredible story. Let me just kind of back up to the beginning. What was the inspiration for you to even start the business back when you did yeah, so? Wes: it's a little bit interesting. So the business model changed quickly after we started. So the initial business model was actually deploying you know kind of industrial scale GPU capacity to do altcoin mining. And that goes back a lot more to my background, which you know. I've been a tech investor for 25 years now and really what I saw was an opportunity in that market. So altcoins are anything but Bitcoin, basically, and the largest being Ethereum, and the idea was we were going to deploy a lot of GPUs and there were many different proof of work networks that require GPU capacity to run for different altcoins Again Ethereum being the largest when it was proof of work, before transitioning to proof of stake. And the idea was, as an investor, instead of putting money into these different altcoins, you could actually just aim the compute power at different networks depending on which one was most profitable. And so we were going to be a large scale GPU operator doing Ethereum and other altcoins, and we signed an agreement with a company called Sparkpool that was the largest Ethereum pool in the world I think it had roughly 25% of the entire hash for Ethereum at the time and we were going to deploy a lot of GPUs in China actually, and so we raised money for that in April of 21. And then, at the end of May of 2020, was when China cracked down on Bitcoin mining and our business model changed because the opportunity to build all this infrastructure in the US was basically presented to us. I'd already started to assemble the team that could go out and do that, and then we just accelerated that. So that was really the genesis of the company. But you know, when the world changes, you have to be accommodative to that, and so we have been. Chris: That's a great point to make and let's kind of stay on that for a minute. You start out with an idea and a plan and that was going to be in China. China, you know, without any control, you have changes, the laws and things, and you're forced to pivot. Walk us through, maybe, how that played out for you, the decision-making. Other entrepreneurs face that all the time, I think, and some successfully and, as you know, some unsuccessfully. So what are some of the things maybe you could share to help someone navigate through when market dynamics beyond your control change and force you to just totally pivot your business model? Wes: Yeah, it's an interesting position and, you're right, sometimes it's hard to make it through those. So what we did? We stepped back, because when the news first hit I remember it was I think it was the last Friday in May I was sick to my stomach. It was just like the entire business model we were going after has just been closed for us. But we spent some time over the weekend thinking about what opportunities does this create? And it became very clear the opportunity it created very quickly. The thing that was fortunate for us is I had already been in discussions about building sites for our GPUs in the US. We were looking at power sites. We were looking the US, we were looking at power sites. We were looking at, you know, construction, we were looking at that, and so there was a pretty clear path. And you know, our partners in China were looking for capacity outside of China very quickly and so we kind of had a natural customer base and we already had kind of the start of looking at these sites and what we could do there. So it was very helpful to have that. But you know, at the start it was a big gut punch when we found that out and it took us. You know, really over the weekend it became clear for us, but then it took us a couple of weeks to really change and take action on the new business opportunity and take action on the new business opportunity. But what I would say in general is typically if there's a big change, it definitely can wreak havoc with current businesses, but it's going to create some new opportunity. Chris: I think that's the idea. Wes: That's the idea of the opportunity, yeah. Chris: Yeah, I think that's the. The lesson I see consistent in talking to entrepreneurs is, you know, gut punch moments cause you to rethink the business model or where the weaknesses are, but it's about looking for the opportunity, because with every roadblock then I said, if you really take a close analysis of the situation, you can find opportunity, and then you just try to figure out how to pursue that. Wes: Yep, that's what we did, and, like I said, we were fortunate in that we'd already started putting some of these puzzle pieces in place prior to that news coming out, and so it was a little bit of an easier transition, but it wasn't an easy transition by any means. Chris: So you know it may be too a little bit of your makeup and I know I think a little bit about you. You grew up on a farm, I think in Idaho, and there have to be some lessons learned in growing up in a rural environment that teaches you that you just keep your head down and keep plugging away. Wes: Yeah, you know there's many lessons from farming and I was in kind of the last generation at least in Idaho of family farms where you know all the family members worked on the farm before it was much more commercial and so you know, generally around five to six years old we started working on the farm. I'm sure at that age we were zero help, but you know you have to get trained into it. But we, you know we did in Idaho. You do a lot of irrigating. You get up at 430 in the morning and go stand in a wet, cold potato field and move irrigation equipment around for about an hour and a half. Then you get to do it again in the middle of the day and again at night. So there was a lot of lessons. But our dad taught us being self-starters right. So self-starter was a big part of what else do I need to do, not just the task he gave me and then I have to wait for him to give me another task. Obviously hard work, but I always make the joke. The biggest thing that growing up on a potato farm taught me is that I did not want to be a farmer. That was probably the biggest takeaway for me, but it did instill, you know, very strong work ethic and that's. You know farming is a hard business. Just because you know, like many businesses or maybe it's the worst out of any business the predictability is just. It's just not there right, it's not predictable at all. You know, I always tell people when we used to do stock investments. You know, let me tell you how farming works is. Let's say that you're going to invest in a company that trades publicly. You give me all your money now, and let's call now being it's April, but let's say it was March, and then in October I'll tell you how many shares of stock you purchased, right, which would be your yield of your crop, and then you have, you know, five months to sell all those shares, no matter what the price, and that that's how farming works. You put all your money in up front. You have no idea what you have until your yield comes out, and then you don't know what the market's going to be after that, and maybe you're going to get zero shares because a hailstorm comes through or something. So you know there's a certain resiliency that it teaches you as well, because there's very lean years and there's very fat years. Chris: Yeah, interesting perspective and very true. So you know that's kind of turning back to kind of apply digital. So you know, kind of turning back to kind of apply digital, how has the company grown from a kind of a workforce and facility location in the last couple of years? Wes: So we went from three employees at the start to we're about 200 employees now. Our headquarters in Dallas, texas, and we have the second headquarters here where we run a 24-7 network operations center. And then we have sites, two sites in North Dakota. We recently divested a site in West Texas, so now we're down to two sites in North Dakota and we're really focused on those sites right now. Hyper-scale size data center deployments it is specifically our Ellendale North Dakota site. Data center deployments, specifically our Ellendale North Dakota site, where we have a significant amount of power contracted, so expect to continue to grow pretty significantly over the next few years just because of the market opportunity we see in front of us, it's a lot of growth in a short period of time. Chris: What are some of the things that you've done, kind of as a CEO, to help manage that growth, so that you know you're building a strong team to kind of execute on the company strategy? Wes: So one of the things I've done and I'm, you know, I've been an entrepreneur and investor for a long time, but as I've just, I guess the wisdom I've gained with age is making sure I put the you know the people around me that have the skills that I'm lacking. So I, you know, really focusing on the things that I do really well and putting the other you know other people in the seats around me that do things that I don't do well, extremely well. And so you know, as you grow, I would say the kind of the bigger one for me or for us growing this quickly is, you know, having strong human resources, having strong recruiting, so that we get the right people in the right positions and they're managed the right way and we put the right type of structure in place for all of our employees to be successful. And then so, so we have that. That's been a big one. And then you know, our financing team we're in a capital intensive business, and then so we have that's been a big one. And then you know, our financing team we're in a capital intensive business, and then so we have a great finance team, and then, you know, we have a tech team, so we're kind of a blend between a real estate and a technology business and we're on the leading edge of this new high power density. You know, really, ai workload technology, and so we've had to attract the right talent for that, because, similar when we were building the Bitcoin facilities, you know it was a really shallow talent pool in the US. And it's the same with, you know, large GPU deployments that, like I said earlier, that was a niche market going back to you know 22. And now it's just exploded. But finding the people that know what they're doing, managing these and you know deploying, operating, managing large scale GPU deployments is was difficult. We were early and we were able to attract you know good, really good talent in that space. But you had to go to, you know, national labs and universities to find people that had experience with really large GPU deployments, and so we've done a good job. But that goes back again to recruiting and HR and having a really strong team there to find the people that we need. But there's definitely growing pains, right, as you grow up as a company and you know putting the appropriate structures in place, because when you're, you know a three to five person startup, right, everyone's doing everything and as you grow, the people that were there originally doing everything need to become more specialized. You know, in a group of the company, so that's a that's kind of a harder transition as well. But if you, you know you find the right people and you, you know the team all works together, you're able to achieve that. But there's a in three years there've been a lot of changes at the company, a lot of new faces, and then you know, specializing people. That started, you know, doing everything. When we built our first facility, I think it was eight or nine of us at the company, right, and we're all doing everything to make that happen. And now it's gotten bigger and larger scale and we've added a lot of specialty inside the company. AD: Hello friends. This is Chris Hanslick. You're building Texas business host. Did you know that Boyer Miller, the producer of this podcast is a business law firm that works with entrepreneurs, corporations, and business leaders. Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the at BoyerMiller. com. And thanks for listening to the show Chris: That's great. So you talk about kind of the importance in the recruiting process and, I think, equally important, in the kind of onboarding, integration process, anything that y'all have implemented that you believe that's innovative in that regard to kind of help customize and streamline that process. Wes: You know, I don't think there's anything particularly innovative about what we've done. It's what I will say about our company is, you know you it's kind of recruiting from two different pools. So you have nationwide recruiting for you know people that will come and sit in, you know whether it's exec or you know SVP type roles at the company, and then we have to do a lot of local recruiting. That's another one is you know, our sites are managed locally. We have the 24-7 NOC that sits here in Dallas, but there's been a big push because our sites are typically in rural areas and so that's probably one of the biggest challenges is recruiting and training all of the people and the talent that goes directly to the sites. So it's a unique mix for our company in that instance is that you know it's kind of two different styles of workforce but we have two different recruiters that manage that. Chris: How do you then bring it back together, as you mentioned, two different workforces and obviously two different geographic locations, different states. What are some of the things that you are doing as a CEO and maybe with your senior management, to build and nurture a culture at the company that everyone gets behind, to kind of further the mission? Wes: So I think one of the biggest things that I promote a lot at our company and a lot of the other management promotes is what you would expect at a small, fast growing company. There's a lot of upward mobility opportunities at a company like this and I love to highlight those success stories within our company and really encourage people with the upward mobility. That, I think, is just a big motivator and a big part of our culture. Chris: I think it's been my experience. If people don't see opportunity in your organization, then they're going to start looking somewhere else. Wes: Look we have Our site manager in Ellendale. He was. He was like the I don't know if he was the night manager or but he was. You know he was. He was working at Walmart at night in Jamestown, north Dakota, when he started as an operator at our site in Jamestown jobs that you could do for our company and a year later he was managing the site in Ellendale and he just you know his work ethic and he just shined through and he was able to move up very quickly and, you know, moved his family to Ellendale, north Dakota, and is running the site there for us now. And it's just, you know that we have many of those stories inside of the company, but we do. I think we're unique in that we do hire locally, we offer training for these technical jobs and you know they pay typically very well versus other jobs that are available in these locations and again, there's a lot of room for advancement inside the company and it creates a really nice culture for us. Chris: So you were talking about where the business, I guess is pivoted to in large part, is providing energy and power to fuel the AI movement. There's been a lot written and discussed about the idea that one of the limiting factors of the power of AI is the lack of power to run the centers or the computers needed to run the machines to do the learning and have that advance. What's your take on that? Because where do you see the industry from the power supply and how do you see that improving over time to try to keep up with the technology? Wes: Yeah. So it's a big issue issue now and it's going to become an even bigger issue as we go through this year and into next year. Just the power capacity in the US. So the ring in Virginia basically out of power. That's the most popular data center market in the US. Santa Clara, maybe the second most popular data center market out of power. Chris: If you want new power there, it's seven to 10 years and a lot of the other Wait a minute, say those two things again because I don't think people have an appreciation for that issue and the magnitude of what you just said. So in Virginia and the nation's capital-. Wes: Yep Santa Clara. Chris: And so. Wes: California, yes, silicon Valley, two big data center markets. They're effectively out of power. Chris: If you want new power there, it's a really long wait time seven to 10. Wes: Because you have to build the infrastructure right. You need power generation and you need transmission right, and generation can be built much faster than transmission can be built. It depends on where you are right. Some states are much friendlier to new power generation than others are. So what we have done to solve that is we focus on stranded power, which stranded power means there's a lot of power generation and maybe not enough transmission to move that power out of the location where it's being generated. And the way we solve for that is we take our product, our infrastructure, to the point of generation. And so there's some other things that you have to do. You have to make sure that there's a good fiber grid for fiber optic communications at the site as well. So not every site works for this, but there's a significant amount of stranded power around the globe, but we're focused mostly here in the US. And how do you get stranded power around the globe? But we're focused mostly here in the US. And how do you get stranded power? There's really two ways that I've seen that you end up with stranded power in the US, and one is renewables are a big source of that solar and wind and typically everything we have done has been located with wind farms and there's an incentive to build where the wind blows a lot for wind farms and land is cheap, and it's, you know, there's an incentive to build where the wind blows a lot for wind farms and, you know, land is cheap. And so North Dakota, I believe, is the sixth largest wind producing state in the country and they're 48th or 49th in population. That state generates over double the amount of power that they use inside the state, and so we, you know, at our Ellendale facility, I believe, it's about two gigawatts of wind that feeds into that substation, and that's where we are located. So finding strain of power that way the other way strain of power happens in the US and, I would assume, around the world too is a very power hungry. Industry goes out of business, company goes out of business or closes a plant or something in a certain area, and there's this massive amount of power infrastructure that's left behind. So, like Alcoa smelter plants, for example, that have been shut down, those have become Bitcoin mining sites and probably sites that are attractive for high power density data centers as well. So we focus on that. Now that can be a short and kind of medium termterm solution. Longer term, you know, it becomes a bigger issue and I've heard you know any kind of. There's been so many numbers thrown around. One of the hyperscaler CEOs last week, at a conference I believe, said that a hundred gigawatts of data center capacity would need to be built between now and 20, just to supply the hyperscale. And so to put that in perspective, the entire US market for data center capacity is like 22, 23 gigawatts right now built over the last 30 years, and you're saying there needs to be a hundred in the next six years. That's going to be pretty hard One to find the power and two permitting building all of the other things that go along with it. Maybe the number's not that high, but it's still going to be a very big number. And in the meantime, for electricity, you have competing priorities, right. So you have this new data center application, you have EVs becoming a bigger percentage of cars being driven, you have new things like green hydrogen generation, which requires a lot of electricity as well. So there's definitely competing priorities and it's going to be a bigger and bigger issue. And for me I've thought a lot about this that the only solution that I see the longer term for this. If we want to do it in an environmentally friendly way, which I think everyone's focused on is there needs to be a lot more nuclear generation for baseload. Chris: Okay, that's interesting. Baseload, okay, that's interesting. Not dissimilar from what I've heard and the other things that get talked about is a lot of power is generated through water, right, and then we have competing issues on the need for water. Is it going to be to power these centers or for human life? So we're going to be struggling with those over the years to come. Let's talk a little bit about, I guess, from where you sit. Where do you see this AI and power generation issue and what are the opportunities and or risks for the Texas business ecosystem, if you will? What are the opportunities where Texas and Texas businesses might thrive and what are some risks? Wes: So there's I think there's a lot of Texas businesses that will thrive. We actually source a lot of our components and equipment out of many local Texas businesses here. So there's that ecosystem and that includes, you know, transformers, switchgear a lot of the electric gear that's going into our facilities we source out of Texas. So there's a big opportunity there for Texas at large. Outside of us, you know one of the largest, you know, energy grids in the country here with ERCOT, and so there's a lot of opportunity there. You know there's a lot of there is stranded power opportunities specifically in West Texas that could feed into this. It needs a little bit better. You know fiber network. It depends on where you are in West Texas. So some of those work. But there's a large opportunity for infrastructure in Texas for certain, and it's a very attractive market for that. But there's a lot of other businesses in Texas that are feeding into this entire supply chain. You know it goes down, it's pretty, it's a pretty deep supply chain for this business. And if you think about so, let's say, a meg of data center capacity, we have our own costs, that we do. But if you're building tier three style data centers for this type of power application you $1.2 billion for a gigawatt. You're spending $12 billion on construction and equipment and so we're saying $12 billion for a gigawatt and, like I said, on the high end of the numbers I've seen out there, we need 100 gigawatts over six years. That's a lot of business to be done. A lot of investment by the way, chris, that doesn't include the compute gear inside of the data center. So yeah, so that the cost does not include, you know, the gpus or servers and networking gear to go inside the data center and you should think about that being kind of. You know two and a half to three x what the cost of the data center is, so it's just staggering numbers. Chris: You're talking 30 to 40 million per gigawatt per megawatt. Wes: And then times that by a thousand for a gigawatt, and then the number I gave early was again this is a number that was not provided by me, but 100 gigawatts over six or seven years. Yeah, it's a really big number. Chris: Wow, well, it's coming off of that. I want to turn back kind of towards you a little bit and I always like to kind of talk about leadership styles. I think that's helpful for business owners to kind of reflect on themselves about how you show up as a leader, knowing that can evolve over time. So how would you describe your leadership style today? How do you think that's evolved over time? Wes: Yeah. So my leadership style is, you know I mentor some people. I like to, you know, keep people constantly involved in what I'm doing so they see what I'm doing day to day. And you know again, as the company has grown right, that I don't interface with every employee on a regular basis. You know I have a leadership style, that is, I'm not a micromanager. I want people to be successful in their roles. I want them to take, you know, the authority in their roles and manage their part of the business for them. And I think that's how you know, over time, how you build a much more efficient. You know big company versus a small company. You know, when we were first starting out, I definitely was, you know, had to be more of a micromanager because I was involved in every single task of the business. But as you get the right people in places and I give them a lot of autonomy to run their groups, I think that fosters a good culture and company over time is, you know, people feeling empowered and then feeling like they have you know, the destiny of at least their group. And then what I really still like about being a small company, even though we're much bigger than we were is everyone can see their own direct impact on the company. Right, you can still make a big difference as one individual inside of the company and I really I foster that culture inside the company a lot and again, I always push on this upward mobility and the fact that you're at a place where there's a lot of opportunity. Here at this place, you don't need to look outside of it to find opportunity, and I think it creates a lot of excitement inside the company and we all kind of with a small business, you kind of all ride the roller coaster together because you constantly have setbacks and you constantly have victories Then and you know we've had stretches where we have, you know, setback after setback and that maybe comes on the heels of a lot of victories in a row too. So you know, riding that roller coaster is something that everyone has to get used to, but I think we do it really effectively. But hopefully that answers the question of kind of a leadership style. Chris: Yeah, no, definitely. And you alluded to something that's part of my next question and that is because it's just part of life Can you think of and share with us kind of a challenge or setback that you've encountered could be in your personal life, but or in business that you learned from? That made you better? Wes: Yeah. Chris: And those are always, I think, some of the best learning moments. Wes: I've. You know, in my career I've had many of those and those are, you know, those are definitely learning moments and it's been, you know, either investments or in other businesses, and this is where I was talking about earlier that. You know, one of the biggest lessons I've learned is surrounding myself with people that have the skill set I don't have right. That's probably the biggest one, but I would say the biggest as far as running this company. You know, as you run a company that's growing fast and you're doing a lot of different things, you know you have to be a problem solver, right. A lot of people get really down about issues that happen inside the company. You know we had some setbacks recently where we had some. You had some equipment issues on one of our sites that went down and then, while that was happening our Texas site we were notified by the power provider that they were taking it down, for I don't remember if it was 10 or 14 days, for improvements on their grid had nothing to do with us, and so you have all of this kind of hit at the same time and if you're the CEO or another executive company, you have to be a leader. Through that. You have to solve those problems. I'm not a person who goes and screams and yells at people because I don't find it productive, but that's been the biggest is, if you're starting a company, you're going to have so many challenges. You have to be a problem solver for those challenges and especially if you have employees around you, you have to be the problem solver. And I say this about most. We're kind of an interesting blend between real estate and tech as a business, but if you're like a tech entrepreneur, you have to be a perpetual optimist. Right, you just have to be, otherwise you won't last. So you have a lot of setbacks and you have to fix those and grow and become stronger from them. But, yeah, I would say that's probably the number one is being a problem solver. Chris: I like that. So many people I've talked to. The word I would use is as an entrepreneur, you have to have grit, and it's not as easy as you think it's going to be and expect the unexpected right. Wes: Definitely expect the unexpected. Chris: Kind of like when China shut your business model down. Exactly so you know, Wes, this has been a really great conversation. I think we could go on forever, but I want to just turn to a little kind of fun personal side before we wrap up that. You know, I think we've already answered this question, because I usually ask my guests what their first job was, and I think it sounds like yours was on a potato farm in Idaho. Wes: So yeah, my first job was working on the family farm and then my second job when I was in college was I was a service station auto mechanic from skills I had learned on the farm. And then I was finally able to get out of that with an internship institutional money management firm. I think it was my junior year in college I was able to do that. But and then I went to an investment bank in New York out of college and then it's kind of been you know some of those through that to here. But yeah, the I would say my first real job outside of working for my dad on his farm was auto mechanic at a service station. Chris: That's impressive. So how long have you been in Texas? I moved to Texas in 2013. Okay, so you've been here long enough to answer my next question, which is do you prefer Tex-Mex or barbecue? Wes: If the Tex-Mex is right, I prefer Tex-Mex. Chris: Okay, I like that qualification, so we'll wrap up with this one. If you could take the Tex-Mex is right, I prefer Tex-Mex. Okay, I like that qualification, so we'll wrap up with this one. If you could take a 30-day sabbatical, where would you go and what would you do? Wes: Wow, that's a good question. It's never even crossed my mind that I would have the ability to do that 30-day sabbatical somewhere that is not a population center, probably has a beach, doesn't have to be anything specific and people can't find me on my cell phone. That would be the requirements. Chris: Those are good ones. I like those. Well, I do like the question, because most entrepreneurs never take the time to think about that right. Wes: Or have the liberty to. I have not thought about that one. Chris: Well, good, now you at least have a framework for it if it ever happens. So, wes, thanks so much for taking the time. I really appreciate getting to know you and hearing your story. It's fascinating stuff what you and your team at Applied are doing and have

