This episode was a live recording at a joint event in Chicago between the Booth and Kellogg Business Schools. My guest was Doug Cook, Chairman of several companies throughout Illinois in windows and siding, chimney care, garages, elevators, and more; With windows and siding being his most notable business in Feldco. Doug gives a deeper walkthrough of his very impressive and entrepreneurial career at the start of our conversation. We also talk deeply about empathy and how to develop it as a skill, empathy when building a team and selling to customers, trust and respect as a CEO, lessons that are the hardest to be taught, and much more. Doug is a fantastic person, I think that will come through loud and clear throughout the episode.
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Ravix Group — Ravix Group is the leading outsourced accounting, fractional CFO, advisory & orderly wind down, and HR consulting firm in Silicon Valley. Whether you are a startup, a mid-sized business, are ready to go public, or are a nonprofit, when it comes to finance, accounting and HR, Ravix will prepare you for the journey ahead. To learn more, please visit their website at https://ravixgroup.com/
Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
(00:04:47) Doug’s background and career
(00:12:10) Lessons Learned: Less is more
(00:16:50) Common Skillsets in CEOs
(00:28:09) Developing empathy as a skill
(00:34:30) Finding the line between becoming too friendly with employees
(00:35:14) Developing empathy with customers
(00:37:10) The CEO’s role with customers
(00:40:37) Refining a Product line
(00:47:49) Difficulties in Growth through Acquisition
(00:50:37) Building Trust and Respect with Employees
(00:56:33) Are there any CEOs you admire?
(00:58:32) What’s a strongly held belief you’ve changed your mind on?
(00:59:49) What’s the best business you’ve ever seen?
Alex Bridgeman: Most folks are, I think, fairly familiar with who you are. But I think for anyone listening, they’re probably not nearly as familiar as the average person in this room would be. I would love to just start there and hear more about your background, businesses you’ve run, career to this point, and involvement in the schools here too.
Doug Cook: I am Doug Cook. I’m a 1998 graduate of Kellogg. I spent the first part of my career working in broadcasting for ABC and other companies in that space. And I went back to grad school with the intention of utilizing it to catalyze something a little bit more robust that hopefully would take me beyond my 20s. So when I was at Kellogg, I was really inspired by the limited range of entrepreneurial subjects they had at that point. One class was something called entrepreneurial finance, and the professor was a guy by the name of Steve Rogers. And it was always rated as one of the highest classes at Kellogg, but you couldn’t get in there until it was your subject- rather your class number 17 18, 19, so it was kind of near the end. And if you really had a passion for it, it was something you couldn’t really explore until you were almost out the door. So I was doing that. And I, lo and behold, got the class. And it was, I believe, my second to last quarter at Kellogg. And for anybody that’s done the evening program like I did as a MBA student, working all day and then going to school at night was somewhat of a trudge, and it made for a long day. And so when I was up in my higher number classes at Kellogg about to graduate, you kind of knew how to feel, how to roll, and how to make it all work. And you were- classes became somewhat transactional. And when I took this entrepreneurial finance class, it was one of those classes that I literally sat in, and three hours would go by, and it was like boom. So you get different signals in life about things and connections and likes and dislikes. That was one of my very first things that maybe I should think about this entrepreneurial subject a little bit deeper than maybe I have to date. And so it was at that point where I pretty much stopped looking for anything in a corporate world position. I stayed doing what I was doing in broadcasting. At the end of the day, it paid me well, I enjoyed it, but it wasn’t going to be something that was going to sustain me for forever. So rather than go to school in the evening, I kind of supplanted my MBA program with an acquisition search. I had- I should say I didn’t have a partner. I didn’t have an idea to go and start something up. But what I did have was a few bucks that I had made from an earlier real estate transaction a few years earlier. And I wasn’t married at the time. And I figured, okay, let’s dig a little bit deeper into this whole entrepreneurship through acquisition thing that we spent some time talking about in this one class. And so I finished my degree, went back and talked to the professor, and he gave me three or four different people to talk to, all of whom were intended to do the scared straight speech. And they’re all rooted in failure, miserable experiences, they were lucky to be alive, and all this kind of stuff. Steve wanted me to go and visit with these people and come back and report back to him. I think he was obviously testing to see if I had the stamina to kind of learn a little bit more. So it was at that point that I did a few more of those things, and I passed the test. And I was introduced to a business broker, a friend of Steve’s, as well as a few other people to kind of evaluate, I figured I needed somewhat of a shaman to kind of walk me through this process of acquisition that I was going to embark upon. So I found a terrific guy that was highly recommended, and we clicked, and we spent two years working together on evaluating businesses, and this is back in 1999 and 2000. I was working full time. And I looked at probably 150 different businesses over this couple of years. I made site visits to probably 40 or 50 of them. I made three different offers, every one of which was rejected. I learned some real tough lessons along the way of what not to do. I thought I was real hot shit when I started the process, and I thought I had all the answers. And a lot of people would be interested in selling me their businesses only to have them slam the door in my face. And so you learn along the way that it’s not a linear process. And there’s a lot of stops and starts, and you as a person and you as a professional have to do some growing. And so I’d like to think that kind of transpired over those years of ’99 and 2000. And it culminated when I met Bernie Feld through an introduction that was kind of a mistake. I met a guy that was looking to sell his business and just so happened had a business that was going to be a pretty good fit for me. And it was a pretty affordable thing. And so the lesson I took was that you never know what’s out there, so you better put yourself out there. And Bernie was selling because he was looking to retire. He had a nice local business that was dusty. It