Episode Transcript
[00:00:10] Speaker A: Here we go. So good to see you, as always.
[00:00:16] Speaker B: Good to see you. Like you haven't seen me in months.
[00:00:19] Speaker A: Exactly. It's true. Well, you know, I traveled yesterday, so maybe I missed you because I was gone Monday night, eight, and all day Tuesday, and limped in half dead on Tuesday night.
[00:00:29] Speaker B: I've seen you all day today.
[00:00:31] Speaker A: You haven't seen me all day today. I've been in the office next door, but with the doors open, but completely engaged in different things.
[00:00:40] Speaker B: Nice to see you.
[00:00:41] Speaker A: Yeah, Jason would have been just easy to say, nice to see you back, but that's fine.
So interesting. I was talking to someone the other day, and they were probing me aggressively about the automation division and why, and it was someone that wasn't 100% familiar with our space or what we do. But for whatever reason, the idea that we were in packaging for 83 years prior and decided to get into automation just didn't seem to fit into their way of thinking, wasn't aligned. And I thought, well, that makes sense, but let me explain it to you, and just proceeded down this idea of. And the questions were, did you feel the need to grow?
And you thought, I know automation, or were you looking for a revenue stream, or what was the driver? And the simple answer was, it was that there was enough demand and customers that mattered to us kept asking me the same question over and over again. Can you help us? Can you do this? Our labor pool is either unreliable in quantity or quality. Our productivity is such that we can't keep up with orders or so on and so forth. And the simple answer was no. I was just listening for demand. And having said no so many times, got frustrated and decided to take it upon ourselves to create the supply, because we had been partnered with people in automation, and we were relying on other people to do our controls work and some of the more technical aspects, and I got sick of it. So after a while, I finally said, we need to do this. We're going to continually put ourself at risk. If big customers say, can you do this? And if we continue to say no, and somebody from our space, like packaging, says yes, we could be jeopardizing all of our packaging business in the process. So the answer I finally got, I say tired. I mean, there was a frustration because I hate saying no. And even the idea that that would be a loss. And finally thought, I need to do this. We need to make this investment. At times, we're going to be faking it until we become it. And that was really where that came from. It was out of two things, right? There was an offensive play as it related to filling demand, but there was also a defensive play because I thought, oh, man, if somebody that looks like us, beats us to this space, it could jeopardize all of our core 90 year type business. So then I was just thinking, and then a lot of times when I have conversations like that, I then spring to your business or the construction component of it and think, I wonder how, what's that going to look like for britt? Or if I fast forward seven years from now or eight years from now? Because a year from now, you have an idea, what's that going to look like? Or what do you think it would be that would pull you to a different revenue team or just growth in general?
[00:03:26] Speaker B: Revenue?
[00:03:27] Speaker A: Man, I knew it as soon as I heard myself. I was like, oh, my.
[00:03:31] Speaker B: Revenue.
[00:03:31] Speaker A: No tongue. Get it together. She's going to blow me up over this. Maybe I'm just thirsty.
[00:03:38] Speaker B: I don't know if that was a question or before you asked your question. I think it would be a good thing to take one step back. Because when you say automation, there's a lot of people that are thinking robots or flying vehicles. What does automation mean to you in your space? What does your division do? Because automation means a lot of things to a lot of different people. I think that's important to disseminate.
[00:04:02] Speaker A: Great point. So I'll even back up just one further. So go back seven years ago, which would have put us in the 2015 16 time frame. So we're coming into the era before the pandemic, and unemployment is ratcheting down 4%, 3.53, I think unemployment nationally hit 3.4% as a low at one point. So our customers are saying to us, I can't get people, my overtime is out of control, so on and so forth. What can you do to help us? And really that meant, do you have machines of some kind at your disposal that can help me speed up or make these more mundane and packaging? Right. I mean, there's a lot of end of line type things, thinking about setting up a box, putting this stuff in it, closing it to be really rudimentary. But that's all very labor intensive and really non value add. I mean, if you're in a manufacturing plant, the things that go into making the widget are value add. Everything else that's not, that are non value add. So a lot of times they'll start with the packaging guy and say, hey, packaging guy, what can you do about this big pile of widgets? At the back of the line that we can't get out. And sometimes in those days prior to building this out, there are machines that are pretty simple that you can almost reach off the shelf and say, oh, you need this machine that will close the box and it does it faster than your humans. And that pile goes away. Doc, not custom piles or adjustable enough that you can accommodate a bunch of different sizes.
But then it got more complicated because they were starting to struggle to get certain types of employees that were in the process actually making the widget. So it would be, Mick, you've done a nice job on the end of the line. You seem to have solved these problems for us. Which problems in the manufacturing world are usually a constraint. There's a pile, right? And something's blocked and there's a pile that gets formed by that blockage. Or the only option is to throw heads and people at it to keep it under control, which isn't sustainable cost wise. So it was Mick, can you go upstream into the process and can you help us up there too? And many times the answer, because we just didn't have the talent internally to Arnold packaging because it would have you building machines or tying multiple machines together even, which is called integration. We didn't have that skill set or that superpower in house. So that's that automation component. And really what we're doing there is. I don't love the word automation. It's about productivity, right? So it's looking at input and output. Input being manpower, output being the widgets that you make at a minute, an hour, whatever, and improving upon that, decreasing the input, increasing the output. But usually it's both. So we tend to use automation as a way of doing that, which would have you thinking about robots and cameras and autonomous guided vehicles and crazy nerdy stuff like that. But really those are just tactics that are tied to the strategy of improving productivity. So it's called automation, but really what that group is doing is making our customers more efficient by pulling the edges on input and output.