In today's episode of Building Texas Business, I chat with Sassie Duggleby, founder of Venus Aerospace, about her groundbreaking work developing hypersonic flight technology. Her vision is to connect the world through travel that spans continents in just one hour. She shares her motivation, sparked by living abroad and a desire to unite people across borders. We discuss Sassie's journey building Venus Aerospace from the ground up. She offers insights into raising capital, growing from a small team to over 70 employees, and prioritizing work-life balance for families. Sassie also talks about navigating challenges in aerospace, an evolving field with careful regulation. Our discussion delves deeper as Sassie reflects on balancing entrepreneurship and motherhood. She also addresses tackling biases facing women in STEM fields. With her tenacity, Sassie is clearing paths for others. SHOW HIGHLIGHTS Sassie Duggleby, CEO of Venus Aerospace, discusses the company's vision to revolutionize global transport with hypersonic flight, aiming to turn international travel into one-hour journeys.We explore Sassie's personal experiences, from living in Japan to leading a pioneering company, which fuel her ambition to make the world more connected through rapid travel.The conversation covers the evolution of Venus Aerospace from a small team to a 70-employee company, emphasizing the challenges and strategies of scaling a startup.Sassie shares the importance of cultivating a strong company culture that prioritizes family time and how it aligns with their vision of 'home for dinner'.We delve into the regulatory challenges faced by the company, such as securing permission for supersonic flights over land and navigating government relations.The episode touches on gender biases in the aerospace industry and how societal norms impact women, with Sassie recounting her own experiences as a female CEO.Sassie reflects on the need for potential changes in the academic system to accommodate different learning styles and to support women in STEM fields.Discussing personal challenges, Sassie emphasizes the importance of balancing motherhood with the demands of leading a startup and the intentionality required to maintain a work-life balance.A lighthearted discussion ensues about Tex-Mex versus barbecue, providing a glimpse into Sassie's personal preferences and her vision for a tech-free sabbatical in nature.We highlight Sassie's journey as a successful female entrepreneur and her contributions to the aerospace industry, particularly during International Women's Month in March 2024. LINKSShow Notes Previous Episodes About BoyarMiller About Venus Aerospace GUESTS Sassie DugglebyAbout Sassie TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Sassie Duggleby, co-founder and CEO of Venus Aerospace. Venus Aerospace is a startup company focused on engineering the future of hypersonic flight by making one-hour global transport possible to connect the world and make it safer. Sassy talks about the importance of cultivating a strong company culture, where at Venus, they are focused on making it home for dinner. She also shares how she balances being the CEO of a startup while also being the mother of two. Sassy, I want to welcome you on to Building Texas Business. Thank you for taking the time to be with us today. Yeah, thanks for having me so very intriguing stories. I was reading your bio and I just want to give you a chance to introduce yourself to the audience and the listeners. Tell us you know who you are and what you do. I know your company is Venus Aerospace, which sounds really cool, so let's tell us about who you are and then what Venus Aerospace is. Sassie: Yeah, so I'm the co-founder and CEO of Venus Aerospace. Venus, we are using a next generation rocket engine to enable super high speed vehicles. So what does that mean? High speed vehicles is in planes, drones, and we've got an engine that allows you to take off and get up to speeds around Mach 4. So four times the speed of sound and super efficiently cruise across the globe. You can push all the way up to Mach 9 if you really wanted to, and then come back down and land and it would let you go. You know, say, san Francisco to Tokyo in under two hours. Wow. Chris: That's a little crazy, huh yeah, so does that mean you're a true rocket scientist? Sassie: I'm actually married to a rocket scientist and I manage a ton of rocket scientists, but I would not claim that title for myself. Chris: Okay, all right, so, but you're the one of the few that would say, well, it's not rocket science, but it kind of is. Sassie: It is in this case for sure. Chris: Yeah, I love it. Okay, so that Venus Aerospace, so high speed travel. For what? For? Obviously for a normal consumer. Sassie: Yeah, so the ultimate goal is commercial travel. We have near term opportunities doing hypersonic flight testing for the Department of Defense and then hypersonic drones, kind of for national security and defense purposes, both for, you know, nato and the US Department of Defense. But that ultimate goal is you know kind of how does the world change, if you could get anywhere, you know, in two hours, you know whether it's business travel or it's, you know, delivering parts or it's, you know, global organ transplant. There's a bunch of opportunities that you know what's your time worth and if we could give you back time by helping you get across the globe faster. That's our ultimate vision. Chris: Wow, I mean that's. It is visionary. So what inspired you to get into this business? Sassie: Yeah, so prior to starting Venus, andrew and I. So we co-founded the company together. Andrew's, my husband and we were both working for Virgin Orbit, so we were launching rockets off the wings of 747s. And while we were working for Virgin Orbit, we actually deployed to Japan. So Andrew's in the Navy reserves and in the Navy he does ship repair. So I always joke why a PhD rocket scientist is doing ship repair. That's a whole different question. But 2018 was a really bad year for the Navy and there were a bunch of collisions out at sea and they couldn't get the Navy ships all the way back to the United States. They could only get them to Japan. And so he got a call in like February 2018 and said, hey, we need you Any chance you could come to Japan. And I looked at him and said, can we go? And so we pulled the kids from school, moved to Yokosuka, japan, and it was actually living in Japan that we realized you know how big the world really is. So, you know, I had, we had traveled internationally, but we'd never actually lived overseas. And so it was literally a Sunday afternoon. We were sitting out on our balcony overlooking Tokyo Bay. You could see the whole, you know American shipyard there and we were talking about my grandmother's birthday was coming up and how do we get home? Do I take the kids jet lag socks, like we were just having a normal Sunday conversation. And Andrew looks at me and he says well, you know, there's a new rocket engine coming on the pipeline. That's been theorized for about 30 years. They've been working on it at academia, at the universities, and he said I think if this engine's ever proven, I think we could put it on a plane and we could be home in an hour. And I literally laughed at him in that moment. But then he started explaining the physics to me and how the engine works and how it's way more efficient If you don't have to, if it's more efficient, you don't have to have as much fuel. And just was getting into it. And we started kind of dreaming like, well, what if this engine ever really comes along and it's proven? And so you know, fast forward, we get back to Southern California and we're back working at Virgin orbit after the deployment. And he comes home from work one day and he said, hey, purdue University, their research, one of the research labs proved this engine and it's called a rotating detonation rocket engine, which I know is a mouthful Rotating detonation rocket engine. And so this engine in an A B test. So the rocket engines that, like we use today, are only about 2% more efficient than the rocket engines that we sent, you know, astronauts to the moon with 50 years ago on the Apollo missions. So in 50 years we've gained about a 2% increase in efficiency, which is not much. Well, this engine, on the other hand, gains about 15% efficiency, and so it's just a total game changer. It's almost equivalent of going from like propellers to jets, like how much that impacted airplanes. It's the same thing. So going from a it's called a deflagration engine like a campfire burn in a chamber, which is what we've been using forever, so subsonic combustion, to detonation, which is supersonic combustion, and if you can detonate a propellant you extract more energy. It's just more efficient. And so we literally stand up that rotating detonation waves, so it rotates around and around in an annulus. If you go to our website you can see videos of it and with that detonation it's just more efficient. And so if you don't have to hear as much fuel, you can put wings and landing gear and all the things that actually would finally make kind of a rocket plane actually work. Chris: Wow, yeah, and I guess going that fast at me all I know is what I see, like on TV in the movies, that going mock speeds is challenging, I guess for pilots now, because it's only people in, you know, in jets that do it. But for passengers, I guess the cabin can be pressurized or contained where it's safe for the, or maybe that's where you're getting to, I don't know. Sassie: Yeah, well, so humans are really good at constant velocity. So once you get up to speed and you're going the same speed, I mean you know an airplane, you don't feel like you're trying to get there. I mean you don't feel like you're traveling what? 800 miles per hour across the globe or whatever the speed is. You know it's acceleration, like when you have G's, that that's what we're not as good as handling. So our vehicle, our plane experience, you would take off and it would be about kind of a 10 minutes of that takeoff experience where you're in the back of your seat, but then you'll hit constant acceleration, just like an airplane. So it's no different. I mean, think about astronauts in space or traveling what Mach 24, Mach 25, and orbit constantly, and you know that it's just the acceleration that's the hard thing. So okay, we've got one of the joys of being here in Houston is you know we've got Johnson Space Center down the road from us and you know we've had their human factors team look at you know our kind of trajectory and they've said oh, you're totally fine, you've got no problems at all. Chris: That's nothing. Right, yeah, exactly so. You have an idea and I love the story of on a balcony in Japan and just it's interesting to me because so many entrepreneurs they may not be in that same setting, but it is this conversation about an issue or a problem and how to solve it and they have the idea right and it boiled down to its basics, no different than what you and your husband were talking about. So how did you take that concept and the idea that, ok, Purdue proved it and turn that into Venus Aerospace? Sassie: Yeah. So as soon as Andrew came home and said, hey, they've proved it, I kind of looked at him. I said, do you have this? Because he intimately knew he was a former professor at Texas A&M, so we intimately knew how far academia could kind of push the technology. And we said, all right, we've got to go grab that technology and kind of pull it up and actually bring it to the world. So I incorporated the company and then I actually went and took a class on how do you raise venture capital. You know, while I have an engineering undergrad and an MBA, I had not ever, you know, raised VC money before. And so it was actually a group of women that I found they were teaching a course on how to one of the goals was to get more venture capital into the hands of female founders. So statistically, about 2% of venture funding goes to females, and so they were trying to help with that. So I took a class and learned how do you raise VC money and how to, you know, build a pitch deck and all the things. And then, as soon as we got Virgin Orbit to its first launch, we actually quit our jobs and went full time on Venus and we spent about. It took us about six months and, I think, 200 conversations, 200 pitches, until we finally, you know, found that investor that said, yes, I'm in, and we closed a seed round of $3 million in January 2021. And that was actually the same time we decided to move the company from Southern California to Houston. I'm a seventh generation Texan so wanted to get back home and Houston. One of the great things about Houston is it's got the Houston spaceport at Ellington Field and it's the Ellington Field. It's the only urban spaceport in America, which means, you know, we are literally firing rocket engines here at Ellington. You know our previous experience. You know Virgin Orbit our headquarters was Long Beach, but our testing all happened out in Mojave, and so Andrew, when he became head of launch operations, pretty much lived in Mojave. I was a single mom for a couple of years and we were, like you know, as a husband wife founding team. This is not like we have to find a place. We can do it all in one location. And Houston, you know, rose to the very top, and so we closed our seed round of funding and moved the family to Houston and it's been, you know, I really believe, the best move for what we could have done, you know, for the company. Chris: That's great. So let's talk a little bit about the challenges of raising venture capital money. I mean you obviously at 50,000 feet, you said 200 conversations before you got one bite. But you know, I have to believe. I know we have clients that go through this or come to us, you know, in the similar stage trying to capitalize on an idea of raising money around it, so they get a company off the ground. And I have to believe. Other listeners out there are curious as well. What are some of the lessons learned that you feel like you could pass on to someone that might either one help them understand what they're about to get into, or maybe it's. You know, I learned this and avoid doing this. It might make it your process easier, sure. Sassie: You know. So one of the things that Coach Tommy in learning is it only takes one, yes, right, and so you just need one person to believe in you, so kind of having that grit and just saying no, like Andrew and I knew we had a good idea, we knew we had something. One of the challenges was finding the right fit. You know so venture capitalists often have a thesis in terms of what they want to invest in. So if you're an enterprise, saas, software investor, you're probably not going to invest in a rocket company, and so it took a while for me to find, for us to find kind of those folks with the correct thesis and they get introductions to them. The other thing is we needed patient capital. So we're also not on this like super short journey. We're not going to throw a bunch of programmers in the room and, you know, spit out a program of a unicorn. You know we need time. We need time to build, we need hardware, we're capital intensive and so finding those people that understood those longer timelines, and we're okay with that. So that's one. The other thing I would say is we started off building our own pitch deck and thought surely the design doesn't matter, and fortunately we had a pretty early believer that said hey, I'm interested, I want to help you guys, but you need a better pitch deck. And so it kind of like crushed my soul to go pay a designer to build our pitch deck. But the minute we went from the one we designed ourselves to like a professionally designed one, our traction went way up. And so it and I look back in the pitch deck we have was horrible. In the pitch deck the designer built was beautiful. And so you know, I'm actually glad, I'm very glad we sent the money. Chris: I think that you know there's a lesson there for sure in the way I've seen it play out in a number of different scenarios with kind of startups because you need to figure out what's truly an expense versus an investment in the future of your business right and what you just described and hiring that professional. You're trying to say I can do this myself, I'm going to save a little money, but the investment you made, even though it seemed like an expense you probably were questioning whether you could afford, is actually a smart investment. That the return on that was crazy. And you know I can analogize that. Sometimes the startup legal stuff we tell clients or potential clients look, you're investing dollars, even though it seems like an expense on legal, but you're investing dollars and making sure your company's set up right. That will help you going forward. Sassie: Absolutely I completely agree. Chris: So you got the pitch deck going and and then I guess you continued on the road to pitch the idea to people. I also love kind of what you said about the honesty and being direct about what your business was and what this investment would look like and what it wasn't right. You weren't going to be returning a profit or return on the investment anytime soon. So you that I think you said someone paid capital or patient capital. Yeah, I love that. So you got that going. It was January, I guess, 2021, you said. And so take us now. How many employees have you grown to? Sassie: Yeah, so we're. You know that was January 21, 21, we're what? In March 24. So it's been three years. We've scaled about 70 full-time employees and we scaled really quickly. You know we did a $3 million seed and, what was fascinating, the minute our main investors are called Prime Movers Lab for our seed round put out a why we invested in Venus Aerospace. We got an incredible amount of well we would have invested. We would have invested. So we ended up capturing another 10 million in safes, so simple agreements for future equity. You know, built for a year and then the Prime Movers Lab actually did a preemptive A. They were like you guys are crushing it, here's 20 million more, keep going. And so, yeah, so we scaled pretty quick up to, you know, 50 ish. And that was an incredible challenge, like going from three where it's three people and a PowerPoint presentation, to 50 to 70 people like you. Just, you know you go. You've got to learn how to communicate better. It's no longer sitting around a kitchen table. You know. We literally started the company at our house and so everybody knew what was going on. Everybody was connected. I think once we hit 15 employees, we were like we have to find a location because we had two new people coming and we did not have a single spot in our house to put them Like we were about to start using our kids' bedrooms, and so that was the trigger. That was like, all right, we, you know, we ended up finding the hanger at Allington. But yeah, scaling is a fascinating, you know, and every stage, you know, it just gets a little bit different the minute you think you have it figured out. You grow again, and so we've started about 70 now for the last year, which I think has actually been really healthy for us because it's allowed us to build kind of better systems and processes into the organization for decision-making and for budgeting and all the things that I think will help us as we go to raise our next round of capital and want to really accelerate and start building, you know, mach 5 drones. We've got all the pieces in place to help us with that. Chris: So that you know you described, I think, any fast-moving business the challenges that scalability and managing it right, keeping your arms around it so it doesn't get out of control. I guess that's very hyper growth that you went through. So what were some of the things that you had to do through the hiring process to make sure you were making smart decisions on these hires while you were still trying to build processes and systems in place to kind of manage it once they were all there? Sassie: Yeah, you know, one of the things we early on put we call it the Venus values into place, kind of our culture and who we are and how we operate is just as important to us as the technology that we're building, and so we call it the Venus flight plan and so every kind of and it's all related to, you know, flight. But we do a lot of, we did a lot of culture. Yes, we want to make sure you can fit technically and can you do the skills, but then are you going to be a cultural fit? And so you know, even from an interview perspective, we'd have people doing technical interviews and understanding their technical skills. But then a cultural fit, are they really going to fit in culturally? And I actually think that is key. And then I do tons like I'm constantly I feel like I'm a broken record but talking about our values and who we are and how we're going to treat people, you know, I think the aerospace industry as a whole is often very broken. It was born out of war and it's. You know, I found myself at 38 as the oldest female engineer at Virgin Orbit and I don't know, I don't think 38 is that old. Chris: So I don't think so either. It seems like we're getting young, right now. Sassie: Yeah, so you look around the room and there'd be a ton of, you know, 25 year old female engineers a few 30, and by the time they're 40, they're all gone. And so you know we it was like what's wrong with the industry that you know there's no 40 year old engineers, that they all flee. And so we were very intentional. I mean, we actually named the company Venus because she's the only female planet. All the other planets Mars, jupiter, saturn, mercury they're all Roman gods, whereas Venus is a Roman goddess, and then she's also the goddess of love, and so we have a premise of like what would it actually look like if we love our employees as well? And so you know that's. I think that's been one of the key tenants of like kind of who we are as a company. You know we want to build that family friendly, female friendly aerospace company and that you know those shouldn't be in dissonance with one another, but they often are. Yeah, that's brilliant. Chris: Yeah, what you kind of started with. And to totally agree, culture's keen and I think it's important you know that. You emphasize that in the way you did and I hope our listeners took note. We believe here is the same thing. When we hire, yes, you have to have the technical skills and that's kind of a given and you can interview for that and test for, you know, while someone's here, through your training programs and whatnot. But culture, it doesn't matter how good you are technically, if you're not a cultural fit, you will never work. If the company is really committed to culture, right With this inclusive and loving the employees and wanting that environment where people want to be. Actually, I think Jack Welch said it, if you have a real high performer, that's not a cultural fit. He calls that cancer, right, and that can. We all know what cancer can do to things. So you can't allow that into your organization. But I think it's great with your focus on that. So what are some of the things that you do to make sure the culture is one defined but two cultivated and nurtured? Sassie: Yeah, so we do, you know, values shout outs. I mean, everybody has the Venus flight plan. I literally have it here on a mouse pad, you know. It's like this is who we are, it's on our website, it's on our screen savers kind of plastering around, and then we do a lot of Venus values shout outs. So we have like kind of managers and we expect like we want shout outs on certain places. You know we do awards. Anytime I send a communications email out to the company, I always, like, put some reminder about a Venus value. So I've just I just constantly say that, say it over and over, like this is who we are, this is how we operate. I feel like sometimes I'm a broken record, but you know they say you have to say something seven times before someone really hears it, and that's been a huge lesson for me, Like things that I feel like, oh, it's obvious, this is what we're going to go do as a company. This is our strategic goal. Well, I'm talking about it all the time to investors, but I realized sometimes, you know, our team might not be hearing it, and so that's been. Probably one of the biggest learnings is just how often you just have to say the same things over and over