wasn’t rusty. It wasn’t a failing business. It had an older but very dedicated staff of people. And it had a simplicity about it that I thought fit me, a first time entrepreneur or aspiring entrepreneur, very well. It checked a lot of boxes that I was interested in pursuing as an entrepreneur. And so I spent the better part of the year of 2000 trying to get that deal across the finish line. And I finally closed on it October 6 of 2000. Feldco, when I bought it 22 plus years ago, was about an $8 million business doing a lot of things in and around the Chicagoland area in the home improvement space. Beyond windows, siding, and doors, we were doing kitchen cabinet refacing, patio enclosures, roofing, decking, you name it, whatever you can do to make a buck to do some things and be a bigger business, let’s do it. I learned a thing or two, came in and knew nothing about this. I was a visitor on their home turf. And basically, I got lucky. I walked right into the Dot Com bubble bursting and 9/11 literally a few months after I started. And so I was met literally by a big storm. But at the same time, I was informed by some pretty tough realities. We made it through, and we made it through ’08, and we got bigger and better. And we faced COVID, and we got bigger and better. The company that we have known as Feldco today is a what I’ll call more simpler refined company than the $8 million Chicago centric company that I bought 23 years ago. Today, it’s a business that serves 10 different distinct markets in four different states. We only really sell four products, windows, siding, door, and roofing. And we’re north of 125 million in annual revenues. And that’s just Feldco. It’s also given us the opportunity to buy businesses in the home security space and exit very successfully there. It’s given us the opportunity to go and start up some consumer finance companies that we’ve done very well with as well as getting into some other spaces too in the b2c home service space that we to this day still appreciate with. So it’s been a great ride. It never is at the place today that I thought it was going to be when I began this 23 years ago. I’ve way exceeded those wildest imaginations. But I think the big lesson that I would take over my entrepreneurial career is you’re not going to win the game unless you’re in it. Don’t be afraid of failing because those are going to be some of your best learnings. Just make sure they’re hopefully earlier in your career rather than later. And don’t ever underestimate the importance of people because they are your path to success.
Alex Bridgeman: Is there a mistake you made early on that didn’t end the game for you but today might have been- you mentioned like make the mistake when you’re young versus when you’re old-
Doug Cook: Is your question specifically about my search or about my operation after I bought the business?
Alex Bridgeman: Yeah, operations.
Doug Cook: Okay, so it’d be like you caught the rabbit, now you’ve got to figure out what to do with it. So yeah, there’s a slew of those, and most of them are originated with my mouth. So you realize real quickly that you shut your mouth, and most of the problems start because of loose lips. So one of the things that I learned real early was less is more. Keep your ears open, your eyes open. Always be available. Always be there to inspire, to lead. But don’t be there to answer questions per se. You’re better off, and this is a big learning of mine, when asked a question, respond with one. Provoke thought, don’t provide answers. Get people to help solve answers and get to where you are from a thought prospect. If you want to bring people along, you want to develop a staff, you’ve got to get people to think critically and to be curious. And that’s a big part of your job as a leader. And so I know all of us at various points in life would rather just give the answer to move on for just being quick and like I don’t have time to explain this right now, just do it this way. That’s a missed opportunity for future game. And that’s where I’m getting at. And so those are some of my very early lessons. You have youthful exuberance, you just want to get stuff done and sometimes bypass some of those important learnings that you otherwise could benefit long term from.
Alex Bridgeman: Yeah, I’ve had that even in my own chief of staff role where early on, six months in, I’m still just asking questions because I’m trying to learn about the business, and then 12 months in, like okay, I know a few things now, like maybe a statement works now. Maybe I can like give answers. Nope, still don’t know anything. I’m actually still dumb, still ask questions.
Doug Cook: Yeah. The key is getting the answers to the questions and knowing the truthful answers. And that’s often found early on in your entrepreneurial career where you’re doing it yourself, not relying upon other people to provide you answers or to provide you responses. In a really, really solid entrepreneurial early stage experience, you, the lead dog, are out there pursuing the answers. Because in reality, you knowing what the truth is is really important, not only because somebody else may not know it, and therefore if they’re telling you something that may not be the truth, and like there you go, that’s just the start of a really bad connection. So early on in your career, it’s back to that youthful thing, roll up your sleeves early. That’s where you can inform yourself and get a little bit wise. And by the way, just because the answer, don’t ever let them know you know the answer. It’s one other test that you can provide down the way when you ask those questions – oh, really why is it that way? See if they know the answer. And if they don’t, help them get there. But don’t give them the answer. It is the old teach and fish; don’t give them the fish.
Alex Bridgeman: Any particular time where that’s happened to you come to mind the most when you think about that mistake?
Doug Cook: Stressful moments where there’s a lot going on, and you feel almost an energy, kind of a surge to get something done and move on. And in some cases, to achieve that, check that box so we can get on to the next thing, you might make a short term quick decision that’s going to have negative long term consequences. And so, when the pressure gets turned up, it’s important for the leader to slow things down as best they can to make solid decisions. Some of those decisions may need to still be made fast and rapidly but not every one of them hopefully. And if you can get into a point where it’s almost like a baseball batter that can see the laces on a ball coming to them to be able to differentiate between a fastball and a curveball or slider, they can see that. A really fine hitter can do that. A fine executive, a fine leader can have the same similar skills within their business to understand what is the tell for what’s coming? And how do you need to be prepared before you may need to be?