[00:07:23] Speaker B: Yeah. And that's something I learned. I think it's important that people understand automation can include cameras and conveyors and some of the simpler. Now they can be complicated in nature, but some of the simpler things, it's not always these robotic arms and agvs.
There's a lot of different things, as you said. In your eyes, automation is making a customer more productive, period. I think that's a really simple way to look at it.
[00:07:51] Speaker A: And interesting, let me give you a really, there's two great day to day examples that everybody experiences that they probably don't think of it that way. But if you think about when we got automatic teller machines a bazillion years ago, if you're on the bank side of that, then you look at that and say, well, I've removed all of my input, right? I no longer have any people dispensing cash, but I get the same amount of cash out that I used to. So that would be improving their productivity because they held output constant and they reduced and or eliminated input. The Safeway looks at self checkout the exact same way, where the same number of groceries are getting out their door and they're selling the same amount of product, but they've removed the input that is the cashier. So we're doing the exact same thing in the industrial, manufacturing, or distribution world. And it all comes down to productivity, Excel. I mean, I could go on for days about tools that have come out that nobody really looked at the same way, because they didn't look at the automobile production line and go, uh oh, yellow robot arm in, John, out. That was all very quietly done, whether it was the bank teller or the cashier. Now it's becoming a lot more. There's a lot more sensitivity and a lot more acknowledgement of it, but it was much quieter. No one said a word when Microsoft developed Excel and cleaned out the back offices with accountants and that whole piece. So it's all over the place. But that productivity component is what we really solve for on that side of the business. But a long answer to we really just were tired of ignoring the demand that was there and finally decided to create the supply, which was difficult, but the absolute right thing to do for our business and all the synergies that go between the two.
[00:09:36] Speaker B: I look at that as when you were asked, and I'm sure I'm making assumption here, but I think this is probably correct in that when you were asked to do some of this automation prior to six, seven years ago, you may have said yes sometimes, and you would subcontract that work out to somebody capable, a partner capable. And that is really relevant to what I'm trying to do. When I'm looking at our growth strategy for Tagler construction and supply going on seven years now and for so long, we've done a lot. So we sell specific products, building material products, and as we've been asked to do more, just like you, customers are asking us to do more. They're great customers. We want to diversify. But a lot of these products are outside of our core competency. So we are buying from somebody else that can source these products, or we're asking to deliver turnkey solutions, which if people aren't familiar, that just means a furnished install as opposed to just a furnish option. We're subcontracting that install piece, which we still do because we don't want to be an install game. But I think what I'm really looking forward, what I know we're looking to do right now is not necessarily increase revenue, even though that's great, we're trying to do both, but really it's decrease our costs. And how do we do that? It's by cutting out a lot of these middlemen that we've been using because we didn't have the direct contacts to go direct to source some of these products outside of our core competencies. So now that we're saying, okay, we can supply lumber, precast pipe, to name a few things, and there are some other products that are similar in nature or supportive of. Of what the projects we're looking to do or with what we're selling right now. How can we form relationships direct with the manufacturer and not that middleman and become a distributor, one of maybe their exclusive distributors? So we're trying to get ourselves into positions now where we're going direct to the source and knocking out the middleman. Not in all cases. In some cases, that middleman is so important because, for instance, we work with some larger companies who are the middleman, maybe even sometimes where we could go direct. There are certain instances where we can't because we don't have the credibility or haven't formed that connection. But even in some, because they've got the manpower to, whether it's read plans and create takeoffs of the plans or whatever that looks like. So in some cases it makes sense. But a lot of times right now, we've got to figure out how we can now form connections to be a direct distributor for manufacturers. So that's where my mind is. Because when you're able to do that as a distributor or a supplier, all of a sudden your profit margins increase. Big time risk goes up, but profit margin goes up.
[00:12:44] Speaker A: That's right. So I'm so glad you said that, because there was any number of things that were going through my head as you were laying that out.
And that's exactly. So. I think in general, in life, return is commensurate with risk. So in that moment, you're buying inventory. Right. The risk that we're talking about is the inventory or whatever you have to do to get to that next level. The other thing you said was really fascinating, too, was about differentiation. You said, well, there are times when we could actually go buy direct, but someone's doing something, a takeoff, right. Is something that we talk about a lot, and that's a differentiator for that particular person that keeps you shopping there. So the differentiation piece is really interesting. You said a bunch of things in there. I was like, oh, that's right. But that's differentiated. That's why you continue to shop there. Oh, you're not ready to take on that risk. Some of it's just that these jobs could be so big that you stay there because the financial backing of that partner is what you need from them. The differentiator might be sheer dollars that they have to put towards it, which is just another way of saying risk. So, yeah, those are all interesting points. I mean, I'm hoping there's some audience members that are listening this going, okay, yes, absolutely. But it's not just as easy as that. You have to be completely dialed in and do the diligence on the risk component because that extra 510 15, whatever points of margin come with some type of commitment. And generally in the form of risk.
[00:14:12] Speaker B: Absolutely.
And financial risk. Definitely.
And worth mentioning ships to a manufacturer, for instance.
