Greg Brenneman at The Mansion with CXRE Asset Director Rick Walker

Greg Brenneman on Conversations at The Mansion with Rick Walker

 

Greg Brenneman, an international businessman, is the chairman of CCMP Capital and serves on the board of directors of The Home Depot, Inc. Brenneman formerly served as CEO of Burger King, Quiznos, and Continental Airlines. In today’s episode, Brenneman discusses what he looks for in a new hire, what it was like turning around Continental Airlines, and his mission efforts overseas. About the show: Brand new guest-driven video podcast brings together the most interesting thought-leaders who provide viewers with unique perspectives at the intersection of media, business, politics, responsibility, and work, in a casual, fun, and free-flowing conversation at The Mansion.

 

0:00
We wanted to make sure if we were shut down for 60 days by the US government, we could pay our employees, right our associates. And in fact, the D o t invented the rankings of the airlines because continental was so bad at a true story,

0:14
sort of indirect command there that we’ve got to be first, first or last as as the famous Ricky Bobby said,

0:21
What’s the saying? If you owe a little the bank owns you if you owe a lot, you’re on the bank. That’s what we actually own. We are in pretty bad shape. Really what tithing is it’s really fasting from money so it doesn’t become a controller it can be a wonderful servant or a relentless master.

0:38
I’m Rick Walker. I’m sitting down with some of my most captivating friends to discuss topics ranging from politics and business to religion and pop culture. Welcome to conversations at the management.

0:56
Gregg Brennaman, welcome

0:57
to the mansion. Thanks. It’s great to be here. Rick. It’s nice to be here with you today.

1:01
Great, great, great to have you. Good to have you. Well, let’s jump right into business. I want to I want to get a little bit of your background. You started off education wise, I guess after undergrad school at Harvard and you ended up at Bain is your first consulting gig but so could you kind of walk us through that through that process that time of your life?

1:18
Yeah, absolutely. No, I I grew up in a small Kansas farm town. So in a Mennonite farm town, I grew up Mennonites, sub Amish relatives, and learn how to work really hard and to treat people with dignity and respect there and then I actually left to go to school in the big city of Topeka, Kansas and went to Washburn University. So I actually am kind of rolling with no real mascot so my the first mascot and Heston where I was it was a farm town. And there was a big company there that made swatters, hey swatters. Okay, and so we were the Heston swatter, so our mascot was a piece of farm equipment, and then I went to Washburn, and we were the Washburn checkerboards, after ecopod Washburn so our mascot was this man with this tall hat. So I’m still looking to get to a place with a good mascot, but I went to those and then after that, I went and got my CPA, I had my CPA coming out of undergrad, okay, and went and worked at a accounting firm called Arthur Andersen, which is kind of doesn’t exist anymore than kind of merged and, and combined. That used to be the big eight. And that’s the big four. And after that, went back to Harvard business school and got my MBA and went to work at Bain many years ago, when Mitt Romney was running the firm, so got to you know, spend some time with MIT, you know, and others doing that became a partner at Bain. And about two years into my tenure at Bain, three of us left Boston and open Bain stalis office. Okay, and so that’s a big office now. That’s a really big office. Yeah, we went from three of us to, I don’t know, 120 and like three years. So it really fast growing, it’s a big offices now Dallas and Houston. So they’ve come to Houston as well. And my son ended up working there for about 10 years, you know, many years after, after I did, he just left last year, and, and I was doing turnarounds at Bain. So taking companies that were really broken and kind of was leading Banes turnaround practice. And the one of my clients was Continental Airlines when it was in just terrible shape. It was a 10th place airline, you know, is 10th out of 10. And on time performance stamp out of 10 and baggage handling, had, you know, 10 out of 10. And customer complaints had 10 presidents in 10 years, and was working to help turn that around.

3:36
These days of continental, you can see the changes. Something new here. renewed sense of pride there. The fact is we’ve been listening to you.

3:52
And it’s showing

3:55
when we look

3:59
like the act and especially in the way we serve you.

4:05
And then David Bonderman, who own continental at the time was the only deal he had out of the bachelorette had left the bass brothers to do it called and, and asked me if I would be the president of continental and so at 32 I took a leave of absence from Bain initially and then formally left to become president at Continental Airlines. So that’s kind of my, you know, that quick stair step into how I started doing crazy things like turning around companies and, and, and having some fun too.

4:36
Yeah. So so funny, funny thing. We interviewed Senator Mike Lee last week, and who actually we’re gonna waste his video next 24 hours as well. You mentioned Mitt Romney. So I’m trying to convince senator Lee to pull rank with mitt romney. Of course, Senator Lee is 25 years younger than Mitt Romney as the senior senator of Utah and Mitt Romney is the junior senator. Yeah. And he refuses the poll rank and he said he I think he said mitt, Mitt likes to make the joke that any anytime you can you have the word Jr. in his title, he’ll still take that.

5:09
They’re a pretty good combination because I think they bring a couple different perspectives to the state and both incredible senators

5:15
definitely, definitely you sort of wonder what direction the states trending there are opposite ends of the conservative spa they very much are. Yeah, they

5:22
truly are. But yeah, I respect both of those guys. They’re both incredible individuals.

5:28
So growing up in Kansas, did you have that influence? That’s there right now with the Koch brothers? Were they were they really big back then? Or was it Yeah, no

5:35
show where I grew up in Heston was about 20 minutes from where they were, which tie is where the cokes are. And they’ve certainly were influential and become more influential, but it was a real town of entrepreneurs, that whole area. So my great uncle Lyle Yost, which who was my first mentor, he gave me my first job in the third grade. He actually if you ask him what his mission in life was, he would say it was to mechanize things for farmers. Wow. And so when he was a kid he used to when they bailed hay used to have to take loose hay with a pitchfork and throw it on the back of a wagon. And he invented the first hay baler. And then he invented those the machines that make their big round bales and the big square bales, you see. And he turned that into a fortune 500 company in Heston. And he also taught himself how to fly. So he was a pilot. And if you asked him what his purpose in life, what God called him to do, he tell you, it was to give away all his money before he died. Wow. And so he developed this missional approach of faith at work. And he thought if you create jobs for people, you’d earn the ability to speak into their lives. And so he, he started the largest what’s still the largest dairy in Latin America completely as an exercise to create jobs. For people that didn’t he built the Aspen chapel in Aspen, Colorado, if you go to Aspen, there’s a chapel in the middle of town. Yeah. It’s dedicated to my grandfather and to my great uncle, both who were preachers. And so just an amazing individual. But uncle while was pretty good friends with Fred Koch, who started Koch, but also with the gates brothers from gates Learjet and the Cessna brothers. And then later, a little bit later on, Frank Carney started Pizza Hut, in Wichita, so it was just kind of pot of entrepreneurs, and just a ton of businesses kind of spawned out of that, that group of entrepreneurial individuals, but my great uncle was very much a part of a part of that. And, and just an amazing human being. Sure, sure. And of course,

7:40
when for I think Fred Koch died, Charles Koch took over from Charles

7:44
took over from Fred. And, you know, I still stay in touch with with the Koch family, I saw Charles maybe three months ago, wow. Ta and, and spend some time with him and his senior management team, a lot of the folks they’re incredibly individuals and human beings, many of them I went to high school with. So I, our high school graduating class was 61 as the Heston school authors and of his top five guys a couple are from my High School, graduating class, and and from that era, you know, right around when I graduated, and then a couple more, you know, went to places like Emporia State and, and have done just amazing things. But it’s a, it’s a group of really homegrown individuals that Charles has mentored over a long period of time. Sure,

8:35
sure. It seems like there’s a direct correlation between his strategy and your strategy, because he’s known as being the CEO mentor, when he wrote these businesses, the Georgia Pacific guys, they’d bring in their Indian philosophies, and they would, they would, they would roll it out. And I remember, and I do want to talk about your Sunday morning group, small group. I know Kyle van is part Yeah, so the CEO of coke energy. Yeah. And it was also I think he was mentored a little bit by Charles Koch. Yeah,

8:58
Charles, he was really Charles right hand man for many, many years before he ended up at at Koch energy, you know, as well. And so it Kyle and I went back together. And it’s like a homecoming for Kyle, for sure to see to see Charles and the team.

9:14
So so so Kyle, and I were having breakfast One morning, and Kyle Kyle has been been mentoring me for a while, probably over the last 12 years, something like that. And he tells me the story where he walks into Charles Koch’s office, I guess he shows up once a month for this sort of leadership meeting with with Charles and Charles handing him the book, it was Louis Ludwig von Mises human action books, which is 1200 pages, if someone’s not familiar with that 1200 page book. And he said, Well, I’ll see you in two weeks, I think is what he said. I’ll see you in two weeks, and we’ll discuss it. Yeah. And so and so. So yeah, I mean, he’s running these businesses. I think he’s training other CEOs as well, but he’s also has his homework assignment to read this 1200 page book on Austrian economics.

9:57
And now Charles is a big thinker, right? Yeah, a very much is an Austrian economics. It’s been his passion I think for a very long time. And, you know, he’s he’s been very philanthropic as well he you know, sometimes you when you get into the press you never know how people are going to spin things and but he’s he and his brothers have done a lot of good in the world is as well with their philanthropy but but he is he’s a libertarian for sure.

10:25
Yes, yes, yes. Well Greg, I want to give you a gift just just to thank you before before we get started here so one of the one of the elements of the of the show is is fashion and design and so I tried to give everyone a little bit of a gift that they would that they wouldn’t Express why

10:39
you’re so dapper

10:43
so so this this Thank you. And so so we all we always give a couple of rules with the gift. Yeah, so these are only the war with jeans. Okay? joggers, okay, and so I don’t know if you if you want to take it out.

10:56
And can I open these up and take a look? And I texted Andrew for your shoe size. Oh, fantastic. Look at those. Yeah, I would say probably not with suits, but it they actually look like they could make it work. Well. Thank you very much.

11:07
Yes, yes.

11:08
Enjoy these. You’re welcome. You’re welcome. Sounds fantastic. Yeah.

11:11
And so the politicians, the politicians, you got a standard $20 or whatever the federal Yeah, yeah.

11:17
I appreciate that.

11:19
So one of the funny things is when I saw your, your YouTube history, my most views I think the number one the top the top watch video was interview you did at UK in society with Bill and Cody Nath so Cody Natha. I have breakfast Cody once a month. He was actually over here 48 hours ago, and I mentioned that you were coming and he kind of getting kicked out of out of that. But, but bill Nath and then Kyle van and I think how Chappelle Chappelle Yeah, have had the Sunday meet morning meeting. You want to tell us a little bit about Nash?

