A lot of people put their career first over everything else for a long period of time, and there are consequences to that. Doug Robinson always wanted to have a more balanced life between work, family and community, and so when an opportunity presented itself, he made the choice to move to Colorado to have a shot at it. Gathering the right people, he formed a successful organization and started his own firm. He is now the managing partner of Dry Fly Capital, a private equity firm casting vision for legacy business operations to expand into growth. Doug talks about the tradeoffs of creating your own firm, closing transactions, bringing companies to market, the culture, vision, and core principles of his firm, and more.
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Transitioning Into Running Your Own Firm with Doug Robinson
We have Doug Robinson as our guest. He’s the Managing Partner of Dry Fly Capital. He’s an adjunct professor of Finance at the University of Colorado Boulder and he is a former candidate for the Governor of the State of Colorado. Doug, you have a deep and varied background. Let’s dive into your background and talk about the journey.
I’m a father of five and married to the same woman for many years. The kids turned out okay. Our oldest is 28. The youngest is a junior in high school. We have one at home still. That’s what I’m most proud of. Along the way, I’ve done a lot of things. I’ve been an entrepreneur. I started businesses. I’ve managed larger companies. I ran for political office. Now, we have an independent private equity firm and we have four portfolio companies. It looks like we’re about to have a fifth. We have purchased companies and installed management and running those companies as well. I’ve had a great life. I was born in Michigan. I got to New York out of college. I spent several years in New York and many years in Colorado.
When you came out of college, what was your skill set that you got in college that took you to New York City?
I discovered along the way in college that I liked numbers. I liked finance. I had an internship on the bond desk at First Interstate Bank in Los Angeles. I interviewed and found a way to get back to New York and took a job as an investment banker, as an analyst at Dean Witter in 2 World Trade Center. I didn’t realize at the time I was signing up for about 80 to 90-hour average weeks. That was quite an education.
As a credit analyst in the bond market, those guys go deep in the balance sheets to make sure the credit quality is sorted out. I think more about a company from their balance sheet than perhaps the equity side does, in my opinion.
The balance sheet tells you everything. Balance sheet, cashflow, income statement, that’s usually where people start. That’s the least important of the three statements, but they’re all important.
You were at Dean Witter, which is no longer with us.
Dean Witter is now part of Morgan Stanley. I went back to business school. I went to Columbia Business School in New York with an emphasis on finance. I came out and joined a media company in their corporate development group, Maxwell Macmillan, Macmillan Publishing. I was on a team where we brought 23 companies over a couple of years span. I was recruited and I joined a firm called Hambrecht & Quist, which was an early underwriter taking companies public technology companies based in San Francisco. I was in New York. There were lots of travel back and forth, but we were doing IPOs primarily for emerging internet and technology companies along the way. I was traveling so much my wife said, “Is this what we signed up for?”
You were married to her these days?
I was married. We just had our third child. Out of the blue, I had a new assignment in Colorado. I’d lived in Colorado as a kid for a couple of years. My wife grew up basically at the Air Force Academy. Her father was a professor at the Air Force Academy. We loved Colorado. She came out with me. It was one of those days in October where it was bluebird sky, 65 degrees and the snow on the mountains. We said, “We’ve got to move here.” Like it sometimes happens in life, literally a couple of days later, a friend of mine calls and said, “There’s a recruiter that called me and there’s a firm in Denver that wants to start a technology investment banking practice. Would you be interested?” My wife said, “Absolutely.” I was out the next week and I met with them. You’re figuring out is the glass half empty or half full? It’s not New York. It’s a different opportunity, but we decided to move. That was many years ago. I came out and I was running corporate finance and then all of the equity division of a firm here Hanifen Imhoff. Determined that the day of the regional investment bank, full-service investment bank was coming to an end and we sold that firm to Stifel Nicolaus.
I started my own company with a few other folks that I’ve met called St. Charles Capital. We grew that to be the leading independent investment bank in Denver, sold that to KPMG in 2014. I spent a few years with KPMG and then I decided it was time to try to do something in politics. Several months I spent running for governor. I lost in the June primary and then I joined up with a longtime friend of mine to start a private investment firm and to look at various companies that we think we could bring our expertise to improve. I got a teaching job at the University of Colorado. That’s my story.
You come out of school and you go into the credit world and start doing the analysis. You’re working for major corporations. There’s a point where that changes where you’re not interested in doing the corporate gig anymore. You’re more interested in getting regional and getting more into details. At some point, you decide to start your own business. What was that like when you go home and you go, “I know I’ve got a good job and doing this, that and the other and I’m progressing. I want to leave that behind and I want to start my own firm?”