We are aligning those partnerships right now. It's taken us seven years to get there. Why? Because if you're a manufacturer and you're creating a great product, whatever that may be in any industry, you're only going to partner, align yourself with great distributors. So when you look at a company that's younger or just hasn't been around as long, they've got to value that risk. Like, do we want to get in bed with them? It's their product. They need to make sure their customers, the end user sites would say, which would be my customer getting served. So anyway, that's, again, a long way of saying we needed these seven years to be able to get to the point where manufacturers wanted us to be a distributor. Now we're up playing against big multibillion dollar companies, and we have to be able to survive. And I think it's worth saying, just because we are by far, I mean, not even close to the smallest distributor. For a lot of these manufacturers, there is something to be said as a smaller distributor and just being closer and more engaged, a lot of these other competitors, I will call them, that, are also distributors. They've got so many more products, or they're simply not as hungry because they don't have to be. There are all these things that you can leverage as a small business, as a distributor, where all of a sudden you become wildly valuable to this manufacturer. And typically it's going to be regionally or locally and maybe not national like some of the other competitors you're working with. But these guys are looking at local. I mean, they're all territorial in nature.
[00:16:15] Speaker A: Jobs being done here. The jobs being done here.
[00:16:18] Speaker B: That's right. And I think because we only have a limited amount of manufacturers we work with, and they are so critical to our business success, every single one of them. That profit margin means a hell of a lot more to me than it does to the big multibillion dollar company that works in our advantage. If we scrap and we work hard and we're diligent.
[00:16:41] Speaker A: Right.
[00:16:41] Speaker B: So I just think a lot of smaller companies that are out there maybe in the same positions because this is so relevant to so many other industries that want to source products direct, you can do it, and you can definitely play the same game as some of the big boys and better.
[00:16:57] Speaker A: Well, I think the question you ask yourself is, and we touched on it already today, is, what's my differentiator? Right? I mean, you were talking about scrappy, and the word you didn't put in there yet, but I knew you were going to, is agile. That agility. You'd have to ask yourself, if I'm going to compete here, what's my differentiator?
Why would my potential customer pick me over the behemoth, right? If I'm David and that's Goliath, what would be more attractive or differentiated about David, where you'd say, you know what, you might look a little riskier, if you will, just because of your size. And for whatever reason, some people may equate size, whether that's in revenues or buildings or people exclusively, as an indicator of risk. It's not. It's not necessarily at all. So if I'm in that moment, and regardless of who you're competing with, because you might find other small companies that are incredible, right, and they know exactly what their differentiation is, and they get that messaging to the customer faster, better than you do, then you're in trouble, you've lost that edge, or you might have lost that opportunity.
[00:18:00] Speaker B: Well, we're going to be faster every time. I know that if there's five distributors regionally, and that is with the particular project I have in mind, there is only five of us, we're going to be first to the customer every time. Now, are they going to go with us? They might have a long standing rapport with some of these other shippers and the answer might be no, but we will get there faster because we're smaller and we're more agile and we're younger and we're hungry right now. Right. But it does allow us, we don't have all these levels of bureaucracy that we have to work with. It doesn't have to go through three people to get a purchase order out or approved or a quote out. It's just we don't have those layers.
Sometimes that's not a great thing because you don't have all those checks and balances. But it does allow us to move faster.
[00:18:49] Speaker A: Or if you weren't back first, it would be because you were out of bandwidth that particular day. Right. Because you didn't have as many people to put all that demand over. Right. So that could be other piece too. But yeah, absolutely. The other thing that's interesting just about there was an exercise that I did with my executive team, or I should say exercise. It's an ongoing component that we've put in that we called pigs. These are profit improvement goals. And I think for the longest time, and I didn't say a whole lot to them, it was, all right, new idea. Here's what you're responsible for between now and our next meeting. Each of you have to come up with a profit improvement goal that we'll call pigs. And what do you think? And I think for such a long period of time, or maybe by department, certain departments might cling on to something. For example, when I look at the Ops group, I would imagine their first thing was, oh, cost. How do I control cost? I have labor, I have material. What am I going to do to control cost? That's the only way that I can affect profit inside the organization versus, well, don't forget about the whole other side, which is sales. Right. What can you do? Just because you're in operations and you don't have the word sales on your business card, what can you do to affect sales? And back to our original conversation, would you see yourself selling more of the same product? So part of your thing was, well, it would be more of the same product. And if I could go direct and I could capture that margin, I could do it profitably and may have to make some investments along the way to support that.
Or are there things that you think are close enough that you might create a new basket or something that was not in your exact lane today? Lumber, plywood, pipe, those pieces. Is there something close or just adjacent that you could pull in that that's of interest to growing the business that way and even too diversifying. So if something. You were to have a storm over here, right. The plywood market goes crazy, whatever could disrupt your business, that you'd have something over here that could be really helpful if times got a little difficult.
[00:21:00] Speaker B: Yes, absolutely. And we look at all those things.
There are a lot of different pathways to get there. So one, reduced cost, score direct to manufacturer, increase profit margin. The other one is sell more of what we're selling right now, increase revenue. The other one is diversify our product line, which you're alluding to. And then the other one, too, which we're also looking at, is opening. It could be other locations. So expanding our footprint.
[00:21:27] Speaker A: Right. Geographic.