11:50
So yeah, no, when I was about 45, which was I hate to say it like 1415 years ago, now. I had come back from having, you know, worked with great teams to do the turnaround at continental and PwC Consulting, and then Burger King and, and all very successful. But I felt like, you know, going back to the example of my uncle while and his dual mission of being successful in business and creating jobs, but also translating that, you know, to helping others. I’d felt like the church in Atlanta to see you know, you’re neither hot nor cold, but you’re lukewarm. So I’m gonna spit you out. You know, Jesus says in Revelation, and, and so I thought I really need to actually, if I’ve been writing these one page plans to turn around businesses, I need to see if I can write a one page plan to turn around me. So I actually pulled out a sheet of paper and just put the what we call the five F’s faith, family, friends, fitness, finance, and thought all this two or three things under each of those that are blue chips, essentially, are the things you want to accomplish in life. That won’t necessarily make your daily to do list, right. And so the first of those under faith, I put, I want to become an intimate of God’s right AWT measures, a theologian has a statement, God doesn’t have favorites, but he does have intimates. And so I was thinking, what are the few things I could write down there to short a rule that would really make a long term difference? And the normal things are true. What do you read? What do you study? You know, are you spending time in the Bible, you know, or, you know, you’re spending time in prayer. But one of the things I thought that would be beneficial to me, which guys are terrible at and you know, me too, are terrible at is actually developing a close group of friends that were CEOs could relate to the problems that you kind of face running companies or, you know, working in the business world. But we’re also very strong believers and had good face. So out of that actually came a small group, we call it pro after proverbs 2717. You know, iron sharpens iron. And we’ve been meeting for 1415 years now. And so it’s a bill Kyle, and how, as you mentioned, and myself, and we meet, usually Sunday mornings before church actually is COVID hit and, you know, we actually met a lot longer because, you know, we weren’t kind of rushing to get done, but we start at usually 630 or so in the morning and go till like 830. So a couple hours and we either read something or right now, we’re going through toasters, you know, knowledge of the holy book, yeah, there’s a great book, but you know, we listened to a lot of Tim Keller sermons, we’ve done a number of different things, and we’ll talk about it and then we’ll just share life. Yeah, do some scripture memory would share life together. And we’ve been doing that now for probably 40 weeks a month. I mean, with people on vacation and stuff we miss occasionally but for 1415 years, and that’s been that’s been a life changer and anybody that whatever your age is, I wish I would not have waited till I was 45. But, you know, if I can look back and say, you know, if you could start that in your 20s be pretty cool, right? You know, to have that kind of close group of friends. Sure so those guys are fantastic. Yeah,

15:02
yeah. So you mentioned Tozer I think that book is where he drops the line. It’s not what you do that makes a man holy. It’s why you do it.

15:09
Yeah. He’s got a lot of great lines. And that you know, is he you know, he that’s another one that says what you what you think about God says more about you than it does about God. That’s right. Yeah. That’s right. Yeah. Pretty impressive. But

15:22
yeah, yeah. So I guess it’s down, we could talk for just just to jump straight straight into the book as well be. So you’ve got the book that center rounds centers around this five step, go forward plan, this turnaround plan. And you write the book up into alternating chapel chapters, business, organizational turnaround and personal turnaround? Would you walk us through the through the five steps and why and why you chose those?

15:43
Yeah, no, absolutely. So I really didn’t set my goal out to ever write a book.

15:51
I had, after we’d done the turnaround at continental, which was written up quite a bit in the in the press in the journal and in the Harvard Business business history articles. Yeah. And I got a call from, from Suzy wettlaufer, who was actually is now Suzy Welsh was ended up being jack Welsh, his wife, wow. But Susie and I went to business school together. And we were in the same same year. And we we sat next to each other at Bain. So we both went to Bain. Together. Wow. And so she was editor of the Harvard Business Review and as president at continental, and she said, Greg, we have to write about, you know how you guys did this? Because, you know, I’ve been following it. I’ve been reading the press, and it would be a great, your Harvard Business Review article. And I said, Now Suzy, we really don’t. And she kept bugging me. And finally, she said, What can you just send me something and I’ll play with it. And she was not people. Most people don’t know that she was a romance novelist before. She came to Harvard. So she was incredible writer, different, you know, different genre. But but so I sent in what I thought was, like, pretty pathetic, and I spent a few hours jotting a few things down and send it to her. And she sent back this just amazing article that she had edited, right, you know, edited, I put in loose quote, she had done a great job with it called right away and all at once how we save Continental Airlines. And so that was out there. And it became an HBS bestseller as people were thinking about in their own cases, how to either turn their companies around or if their company was what I call satisfactorily underperforming, which I stole from my early days at Bain, I was a Bain term, and could get better, you know, it was they were also applying it to that. And the way we actually turned around continental is, is it was really a five step process, part of which had been developed when I was working at Bain doing turnarounds essentially and doing it and the first step of that was write a one page plan. So have a plan and track your progress. And so for every business, I work out, I pull out a sheet of paper and I write, I write market, financial product, and people write, and, and then under each of those categories, just four or five things that are the main value drivers that will really, you know, transform a business, either, you know, tune it up, or you know, completely turned it around. And so the airline is a great example, we tried to come up with catchy phrases for each of those. So the market plan was fly to win. Sure, you know, the first bullet under that was stopped flying places people don’t want to go, you know, so I could go on and on. But the and then we fund the future was a Financial Peace because we said if we don’t have some funds, we’re not gonna have a future we’re almost bankrupt. That’s right. And then make reliability reality, you know, was the, you know, product plan, and we are so terrible. You’re the 10th place rated airline, you know, for years and years. And in fact, the D o t invented the rankings of the airlines, because continental was so bad. That’s a true story. And so we flipped that and said, We need to actually get people to their destination on time with their underwear, serve them good food, when they’re hungry, show movies when they’re bored, and do that 2500 times a day. And then the last piece was the most important called working together, which was the people plan. So having that plan, you know, four or five things under each of those four categories, no more than that metric. So you can tell where you were Yeah. And rallying, you know, 55,000 people around it, you know, really worked the stock went from six to 120. And wait for six years in a row were the best airline in America as measured by JD Power and we went to first and the on time performance and and became number 18 on the 100 Best Places to Work in America. So I mean, it was it was kind of magical. That was the kind of first piece that the second piece is build a fortress balance sheet. So that’s essentially make sure you don’t run out of cash and your debt matches your maturities. You know that for the real estate business. You know, it’s some sort of basic things that things people forget, you know, as they’re doing businesses. The third one was bank money and not money out. We say You can make an error, you can make a pizza. So cheap, nobody wants to eat it, you can make an airline so bad the service level, nobody wants to fly it. And that’s true about anything. So that’s kind of the third point is how do you generate revenue, not just reduce expenses. And then the fourth one was build a team, clean house if necessary. So you need to take your plan, don’t look at who you have on your team, but draw the team that is needed to fit your plan, the org structure, and then you know, figure out who you really need to execute it, some of those people you may have, but some of you may not. And you need to treat people with dignity and respect if you need to, you know, move them along down the highway of life, but you need to do that to be successful in any business. And then the last piece was let the inmates run the asylum, which probably in today’s words would be better expressed as you know, make sure you once you have your plan, got your fortress balance sheet, you’ve thought about how to generate revenue, you’ve got a really good manager team that can work with people and are people that can motivate people, then just empower the empower the employees to do it. And, and that’s the kind of that’s the five steps it you know, simple and easy are not the same thing. That sounds simple, but it’s often hard to do. Sure,

21:16
sure. So so before you’re making an offer on acquiring a business, I imagined step one, you’ve already identified some of the KPIs that are needed to cut some of these key levers that are if we change these three to five things, or three to 15 things that we would we would turn the business around.

21:31
Yeah, no, in fact, in like, as I was looking at whether I was going to take a CEO job or not, I would actually pull out a sheet of paper. And if I couldn’t write the plan, I mean, didn’t have to be perfect, because you need to check it with, you know, your manager and management team and other people that that know the business better. But if I couldn’t have a good idea of what to do, I didn’t take the job, essentially. Yeah. And and the same is true for buying businesses, if we can’t sit down and actually pull out that, what are the you know, we’re gonna in private equity, where I am now we’re gonna own the business for five to seven years, something like that? What are the you know, things we can really accomplish? In that time to grow the business? I really do believe God put us on this earth as business people to create jobs and grow things. And what are that? What are those things, those key levers, and there can’t be 50 pages, and it can’t be a tomb, it’ll never get read will never get done. But what are those really key things? And yeah,

22:25
it takes more time and more thought to do a one page plan than to do 100 page plan.

22:29
It really does. In fact, this gets attributed to a lot of people this statement, I’m about to make Mark Twain most famously. But it really if you go back and I traced it back to Blaise Pascal in the 1400s, who said, I would have written you a short letter, but I didn’t have enough time. So I wrote a long one. And if you really want to ever stump your management team, ask them to sit and agree and spend the time to write a plan that’s on one page that has no more than four bullets under each of those categories are five that’s in like 16 font, not, you know, two font, right, you know, where you need a magnifying glass. And you’ll have a really great discussion, because it’s hard to do it, but when you do it, it’s so powerful, because then you know, you can roll it out and communicate it to everybody. Yeah,

23:16
yeah. Build a fortress balance sheet. I think continental you use the cap one to the capital markets, and there was some attractive bond pricing at the time bond rates at the time. I think you use debt as a

23:27
well, we we actually inherited something a little bit different than that, so that I should credit jamie diamond, my friend with the fortress balance sheet idea. He was really a pro at that during the financial crisis. I went in to see him and he explained to me why he was still standing, you know, he had really focused on his balance sheet. So the term comes from really from him. But But the idea at continental when we got in there, I discovered maybe I was there three weeks as as President, and it was Thanksgiving Day of and I was going through the cash flow statements, and I discovered we are going to run out of cash in January, on payroll, January 17, was payroll we’re gonna run out of cash then. And it would have been Continentals third bankruptcy and probably wouldn’t have survived that they had to before we got there. And so I called the board and my partner Gordon bassoon is an incredible I was incredible manager and said, Hey, we got two choices, we can either negotiate with the creditors, they’re like eight or 10 that matter GE, Boeing Airbus, you know, Rolls Royce on engines, you know, you can imagine who they were or declare bankruptcy for the third time and nobody’s really ever survived that. And so the next Monday after Thanksgiving I found myself with with the creditors in a room and I said, Hey, here’s the deal. Here’s our go forward plan, you know, our one page plan and what we’re going to do to kind of try and fix the airline. And here’s our financial situation, right in terms of our cash flow, and here’s what we want from which was basically not to make principal and interest payments anytime in the near future. And they all started yelling at me. And so I got up to leave the room and they said, Greg, where you go? And I said, I’m gonna go home and watch TV. And they say, What do you mean, you’re gonna go home and watch TV and that? And I said, Well, do you know what the first step in problem solving is? They look at me kind of funny. I said, it’s who’s got the problem? I said, this whole company’s worth 175 million you guys are in the hock, you’re owed 12 billion, you fix it. And they came and got me, you know, 20 or 30 minutes later, and we work something out. And they were all paid off about 18 months later. Wow. That’s just how fast it turns. So we ultimately were able to access the financial markets after the the turnaround started happening. And you know, we became profitable, but but not right away. Right. A few things to do before that. Sure, sure. Let’s just saying if you owe a little the bank owns you, if you owe a lot. You’re on the bank. That’s right, we actually we are in pretty bad shape.

