Katie Poehling Seymour – Inside a 5th Generation Distribution Giant – EP.264

Inzo Technologies – https://inzotechnologies.com/

(00:00:00) – Intro

(00:04:00) – Becoming CEO and taking an in-person tour of all facilities to get a sense of the situation on the ground

(00:07:25) – Customer feedback

(00:09:56) – How larger distribution locations affect the direction of the business

(00:15:22) – What are the keys to a good location for a massive distribution center?

(00:17:33) – How does e-commerce sales impact data?

(00:19:53) – AI breakthroughs

(00:25:47) – Customer service evolutions

(00:31:19) – Acquisitions

(00:34:09) – Debt utilization

(00:37:58) – Katie’s career before First Supply

(00:41:52) – How do you describe your style as a CEO?

(00:44:42) – Constructing a board

(00:46:30) – Succession planning

(00:49:33) – Lessons learned from other family-run businesses

(00:52:43) – The next generation of the business

Alex Bridgeman: Welcome to Think Like a Known Owner. This podcast is all about interviewing the most ambitious CEOs to understand how they grow great companies. And Katie, it’s great to meet you and learn more about First Supply today. And we were talking about how curious I am about distributors and how many hundred year old plus companies there are in distribution, and First Supply, 128 years old. I’m not sure exactly when the anniversary date is, but round numbers are 128, 700 employees, 53 locations. So really huge business. And you became CEO during COVID. So just within that short 20 second blurb, there was like a hundred different things we could talk about. But one thing I was really curious to hear more about was the tour that you did, visiting all the different locations, something you mentioned your father did. And I was curious about what kind of questions were you asking and trying to compare answers or compare like what’s the vibe or energy of a certain location versus another, where are problems creeping up. I’d be curious kind of what things you were asking about and trying to focus on or observe along your tour. 

Kathryn Poehling Seymour: Yeah, well, thanks, Alex. It’s exciting to be here. And in all honesty, we will be 128 next month. So we’re still a couple weeks away, but I’ll take it. I’ll take it. It’s May 20th, and we celebrate every year with ice cream Sundays or something just to celebrate our birthday. It’s really, really fun. It was really fantastic to do the tour of all of our locations. I got to meet with really every single person. We also did a virtual, just in case anybody missed it, in distribution, our drivers are some of our most important people. And often they’re the ones who don’t have an opportunity to make those connections because they’re out delivering product. But the the things I was really interested in understanding was just what was going on on the front lines, what was top of mind for our key team members that were in front of our customers every single day, who were managing vendor relationships every single day. And there was a different flavor in every location, really. Our locations are from Kansas City to Detroit and everything in between. Some are single person locations, some have a hundred people. So people’s concerns are different. We’re also embarking in the largest project in our 128-year history and the largest investment the family has ever made back into the business in a large distribution center, which will really change our model quite a bit. And I wanted the opportunity from a change management standpoint for every employee to ask me personally why we were doing this project. Why is this important to me? So, I spent some time with a couple of slides just to kick off the conversation explaining to them a little bit about our history, what brought us here to this decision point to revamp our distribution model, why it was going to impact them, and then again, why it was important to me. Why is the CEO sitting in this chair today? I decided that this was the time. And I certainly didn’t do that alone. It was a team effort. It was our board of directors and it was our family, all the people deciding that it was time. But that really was the goal of those conversations. But the biggest thing is I wanted to know what were their stuck points, was there anything I could do to help release any of those? And honestly, we changed a couple of procedures in mid stride, in the moment, things that said, you know what, this doesn’t make sense. I’ve heard this now from three locations. Is there something we can do about this? And we pushed through a couple things. And then really, again, what was important to their customers. Especially in some small locations, I had an opportunity to just sit at the counter and talk to the customers as they walked in and said, hey, what are you working on today? Any cool projects that you want to tell me about? Do we have everything you need for those projects? Is there anything that we should be doing differently? And just that ability to soak up the environment is the best education any leader could ever get. 

Alex Bridgeman: Yeah, absolutely. Was there any- what kind of ideas from customers did you get? I’m sure there’s ways around like, hey, how could we become more of your business or what would make it easier to work with us or order from us or handle returns or rebates or whatever, like what were some feedback points that customers gave? 

Kathryn Poehling Seymour: Well, if you ask a customer, you never have enough inventory and it’s always too expensive. Those are always the first two pieces of feedback. So you get past that. And we’ve made a lot of investments in our ecommerce site over the last couple of years. We were really on the front lines of having ecommerce a number of years ago. And as technology has changed, we’ve relaunched that site a couple of times. And our current platform and our current team and our current go-to-market strategy from an ecommerce standpoint is the best it’s ever been and best in class. We won awards for it. I’m so proud of that team. But that was something I talked a lot about and I wanted to know how they were using it, if they were using it, if they weren’t using it, how come? What were the barriers to their lack of using it? Was it that we didn’t have the right product? Was it not easy to find? Was the right outside materials not there? So did we not have spec sheets or cut sheets or ability for them to understand the product so that they knew it would meet their needs or not? So we talked a lot about that. But the other thing that I have been really interested in is just the projects. What kind of projects are going on in our area? Is it multifamily residential construction? Is it commercial projects? One of the things that was really interesting to me, we have a location in a very agricultural community and kind of the mega farms, I think that’s the right term, some of the gigantic farms that are going on, that have the needs that they have, excuse me. So, from those gigantic agricultural sites, what products do we have that we’re able to supply to them? Are there other things that we could also be supplying to them? That was fascinating, the projects that are going on at largely dairy farms, being based in Wisconsin, we’ve got a lot of that here, but a lot of water. One of the things, one of the stories I tell in our founding is we were founded by my great grandfather needing metal windmills, he needed to supply metal windmills because the most important thing on any farm is moving clean water to the animals and the people. And that hasn’t changed. So, some of those things that we can draw that line 128 years through we’re still serving our customers with some of their same needs, where we’re able to solve some of their same problems, but how can we solve more of them and how can we do it better? 