[00:21:28] Speaker B: Geographic. Or it could be doing something completely outside of our lane and adding it to, maybe I shouldn't say completely, it's going to be synergistic in some way, like automation was to your packaging. But it might be, maybe we're adding an install team or something in that nature. That's not happening. But you get my drift. Yes.
[00:21:51] Speaker A: You've been there, right?
[00:21:52] Speaker B: Yeah, we've been there.
[00:21:54] Speaker A: And that is no longer intolerable from a risk perspective. And all of it. All of it, yeah.
So what we're talking about is when Britt and I first met, she actually had a general contracting business and wouldn't just supply, but furnish. I mean, what was the first job? You built a restaurant. Right.
[00:22:13] Speaker B: Actually, the very first job was a office space for a food delivery company.
And then we did a couple of restaurants, and then we did a bunch of hospital work, then we did an office for Salvation army. We did quite a bit. It was all interior tenant improvement work. But yes, that general contractor side, I intentionally dissolved that after about two and a half years, I think three years.
[00:22:43] Speaker A: But that's interesting because you asked me the question about automation, where, yes, we were subcontracting that work out, and as it continued, our partners got less and less reliable. And I made the decision to actually double down and create it and go into it, which I think. I think. I don't know which we got. Right. But you made the exact opposite choice. Right. Your move could have been, well, I'll just go hire my own crews and I'll just get actually directly into the general contracting or construction business. And you made, I think, the exact right choice, too, in saying, no, that's not where we want to go. That's not going to be acceptable from a risk perspective. I think the growth trajectory is to go heavier into the supply side and stay away from furnish or anything that looked like labor. Yeah, install. Sorry, my bad.
Or the install. Or even pure construction work, which I think you got right. That was an interesting pivot point, and that was very early in our relationship.
[00:23:43] Speaker B: Two reasons that made it a little.
[00:23:45] Speaker A: Bit easier, I got to say. I just said, and that was really early in our relationship. Someone would have been like, remember, you decided that you wanted the right side of the bed. That was early in our relationship. And I was like, you remember to exit. You decided to exit general contracting earlier in our relationship.
[00:24:00] Speaker B: Those are our milestones.
This is so true. But you're giving me a little bit more credit than I deserve now. It was the best decision I ever made. I mean, less manpower, less liability, the insurance piece, so many things. But a. I never wanted to get into the contracting business, but I had people that formally I had a relationship with when I was working for a general contractor, and they're like, hey, our relationship was not with the company. It was with you. Can you do this? And being so freaking hungry for business and scared out of my mind, I was like, yes, I can do that.
[00:24:35] Speaker A: The answer is yes.
[00:24:36] Speaker B: So then next thing I know, I look around, we have a general contracting business that was never supposed to be. I was always starting with selling lumber, right? So that was not intentional to start.
[00:24:46] Speaker A: With, but stay on that, because the interesting thing is, despite not really being interested in it, but, oh, my gosh, you have some demand. I'll figure out the supply. Continue on to the conversation. That actually sealed was the final decider of why you said, oh, hell, here's the reason I've been looking for to get away from this. And one of your customers gave it to you.
[00:25:08] Speaker B: Sure, tell them. And I will also tell you what we did. So I hired, I forget how I met him, but I hired one, no, two guys, and I project manage. I lived at the bars and stuff we were working at or wherever we were, and then I were building them. I was like, project manager.
[00:25:28] Speaker A: You just said I lived at the bars. I just want to make sure.
[00:25:30] Speaker B: Oh, yeah, I should have been drinking at the same time. And then the two guys did the work. So I was project managing. They were doing the work, and it was just that the three of us, and they would sometimes bring in some other guys that they knew, and we would just get it done. And that's how we did it for a couple of years until I ended up partnering. But, yeah, it was all just partnerships and me bringing guys on but the last conversation that you are referring to, that was the, you have these moments in your life that just change everything. They change the trajectory of what? Your trajectory.
This trajectory.
[00:26:09] Speaker A: Yeah, got you.
[00:26:10] Speaker B: It's hard to say was when we had a customer at that time, and they were a customer on our supply side, because you have to think about this. So our customers on the supply side were general contractors, so our customers were also our competitors, which, in hindsight, yeah, of course, that's a conflict. But I wasn't thinking of it like that. We were so small, and we were doing, relatively speaking, so few projects. But one of our customers on the supply side said, hey, listen, I'm buying products from you, and I'm starting to have a hard time with it because I am funding and fueling a competitor. And I thought to myself, you are a multimultimillion dollar company doing massive projects. I'm doing a little restaurant down the street here, trying to survive. Like, we are not competitors, but in their eyes, one day we would be. So that was the final, like, okay, if my customers on the supply side are starting to have a hard time with this, and I could potentially lose those, now I've got to make a decision. And it was maybe one of the greatest conversations I had because it changed my business for the better. And that's when I was really able to dig know, when I was doing the GC side, I mean, that takes all of your time. There's so much to it. That was when I was really able to dig into the distributor side, the supply side, and build that business.
[00:27:42] Speaker A: Well, yeah, you effectively become a slave to the mean. You end up looking like a shift worker, if you will, because you're following construction schedules. Right. You end up working or living the life of someone that's on the job because you have to be there when they are. And all of your flexibility and the things that you love about running your own business are somewhat stolen from you, if that's the choice that you make to go in that direction.