25:58
Yeah, I think I think it was jamie diamond that last 48 hours, they released her statements, he made a statement that he believes consumer accounts of $2 trillion in additional deposits right now. And they’ve seen a 26% decline in consumer debt on their balance sheet. And the last

26:14
Well, you don’t you don’t i don’t know what the the end implications of all that’s going to be but you don’t have to wonder why that is, right. I mean, what did we do 2 trillion a stimulus? Last spring? and 20. We did another I want to say six or 800? billion in December, right? Yes. And we just did another 1.9 trillion. It’s hard to even say those numbers. That’s like one year’s federal discretionary budget each time you say that number. And so we have like, piled on the debt. And we sent it to the consumer. So I think the consumer is super healthy. And demand is like roaring. I mean, the economy is roaring. But you know, I really don’t know that we needed that last stimulus to be on. I mean, we need to target a stimulus for people had been hit by by COVID. We’re out of work or, you know, people that were neat needing it, but I think we should be roughly done, I hope with this helicoptering of money, but that’s kind of why the consumer balance sheet is where it is. It’s it’s really been given to them by the federal government. That’s right.

27:21
There’s this dichotomy because people that I think we both probably know that the PPP first round camp comes up, and they apply and they get 5 million to $10 million, I’d have a friend, they got $10 million here in town. And that, I think, is the maximum amount. And, and so it’s run entirely by family offices, right, a separate entity, but the operating business needed for $10 million to stay afloat, which they would have invested, obviously, to keep the business afloat. But they said, Rick, we have to take the money, because we’re going to be inflated out of our current assets. Yeah. And there, I think they Right.

27:55
Yeah. Now, it’ll be interesting to see. I mean, at time will tell, but I do think we need to kind of come back and, and and just do it. Just, you know, I think we’re getting to the back end of COVID, with all the vaccines happening. And we’ll have to, you know, have to sort of mind our financial house just a little bit here to go forward.

28:16
That’s right. That’s right. management teams. Every time I just assuming that we’re coming, we’re going to take over a business, we’re going to it’s a turnaround, it’s a turnaround project,

28:28
the management team there is probably responsible, why it needs to be turned around. Is that typically a management team that needs to be replaced? It kind of depends on the situation. So I think again, if you take your plan out, and you say, Okay, now what’s the perfect team to execute the plan, not what do I have? In a really, really good company? Right? You know, I’m lead director at the Home Depot, it’s a really good company, this if you do that, you know, you probably have five or 10% You’re always moving people around, to get them into the best position to give them experiences and stuff. That’s more kind of normal management. But if you’re in a company that’s really broken, like we were at continental or Burger King was in the same kind of state, you know, that’s really and there’s you can think of other examples IBM under Lou Gerstner Chrysler under Lee Iacocca, way back when but but there’s lots of examples. It’s pretty hard for that sled dog that took you in the ditch to pull you back out right? You need some new talent. At continental we had 60 officers when we arrived we we actually did a basic test of that you know, I I had to state these in funny ways. So don’t take offense to them but I do a what I call an IQ dipstick test like you remember used to check the oil in your car with Yeah, dipstick. Yeah, yeah. If it comes out two quarts empty, probably not going to work. You know, you need to help that person find a different role. Sure. And then fly across the Atlantic test, which is, is this a person you want to sit next to flying eight hours in a plane is it somebody you can work with is somebody you know that worked so well with others because, you know, working together is such an important part of business. And so we went through the management team in that sense. And we actually ended up replacing about 50 of the 60 with 20 folks that were really, really could optimize on all those, both those dimensions, both they’re really bright at what they did, and very talented and, but also, were great working with other people and treated other people with dignity and respect, and did the same thing in many other businesses, you know, Burger King, and many of the businesses we own at ccmp, we apply the same process to Yes, you hope in a really well run business, you know, you’re just adding a person or two, or you’re just, you know, basically augmenting the skill set. And that happens many times in one that’s really pretty broken, or that needs a totally different skill set that becomes more intensive in terms of that. So it’s not always you have to replace everybody. But sometimes you do.

30:56
Before we start rolling, we had a conversation about Jordan Peterson, Jordan Peterson is a real big IQ proponent. He and Nicholas seem to leave a big argument on Twitter, everyone saw about IQ their IQ is, is is a good thing to measure people live or not

31:11
think why do we even have to debate this? And because it’s so bloody obvious to me that intelligence is a major predictor of life success. I mean, you people, I’ve measured the IQ of University of Toronto people, you know, people in this room who have an IQ of less than 120 are rare. Well, why? Well, smart people go to university. Now, is that actually a contentious statement? What shouldn’t be a contentious statement, it’s self evident, universities are actually set up so that smart people could expand their abilities. That’s why they were there. And you’re selected on the basis of assessments that are essentially there to assess something like intelligence.

31:46
And I think it’s illegal. I think it’s discriminatory in the United States to use IQ, pre selection, but I think you use cognitive assessments. And so we started using a tool that’s assessing the cognitive performance of people. And so we stopped hiring people that are not in the top 30 30%. I interesting. Yeah, Carnage performance, because they learn faster, they’re smarter, they, they’re better problem solvers and not spend as much time training them.

32:07
Yeah. No, it’s interesting, I’m sure you can apply a lot of theory. And to that we weren’t we were much more organic in our approach, you know, we just, you know, said, we actually looked at the people who were talented in the organization said, Who do you know? Yeah, right. Who do you know, that’s really good, you know, if we needed, say, a pricing person at continental, or we needed somebody in opposite Burger King, you know, we did kind of, you know, who do you know, that you’d want to work with that you think is excellent. And we often ended up getting folks that were number two or three in that positional lineup at a competitor or, but you know, we’re probably smarter than their boss. And not embarrassed to do that a lot. It’s not a bad way to not a bad way to hire. Yeah,

32:50
I get my cognitive assessments back from from my management team. And I realize I’m the stupid one. Yeah,

32:54
no, exactly. I’d be scared honestly, Rick to take one of those tests I might have passed. Just don’t

33:00
share with anybody. For sure. So you’ve got these different elements, when you’re looking at at placing a team member in a in a leadership position, you’ve got obviously cognitive capacity, the dipstick tests, you’ve got resume, you’ve got integrity, you’ve got some other other variables, there are relevant workhorse education, things like that. What are some What are maybe the two or three things that you that you put most emphasis on that, that, that they’ve got to be these two or three things before you even get up out of the gate?

33:29
I think I think just a demonstrated ability to work with other people successfully, somebody you’d really want to, you know, be in the trenches with so that that’s just so fundamentally important, because life’s way too short, you know, quite honestly work with jerks. So so. And then I also kind of put a lot of emphasis and thought into diversity, ethnic diversity, gender diversity, but just diversity of thought and idea and experience. So you’re looking to develop a pretty well rounded team. And then obviously, just a capability, right? I mean, just, you know, what have they done? If they’ve done it before? Do they have the ability to do it? So I’d say probably those three? Yeah, I’m sort of constantly thinking about

34:12
so so. So in your book, there’s an underlying tone, a bias towards action? Yeah. There is a general tone of focusing on money in versus money out, which is a more of an aggressive stance for business. A lot of business guys are operators, they want to cut the OP x, but they don’t want to focus on marketing and sales. But you’re you’re I mean, you’re a big proponent for sales marketing. Seems like you’ve got this kind of aura of being aggressive and being being out there in advancement in action.

34:40
Yeah, it’s a it’s a good point. I like to say I’d rather somebody make 20 decisions a day and get two of them wrong, and fix those then, you know, take two months to make a decision. So there’s a clear bias of action. If you’re turning something around, it’s really broken. You don’t have any choice. I mean, you got to go fast, right? But but the companies that are satisfying Really underperforming, that are doing fine, but not, you know, hitting their full potential. Those are the ones where you kind of have to push a little bit more on the, you know, on the organic growth. I’ll tell you, I admire Craig minear, who’s the CEO of Home Depot and a dear friend of mine. He’s just constantly pushing, as was Frank like before him, but what can we do better? How can we think about this better? How do we go from just bricks and mortar to true interconnected retail. And, you know, the stock price, like every day now hits a all time high. So you can kind of see the results of that it’s fun to watch. We love buying businesses that actually are what I call fantastic industrial businesses. But that you can actually take and transform from a market perspective, like digitally transform them, use a new technology and a couple good examples of that generac, the home standby generator company has a fantastic CEO, Aaron yada, we own that company for a long time. And it was a incredible manufacturing engineering company. But almost had a little bit of the philosophy way back when this has been true for years now, of you know, this would be a great business, if it wasn’t for the customer, right? They just so much love the technology and the manufacturing, we did a lot of things to kind of look forward and Aaron put a little chip in the generator that when before it could get turned on, essentially by an electrician that was installing it, they’d have to register the address. So all of a sudden, you knew where all the generators were being installed, and you knew where to market right simple things like that. We actually learned just in traveling around with the installers, that the people that install generators are electricians, right, that work with high voltage electricity. And there’s almost a direct correlation between people that work with high voltage electricity and introverts, you know, they tend not to be, you know, sales type people. So we developed an iPad app that when you went into a customer home, you could say, what do you want to come on? Do you want your refrigerator Come on, or you want your hva see half your house, your whole house when the power goes out, and that iPad app would lead you right to a sale and actually price it for you and everything, so it has videos in it. So with it for an introvert, it’s very hard to kind of sell they had a tool that actually was very helpful to them. So you’re currently trying to think of things like that. We actually own a pool equipment company now called Hayward which is a leading supplier of pool equipment. If you’re down here in Texas, you’re you’re probably short pool equipment after that I storm because the pumps and the heaters and stuff. But we we’ve done a lot of things to transform the company with variable speed pumps, high efficiency heaters, UV and ozone treatments, take out a lot of the chemicals and has fast payback. But probably the coolest thing is these controls. Now if I could pull up my cell phone and show you this, we had him rewrite an app for it. The app was terrible. I mean, you could hardly use it to sort of control your pool if your iPhone and we brought it you know, as firm a 26 year olds in sort of redo it, it’s now the number one rated app on the App Store. Wow. And you can control your whole pool on the app. And there’s 93% attachment of product pool product to the app. So if you have the app, you’re putting in Hayward pool equipment, and so it’s been a fantastic. I mean, I can’t tell you how well the company is doing. But it’s been a great company, but it was satisfactorily underperforming in terms of go to market. Sure. So new management, new CEO, new CFO, new head in North America new management team, but also some tools that really helped to digitally transformed the business. So those are examples

38:38
of how that works. So so I want to I want to use digital transformation as a tool to get into this idea of speed. And I can just tell you in our in our internal business, we’ve got Zach that’s that’s watching off camera, who’s one of our top leasing guys. We looked at about two years ago that the transaction speed making an investment in tying the CRM with the with the signing platform, our leasing side, of course, you own commercial real estate, the top line is based off your revenue from leases. So the leases, if you speed up lease assets you spoke for do you deal flow in your in your revenue agreement? Well, with that we’re going to invest significant money and time or CRM with our E signing platform, just just take take a few minutes off the cuff. So what we measured a couple of months ago was that when you send out one of these 20 or 30 page leases to these tenants that we were able to cut the the average time to sign so they’re going to sign a lease. They were signing it, I think it was in three and a half minutes on average. So think about that 30 pages, you’re not reading the pages in three minutes there to sign it. We’ve had some crazy things happen via that esign platform, people just sign it on their phone, just because you know the technology there you make it easy. It’s convenient. It’s the natural thing to do. We’ve had multimillion dollars, hundreds of page contracts signed in in less than 10 minutes before using the same sort of thing and so little incremental improvements. They’re really, really accrued with up to the top. Huge, huge and you know, in leases, that’s perfect, right? it you know I,

40:07
I sit on a lot of boards, I have a lot of board resolutions I need to sign. And if they send them to you in a PDF now coming to your your iPhone, you can of course actually just hit on the PDF, you have your signature you’ve already left in there, it’s your signature, move it up to your signature line, pop it in there and send it right back well, right where it used to be, you know, print this thing out, sign it, find a fax machine, you know, or, you know, or or FedEx it back. I mean, you can now do it in a fraction of that time. And it’s perfect for documents like that. Right. So races are perfect. That’s right.