Alex Bridgeman: And before we get too far down any one path, you mentioned something earlier about the larger distribution center changing your model in some ways. In what ways is that? It’s 300,000 square feet, 308,000. It’s massive. Where does that affect the business and change the direction of how you distribute product? 

Kathryn Poehling Seymour: So today, there’s kind of three models for any distribution business. You’ve got a single location or small locations where you keep all your material in the location. So everything you need for your customer on the front line is in one location. Then you go to a regional model, which is where we find ourselves today, where you’ve got kind of regional hubs, and then you redistribute the product through those regions. And then you move to a distribution center model, where you’ve got one or multiple large distribution centers, and then you redistribute the product to your network of branches and locations from there. And that’s really what will change for us. We’ll have the ability to have broader and deeper inventories across our key product lines. And we’ll be able to get that to our branches on a daily basis, so that the branches don’t have to hold as broad of inventory. They can hold deeper inventory. So for our customers, if they’re coming in and buying a box of a fitting, they can now come in and buy two boxes of that fitting because they know there’ll be more there tomorrow. And we might be able to have that one-off thing they only need once a month. We’ll be able to bring that in for them the next day too. So, it’ll really allow us to move our inventory faster and get more inventory closer to the customer. 

Alex Bridgeman: So, what challenges- because there’s a- you’re switching models presumably because the old model is breaking or has more risk associated with it. So, at your scale today, where have you been seeing the more regional model starting to break down? Like what kind of common issues does that cause that a large distribution model or large distribution center starts fixing? It sounds like inventory is certainly one of them. 

Kathryn Poehling Seymour: Yes, exactly. We started this project actually in 2017. So, this has been almost 10 years. 

Alex Bridgeman: Wow, quite a while, yeah. 

Kathryn Poehling Seymour: Yeah. We recognized that we saw kind of the, we saw the edge. We knew that, to your point, what was breaking? We saw some cracks, and we knew that the more we grew, and if we grew the way we wanted to, those cracks were just going to become bigger and we weren’t going to be able to provide the service level that we’re proud to offer to our customers. And we were going to start getting beat by others who could do that in ways we weren’t able to. So kind of looking at the competitive landscape, looking at our customer needs, and looking at our strategic opportunity to deliver into the marketplace, we knew that we needed to make a change. Fast forward during COVID, we grew 30% in just those two years. We were bursting at the seams. We just didn’t have a corner to put a product in, and we could have brought in more product if we had the space for it. So we knew, okay, this is what the edge looks like. We’re at it. Let’s go. Let’s get this going. And so we know if we continue to grow the way we want to, we’re going to need to do this and we’re going to need to do it ASAP. This for us got a lot of efficiencies. It allows us to really build economies of scale and be a more efficient operation. And it’s not so that we can reduce space in our branches, reduce employee headcount. It’s not about cost reduction or efficiencies for that reason, it’s a hundred percent a growth play. It’s all about we’re going to need more employees, we’re going to need more branches, we’re going to need more products so that we can service a broader range of customers and geography. 

Alex Bridgeman: So, are you working on other similarly sized distribution centers across different regions that you serve? Like is this kind of just the first one and there’s others coming, or is this kind of like a test case, let’s see how this works, dip our toe in a little bit and then replicate this elsewhere? Where along kind of the strategy does this location sit? 

Kathryn Poehling Seymour: This is our first, and again, if we do what we want to do, if things look like I hope they look in 10, 15, 20 years, this will be the first of many. We acquired enough land. We did, part of this obviously was a huge location study and a whole bunch of research and education around where this should be located for today, where it should be located for the future. At the end of the day, our heartstrungs went out a little bit, but certainly pragmatically, we’re a Western Wisconsin company. We were born in La Crosse, Wisconsin, and this distribution center is right outside La Crosse, Wisconsin. There were 11 families who work in a distribution center for us today. They’ll move over with us, all 11 of those people. So we were able to do some of the things that make us who we are, but also have a great geography with fantastic incentives by the local community to make sure it was a smart decision to be where we are. But given that, it’s really central to our geography. So we have enough space to double the size of the building if we’d like to. But we also believe that that might be one of the levers to pull. And the likely second lever is that there’s other locations of this size of facility, depending on where our growth takes us. Is Kansas City our biggest growth market? Well, then maybe we have some opportunity to go there. Is Detroit, Michigan, and that part of the country more of our growth market? Today, this building can service our current geography, but as we continue to expand that, there’ll be opportunities for more growth. 

Alex Bridgeman: You mentioned doing a lot of research around the land and location. What are the keys to a good location for a distribution center this big? 

Kathryn Poehling Seymour: Really, we were able to hone in pretty quickly on the geography. So for us, it was being able to service every location every day. And what would that look like? If we were way down in southeastern Wisconsin, getting to northwestern Minnesota would have been that further of a stretch. Whereas when we’re in western Wisconsin, we can really draw that map out. As I mentioned, we started in western Wisconsin, so it’s not very surprising that we sort of fanned out organically like a wave across the geographies. So that also was part of the consideration set. But it came down to availability of property, opportunity to work with the local administration and jurisdiction and the village and understanding was this the right development opportunity for them too. We’re talking to a couple different communities. It had to make good sense for that community as well. 