[00:28:07] Speaker B: Well, let's be honest.
If you run a business, you don't really have a lot of.
You're always on the clock. So I'm not sure it makes much of a difference, but what I will.
[00:28:17] Speaker A: Say, but with no flexibility and schedule, that's even worse than working 24/7 yeah.
[00:28:24] Speaker B: I mean, we were doing hospital work, so it was weekends, it was middle of the night. With things go wrong, we needed. I can't think of this, but it's clean air. You need certain equipment I mean, it was a lot with a very limited amount of people doing it. So anyway, it was a great decision, and that conversation was transformational in the business. But if you look through your business, it's interesting how you can pinpoint those certain conversations and be like, wow, that simple five minute conversation changed the direction of the business.
[00:28:58] Speaker A: That also might have been. You and I talked through that a lot. That might have been one of our early duo moments, if you will, where I was looking at that, too, and I think it's because I watched you go to a hospital in a really challenged part of town at 03:00 in.
[00:29:12] Speaker B: The morning and thought it was like a Sunday or Saturday. Yeah, I have not thought about that since.
[00:29:19] Speaker A: That's right. I was like, click, click. Are you still alive? Please tell me you're okay. It was like every ten minutes. And I thought, oh, boy.
[00:29:25] Speaker B: Absolutely.
[00:29:25] Speaker A: Yeah. I'm not really a big fan of this.
[00:29:28] Speaker B: Very true.
[00:29:29] Speaker A: It's one of our early collaborations.
[00:29:31] Speaker B: It is. So I don't know if I ever even answered. I went on my own little rant there. I'm not sure if I actually answered the question which the growth strategy is for us and which bucket we're going to be filling as far as how are we going to build. And I think the question is all of it, all of it are options. I don't know. I've never really been someone that said, in five years, we're going to be this five years, we're going to be this even a year.
[00:30:02] Speaker A: Right?
[00:30:02] Speaker B: I don't know. I just know that we do the best at what we're doing now and we see what organically transpires and then we lean into what looks like great opportunities.
[00:30:15] Speaker A: I heard it put very simply along the way. It was, it's going to be what the customers want it to be. Right. And whether that's speaking to the demand component we've talked about, but it's going to be what the customers want it to be, and your job is to listen to that. And I guess the other thing I would question for you, too, because this is something that I had to consider in the automation component.
One of the things that kept me from jumping in with both feet. Right. I was incredibly tired and frustrated of saying, wow, we can't. We basically know we tap out there.
One of the barriers was we didn't have that skill set in our company. Right. I mean, easily, if I look over and say, I'll give you a case in point, like right now, we are considering doing some packaging for someone, and it's as simple as putting cans in a box, not a big deal. But I look at that and go, okay, we know how to do that, and we have manpower, and the assets are very well aligned to say, sure, I'm not sure if we'll do a ton of it, but good customer.
We're basically selling manpower here anyway. Right? So, yeah, of course, that was a completely different animal. I didn't have mechanical engineers and so on and so forth. I guess question to you would be, gosh, what would that look like where you'd say, oh, yeah, I'm willing to go build a team that has those superpowers to leverage that type of opportunity.
[00:31:36] Speaker B: There's not one answer to that. I don't know until I see it. It's just one of those things it's brought to you, and you evaluate it just like anything else. I mean, there's been a lot of those moments.
We bring a lot of opportunities, and there have been a lot that we've said no to, but there have been a lot we've said yes to. So I think we just got to evaluate and identify and be aware as they're brought to us. But the one interesting conversation I had the other day, and I might have mentioned this on last podcast, I can't recall, was the opportunity to potentially open another office, because there is a particular city where there's a lot of work going on, and they see us being able to play a major role and even as a partner for them. So it was almost like, hey, if you come here, we'll be your safety net, and you automatically have business in us as a customer while you get up and running type of deal. And that is something I am very interested in. So if I'm looking at the two strategies I'm most interested right now are, one, potentially opening up another location, which is not going to happen immediately. There's a lot of work between here and there, if it even happens. But that's one to be considered, and then two, it is, I wouldn't say to diversify products. It might be actually the opposite, which is honing in on the products we're selling right now, and in particular, a particular project, which is heavy civil projects, highways, roads, bridges, and then creating stronger relationships with manufacturers within that very specific product and project space to increase our profit margins. Those are the two avenues I think I see the most opportunity in right now.
[00:33:27] Speaker A: Okay.
[00:33:28] Speaker B: But in two weeks, I could say something different.
[00:33:31] Speaker A: True.
[00:33:31] Speaker B: Because that's just how I work. I am open to all opportunities.
Now what about you?
[00:33:40] Speaker A: Which part?
[00:33:41] Speaker B: Which part? What is your growth strategy?
[00:33:44] Speaker A: Right now we're doing more of know. We've been through an interesting.
[00:33:47] Speaker B: More of what?
[00:33:48] Speaker A: Well, just, just in.
[00:33:49] Speaker B: More podcasting.
[00:33:50] Speaker A: Yeah, more podcasting.
[00:33:52] Speaker B: Mcarnold podcasting is going to single handedly.
[00:33:56] Speaker A: The pay has been incredible so far. So I figured I could know, stop selling bags of air and just do this full time. Not even close.