40:43
And so we’ve got the spiceworks action, which also has an implication towards speed. Yeah, deal speed transaction speed, you mentioned that, that you’d rather someone make 20 decisions to get a couple of them wrong. They’re not making decisions at all, because you really allude to this feedback loop. And the quicker we can turn around this feedback loop, the more progress we make over time

41:02
now. Absolutely. And and time is precious. And particularly if you’re at a company and you’re either growing or turning it around, having people be able to fail fast. Yes, with some guardrails, right, you know, you don’t want people you know, betting the company on anything to do that. But but fail fast, get the feedback get better improve their decision making it, it’s critical to sort of optimizing a business, right.

41:27
I think john Maxwell wrote the book, sometimes you win, sometimes you learn. Yeah. And I mean, that’s, that’s really, really, you should

41:34
always, always be making mistakes, right?

41:36
Yeah, yeah, that’s right. And I think there’s there’s a lot of research that’s been that’s been done on the the idea of trying to communicate to the the management teams in the in the multiple levels of an organization, on the concept of the cost, actually delayed decisions, the cost of not making the improvements sooner rather than later. And the cost of weight is typically far greater.

42:00
Now, there’s a lot of studies on that, for sure, you know, in terms of the in terms of those loops, one to say, one thing you can do for your whole organization, for those of you are running businesses, to kind of speed this up, and to help people think about it as if you have that one page plan. So everybody’s focused on going east today, you know, in East is like, in my mind, oh, 702110 on the campus, you know, nine, O nine o is perfect east, okay, you know, then you’re fine, you can let people have some degrees of freedom, if they’re going to seven oh, you need to turn them around. But once you have that one of the tools from very early on, we used certainly at the airline, but I’ve used kind of my whole career. It started out with voicemail, essentially, where you’d set up a one 800 number, and every Friday afternoon, you’d leave a voicemail message with, here’s kind of what our plan is, again, here’s what we did last week, here’s what we’re going to do this week, here’s what I want you to know. And especially for organizations, leasing would be a great example, airlines with people spread out were a great example, or Burger King are the franchisees we’re all over the place, you know, all over the country all over the world. People would dial into that, and they get an update once a week in terms of, you know, here’s where we are, here’s the progress. Here’s kind of what we’re focused on. And it really helped people keep people informed as to where we were on the plan, right? And that personal communication at the time, you know, dial into voicemail. Now you can leave them a video, right? I mean, there’s a lot of newer technology now you can use to do it. But being able to personally hear your voice. And you being able to personally take their feedback and actually act on it and reflect on it and push it back out really does speed that improvement time and brings everybody along at the same time.

43:46
Yes, yes. Yes. So I can tell you so one of the one of the interesting things is the foundation that I’m chairman of right now we hired I think a friend that friend of yours waters Davis.

43:57
Oh, yeah, waters is great. What are some of my best friend at Harvard Business School?

44:00
Yeah, I think I think I thought I’d heard that. So we brought him in, right after his tenure, being president of reliant, energetic and 10,000 employees, whatever was there, and it was nice bringing him in, because as a board member, we don’t have to worry about anything, you just you just you just turn them up, turn the keys, you just let them go. Yeah. And and, and so one of the things that, that he stresses is it’s really important in a larger organization, that that you as the as the chief executive that you notice that there’s a lot more places where you get to the word know, before you get the word go, yeah, that there’s there’s not enough permission. There’s not there’s not a lot of controls a lot of negativity, risk aversion in large organizations with not a lot of places where they say, Go, Go make a go make a run out of go be aggressive on this. And, and so that was one of the things that that I learned from waters. And so as we’ve as we’ve looked at and had, I guess, structures that we try to set up over time, we’ve tried to implement these I think this is maybe a Harvard Business School I am this this this responsibility matrix is raci matrix where you set up the responsibilities, accountabilities and so forth in these organizations. Did you use it does use a formalized structure Do you use formalized structured for to talk about responsibilities and accountabilities are new.

45:16
Now, we really, we probably didn’t, you know, we probably weren’t as formalized as we needed to be, we would, we would, you know, we just do a lot of communication kind of, of what we wanted to have. And then we set up both at Connell Burger King, we set up one 800 numbers, where if employees, any employee saw anything wrong on the system, or anything they thought needed to be addressed, they could actually call in, and we would get back to him within 24 hours with, we’re gonna fix it or, you know, we’re not, and here’s why, or, you know, we need to study it a little longer. And here’s one we’ll get back to you. Yes. So and then every morning, particularly at the airline, we would have a meeting with representatives, leaders from the flight attendants, and pilots and mechanics, the gate agents, the entire ops team, and we would, we’d go through and we’d address those. And so, you know, do that two or three years, and pretty soon, you’re in pretty good shape. So we in a sense, it’s had that feedback operation. And then the Continental when we got there, Burger King was the same, we had so many rules, do this, do that, you know, every time something went wrong, somebody write another rule. And pretty soon the rule book gets to be this thick. Yeah. And so, you know, we basically got to trash cans and diesel and and lit it on fire, and basically just sat down and with folks developed two or three pages of general guidelines, right. And then you can, your leasing example was a good one, because you can put some, some technology inside of decisions that are being made. So I’ll give you one, everybody would think about it, the airport, a gate agent, has a problem of flights been delayed, somebody’s bags were lost, something happened, they should have a set of tools where they can actually delight the customer, right? And that might be an upgrade, it might be you know, we’ll deliver your bags to your home by this time, whatever that is, right? They ought to be able to make that decision on the spot. Well, if you have technology in there, and you see that the same gate agent, upgraded 20 people with the same last name, and it happened to be their same last name. I know they upgraded their whole family, right? So then you can go back and you can say, Hey, we’re not doing that we’re not, you know, yeah, we’re not here to upgrade your whole family. But what we’re here to do is delight the customer. So you don’t need to set so many rules in place, you can actually use technology to kind of help you allow people the freedom to make a decision. And then if you see patterns, or you know, you know, somebody makes a mistake, you can go back and address it, but you give them the freedom to make it for sure offer we used to say, you know, at at the airline for sure that it’s a captain’s airline. So if that if folks are there, and you want to, you know, your decision to take off, right, you know, you make the decision and the system control people, there’s kind of a Star Wars like place that controls that in the entire network at airlines. You know, basically whoever’s running that you know that that shift, that’s their shift, right? They make the decision. So are they going to make all right decisions in terms of what flight to cancel? What flight not, you know, when to slow down things in New York? Because there’s weather coming are probably not perfect, right? Yeah. But you know, you can’t make all those decisions at the top, you have to let people make those decisions. That’s

48:23
right. And I think I think I saw a lot of pictures of you actually in Home Depot stores. Yeah, over the years. I mean, you spent a lot of time with frontline worker we

48:30
do. Yeah. Now we spent a lot of time with our associates. We really love our orange blooded associates, and Bernie, Marcus and Kenny Langa are going and Arthur blank were the founders of Home Depot. And they developed two pieces of strategy, which were brilliant, right? two sheets of paper. One was an inverted pyramid. And it starts with customers at the top, you know, is it’s inverted. So, and then it has the associates, right, the orange blooded associates, and then store management, and then that store Support Center, right, you know, which is our headquarters, and in the CEO, right, the board doesn’t even rate on this thing. But that’s the, that’s how the company is run. Right? So it really is to empower the associates to make the right decision. And there are famous stories of this happening of associates in the early in the day, taking tires that people returned at Home Depot, Home Depot doesn’t even sell tires, right, and get rid of my credit. So yeah, so that that’s very rewarded. And then we have a value wheel, with the culture of the company on this value wheel. And that’s the other thing and quite frankly, we’ve added a third one, which is a stool that Frank Blake and Craig minear came up with, which is an interconnected retail, so kinda, and that you could run the whole company off those three sheets of paper. Wow. Right. You know, I mean, it’s all values, right? It’s all it’s all hanging into your values and it’s a complicated big business and, you know, it’s, it’s, you know, admire the management team. There’s doing a great job, but It really comes back to those core values.

50:01
That’s right. That’s right. I think of someone like a horse schultzy, who started kind of the modern day Ritz Carlton. Yeah,

50:06
exactly same. Same power. The same was a Walmart. Exactly right. Same thing. Exactly. Yeah. And her

50:12
soaz I mean, I think even the housekeeper’s in those in those Ritz Carlton’s have the authority to make anything, right, they own all the problems, they hear whether it’s their problem or not. Yeah, and I think it gives them a $2,000 per person budget to handle each complaint if they need it. They need Yeah. And so and brilliant. It is, it is, and they don’t know when maybe someone abuses it somewhere along the line, but but for the most part, it’s really, really worked. And we actually brought in about every three years, we’ll we’ll do a year a concentration on the Ritz Carlton, customer service metrics about how to ramp up how to onboard a new project, that sort of thing. A lot of similarities. And I think they do things. Right. So let’s get back to the the balance sheet item. Obviously, right now we’re at a time of low interest rates. They’re artificially low, I think I think the Treasury and the Fed are, are clearly working together towards towards impacting that, for obvious reasons. What, what is the decision whether or not to take on debt for a business in order to reinforce their balance sheet, especially, especially in a time like this? Whenever we have low, low interest rates and a little bit of uncertainty in the future? Yeah, no, I