again. Chris: Yeah, I think you're right. I think it's that repetition and certainly top down, it has to be at the tops to become to infiltrate the entire organization. And I believe what I've experienced here is when you start tying your values and the behavior that you say defines your culture to behaviors that others in the organization are doing, so your shout outs as an example, right, when you say you know, jane did such a great job on this task and it demonstrated this value, right, people start personalizing going. Okay, I see what that value means in action. That's. I think that's great. And you said something there at the end I think is so true, cause your job is so external sometimes and I can relate to this you sometimes forget how important it is to make sure all those great things you say externally to keep the company going, that you're saying them internally to remind everyone how great the organization is and you know how important it is to keep this thing going. Oh for sure, for sure, what? Let's talk a little bit just about any challenges you've faced getting this company up and going and kind of what the lessons learned have from that and how it's kind of made you or the company stronger, cause you went through a rough patch or two. Sassie: You know, I say one of our biggest challenges we've been hitting is regulatory. So we're trying to fly a supersonic. Well, we actually flew a supersonic capable drone a couple weeks ago but we had to throttle it down to below Mach 1 because we didn't have the regulatory clearance to fly supersonic. It's illegal to fly supersonic over land without authority. Yeah, I mean the sonic boom does. It's legit, it does make a noise and so you know, they outlawed that back, I think the 50s or 60s, and so there are places, there are ranges in the United States that you can fly those speeds, but you have to get government approval and it's, you know it's been. Yes, you can go fly here, but it'll be three years. Well, we're a startup in three years like we're out of cash or we're growing super fast, and so that's regulatory hurdles have probably been one of our biggest challenges. That I kind of didn't expect. And then you know we're building technology that right now is one of the top priorities for the Department of Defense, and so in my mind you would think that DoD would be just throwing cash at us, but it's been very small. You know, we've got a little bit of DARPA money and a little bit of NASA money and a little bit of AFWARX Air Force money, you know, but not to the extent of what you know, based on the priorities of what you would think it is. And so I've had to learn, like, how do you play the DoD kind of Congress lobbying game and I call it a game because I feel like it is a game- and so I don't. Chris: I don't envy you at all, but I game, I think is the right way to say it sadly. Sassie: Yeah. So you know kind of learning that it's not necessarily a meritocracy, it's not the best technology wins, but it's. You know, do you have the right relationships? And were you in Capitol Hill at this time and we've been talking to this person? And the minute you build that relationship, then that person leaves that group and then you got to start over again. And so I joke, I've learned. I've had to learn how Adventure Capital World works and then the minute I figured that out, it's like now I've had to go figure out you know how congressional budgets and DoD and how all that works, and you know. So it's been. I've learned more in the last three years than I've learned, I think, in my previous 40, just because it's fascinating, but it's been a lot harder, I think. In my mind I thought the DoD, like if you build great tech, they will come, and that's not necessarily the case, and so we've had to start really building the right relationships and brought in a team that knows how to do government relations and so it's been a big learning curve. Chris: Yeah, you hate to hear that bureaucracy can get in the way of something so innovative and potentially transformative, but at the same time, I don't know anyone's gonna be shocked by that either. Right, it's kind of a sad statement. Sassie: Right, and there are lots. I've got to give the DoD credit. There's lots of groups are really pushing on innovation and recognizing that hey, we need to change and you know, one of the things that makes America great is our innovative ecosystem and how we can. You know the startup world and the venture capital and you know what happens in Silicon Valley and other places, and so there are definitely folks within the Department of Defense that recognize that's kind of the. That's what the US is, super power is, and how do we leverage it. But it's just a really slow flywheel and we'll get there. I know, because I know what we are building is so important that you know we'll be able to knock down the right barriers. But it's just been. It's been harder than I think I expected it was going to be. Chris: Yeah, it seems that way. So, as you were talking about that, I'm curious are there competitors to Venus out there, like others, that either have a similar or they've gotten permission to use the same technology, and not just necessarily in the US and other countries? Is this kind of like a you know back, going back to the 50s and 60s, when it was a race, you know, us and Russia were racing to the moon? Sassie: So in terms within the United States, you know. So, venus, our whole premise is that if you want to go really fast with a plane, instead of being a fast jet you should be a slow rocket. You know so our last rocket went mock, like when we were at Virgin orbit. It would go mock 10, split in half and then go on to mock 25. And so you know, when we're seeing mock four or even mock nine, that's slow compared to what our last last vehicle did, and so there's nobody else that's using the engine technology that we are to build fast, fast or slow rockets, and so we're kind of the only one in that realm. Like there are some other companies trying to build really fast jets. But we always say Top Gun Maverick was the perfect marketing story for us because, assuming you saw it, what happens in the very opening scenes of Top Gun Maverick? Chris: Yeah, he goes faster than what they told him he could, or why right he pushes? Sassie: he tries to push his plane to mock 10 and he literally melts his vehicle. Because if you fly fast through the soup of the atmosphere, you know it creates an incredible amount of friction and it creates an incredible amount of heat, and so it's really hard. And so, because you're a jet, the difference in a jet and a rocket is a jet has to bring. You know, go to campfire one to one. What do you need for a fire? You need fuel, oxygen and a spark. So a jet gets its oxygen from the air, which means it has to fly low enough in the atmosphere that can. It can feed its jets, which means it's got to fly through the soup. Right, we're a rocket, we're carrying our own oxygen with us in a tank, and so we can go up higher in the atmosphere where it's not as soupy, and thus fly where it's way cooler, so our vehicle won't melt. It's actually a much easier problem. So nobody that we know of in the world is looking using the engine that we're using for in the ways that we're using it Now. There are other people using this rocket engine, possibly for, you know, orbital launches, or you know we're working with NASA because they're really interested in it as a moon lander. But you know, we think we're the only ones. Now, that's not to say that some of our competitive you know, near peer competitors are not also looking at the same technology. Chris: Gotcha. Let's go back, because you said something that I found interesting you know we're going to get your take on it and that was around females in this industry and how you looked around at 38 and you were the oldest and that there aren't any in there Once you get to mid to late 30s, into the 40s. What is it? Do you think that was, or still is, maybe driving women out of the aerospace industry after you know they're in it for early, an early stage of life? Sassie: You know I've done a lot, spent a lot of time reflecting on this and I wish I knew the exact answer. I think I think it's multiple. I think one of them, when you don't have mentors, when you don't have someone older than you to mentor you and show you how it's done, you know, you decide like hey, maybe it's not worth it. I think some of it is. I mean, it wasn't unusual to have an 8pm meeting on a Thursday night when I was at Virgin Orbit sometimes, and so you know, if you're a mother and have young kids at home, like that's really hard. So just hours and expectations of hours, I can. You know. I think, as much as I would love to say it starts at a young age. There's no messaging sent to young kids, to young girls versus young boys, of like hey, you should be playing with these types of toys and boys can play with rockets. And I don't know that. I don't think society intentionally means to do that, but I think those messages still happen. I mean, I can tell you this happened recently. I was, we were given a tour here at Vina and it was with a group of very respected angels that went to a very respected university, I'm not gonna see what it is. And this gentleman came up to me and I introduced myself we hadn't started to tour anything and I said hey, I'm the CEO of Venus Aerospace. And he turns to me and he says you don't look like a very typical aerospace CEO. This is you know what 2024. Like I was so shocked by it, I didn't say anything and I wish now I'd said well, what makes me look different? Like what does an aerospace CEO look like? But that is still, I'm typically the only woman in the room when they're presenting for Venus as a founder of an aerospace company. It's just I wish I had better answers. You know, I've, even I've spent some time talking with some people that do kind of education on, you know, stem education and some of it. They even say, like you know, a lot of the engineering education is built based on how men learn, like men and women actually learn differently, and so based on how they teach, because it's been, you know, taught since, you know, for a thousand, hundreds and hundreds of years. Engineering is often taught with more how the male mindset works, and so it just tends women to be like, yeah, we're not going to go that route. Interesting. So I think it could need some changes in the academic system. But I mean, having come from a world where my husband was a professor, like there is no incentives for a professor to change how he teaches or she how she teaches. Sure, they're. They're actually, especially at a tier one research institution. They're there to, you know, do research and teaching just happens to be this little side gig, right. It's something they have to do right. It's something they have to do, not exactly? Chris: Yeah, I'm still a little shocked by the comment you got a couple of weeks ago. But so let's talk. You know, maybe digging a little bit on your own personal journey, because you're I think you said a mom of two, correct? So you know how have you managed that and navigated through. You know, still being a mom to those two, while you, I guess, one when you worked at Virgin. It couldn't have been easy, but even more challenge embarking on a startup and you know the growth that you told us about from zero or three to 50 so quickly and that. How have you tried to balance and manage your time, because I know there's clients in our firm, of our firm and listeners of this podcast that are in that same position. Sassie: Yeah, you know, I wish I could say it was easy, but it takes a lot of intentionality. So our company vision is home for dinner. We want to fly you across the globe and have you home for dinner. If you work for us, we want you home for dinner. And that's because we have, you know, as a husband and wife team, we have, you know, the two daughters that it's like we've got to be home for dinner with them because you know one of them is in high school and she's going to be out, hopefully, god willing, out of the house in a couple of years, and so we just put that in as a value from the very beginning. And so we are home, we eat dinner around the kitchen table with them almost every night I can't, you know, I can't say every night, but most of the time. Chris: No one would believe you if you said that. Sassie: Yeah, no, we don't. I mean, I just came back from two weeks of almost straight traveling and I did. I was heading to another event and I came out with my suitcase in the morning and my daughter literally looked at me and said, mom, you're leaving again. And so there are times that's hard, I can't say, I can't say I've got to figure it out, but it's being that being super intentional. And then when I do have time with them, you know, just making sure I make the most of it. It's like, you know, we do not at dinner ever have our phones out. We don't talk about Venus at all, because it's the last thing they want to hear about, you know. And then I do try we have tried to kind of sometimes bring what we're working on into their world. So I got to fly my younger daughter out to one of my events and she got to see me on stage and see what that world looks like. And so you know, getting them to understand like what we're doing, you know we've been trying to be more inclusive of that for them. Chris: I think that's great. I mean, to your point, everything's a balance, right, but I think that balance of not talking about business with them or around them all the time is smart. But introducing and

In today’s episode of Building Texas Business, we sit down with Jerry Mooty, the CEO and Principal of @properties, Christie's International Real Estate in Dallas and Austin. Jerry takes us through his remarkable journey from managing partner at a law firm to heading a major real estate brokerage. He shares how resilience and adaptability allowed him to steer his business through the 2008 financial crisis and leverage opportunities arising from the pandemic. Jerry also provides insights into growing his firm through innovative hiring strategies and technological platforms that streamline agents’ work. We explore lessons learned around overcoming adversity, strategic partnerships, and balancing operations with culture. His story offers a candid look inside one industry titan’s challenges and triumphs in managing debt, acquisitions, and new ventures in sports and entertainment. SHOW HIGHLIGHTS Jerry Mooty shares his transition from being a managing partner at a law firm to creating and growing a real estate brokerage, including the challenges faced during the 2008 financial crisis and opportunities leveraged during the COVID-19 pandemic.We discuss Jerry's innovative business model that hires agent-attorneys and how it differentiates his brokerage in a competitive real estate market.The episode covers the technological advances at @properties, such as the Platform, which incorporates AI and a suite of tools to increase agent productivity.Jerry reflects on managing $60 million in personally guaranteed debt and the strategy behind transitioning to a debt-free business structure.Strategic partnerships and the process of acquisitions, especially in the technology sector, are explored along with Jerry's experience in due diligence and venture capital dynamics.Jerry discusses the significance of cultivating a company culture focused on employee well-being and the shift in his leadership style from operations to creating an enjoyable work environment.We touch on the importance of friendships in Jerry's professional journey and how they've influenced his career decisions and leadership approach.Challenges facing traditional real estate agencies like Remax are considered, with a focus on adapting to technological advancements and market changes.Jerry provides insights into his personal preferences, revealing his fondness for barbecue over tex-mex, adding a personal element to the conversation.The conversation highlights Jerry's efforts in expanding his business, including the recent launch of a sports and entertainment division and developer services to cater to specific client needs in the real estate market. LINKSShow Notes Previous Episodes About BoyarMiller About @properties,Christie's International Real Estate GUESTS Jerry MootyAbout Jerry TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode you will meet Jerry Mooty, ceo and principal of App Properties, christy's International Real Estate in Dallas and Austin. Jerry, by anyone's definition, is a serial entrepreneur, having started a law firm, credit card processing company, real estate development company and now a real estate brokerage firm. And Jerry tells aspiring entrepreneurs expect the unexpected. Jerry, I want to thank you for taking the time to come on and welcome you to building Texas business. Nice to see you. Thanks for having me. Good to see you too. It's been a while. Let's just start. You know you've done a number of things and we'll get into some of that, but currently, what's the business that you've started and you're currently today? Jerry: So Jerry Mooty from Dallas have a business now in the residential real estate brokerage industry. So I compete with Compass and some big national brands that most of the listeners will know about. Chris: And that company's called App Properties right. Jerry: Yes, sir, it's called App Properties Christy's International Real Estate. So we kind of have a working on that. Chris: And I know you're kind of got the Dallas area covered, but I think you've also recently expanded into Austin. Jerry: Yeah, so we started in Dallas proper with our headquarters, and then we opened a second office in Frisco, texas, and then we just recently, in the fall of 2023, opened up Austin, texas. Chris: So you know, as a recovering attorney, what was it that inspired you to get into the residential brokerage real estate business? Jerry: So, interesting enough, you kind of know my history, but I founded a law firm when I was 28 and I grew that into about 60 lawyers in four cities. As the managing partner, I started doing a lot of deals for the partners as opposed to practicing law, and I went down several paths. I had a litigation support company that I founded and grew that for the partners and then, you know, ironically got into a real estate development a little startup where I had a home building division building spec homes and I had a commercial division where I was doing some commercial projects. Raw land development had a resort under contract in Bernie, but, like a lot of people in real estate, 2009, 2010 came and that was the end of my glory days in real estate. All right. Chris: So then, what led you to? You know, get involved with app properties and then take this down, go down this rabbit trail. Jerry: Sure. So in 2012, I sold my interest in the law firm back to the partnerships. I didn't want to go back to practicing full time and then did quite a few different entrepreneurial things from about 2013 to about 2019. Any you know, I had a credit card processing company, backed by the Jones family, called Blue Star Payments that merged in with a tech company and we rebranded Blue Star Sports. We were backed by some pretty large VC firms Bain Capital and GenStar partners and Providence Equity and then obviously, the Jones family. So we acquired about 27 companies in about three years and then we sold that company in 2017. Then I was kind of looking for the next thing and I became the chief business and legal officer for a Silicon Valley tech company for a couple of years. They were in a big money raise and it wasn't going so well and I was deferring comp. So I started looking at what I was going to do next. One of the people in my network is a ex litigation real estate litigator. She had gone on and got married, had kids, got a real estate license and had a brokerage here in Dallas and her model was she was going and convincing unhappy lawyers to get the real estate license. So she had about 10 agents slash attorneys as her brokerage and she approached me to come in and run her brokerage for kind of like I did the law firm. So that piqued my interest enough so we went down that path. Sadly we didn't get to execute our documentation because they ended up having a divorce situation. And then two weeks later COVID hits and so I'm waiting to take my real estate license and not sure what I'm going to do after that. Come out of the first 90 days of COVID, the market's red hot, so I hang my license, I start doing deals for my network friends and start marketing myself as an agent. All the meanwhile I'm looking for something to buy or to own or start, and so that led me through developer relationship here in Dallas to the ownership group of at properties out of Chicago. They made that introduction, flew up and met with them and really fell in love with not only the brand and the culture but also the technology that they had built. Chris: Amazing story. There's a lot to dive into there. I may definitely want to go back some, but let's stay with that properties for now. And yeah, so you that's a. It's born out of COVID, I guess. Tell us, though you know, because I know just from you, know keeping up with you and then reading on the website you've experienced some like amazing growth in the last, I guess, three and a half years. Let's talk a little bit about that. And in talking about what you've done that you think has helped accelerate it, let's talk also about the maybe the pains with growing so fast. Jerry: Sure. So as I was looking to own something and this opportunity came up, I negotiated to purchase, you know, the North Texas territory. But I wasn't really prepared to launch because it was just me and I hadn't done a whole lot of recruiting. But I had some real estate deals in the pipeline that I needed to leave the current brokerage I was at before I papered those up. So I ended up launching at properties by myself just one agent, and got temporary space and, you know, true entrepreneurial spirit started recruiting, putting in my support team, landed a pretty big compass team right out of the gate and that kind of helped accelerate the visibility. And so the first, you know, six months we grew to 10 agents by Christmas. So it wasn't, we weren't a big brokerage, but we were putting things in place. By the next year we were about just under 40 agents. So we had a really good, successful year and, you know, quadrupling our size and then last year 2023, we doubled again to about 80 agents in Dallas. So we've been kind of there's been some faster growth brokerages, but we're very we're considered more luxurious. Our agents are more high producing agents and they take a little longer to transfer from one brokerage to another based on their pipeline and their restrictions. So now that we're three and a half years into this and Austin's really kind of been a little bit of a catalyst in the last six months because initially that territory wasn't available there was a Christie's affiliate there my corporate partner asked me if I wanted Austin about a year and a half ago. I said yes and so I started putting the play pieces in place and we launched that in September. We've added quite a few agents in the first 120 days over 70 something agents there. So all in we got about a hundred agents in Dallas, about 70 in Austin. So that's the good side of the business. The headaches, as you know as an entrepreneur, are several and many. Too many to list, but we'll cover a few. My most recent success story is I just hired a controller after three and a half years. So I've been doing the books, reporting to corporate, paying the royalties, paying the checks, paying the agents. So those are the things. As an entrepreneur, you really you put your blood, sweat and tears into these businesses and then you have to get to a certain level, to where you could start to relieve yourself of some of these pains. Chris: Yeah, that's so true, jerry. A lot of the people that I've had on before say exactly that that it's one when you're starting out, you're not big enough to outsource it or to hire for it, so you got to do it. But then it's getting to that point when you even when you are big enough and can afford it the level of trust and hiring the right person to hand off those key aspects of the business, so it frees you up to do the things as an entrepreneur or the visionary you want to be doing. So let's talk about that. What was it that you think helps get to a level of trust and comfort that it's time to hand off and it's the right person to hand off to? Jerry: Yeah, I think, based on my background of being an entrepreneur, you make a lot of friends and you kind of know. You learn the hard way. You hire the wrong person a few times and then, as you get older and more seasoned, you kind of know what to look for. In this instance, with that properties, I hired somebody I'd known for 35 years to come in and be my director of agents. I've known her since the SMU days, so the trust was already built in and then you're just very selective as you add the pieces to the puzzle to get those right people in place. So in half years we've let one or two people go, but we've been pretty successful in hitting the mark. Chris: That's great. So 70 agents or so you said. Have you started to implement any kind of processes that help with the integration process as you bring in these new people, so they understand kind of what the expectations are, what the benefits are for making the move? I mean, so where are you and what's the process you've gone through to kind of make that more institutionalized? Jerry: So the background for at properties and the corporate support we have is pretty important in how we've gotten here. They're a 25 year brokerage. They're the eighth largest in the country before acquiring the Christie's affiliate network, so they kind of had the processes in place. So it's buying. Whenever you buy a franchise and you wanna go down this path, you kind of get a little bit of assistance from and some help along the way on someone else putting the right pieces in place. I think what we've done a great job is integrate and implement those things that they've brought to the table, which I think revolves around a lot of our culture. You know, I think culture is so important in any business you have and so it's just we have fun things called at love, local events that came from corporate. So we'll pick a merchant somewhere in our geographical area, we'll partner with them, we'll send out a marketing campaign. Let's say it's a coffee shop and then whoever shows up at that coffee shop, our agents are there and we're running a tap for a coffee or a Danish in the morning. So that's kind of the community outreach piece. We use the word love strategically in all our marketing. So we say bringing the love to Dallas, bringing the love to Frisco and those types of things. So you know, recruiting is probably once you get the, once you get your overhead stabilized and your office space and those types of things. This is a business about relationships and recruiting. So I would say our two most important people outside of myself are our head of recruiting out of Frisco, head of recruiting out of the Dallas office, and so those have been very good hires. Chris: You know most, I think most businesses. It's hard to say they're not people, businesses or relationship, but certainly you know in the business you're in, where you're so customer facing right, you need good people that can go out and attract