Alex Bridgeman: Yeah, diving into that more, you’ve spent a lot of time with a lot of different CEOs and met some very successful CEOs too. I’d love to hear about what are some skills that you see in common across great CEOs? Anything come to mind in terms of similar skill sets or the way they approach problems?
Doug Cook: So I’ll answer that two different ways. I’ve had good fortune in my life to be around exceptional CEOs, legendary CEOs. The qualities that make them excellent, legendary CEOs are different than the people that may be exemplary entrepreneurs. There’s still quality leadership traits that are transferable, no question about it. But in a large corporate CEO titan type, the skills that that person needs to bring to their game every day is different than the person that’s basically working in a small business where the factory’s in back and AR. It’s a different deal. It’s just a lot more impactful from the standpoint of the skills that you need to be able to deal with that. The big corporate CEO is answering, in some cases, Wall Street. The entrepreneur’s playing on Main Street. And the reality is there a to rather simple degree. But there is a skill set difference. And I know some wonderful CEOs, big CEOs, that could never be an entrepreneurial CEO. They wouldn’t want to be; it just wouldn’t be a good fit for them. And commensurately, I know really good entrepreneurial CEOs that would never be able to be a corporate CEO, the discipline and type of things that need to be brought to that. So that’s how I would answer it. It’s a little bit different for the two, both leaders. But there’s some real, very refining characteristics between the two.
Alex Bridgeman: Do you think there’s some danger then in an entrepreneurial CEO searcher buying a small business studying how a public company CEO might run their business?
Doug Cook: Absolutely. Jack Welsh isn’t an entrepreneur per se. So go and reading one of Jack Welsh’s, his book is a wonderful book, he is a great, tremendous CEO, tremendous leader, lots to say, lots of great stuff in there for entrepreneurial CEOs to take. But his approach wouldn’t necessarily work in a small entrepreneurial setting, per se, of a machine shop or a Feldco type of business. I mean, if I tried to employ some of Jack Welch’s approaches to the way in which he himself would have, it just wouldn’t have rolled because I don’t have a GE staff working for me for starters. I mean, it’s a little different. I have people with very different educational backgrounds and life experiences as part of my team, than a corporate infrastructure like GE. So you’ve got to know your audience. And you’ve got to calibrate accordingly. But good leadership skills are ubiquitous. Those are uniform, but they are different roles.
Alex Bridgeman: What about skills for that entrepreneurial CEO role that an MBA student could attempt to study and replicate and add to their own toolkit prior to going to run a business?
Doug Cook: Great question. So range, personal range. Let’s start with that. Somebody that in and of themselves can sit down with a diverse group of people and be comfortable. Just starting with that. Because an entrepreneur is going to have to deal with people through the acquisition process. It’s going to be a very diverse set of people. And if you are fortunate enough to be successful in your entrepreneurial pursuits of acquisition, you’re going to have a business one day that’s going to be filled with people, and you better understand how those relationships are going to work and how they’re calibrated. I can guarantee you CEOs of large corporations don’t have the body odor questions that may find their way to my desk, or somebody is upset because they had a catalytic converter stolen out of their car in the parking lot. Little business, little problems; big businesses, they don’t even- forget it. That’s a different league. And understanding that is important.
Alex Bridgeman: Is that a skill you think can be practiced or refined? Sorry, were you going to- Is that a practice you think can be developed over time before stepping into a business?
Doug Cook: Yeah, I’m always a big believer in how someone’s informed. What’s their life story? What brought you to this point? How did you grow up? Why did you go to this school? Why did you do this summer job? Why did you do that summer job? Why do you want to do this? What about this entrepreneurial thing is appealing to you? And I’m sure we all know people out there that want to do it because it sounds cool. They think, hey, I want to be in Inc Magazine. I want to be the next greatest hottest thing. This is it. Great. I love that. That’s a good start. But I also want to be a great baseball player. I have no business playing baseball. My point is, you got to make sure that your want is really going to fit you. So going back to some of these qualities that matter, education matters. You want to have somebody- I’m not saying you’ve got to have a Harvard MBA or Kellogg MBA or Chicago MBA. They help. But I know some pretty successful entrepreneurs that don’t have a college education. So, getting back to that whole point about range, I’ve seen a lot of elitism, if you will, snobbiness from people that, well, I don’t really like this business, or that guy, he doesn’t have a college education. Yeah, he can run circles around you. Like, he’s brilliant that way. So the people that can kind of be aware that there’s always somebody smarter, wealthier, and have a better idea than them out there, like tone down the ego. A lot of us have been pretty successful in our careers getting us to where we have here. But the competition starts getting a little steeper and having that humble reality that they may be across the table from you, and you’ve got a lesson or thing to learn here. Take that and always have that confidence in your abilities. Don’t lose that. But don’t get overconfident. Some other skills that are very important to identify early on: How do you handle adversity? What does that mean? Well, what happens if you found out there was a gunman in your building? What happens if you find out that there is a cocaine problem in your company? What happens when you find out your CFO’s sleeping with the sales director’s wife? You don’t want to deal with that in most cases. Like OMG, this isn’t what I signed up for. This isn’t why you guys invested the time. It’s those kinds of things that can take you off course. Getting back to the range and just understanding the reality, when in Rome, guys, this is what can happen. Just accept it. If you don’t want to deal with the random incomings, then being an entrepreneur