51:15
think it really does depend business to business. And I’ll talk about business and I’ll talk about life because I think that those are two are pretty different. Yes, you know, that the business side, so you got to decide what’s important to you, and, and what you really, you know, what you want to do, you don’t want to get out of balance. So you want to make sure your maturities are long enough out there, you have plenty of cash, you know, and all that. And certainly, some businesses can handle a decent amount of debt. But I remember this time last year, Craig Muneer is the CEO of Home Depot. And, and, and the CFO and I were talking and Richard macphails, the CFO, and we decided the most important thing to the company, and there wasn’t even a question. And back to that inverted pyramid was, we wanted to make sure if we were shut down for 60 days by the US government, we could pay our employees write our associates. And it was the single most important thing. So we said, well, how much would it take to pay our associates for 60 days, if we’re totally shut down, you know, we’ll have a little bit coming in off a.com. And you know, all that. So we did the math and the math was $11 billion, it would take 11 built, we didn’t end up getting shut down. But But we were essential, but $11 billion. So we had 3 billion on the balance sheet, but a $5 billion commercial paper program. So that’s an eight. We went to JPMorgan, we got a line of credit to backup that commercial paper program. So we got a $5 billion line of credit. And but the markets were closed, the bond markets were completely closed in March of last year. And we needed 3 billion more, right? So in looking at Craig and Richard, I said, you know, if Home Depot can’t open the bond market, there’s nobody can open the bond market. So let’s go try. And they went out and credit to them. within two hours for that 3 billion we had, we had like $29 billion worth of demand. So at like, under 3%, right, everybody wanted Home Depot paper. So we actually borrowed five. So we got to 13 ad to give ourselves a little bit of a cushion. We never really needed to use that. So we were able to use it to do an acquisition we wanted to do later and and we had a little bit of negative carry on the cash on the balance sheet for a little bit. But the point really was we wanted to protect the whole reason we did that was to live to the culture to protect the associates from something really bad happening to them and their family. And there’s 500,000 of them roughly So sure, that’s a lot so and a big piece of the economy. But if you think like that, and that’s why you’re pulling your debt down, and it’s to keep with your values and to manage your business. That’s an extreme example depot’s a very successful company. But but but that that’s a pretty good use of debt. So I think you can use it you know where it makes sense. And we do in our business all the time. I think personally, once you write your one page go forward plan. So you take out your sheet of paper and you write faith, family, friends, fitness, finance, and you figure out what that is, you want your personal balance sheet to be set up, so that nothing stops you from executing that plan that God has put in front of you in your life, right? So you always want to ask the question, is this decision or is this increment mental amount of debt gonna cause me to be further or closer to my maker to be closer to or further away from my family, to allow me to invest in building my friendships, you know, to allow me to maintain my health to exercise to take care of myself, and, and you really want your personal balance sheet to match, you know, alongside of your plan to make sure that you actually own your life. The bank doesn’t own your life. Right, right? That’s right. And and so that’s a different answer. I’ve got some general rules of thumb for people in terms of how much to spend on housing and you know, how much kind of debt to take on but I think in your personal life, the less debt you can actually manage to, the better off you, you are right, because it gives you freedom, you know, you get, in fact, on the, you know, where build a fortress balance sheet is kind of the business step I use for personal life, I use this step for finances called choose freedom. Right? Because you want to you want to be able to to do you know, to fulfill God’s calling in your life without a bank having call on a call on you.

55:38
That’s right. That’s right. And I think the predominant command in the Christian faith is fear not Yeah, I mean, that’s the most common command that our Lord gave us a second second, maybe maybe the money, don’t he read certain, certain verses. And so if we, if we have a fear, and the fear is intrinsically built into this debtor, borrower relationship with the lender, it really hinders us.

56:02
It does hinder us and it also hinders, another thing that’s important so in in business you think money and not money out that’s right in life, it’s exactly the opposite you think money out not money in because generosity is the only cure for materialism. And you can look at the 13 major worldviews you know, Christianity, atheism, enlightenment movement with the manual, can’t Judaism, the Muslim faith, the only thing they all agree on is that we need to give alms to the poor that we need to help those out that are less fortunate. Well, if you owe a bunch of money to the bank, and your and your own cash, personal cash flow situation isn’t balancing because you’re out spending your your income, right, you’re living above your means. Your chance of really being truly generous and getting the blessing from being truly generous, you know, goes way down, right? So that’s just another reason why you want to keep your personal balance sheet in in pretty good shape.

56:59
And you cite the great CS Lewis quote from your Christianity, the only safe bet is to get away more than you can afford. Yeah, I think he I think he stole that from from Wesley as well. Yeah. You know,

57:09
everybody. You know, it’s funny because I was given this talk, this commencement address at my son’s school when he graduated, which is Asbury University, my youngest son and which is a Methodist. theological, theological school. But you know, he went to the undergrad there. And so I was going to be talking not only to the undergrads, but to all these, you know, theologians. And so I wrote this ad this, this talk up on faith at work, and I sent it to Tim Keller, and he said he, I think he stole this Greg from my book, every good endeavor, which I honestly didn’t, but I probably stole some of the concepts. I probably got some of the concepts from there. But I told I told him back I said, Tim, I think you stole everything you got from CS Lewis, who took it from, who took it from King Solomon, who said there’s nothing new under the sun. So the reality is, you know, I think some of these time honored, you know, principles and, you know, are really, yeah, I think we all we all live on the shoulders of giants, right?

58:07
Yeah, that’s right. That’s right. I’m gonna put the Disclaimer This is we say anything. It sounds smart, we stole from summer, we just can’t remember. I can’t

58:13
remember where I tell everybody. I’ll give you attribution the first time and after that, I’m going to take it.

58:19
That’s right. That’s right. So so you, you introduce the topic of books. What sort of books do you enjoy reading you because you’re an avid reader? Yeah,

58:28
I read a fair amount. You know, I like I like all kinds of books I used to read probably until I was like, 45. I read a lot of I like a you know, I read a lot of the john Grisham, Greg Iles, kind of things to relax. I don’t really do that anymore. So part of that epiphany of I probably had to watch what I read because you can only read so much. That’s right. And I really do personally enjoy reading theology. So I read a lot of I read a lot of theology and, and books and books like that. I love history. I love historical biography, as well. So yeah, I like reading books.

59:05
So I do. I’ve been doing 50 books a year for I think it’s my eighth year. That’s great. And same sort of thing. I I tend to read more theology, if I’m looking at business books or theology, I’m gonna, I’m gonna just go ahead and

59:15
yeah, read this theology takes you to a different place. And in a week, quite honestly, we get a lot of business interactions. So

59:22
yeah, you know, it’s probably a probably more important place to be. That’s right. Right. And I’ll still know the line from Lewis he says that you can never understand the lower medium without understanding the higher refers. Yeah, having the perspective is right. And so understand the higher the theological endeavors help us help us better understand business and PR and deal with people now. It’s important.

59:41
Yeah, absolutely. Yeah.

59:42
So so what what sorts of authors and theology books to you?

59:47
Well, I you know, I love reading treasure. j. i Packer, you know, is another, you know, excellent to read. I think I’ve probably read almost everything. Tim Keller’s written. He’s a good friend. Really, this CS Lewis of our time, just an amazing human being. So on the theology side, I, you know, I like those I really enjoyed, you know, David Brooks wrote a book called The road to character, you know, in New York Times columnist. And it was, I thought David did a great job with that book. I enjoyed that book. So

1:00:17
you mentioned the virtues in there that you didn’t

1:00:19
have, yeah, he, he talks about my favorite kind of quote, I use a lot from that book is, you know, there are resume virtues and eulogy virtues, you know, resume virtues, or how somebody introduces you, when you’re giving a speech, or you know, doing a podcast or whatever it might be, you know, sort of the litany of stuff you’ve done in your life. And, you know, in the very end, those are really not so important. Right. You know, I mean, it makes you feel good when you hear him but you know, not so important. But the eulogy virtues are what really, you know, matter is, what do you want people to say at your funeral? Yes, right. Where do you want to have invested, you know, throughout your life, and that’s the point of writing the one page personal plan, it’s really to get, you know, in poker, there are red chips, white chips, and blue chips, the white chips are a buck, the red chips are 10, and the blue chips are 25. And in, I sort of think of it like that, you really want to get those blue chip things that if you don’t focus on time is just going to pass. Yes, you might be spending a weekend with each of your children every year, it might be spending, making sure you spend time with your parents, you know, doing something meaningful, it might be making sure you spend plenty of time mentoring other people, or after you read a good book, sending it out to those that you think might get something really meaningful out of it. You know, it’s it’s those kinds of things. You know, my wife and I, and with Britton, Julia Harris, who are dear friends have been doing marriage, a marriage summit for the last 13 years were younger, you know, couples, things like that, that you’re really trying to build longer term value that will extend past you know, your time on sure on earth and to pass it on, like folks have passed it to us. Yeah, right. I mean, we’ve been, I was fortunate really to have some amazing mentors in my life, whether my uncle Lyle, or I got to spend a lot of time with 41, George HW Bush, and when Senator Lloyd Bentsen, here, you know, and yeah, he was on the Continental Airlines board. And really, yeah, he he actually, when he left government, he actually came on the Continental Airlines when he called me and he said, Greg, I’d like to meet with you once every three weeks. And I said, I want to do a couple international trips with you. So I said, guy, you know, that sounds fantastic. So so we would meet, and and then we went to goin srH together? You know, I don’t know, two or three months into this. And we went to see, Madam, the president there. And we got there. And, and, you know, I was, you know, continental was driving flights into these places. So that made some sense. And we had this honor guard, you know, with the soldiers with the swords and all that. So we are and so we’re in the car, and he said, Greg, at this meeting is for you, with the president to talk about air service. So why don’t you you know, go first I said, with all due respect, Senator, none of these guys would be here, the fancy swords in the band if it wasn’t for you. So you go first. He said, Now let’s walk together. So we did, but I asked him like six months into this. I said, you know, Senator, it’s been an incredible honor to spend this time with you. And I really appreciate it yet. But I said, I have to ask you a question. He said, What’s that? Greg? I said, Well, why did you agree? Or think, you know, reach out to me to kind of help mentor me. And I don’t know how many of you remember senator Benson. Right. But he had the most famous debate line in the history of political debates epic against Well, yes. Yeah. Against Dan. He was debating dan quayle, who was a young senator was President Bush 40. One’s running mate. He was running with Mike Dukakis. That’s right. And they were having this debate. And and Dan Quayle was comparing himself to JFK because of age and temperament. And so huge

1:03:55
mistake

1:03:55
here. And, and Senator Benson basically ended the debate by looking at him and saying, Senator, he said, I knew JFK. He said, Senator, JFK was a friend of mine, and he said, Senator, you’re no JFK.

1:04:12
I have as much experience in the Congress, as jack kennedy did when he sought the presidency. I will be prepared to deal with the people in the bush administration, if that unfortunate event would ever occur.

1:04:26
Senator Benson?

1:04:29
Senator, I served with jack kennedy. I knew jack kennedy. jack kennedy with a friend of mine. Senator, you’re no jack kennedy.

1:04:46
And that was basically game set match. Right? So it’s that same tone and kind of smirk. He actually looked at me and said, Greg, the reason I decided to mentor you is because you need it. Wow. Which was, you know, it’s classics. Senator Benson but but, but he was just an amazing, amazing man. So he was so but I was fortunate to have those kinds of guys as mentors. So if you think about mentoring and helping other people, I think we all need a Paul and Timothy, someone who mentors us and someone who we mentor. And, and so he tried to pass it. We all need to pass it along.

1:05:20
Right, Jim Jim Collins new book, I think it’s b e 2.0. talks about his hulak I think some people refer to these people these these chance random encounters that you have where you meet these people. Kyle van was one of people.

1:05:30
Yeah, cause perfect example.