Listen, I mean, we're out of business goes in these cycles, right? And it's funny, we were talking about piles, right, and constraints, the evolution of a business, at least in my experience so far. And not sure if this is particular to us or not, but in my role, I'm really just a big project manager and looking for the constraints. Our last big. Yes, the business has been growing and we've had some great growth, but at the same time we were lacking in infrastructure. So whether it's the building and some of the things we've done, we spent a lot of money creating supply. I feel like we're having a supply and demand conversation today, a lot, which is interesting, because when you were just talking about going to another city, the short answer is, well, there's supply down there. There's demand down there that's not being met. So I'm just going to go add supply. I mean, that's the real simple thing. And we've had to spend the last few years creating supply, infrastructure, whatever that is, so that we can sell more product. And now that we have done that, it's sales, sales, sales. I mean, a lot of the big chunk of our investment for the foreseeable future will be in the sales and marketing side of the business because we have all of this capacity that we've built, and now we have to go fill it. And it's not ever this one or the other. You're trying to do it all and time it all. When's the perfect moment to bring on that machine that doubles your widget output? And it's the same exact conversations and scenarios we talk our customers through. We're going through it internally as well, right? I mean, when do we double the widget production because we know the market's going to want more widgets. Well, there's that very fine line because the widget production doesn't double by itself. You have to invest in some fashion, and usually while you're doing that, you're making less money. Right. Or that investment is sapping your profitability until you can get back over and sell more widgets again. So for us in this moment, it's about selling more, which is just simply creating more demand. I mean, we just keep it on supply and demand today. That's a cool thought because economics 101, but it really does make the business world around. If you just look around, what businesses are doing is creating supply to fill demand that they've identified.
[00:36:22] Speaker B: Would you consider much like we are ever expanding the Arnold packaging or Arnold automation or both footprint?
[00:36:34] Speaker A: Always. But I would say yes, but not until in the short term, not until I sense that there's anything that looks like market saturation or we're done here. I'm not in any massive hurry to get on planes, trains and automobiles and spread our resources. There's so much wonderful business here in the DMV that we don't have. There's lots of people buying packaging that we're not selling it to.
And I think we're head down and our marketing team, which our production team is our marketing team, which is pretty cool, we're head down on the penetration piece to say, why are you buying brand b when you could literally buy brand a and working on that? Because we know in this market, with the assets that we have, transportation and so on and so forth, we're a very formidable competitor. Those are differentiators of ours. It becomes less hard to differentiate in another city. Or if you look at the investment that it takes, warehousing, so on and so forth, there's so much work to do right here in this market with these customers that I love. I mean, I love selling in our backyard, the people around.
Did someone describe the difference between Washington and Baltimore to us today? What do they say?
[00:37:47] Speaker B: Oh, Washington is.
[00:37:49] Speaker A: Where'd you go to?
Oh, no. What do you do for a living?
[00:37:53] Speaker B: What do you do for a living? Baltimore is what are you doing?
[00:37:55] Speaker A: Exactly. Yeah, that's. That's right. And I just know as I look at the people that we sell to and the great relationships that we have, it's like that. It's that very texture. There's such great texture around here and the people, there's lots of generations here. I really love selling to people that are like that and want to partner with customers that look like that and value partnerships that are conducted that way.
[00:38:23] Speaker B: One other thing we didn't mention, which I'm really surprised, especially considering you've done this a couple of times already, is acquiring other businesses, which that's something I just definitely want to do in my lifetime, not just to learn the process and everything. Obviously, it's got to be the right company and make sense, but that's something.
Recently, a couple of opportunities have been brought to my attention and haven't looked at any of them seriously. But I'm also always open to that. If there's a particular company that does something really well, that's another growth strategy and probably the easier one. I mean, you can go ahead and build it from the ground up internally, but if some other company is doing it really well and you have the opportunity to acquire it, that's a sure way to grow if you do it right. Thank you. That being the key. It's not that easy. I know, but to grow faster?
[00:39:17] Speaker A: Yeah, look, I mean, it's a faster way to book the revenue. It may or may not be profitable, depending on the type of diligence that you do, and you could end up. I mean, I've had friends in business that have made acquisitions that took them out just because they either didn't do the diligence or they didn't see some of the risks that were out there. And we've done two acquisitions along the way, and we're a small company, so obviously they weren't massive acquisitions, but they were massive to us, and they were massive as a percentage of what we were doing. And they had all the same type of risks. And if we had gotten it horribly wrong, it could have put us in jeopardy, or at least set us back for a long period of time. So, I mean, I love acquisition.
Acquisitions are really interesting in today's world, too, and they go in these ebbs and flows. We bought a company in 2011 and we bought a company in 2018. And what I remember about those periods of time, eleven, we were on the backside of that first financial meltdown, and it was a time when a company our size could make an acquisition. Right. The valuations of businesses were reasonable. There wasn't just this massive amount of capital sloshing around like it is now and like it really was. Prior to the Fed moving interest rates and 2018 the same, the market was on the rebound.
Didn't know there was a pandemic right around the corner. But I would say if you're a company our size and you're trying to do acquisitions with just your resources and banks or so on, I mean, I'm not talking about private equity or venture capital or any type of those other capital sources where you're relying on the balance sheet of an 88 year old business. In 2011, we were twelve years younger. Right. 78 year old business, and you are personally signing on the line and the failure might take your house. Right. So those are the types of acquisitions I have been through.