isn’t for you. So if you don’t really like adversity and all that, I’d tell you that that’s one of those things that entrepreneurship is filled with. The reason that the success is so great in entrepreneurship is because some of the adversity can be really painful, which makes that good stuff really even tastier. Another thing that’s really important is stamina. Stamina is something that I can’t speak enough about. Well, how do you evaluate stamina? Well, understand someone’s ability to withstand enormous pressure, really endure things. Stamina is very important to get through situations where you may go and buy a company that requires an inordinate amount of turnaround or you need to really dive in deep. You’re going to be put to the test, you’re going to be put in places that you never imagined being with people you never imagined being potentially, doing things you never imagined, crawling around connecting tables on a floor one night asking yourself, what am I doing? Well, what you’re doing here is you’re building your business and you’re showing your team what you do, how you roll, and we’re going to do anything we’re going to take to win. This isn’t about you suddenly regressing in your life; you’re going to become some sort of an hourly employee. That’s not what I’m suggesting. But it’s those kinds of moments that you have when you’ve got to dig deep, and stamina is absolutely one of the most important things that I’ve ever seen real successful entrepreneurs nail. It is just that it’s like they have a different level of what their fuel tank is like. They have like a reserve on their reserve on their reserve. The other things that I would tell you, too, about people is understand their influences. What do I mean? Understand what influences them. Here’s a good start. Who’s the first person they talk to in the morning, and who’s the last person they talk to before they go to bed? If you have a partner or you have somebody with you that’s in a relationship, you better understand that that partner of your partner is your partner, and they’ve got to be on your team, and they’ve got to be dedicated to your cause. I’ve seen repeatedly where good things come undone because the third party, that significant other, a wife, a girlfriend, a boyfriend, husband, whatever, isn’t invested and becomes turned on the environment, turned on the opportunity, and views the company or you as the leader as the problem. And you need that, and it becomes like a multi dimensional game that becomes very difficult to fight. In fact, there’s no winning in some cases. So there’s a lot of little things like that that you don’t really think of until you realize, oh no, this really does matter. How could this- It does matter because it matters. It’s a fact because it’s happening. You don’t want it- I accept the fact that you don’t want it to happen, or I don’t want it to happen. But it’s happening, and you got to deal with it. And that’s kind of some of those realities of you really need to dig deep and pour through.
Alex Bridgeman: Yeah, a common theme through all of those is this idea of empathy, this skill and ability to have empathy for others, talking about range, working with that third party, that spouse or that partner of the partner. How do you develop the skill of empathy, and how do you refine it over time?
Doug Cook: I love to steal good ideas. What does that mean? Well, somebody once gave me an idea that went like this. Make sure all your key staffs’ kids have great birthdays. So make sure you send them big cookie bouquets on their birthdays. The kids like that. A lot of things. Ways in which you can show that you know they have a life beyond their desk, their office, that you too are human. Here’s one. I had an employee, I’ve had many employees that have passed away over the years. But this was early on in my career. So early on in my time at Feldco, I had an employee who died. And there was a wake the night before, and then a service the next morning, followed by like a reception, a funeral procession and then like a lunch reception thing. And I’m like, oh my gosh, that’s like a full day of commitment. Wow, that’s a lot. So I’m like, okay, well, do I go to the wake, or do I do the funeral? Like, which one do I do? And so I remember sitting there like, okay, I’ll do the funeral. That would make more sense. It just if you can’t do the night before, you go to the funeral. And so I called up somebody who knew me pretty well, and I said, so what do you recommend? And this person says to me, well, what are you thinking? Rather than answering the question, they said, what do you think, and I said, well, I think I’m going to do the funeral and the events during the day on Tuesday or something, rather than do the wake on Saturday or the night before. And the person asked me, okay, what went into that decisioning? And I said, well, the wake is way out in Northwest Chicago, and it’s like an hour and a half to get out there during rush hour and then to turn around and get back out there. Oh, okay. And the person hears me explain all this, and they said, well, when would it occur to you to go to everything and not miss a beat? Because I guarantee you, you not being there would be more noticed than you being there. You’re not doing this for notice’s sake. But you’re doing it for the right sake. If this guy worked for you, what’s an extra hour or two? That’s nonsense. And sometimes you need to have some people slap you upside the head. And that was a small thing that actually doesn’t go unnoticed. And it’s one of my things. Death is a big thing in people’s lives. It’s something that I very much honor with people and their families and so forth. So that’s something that I always give people a very long leash with, to build that empathy to your words, to understand that this is, at the end of the day, a business where I ask a lot of people, but I’m also willing to give back. And so in those darkest of hours, you go and do things to do things that show that this is a human organization, serving humans, made of humans. And that’s a small tail, but you go to the whole funeral, the wake, everything because that guy was always showing up for you, or that lady was showing up for you. And that’s the message you send is a true leader is somebody who doesn’t ever pull back.
Alex Bridgeman: It seems like a hard thing to do if it’s not also genuine, if it’s not something you also totally actually care about. Like if you’re going because this is an appearance thing, you’ll look good, and you measure every empathetic action or decision that way, that feels like it would break down quickly.