Alex Bridgeman: Gotcha. I assume like near a freeway is pretty nice too, and most of the distribution centers I was like looking around at in West Salem are pretty near the freeway or main road, so that no one wants trucks going through a cul-de-sac, so that makes a lot of sense. 

Kathryn Poehling Seymour: Yeah, exactly. And our current distribution center, it’s small. It actually, two things, it’s next door to a brewery because brewing in La Crosse, Wisconsin, is a big deal, and it was an old beer can distribution center. So the brewery would keep all their beer cans in there and then fill them up. And the joke I tell is that you can imagine the size of a beer can and the size of a water heater, we filled it up pretty fast with our products. So undersized and it is downtown. It’s in a downtown, so to your point exactly, the trucks are coming through, crossing over bike lanes and all the terrible things that you don’t want semis doing and taking 20 minutes from the interstate to get to either pick up or drop off of product and then 20 minutes back out, whereas now they’ll be about three minutes from the interstate. 

Alex Bridgeman: Yeah, that’s a pretty big improvement. You mentioned, of course, ecommerce being a growing part of your business too. Maybe this is a dumb question, but having a large distribution center where you’re sending product to each location every day, is there other benefits data-wise for having an overlap so you can see where ecommerce orders are coming from and then where are products being purchased in a location and try to optimize inventory better across locations? Is that data you’re able to see and get benefit from? Like can each side kind of help the other improve and become more efficient? 

Kathryn Poehling Seymour: Absolutely, you just described the benefit to all of this perfectly. And data is so critical, especially in this age of AI. I can’t believe we’ve been talking this long and I haven’t mentioned AI yet. It’s my most recent obsession because I feel like I had a bit of a breakthrough in the last couple weeks about really understanding what the opportunity for distribution is. We know it’s there, but as it becomes more granular, we can start to see clear applications. Anyhow, for our ecommerce site we’ll have not only, for example, 25 of some product available locally for someone ordering on ecommerce, we’ll have 2,500 of that product available one day away or overnight right there for them. So, if they’re looking and saying, I need a hundred of these things, but First Supply only has 25, they’ll be able to see on the ecommerce site, oh, actually they have more than enough. I can place my order and know that I’ll have it when I need it anyways, without having to check other people or call other competitors or call us and say, hey, do you have any more? Could I get more? When can I get more? It’ll really, again, speed up the ability for us to have product to the customer faster, and our customers to understand our depth and breadth. Many times you talk to a customer, we talked about, I was talking with customers on my tour, I talked to a customer and they don’t realize the number of locations we have. They don’t realize the number of employees at First Supply because they’re familiar with their own branch and their own team. It’s not all bad because that means that they feel really close to their branch and their team. They’re delivering everything they need. They don’t even need a bigger company behind them. But when they do, it’s good to know that they have that. And this has been a great education for our customers too, to know our depth and breadth and how much we’re able to deliver for them. 

Alex Bridgeman: You said you made an AI breakthrough recently. What was that? 

Kathryn Poehling Seymour: I listened to a couple of, I went to a couple of really fantastic meetings that just helped, again, me understand better how to activate AI. And this was, one of the speakers said something really fantastic. I had been looking and our team had been looking at AI through the lens of each of our software platforms and each of our software packages as an additional kind of ERP or enterprise-wide project. And so, we were looking at our distribution center, we’re going we don’t have the capacity to do a project like this right now. When we look at our, we an Infor product for our ERP, and we had been working with Infor, and this was going to be like a couple month project, and it was going to cost so much in consulting fees. Well, the speaker really had sort of a suite of all of these small tools that are largely free, and just, hey, go use this, go try it, go test it out. Most people are using Chat GPT today throughout our company, but are there ways we could use it smarter? Could we invest in the enterprise version and then start to protect our data and use it differently? So it helped me see that this isn’t this big, scary thing. This is small and easy, and we can use it even more and more every day in our own personal lives. So, I’ve started to put a couple of tools on my phone and do a couple of things myself and test them just personally so then I can figure out what kind of the solve is or what problems they’re able to solve for us in the business too. 

Alex Bridgeman: Is there one particular project you’re most excited about? 

Kathryn Poehling Seymour: Two things that we’re working on right now, we’re pricing, and in the advent of tariffs and everything else going on, like everything going on in the world right now, we are going to need to be able to deliver pricing and update our pricing that much faster. And that’s just big data, anything where you can use big data. So we need a way to process and analyze that information coming to us faster. So, our FP&A team, our financial planning and analytics team is testing a tool right now that we think might be able to help us do that even faster. Next week, I said, here, do this for a week and then report back. We got to do this fast. That’s one of the things that I’ve learned. The breakthrough is like you’ve got to use it fast, we got to make a decision fast. Either this is going to work or it’s not. We don’t need to pilot it for six months, we need to pilot it for a week and then we’ll know. And then CRM is another big one for us too. Distributors create so much data and so much data about their customers and their customers’ buying patterns and the seasonality and all those things. But activating that data is going to be really critical to us. And again, do we need a Salesforce level product? Maybe not. Maybe we need something that’s smaller and more nimble and easier to plug in. That one we haven’t kicked off yet, but we’ve got some ideas about what we want to test. 

Alex Bridgeman: It does seem like AI is going to make kind of the level of software needed to accomplish something a lot lower, that you won’t need the super intense software platform to fix this problem anymore. It’ll be something much more simple that maybe you can train up to that level as you need to. But I like your boundary of like the one week, like we should know within a week if this is going to work or not. If we set it as a month or two months, it’s going to drag on, it’s not going to be a priority and we’re just going to forget about it. We need to know pretty quickly if this is going to work or not. I like that. 