But right now, valuations are still incredibly, incredibly high, and interest rates are incredibly, incredibly high. So this is a tough acquisition environment for a company like us, the way we acquire. If I wanted to try to go out and command other people's money and sign on the line for those returns on investment, could certainly do it. But I think right now, I love the organic path. We love, like you do, going toe to toe and penetrating our competitors business and attempting to take it away from them. Never opposed to acquisition, but that particular mode where we are right now in this business climate, that's what our growth looks like. It's hand to hand combat.
[00:41:57] Speaker B: Yeah. I do like the idea, if we were to do acquisition, doing it the way you did, when you start getting private equity and other money involved, you're captive to a lot of other people. And that is something that the freedom and autonomy of literally bootstrapping a business and having 100% control is pretty amazing. I'm not saying I'm not opposed to doing it differently at some point, but not right now. But I think on the acquisition side, it depends what your goal is. Right. How fast do you want to grow? It's a way where you can grow a hell of a lot faster. I mean, actually, if you do it all yourself, you may never even get there. It's too much. I mean, think about how long it's taken us to build our businesses. If you want to expand and get into all these things, you might not be able to do it by yourself, but you can get there through acquiring businesses. But it depends what your goals are and what you're looking to do.
[00:42:52] Speaker A: Yes, that's a great point. Simple one, why grow?
So what are your motivations behind growth? I mean, everyone's like, got to grow, got to grow, got to grow. Okay, I agree. There was a sign we had hanging around our other buildings along the way. We don't have it here. If you're not growing, you're dying things along those lines. So at your core, what is your motivation behind growth?
[00:43:19] Speaker B: Sure. That's always the question I'm asking.
What is it? Yeah, good question. I mean, for us, we're growing because we're growing. Our customer base, they're asking for more things. If we don't grow, we are going to have to turn away a lot of work, which you can do that I don't. I think there's so much demand out there to be fulfilled that we're not fulfilling. So I want to grow just because the demand is there.
[00:43:48] Speaker A: Well, there's got to be some kind of fulfillment, though, right?
[00:43:51] Speaker B: Of course. Absolutely.
[00:43:53] Speaker A: And I already know the answer to this, but what's the fulfillment?
[00:43:57] Speaker B: I mean, for me, I can't stay stagnant.
I want to grow because I'm driven by challenge, by achievement, by, you could say some of it's ego based, for sure. And I would tell you you're absolutely. That's part of it.
Is that in the front of my head, like, I want to do this for me? No, but, of course, as you said, I could probably stay the way we are. I mean, live comfortably, do really well, not have all this stress of continuing to grow. But that's just not in my dna. I don't know. I have to have, as we talked about, some kind of, what's the next boulder? What's next that keeps me going? Like, that adrenaline, that drive. It might kill me, too. Seriously. And is in some ways. But it's also like, if I don't have that in my life, I just don't feel as energized.
[00:44:54] Speaker A: Well, the one thing you never said, and that entire answer was money. That was never a fulfillment.
[00:44:59] Speaker B: It's not right. That's just not it.
[00:45:01] Speaker A: And then the other thing I know about you, it would also be the idea, because one of our favorite questions is, do you love to win or hate to lose?
You'd say what you said now was, well, if I'm not winning, then I'm losing. And I hate losing because we both are hate to lose. We're both hate to lose people.
[00:45:18] Speaker B: I don't know. I love to win, too.
[00:45:20] Speaker A: Do you? Yeah, you do. But you never stop to celebrate.
[00:45:25] Speaker B: No, but that's a hard question. I can't choose.
What?
[00:45:30] Speaker A: You said you love to win, too. Yeah.
[00:45:33] Speaker B: I don't know. I walked the fence on that one. But all I know is I am so inspired and invigorated by just going, going, and the second I stop, I don't even feel like myself.
And, again, sometimes that's totally to the detriment of health. Other things like that where at some point it might be like, holy shit, you got to figure this out, because I have those other challenges, too, but it's just who I am, I guess.
How about you?
If I turn that question on you, why would you say, a, you want to grow, right?
[00:46:13] Speaker A: Yeah, I do. But it's funny.
I think that's one interesting thing about when you do own your own business or you are effectively. I hate this term, but I'll use it here, calling the shots. You do get to choose, right?
If growth is part of the strategy or is it more profitability? Certainly for the business to thrive and provide for all the people that it needs to provide for, you need to grow just by virtue of things, that it gets more expensive to run the business and so on and so forth. Unless you can continually work the profitability side of it exclusively, you're going to need to have some growth along the way. But yeah, I would say it's exactly the same thing for you, man. I love taking care of the customers. Right? I mean, that's my favorite part is I love the solution side, I love the innovation side, and I love the solving. And I've just found that in my career in the business is when we've done a good job of solving that, the customers show up as a result of that and therefore they buy things and therefore we grow. It's not the other way around. It's like, I got to grow. What am I going to do to grow? It's almost more of this truly organic thing which says if we do the right things, we build the right. If we listen to the market and we create the right demand and deliver it the right way, then people are, they're absolutely going to buy it. And as a byproduct of that, we're going to grow, not the other way around.