good customers, provide good service. But I have to imagine the last 18 months or so in residential real estate hasn't been the easiest. So can you talk a little bit about what you've done to help continue, promote one, promote the culture, to keep people positive and energized while managing through what has to have been a challenging time? Jerry: Yeah, absolutely so. Obviously we're all aware of how hot the market got, you know, a couple of years ago, you know, during COVID and post COVID. What that did in our industry is everybody wanted a real estate license because they saw all these transactions happen. So we had an influx of agents that came in that are young, inexperienced, but were here to make some money. And then, when the market turns, you kind of have the reverse effect. Those people were all eat what you kill, or 10, 9, 9 commissioned agents. They got to figure out how to pay the bills, and so we've had a pretty big exodus. Probably 15 to 20% of our agents across the nation have left the industry, and so that's been good for the sense of the people staying in it because you got less competition. But the ones that stayed in it most of them, have been through some of these ebbs and flows of the market, and so they kind of know how to prepare. And most of that revolves around when your transaction desk is slower, what are you ramping up to do? Are you ramping up your marketing, your postcard, social media content, are you revamping your website? And so those are all things that we, which the agents that work for us and part of our big, strong sales pitch based on the technology that we have. Chris: Got you Speaking of that on the marketing side, you know, are you seeing? I guess, one area or the other as far as marketing strategy work better, get more visibility or more return on investment. You see so much on social media, so it seems natural that that would be one, but I don't know if that's the leading one based on your experience or not. Jerry: Yeah, I think in pretty much every industry has been affected by the internet and no industry more so than real estate. I would say probably 10 years ago you saw a lot of print ads. You saw a lot of ads and you know business journals and those types of things trying to move property. But now it's really a digital world. We're using social media, we're using tools called AdWords, which is a retargeting tool to where it's essentially like if you went and looked at a pair of shoes at Nordstroms and then you left Nordstroms, those shoes are following you around. So we have the ability to target, geo track and geo target potential prospects and clients through our technology. Obviously, websites are important. Your collaboration tools that you're preparing a search for a prospect, like they're looking in this area for a certain price point. We have the ability to set those searches up and work with a prospect or a client on finding the home, ironically in the last price. I don't know when this started, but in the last year or so, almost 85% of buyers find the home they want before they hire an agent, or at least they zero it down based on how much information is on the internet. And so, really, as an agent, what you're trying to do is bring your expertise not only to get that transaction under contract, but then most of the work happens one second transactions under contract all the way through closing. Chris: Right, that is an amazing statistic 85%, but you're right. I mean, when everyone goes to the internet first, I think, to research or validate or do something. So it makes sense to me, but it's a big number. Sounds like you know here you use your work, technology and innovation and stuff quite a bit already since we started the interview. Some of this may have come from your franchise or some may have come from some things You're doing, but what are some of the things you believe are innovative in the way that you're operating the brokerage and helping your agents be successful? Jerry: Sure. So I think when you start understanding what different brokerages bring to the table in regards to support for their agent portfolio. Obviously marketing is a big one because they're pushing all the stuff out that we're talking about, but also the day-to-day operation of an agent is pretty important. Most brokerages large brokerages like Coldwell, banker, some of your biggest national brands are very antiquated when it comes to technology support. I would say there's two brokerages at the forefront. I'd say Compass is in second place and I think App Properties is in first place. And I say that because we've been building a technology stack called Platform, or our franchise or has, since 2003 and basically an agent logs in and does everything they need to do as an agent in one technology. When I interview agents and I show them the technology, they're blown away because they're in four or five, six different technologies throughout the day trying to get their social media posted or created, their transactions done over here, their docuSigns another technology they have to use, and we have everything in one place, and so that's been a real big selling point for us when we're recruiting these agents. Chris: Yeah, I mean anything to make your employees or, in your case, I guess, your contractor's life easier. Have you started to look into, or is this already incorporating any kind of versions of AI? Jerry: AI is already integrated. Nowadays, agents are always doing, as an easy example, they're doing descriptions of the properties. So now you can lean on AI to help you describe a $5 million house with five bedrooms, six baths by describing it into AI, and then it'll help you create that luxury description. So there's things like that. Obviously, our CRM has a lot of AI tied to it and so, yeah, that's the way of the future and it's getting more and more integrated and implemented into all our tools. Very nice, very nice yeah. Chris: All right. So I want to make you kind of reflect back. So yeah, this about, by your own description, not the first time you kind of started a new venture or stepped outside your comfort zone. So when you think about what you did I guess leaving, you know, maybe leaving the law firm or even some of the ventures you started while you were there, but going to credit card processing et cetera where are some of the lessons you learn through those ventures that you think prepared you for taking the step you did without properties and the steps you're taking now to grow so rapidly? Jerry: Yeah, I think if you're a serial entrepreneur like myself, I think the one thing you learn each time that you have an idea or you go down the path of starting something is you think you're going to get to the finish line a lot easier. It's your idea and you think you're going to do that. And I think probably in every instance including the law firm, including the credit card processing is one lesson is it just takes a lot to probably 10 times, 100 times more man hours and work and you got hurdles. That you're not expecting. But I think that's part of the reward too is why I'm built the way I am. You enjoy that when an obstacle comes and you get your way around it or over it. But I think you know frankly, it's probably what every entrepreneur says it's never as easy as you think it is. There's no get rich. You know we talked about most of what we do as lawyers and what I'm doing is a people game. You know you're hiring people and people disappoint, you know, and you're having to find different people sometimes, and so the lesson is just pride and expect the unexpected and you'll be okay and be able to sleep at night. Chris: I like that. Well, think about, is there a kind of a challenge or a failure setback that you can point to over the last, you know, 15 years, 20 years, whatever that you feel is maybe in some ways either a defining moment for you or one of the bigger learning moments that you got? You kind of got hit with a little headwind but you overcame it and because of that it's kind of helped propel you either in your own personal journey as a leader or, you know, in things you learned as an entrepreneur. Jerry: Yeah, I'd say you know, probably the biggest lesson learned of all time was me starting a real estate development company with a home builder and a commercial partner and, you know, diving into that with not a whole lot of experience, and so the challenge was obviously, in real estate, you're hoping to build something and sell it, and so the big challenges is if you build it and you borrow a bunch of money and you don't sell it. And so in 0809, 2010 is probably should have been my premier happiest days of my life. I'm on a law firm, I'm making some good you know coin on the law firm side, but I'm literally getting dragged through the mud financially on the real estate piece, and it's probably one of the reasons it's taken me 10 years to get back into it on the brokerage side, because I literally came out of that was some financial PSD. You know just could not sleep, you know got I mean health issues, depression, pretty much everything you can experience as an entrepreneur and so you figure out a lot about yourself when you're going through something like that, and you know you either stay in bed and talk about it or you pull up your socks and get out and try it again. Chris: That internal fortitude, you know I think any entrepreneurs got to have that or it's just not going to happen. I appreciate you sharing that. Were there some things that you did? You know that you know other than just I mean pure gutted out. You know, to help you kind of get through that. You know, leaning on family friends, I don't know. I mean I have to believe we've got some listeners and other people out there that you're going through the same thing. Jerry: Sure, I think where I lucked out was, you know, just to be frank, I was on about $60 million and personally guaranteed debt that was worth probably about 30 by the time I was trying to get out of it. So there wasn't going to be any family help. It was. It was hey with you, you know, in a loving way, of course. But when you dig a hole like that, you just got to figure out the best way out. And for me, where I benefited was I had a law degree and I was a lawyer and creditors could not touch the ownership interest in my law firm because it was tied to my license. So, through bankruptcy lawyers and all that stuff, I got educated on that and gave me the strategy to get through that situation and come out on the other end, which was one of the reasons I sold the interest of the law firm back to the partners, because that allowed me to have a little bit of a stream of income there in 2012, 13 and 14, while I got the credit card processing company going and getting these other things going. So there was, if there was, a silver lining, it was that fact, but it was still still pretty embarrassing financially and pretty embarrassing as a professional to really go through that over a three or four year period. Chris: You got to be hard but, like I said, I mean now that you've come through it, you know you can certainly appreciate the opportunities you have today and know that. You know I certainly probably learned some lessons of what to not do, going forward right. Jerry: Absolutely, I would say. The one lesson you learn in that scenario is you become a lot more frugal with your financial decisions and you know, especially in the banking industry, like one thing I'm proud of with that properties is we've never bought a bar to dollar. We got zero debt, and so those that's a probably a direct result of what I went through, you know, 15 years ago was I don't want to do another business where I got a bunch of debt and I'm trying to get that off and make money to live off of. Chris: That's great. So you mentioned earlier I think it was a credit card processing BlueStar, where you had some dealings with Bain Capital, and obviously you're dealing with a franchise or in this current business. So let's talk a little bit about maybe what you've learned through that. I kind of relate or maybe call those you know investors, partners, strategic partners. What have you learned as kind of some of the best ways to deal with them so you keep that relationship strong and healthy? And maybe it's something you know that happened that you're like I did this or they did. You know something that happened that soured the relationship, one they got to help our clients here at the firm you know, you know find themselves in those situations all the time, and so I'm curious you know what you know, what lessons you've learned through that process? Jerry: Yeah, so I would say getting involved in. And so when we had the credit card processing company, it was pretty a pretty simple model. We were going out and you know recruiting or or you know we're trying to sell merchants, you know restaurants Anybody who ran a credit card was it was a prospective client approached by a group who had an idea of buying up these technology companies in the youth sports space. So like, if you sign your kid up for soccer, you're there's usually a form and at the end of that form, whether it be the YMCA or anywhere else, you're paying a fee for your child to play that on that soccer team. So the model we had was take the credit card processing that we had built our own API and those types of things and bake it into a technology and go buy these companies. And interestingly, it was about how do you flip the model from a EBITDA and a multiple perspective. So these tech companies that weren't that large of companies because they were kind of geographically located, running different types of youth sports camps or whatnot, they weren't sophisticated enough and they were usually outsourcing their credit card processing to stripe or squares or something like that. So we would acquire these companies and bake in our own processing and from an ownership perspective, then that would change the multiple for maybe two times to 12 times because you have that reoccurring revenue stream coming into your business model. I literally probably learned more over that. First, 12 to 20 per month as we were acquiring these companies, doing due diligence on them, and I was the chief legal officer of the company, so I was in charge of all the due diligence. So we acquired 20 something companies and I bet I did due diligence on about 300 over two years. But it was really cool because I got to see what investors and power players in the venture capital market, how they looked at things and it's there's not a lot of emotion, it's numbers on paper and it's how do we make, how do we do this to this group of businesses, and then how do we sell it and make money. All about the return on investment, right. Chris: Exactly so. It's a. Jerry: It's very cutthroat which some businesses are, some aren't, but it was a great learning experience. I'd like to say I probably learned more in that two to three years Dealing with those big VC firms and listening to those meetings and kind of running point on due diligence than I probably learned in any other aspect of my life. Now, that's so, but that's so. Chris: Let's turn it back a little bit to app properties specifically. I know you've recently launched a new sports and entertainment division Tell us about that. What's going on behind that and what are you trying to accomplish so in the real estate brokerage? Jerry: world. There's different ways to market yourself right, and a lot of that boils down to your experience of your agent portfolio, and so some real estate brokerages are residential, some may just be commercial, but on our side we have, we've accumulated some agents that allowed us to create these divisions because of their experience levels. So land and ranch is one division, and then sports and entertainment is another division, and basically there's some criteria that we've put in place before an agent can say they're part of that team or that division dealing with professional athletes or celebrities on a number of occasions, some of the qualifications, but essentially, when somebody's moving like a professional athlete or a celebrity, there's a lot of sensitivity to that, or there's a lot of urgency, there's a lot more moving pieces, and so that specific division has agents who are, you know, experts in helping that transaction or that client Get from point A to B and solve a lot of problems along the way how to move their cars, how to move their kids into new schools, you know everything that comes along with kind of that type of transaction, as opposed to someone just buying a house and selling a house. So are we going to see? Chris: Super Bowl ads anytime soon, if I can at homecom I could afford it. Jerry: No, that's the goal is. We're really good because of how the clients affiliate network has come into play for us. I don't know if we mentioned this before the call or on the call, but you know our corporate partner ended up buying the Christie's affiliate network, which is a network of independently owned brokerages around the world. I think we have 900 offices in 54 countries, about 35,000 agents, and the reason Christie's the auction house, christie's the family who's owned that brand and that company for two hundred years. They sold the app properties because of the technology and we've been for two years bringing a worldwide global powerhouse network together into the technology to share referrals and data and information, and so that's been one of the one of the real keys to some credibility for us. Very cool. Chris: I think you just launched something else, maybe in the last week. Developer services Tell us about that. Jerry: So so again, we all know there's developers out here but we're not sure there's developers out here building multifamily building, you know, developing neighborhoods, multi-use, and so for a brokerage our size to have the ability to provide those services was kind of hard. So we ended up meeting a group of people out of Austin who came from Storybill and for those listeners who've heard about Storybill, that's a multi-billion dollar developer who went, ran out of money last summer. But we ended up negotiating their entire creative team to come over to Christie, our Christie's, and create this development services division. So starting with the chief marketing officer all the way down to their website development team, their on-site sales, so we've got a team of about 12 of superstars and they really fell in love with the Christie's brand to kind of move from Storybill into our umbrella, to kind of push those services out. So that'll be a huge win for us. Chris: So, as you sit there running all this, what is it that kind of triggers for you that this is an opportunity that makes sense, because not everybody can see that, and so there are things you're looking for. How do you go about making that decision and taking on the risk? Jerry: Yeah, so risk is a little less scary in our business because most everybody who works for our brokerage is a 1099 contractor. So we really have a pretty lean machine when it comes to we're running this right now with about seven full-time employees, three offices, so you got overhead from an office space perspective, but really you're kind of it's kind of a lean business model, which is one of the things that attracted me to it. And then obviously you have to have the people to be able to promote these different levels of services. So I think the thing that's been lucky for us is one our relationship and our network in Dallas to help get it started. And then obviously the people we've been able to add at such a young infancy of a company have given us the credibility and the numbers are reflecting that. Chris: Gotcha. So before I don't want to wrap this up without talking a little bit just about you and your leadership style, let's talk. You know, how would you describe your leadership style? How do you think that's evolved over time based on the scars and other lessons learned? Jerry: You know you work at a law firm, so you know running a law firm is you got a lot of smart people, a lot of egos, a lot of staff, a lot of overhead, and so I learned a lot about you know the operational side of a business in that seat. And then I think my ownership style has probably changed completely since I left the law firm. I'm a lot more interested in the well-being of my employees, a lot more sensitive to the culture. I think. When you talk about people coming to work and going home, in my mindset now I want that to be a great experience. I kind of use the word experience a lot in the last couple of years for some reason, and I think it's just. My evolution is like everything in our lives is an experience and you can make it a good one or you can make it a bad one, and so I think my leadership style is I want every experience to be a good one. At the best I can make it. Obviously you're going to have your headaches and your issues pop up, but we have the music on in our offices every day. We have happy hours on Thursdays. We built bars in both of our offices in Dallas and Frisco, and then we're putting one in our location in Austin so that we can have happy hours with our agents and our clients and our prospects. We hold a lot of events and I think our interaction with the community and the philanthropic stuff that we're doing is really cool. So I think where I've gotten is you know I'm 54 now and you know I started that law firm at 28 and I had a whole different picture in my mind at 28, right Till 35, of what life was going to be for me, and now I'm kind of trying to enjoy it a lot more. Chris: I love that man. Happy for you. You know clearly you're on the right track and couldn't agree more about how important culture is to any company. And I think I've said similar to you. I think life is about experiences. I think they're only really down to learning experiences good experiences and learning experiences as though, rather than bad, just learn from them and don't repeat them. Jerry: Yeah exactly right. Chris: So let's turn a little bit on the personal side of things and not as serious. What was your first job? Jerry: First job, I was a clerk in a law firm. Chris: Okay. Jerry: I was working in law school. Okay, my first job in high school. Like most of us, I grew up in Missouri in a small town. I had a yard. You know service with my best friend and we had our lawn mowers in the back of his truck and we mowed yards. So that was probably my first experience as a having a job. There you go, and first is an entrepreneur was leaving a 250 person firm to start a law firm with two other guys and being 28 years old and that was pretty exciting. We had metal chairs and you know fold up conference room table and laid out of the movie. Chris: Love it. Well, I can relate to the a little bit to that, but definitely relate to the mowing yards. That's what buddy of mine and I did in high school. So you know good money then I guess. Okay, personal preference, tex-mex or barbecue? Well, that's a tough one Probably barbecue. All right. And if you could, take a 30 day sabbatical. Where would you go? What would you do? Jerry: You know, this is my two sons who are a senior and sophomore at University of Texas right now. They called a year ago about this time and said, dad, we're going to go to Japan. And I was like, okay, and they got on a plane, just the two of them went to Japan for three weeks and after hearing that I kind of want to do that. Chris: How cool is that. The two of us went and did it on their own. Jerry: They did it on their own, traveled around on trains and backpack and love it. They're experienced when they told the stories and went through the pictures. I mean it's just a really cool culture. I'd like to go experience that. Chris: Okay, jerry, I can't thank you enough for taking the time to come on. It's hard to believe that you know I don't. I might add the numbers we met at SMU and, as undergraduates, went to law school together, so we had a lot of years together. So it's great to see where you are today and what you're