Kathryn Poehling Seymour: Yeah, exactly. And my breakthrough is a little like, I have an Oura ring and I love it. And the reason I got it two years ago because I started to see the smartest people I know were all wearing them. I had this like week where I talked with three different people who I was like, wow, if those three are all doing this, I got to do this too. And I feel a little bit that way on this, like wait a second, these really smart people are saying I’ve got to know more about this, I want to learn more about this, why am I not learning more about this? I’ve got to dive in myself. So, yeah, I think it’s just going to be something we can’t obsess too much about it because we can’t put the cart before the horse, but at the same time, it’s certainly got to be something we’re all aware of and that we’re all, to your point, like using all the time in small ways until it just becomes normal. 

Alex Bridgeman: The Oura Ring doesn’t have like a vibration for like alarms or anything, does it? Or phone calls, it doesn’t do that? 

Kathryn Poehling Seymour: No, it doesn’t. But what I love about it is that it’s pull information. It’s not pushing information at you all the time. I’m a person, I know myself, if I had an Apple Watch, I’d be looking at my steps all the time, I’d be checking my texts all the time. Whereas this is just collecting data all day and I have to go out and get that data and look at it when I have a minute to do so. Or I usually, at the beginning of the day, the end of the day, how would I sleep? What am I setting myself up for? And then at the end of the day, how did I do? Oftentimes as I’m done with my day at work, I’ll look and see, okay, how were my steps today? I felt like I was sitting at my desk all day. Should I go for a walk tonight? It just gives me that kind of data, but its not pinging me all the time and disrupting me. So I like that about it.

Alex Bridgeman: I have an Apple Watch mostly because I would miss phone calls otherwise. So, I like that. And then it acts as an alarm in the morning. It won’t make any sound, it’ll just vibrate on my wrist, so I can wake up before my wife wakes up without waking her up as well with a loud alarm. But your point around the pings all the time, that part is annoying. And if there was a happy medium where there was no screen, it was just a ring that could vibrate for phone calls or in the morning, like that would be great. But that’s more of a tangent that I’ve been trying to solve for a little while. One thing you also mentioned earlier was how customers like want to have confidence in their orders and be able to place orders online and having enough inventory, which kind of gets into some of the maybe trends that you might be seeing with customers. Like what does really high quality customer service look like today or in five years versus 10 or 15, 20 years ago? Where are you seeing the list of priorities for a customer? Price is always going to be there, but what else is kind of creeping up there? 

Kathryn Poehling Seymour: It’s interesting, because as you mentioned, distribution’s one of the oldest business models that exists and the mantra of distribution probably hasn’t changed since the beginning of time. It’s the right product at the right place at the right price. And so those needs don’t change, but their priorities change a little bit. And then the expectation around how those things will be delivered changes a little bit. One of the biggest trends I see today is that our customers are also consumers. Whether it’s a large mechanical that has revenues of hundreds of millions of dollars or whether it’s a single truck contractor who’s working really locally, they’re just buying things on Amazon. They’re probably having their groceries delivered. They’re doing all of the things that we do every day as consumers. And that starts to bleed into the rest of our lives. When we have expectations as a consumer, professionally, whether we want to or not, we build those same expectations into the rest of our life. So I even think about how information is delivered from my kids’ school. I expect it to be fast and electronic and all those kinds of things. And so if it’s not, you’re almost surprised. So our customers have those same expectations. And that’s why ecommerce is so important, because they don’t necessarily want to have to pick up the phone and call a person to find out what their price is and whether a product’s available. They want to be able to do that on their phone, on an app, on a job site in real time. Sometimes, though, they also want to be able to call a person. And people have different expectations for different projects, maybe with different parameters. So, our customers still need the same things, but they want it served to them or they want it provided to them in differing ways over time. 

Alex Bridgeman: Do you have an app today or are you working on one? 

Kathryn Poehling Seymour: We do. We have an app that really hooks up to our website. Some of the other things that we’re working on that I think every distributor is working on that help solve for some of this, chat, the ability for customers to chat into us, the ability for customers to text and then be answered by a person or hopefully by an agentic AI operator that can solve for some of those basic things and then get pushed into a customer service person if those basic things aren’t being solved. I read something recently about, well, I think it was some maybe research we even did, but the number one calls we were getting into our kitchen and bath stores were our hours. That’s the number one reason someone was calling us. And so we had people stepping away from projects or sales or other customers to answer what our hours were. Information that could easily be served up in other ways, by the website, by an automated message, or by a chatbot or something that could say these are what our hours are. So, ways to understand how critical is the information and how critical is human intervention in providing that information. 

Alex Bridgeman: That’s wild, that’s hours. Like, that seems like a pretty quick weekend fix. Let’s put the hours on the site for each location or at least make them like the first thing that loads on your phone. I like to use like for my own website and other stuff, like what does it look like on my phone? Because my sense is if I reach out to someone over an email, they’re probably reading the email on their phone, they click whatever link I sent them on their phone. So, what is the first thing that shows up on their screen when that link loads on their phone? So, what does it look like mobile? And if I have to scroll too far to find something, that’s frustrating. Same thing with like restaurants and hours or the menu. Like I’m generally going to a restaurant’s website for like kind of one or two things at most. Sounds like the same thing here too. 

Kathryn Poehling Seymour: Yeah, it’s interesting. We have four Kohler Signature Stores, which is a partnership with Kohler, and they had redesigned their mobile site. It was probably two redesigns ago now, but I thought it was kind of ugly. It had this big map and like these big words of the hours. And I’m like, shouldn’t we have some sort of inspirational image? And they said, absolutely not. The two things people are clicking on are the hours and the location. We need to deliver that immediately and at the top of the fold so that people can just get that information and not be frustrated clicking through all these beautiful images before they get the information they’re looking for. So again, all the learnings to make sure that, yeah, you may have one idea of how you want something to appear, but if it’s not functional, it’s also not useful. 