1:05:33
We’ve got, you know, just two or three people in everyone’s lives that maybe they really made a huge change in the trajectory. So Lloyd Bisson, the third who’s still living is a real close friend. We have a joint once in a while. Amazing family. So so we’re sitting, we’re sitting having lunch, probably three or four years ago. I just he and I, and in walks Neil bush. Now for the people aren’t familiar with it. So it was it was George HW Bush, Dan Quayle. Yeah. Versus Dukakis. And Senator Benson. Is that is that is that so? So they so Lloyd, so Lloyd, the third stands up, I stand up, and we have this interchange with with Neil bush. So these are the sons of probably two of the big icons of both of the liberal and the conservative movements in the 1980s. And, and I just sit there, Greg, I’m just an all of this conversation. I’m thinking this is this is kind of a quasi historic moment where these two guys compare notes. And, and so and so we sit back down, and I just never realized how involved the partnership between Lloyd the third and Lloyd Jr, which is the senator Yeah, really was how close that Father Son bond work.

1:06:45
Yeah. And he was close to his sons, for sure. I respect his sons immensely. The The interesting thing about you kind of say, conservative and liberal, the interesting thing about those two guys in their generation is they were all the greatest generation, right? They came out of World War Two. And they knew what it was like to fight for the US and and actually, the country was way more important than the political position. And Senator Benson was a very conservative what they used to call in the day blue dog. Right, right. And Senator and President Bush was a very compassionate, what I call Republican, right. So, you know, they actually politically even though they, they competed against each other, not in that only in that race, but in another race, early in their career. They were actually very philosophically close. And they were quite good friends. Really. So yeah, it was, it was a different day, as they say. And, you know, as I think about politics, I long for that, you know, I got, you know, I had the opportunity to know them both pretty close, closely. And I kind of long for their, their true sense of what America is, and, and the teamwork that’s needed in the country.

1:08:00
That’s right. That’s right. And you and I don’t want to I don’t wanna get into a tangent with with politics, but it seems like it seems like both sides, both parties have just gone to the extreme. Yeah. And there’s no, there’s no common ground back then. Obviously, the blue dog democrat would be sort of a moderate republican these days, there

1:08:16
would be absolutely yeah, no, for sure. Yeah. And, yeah, I think we’ve, we’ve actually nailed down where the extremes are now we need to sort of see if we can figure out some in between.

1:08:25
That’s right. That’s exactly right. That’s exactly right. So in the in the context of trying to put together this executive team, that they’re finding the right people, Jim Collins line again, which is which is epic, which is got to get the right people on the bus, we got to give them the right seats there. It seems like that that may be most of your job. If you’re if you’re coming in from a private equity standpoint, just getting the right people there and let them

1:08:51
yeah, no, no question. In private equity. What you’re trying to do is take the company and write that plan with management, right? Yeah. Preferably, as you’re kind of looking at the buying the business, you write it together. And then and then you just want to make sure you have the right folks to, to execute it. And if those right folks are in place, fantastic. Life is so much better. But if not, you know, you need to, you need to sort of make that happen, right and get and get that team in place. And, and in because you’re you’re you’re owning you know, 1012 businesses at a time or something, you really want to get yourself in a situation where, you know, they do you know, run the car, I mean, they are running the company or not running the company.

1:09:32
That’s right. That’s right. So it seems like the job of the CEO, I guess, I guess, of the private equity CEO is really to monitor the CEOs to have a team on on staff that can support them probably focus more on opportunities rather than problem solving.

1:09:47
Yeah, well, there’s a little bit of both. I mean, there’s always in every business and problem solving as well. But what we do in our firm but maybe a little different so half of our partners are owners like myself are are traditional operators, right? We’ve actually run businesses, we’ve been CEOs for private equity, you know, done that sit on boards, like Home Depot and others. And half of us our traditional private equity guys have been in their private equity their entire career. So on every deal we do, we have one of each, at least. So we have that balance. And I think that’s worked out really well. Because if you’ve sat in the seat of the CEO, and you know, what their problems are, and what their issues are, you can actually be, you can provide a different kind of counsel to them than what they would get just from a financial, you know, a financial person. And likewise, the partners that have been financial people in their careers have a lot to add in. And, you know, deal structuring and capital markets and other areas. But but that model has worked pretty well for us, right. So so in 2006, JP Morgan Chase decided they want to get out of the private equity business if memory serves, and so they spun out ccmp capital, I guess, the future ccmp capital, and you joined a couple years later, yeah, yeah. So the way the way that worked, I talked to Jamie at the time, he had actually they had just done the merger of bank one and JP Morgan. Okay. And I think they have did that merger, just to get Jamie right, which has been precedent. He’s probably one of the better CEOs in the world today, and has been for a long time. And he ended up with two private equity firms. So he ended up with JP Morgan partners, and one Equity Partners. One equity was run by a fantastic guy by the name of Deke cash. And it was a bit quite a lot smaller than JPMorgan partners, JP Morgan was kind of the merchant banking operation of the bank. And so Jamie decided to spin out JP Morgan partners independently, and that became ccmp says chase chemical manufacturers or Morgan partners. And that happened in 2006. And I had been talking to Jamie and to the the team, the ccmp. Team tight, you know, for a while kind of through that process and officially joined them in 2008. To change the business model a little bit to this two heads are better than one model, right with an operator. And so I’ve been Executive Chairman there for since that time,

1:12:09
so we’re already in private equity, in that in that before you got into that role. No, I

1:12:13
was actually still running company. So I had run, you know, I was still running. I think at the time they spun out, I was still running Burger King. So So I’ve just been talking to him for a while I had my own family office, which I call, you know, been around a long time called turn works. So I was doing some stuff in there. But but but now that was my kind of first foray to go into the dark side and leaving run companies and go into private equity.

1:12:37
Yeah, yeah. So so in the private equity business, one of the big strategies, obviously, if you got strategies around different verticals, often, obviously, around different industries, different plays, Turn around, turn around deals, minority majority stakes, you guys, obviously, in the turn of business, you have to focus on majority stakes, you got to get controlling stakes village.

1:12:56
Yeah, in fact, we’re almost entirely with very few exceptions, controlling stake oriented, you know, in our business, and we actually have over time really focused the business, I found the fastest way to make money and stop doing things that lose it. Right. And that, you know, comes back to the great continental example of, you know, I looked at the schedule, and when I got there and 18% of the Flying was cashflow negative, it wasn’t covering the cost of the food, the fuel, the crew, the aircraft rent. And I said, Well, why don’t we go Greensboro to Greenville eight times a day when both customers are on the first flight? So I’d say a strategic and I’d say, well, when did you ever make money? And they’d say it never did? I’d say how strategic could that possibly be? Right? Yeah, we’ve all had those conversations. So the same thing is true on private equity. You know, when you get when you’re part of a big bank and coming out of a big bank, like they were, they had a little bit of everything. So they had some real estate, Latin America, they adventure in California, they had an Asia thing they you know, a lot all over Europe. But if you really did the study of where do you make money, right, about 120% of the profits came out of middle market, private equity, consumer, industrial and retail, right. So our consumer, industrial and healthcare, so we focused just on North America, consumer, industrial and healthcare. And over time, we just got really tight and really, how

1:14:09
are you defining middle middle market as like 550 million dollars in EBIT? Ah, or how do you

1:14:14
think it’d be pretty small for kind of what we do? Yeah, show so I’d say depends on the company, but that would be at the very small end, okay. You know, that up to, you know, I don’t know, probably the biggest we’ve owned is a billion. So So, so but you know, more of them would be in the sort of, you know, 150 to 250 range. And then, you know, like, a couple of businesses we’ve sold lately, and, you know, when we bought them, you know, one of them was 130. And by the time we sold it, it was 310. Right? So we’ve grown essentially over four or five years. And the goal is to grow businesses. I mean, that is the goal. It’s it’s to grow businesses create jobs. We

1:14:55
got we got to get into a one on one Bake Off with Zillow backed Private equity or Zillow back subsidiary last month, and it never just got crazy. It’s not crazy. And I’m realizing that people have access to the capital markets, especially, especially if they’re not direct capital market related. They’re, you know, they’re going through a parent covenant company, a subsidiary, they just really have no concept of what good businesses and they’re just trying to acquire assets will. And and you guys don’t don’t make acquisitions like that. You’re you’re more more kind of medical industrial. Yeah, yeah,

1:15:28
we’re more, we’re more, you know, we will pay up for good businesses, but will not, you know, we’re not, you know, by eyes bayana a multiple of revenue people. Right. So, you know, we’re real earnings, real cash flow. Yeah, I wish quite honestly, we were good at investing in technology, we are great at doing digital transformation of industrial companies, or consumer companies, or healthcare companies that are, you know, real companies. Sure. But you know, I wouldn’t even have a clue what had a bet on the net, next, Facebook or the next, you know, Amazon or Google or something. I wish I had that skill set, I’d be a lot wealthier if I did, and, you know, we could get more money away. But, but so we try and stick to what we’re good at, which are North America, consumer, industrial, and healthcare.

1:16:14
Yeah, I think the I think the old version of Benjamin Graham’s Intelligent Investor that I that I have access to, I think their last data set on on on sectors was from like, 1926 to 1976. I think and, and he said that during a time of high inflation, which was where I think it looks like, you want to get out of everything except for industrials. Yeah. And, you know, maybe some some power companies, things like that, that have to have some protection margin through through regulatory requirements. But it seems like tech tech may be a good place to escape from right now.

1:16:49
Yeah, yeah. I don’t know. It’s, uh, every time I think that I, you know, it goes up some more so so I don’t know, we, we don’t invest there. But yeah, I’m in all the people that have gotten that, right. Because they’ve, they’ve obviously been able to see around the corner a little bit.

1:17:04
That’s right. That’s right. So the, if you a few years ago, I was I had this interesting dinner I had dinner with with a young guy, he was in his 20s. We’re both in our 20s. And, and there was a group that brought the 300 top CEOs from around the country to a one week old participating in South Beach, Miami, South Beach, put it with the Ritz Carlton, we thought we thought we were fancy stuff. And I had dinner one night with this with this guy in his 20s. He said, Yeah, I just sold my, I sold my company, my tech company to AOL. And and they, they just ran into the ground for 18 months, I bought it back and I’ve got $6 million left. And he said, Rick, I’m just gonna put this $6 million into a into a bond and like, you know that that’ll be on retirement when I get to be 60 or 70, or whatever would be, he said, I will never ever spend that $6 million. So we stay in touch a little bit. And, and about probably three years later, I turn on the news. No, I see I see an article, I see an article that this person was now the second wealthiest person in Canada, because he took that $6 million and founded a company that became known as Uber. Oh, wow, wow. And asked and so so I’ve been I’ve been falling at a distance where he’d buy the I think he bought a Malibu mansion for like, 120 million or so. But it’s something just insane like that. Because there was that that one more that one. One more. Yeah. And, you know, you know, Benjamin Graham, for instance, he received that would be idiotic thing to put, you know, high risk, you put you put your last egg in and put in a high risk basket based

1:18:32
if you’re going to do a do while you’re young.