In today's episode of Building Texas Business, we have a discussion with Devlin Lyles, President of Improving, about AI's evolving role in business. With his extensive tech leadership background, Devlin offers insightful perspectives on strategically integrating AI and shifting workforce mindsets. He explains how AI enhances personal productivity and compels a transition from manual tasks to advanced system management. Other notable topics include vendor resiliency, learning cultures, and personal growth's influence on business innovation. Wrapping up, Devlin shares his views on AI's future impact through emerging tools and personal assistants that boost productivity. Join us for this enriching exchange at the intersection of technology, leadership experience, and work-life harmony. SHOW HIGHLIGHTS Devlin discusses his transition from a young programmer to a leader in technology, emphasizing the role of AI in changing business strategies and operations.We explore the psychological aspect of AI adoption in businesses, addressing how the workforce adapts to the enhanced productivity and evolving roles that AI tools bring.Devlin makes an analogy between the historical rise of ATMs and their impact on bank tellers, to the current transition from manual task execution to strategic AI system management.We dissect common misconceptions in AI implementation, such as the belief that data must be perfectly curated and the pitfalls of building bespoke AI solutions from scratch.Devlin highlights the importance of focusing on problem-solving over the technology itself, encouraging companies to differentiate between truly valuable AI applications and those simply following trends.The conversation delves into vendor resiliency, with a focus on the legal protection offered by large companies like Microsoft for their AI services.We discuss the cultivation of a learning culture within Improving and the impact personal development has on managing technology and fostering business innovation.Devlin shares insights on the future of AI, such as the potential of a "cloud of things" and personal AI tools that can enhance daily productivity and support memory.We examine the transformative effect of AI on mundane tasks and its potential for significant impact on industries like logistics, supply chain, and manufacturing.Devlin and I reflect on the importance of hobbies and personal interests, such as golf and video games, for maintaining a balanced life while engaging with technological advancements. LINKSShow Notes Previous Episodes About BoyarMiller About Improving GUESTS Devlin LilesAbout Devlin TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Devlin Liles, President of Improving. Devlin is a leading expert in the application and use of AI for businesses. Devlin shares several helpful ideas relating to AI for businesses and believes that a business's readiness for AI is mostly psychological. Devlin, I want to thank you for taking time to join us today. Why don't we start by just telling us a little bit about yourself and your background and your role with improving Sure. Devlin: So Devlin Lyles. That seems like an odd thing to say. So I'm a technologist by kind of trade and training, so I started writing software when I was very young. I was 8 when I started programming. Chris: My dad got me into it. Devlin: I started my first software company when I was 16 in high school, building used car websites and that kind of thing Right at the kind of dot-com bubble expansion, and so decided I was going to not do that as a career. I was going to become a professional soccer player. That didn't work, so I kind of fell back into it as a hobby and kind of continued on that. Chris: Most programmers think of a professional soccer player as a dream, right yeah absolutely. Devlin: And so I ended up kind of falling back into my hobby as a career and then came up through kind of corporate IT at Tys Foods and then got into IT consulting and been doing that for the last 15 years. So that's a bit about me. Chris: Okay, and let's talk a little bit about improving where you serve as president. Tell us a little bit about what improving does in your role there, and then you know one of the things I really want to focus on, as you know, is things on most people's minds over the last 12-18 months is AI, so it's kind of couched in that context. Devlin: Sure. So my role with improving has kind of evolved over the years. So I actually started as a consultant delivering to our clients and I came in kind of two and a half three years in and so we have an equity share model. So I grew an equity share at improving and then took over as president here in Houston in 2017. My global role for improving is chief consulting officer, so I own client delivery, thought leadership, go-to-market and employee growth kind of that space, and so AI has been a big part of that conversation. Now the interesting thing is I get to live in a time machine somewhat in this space of AI has been a big part of that story for us for five to seven years. The world with chatGPT, kind of making it a part of the zeitgeist, is really catching up, and so it's cool to have these conversations and really talk about it, because a lot of our excitement and like oh, it's going to be utopia from 2017-2018, when there were some big strides being made forward and we get to kind of relive with everybody else. Chris: Interesting. Yeah, so you're living it for the second time. Devlin: Yeah, and it's. The thing is that, going through at the second time, you get somewhat of the hindsight in real time, which is interesting. Yeah, because we ended up helping a lot of customers apply some of these technologies, and technology always has this kind of pull to off the shelf right Systems. We used to pay tens of millions of dollars to build custom right. Think about CRM, a client contact management system, right Almost everybody has today. Chris: Yeah. Devlin: In the 1990s that was a multi tens of millions of dollar project for only the biggest companies to really have a unified customer relationship management system. And today I can go, put in a credit card and sign up for HubSpot or Salesforce or Dynamics right off the shelf. There's this pull to off the shelf that happens in technology, which leads to the middle market and small businesses being able to take advantage of what used to be incredibly expensive technology and that's actually what we're seeing in the AI space is it's driving from. I no longer need 100 million to approach this problem. I can actually apply this for 20 bucks a month, yeah. Chris: It's a great observation and yeah it's so true that it becomes, I guess better, efficient and more economical right Each time, I guess, as technology is with us and develops longer. That's a great kind of segue. I want to just kind of start with what are some of the key factors a business should consider when evaluating their readiness for adopting AI into the business. Devlin: Interesting For adopting AI into the business. Readiness is mostly psychological, because there are pieces in the business today that you can do better. We break this into kind of three parts when we talk to business leaders about this. One is how do you do your job much more effectively, right? What's the superhuman version of Chris? Right, there's AI tools to make that happen. Like, I'm a very well augmented human, I have tools that analyze my notes and make sure that I don't forget things. I've got tools that keep reminders and stuff on my personal network. Now, they're not spamming my friends with, like text messages to buy things, but it's going. Hey, you haven't talked to Bob In two months. Here's what you talked about the last time, so I can reach out to Bob. Hey, man, we haven't caught up. How's your wife doing? How's your son doing? Like those kind of things. That's the superhuman version of me, because I want to stay connected with my friends Just bad at it and so it covers that gap for me. So that's the first part is like that personal productivity side, which is mainly just a resistance to change. That you'd see in any technology adoption. It's psychological, organizational. People have tied their identity to the work they do and so changing that means like an existential crisis sometimes, right? Sure, think about a bank teller when the ATM came out. Right Now, we still employ a lot of bank tellers, but their jobs drastically changed. It's that moment where we're not going to get rid of a bunch of humans and have robots doing those jobs. What we're going to do is change the job of the human to guiding them, controlling and managing the robots. Chris: I think that's an important point to kind of reemphasize for the listeners, because I think so much that's out there. You see these news headlines and articles. I think people think robots are going to take over the world and I think the point you just made that that's not the case. But the role the human will play will adapt and change and while that sounds scary in a vacuum, if you actually take a moment and look back, that's what's happened throughout our evolution, especially in the industrial world and the business world in the United States. Right, jobs have evolved and changed over time, and I've heard you say this before, so this is nothing different. I want you to dig in a little deeper on that to help the listeners understand and maybe some historical points to compare to. So it makes it a little more tangible. Devlin: Absolutely so. Think about the way we did accounting before the PC was invented, right? So before the Apple II, we're talking in the 1970s, right Before computing devices were in everybody's office on everybody's desk, right? The way we did accounting was we managed the book and you wrote entries in and you had somebody checking the math and you had the you know 10 keys sitting there with the stream of numbers coming out of it. Right, and your accounting department was massively larger than it is today. To be able to accomplish that, it had to be right, which was a big overhead for a business to bear. Right, and you had these big accounting firms who would help with economies of scale or whatever. But like, that was really the ballgame, right, and it took a long time to like, close out the books and do tax audits and those kind of things. Now fast forward to the introduction of broad computing power. That sped up that process. We still have accountants, we still have bookkeepers. In most businesses you can close the books on a month in 10 days, 30 days if you've got a lot of moving parts. It's not. Hey, we just closed January. In June, a crude accounting became far more prevalent. We had less financial fraud overall, the stories about it happen more often, but we have less by volume and we're actually getting more insights out of that, because it's no longer just tracking all the pieces but going hey, did you notice last month you had increased expenditures in this area without the increased revenue tied to them? And so we get business insights on top of what we used to get was just transactions. We not only have lower accounting costs, but we then have better outcomes from it. Ai is going to do something similar From a business perspective. It's going to allow us to get. It's going to allow us to get better outcomes or lower our costs, to give us pricing power in the market. Because all technology is labor compression right, what a welder by hand used to take hours to do on the original factory floors and structural integrity of the original cars that we were rolling across an assembly line right. Think 1930s, 1940s. We now have robotic welders who can do in 15 or 30 seconds with far more precision, with less human injury. Right Now, the quality checking, the x-ray and all that is still reviewed by a human to make sure that weld is solid, and even that we're automating some of. But like that, evolution allowed us to produce stronger, faster, cheaper, safer cars. I think we're in that space where AI is largely going to be applied to the problems that are on the edges of humans do a lot of it, but we're not very good at it because, like our bookkeepers, there's that whole notion of human error. Chris: Yeah, not that there won't be computer error as well. Oh, yeah, and so you kind of that's where the check and balance comes in. Devlin: And the idea of technology is just going to solve everything. Hopefully, as a civilization we've moved past right the 1970s to today. I used the 1970s because that was kind of the broad evolution of available computing right To today. Every new technology has created new problems. A joke with our team that yesterday's solutions caused today's problems. And that's a good thing, because, one, we always have problem to solve and, two, we don't have yesterday's problems. So AI being introduced is going to create things like we now need to manage bias, the computer error, right. That's not something we do today very well. When we talk about humans, right, like how do you manage bias at scale? In a thousand person company is like all right, hr and an army of training, but with a computer you can actually try to start tilting at some of these things. Now, does that mean we're going to do it Well, we're going to do it better than we do today. Probably we're going to do it wrong and have to create tomorrow's problems. Chris: Yeah, I love that perspective. So what are some of the obstacles or pitfalls that you've seen that businesses encounter when they're trying to implement technology, and maybe even specifically, obviously specific to AI technology? Devlin: So there are two. One of them is perfectly valid and it's going to be some learning that we have to overcome, and I'm going to start with that one the belief that I have to spend a ton of time and money to correct my data right. Because, traditionally over the last 20 years you've had data engineering and data warehousing and data lakes and, like you, had to clean it and curate it and do all this work. That belief is a little antiquated, right. You can bring in raw data and then actually use a lot of these automated systems AI systems to clean it up with you so that the labor of that is way less scary. Now that's the pitfall most people fall into is all I got to get my data cleaned up before I get any value. And so that ends up raising the price tag of going after these technologies and ultimately keeps companies from getting some of that benefit because they don't want to pay that cost. And then the second pitfall is building your own. And what I mean by building your own is every business has unique challenges and they have their particular flavors, right? It's why, where SAP works for one, but you know, acumatica would be better for somebody else as an ERP system. But you don't have to reinvent the wheel and we keep doing that, right? I was just talking to a friend of mine, houston based company yesterday. 500 million in revenue and we're like talking about one of their AI initiatives. It wasted $6 million, didn't get anything out of it Wow. And we're talking about them like. You can do that with almost off the shelf tools everything you guys were trying to accomplish in about four months for about half a million and the difference is that they try to reinvent all the wheels. We don't need to do that, just like you're not going to build your own email system, right? You don't need to build your own baseline architecture for a large language model. Use one of the foundational ones that's off the shelf and you don't waste a lot of that time and effort. Chris: And that gets you that good way to get started. Devlin: Yeah, it may evolve from there, may evolve from there you may hit a problem where you do need to build your own. Chris: I kind of the rule of thumb I use is if your IT budget doesn't start with a, b, you're probably not building your own machine learning models, so that raises a good question, and that would be how can companies distinguish between an AI solution that actually is going to offer value real value versus just a company following the hype right and being misguided by the solution. Maybe they choose. Devlin: Fall in love with solving the problem, not the tools. So if let's take my company right, we spend a lot of time trying to solve one big problem. That big problem was knowledge. We grow the acquisition We've done 14 acquisitions in 14 years and we always create knowledge silos. And so when we bring in somebody, our current team doesn't know their stories for, like, selling their skill sets, what they're good at, those kind of things, and they don't know all of our stories. And so we had this big knowledge silo gap problem right Right Now. Ultimately, what that means is when a customer goes, hey, do you do X, regardless of what X is, they're going to say no because they don't know the stories. Now, how do I overcome this? I could do training, all right, but then I got to do that training every time we acquire a company and we're doing like we're aiming for two to four acquisitions a year, which means that's not a sustainable thing because of the labor cost. Right, it's like, okay, well, maybe I allow the silos to continue and just accept that's part and parcel of the business. It's possible. Chris: Possible, but you're a miss out on a ton of opportunity. Exactly. Devlin: Or we take all their stories, their case studies, their customer testimonials. We loaded them into what we call echo, which is a AI enabled chatbot, and it literally reads SharePoint. Right, it's not like it's not parsing data. There's no big data engineering effort. It's loading Word documents, PDFs, all this off SharePoint and they just chat with it and they go hey, have we done a deal with a major energy company? And it goes yes, here are the three, they're most relevant to you. And then it embeds the PDF and goes and here's where you find more details, so that the sales team on a sales call can have echo up on another window. Like, hey, have we ever done that? And it goes yes, in this office, here's the people to reach out to that level of knowledge. Access would have cost us thousands of hours of training, Right, and so it's that type of thing. Focus on the problem. Where do you have pain and where are you wasting hours? You don't actually care as a business owner unless you're selling AI as a product, Right. You don't actually care if it's an AI solution, an automation solution or just really clever software. You just want the problem solved, and by not falling in love with the tool, but falling in love with solving the problem. You focus on the right thing Because the value add, the ROI, is all about the problem, not about the tool. Chris: Look, that makes sense. It's easy to remember, for sure, and I mean I think you're right. Devlin: I think most business owners agree. Chris: I just need this problem solved effectively and efficiently. Devlin: By the way, you find these problems by going. What would it take for me to 5x my business today? The things that immediately popped to mind? You're like, oh well, this would break and this would break, and this would break and this would break. That's your list. For me, it's like well, I need five times as many account managers and my accounting staff's got to grow and I'd need better hiring. That's my list. Do I need five times as many account managers or do I need to help automate a lot of the account management and administrator to make them more effective? How do I upskill and get my recruiters leveraging AI, sorting and those kind of things to pull more people into the pipeline? That's my list. By simply going. What would it take to get bigger? Buy a big number. If 5x isn't scary enough, tack a zero on there. Chris: That definitely would be scary. Devlin: So let's, talk about. Chris: There's a lot that's been written and it's something we're doing here ourselves and that's with AI out there. What are best practices that businesses should be considering around policies for using, evaluating, adapting AI technology in the business, ai technology in the business. There's a lot that I think it's probably best practice. There should one. Yes, you should have a policy, but anything you can kind of guide the listeners on on those issues around a competent and well thought out AI policy. Devlin: So it's got a few pieces. Number one data privacy needs to be forefront in that conversation, primarily to protect your business and to protect your competitive advantage. So if your AI usage or acceptable usage policy doesn't include something about how data privacy should be evaluated, that's a big gap. Now your opinions about data privacy are gonna be your company's opinions, but those tools that are cheap and freely available today are largely cheap and freely available so that they can use your data to train a better tool. Is that okay with you? Some people will like yeah, it doesn't matter, and some people are like no, I absolutely can never allow this data out of my control, at which point you gotta choose different tools. So data privacy is number one. Chris: To that point. You may be aware of this and I recently wrote a little, brought it on it, but you had the New. York Times lawsuit saying that all trained on copyrighted material. Trained on copyrighted material, so that's kind of to me somewhat akin to data security and privacy, and that's a whole other issue about copywriting and licensing around information. So we haven't talked with that in a minute. Let's keep on the data or AI kind of policies. And so you said, most important thing, data privacy. What's next? Devlin: Second is vendor resiliency. Now, this is gonna sound a little tough to like the indie developers who are trying to launch their product, but last year in the US there were 6,000 plus tools launched on the AI Hype Wave. Now the punchline to that story is over 4,000 have already failed Already, had to either pivot or gone out of business. Vendor resiliency if you're gonna start pulling these into your business, evaluate the vendor. Are they gonna survive long enough to be valuable to you, or do you now have a broken tool that's no longer being accessible that you've woven into your business? That is gonna drive you towards some of the bigger vendors, the ones that have been around for a while, and, as it kind of should. If you're weaving it into your ops Now for experimentation, use the little players, Like that makes sense to me, but when you're talking about a broad policy, vendor resiliency is gonna be a big thing. The other side of vendor resiliency is how are they going to indemnify you from the inevitable lawsuits in this space? Right? Microsoft, Google, Amazon have all said if you're using our tools inside the license agreement, there's indemnity. Right, that's a pretty big shield, right? Microsoft actually said that they would. If you're using their AI services. They would protect you and defend and pay a settlement if one ends up happening for copyright infringement. So, like the Times article thing won't hit the consumers of those AI tools. Microsoft has stood in front of it and said we're good, that's a big shield. Now if you're a small to mid-market software player, can you put up a shield right Right To your customers? As a customer, I need to start caring about this. And then, lastly, in that policy, some centralized knowledge repository, some centralized store, Because what we found is everybody's play. Everybody's trying, experimenting using these tools. They're wiring in their favorite one. I do this almost on a daily basis. I kick out unapproved tools from meetings that somebody like wired up like a meeting transcriber, listener, bot, and I kick them out of meetings and send a note to whoever did it. I'm like just to be clear not approved. Chris: Right. Devlin: Here's the approved one. Don't use that one and everybody's just so. Expense control and some kind of central review. It doesn't have to be heavy handed. Ours is literally just a let us know when you're experimenting so we can check in on the experiment because it might be something we want to share. Yeah, right, but some kind of central right. Yeah, because a lot of these are SaaS based. A lot of them are out, kind of in the ethos of like knowledge tools, like note taking tools that I use. There would be no way for improving to know that its IP is in that tool if I didn't tell them. And so you've got to. You've got to have kind of a reporting and honor system for the employees to tell you where your data and vendors live. Chris: So one of the things that I know that improving and the leadership and improving which includes you. You've done a great job of building a culture and a company that embraces technology, embraces innovation. What can you share about that experience and that journey at improving to maybe help others understand, you know how they may be able to do the same thing. Devlin: Absolutely so. I have the oddity of looking at this kind of if I look back down the mountain, it seems like it's a long way, but all I can see is looking up the mountain and it still seems insurmountable. So I guess first would be the journey doesn't end. Don't let the size of the mountain scare you, Just take a step Right. For us we have a lot of like growth and planning kind of baked into our employee management model. We call it PATH, that's our employee growth systems, and part of that is maintaining your marketable job skills, literally what we call hard skills right, the marketability of a person to maintain. Because there's this kind of natural degradation If I stop learning, I become less and less valuable because the market moves ahead of me. Right, and so, recognizing that truth and going okay, what are you doing this quarter to grow with technologies? Then we go okay, what new tech are you learning or playing with or experimenting with this quarter? What we have found is, as long as there's a vehicle for them to share that back to the company and make an impact, people are highly engaged If it is just playing over here and then they have to come back over here and do the same thing that they've been doing for 15 years less engagement, and so creating the vehicle in which their experiments can have a long lasting impact on the business created a lot of engagement. And then the other side of it is we recognized a while ago that if you're not growing, you're dying as a business, and that's true for all of our people. It's what we call the plateau of slow death. Like you've just decided to coast that will have an accelerating decline in your value to the business. How do we help people stay on a plateau of slow growth where they're still incrementally investing? Sure, Now for us that's five hours a week because we're a technology company, it moves quick. Right, that might not need to be five hours a week for somebody in manufacturing, distribution etc. But probably an hour a week just reading. Like there's the Wall Street Journal podcast, there's this podcast that's phenomenal for staying abreast of what's happening. Like consume an hour a week of new information for you and your team, and you'd be amazed at what doing that week after week will do to the business. Like it just accelerates. And it sounds very simple. It was one of the first steps we took. Chris: You know that the dedication to being intentional about the learning and self improvement on a weekly basis, I think is amazing that any business right I believe so I am amazed how many business owners and friends I have that work in businesses and they're so busy that they're too busy to survive. I've said here in this firm before and you have to repeat it, and we're all can be victim of it and guilty of it, but busy can't be an excuse. I'm too busy to do X when X is strategic work on how to improve the company or yourself. Busy can't be an excuse, Because if it is, then nothing will ever get done because you always feel too busy right, and so I pay for a lot of tools. Devlin: I'm a well augmented human right. One of those tools is summaries of like business articles and books and all that. And so while I was sitting here waiting for this conversation, I was reading one of those. And it's that overarching approach of like how am I getting value out of those moments, like when a meeting wraps up early, do you sigh in relief and like, walk out and waste 10 minutes? Maybe that's good recovery and you need that for emotional balance. Okay, but is it intentional? Did you go hey, you know what I need emotional balance and chose that. Or did you go? I got 10 minutes. I'm going to read that book summary, or I'm going to read an article, or I'm going to check out what's on HPJ innovation stuff, like those questions. Right, just making the consumption of data an option mentally for all this. This is why I say like, a lot of our barriers are psychological, because the technology is actually not scary Once you start exploring it. It's only scary when it's like Skynet and Terminator from the movies, and so then it's scary and that makes sense. Chris: But let's get this right, let's bring this full circle from the beginning of the conversation. Right what you're talking about and recommending people. Be intentional about that. Self learning, that discipline around self learning and improvement, is really going to be essential as new technologies come online, because we you said earlier right Technology is going to force the worker to adapt and the only way you can adapt is by continuing to learn. So, to be successful alongside technology like AI, it's going to be essential. Devlin: This is actually. I'm a future optimist, and what I mean by that is I think that technology elevates humanity right, Very similar to capitalism. Elevating humanity it has made life better. It's increased longevity, it's done a lot of things. Now, that's not to say technology is perfect and we live in utopia Like, but it is. Technology elevates us, but it makes us do the harder version of life right. Technology allows us to play life on hard mode. So, like social media, I can doom scroll forever, which means I have to own the choice. Right Before that, technology enabled me to stay connected with all my friends. I didn't have to make that choice Right. Right, ai, by taking a lot of the complexity, a lot of the time consuming tasks off my plate, means that all that's left are the difficult tasks, it's the hard mode tasks, and getting really good at the hard mode tasks is the value creation in the future. It's hey, I got to go write this software. The writing of the software, the actual typing, is going to get much easier, just like accounting, just like bookkeeping, just like going through and like automatic scanning of discovery documents in the legal space. Sure, used to be very time consuming Now is being accelerated by AI and automation. So now then, the hard part is understanding what software I need to write and why, understanding what those transactions mean to the business and why, understanding what, in that discovery, is pertinent, important and relevant to the story I'm telling. Right, like all the hard tasks, get left the