Alex Bridgeman: Yeah. Also, if there’s a holiday coming up, are you open on that holiday? For Easter or Christmas, Thanksgiving, like what are your seasonal hours at this very week? I don’t want to have to go to Facebook, Instagram, or Twitter, your Twitter page, to find out what the updated hours are. They should be like right there front and center. 

Kathryn Poehling Seymour: Exactly. 

Alex Bridgeman: When you think about growing as a business, it seems like most of your business has been organic through new locations. Have you acquired others or what’s kind of your philosophy around acquiring other businesses within First Supply? I’d be curious what the fifth generation, what’s the five generations of family kind of perspective on that? 

Kathryn Poehling Seymour: Yeah, my father was very acquisitive. He made a lot of acquisitions. During the four years I was at college, the business doubled in size, in number of locations and revenues, largely through acquisition. And so at that time, there were a lot of smaller wholesalers that were at an inflection point, and we provided a great solution for their family to move forward with another family. So, there’s quite a few families that make up the First Supply family really at the end of the day. And it’s something that’s a priority for us as well. The dollars and cents have to make sense and that’s oftentimes what we find is that we- it’s hard to make the P&L make sense at a certain point. But we’ve been working really hard on the opportunities. We know, especially for companies that value a hundred years of business, things don’t happen overnight. It may take years or even generations in some cases before a family’s ready to, or a founder or whoever it may be, that may be ready to exit the business. And we want to be the first call when someone’s ready to do that, in a culture that makes sense for us as well. 

Alex Bridgeman: So does that raise the bar then for the quality of business you would look at potentially acquiring? Because they’re pretty large, you have a strong culture, a strong set of beliefs. I imagine the minimum standard is pretty high for looking at partnering with another business at this point. 

Kathryn Poehling Seymour: Yes, I would say that that’s true. Because our cultures have to be able to blend at some level. You can’t really- it can’t be oil and water. Otherwise, it’s really not a good partnership for anybody, for either group. So, I wouldn’t say as high standard, you said that, I thought, oh, wow, no, I hope that’s not our point, but at the same time, you’re not wrong. We want to make sure that our culture is important to us, our values are important to us, and businesses that want to partner with us should have those things be important to them too. 

Alex Bridgeman: And this kind of tags into with using debt. A lot of long-time family businesses have an aversion to debt for one reason or another. If you’re acquiring businesses, I’m sure there’s a role for it somewhere, but you obviously care about longevity, like being able to continue running this business for future generations is more important than making money today at this very moment at the expense of that long-term growth or stability or safety. What has been your philosophy around debt and using it prudently, but keeping the business in line for where you need it to be? 

Kathryn Poehling Seymour: There’s a couple of things I think about that. Number one, I feel very fortunate in this role given the set of circumstances that I have as CEO of First Supply specifically, that we can make long-term decisions. We can say we know that over the next 25 years, the ROI on this makes sense. It might not make sense over the next even 25 quarters. Like it may be that this is something that’s going to have to build over time, but ultimately, it’s going to return more in the long run. I don’t always envy my friends that have private equity investors or partners or at public companies, because the timeline is so much different than being able to make those other investments. And some of our largest vendor partners align with us very well in being privately held as well because we can have partnerships and we can make decisions as partners that have that long-term view to it. And for us, growth-oriented investments are critical, making sure that whatever investments we’re making that rely on debt are ones that are going to grow the business, again, over the long term and not necessarily just that flash in the pan over the short term. And then protecting our family control is really critical. So the opportunity to use debt versus equity financing is something that’s important to our family today. We have a very robust family governance structure as well where we have 16 in my generation. I’m the only one active in the business today, but there are 16 people that we spend a lot of time, we have annual family meetings and then we have other meetings, we have a family council that meets monthly, just to make sure that we are aligned when we’re having input into some of these things and that our values and our goals and objectives are aligned across our family. And if they’re not, if a family member says, you know what, this isn’t my best investment anymore. I’m still part of this family, but I’m not part of the business owning mechanism of this family. And what does that look like? And then what is the off-ramp for that person or that group of people who wants to make that decision? That allows us to make sure that we have really positive engagement and interactions, and there’s no one feeling like, I’m stuck here. I know what this looks like and what my options are. That’s been a lot, a lot of hard work over quite a long time, and is new for us, but we keep evolving and growing in this family governance structure. 

Alex Bridgeman: So, you’re the only one of 16. How did that happen? No one else found distribution businesses as interesting as we do? 

Kathryn Poehling Seymour: I guess not, I don’t know. But we have a rule in the family, it’s one of our shared values that we have to work outside the business for five years. And so often- and we do that for a couple of reasons, so you have another boss, you’re not just at the family business because it’s where you landed, and you bring fresh ideas into the business when you come back after five years, you say, wow, this company I was at did this or this or the other thing. But so, I did my five years. I wasn’t looking for a job when my father approached me. I said, you know what, I really like what I’m doing, it’s really exciting, it’s really fun, I see a career here. But over time, I saw him in this business, lead this business, and I knew he had a really interesting job, and I wanted a job as interesting as his, I just didn’t know it would be his job that would be the interesting thing I found myself in. 

Alex Bridgeman: You also, I saw you have a JD from Notre Dame. How did that happen? Where was the- talk about some of your background before First Supply. 