1:18:34
That’s right. That’s where you got time. You got time. Yeah. So So how do you how do you mitigate risk? Or do you even bother mitigate mitigating risk from from an investment strategy from from the private equity level?

1:18:45
Well, I think there’s a lot of risk mitigation you can do, you know, currency Counterparty, you know, you go through those No way, you know, everybody said, you know, mitigating risk really became understanding what banks you were actually working with? Yes. Right. So, so you need to keep your eye on those kinds of things, and things that you don’t think would matter right now, you know, like that, you know, kind of matters sometimes, right? So you got to pay attention to it. But in terms of hedging, and stuff like that, we buy really good businesses that we think we can grow. And, and then, you know, sometimes we’ll take them public, we have three businesses that are public right now. And so we have some market risk, right. And in the stock, we won’t hedge that out. But what we’ll do is, once we take it public, we’ll look to liquidate it reasonably quickly. You know, to sell it out. So we’ll, you know, we’ll mitigate risk risk that way. And then, you know, personally, I think as you’re looking at your own portfolio, you really just want to make sure you got a good balance of cash and, and equities and it you’re just balanced right? Sure. No, it’s probably just the same way you should eat your lunch as well. Make sure you eat a balanced lunch or live your life right. I think it’s, you know, all good things. kind of come with, with balance, but we’re constantly looking at, you know, our debt maturities at at, at the end interest rates rates, you can borrow so inexpensively now but it’s the one thing you can’t do is like you’re you have to have a line of credit and you have to have your debt that actually matures, you know, long enough into the future that you have. You can execute your plan. I like saying private equity is like a long dated option, right? You have an option on a company for a very long period of time to make it better. You just don’t want anybody shortening the date. That’s right. And that and that’s where you get into kind of risk.

1:20:35
And you guys don’t don’t do any shorts, you’re not a full hedging firm.

1:20:38
We’re not at all We don’t trade publicly. So it’s everything we buy is, is private, we might take it public. Yeah. And then we have shares to sell out because the companies become successful in public buyback. But

1:20:49
you’re not buying tips or inflation adjustment securities to offset anything. Okay. We, we like we’d like to use I’m old school investing strategy. And I like to look for high regulatory businesses. Yeah. So for instance, we have an elevator business, and we’ve got our obviously a brokerage. But yeah,

1:21:08
there’s but there’s barriers to entry around those. That’s right.

1:21:10
Yeah, that’s right. That’s right. And so and so do you do you see these barrier barriers, barriers to entry businesses is worth higher multiples over time, especially when you look at making the acquisitions initially, and what you’re going to dispose it for? Well, if

1:21:25
you go back, and some of you kind of will recognize Porter’s five forces, right, you’ve seen that paradigm before. If you look at businesses through that prism, you can actually understand what those barriers are. So they might be regulatory, like an elevator company, or you know, or a brokerage firm, it could be regulatory, there could just be market barriers because of technology or because of patents. Yes, or because of the competitive dynamics. So this business that we own now, Hayward, in the pool equipment business, there are three global suppliers of pool equipment, right? So it functions really, really nicely as an industry. Yes, there’s a good healthy, you know, competition, but but it functions very, very well. So you can actually look at businesses and say, what are the barriers to entry, the barriers to exit? And competitively How is that going to function? Certainly regulatory barriers are one, there are other barriers, right? in technology or in market share, or capital availability, or, you know, manufacturing capability. But those businesses that do have those barriers around them, right, where, you know, people can’t enter, you know, quite as quickly Real Estate’s an interesting one, because if somebody can get a permit, say, in Houston, Texas, where we are, there’s not much zoning, that’s where you can pretty much build, so you probably ought to pay attention to what permits are being filed before you put up another big office building, right, you know, you know, what’s, what’s kind of going to come on the market, right? So I’d say the barriers, there aren’t all that high, right? So you need to understand it a little bit differently. But But and there are a lot of businesses like that the oil and gas business is the perfect example of that. Right? The what you’re producing is a pure commodity, right? There’s no differentiation to speak of, so you better make sure your cost structure is in line you got you know, access to the to the best transportation and all that kind of stuff, where in something that has a barrier, like you’re talking about, like the elevator business, you have a few more degrees of freedom. Yeah, because the chance of getting disintermediated they’re just a lot lower.

1:23:30
That’s right. That’s right. My favorite business we have a we have a federal government business. And we we we manage very very complex real estate related projects for them that also require a software component so we have able to capture the data control the data and and be able to have a little bit of a captured audience least over five years, you know, trying to get these five private deals over time. And that’s my favorite business because the government is so difficult to work with Yeah, they are so so impossible to work with. And they don’t realize that whenever they open up competition, they’re gonna get better pricing and more competition or a better quality over time. And that that’s the that’s the ironic thing is these guys have never read any February pass by car or anything like that just just for you know, free market principles if you apply to the to the federal government, they’re gonna work

1:24:19
yeah. Now for sure. Yeah, it’s, there’s there’s a lot of examples that we own a business in Canada, that’s a integrated facility management business that the project side they’ll go in and retrofit buildings with hot LED lighting and high efficiency hv AC and windows and insulation, and then on but their bit their most of their business is actually managing that remotely, right. So they’ll put sensors in, they have, you know, several 1000 Hv AC technicians in Australia, the US, Canada and the UK, and they dispatch you know, to do that, but they cut the electricity usage of the businesses so tremendously and there they went every ESG award you Because of that, but that’s got a really significant barrier to entry, because you’ve got the, you know, getting skilled labor right now is so hard it is. So if you actually own the skilled labor and you own the software package, and it that allows you to monitor the sensors to control, the contracts you get are very long. And the customer retention rate is over 99%. Yeah, because of the value you’re providing. So that’s another kind of example, like you’re talking about just a business that it might not look to have a barrier that’s totally regulatory, but it has a practical barrier, because the customer service provided that’s just fundamentally sound.

1:25:40
Yeah, yeah. The big espc is like Sylvania energy service performance contracting companies that did sort of that back in the back in the early 2000s. really cleaned up. Yeah, I mean, they did really, really well.

1:25:50
Good. They’re good businesses, and they do well by doing good, right. And so they’re actually reducing the carbon footprint as well.

1:25:56
So you say you said on the personal level, is the inverse from the business level businesses, you think money and not money out? personal level you think money out? Not my man. Yeah. alluding to a concept of philosophy of generosity as a as a mechanism really just to solve your, our natural read as as people.

1:26:15
Yeah, no, you know, it’s, yeah, exactly. No, I think, obviously, that the Christian philosophy certainly backs that up. There’s a lot of verses in Matthew, and throughout the Bible fact, money is the number one thing talked about, yeah. And the Bible, and God tells us you can either you know, love me or money, but not both. And, and, you know, it’s really what tithing is, it’s really fasting from money. So it doesn’t become a controller, it can be a wonderful servant or a relentless master. That’s right. So, so basically, but paying forward and making sure God doesn’t need our money, but we need to, we need to give it to help others. And but you don’t even have to if even if you’re not Christian, if you’re, you know, an enlightened us or an atheist, and you still go through the literature, you know, everybody really does believe that giving alms to the poor and helping those less fortunate is super important for our own mental well being as as well as obviously to help out but but but it’s, it’s just super, super important.

1:27:17
So some of my business partners, my best friends are Hindus. Yeah. And they are very good, very generous, helping helping out the poor. And one of the one of the ideas about generosity is something that Randy Alcorn talks about in one of his books, I don’t think it’s the book on the head. And I think it’s maybe the the treasure principle where he, he uses Luke 1234, as an example, where your treasure is there your heart. And he says, you can direct your heart, if you put your treasure the first time that the heart literally follows the treasure. Yeah,

1:27:44
no, I think he’s probably absolutely, you know, right on that. And we’ve actually for years and years now, by 15, over 15 years, we’ve given away money as a family. So we have our whole family involved in it. And our kids are all responsible for certain philanthropies that we’ve decided under our family mission to support and we use Christmas day for that, Rick, so we, we have a family meeting on Christmas day we have, we do the Christmas story and and open a few presents have some brunch, and then we spend the rest of the day actually going through and allocating what we’re going to give away as a family that year. And that’s kind of how we spent Christmas Day. And that’s actually added a whole new meaning to Christmas, to sort of focus on on others versus on, you know, on yourself, and, and our kids who are now not kids anymore, they’re 30 to 30 and 28 are really, really good at doing this. So they they’re responsible for, you know, bringing for, you know, bringing an annual report for the charities we support. And actually, for recommending others, the only rule now is that they have to, they recommend one, they also got to make a recommendation of what which one to drop, because there’s only so many you can actually you know, support well, and it’s time talent and treasure. It’s not just treasure, so it means you have to be able to spend a little bit of time on it. That’s right.

1:29:07
And that’s the big challenge of the Christian life. That’s what makes the Christian life really unique from the restaurant religions is it’s a it’s a faith in which demands, the whole person demands, the intellect demands, the life demands, the personalities demands the the effort and the work. And it’s not just an intellectual

1:29:23
exercise. Yeah,

1:29:24
exactly. Exactly. So there’s a there’s a great, this great group of private equity guys in the Manhattan area, because you spent a lot of time in Manhattan sounds Yeah,

1:29:33
still still not not in the last year. But prior to that? Yes. Yeah.

1:29:38
So they wrote I think a couple of guys wrote a book based off their their their case study with the Robin Hood foundation. Yeah. And so are you familiar with this? So

1:29:47
I’m not familiar with the book, but I know the Robin Hood foundation. I know that I know, the New York Community pretty well. Okay.

1:29:53
Okay. So so it’s really unique because they were trying to figure out they’ve got this mission to help bring people out of poverty. They’re funding grants around around things like education, prenatal care, after school programs, even making sure people have food that’s necessary. And so they had to try to quantify all this and how to how to roll up to their, to their mission. And so they grow through go through the statistical analysis of how they do that on a forgiving spectrum, and how they rate each of these individual efforts on here, because they’re issuing 100 200 300 grants a year and how do you? How do you get all that to roll up and deploy capital in an inefficient measurable format? And I really like the ingenuity that business guys like you and they take to the nonprofit space, because it seems like a lot of the really sharpest a lot of the sharpest business guys are stuck in. Focus on business. Yeah. And and they don’t really use their talent, yeah, to serve nonprofits. Yeah, we’ve

1:30:51
enjoyed, I enjoyed doing that. So you know, in that in the things we support, we, we try and help out as well, and sort of making sure there’s, there’s really sound business principles, and even inventing some things that they can do, or say, giving them some ideas of some programming. Because ultimately, you want the programming to be self sustaining, right? If you’re just donating. And there’s not something that’s why, you know, my uncle, while had this, basically, giving philosophy of creating jobs was kind of behind everything he did, he thought you could speak into somebody’s life, if you if they had a job and their family was taken care of. So we’ve kind of adopted that, too. So almost everything, all of our giving is focused on creating jobs, whether it be in Honduras, or, you know, wherever we’re doing that kind of work. And, and, and that actually enables itself for you to set up a mechanism where you say, if we’re gonna do something, ultimately at the back end of it, it has to be self sustaining. That’s right, right. Because if it’s not, it’ll just go away. Right, once the donation stops, you’re done. Exactly, essentially. And so we’re always trying to think about, you know, how do we develop models that we can seed the funding and, you know, start the process, but you know, by, you know, second generation of it, it’s, it’s got a self sustaining model.