Doug Cook: Very. Oh, listen, it goes to say, like if you’re a fraud, that’s like an immediate disqualifier. You’re going to be unearthed real easily. Being an entrepreneur is so intensive, it’s 24/7. You’re going to be revealed. It’s impossible for you to keep a game face up all the time and not be somebody who you are, warts and all. People are going to see you for even your bad stuff. You’re impatient, you’re impulsive, you’re a smoker, all your frailties. Part of your job is also how do you make those some of your strengths. That’s one of those things. For example, I’ve been known to have a cigarette here and there. My staff loves it when they see me smoking with them. It’s crazy. If there’s a group out back or we’re like at a retreat somewhere, you can be damn well sure I’ll go catch a cigarette with some of the people. It’s like, you wouldn’t believe it. It’s like this guy’s real. It’s like okay, I shouldn’t be smoking a cigarette. But you want a fun thing, you get unbelievable moments with people. It’s those little things that you wouldn’t think that would bear that, but there you go. Taking a cookie bouquet to a guy’s kids or lady’s daughter, whatever it might be, a graduation present to somebody that is doing something, they go a long way. They go a long way. So having empathy and understanding what’s going on in someone’s life and world is very important to making a company work, especially the way we run ours.
Alex Bridgeman: You’re saying you bring cigarettes to kids’ birthday parties?
Doug Cook: Yeah, I haven’t done that. But I probably wouldn’t advocate that. I may hear something about that. But no, there’s some other fun things we’ve done over the years that people really- people like it when you let your hair down, if your real genuine. It’s not that way all the time. So let’s have some fun with it. And I may like it to be that way more often than not, but you got to also kind of draw the line and say, listen, this is a work relationship. We’ve got to be appropriate. But at the same time, people, again, know your audience. Know what you can do. And I’m not suggesting you go out there and be an idiot, but have fun with it.
Alex Bridgeman: Is there a line where you become too personal with your employees if you’re trying to be empathetic and being a part of their personal lives to some extent? How do you know where maybe you’re going too far and it looks like special treatment and starts to change work dynamics in a negative way?
Doug Cook: It’s something that can happen, yeah. And I would venture to say it’s probably one- it’s probably only a one and done. Like you’re going to get burned by it pretty good one time and you’re going to realize it’s going to chase the need to do that ever again. Just out of fear and just like okay, I don’t want to go down that path again. But you try not to have it turnaround and fall into the category of no good deed goes left unpunished. It’s a painful lesson.
Alex Bridgeman: What about with customers, like empathy with customers and products, selling? How does empathy factor in, and how do you use empathy with a customer or a prospect versus your team?
Doug Cook: Well, one of the things that informs our company’s role is we want to achieve a concept called customer delight. We want our customers to be delighted, not satisfied, not receiving what they expected. We want them delighted. We want them really excited about the completion of their project. We work really hard to achieve that. Reality also offers us up that we’re human, and we make mistakes. And in our world, success is often defined by a measurement that could be off by a very small degree, something wouldn’t fit, we couldn’t get it installed, we had to reorder it, it just takes a little bit longer. And then you launch into like a remake and just a little bit of an inconvenience. We want people feeling really good. Most people come in and spend anywhere between $8 and $10,000 with us out of the gates. It’s a big amount of money. And I tell people all the time, I don’t spend $8 to 10,000 with much frequency. So you as a sales representative need to have empathy for that customer, how hard they worked to earn that money, and you’re working to earn that from them. And never violate that trust. Always build on empathy. Make sure that you don’t take that money that evening and never show up for that customer again. Make sure that customer knows who you are. We have all kinds of systems and procedures that really do build empathy into our system. And we want our staff to connect with the customers because it is an emotional purchase, believe it or not. We’re going in and screwing with people’s homes and families, and in most cases, that’s their single largest asset. So, it’s a pretty sensitive situation.
Alex Bridgeman: Yeah, certainly. How close as a CEO do you try to be with customers, with the direct customer who’s paying for their home remodel or new window or what have you?
Doug Cook: It was easier earlier when it was smaller. And I was in my absorb, absorb, absorb mode, and I sunk my teeth into everything because I wanted to make everything about the business my business and understand what was going on, why it was going on. And we also had a different size back then, so it made it easier to do that. I will tell you that today, I still know what’s going on with customers. I don’t have the same level of stickiness with it as I may have 10, 15 years ago. But we have pretty developed systems from just an IT perspective that gives me a pretty good handle on things from a data standpoint, and I can understand where things are at. And at the end of the day, I make sure my office is situated right next to the sales room. So I know exactly who’s coming and going. And I have a good sense on the pulse of the business. So I try to make the customers front and center because that’s ultimately what pays the bills.
Alex Bridgeman: How do you tell that- How do you coach CEOs that maybe are starting in their businesses recently or just peers of yours? Like is there a common sense for how close to customers you should be?
Doug Cook: I think it depends upon the business. Is it b2b, b2c? Are you doing remote work, you’re doing 50 states, are you in one market? Kind of the definition of a business matters there. What I would say, in terms of, let me think, in terms of- Give me the last bit of what you were you were getting at there.
Alex Bridgeman: Is there any common sense you’ve established from CEOs and peers you know of how close or how in touch with customers should you be, like what percentage of your time should you be spending with them? Should you be talking with them directly, working through your sales team? Like how many layers close to-
Doug Cook: The voice of the customer, where are you at. As a marketing guy, which I am, the customers is- I make it very much- I put myself out there a lot. I like going out to shopping centers. I like going to conventions. I like seeing what’s out there. I like seeing how people respond. So the customers, the knowledge of the customer, data, physical, observation, all of that is really important to what we do, how I’ve rolled over the years. Listen, everybody has a customer to some degree, some are a little bit defined differently. And so that CEO versus me versus somebody else, you kind of do it your own way. But we have the general market consumer. We have Joe and Jane six pack as our general customer and how we go about digging into that. And that’s my background as a marketing professional too. So I really like that. It connects with me. And maybe that speaks a little bit about putting yourself in a position where you can succeed and knowing that you got to have a passion, at least I did. That’s something I’ve come to learn in my entrepreneurial discoveries. I like the customer and the dynamic of the customer. If there’s an executive out there that doesn’t appreciate the customer, understand the customer, have empathy for the customer, like you better watch out here, that’s going to be a little bit of a problem. They’re kind of important to the overall equation. So putting yourself out there, or if not yourself, finding your way to put your tentacles out there to get that information from the customer is pretty damn important. Otherwise, you’re going to go and cocoon yourself and isolate yourself and lose touch with reality.