A couple of things play into that. Some of that transition was driven by a desire that I grew up with to have a balanced life. To have corporate success but also a family and personal success and community involvement and to give back to the community. I found in New York that it was too difficult for me. I couldn’t make all of that happen. I’m not saying that people can’t in New York, but I was in a great firm where everyone that I respected above me had put their career first over everything else for a long period of time. There are consequences to that. They were almost all divorced or mistresses or the kids off to boarding school. I didn’t want those things.
I made a choice to move to Colorado where I thought I could have a more balanced life. It showed up for me in the first week. I’ll tell you the anecdotal story. In New York, when you meet somebody out at a social gathering, somebody will introduce themselves and will say, “What do you do?” You know exactly what they mean and that, “Are you in investment banking or on the credit desk or the derivatives or public finance?” You talk about that. I’m out here in Denver the first week and we are at a social gathering. Somebody says, “What do you do?” I said, “I’m in corporate finances,” and they’re like, “No, what do you do?” I said, “What do you mean?” He says, “Do you fly fish? Do you ski? Do you rock climb? Do you bike?” It was a more balanced life and that’s what I wanted. I found it was a trade-off. I wasn’t doing those deals that were being written about on the front page of the Wall Street Journal as I had, but ones that were impacting people.
The value of my career being an investment banker is getting to know the CEOs of these companies and when they’re going through a transaction, either selling their business or raising capital. This is the most important thing to them at that time and you get to know them intimately well. Often, as you get towards the closing of a transaction, you’re talking to them three or four times a day around details of these transactions. I learned that, “That would be fun to be running your own firm. It takes some risks to do that, but with higher risks, there’s a higher reward as well.” I thought that if I gathered myself with the right people around me to start, we could have a successful organization and we did. I made that transition.
You’ve seen many businesses come to market over and form and sell. There are a number of those transactions that didn’t finish. They came to the table for one reason or another and failed to go through. If you were to look back over those businesses that didn’t transact, what would you say the one or two key reasons that they don’t transact?With higher risks, there's higher reward as well. Click To Tweet
By far, the overall reason is that people are unwilling at the end of the day to compromise or to make trade-offs over things. There are some things that you don’t compromise, but when you’re in a business transaction sometimes the attorneys get involved and you get mired in the what if scenarios. It’s a risk allocation discussion and you can’t see a way through that. People get tired of the process. They underestimate the extent of due diligence that a buyer wants to do. At the end of the day, they’re not willing to compromise and they walk away from it. Usually, that’s what happens. Sometimes you see a buyer that will re-trade a deal at the last minute or something like that and that’ll cause a deal not to happen. One of the things that we were the proudest of at our firm, St. Charles Capital, which we started in 2004 was that over the several years that we operated it and sold it to KPMG, our closing ratio was 84%.
For the people that don’t know, what is that ratio compared to the norm?
The norm is probably less than 50%.
For the folks that are going like, “I have a business or I’m concerned.” When you were bringing companies to market and when you’re looking at them, what were the key things that you would either find or train them in to get ready to sell?
Before I answer that, the 84% we were successful and closed. The difference at 16%, about half of it was financials deteriorated through the sales process where they took their eye off the ball. The numbers went south. Of that 8% that was the difference, half of it was we couldn’t find the right buyer or something. People get their egos in the way and they can’t seem to get to yes basically, but most of the time we were successful. The key things for a smaller business if they’re thinking about going to market are starting to prepare ahead of time. Preparation is everything. Prepare not only the financials and the information that’s going to be in a data room, but most importantly prepare to have a management team or a group around you that can follow. If you’re the CEO and you’re used to doing everything, maybe you shouldn’t be doing everything. You need to be able to say, “If I’m out of this business a year after the sale, it can continue and grow without my presence.” Those are the key things.
I’ve got a little bit of background as a business owner as well. There’s that key difference between having a job and having a business. For you, you built this business. When you first started St. Charles, how many people did you have?
When we sold it to KPMG, we had 35 investment bankers. A little under 40 total.
When you started, how many did you have?
There were four of us.
I think about the progression, adding staff and passing through the vision and culture. For the folks that are in a growth curve, what advice would you offer to them about culture and vision and core principles of your firm?
To answer that, I probably need to step back and tell you about an experience that I had after I first came to Denver that changed the way I thought about leadership in business. I was always highly motivated to get things done. I’d start my day with a to-do list of things that I wanted to accomplish. I was a running aside of this firm, Hanifen Imhoff. The equity side had about 75 employees. I remember one day in particular where I had this list of things that I needed to do accomplish. Three times I got interrupted by people knocking on my door saying, “I’ve got this issue with a client or with this other guy on the sales desk or other things.” I was aggravated like, “They’re taking time away from what I need to get done.”