difficult task, because those are the ones AI is really bad at Right. Chris: Basically for now. So before we wrap this up, I definitely want to ask you your thoughts on regulation and what you think Congress should or shouldn't do around putting some regulations in the AI space. Devlin: So AI regulation is coming, like that's going to be the case. Any sufficiently developed technology ends up getting regulated at some point. Should do. Transparency to empower a educated consumer is phenomenal Like stating if you've baked an ethical bias or a political or religious bias into a model so that the people who are using it can choose, right, that makes sense. Chris: Realize that the output is tilted in some way. Devlin: Right, that's great to know as a consumer. Right, and luckily that's where a lot of the early regulations in this space are tilting. The shouldn't do side of it is dangerously close to that, which is then publish how you built the model to prove that statement, which is a lot like saying give everybody your proprietary trade secrets. Right, there's a reason that open AI stopped publishing a lot of their and here's exactly how we built it, and that's because a whole bunch of other companies took that research that they poured tens of billions of dollars into and created additional models that were almost identical in performance. Right Now they're different and they were developed by different teams and all that. But, like, there's a reason it went from we have one major version of this to we now have 15 publicly available commercial models. Right, that gets dangerous when you start regulating people to destroying their business, and so that's the line I'm hoping we walk the stifled innovation that happens on that second one we're seeing in the EU when they passed the and here's all the restrictions of AI you have to publish your training set and your methodology and all this stuff. It's like awesome, and there was a mass exodus of AI companies from that area. Like yeah, they're like nope, we are not going to, not going to participate if you require us to kill ourselves. Chris: Right. And so we're going to invest time and money in something that they can't then have a return on. Devlin: I mean, if you look at the open AI side of it, this is tens of billions of dollars in decades of research and development and work to make this happen. Imagine if you then had a law that said and you have to enable your competitor, who doesn't have that cost, to then rapidly get to the same point for a 10th Right, and so there's a balance between you want to democratize some of it, you've got to balance the investment side of it, and if you go too far which I believe personal belief that the EU did it just causes a significant drop in investment. Chris: So you know, kind of with that in mind, where do you kind of foresee the evolution of AI over the next five to 10 years? Devlin: We have largely looked at AI as the Jetsons robot or terminator, where it's this one thing that is omnipowerful, omnikable, right, omnipresent. I don't believe that's where we're going. The best minds in this space, of which I get to talk to I am not one of, I beg the difference. Go ahead. They would tell you that it will be a cloud of things like imagine that you're surrounded by Chris's swarm of empowering bots. You've got a bot that helps you manage your schedule. You've got a bot that helps you take notes from a meeting without having to like jot them down, and all of these save you 10, 15, 20 minutes an hour and a half a day. That means somehow Chris is doing 50 hours of work in a eight hour day because you've got this super human capability that's empowered by all of these things. That's where we're headed. I just saw I was playing around with a toolkit that there's been a lot of hype over the last few weeks is the video generator, pica. It's like mid journey or Dolly or stable diffusion for images, but does videos. Chris: Okay. Devlin: Like cinematographic grade quality. The problem is you have to also get really good at understanding camera movements and placement and blocking and all these things that directors have known for decades, and so it's not built for this average consumer. It's built for making folks with that knowledge massively more successful. Right, being able to go and here's a rough of my movie idea. Right. Here's a short of my movie idea for $1,000, not 70. Chris: Right. Devlin: Right, that will accelerate the creative space in movie making, but it's not going to get rid of a need for that knowledge base. Same thing's true with geophysics and well-planning and the energy space. How do we conceptualize all of this and make a human significantly more powerful? So this team that includes a drilling engineer, a geophysicist and all this can plan wells and make financial analysis, and all that in days, not years. Right, that acceleration is where we're going to see it. We're going to see it through these kind of micro enhancements. I carry several of them with me. I've got a note-taking system that maps all of the connected topics that I've been researching and digging into and it's wicked, fun and crazy. But I built a chat system on it that runs on my laptop and so I can ask questions on my notes. I'm like, hey, in my last Vistage meeting there was a speaker who talked about this what were the key takeaways? And it goes. Here's the notes. Here are the key takeaways. It's that kind of empowerment, because human memory is fallible, and so how many of us have wished like I wish I had a better memory. Chris: It doesn't have to live in my head. Yeah, Kind of like what it. There was something five minutes ago I said I needed to do and now I can't remember what it is. How often does that happen? Devlin: I carry around to do this and to do this integrates with it, and so at the end of the day, right before I typically leave the office, I get a reminder set from the automation I hooked up to it. Now it looks at my calendar and goes where's the right point to remind a Devlin to do those things before the end of the day. So like folks literally like I don't know how you do this, I'm like I don't, I'm very well augmented that yeah, you said that more than once. Chris: I know you mean it very well augmented. So I was going to ask you what some of your favorite AI tools are. I think you've shared them just now, but maybe just a quick summary of maybe three or four of your favorite tools for the listeners who were trying to frantically take notes. Devlin: So I for network management. So my personal network management I use clayearth. You literally go to. Clayearth is the URL. I think it's phenomenal and I use that to manage my network. It does not spam or reach out to, it just helps me reach out and stay connected the kind of in my business version of that one is dynamics. We use sales copilot for dynamics. Einstein in Salesforce does the same thing. Chris: So in the business. Devlin: We use a different one because

In today's episode of Building Texas Business, fashion entrepreneur Elaine Turner is joining us to talk about her journey of launching Edit by Elaine Turner, her luxury boutique that emphasizes mindful consumption. She shares her experiences navigating the challenging retail industry and lessons from her previous ventures. Elaine gives advice on balancing your brand identity and adapting to changing customer expectations. Her stories highlight the difficulties of expanding business plans and finding community resonance. She also shares her views on building teams that align with the brand spirit, which can be valuable for entrepreneurs. Toward the end of the discussion, Elaine reflects on her personal experiences of living in Houston and Santa Fe. Elaine's gratitude for the hard-won lessons makes her a role model for navigating the industry's turbulence with empathy, vision, and agility. SHOW HIGHLIGHTS Elaine shares her experience with Edit by Elaine Turner, a Houston boutique offering curated European luxury brands, emphasizing mindful consumption and the art of editing in fashion.We discuss Elaine's background in entrepreneurship within her family, her early interest in fashion, and the influence of her parents and mentors on her career.Elaine describes the lessons learned from launching a luxury line that failed, the importance of understanding brand identity, and the value of knowing your core customer base.Chris touches on the challenge of balancing novelty with accessibility in fashion and the pitfalls of expanding too quickly.We explore the importance of community focus in retail and the critical role of hiring team members who align with the brand's culture.Elaine recounts the transition from brick-and-mortar to digital commerce, noting the surprising speed of change and the recent shift back to a balance between digital and physical storefronts.Chris and Elaine discuss agile leadership, the importance of empathy, and the necessity of adapting to the needs of the workforce in the retail industry.Elaine reflects on personal transformation, the process of starting a second business, and the evolution of relationships during life's challenging phases.We chat about Elaine's personal side, including her preference for Tex-Mex over barbecue and her dream retreat to Santa Fe.Elaine shares her gratitude and excitement for her new venture, Edit by Elaine Turner, and the journey of crafting a life filled with purpose and passion. LINKSShow Notes Previous Episodes About BoyarMiller About Edit by Elaine Turner GUESTS Elaine TurnerAbout Elaine TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Elaine Turner, founder of Edit by Elaine Turner and Elaine Turner Designs. Elaine's entrepreneurial passion centers around fashion and lifestyle brands, but her true passions are serving her community and empowering and supporting women through education, connection and philanthropy. Alright, let's get going. I cannot wait for this episode. I'm so excited to have Elaine Turner here. Elaine, thanks for joining me today. Elaine: I love being here. Thanks for having me. Chris: One of the things I love about you is that you are a serial entrepreneur, and I think those are my favorite people to talk to. Let's talk about what you're doing today with Edit by Elaine Turner. Tell us what that is. Elaine: I just opened a new store concept here in Houston, in Tanglewood, and the store is called Edit by Elaine Turner. Really, the whole idea of the store was concepted from a place of renewal and redemption, because we can talk about my story beforehand. But it was all about this idea of curating hard to find European luxury, upscale brands for the Houston clientele who I felt like the art of discovery, like what else? She goes to Tutsis and she goes to Neemans and Saks and Nordstroms and we're lucky we live in this incredible cosmopolitan city full of all the options. But I wanted to offer her something that maybe wasn't so out there and so ubiquitous. Edit was really born from the art of creation. I will be your editor and I will go out and find these really unique pieces for you to engage in and add to your wardrobe. Chris: That's great. Elaine: There's actually some real meaning behind the word edit, then right, yes, so edit is about not only let me edit for you and find those unique, hard to find pieces, but it's also about, for me personally, sort of leaning into this idea of, as women and as consumers, we only ultimately need what's essential. And I think, as we age and we become more mindful about what we put on our bodies, what we put in our bodies, that it's not always about quantity, right, we don't have to buy, like you know, every trend that's ever offered to us. Like we can be more thoughtful about what we choose. And so it's about letting go of the unnecessary and really retaining what's of value to you, and so edit is supposed to be all about that. Like I'm saying, this is what's of quality to you. Chris: I love that. I love the thought behind it. Thank you, because you're right, you can go into any store and get stuff, so this is one. This is an episode where I'm like there's so many different directions to go with you, but I think you're right. You talked about renewal and redemption. You have an amazing story because this is your second go at it. Elaine: And the first was successful. Chris: Sometimes people second goes coming out of failure. Let's talk about your passion and what got you into the kind of the fashion industry. Talk a little bit about that first venture. I think in doing that I encourage you to start what was called a Lane Turner or Lane Turner designs back in what, 1999 to 2000. Yeah, exactly 20, almost 24 years ago. A while ago, chris, you must have been an infant. Elaine: I was 29 or 30 when I started a Lane Turner designs and really my story really comes from an origin story of entrepreneurship. That's the number one thing. I was born in a family of entrepreneurs and I'm kind of a believer that entrepreneurship is sort of passed on through DNA. I think you've got to be a little left of center to engage in being an entrepreneur, because it's high risk, you kind of, it's lonely. You know you're the one kind of putting yourself out there thinking of these ideas and visions and you're usually entrepreneurs are trying to solve problems, so they're thinking, hey, what's not out there that could be out there? And I watched both of my parents start companies and both of my siblings also at one time had their own companies, and so I feel like for me it was sort of osmosis. You know, I was very much inspired by my parents. They were my mentors growing up and so I always knew when I went to school, went to UT and I majored in advertising, marketing, but I always knew I wanted to do something in fashion because my mother always encouraged. You know, this is how you express yourself. And it was always done from a more thoughtful, deep way and I was like I'm not saying, not just fashion, you know, because of materialism. But she would literally watch me walk downstairs and say, oh, you have a gift. Like you should really think about something in fashion, Like this is the art of communication. Chris: She wasn't one of those moms that looked at you and goes you're not wearing that. Elaine: Yeah Well, maybe a couple of times. You know it's an evolution, Chris. I'm not saying that I came out of the gate putting all the outfits together, right, but she always encouraged me on a much deeper level that I think this is something that you should offer the world. You know, Even in my teens and my twenties I knew I wanted to do something in fashion, and so I went to UT and then I immediately called a mentor of mine. Joanne Burnett and said I really want to do something in the fashion industry. And she said, hey, there's this company out of Dallas you should talk to and they might give you kind of an assistant job in the design area or whatever. And so it just was a super, you know, very organic growth for me. Back when I was at UT there was no fashion merchandising program, so that was in it. So I had to learn everything in the job, you know, on the job, and have like mentors train me Right, but always knowing I wanted to start my own thing. Okay, and that was always there. It didn't really happen Like some people say. That sort of happened by happenstance. For me it was pretty intentional that I knew in my twenties I wanted to learn everything and then I wanted to start my own business. Chris: So I hear that story a lot, but you also hear the ones where, like you said, there's a problem to solve and someone says, okay, I'll do this. Let's talk about taking you back to that 28 to 29 year old self when you said, okay, now it's time. Some people are scared to take that step. Let's talk about and educate the audience. What was it like for you to get to the point where you're ready to take this risk? What was that like? What did you learn from that experience? Elaine: Yeah, I mean it's a great question. I think I knew when I was 29, I had learned a lot in New York. I went from Dallas to New York and worked for several companies in New York and I started recognizing in the market that accessories were really taking a much bigger, I would say, segment of the market. So, like the big designers at the time, like Donna Karen and Ralph Lauren and all that they were starting to do these handbag collections or accessory collections right when they were really starting to kind of form a look and a name for themselves in that area. And Kate Spade was just coming on the scene and I thought, oh, there's something there that I think that there was a void that I could fill like an accessible price point, and I really focused on novelty applications. So I was really known for this resort wear look where I did Raffia rat bags and tortoise shell handles and I did a lot of specialty leathers like Python leather leathers with multi-colored. So a lot of novelty right. Chris: From. Elaine: Texas, of color and bold, and so I started thinking to myself well, what if I did a small handbag collection and put it out in the market? And I really thought about my price point because I wanted it to be accessible luxury price point and started to see if I could sell my wares. You know, and I had just moved back from New York to Houston and my first literally I have this memory my first account was walking into Titsies and Mickey Rosemary and meeting with me in private and saying I'll carry all your collection on consignment for the first six months and if it does well, then I'll start buying it. Wow. So I said it's a deal and that was how I started. And the bags were made in Brooklyn and he really mentored me on price and segmentation of the market and who you're catering to and the look and feel of the bags, and he was a huge part of why the company grew, because he really helped me understand, I think, from a little bit more of a mass perspective, how to grow the business and not keep it so boutique, right, Right. Chris: How to be able to scale to it. Elaine: Exactly, and then I was able to get into Neiman Sax and Nordstrom and started growing a really large business from there. Chris: So okay, as you got this fashion mind and creative mind, I mean, what were some of the things that you had to learn to grow that business to scale? Let's talk about that. I mean, and if you think about something like a failure man that went horrible, it went horribly wrong but by gosh, I'm glad it did because I learned so much. Elaine: Many failures and challenges and opportunities along the way. But I mean, I think that what I learned is the idea was really about offering sort of this accessible lady like elegant accessory line to women who I felt like that wasn't really happening like. As much as I loved Kate's bag, it was very basic at the time. It was like nylon little shopper bags, right. Chris: No offense Kate. Elaine: We love Kate, but now it's very novelty. So we all evolved, but at that time, yeah at that time it was just this really simple kind of utilitarian shopper bag. So I felt like I had a niche and like let's add novelty into the handbag space and the handbags were really becoming this sort of individualistic part of fashion. It's like, you know, wear a dark suit but what's the special handbag that just pops off? You Like what makes it almost that final touch. And so, for me, the challenges. I think what I learned is okay how do I retain the novelty and the specialty part, retain the price, keep the price where it needs to be, but also have a product that is appealing to a lot of women? Because I was growing scale, I mean I was like I want to open stores, I want to be in wholesale. I mean I had my own New York showroom and so some of the challenges, like an example was I decided to spin off and do a real high end more I don't know coutures, not the right line, but a real high end luxury line in Italy, but to keep my more accessible. So, like the bags were in from like 195 to 500. Chris: That was kind of where I saw it. Elaine: Well then I thought let me go off and try these $1,000 bags. Well, it ended up being a huge flop, which is okay. But I realized that by doing that I grew too fast and I was trying to appeal to a different customer too quickly before the brand had really penetrated and distributed distribution enough in those places. So it was like I jumped the gun and then I don't think I had exhausted the price point that I was in. So that was one failure or challenge that I kind of pulled back on and thought well, I think I did that too soon because you know it's a big investment, you're investing in real Python lovers and you're doing it in Italy and these little family and factories. But you learn from it. You know. You learn like no, go back to your core, don't get away from it so quickly. But you know. Chris: That's to me, what's so fascinating is getting back, you know, staying and knowing your core, because the story you just told I've heard told in many different industries, right, so it is applicable across industries. So, you kind of confused the identity of the company. Elaine: Yes, yes, that's exactly right. Chris: And you have to be careful as an entrepreneur. Be careful not to do that and if you're going to make sure you know. I think it's a delicate thing to do and it's interesting that it can happen in any industry. So right in the handbag and fashion, you can dilute that core customer who's so loyal to you. Elaine: And I think what happens with entrepreneurs that we all fall a little bit victim to and I think speaking someone might relate to this is that you're constantly thinking of the next thing because that's just you're always feeling that void will like that. I don't see enough of that. At that price point let's make it ourselves, and sometimes those ideas and that vision can get ahead of you, and then you have to be able to pivot and save yourself. Wait a minute, I think I jumped too quickly because entrepreneurism is really about creation or vision and filling the void and solving the. But sometimes you can almost go so far that you go too fast. Chris: How did you regulate yourself in? That was it? Was it surrounding yourself with, with the team? Was it just learning from trial and error? You go and I need to learn what I need to pump the brakes. Elaine: I mean it's a combination. I was lucky. I've been very blessed. My husband's always been a deep, strong partner to me and he helped me with. At first he didn't really get involved. He ended up full-time working with me in the business about after seven years of me being in business and then he started really helping me. But he was always a more cautious one to be like let's just, let's really exhaust what we're doing right now, but then seemed to have a really deep understanding of timing, of like. For example, I got into the shoe business and I was really nervous about that after what happened with the high-end collection and the shoe business did incredible for me and in fact I think if you talk to women today, that was really the category that they were the most wedded to so it, but it was the timing. I had enough, you know. I had enough brand awareness. I had multiple stores at the time. She was the loyalty and also the trust was built up at that time, whereas when I jumped to the real high-end bags I don't think I was quite there yet. So a lot of things are timing. You know when to be. You know you have to be really thoughtful about when you do big expansion moves, and I think the shoes happened at just the right time that she was ready for that. Chris: Yeah, a lot of it is timing right. Let's go back kind of the high-end handbag. So another thing that's hard for people, especially entrepreneurs, to do is to kind of admit that failure. How hard and what and what good advice would you give to say you got to know when, and it's okay, cut it and say this just wasn't, this didn't work, whatever it may be. Elaine: I think it's some one of the most important things you can do being a business owner and I mean honestly just being in business at a certain level is to know when to look in the mirror, be accountable and look at it not as a failure but as a huge opportunity for growth. And also, when that stuff happens and it's happened to me multiple times it also models for the people before you that it's okay. It's okay to go. You know this worked, this didn't, so how do we get out of this in the most thoughtful way? Also, the less you know the way, economically that doesn't hurt us as badly, but it having that courage to know when to sell, when to get out of a lease, when to liquidate a product that didn't sell. You know, those are all just parts of being in business, and I think what happens with people who end up really struggling as their egos become so involved and the pride takes over that they aren't willing to take a step back and say this doesn't mean I failed. This means that I have an opportunity to change something that didn't go as expected. Yeah, and that's also personal, like forget business how about marriages and friendships and relationships and how we navigate the earth. I mean, sometimes we just gotta look in the mirror and say we gotta redefine this yeah and that's actually a beautiful thing, and it's to me like winning in life. It's not failure. Chris: I agree. I mean, I think it's a mindset, and so I say all the time no bad experiences, just learning experiences that's it. Elaine: I'm inspired. Yes, that's it. I think we you could have answered the question okay so you have this going. Chris: You expand the shoes, you have stores that took people. So how did you build a team and how would you, when you look back, how? How would you verbalize and describe the culture that you built at a length turn? That's such a nice. Elaine: I love. Well, I loved all of that and I especially loved the culture and the brick and mortar aspect. I think that we spent so much time and energy focusing on the community and we had we're I like to say we were one of the first retailers in Texas to build a charity platform within our brick and mortar where we had an event-based charity platform. So each month we would hold several events and team up with charities and sort of have a win situation where we donate a certain amount of proceeds and then they get to experience Elaine Turner and what we're making and creating. And you know and today you see it across the board, with Tori Burch as a women's foundation and Kendra Scott has a huge event platform. But it was something that the brick and mortar stores were really an integrated, intimate experience with the community and it meant that's probably one of the biggest things that I take away that I'm the most proud of, is what I created within those stores. I really created a place for women to connect one with one another, to educate one another, to inspire one another and to give back to the community. Chris: Yeah, so it's beautiful, but it takes more than you if it's going to transcend right into the different brick and mortar locations because you can't be everywhere all the same time and I didn't know so what were some of the? Things that you did as you hired, whether it was store managers or you know, whatever your involvement was, to make sure that the people you were hiring connected with that vision and that passion. Elaine: It's. You know, hiring your team is the most foundational, essential part of how you win as an entrepreneur and it's not easy and sometimes even within that you make mistakes and vice-over I'm talking like that person might make a mistake that they even chose to come work for me. And then I realize that