Alex Bridgeman: At the start of our conversation, you talked about going from many products to four core products and granted over a larger regional area. But how did you refine your product line out to a core of four or a handful?
Doug Cook: Very early on, I was in the office one Saturday afternoon, and I got a phone call from an employee of ours whom I didn’t know, but he was an employee, because it was very early on. And he said that he was at a job site and the police were there, and he was going to be arrested. And I said, why are you being arrested? And he went on to say that he didn’t have the proper certification necessary to do all the work that he was put out there to do on this given day and that the good news is that he hasn’t been arrested yet. And if I get there fast enough, I think I can probably avoid arrest. And he says, I’m only two blocks from the office, so please come and help me. What do we do there? So one of the lessons I learned very early on was that this happened because we were trying to do something we knew nothing about. And this guy was out at a job site. We were trying to skirt the law. And we were doing some sort of a roofing system on a house that we had no business doing, and somebody sold this project to make some money. And now I’ve got the police knocking on my door. I’ve got a guy, an employee that’s threatening arrest. And who knows what else. And a customer that ultimately entered into a contract with us and thinks they’re getting something that we’re not going to be able to deliver them. I mean, this is like a nuclear scenario, how did this happen? So I learned very early on that we had to rein in what it is we were selling. We needed to simplify our product lines. What we were doing and the products we were selling were too diversified. And we were trying to go too many people, too many ways to too many people. And it just led to an inordinate amount of possible outcomes and disasters. So, in learning and churning through a lot of this stuff, I realized that in order for us to grow, we needed to cut, and we needed to cut product offerings, we needed people to learn a lot more about fewer items and become experts on them. And that’s really what we did was kind of get rid of a lot of the clutter, a lot of the static, a lot of the blurred lines, and really made it like very clear black and white, this is what we do. And there’s a lot that we don’t do. But we’re going to do our damnedest for you if you fall into the group of things that we can deliver for.
Alex Bridgeman: Yeah, that seems to be the opposite of many search journeys where folks will add products to their company over time as a part of expansion. But in cutting products, what factors might get a product cut?
Doug Cook: Quality, that we can’t produce or deliver a quality product for a customer. That’s always a big lookout, that listen, someone’s calling us to improve their lives, and if we’re doing something or we’re installing something that isn’t doing that, we’re in trouble. So we’ve got to have sound products installed by real good professionals. And so if there was any problems with what I would consider product quality or the ability to succeed accordingly, we got rid of some stuff – patio enclosures, roofing systems, decking systems. There were a lot of different things. Kitchen cabinet refacing was something that we used to have in our product line when I arrived. Yeah, I made a few bucks every year. But the bigger problem was the problems they caused and the distractions, that something that may be an 8/10 share contributor product has taken 50% of our time to try and rectify and it’s delivering a 35 margin. I mean, it’s like forget it. What are we doing here? This thing owns us, and we’re a slave to bad. So we looked at things. We didn’t cut everything all at once. We took a pretty careful approach because my concern was let’s not cut off our nose to spite our face. Let’s see what we think is going to be achievable through maximum- minimum impact but maximum return kind of thing. And we went about it slowly but carefully over a period of a couple years before we kind of really settled on the three core products of windows, siding, and doors.
Alex Bridgeman: What were some other knock on effects from simplifying? Knock on effects, so what were the dominoes after going to a smaller product line? You mentioned safety and understanding was one of them.
Doug Cook: Oh my gosh, training. I mean, where do you begin? The ability to hire, to standardize, expand. You bring in a group of people, 20, 30 people, and you can train these people in unison on selling. And then when we initiated our whole field digital selling system where you’ve got tablet technology that you take out, and we can do market by market pricing and get away from indiscriminate pricing and some person’s going to go and open up a three ring binder and look for a price and hopefully compute it correctly with a deduct, forget it. Once we were able to really kind of push pricing down from an automated, integrated way with technology, a lot of that stuff is what simplified things out and grew margins, eliminated product lines, and really just kind of overall lifted the system. Less is more.
Alex Bridgeman: Yeah, it certainly sounds like it. Did pricing change as part of that simplification where you got smarter about pricing or had more power to increase it because you were becoming better at serving customers with those products?
Doug Cook: So I’ll answer this two ways. Pricing, i.e., the cost we pay for the product went down. As we started selling and simplifying the system and we had response from customers going like this, our purchasing power as a retailer was meteoric. I mean, we could drive pricing from that perspective. Commensurately, our purchasing power we were able to pass along to the consumer. Again, it’s one of the value principles as why someone would buy from our company. We can provide really good products at very fair prices. Are there better products? Yes. Are there cheaper products? Yes. But what we do is deliver really excellent products at very fair prices with outstanding delighting customer service. So it’s that careful balance that I would challenge that nobody does a better job of kind of balancing those three important factors than what we do. And these issues that we talked about product simplification, empathy, people, all these things that are part of this kind of special thing that we do that we think differentiates ourselves from competitors. Because a lot of competitors out there, there’s very- in our space, there are no barriers to entry. Anybody with a pickup truck can go to Home Depot or any sort of retailer and go get window products, siding, anywhere, you can do it. If you’re handy, you can go do it yourself. Most people don’t want to do it themselves. So the reason they- I’m sorry, the reason they call us is they want a competent, fair organization to deliver the goods for them. And that’s, I’d like to think, how we do it and have continued to do it for decades after decades.