Kathryn Poehling Seymour: So, I’m a tax attorney by education; my undergraduate’s in accounting. And again, I wanted to go to a big business school and I wanted just to go into the best program that business school had. So, I went to Arizona State, and they had a top 10 accounting program in the country at the time and happened to really enjoy it, which is a odd thing to say, I’m one of those people that enjoyed accounting school. 

Alex Bridgeman: Well, I’m an accounting major too, so you’re talking to the right crowd today. 

Kathryn Poehling Seymour: I’m among friends. And honestly, the last three family members to run our business have all been accountants, my uncle and my father and me. So it seems to be a good background. After my undergrad, I knew I wanted to have a broader background than an accounting degree would give me. Obviously, you need to either get a master’s or something else to sit for the CPA. I did not end up sitting for the CPA in full disclosure. So, law school was a great track for me. I was really interested in it. I’d always been kind of interested in it. And it was something my father encouraged. We don’t have anybody in the family who’s ever been to law school. I’m the only one, oddly in such a big group of people. We have a lot of doctors, a lot of really, really smart people, just no JDs. So I pursued that path and it served me really well. Fantastic education and a different way of thinking, different approach to things. And I’ve been lucky to have my career from, I went to work at Deloitte in tax consulting. I was doing a lot of M&A and really interesting projects in the Milwaukee office of Deloitte, and then came to First Supply. 

Alex Bridgeman: I also did not sit for the CPA exam and didn’t go down that path, but I also did enjoy my business law classes. And you’re right, it does give you a totally different view of the world when you have to think about what, not just like general law, but like very specific business law around certain industries and regulations. It just changes your worldview in a really big way. 

Kathryn Poehling Seymour: Absolutely. And also interestingly, so my cousin-in-law is our CFO, and he’s obviously also an accountant. And so all four of the people who have really been running our business are accountants from a family aspect. But yeah… he doesn’t have the law background. So we come at things differently sometimes. We arrive at the same answer, but it creates just a really great discussion. So, we’ve got different perspectives around different approaches that lead us to better decisions because we’re able to take those lenses and find the common path in them. 

Alex Bridgeman: Where would you say the JD has influenced kind of the way you approach running First Supply today? If you could point to kind of one or two maybe recent decisions or just lenses you look at the business through, what might those be? 

Kathryn Poehling Seymour: I don’t know if it’s the JD aspect or if it’s just in my nature, it’s probably maybe exacerbated by my JD, but I tend to have a very contemplative approach to decision-making. And actually I was exchanging some notes with one of our vendor partners about all of the tariff things, and I felt like I was probably bugging them a little bit because I really wanted to know their perspective. And they said, yes, yes, we’ll get back to you. But I ended up joking in our email exchange, it was probably the old attorney in me that I just really want to understand all the facts so that it best guides my decision making so I can make my case for whatever decision is our ultimate outcome. I don’t need anyone to tell me what the decision should be, but I want to understand the different perspectives and I want to understand the environment so that then we have the best decision forward. So sometimes it can make for slower decision making, but I think that it allows us to step through the process and really understand the environment around us as we make decisions. 

Alex Bridgeman: How would you describe your style as a CEO and where do you find that influence for that style? Maybe as a way to frame it, like if I was your personal intern for a week, what would I observe? What do you think I would notice and pick up on? 

Kathryn Poehling Seymour: This is a great question. So, one of the things, I find myself, as a leader of a business, leader of a family business, and the first female to do so, and all of that, I think, informs my style. I’m asked to speak to women business leaders from time to time, and one of the two kind of mantras I have, people ask a lot about work-life balance, and I believe there’s no balance, it’s all a blend. And so, I may spend my day picking up a kid at school and then walking right into a meeting, and I may- I try to travel with my kids when I can. Oh, there’s a meeting in Florida? Okay, guys, you’re coming with, and we’ll bring the childcare, and we’ll make this work. And I think that informs my style as well because it’s important to me that my team has that same perspective, which is a really different style than, I think, especially in distribution where it’s still very male dominated industry and there’s still- I’m also a younger person in our industry I’ll say. In the American Supply Association, I was our president a few years ago. I was our second female, but I was our youngest president ever, so I have that aspect too of just a little bit different approach to things just based on all of those demographics. And I think that informs my style. But again, at the same time, my contemplative approach which I would say I seek, I just did my review with my team, and I seek to understand a lot of information which can be good and bad. So it’s something to make sure I’m always evolving. I have a pretty natural curiosity. I want to understand things. I want to… visiting our branches was really great for me because it was an education experience for me to never stop learning. And then the other thing that I think is really important is to have an advocate and be an advocate. So wherever I can find opportunities to advocate on behalf of someone else, especially maybe a young woman in our business that is looking for opportunity that maybe is overlooked or has other priorities and so it is approached differently for projects. And then making sure that I’ve got my own advocates. When our board of directors is in executive session and they’ve got things to say, what are they saying on my behalf? And do they understand my approach and do they understand my strategy so that when they’re talking without me present, do they understand that? And do they understand the why and what the outcome’s going to be and why the outcome’s important to me? 

Alex Bridgeman: Who makes up that board of directors? Is it primarily family or are there some more independent members? How does that- what’s the construction of that board? 

Kathryn Poehling Seymour: I’ve said a couple of times that I’m lucky to be sitting in this role. And one of the reasons I am lucky is that we were very early to have an independent board of directors. My uncle set that up in the early 90,s which was rare for family-run distribution companies at the time especially of our size. So we have four independent board members that we refresh every so often. So we have a program and we work with various consultants. We work within the networks of those independent directors for new directors. And then we have three family members, myself, our CFO, my cousin-in-law, and then an independent family member that does not work in the business. 