when the right fit on our side, it's very reciprocal. There's no one that's above anybody else, it's just sometimes the fit's not there. But we had become so well versed in who we were culturally that we were all about you know intimate experience. Giving back fun. Luxury was one of our big. We're all about having fun, it's not. We don't take ourselves too seriously. You don't have to wait in some line where there's a you know bouncer. You don't have to act like we're not too exclusive for you. We are an enveloping culture. And so it became where we actually and I'm saying at the beginning there were some probably bumpy roads, especially as we started getting into retail, but as we really started building this store footprint across Texas, we got pretty good at those managers and had really low turnover. You know where we really built and we had a store director who had come from Michael Kors who really understood how to build that team culture. But I mean, some of my most prized employees at the time were the people who are running those stores. They just got it, you know, and then sometimes it didn't, and that's okay too. Chris: It is. I mean, you're hiring is an imperfect process, right, and I think, but if you have a core identity that you know and you'll know when there's a fit and when there's not, exactly. And then the key is if it's not a fit to move fast. Elaine: Yeah, and they've all gone on. I mean it's just interesting you've asked me this question because we're going pretty personal. But you know, as I was launching edit, I started looking for some of my older leaders that I loved and they, I mean I look at my head and I'm like, oh, they're running. One's running Carolina Herrera here in Houston. Another one's store, director of Kate Spade, another that Jim's like well, we, you know, help to give them that foundation and that's awesome. But I mean nothing makes me feel better about myself to see some of those women soar in the retail space like a proud parent right yeah, and beautiful people. Chris: So that's good, that's so good. So as you ran the company, I know you got to a point where you decided it was kind of time to put things down. Yes, and you the original a late turn. You closed over a period of time. That had to be a pretty difficult decision, an emotional decision, because it was born out of passion right, it was very people come to those, you know, face those roadblocks or those forks in the road. You know how did you go about kind of handling that and then coming to grips that it was okay. Elaine: I mean, I think, just like anything, it's been a journey to get to the acceptance, or for me to find that acceptance, around that initial a lane turner designs journey. But there was a lot of things it wasn't an overnight thing that were leading up to me realizing that I needed to hit button in my life. And just like anything else, chris, it's never just usually one thing, it's usually a series of things. You know, I mean it's kind of morbid, but they always say, like a plane crash doesn't just happen with one wheel falling off, it's usually a series of things and at the time you know that's been almost six years retail had really shifted dramatically from more of a brick and mortar clientele experience to kind of the Amazon age being very real, which is all about ease and convenience, right and so, and then I'm always very transparent and vulnerable about my business. The capital was really put into the brick and mortar experience and I was behind on the digital aspects. I was, and that you know. That's just. I can totally admit that today. It wasn't that I didn't have it, but I didn't have it near like some of my competitors had it right and so I had to really come to grips with that reality that the store traffic had started to dwindle and women were really calling for the digital experience and saying, look, I don't want to find parking at your store, I don't want to do that anymore. I'm really moving into this idea that the package has dropped, I can return it and put a sticker on it, and so my husband and I were just sort of playing catch up. And then, alongside that challenge, which was immense, I personally have an autistic daughter who was also reaching teen tween age and starting to really have a deep awareness of her differences and struggling mental health wise, so I needed to find out how I could intervene and get her in a better place. And then both of my parents were diagnosed with terminal illnesses at the same time oh, wow and that's when I said okay, god, like I hear you, I get you and I'm not a failure. I need to change my life and I have, and I took those years to caretake and get people what they needed, because, even though I'm a passionate business person, I am a very driven, very ambitious. I am also just as passionate and just as I mean it's my whole life or my is my family, yeah, and so I knew that at that time I couldn't just be everything I I couldn't do it all at the same time. I realized I couldn't be and do it all at the same time, but that was okay that you know it's a beautiful story. Chris: I know there those things aren't fun to go through. I'm so sorry here, but they're seasons in life, right, and I think you know one of the. There's always lessons in every story and there's a lesson in what you just said to me and that is as passionate as you are about your business keep your priorities straight yeah, family always comes first, yeah and you're right, it didn't define who you were to shut the store down right. So that's you know it's a beautiful thing and I'm sure it was hard to go through yeah, I want to take you back to something you said because I think there is some learning in and I always have a question for you because you said look, I realized I was behind in the digital right. I was in the brick and mortar. When you look back at that, was that a function of you just truly believed brick and mortar was the way to go and this digital was a flash in the pan? Or do you think you miscalculated the digital presence and how it was really going to affect the industry and change the industry? Elaine: It was not at all discounting digital. I had a very built up website, three full-time employees who worked on my end, so it was honoring that digital was real. I had no idea how quickly the digital consumer you know landscape would shift. It was one of the most massive market shifts, I think if you've studied it. Chris: Yeah. Elaine: That's ever happened. It happened so fast. I mean, the Amazon age is real. It just took over business. It was just all of a sudden you're buying on this interface and you're not walking into stores as much and it was happened so fast. I remember my husband was like we've got to hire more digital people when we started hiring him. But as quickly as we'd hire him, it was just like our competitors were starting to offer, you know, free returns, all this stuff, like you will just come pick it up for you. Like it was, just became like. It was literally the way people were doing business and I just had no idea how quickly. I thought it would just seamlessly fit into the brick and mortar footprint. Yeah, it took over. I mean, women were like, well, just ship it to me, even just living. Like you live right here, I live over in Tanglewood, like you're you know you're saying no, you need to ship it to me, like even today I saw. Chris: Sitting at your yeah, you know, in your kitchen. I'm not coming, right, I'm not coming yet. I don't think you're dressed up, I'm not. So In hour two you're returning. Elaine: Yeah, so even our Houston base, which is our Houston Dallas our largest they were ordering on my website online and not coming in anymore, but I still wasn't able to provide the type of service that I think they were used to, even online. I was struggling to keep up with that, but what's interesting is how things come around in life, is I think there's been a real balance now? I think that's a little bit over. I think digital is still a value and I know you ordered lots of Christmas presents online. Chris: Almost all. Elaine: Right, but I still think brick and mortar now has eased back into people wanting more human interaction and tangible experience of product, especially luxury product. Yeah, I think people still want that. Chris: That's. What is funny is that I tell people the story. They've seen it in Holly's, my two girls. They create, like these, powerpoint presentations with pictures of their Christmas list with hyperlinks to the website. So yes, I did a lot of all of them. Elaine: I love hyperlinks to the website, but the higher end things. Chris: I didn't have to go to the store for a few things. So there you go. I'm a living example of what you just said. Elaine: Okay, Good, because there is a place for brick and mortar and for human interaction and human connection and educating them on product and servicing them. Tell me where you're going, tell me about you know what you need, and I think that's all finding much more of a balance now than it was six years ago. Chris: Yeah, yeah so let's talk a little bit about you as a leader. How would you define your leadership style and how did you try to show up? You know, in that 20-something year you were running a line Turner as a leader. Elaine: I think my biggest gift as a leader is I think I'm a very empathic person. I so I'm very committed to putting myself in somebody else's shoes and I think that's helped me especially lead women, because my 99% of my employees were women, and women hold a very complex position in society because of the roles and responsibilities that we have and the opportunities that we now have and the dual income families that we're creating, and so women are holding a lot of hats and are trying to be in due for a lot of people in their life. I like to call it the impossible paradigm Right. So I think that I held space for that and I think that when I look back as a leader, I hopefully felt like most of the people who work for me knew that they could pretty much come in and be vulnerable with me about what they could and could not do within the role that they had at my company. I also think that I'm a. I think I have vision. I don't want to like be arrogant, so I'm a visionary, but I think I have a lot of vision so I can look at things really high level and not get so in the weeds where we forget what we're doing as a company and what we're providing. So I'm very passionate about looking at things very philosophically and like well, what is it we're ultimately trying to provide? What's our cut through line here? What are we trying to do? I think that's another attribute that I am proud of. I think there's also challenges and opportunities and things where I've had to grow. I kind of lack structure. I've had to really lean in and and to how do I build more structure? I think a lot of entrepreneurs are sort of impulsive and are like out there trying to fill the void, and I think I've had to really understand guardrails and understand how people need structure. If they're going to work for me, so that's a big opportunity for me it's like okay, how do I provide them what they need to feel like they're doing their job the best that they can, and that's something I've had to work on. So I mean, you know, as a leader, it's just like you may just being human. You know there's some things that come really naturally to you and to me, but then there's other things. I'm like oh yeah, she really wants to have an understanding of her roles and responsibilities. Let me write that down. Chris: Write that down. Elaine: So I think it's just an evolution, it's a growth, you know very good. Chris: So we kind of started with edit and we've gone. I love what's going on, so I want to bring you back to that. You know you take a hiatus. Elaine: Obviously there was a pandemic in there and you're raising, as you said, you know teenage daughter and. What was? Chris: it that told you it was time to get back in the game. Elaine: Yeah, it's such a profound question I had. No, I was really tunnel visioned for probably three and a half years there, where I was just in this mode of caretaking and frontline decision making for my parents and my daughter and just in my husband had just recreated his whole deal and he was sort of out there sustaining us, you know which we had never in our whole marriage, had never not both worked. So that was a real interesting how we were going to figure each other out with our roles changing so much. Like I went through a deep identity crisis of like well, who am I now If I'm not this owner and this fashion person. I'm like you know who am I. I had a big grief process over kind of unraveling that, and he did too with me, you know. So it was an interesting watching us try to figure each other out. But we actually made this decision to once our daughter transitioned to this therapeutic boarding school that we found for her that she's done beautifully well at. But it was really hard for my husband and I. We went and lived in Santa Fe for six months and sort of decided that we needed a healing opportunity. You know of her kind of letting leaving the home and edit was kind of born in that sacred space and I think it's because, chris, I had a moment that I could actually create space within myself for something new for me, because for so many years it was all about somebody else. Sure, I was trying to kind of save these people that I love so dearly. And so I started talking to my husband saying you know, I have some ideas of something that maybe we could think about, and he's hugely entrepreneurial too, which is a whole other conversation we can have. Chris: But he was. Maybe we'll have him on. Elaine: He is huge and he was like let's talk about it. And so we started brainstorming over you know, burritos and we sit in town and I started telling him kind of my thoughts about you know, tanglewood needs this new idea and we need to serve women and brick and mortar. You know things are coming back. So I read all the time about consumer, you know the product sector and retail, and he was like I'm in, I think we could do it, I think we need to bring that to the customer, and so it just slowly started seeping into me and then I started going to market and he would come with me and finding all these unique lines, esoteric lines that nobody had heard of, like a lady from Copenhagen was the first person to bring her to the US and doing all these things where I was like I'm going to take a risk, and she did great. I mean, we just had three months of selling with her, but anyway. So just really leaning into this idea of finding these really unique lines, and it took us about a year. I mean we did a year of like negotiating the lease and meeting the contractors and coming up with the store idea, the space, and I'd love for you to come by and see it. Chris: I've got to come by, so you know, tell where is the store now. Elaine: So it's on Woodway and Voss, right across from Second Baptist Church, so literally kind of in the heart of Tanglewood residential area right by that Krabah's over there. Chris: Oh, perfect. Yeah, Everyone knows what that is, I know so. So you second go around. You opened just recently, like a couple months ago. Elaine: Yeah, open October 9th. So, yeah, what's today's? Chris: January 10th. So yeah, you've just been a few months Going. Well, I take it. Elaine: It's great. I mean it was just a total whirlwind because it's funny, I opened the store of course holiday time period it's like you know I'm trying to get press, I'm opening up during the busiest season of the you know the year and retail, and so it went great and I we beat all the goals that we had. But it's been also kind of a internal reset for me to kind of what is that balance for me, being an owner again but not losing kind of my sense of equanimity, if you will. Like I can go real strong, real singular into my career. And I've had to kind of really do a lot of self-awareness work about in Kaling this was a lot, so don't lose yourself in it and because you don't want to lose the joy in it. And so there's been, you know, even in the three months, there's been some setbacks that have happened already. There's been some huge wins that have happened already. I've had to hire a new team, and so you know I'm not going to lie and say, oh, it's just all like, oh, this perfect law, I mean it's been where. I'm like, oh shit, I got to fix that, I got to do that. But you know I'm doing it and I wouldn't be doing anything else. Chris: So how would you compare kind of starting the first one to starting the second one? Elaine: I'll tell you what you know. I want you to answer that, but I'll tell you you know. Chris: I remember when we were about to have a second child and I looked at someone and they're like oh, people think, oh, you got this, you know what you're doing. And I said you told me something you've done for the second time in your life and you felt like an expert, right? Oh, my God, it's so true, I mean it's been so. Elaine: It's so funny because the first time I was so young and you know, with youth comes a nice amount of ignorance, and so you have no idea what you're about to do or the consequences of what you're about to do, and you're like, yeah, I got this. You know, I'm going to put some little money in, we're going to start this thing. And I started getting handbags shipped to me from Brooklyn in my living room

In today's episode of Building Texas Business, Mike Vellano joins us to share the things he has learned from building his company, Vortex. As the CEO who has steered Vortex's innovative growth, Mike offers a look inside deal-making - including acquiring their significant European branch. Beyond mechanics, it's a celebration of relationships that drive success. We explore personal connections too - from Mike's early job to his passion for Tex-Mex. Plans for an Italian sabbatical link work ambitions with heritage. Mike's gratitude for support systems and understanding of sacrifice offers a holistic view of leading an expanding company. Join us for stories of commitment, strategy and groundedness through change. Mike's experience navigating Vortex's eventful voyage provides actionable insights for any enterprise. SHOW HIGHLIGHTS Mike shares his journey of strategic acquisitions and company growth, emphasizing the significance of people, process, and technology in building a successful enterprise.We explore the legacy of Mike's family in the water infrastructure industry and how this history has influenced his professional path and the founding of Vortex Companies.Chris discusses the challenges and motivations behind starting Vortex in 2015, drawing parallels with the entrepreneurial spirit exemplified by figures like Kobe Bryant.Mike reflects on the transformation from a hands-on CEO to a leader who empowers his team and how he leverages team strengths through delegation.We touch on the importance of maintaining a company's core values, with a focus on the "win as a team" philosophy and the role it plays in Vortex's culture.Mike provides insights on the integration process of new companies and people into Vortex's culture, emphasizing the value of internal sourcing for successful expansion.We discuss the recent acquisition of a foundational manufacturing company and the strategic considerations behind taking calculated risks in business.Mike expresses his personal love for Tex-Mex cuisine and his anticipation for a sabbatical in Italy, highlighting the balance between professional aspirations and personal heritage.Chris and Mike explore the intuitive and emotional aspects of business negotiations and the importance of emotional intelligence in steering deals to success.Mike details the complex nature of legal matters in international deals and the reliance on expert legal counsel to navigate antitrust issues and other legal challenges. LINKSShow Notes Previous Episodes About BoyarMiller About Vortex Companies GUESTS Mike VellanoAbout Mike TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: In this episode, you will meet Mike Vellano, founder and CEO of Vortex companies. Mike and his team have built Vortex through a series of strategic acquisitions since 2015, 17 in total by focusing on people, process and technology. Mike, I want to welcome you to building Texas business. Thanks for taking the time to join me. Mike: You got it, man. Great to be here. Chris: Yeah, let's kind of just dive right in. You're the CEO of Vortex companies. Let's start by just telling the audience you know what that company is and what it's known for. Mike: Vortex is a comprehensive and full portfolio of products and services that serve to repair wastewater and storm water assets, pipes, structures, anything that you, anything that lives in a municipal or a commercial industrial application, and we do it all non-intrusively and through what's called trenchless technology Okay yeah. So find a pipe without excavating. Chris: Okay. Mike: So we get to save the environment a little bit every day. Chris: That's good, I like that. So tell us like this how did you find your way into this industry? Mike: So I'm a, my background, I got a. I have a picture of my great grandfather, paul Villano, laying a water main. In 1925, Italian immigrant came to this country installing a water main and I mean just connected to New York. My family actually fixed that same water main years later. I'm not a finance guy or I don't have an MBA. I'm a. I founded Vortex and I've spent my entire career in this industry, other than you know, cooking in a restaurant and college or bagging a few groceries. I've been married to this trade and and moving that forward, my family was in. My family had a pipe supply business and a and it was in trench shoring and open excavation. My father was one of the pioneers in this industry. In 1994, brought a technology here with my family. The business was actually called trenchless technology and and I left the family business to go to go at a quick stop at a trenchless services business. And then you know the vision to get this thing going. Chris: Wow, so so in. I guess there's a lot of ways. It's kind of a continuation of the family business. Mike: Yeah, I mean, if you look at, my grandfather was using an old steam cable machine to lay a water main to. You know my family delivering and supplying, you know, frames and covers and fire hydrants One of the first water work suppliers in the country to my, my, my father and his brothers and my own goals, who are all entrepreneurs, watching them expand it and bring new technology to, and all of them you know, sort of systematically advancing with the industry, with water infrastructure and buried assets and now vortex is. You know we're an innovative, we're an, we do a lot of R&D and technology development and we and we get to do some really great things with in some pretty, some pretty tough areas. Chris: So it's interesting you mentioned innovation and and R&D. What are some of the things that that you do to kind of instill the innovative side or innovative spirit within the company? Mike: You know, I think, if I think about you know our core values, we have this, our most. Our core values are centered around this, this statement or mantra, called. You know we win big together and then, as we drive down into our culture, we have that. You know we actually have that trademark. It's a big part of what we do. We sign off emails on it and we rally around it if you go into an office, but winning big is thinking big. You know that's a big part of our marketing strategy and you know what we have, the way we think about products that work in infrastructure. You know they don't always come from the lab to the field. They come from the field and they're perfected in a lab and and we have a lot of great people that are that have dedicated their career to this industry, that we've worked with for a long time, and I think everybody at Port Texas is an innovator and I think our culture drives that. Chris: That's great, yeah, so it sounds like you kind of encourage it at all levels, not just some one department that's responsible for things. But are there any things that you do to kind of allow a you know a process for the ideas from the field to bubble up? How do you create that I guess in engagement or pride for people to speak up? Mike: You know, I think having, I think having what what you know Tretches technology is innovative in itself. I mean we're taking liners and pregnant with resin and going through a manhole and we're essentially performing angioplasty in a sewer application. You know we're. When we're coding a large, you know 16 foot diameter culvert with a geopolymer, I mean there's, those solutions don't aren't solved with a material only, it's a system. So it's people, process and technology. I think the way that we innovate and encourage innovation is really, is really through. You know, it can be reactive, it can be proactive. And we started our geopolymer business. We really focused on how the field you know the material led to really, you know, try a ton of innovation and perfection in the field. That was driven by most of our superintendents and most of our group people. So, you know, I think it's, I think it's a combination and it's a, it's chemistry. It's, it's, you know, some of it's organic chemistry, but there is engineering and there is some real science behind it. But there is an art form to what we do. You know there is. You cannot perfect this technology in a closed environment. You need to be able to deal with a lot. You know pipes are pipes of all kinds of construction and diameters, and and condition. Chris: Gotcha, Let me take you back down to the building. You said the beginning. You mentioned that you kind of, you know, broke off and started this. What year was that? Mike: So that would have been 2015. Chris: 15. So you know, that's, you know, the one of the questions I like to ask. You know, guys like you is okay, you had to take, get, I guess, the intestinal fortitude to be ready to kind of take that step, say, okay, I'm actually going to do this on my own. What? How did you know you were ready? What were some of the things looking back that you know, you thought, you know you go, man, that was really tough and had I known it would have been this tough, I may not have done it. Mike: Yeah, I think you know I read it when you're in, when you're in YPO or you're in some of the organizations that are involved. You get some really great case study. And you know there was an article about Kobe Bryant and somebody asked Kobe Bryant how you know how he thought, if he thought he would ever play in the NBA. He's like well, my dad played in the NBA. You know my dad was an entrepreneur, was a CEO. You know I saw that, I saw that spirit and all with all my uncles and my family and my grandfather was in great uncle brought products to this country and innovated waterworks supply and we're one of the first in the country to do something like that. So my risk profile was kind of set out at birth. I mean, I don't, seeing it being around it, seeing your name and the pride of having that on the side of a truck or the side of a building was always something that I wanted to either stay in the business or grow it or, you know, have something that I could, you know, not only make my family proud of but also build on my own and I think, the real working for my family and you know, working for my family, you know we always say we're. You know I would never change that experience. But working around entrepreneurs, and then the stop that I made