[00:47:38] Speaker B: There are two other things. While I'm really thinking about. While you were talking, some of the things you said triggered this. And while I'm really thinking about that question, why do you want to grow? So I've already spoke to the other parts of maybe it is a little ego, maybe it is a little selfish, all those things, or just it being written to my dna, those are all true. There is actually the other side of it, which you're speaking about, your customers. Two things for me are, one, the ability to grow and hire more people and give other people a great quality of life and learning experience. And the more you grow, the more you can do that. For a lot of people, that is incredible. Again, very stressful. When you're thinking about you are in charge of people's livelihoods. They're them, their kids, their families. It's a lot of added stress. But there is nothing more rewarding than knowing you're giving people a really great quality of life. So that is one thing. The growth and being on hire, more like. I love that. And I think about it, you know how much I think about who can we do for our employers or our teammates and that's constantly on my mind. So that, and the other thing, too, from a growth perspective, is when you start to grow, obviously you're more exposed in your communities, and all of a sudden your platform is growing. And I say platform from which now you have a voice, right? Your company becomes credible. More people know who you are. You're more exposed. All of a sudden you've got this foundation from which you can utilize for other things. All of a sudden, whether it's in the community. You have a voice now that is heard a little bit more than when you didn't have this thing called Arnold packaging here. Now all of a sudden you're MC Arnold, and everybody knows who Arnold packaging is. So you've just got a stronger voice that people inevitably are listening to, which allows you to impact things on a greater level than you could before. And I know that my voice prior to having Taylor construction and supply, I'm not saying people didn't listen, but they do listen a little bit more now. And I have a little bit more.
I don't know if I know anything more, but all of a sudden, my voice matters a little bit more to some people. But if you can use that voice and now you can have a greater impact on the things that matter. And I think you know how much you and I love certain things in our community where.
How deep. I'm digging in with Salvation army right now and just doing as much as I can for that. Because the mission is, you see what they do in Baltimore, it's unbelievable. Their house. For women who have been sex trafficking. We built this brand new house anyway. It's so rewarding and to be a part of that, but I only can be a part of that. I am only allowed to be on the board because I have a company. Had I not, I just wouldn't been invited to be a board member. So, I mean, there is that part of me that's like, it just allows me and us as a company to have more of an impact because you just now have this platform. And I knew that from the start that was always in my head. If you start to grow this thing, all of a sudden you're going to be able to do more. You're going to be able to touch more lives.
[00:51:03] Speaker A: Yeah, well, you get more influence, which makes you an influencer.
[00:51:06] Speaker B: Yeah, I think that was the word I was searching for the whole time.
[00:51:09] Speaker A: Yeah, an influencer.
[00:51:09] Speaker B: I hate that. Oh, the influencer.
[00:51:11] Speaker A: But I think unfortunately, somehow that got assigned to people on YouTube doing things.
[00:51:16] Speaker B: Like showing their asses now you're an influencer.
[00:51:18] Speaker A: Exactly right. I mean, I show my ass my entire career, no one ever called me an influencer and all the mistakes I made, but, yeah, no, I think if you can get that influence, but you're right. Unfortunately, if you don't make some noise in your space and gain some cred, you don't even get an invite to be able to get into the platform.
[00:51:34] Speaker B: Because there are so many people that probably have way more to say that's of way much value than you and I.
[00:51:40] Speaker A: That's true.
[00:51:40] Speaker B: But they don't have a company, and they just unfortunately, haven't been invited to the table. And that's just.
[00:51:46] Speaker A: We could work on that. I mean, what can we do to create that megaphone for people that may not have it otherwise? Maybe we could do it here on the platform, find some people we think are interesting, or maybe at some point we can still.
[00:51:58] Speaker B: You're going to hear about them because of, for some reason.
I don't know if there's a solution to that or not. I don't know.
[00:52:05] Speaker A: Yeah, I'm just saying, we know you and I are fortunate enough in our travels to meet a lot of really interesting people, that they're just smart and they're wise and they're interesting and don't know about platforms or haven't necessarily sought one out at this particular point. We should keep our eyes open for those folks and bring them on so that the world could listen to them because they may not get a megaphone otherwise.
[00:52:24] Speaker B: But that is the goal, I think if for people that do have a business and want to do really great things, just think of it. Well, now you have a platform to launch from to be able to impact. Just don't sit there and do your business thing. Use it to do other good things. Yeah, you can always do it. For me to be doing it, even seven years in now, it's really hard. It's very hard to have the time to do those other things. But it's important when you are at a point, certainly where you are now, where you can.
To not lever launch off of that from what you've built would be a shame.
[00:53:05] Speaker A: Yeah. And I will say, too, back to your if there's people listening, interested, it's such a great environment to do it now. I mean, I remember in my 30s, someone told me, get published. That was something. Get published, get published. And it stuck with me. And I love writing anyway. I mean, one of my favorite things to do is write. And I was able to, and I found some small publications or I submitted some whatever.
Now you have all these platforms where you can put yourself into a subject matter expert position, whether you're just doing it on LinkedIn or you're doing it on whatever your megaphone of choice is. It's so much easier now to get yourself into that position and create and build yourself as a subject matter expert. You need to be very smart about how you do it. Appropriate credibility.
That's one that you don't want to fake that until you become it in a public forum or a forum as public as some of those. But gosh, it's easier and easier to the megaphones are laying around everywhere. You just need to pick one up and say something that matters.
[00:54:08] Speaker B: Yeah, I too agree.
That sounds like a man. That sounds like a great place to end it right there.
[00:54:15] Speaker A: Yeah. Find your megaphone, pick it up, say something that matters. Boom.