Alex Bridgeman: What’s their role with like not being in the business? Are they more there to advocate for the family and have a more impartial view? What’s that role fulfilling? 

Kathryn Poehling Seymour: Exactly, they represent the family’s interest and help serve as a conduit between the business and the family for all of those members who don’t necessarily literally have a seat at the table and really represent the shareholder interests. 

Alex Bridgeman: There’s another friend of mine, Mike Boyd, he runs or ran for a little while a podcast, Business of Family. It was all about multi-generation family businesses. I’ll send it to you after this. I think you’d like it. But a concept that you hear over and over again in those episodes is that the family always outgrows or grows faster than the business. Like after a couple of generations, there might be a hundred people in the family and a hundred people can’t have equal dispersed ownership or roles in the company. That would be, it gets really hard. How do you decide who, or at least maybe how ownership passes to future generations? How does that process get decided? 

Kathryn Poehling Seymour: So, I talked about the- we’ve been working on this about 10 years, because we had an ownership transition event that we knew was coming. So the way our ownership will transition will be, it’s a bit morbid, but the death of the last member of my father’s generation, then the shares will distribute by branch to our generation. So we don’t- we’re not owners today, but we’re preparing to take on ownership, which is all the work we’re doing right now. And every family has a different structure. There’s no one-size-fits-all, and that’s been a learning experience for us. Many of us, we’re old Germans at heart, and so we said, well, someone’s already done this, let’s just do the same. Let’s be practical. Let’s get this done, or get it done yesterday. And it’s not that simple because what worked for one family might not work for ours. There’s probably threads in each family’s story that weave into ours. But we’ve worked with a number of different consultants and we’ve worked with the Northwestern Family Business group as well. The John Ward Center has been fantastic for us. It’s a very academic approach to all of this, which again we also appreciate. And we’ve had, I think, 10 people go through that at this point. But we’re just kind of sending cohorts of people through that course, and people are very excited about it. It gives us a common language, it gives us a common philosophy, and it really gives us a deep education around what family business governance looks like and how we can continue to improve it and what it means to all of us. We talked a little bit about our board of directors too and people talk a lot about having their own personal board of directors. And so, as I build that for myself, I happen, again, to be lucky that I’ve got a small group, and it’s incredible how it works, but there’s three women who are young women who have young kids that took over for their fathers in multigenerational family businesses. And that group of women is invaluable to me – tiny questions I can bounce off of them, say, hey, what’s your family doing about this? And we have this fantastic open sharing relationship that we can do that for each other. And it helps bring a lot of insight to our own family because I can share and say, this is the dynamic in this family, and this is how they’ve approached that. Do we want to think about that? Or maybe there’s a different approach for us. So, it helps inform us as well and it creates a real richness to the sharing between our families and our ability to learn from each other and to grow together. 

Alex Bridgeman: One big advantage of starting young is you have the longest career runway of most people in the industry and you’ll be around generally a lot longer than they will. So, there’s some big advantages to being the youngest person. 

Kathryn Poehling Seymour: Yes, there definitely are. Yeah, and I do hope to do this for a good long time. 

Alex Bridgeman: Yeah, certainly. What are some other- you mentioned a couple other family businesses that you’ve built good friendships with. Are there any lessons that stand out from other family-run businesses that you’ve tried to apply or have applied in the past for you? 

Kathryn Poehling Seymour: Unfortunately, some of them are the stories that don’t necessarily end well. And there’s a lot of reasons why a family finds themself in a position where they’ve had to make a decision that impacted either the cohesion of their family, unfortunately family business can be the biggest wedge between a family and family harmony, depending on approach, just again, sometimes depending on circumstances. It’s not that anyone did anything wrong or any one thing wrong. It’s just the situation people find themselves in sometimes. There’s ways to learn though from those families and to say that’s a decision that can be made. If we want to make a decision that leads to X, Y, or Z, let’s just do so intentionally. And I think that’s probably the biggest thing our family takes away from some of those stories is that whatever decision is made, let’s not let that decision happen to us. Let’s make that decision. But a lot of the things really come down to the governance. I’ve used that word a couple of times, but having established governance where everyone knows what to expect, and that we have an open and honest and understanding dialogue about these types of things where everyone feels safe to have conversations and everyone feels informed so that it’s not that Katie has some special piece of information that she’s not sharing forward. It’s that everyone has a shared understanding of the outcomes of those decisions that we’re making and that we understand how those decisions are being made from a perspective standpoint. There’s the very common three circles in a family business and where the overlaps happen. Are you an owner? Are you family? Are you an operator of the business or management? And then who shares in what circles and are there people who are only in one circle or, as I find myself, in all the circles. And understanding which hat everyone’s wearing as they’re approaching decisions. 

Alex Bridgeman: Yeah, it seems like a lot of the managing a family business successfully is just avoiding mistakes and avoiding poor governance or poor decisions. And it sounds like there’s quite a few mistakes you’ve been able to learn from, which is really good. 

Kathryn Poehling Seymour: Yeah, and like I always tell my daughters, you’re not going to be perfect, you’re going to make mistakes. Let’s just figure out what to learn from them and then how to move on from them, so that we don’t make that same mistake again and that we learn from whatever it was, the mistake we make. So we will absolutely make mistakes. It’s just that let’s make mistakes that aren’t so big that we can’t recover from them. 

Alex Bridgeman: How do you want to involve your kids in the business? Do you want them to come to board meetings, come on these tours of distribution centers? I mean, as a kid, I would love to go. I loved seeing different things my parents were working on or different work trips where I’m not going to their work meeting, but I’m going to Orlando. So, I’d like to hang out there for a little while. That’s fun. How do you think your kids will enjoy or have fun getting involved too? 