before I started Vortex, you know, allowed me to get to, you know, the MBA I never wanted you know working around private equity and doing some things that allowed me to recognize, you know, the principles of business that some family businesses don't always fully capture, like HR or fleet management or things that are, or how you know how you manage a P and L and things that are typically, you know, you know, managed at a page in my Italian family, a patriarchal level or you know, however that comes to bear. So I think I always, you know well, my wife, I remember coming home and she had 12, you know Ford envelopes and was like, what are these? And you know I was like, well, we finance some trucks, it's gonna be okay. You know, we had no money in our bank account. So I think some of that stuff is easier for me just because I, you know, back to the like, I had somebody that modeled that risk profile and that ability to say, hey, just go take some chances and you create your own lock and you work. Chris: That's a great story. I mean, it's unique. You're right, cause it sounds like you almost didn't have a choice in it. Right, you were just brought up through from birth to understanding how entrepreneurs work, the risk about it. But yeah, as you were talking, and that has to put a whole another level of pressure on you to say, yeah, this is what I, this is what we do in the Vellano family, I better make sure it works, cause everyone else looking back uncles, grandfathers, and they've all made it work. I better make this work. Mike: That has to be a whole another level of pressure 100%, and I think that's, I think that's, I think that is a driving principle, right, you know people, you can harness pressure and use it, use it effectively. I mean, sometimes I probably run myself a little too hard, but I still am afraid to be late to work. Chris: You know it's just. I love that, yeah, Especially in today's world right that the CEO is afraid to be late and there's that level of kind of accountability that, as a leader, you want to instill in everybody in the organization. Mike: What are some of the? Chris: things you do to kind of to do that to demonstrate that. I mean, obviously it starts with you know your actions, but how do you try to show up as a leader to make sure that those values that you grew up with get infiltrated throughout the organization? Mike: Yeah, I remember going to the first management meeting with my family and and you know we it was you know if you've been around Italians, you, there's always a big dinner. There's always, you know, more appetizers than entrees on the table, good wine, or you know definitely a few cocktails, and you know you sit there and you go and you run and you come in town for a meeting and I remember one of our branch managers. I remember one of our branch managers showing up late and my dad locking the door and just saying you know it's like that, it's two minutes late, it's like, well, we, this meeting started at seven o'clock. Chris: And. Mike: I've done that a couple of times. I'm mellowing out a little bit, but when I first started this business, I mean as a 30 year old guy, you know you're trying to prove a point and you realize that there's better way. You know that's not always the way to do it, but that left a left an impression on me. I think you know there are definitely times where I get overextended and I got to move calls around and I'm not. I want to be, I want to be more, but this is. It's a big job with a lot of responsibility and you got to prioritize differently. But I think you know our core values are you know we are a driven business and I think them seeing drive and our organization, not only by me but our team I mean our team is our team is a very close group, you know. I think, like when we went through our core values, we talked about how teams win. You know families fight, you know, so I don't know he's, I don't. You know we think like a family, but we work like a team, we are a team and I think them knowing that we are going to win as a team, I think that, look, they know that we're all going to get up, that nobody's, that nobody's fallen behind. And I think in a dynamic organization where that's a driven organization and you know they see every time they walk into a vortex office, they see that core value, that we are driven and core values are for all. You know some people. We stand behind ours and I think some of them have become a little cliche, but I think that's how we keep people. I think that's how we, I think that's a model that comes from our entire executive team down to the organization. Chris: Yeah, I would say you know we talk about core values. In my experience, if you identify them right, then their behavioral characteristics for the behavior that you, as the organization, want to see, expect to see and, almost you know, demand to see for those that are going to be successful in your organization. So you talk a lot about I love the win as a team and I thought it was. I love that family's fight, tim's win, that's a good one. I'm going to use that again. But so culture is definitely important to any organization. It sounds like it is. You know, obviously, the years with that. The win is a team mantra. To me, that, then, means that the hiring and onboarding process is critical to making sure you're getting the right people during the interview process as you're bringing them on and building the team. So what are some of the things that you do at Vortex to try to make sure you've got the right processes in place in the interview and integration process to add successful members to the team? Mike: I think that onboarding is we have a great HR person that our onboarding process when we first started was where are we going to grab a steak and or where are we going to where's a fun place to do an interview? And we've created some. We Brooke has really helped us to kind of formalize some things, and our head of shared services that to make that first day you know that first day at Vortex their most exciting day. I mean that's it's got to be. You know whether it's the type of swag they get or their waybook or whatever those things are, and what their introduction is to an organ, to a high performing organization. I mean they got to feel like they're. They got to feel that fire and that encouragement day one. You know when you I think that if you build your team right and you build your people, you know we have we've acquired seven companies now and our executive team has leadership across our. The leadership across our organization has come from those, has come from those transactions and those folks have moved into pretty dynamic roles in the industry and high level leadership roles. So we've brought some of their core values along. But we've also elevated several members of you know an acquisition we did in Maine. We have three people running different parts of the business. Our COO has mentored several you know of our younger project managers and sales people into roles that they're going to be leaders in our business and we have the same role, you know, for me as sort of a sales support role that you know young men that started around 22,. One of those guys is is our is our senior VP of services now and he's been with us for 12 or 14 years through through other places. So I think we focus on you know it is and it's a sink or swim Sometimes. We're, sometimes, you know we do, we do sort of police, our crew and we in our drive gets in the way of really understanding, you know, and wanting everybody to be more than maybe they should be in some cases. But yeah, I think that was a bit of a ramble but hopefully I answered your question. Chris: Oh yeah, you did. I think it's great. So I think in that answer that you hit on a couple of things. I want to follow up on 17 acquisitions in that sense 25. Yeah, that's small to large. Mike: I know that we've got. Chris: Yeah, I know that you recently just closed a new transaction, so it sounds like there's been a lot of growth through acquisition. You know entrepreneurs or people that started a company. I mean, they're faced with right. You know, how do I grow? Do I grow organically? Do I grow by acquisition? Do I do both When's it right? So what are some of the things I guess that you could share from your kind of strategic thinking about? When you felt it was right to make those acquisitions, how did you vet that to go Okay, this is a good fit, knowing, I guess, there's no sure bet. Mike: Yeah, we're acquiring businesses from $1 million to $15 million, $20 million in revenue. So a few of these businesses have been smaller tuck-ins or technologies or somebody would call them an asset deal. So we have, and in all of those we've never hired a banker. We source them internally because we either have a customer or a vendor relationship and we have some, you know, we have some. We have a little bit of a matrix that we use, you know, in the sense of do they have personnel, do they have technologies? Do they support the things that we do? Are there people innovative enough to expand? And, if we can, we add value. We're not going to buy a business that we can't grow organically or turn into something that is truly going to make that business better and make our business better. Sometimes it's technology and sometimes it's, but there is always an organic element to everything that we do. We start, we add crews every day, we implement our technology developments into our own service businesses or into others, and a true differentiator in how we go to market, like how we go to market up until, you know, up until this recent transaction, which is a products company, a subsidiary that I can get into that in a few minutes, but this is the biggest, the largest acquisition we've made and most of our product product's business was developed and grown organically through some smaller, what I would call partnering opportunities with. You know our we're so proud of our business out in Utah. You know we grew we've grown that business, by you know, 20 times from when we acquired it in 2019 with because we had a partner that understood the chemistry, we understood the operation and commercial side and together, you know, great products and a great strategy work. So that's been our that's been a big part of our strategy. And the product side and the services side. We've bought, we've acquired some mature businesses. We just bought a business in the UK that we're really excited about. It's got an excellent market opportunity. It's a service business but they fit our DNA. They're not afraid to do, they're not afraid to go out and work with difficult customers or on difficult projects or take on emergency jobs. You know we live in a municipal world and we really do focus on selling. We go after negotiated work. We don't just go and low bid work like a lot of, like a lot of municipal contractors do or have to do because they don't have the resources or you know, or some of the, I think, some of the talent that we have to go utilize procurement networks or emergency contracts. So it's a steady diet of acquiring to build on or just doing it. Crash roots organic. Chris: Gotcha. So then the next question comes. You do all these acquisitions. Acquisitions sound great and sexy and you go close a deal, but it will only be successful if you are successful in the integration process. You've done 17 of different sizes. It sounds like you've gotten pretty good at the integration process, so I want to talk to you about something about that. It's clearly not happening by accident if you're good at it. So what are some of the tips that you could share about what you all have done there? Processes you've you've developed I'm sure they haven't all been successful. You've learned from some failures, so talk to us about that, tell us kind of you know how that's evolved and vortex for you and your team to make sure you get the integration piece right. Mike: I think we start integrating a deal before it's close and I think that's important and I don't think that's a strategy that can be. I don't know if you can hear that thing. No. I don't know, and I don't know if that's a. I don't think that's a strategy that everyone has a luxury to support. But part of our story is we you know we've never hired as never hiring a banker. We are very familiar with the acquisitions that we're going in to make, both from a personnel perspective, the technologies that they support and how they think about the world. You know we want, we want these acquisitions to be as excited to join vortex as we are to acquire them. The other thing that we don't do is buy 100% of anything. We're typically partnering with a seller that is going to come into the business and continue on and you know we and we do a really good job of I think of, of, you know creating the right level of support. I'm understanding what their skill sets are. At a seller come to me after we bought his company and say you know what? I always wanted to own a business but I never wanted to run it and I'm like, ok, I can see that, but let's put you in a row Like you're. We're here because you were doing something right. Let's figure out what you're, what you're good at, and I think you know our team collectively took a step back and was like this is what he's going to be good at. And he's been and he's one of our best in that role now and still a shareholder and had enough, you know, hasn't had enough. You know really believed in what we're doing and we believed in him as a in this role. And you know, some of a big part of integration is understanding what everyone's thinking and being transparent and saying, hey, you know, you really think of this. We need to get you a better finance person, like, yeah, your finance person can go do this. We were not here to. I think our real focus is finding people and the other thing that we don't do and we buy cash flowing businesses that have good roots and have good people and we don't buy distress businesses. We're not. That's just not who we are and that's understanding what your capabilities are. We don't we want to manage. We want to manage a business, to grow it and build it and make it better. Like I said before, and I think when you really look at, hey, this is we. As you grow up, you know you you'll learn to deal with those, with those situations. We just had a business in Colorado. We kind of took a step back and said, hey, we're breaking even here. This is a distraction. Maybe we can move these assets somewhere else and focus somewhere else, and this is how we can do it in a way that will be more productive for everybody involved. So I think a big part of integration is really understanding our deals and having that luxury by being part of the diligence and really, I think, starting integration almost before we close an acquisition. Chris: Yeah Well, and what I hear you saying is look, we're very thoughtful about and transparent about, the process, and those are two key elements, I think, to anything being successful, so that you're going to have clear communication. It also sounds like you take a little page out to Jim Collins. Good to grade and get the right people on the bus, but in the right seat. Yeah, so your example of I want to always want to be an owner but didn't want to run it. I mean, that's someone that probably should be on the bus, obviously, but he just sure on the right seat for him. Mike: Yeah, I think that you know it's the my father would call it the Holy Trinity. It's sales, operations and finance. But you know, good to grade is that's one of the one of the big takeaways of our best businesses have just really a really great balance across all three of those, all three of those areas. I mean anything R&D, anything project level, any good strategy you have to have. You have to hit all three of those areas. Chris: Yeah for sure. So you talked about a lot of these acquisitions being either vendors or partners that you have interacted with over time, so that, in first to me, you do a really good job at Vortex of creating some really strong relationships with your vendors and your business partners, you know. So let's talk about that a little bit. What are some of the things you do to create in your people, I guess, to foster those strong relationships that sometimes lead to these add-on acquisitions and then become part of the team? Any tricks or things there you really encourage? Mike: You know, like you made the comment about innovation before, I mean, I think everybody, you know we have 800 employees now I think we have, you know, 700 of them want to be investment bankers. I get calls all the time hey, you know someone's supposed to say, hey, you know this, hey, I bet you that guy would be really interesting in this. You know, in this role, or we should look at this company, you know, I think, and some of those have come to fruition and look, you know, when you do that many deals in that time frame which seems like a lot more than it is, but you know, we did four deals in COVID which was crazy, but we all. But you know, I think a big part of that is, yeah, I think a big part of that is like we look at hundreds of deals. I mean we still we can turn. You know we're not going to get into early diligence, like there's some things I can look at with our team and our team is in the higher, you know, the more involved, the more involved we get with a company. You know we might say you know, man, these guys don't even know how to order material, like they're unorganized. You know, I know they want to put like, this is going to be a lot to fix. You know, maybe we can work together and there's been times where we've worked with companies for years three, three, four years talking to them about a deal why we work parallel as a vendor or them as a sub, and then they become an acquisition and I think we both got better together. You know, I think that some of that stuff is, but there's that's also a luxury in our strategy, but that makes our strategy sound. You know, we don't have, we don't have. You know you look at these deals and, hey, if half of them went well with our organic growth which is in the, you know just, you know, high teens to 20s and archaegers in the mid 20s, you know it's, it's, it's a great story. I think that was like as you should be. Chris: So let's talk a little bit. You know more about you and your evolution as a leader. You talked about it a minute ago, just referencing how you're probably a little bit harder, maybe from the lessons you saw from your dad, and you've evolved. Let's dig in a little bit there. I mean, how would you describe your leadership style and how do you think that's changed and evolved? You know, over the year since you started, you know this company and and grown into where it is today. Mike: You know, I think I know what. I know what I'm not, and I know that I have to surround myself with people, that that you know you backfill by weakness, I think. But at the same time, you know our CFO has been my partner for 15 years. You know we've had, we have, people in our team that we've worked with for all of that and even before and even going back 20 years in some cases. You know, I think leadership, I think leadership to me has evolved as I've really understood what I'm truly. You know what I'm really good at, and having enough and sort of having, I think, being intentional and having some humility and being able to say, hey, I'm not. You know, I believe in the one minute manager. I don't need a ton of detail, I just need to know what the issue is, and I've gotten better at really understanding why that detail is important. But, you know, as a leader, I think I think gaining perspective and, you know, and listening, I think YPO has helped me in a lot of ways. You know, being around, I think peer development is something that I never, you know that was not. That's not something. When you grow up in an Italian family in upstate New York. You know, therapy isn't something I don't know. That's something I don't know if I knew the meaning of that word until I was married, but those aren't things you don't. You don't share family business, you don't share problems, you fix problems, and I think that I think in some ways, that's good. Like you know, you, I know I want to run into I think I wanted to run into every birding building until about five years ago, and I've started to realize that there's people on my team that are better at things, that I am and can execute on that. So you know, I think it's a combination of a lot of things, but I do enjoy leading, I do love my team and I, like I love seeing them be successful. Chris: That's good. Now I think it like I said, I think it starts with drive right. You have to have the drive and the want to and a little bit of that risk profile to take the risk and then I think over time you learn maybe humility and empathy and you can let others do some things, backfill where you're not as strong or you want to provide the opportunity. Mike: But yeah, don't get me wrong, the New York Italian does come out. Chris: It's a, it's a, it's real, so Well let's, we'll test that a little bit then on, say, because I like to ask people you know I'm a big believer in I think we learned from failure right and so you know, is there a situation or decision or circumstance you can think of? You know there was a failure right when you got it wrong but you were able to recover, or what you learned from that moving forward that made you better, stronger, you know, leader person, whatever that might be. Mike: I think I, you know, I probably learned from the. You know we always say when we're hiring somebody from a competitor, you know, try to be a good leaver. I think the way I left my family business was probably not. You know it was. It's never perfect. If I could go back, I'd probably. I would probably do that differently. You know there's been technologies that I have died on a hill for and you take a step back and you go. God, why did I think that would work? You know, and I think now I'm having conversations that people had with me 15 years ago where they're going, hey, what do we should buy this company? I'm like, yeah, you know, I'm like that's not the right company for us. And I think there's times where I know I need to explain myself better. But yeah, I think there's been some. We've had. I've had some bad partners that we had to buy out and that I separated with. And you know, when you're going through that, you realize like, hey, this is this guy you know you want to. It's all there fall in your point, in the finger and then, as you get past it, you go you know, I didn't. I perspective in time or time changes perspective, right? So, yeah, I think there's certainly no shortage of things that I failed at. Chris: Gotcha. Well, the other thing I kind of like to ask people as we start to wrap things up is if you think about one or two things you would impart to an aspiring entrepreneur that if you're going to, if you're going to go chase that dream, you know here, here are a thing or two that I think you should keep in mind. Or you know, maybe it's a do this and don't do that type of thing. What would be that from you to kind of that generation, next generation of entrepreneurs, man? Mike: I love move fast and break stuff. Like and you know what, like when I did at first, I felt like we're breaking more. I feel like we've got a point where we move, really we move. It seems like we're moving at the speed of light. But, you know, something like this deal we just closed, which is, you know, sort of a dream deal for us. It's a company that is a founding, founding manufacturer business. It's applied, they're one of the largest producers of liners in our space and have go back to Eric Wood, who's really a, you know, a founding father of our business, who started a company called in situ forum. And you know, we've been working on this deal for two and a half years. I mean, this isn't like 90 days. We got the book and we hired a big New York law firm and our banker, you know, handled all the conversation and we walked in the door. You know, and and here are the changes we're going to make Like we have a foundational, innovative, pioneering you know industry giant that we want to, that we want to take to what we want to take into into its next evolution. And, you know, I think about moving fast. I think move fast breaks, but maybe we're not moving as fast as you think, but at the same time, you know, I do think that's a big you know. Don't be afraid to risk. Focus on what you're good at, because in the minute don't get distracted from that. And and don't be afraid to partner with. You know you're going to have some bad partners, but you'll. You'll if you can find the right ones. That means all the difference. Chris: That's really good. You know the point to that. Similar with employees. Right, you're going to make some bad decisions, whether it's a partner or personnel. But once you realize that move fast, right to cut, because a bad employee can be kind of road culture or a bad partner obviously can run a business down. But once you know that definitely want to move fast. Mike: Yeah, I mean, if it seems like it's, if it seems like you know, bring a raincoat. If it's raining every day, you know we're sitting here having these calls, like this business every month is having the same challenges. Okay, you know, you know, and we've gotten the point of my partners and the key leadership on our team where we look each other in the eye and we go all right, it's, yeah, we need to make a change, and then you know that that leads to some quick and real thoughtful action. So, yeah, I totally agree. Chris: Well, let's appreciate all that. I mean, I think, your success at more taxing your teams I know it takes more than just you in seven acquisitions since 2015 and the growth up to 800 employees is is anything. It's very impressive. So congrats on all that and the new acquisition. I want to ask a few personal questions Just before as we wrap up. What was your first? Mike: job. That was actually my icebreaker at my integration meeting today. My first job was was that Vellano brothers? Chris: Okay, doing what? Mike: I was I think it was counting T bolts because I wasn't old enough to drive a forklift or picking up paper. I remember my father told me hey, I want you to go pick up paper on the. I'll give you a dollar for every piece of paper you pick up on the warehouse floor. And I went out and I had like a grocery bag. I'm like gotta be $1,000. I think you gave me here's five bucks. Go buy a soda. That's right. That was my first job. Chris: Okay, I know you're from New York. You've been in Texas a while, so I ask all my guests do you prefer Tex max or barbecue? Mike: I prefer Tex max. Okay, I like a margarita. I like some good, proper cheats, texas cheese enchiladas and a good margarita. Chris: That's right. So last question is if you could take a 30 day sabbatical, where would you go? What would you do? Italy, no hesitation there. Mike: Anywhere in Italy would be okay. Chris: Very good, very good. Well, that's a popular answer, by the way, but I guess you have family ties that would make it your answer to you. Mike: So some family ties, and I like one that makes both of us. Chris: So, mike, thanks again for taking the time to come on the podcast. Really enjoyed getting to know you and hear your story and wish you nothing but the best of success in 2024. Mike: Awesome. Thank you for your time. I appreciate it. Chris: All right, we're going to end the recording there. Special Guest: Mike Vellano.