Alex Bridgeman: Does that make it difficult to perceive any sort of growth through acquisition model with a business like this?
Doug Cook: 100%. When we were looking at our initial model of expansion, we were looking at growth through acquisition. Instead, what we settled on because we knew that you’re going to go and acquire these other businesses, that you’re just going to be buying some things that we otherwise would be better off building ourselves. So, we greenfielded everything with Feldco. There’s not been anything with Feldco beyond the original purchase that was an acquisition. Our acquisitions that we’ve done have all been in other spaces, home security, garage building, chimney space, elevators and lifts. We’ve done a lot of acquisitions in those spaces. But everything we’ve done to grow Felco has been organic, greenfield growth. No acquisitions have been bolted on to that so as not to kind of challenge that whole cultural thing that I think you’re getting into there.
Alex Bridgeman: Yeah, so when you think of the right businesses, it sounds like they’re complementary in many ways, like one service could lead to the next with a customer. How do you know which services or which ancillary products actually work well together in practice?
Doug Cook: I would tell you we don’t have a definitive answer to that. And so I’d say we’re hard at work doing that. There is a very high level of correlation between our window business and our chimney business. Our chimney business is smaller than our window business. So a portion- our chimney business really only serves Northwest- rather Chicago and Northwest Indiana. So it’s a significantly smaller business. But a big part of Feldco can go along and help them out big time. I mean, that’s a perfectly aligned fit. Homeowners in the Chicagoland area. We know about these homes, we know about the profile their homes, whether they have fireplaces, we know everything about them. We know their financial profile because they’ve potentially done business with us. So, we can do a lot of that with the window chimney business. The garage business has been a little bit of a different story for us as we’ve learned it. One of our learnings there that we never really learned a lot about upfront is the difference between city and suburban construction. It’s a little more convoluted than you’d ever imagine. And it’s a big thing. Listen, we’ve been doing Feldco for 15 years before we ever bought Danlies. And we’ve done plenty of construction projects in and around the Chicagoland area. The difference between installing windows and building structures is night and day. And it’s a very different type of business. They may be complimentary and similar customer profiles, but you’ve got to understand the differences between the two organizations. It’s been a lesson for us.
Alex Bridgeman: Yeah, switching gears a little bit, one topic I know we discussed earlier that you’re passionate about is developing trust and respect within an organization. It kind of builds on our discussion on empathy earlier. But Jamie Shaw was a professor, he or she showed me this matrix of warmth and competence. And if you’re low in both, people hate you. But if you’re high in competence and warmth, people trust you. I’d be curious if that’s a model you’ve thought out or has had an impact in some way in building trust and respect over time.
Doug Cook: I’m not familiar with the model of which you speak. So I can’t speak to that, per se. But I can speak extensively about warmth and humility and connectivity with people. Folks, we’re not in this by ourselves; you need other people here. And so you, in your own genuine way, have to figure out a way to bring people along. And it’s got to be true to whoever you are. Because if it’s not true, it’s going to come across as phony and it’s not going to work. But you’ve got to learn yourself why do people like you? Why are people your friends? There’s a good start as to why you may be a successful boss. And my guess is people are your friend because they trust you, they respect you, they have a good time with you. The commonalities of friendship, play on those as a boss, as a leader. Why is somebody working here at the end of the day? Ask yourself that as a leader, why would somebody work here? Would you work here? What is it? What’s it about? You better understand what’s the answer to those questions. And those aren’t necessarily questions they’re going to teach you how to answer at Chicago or Kellogg. This is kind of stuff that’s like high school stuff. It’s real basic. But you’ve got to understand people, and you spend some time in front of the mirror, and why might somebody not buy what it is I’m selling. Here’s one for you. I was talking to somebody about this earlier. Three folks came to me and they said they have this idea, they want to go and buy this company. And they’ve got this trio of partnership. And the three of them all bring a little bit different acumen to the equation. One’s a data guy, technology guy, one’s an engineer, and then one’s a finance person. And they’re boasting about what the target is, and they have defined goals as to how each of them are going to kind of proceed moving forward. And I said to them, I said, okay, great, sounds like all of you have very defined skills, congratulations. Who’s in charge of sales? Who’s running the sales ship here? And I get, well, he and she and this and that. And that’s when I say, timeout, guys, timeout. Sales is one of the most important things a leader has to embrace. And I’m not talking about negotiating in the sense of oh, I’ll pay this or I’ll pay or that or hey, buy this thing or whatever. Everything you’re doing is selling a vision. You’re selling a direction. And if people aren’t buying what it is you’re selling, I guarantee you, you ain’t going anywhere. So you better understand what people are going to buy that it is you’re selling, and you better understand if your process of selling the idea, the vision, the plan, whatever it might be, is in sync with them or whoever your customer may be. But the ability to embrace that concept of, whether you like it or not, you as the boss is the chief salesperson. And that’s just something that you’ve got to wear. And so being able to sell, being able to work with people in ways that in some cases they don’t feel like they’re being sold. But yet, that’s part of being a capable leader that has range and can deliver their message to a variety of people to achieve your goals.