Kathryn Poehling Seymour: They have too much fun at mom’s work already. So we do some really neat things in the retail division of our business. And we’ve got one of our Gerhard’s Kitchen, Bath and Lighting stores is right by my house and this fantastic community where we do a big trick-or-treat every year and we put, little kids find it hilarious, we put candy in the potties, and so they’re always coming, is there candy in the potties at mom’s work? They think this is hilarious. And they love coming to things. We love hosting things in our store, so it’s something they’re used to hearing about. I had the opportunity with my assistant a couple weeks ago to read to my daughter’s classroom this really cool book called The House That She Built. And it’s a woman who engaged 100% female contractors to build a home in Salt Lake City a couple of years ago. And then they wrote a book about it really to teach girls that there’s a lot of different ways to be involved in the trades, and girls can do all of these things. There’s the tile setter, there’s the architect, there’s the engineer, there’s the landscaper, there’s all these different ways you can be involved. So that was a really fun opportunity to, again, blend mom’s work and what my daughters were learning and seeing all of that. So I hope they just stay curious and they stay interested. And that’s really what we want for all of our children as the sixth generation. And now we have seventh generation members. We just want them to be curious about the business as long as they’re going to be part of it. Again, if they decide that there’s an off-ramp for them, hopefully they still stay curious about their family’s heritage in this business. But that will serve us the best if they just want to know what this is all about. And part of what our work has been is educating the family about what the business looks like today. Even in my generation, many people had parents who worked in the business that looks really different than it does today. And now everyone’s really well-informed after this kind of 10-year work that we’ve put in about what the business does, where it is, and how exciting it is to be part of something that’s growing and part of our communities and really engaging for 700 families across the upper Midwest. 

Alex Bridgeman: Is there any sort of, to that point, is there any sort of like annual or every other year like discussion with the broader family about here’s what’s going on in the business, kind of like a board meeting for a family? Like obviously you have a regular cadence with quarterly board meetings, but from a family perspective, that education, what does that schedule look like and how do you communicate what the business does? 

Kathryn Poehling Seymour: We have an annual family meeting, and it’s part family reunion, it’s part celebration, it’s part education and governance and informative. So our lead independent director of the board presents at that meeting. We typically, the last couple of years, we’ve had another family business leader come in, and we do kind of a fireside chat of what their family is working on, what their family’s worried about, again, informing our family about other ways to think about things. We have our consultants come in and we usually have something that we’re working on, whether it’s a document or whether it’s a process or whatever it may be. We work on that for a while. We usually have a big dinner where we celebrate all the birthdays, weddings, anniversaries, births, all the things that have happened during the year. And so it’s just a really nice weekend. We have phenomenal attendance, which I applaud the family for. People want to come. This year, we’ll have it at our big new distribution center. I’m really excited for everybody to see it. They’ve been hearing a lot about it… following pictures. So, they’ll be able to see all the robotics and all the things happening and working right there. So, yeah, it’s an important part of what’s become the cadence for our family, that we know when this is going to happen, we look forward to it, and the family council really leads that meeting. I support what they’re planning and getting the pieces in place, but really it’s led by that family council. 

Alex Bridgeman: It’s such an interesting concept like passing down a business I think because there’s, with any, maybe there’s 10 kids in one generation, and one of them may take on the business, but you have to have alignment between the kid is interested in business generally and also leading something and then leading something that’s a business that’s the family business. They may want to be a CEO but in totally different industries or something completely unrelated, but maybe the same basic skillset, but they just find it interesting somewhere else, like not the family business. And also, some people grew up in the family business and they want to do anything but that in the future, or some go the other way, they dive in. And it seems like a lot of overlaps have to happen to get that right next generation to step up and lead the business. 

Kathryn Poehling Seymour: Absolutely. And I think it says, I think it says a lot about the culture of my family. I’ll brag a little bit that we’ve found our place with the right leader for the right time, and our culture, we did some work a number of years ago around our values, excuse me, and the values that came forward, we talk about we credit my grandparents with this so much because they created this group of people who want the best for each other. They’re curious, they want to learn, we want to establish something that we can be proud of. We talk a lot, my father and our CFO Todd and I talk a lot about being the stewards of this business. This is not necessarily ours, we have inherited it from the generations who came before us, and we’re simply taking care of it for the generations that will come after us. And that’s something, not something that we necessarily made up, it’s just the feeling we have about how we respect our heritage in all of this. And I think that’s so important, and that started with my grandparents, like I said, and how they informed us all about the business and what those expectations were, because you’re exactly right, that’s not an easy feat. And I would use the word again, I’m lucky enough to find myself in this position to be part of that family and not one that doesn’t maybe have those same priorities or those same values, and not that other values are wrong. They’re just different and maybe would have created a different outcome. So, it’s something, one of the things we did early on in my tenure was recast our vision statement for the business. And I’m really happy with where we ended up. Our vision is to distribute innovation and partnership in our communities for generations. And that’s really important to us. Distribution is what we do, innovation is what we strive for, partnership is our foundation, and our communities are what make us who we are. It’s critical that we’re engaged, part of our communities, and we intend to do this for generations. So, it’s really kind of summed up in something that we can say to each other and say as a business to the communities really well. And I think it does sum up the family values as well. 

Alex Bridgeman: Absolutely. Well, Katie, thank you for sharing so much about the business and especially as a family business, this has been a ton of fun. Thank you for coming on the podcast and sharing your time. And I’m also excited to see more pictures of the new center as it gets spun up and the robots get in there and start doing stuff. So, looking forward to that, but thank you for sharing your time. 

Kathryn Poehling Seymour: Thank you for having me.