1:32:16
Sure, right. Sure. Sure. So I was I was in Honduras, with Kyle, as you go down there, a few years ago, when he was telling a little bit of project that you guys, I think, I think you guys have worked on, maybe a Farm to Market type of,

1:32:28
yeah, we, we have two really pretty big projects going on there. We’ve been down there, we’ve done this with the Nath family bill, NASS and, and Cody, and you know, folks, you mentioned before, where the first one in the origin was a project called thrive, where you would take communities that didn’t have any water at all, you know, were walking, you know, miles to get dirty water, and you’d work with them to drive water into their community, they would build the systran, you’d work with the engineers in Honduras to pull the water over mountains or from streams or wherever you needed to to fill the cisterns. And then with pvc piping just laid out over the the floor of the forest, you’d actually take it to their individual homes into fields off of that, then we set up communal farming. So the whole community would come in, instead of making sustenance farming around their house with a little bit of corn and coffee, and you know, but really just for their consumption, they’re living on about $1 a day, okay. So basically, you would start doing peppers and tomatoes and things like that, that are much higher value added. And then Walmart was kind enough to come in, and we hooked up with Walmart and some others to pull that produce out of there. And that actually took the family up to about $16 a day. Wow. So instead of not being able to go to school, you know, walking everywhere, they have these little motorcycles and you know, they basically their life improves quite a bit. And, and life expectancy expands and, and they can feed their families, and they have some degree of continuation of being able to do that. Because when you’re living on $1 a day, if like there’s a drought or there’s a flood or I mean, you’re so close to, you know, not not existing that you know, you don’t have any margin, say, and then with some of them and Cody really played a big role in this, we actually were able to drive them into coffee production, and set up this coffee Co Op, which is called cafe 504, which is the area co vision, World Vision, this all World Vision. Yeah. And then actually send that coffee to Europe into the US gourmet rated coffee. So those families are up to like $50 a day. Wow. Right? So you can see the progression, right, and that’s World Vision. So that’s called thrive, you know, loosely. And then the other one, I was really perplexed as we were down there that we were doing this unable to do this in the rural areas, but in the urban areas. And it actually helps with immigration too because they have great jobs down there can take care of their families. They’re not looking Can it come to the US, you know, and USA ID starting to get behind this now, which is just for the first time, which is great because this, this will help solve that problem, the and then in the city, so there wasn’t anything there. So we developed a program that we just conceptualized called rise. And in that when we didn’t want folks to get trained to get a certificate, but unemployment of youth is about 75%, or something, I mean, it’s incredibly high. That’s why they’re all in gangs. And it’s a very dangerous place. But we worked with the churches and, and we went to the business community and develop job training for youth from, say, 15 to 25. And we started with 1000. And we’re now I think, this year going to do, I don’t know, between five and 10,000. But you said kind of come through this program, we’re actually training them in what the businesses want and decision making and that kind of thing. And then they actually graduate and about 60% of them actually end up going into business jobs that the businesses have ready for them. So the franchisees, the movie theaters, the banks, that retail establishments, the cell phone companies have are all hiring these graduates, and they really want to get a hold of them. And so the self sustaining part is now we’ve asked them, What does it take you to train an employee because they say these are the our best employees, they’ve been trained. And they say, like 2800, to train and hire a good employee. So they said, We said for you give us the 2800, we can create a self sustaining loop of training people and sending more and more people out all the time to as employees. And so that allowed people to leave the gangs. And the gangs were very supportive of this, because they want their brothers and sisters not to be in the gang. And if they go to church to get trained, they really do respect to churches. So it’s been organic, but it’s actually really developing into something cool. That’s now getting exported across the triangle. And ultimately, a World Vision serves 100 place 100 countries so can get exported around the world. So but that’s the kind of creativity that if you just see the problem, and you say that, you know, this might be worth you working in the rural areas, but the urban areas are just and everybody moves to the city. That’s right. So you have to have a solution for urban. Yeah, that’s right. So anyway, that’s just one example kind of create a job kind of stuff.

1:37:17
So one of my friends, when he found out that I was going to be able to have a conversation with you. He said, Ask Greg about purpose, meaning, and really how you would defined define the life that that is one live with purpose and ultimate, ultimate value. In the end? How would you measure that? What does that look like?

1:37:36
Yeah, it’s a great, it’s a great question. I got asked by a group of CEOs I was talking to if you know, early in COVID, like if you could define managing at a time of crisis in one sentence, what would that be? And that’s kind of hard to do. I think God placed on me, I said, you know, leadership, or leading in a time of crisis is all about absorbing fear, and exuding hope. That’s right. Right. And so I think if we think about purpose in a little bit the same way, you know, what we’re here to do, I really think is business people. We’re here to create jobs. But if you can absorb some people’s fear, right, because everybody’s always fearful of what is that change in my life? What’s the next step? I have to take? You know, all the way down? If you’re in Honduras, it’s in my gonna have food to eat tomorrow. I mean, it gets very basic. Right, right. And you can exude some hope of here’s a way actually to the other side, right, to improve and, and succeed and, and, and feel the success that comes from, you know, working hard and achieving, then, you know, I think you’ve actually, you’ve kind of created purpose such it’s, I don’t know if that’s a great definition of purpose. But I think, if you can help do that with people if you can help absorb fear and exude hope. That’s right. There’s a lot of purpose in that. Yeah.

1:38:54
Yeah. So I want to I want to wind down with sort of the merger of two different two different concepts. I think probably eight 910 years ago, Kyle stuck me on a list of us. You host a dinner you and Brett hosted every October of every timeframe of 50 or 60. CEOs. Yeah. And, and you always bring in a great speaker, I think maybe four or five years ago, one of the themes there was taking taking this first out of Matthew, maybe Matthew chapter 11, where it talks about the kingdom of God is being stored by violent men and these violent men are are taking are taking and there’s different derivatives based off of what translation you use. Paul, Paul puts it a little bit of a different way in First Corinthians, I think it’s chapter 10, maybe nine, where he says, we’re all running a race, but there’s only one person that’s gonna win. So you’ve got to work to be that one person mean, you’re gonna exclude a bunch of other people. You got to beat people to be to be first. And that’s, and that’s the challenge. And almost, if you believe in authority from Paul, he is closer to God for it than we were then when we are. And so we ascribe authority to Paul. And so that’s sort of indirect command there that we’ve got to be First, first or last as, as the famous Ricky Bobby said. So we’ve got these two different orders of aggression that are pent up in our, in our, in our Christian scriptures there. And you took that theme very, very well and and gave a challenge to the CEOs in that room. And as I look and I and I see the work that you’re doing, using your influence to effectuate change and CEOs all over the country, through your books, through the books that you give away, I think every year in the conversations that you have throughout the year with them, what is what is your mindset? What is your What is your passion, like for the CEOs and in trying to effectuate change that that’s eternal change, not just change within businesses norms? Yeah,

1:40:42
that’s a great question. I think we all have a calling to a higher purpose, right. And, you know, what Paul tells us is to run the race, right? And, you know, make sure at the end of the race, you know, what we’re trying to hear is well done good and faithful servant. So I don’t think that means edging a lot of other people out, I think it means if you can encourage people to run that race with you. It’s a lot more fun running in a pack. Yeah. than it is running alone. Right. So so so I think, you know, I think doing that’s important. But, but I think God has given us and it’s part of work, he’s given us each a platform in the world. Mother Teresa had a platform to serve orphans in Calcutta, right? That’s not the platform. You know, you are I probably have, right? I mean, God hasn’t called us to that. But he’s given us a platform of people and, and things around us that we can hopefully influence for the better for for his, to his glory into for his kingdom, right. So that that really is the whole point of that dinner is encouragement of each other. It’s not so much, you know, you know, Britt, or I or anybody else encouraged, you know, just encouraging people, but it’s actually the camaraderie that comes from, you know, being able to actually passionately pursue just a better life and a better world for other people together. Right. And, and to have them reach their full potential in, in God’s calling for them. Right. So whatever that platform is, that’s right. There’s a there’s a famous story and and I’ve heard it repeated a bunch I, you know, didn’t witness it personally. But there was a guy that heard about Mother Teresa’s ministry in Calcutta, business guy, and he was so moved by it sold all his possessions and, and moved over there to help in the orphanage and got there. And she wasn’t there. But so he just started working and for, I don’t know, five or six weeks, he was scrubbing floors and helping out, etc, etc. And she finally came back from her travels wherever she was, and she came in the room. And I guess Mother Teresa was like five foot tall, but really commanded a lot of presence, right, you know, just had this aura about her. And so she said, Son, what are you doing? And he said, you know, explain the story a little bit. And she said, No, son, I know who you are. He said, she said, Son, she said, you know, yeah, and I’ve heard your story. She said, Son, I gotta be honest with you. You’re terrible at this. Right? You know, he said, Calcutta is what God called me to do. Right? This orphanage, you need to go find your own Calcutta. And I think to some degree, we’ve all been called by God to, to our own missional assignment. That’s right. And, and I think if we can encourage each other and walk together and enjoy each other’s company, in doing that, and make sure we’re thoughtfully through mentorship, passing it on to the next generation, that guide helps we’ll do it much better than we have. Because we’ve made a lot of mistakes, I’m sure along the way, yes. That that that I think is what we’re what we’re called to do. So that’s kind of what that dinner is all about. That’s

1:43:48
right. That’s right. So I think I think about the first first that you caught it was the verse from Paul that those who love God will be known by him. And the last verse that you quoted was the verse from Revelation where our chief aim in life is to get the point where we’re in judgment in Christ visually says to us, well done good and faithful service, welcome, welcome in your kingdom. And the Westminster catechism says, the chief aim of man is to glorify God and enjoy him forever. And I can think of no greater, no greater glory that could be stowed upon us as children of God than to be known by God as blue as Lewis eloquently states and, and that, that that appreciation, we can’t come to God except for as a child, and that that appreciation received as a child, Good boy,

1:44:33
good job,

1:44:34
good, faithful servant. Enter into your father,

1:44:38
that’s about as good as it gets.

1:44:39
That’s as good as it gets. That’s as good as good. And that seems to me that, that that, that that being the chief aim of our lives, no matter what we’re doing, we’re just gonna get out there get after it.

1:44:47
Yeah, exactly. Yeah. And then it’s just a matter of executing and we’re all gonna make a lot of mistakes. But yes, you know, we’re forgiving. Yes.

1:44:55
Well, well.

1:44:56
We’re happy to have you as a Kansas for here in Texas and Greg, appreciate your time. coming in and, and thanks for thanks for your leadership and your influence for the kingdom. Thanks, Rick.

1:45:04
It was fun. Great.

1:45:05
Thank you.

 

 

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CXRE » Commercial Real Estate Investment » Greg Brenneman at The Mansion with CXRE Asset Director Rick Walker