Alex Bridgeman: When I think of a talented, prototypical salesperson, I think of someone who’s very outgoing, charismatic, great speaker. Has that always been the case with the greatest sales CEOs that you’ve met? Or is it all over the place, lots of different-
Doug Cook: It’s all over the place. It’s all over the place. The best sales- Does anybody here remember a show by the name of WKRP P in Cincinnati? Or am I too old for that? I’m way too old here. There was like this classic show back in an era gone by. But it was about a radio station, and they had this sales guy on whose name was Herb Tarlac. And he was this quintessential, like dirty sales guy. Like Herb Turner would show up and you felt like he had to go take a shower after he was done with you. That’s the perception of a lot of sales, that you’re being sold or you’re selling and being sold the used car. I’ve seen people who are the brightest, most talented individual take a very different tack to selling. And it’s more of what I’ll call an informed educated approach. You’re being informed from like an intellectual level, but at the other day, you’re being sold. But it’s being done in a different non Herb Tarlic way. And at the end of the day, you kind of say, boy, I really respect this person’s intelligence. He or she knows this product really well backward and forward. It’s a good product based on what this person- they’ve earned my respect. They’re a sound logical presenter here. And so they just don’t come across in a sales way that’s just non salesy, more folksy in some cases.
Alex Bridgeman: When I think folksy CEOs that I admire, I flew on Southwest, and I love studying Herb Kelleher who was, I think, one of the greatest sellers type of CEOs. And he was on the planes all the time. He would sit with customers and hear from them what’s going on and was really, really good at selling that vision. Is there any CEO in particular that you’ve gotten to know who you admire?
Doug Cook: Oh, my gosh, absolutely. There’s some people who- are you folks familiar with YPO, Young Presidents Organization? I hope all of you folks are successful enough in your entrepreneurial pursuits to put yourself in YPO one day. It’s a fantastic organization. It’s a peer organization that exposes you to peers like yourself that are running businesses that have similar challenges and you can work with, be educated by, and all that. So putting yourself in an environment that you can get good candid feedback, and I’ve shared some of it with you already here tonight, that you get through YPO. So always make sure you put yourself in places that you can get good solid feedback, and organizations like YPO have immeasurable return for you. Does that kind of get where you’re going with that?
Alex Bridgeman: Yeah, I’ve heard great things about YPO. And some folks I know who are in it speak extremely highly of it to find peers like them.
Doug Cook: As an entrepreneur, it’s really important to understand early stage, you’re going to be very isolated. It’s really isolating thing. You’re not going to have a deep reservoir of people around you. And you need to make sure, whether it’s advisors, board of directors, or a third party organization like YPO, and there’s a number of other organizations out there, make sure you join those organizations that are a good fit for you, that can give you some good feedback about where you’re at as a leader, where you’re at as a professional, and as a resource for anything you may need. But those outside organizations are ways to kind of fight off that isolation of entrepreneurship that can often set in early in one’s career until you start building something more frothy and you’re able to get out there and establish those external relationships that are important.
Alex Bridgeman: Wrapping things up, what’s a strongly held belief you’ve switched your mind on?
Doug Cook: There’s a few of them. The customer is always right. The customer is not always right. But you’ve got to figure out how they always feel right. That’s a big thing. Working through a business with subjectivity where we can say that we’re done, we’ve installed, this looks beautiful. Well, I don’t think it does. How do you address that? It’s not black and white, per se. But it’s installed and everything’s done. It’s beautiful. It’s perfect. No, it’s not. How do you work with that? So long held belief, I would say is, I used to think that you could live in a black and white world. Our business is anything but; it’s gray. And so you have to make decisions and get comfortable working with the off colors, grays and so forth. And I never thought that would be where I was, but it’s the reality of what you have to do to succeed and take things that are less than perfect. 80% is sometimes better than zero. I prefer 100. Sometimes 80% is better. So those kinds of lessons in life. Pigs get fat. Hogs get slaughtered.
Alex Bridgeman: What’s the best business you’ve come across, excluding businesses that you own, except maybe your elevator one? That sounds really interesting.
Doug Cook: A lot of great businesses out there. I love consumer facing businesses. I love really- I love businesses where people have done some really exciting things. GrubHub, really cool, very basic type of thing but where technology has been woven in that was right kind of in our YPO group. Really interesting business. They’ve obviously had some challenges as they’ve aged. There’s a lot of businesses that I’ve seen over the years that would be considered dirty businesses, that might be a bakery or a manufacturer or something that’s- and just watching some of those cool things be built and whether it’s- I’ve really enjoyed watching food and going into food manufacturing over the years. I looked at a lot of businesses there. Those are really, really fascinating businesses, especially businesses where technology has gotten involved, and they’ve kind of evolved some products over the years. Alex Schneider has done some stuff with that. So there’s a lot of really interesting things, but at the root of it is always have curiosity to ask what people are doing because that’s where you might hear some really cool stuff out there, because there’s a lot of great stuff going on.
Alex Bridgeman: I love that. Well, thank you so much for sharing in this second live podcast I’ve done all time. And thank you all for having me and joining and being a part of it. It’s good to visit Chicago and be in the city more. I’m only in Omaha, so I’m surprised it took me this long to get here but excited to be here. So thanks for having me.
Doug Cook: Thanks for having me.
Alex Bridgeman: Absolutely.