I was stewing on that over the weekend and I happened to run into an experienced executive. He mentored me a little bit and I was sharing with this and he says, “You got it all wrong. That’s the most important time of your day is when you are leading and listening and lifting up other people. Your job as a leader is not to get that entire task done. It is to inspire other people to reach their potential.” A light went off in my mind that, “True leadership is not how many things did you get done, but how do I help other people get inspired about the vision, where we’re going and reach their potential. That we’re going to be better off with lots of people doing it than the energy that I can put into it.” That was a critical event for me.
When we started St. Charles Capital, one I made sure that I had partners that I was with, the four of us that we had a common belief around people. That we had two things: we had trust in each other’s competence and trust in each other’s integrity. That we wanted to build a culture and a firm that was based on doing the right thing and no conflicts and serving our clients. We had a vision and we were to empower people to achieve those things. Those are the things that helped us to be successful where we had a clear vision as to what we wanted to be, the leading independent investment bank in Denver. A roadmap as to how we were going to get there, which was different than the others.
At the time, there were regional bankers that were industry agnostic, but more experts on the M&A process or raising capital. We said, “We’re going to be experts in that but we’re also going to bring deep industry expertise as you got from New York.” When you went to New York as the CEO of Boeing, you didn’t talk to a generalist. You talked to transportation, the airline guy who’s following all the other airlines. That industry expertise allows you to know what’s going on in that particular industry. Who’s buying? Who’s selling? What are the key metrics? How are the valuations? We brought that to the lower middle market and the first ones to do that. Those things combined with our focus on people allowed us to have success and to grow and scale our business. Eventually, we felt the right thing to do was to put that in the hands of a larger firm who could take it from where we had it.
What I think about is business development. If you’re bringing in niche market experts, this is not New York City. This is not LA and not San Francisco. You have to go in order to support that higher and that expertise. You have to find a business. What did you guys do to try business development?
We would task people. We would say when they got to a certain level, “We’re going to give you this particular area.” I was in charge of the technology practice at our firm, which was a bigger area. We would drill it down even further than that. I would say, “You’re going to take human resources software and you’re going to become the expert in that area.” Usually, we built it off of a success that we had with a particular client where we had basically gotten into something and we’ve been able to sell successfully that business. We’d been out talking to people and we leveraged that as a way to go and talk. For example, if you’re the CEO of a human resources software company and the competitor of yours that you know and you’ve been at trade shows and competed against. You know that he sold his business. Are you going to take a call from the adviser that completed that transaction? You probably will. We wouldn’t share any confidential information that we were required not to under NDA, but you could certainly share about how much interest there was in the marketplace? What were the key metrics and the key factors? You had some real expertise that CEO benefited from. We would leverage that expanding into a new area.If you're the CEO and you're used to doing everything, maybe you shouldn't be doing everything. Click To Tweet
You are monetizing your effort.
Momentum marketing is what we called it.
Get in and go deep. For me, we generally have an idea of where an episode might go. This one’s going all over the place, which is awesome. People are everything. The to-do list that you had in the morning, you go, “I’ve got this to-do and my people keep getting in the way of my to-dos.” If I can train my people up and spend time with them, did your to-do list change?
The to-do list shrinks. Suddenly, you have twenty things on it and you’re thinking that you’ve got to get all these things done. When you realize that other people can do it more effectively than you can and that your job is to inspire them to reach their potential and give them the opportunity and hold them accountable. Your to-do list shrinks and it shrinks substantially. One of the guys that I read a lot about at the time was Jack Welch, who was the longtime CEO of GE. He managed that huge enterprise and often didn’t have much to do. He’s a scratch golfer. He was able to train, inspire and lead his people. That’s another key takeaway that they put into training and giving people the skills, which is not just the skills, but also the confidence to be able to do big things. You reward them financially and otherwise. Your to-do list gets much smaller.
When you’re running St. Charles and you’ve got this massive growth of personnel, at some point in time in several years, it’s sold to another firm. What was the transition to the folks that were working there when you were getting ready to sell? I’m sure it wasn’t a secret. What was the reaction and anticipation by the employees knowing that you were going to take and transition to the next stage?
There was a lot of concern around it and rightfully so. We had something special. In the whole time that we ran our firm, we never lost an employee to a competitor. We had some that had personal reasons where they would change or their spouse was transferred and they moved to another city or something like that. We never lost anybody to a competitor. We felt good about that. There was anxiousness. We were a small firm, less than 40 people being acquired by a 21,000-person firm in the United States and over 100,000 worldwide. We were going to be a small piece of that. There was some concern and in hindsight, rightfully so.
Having been around the track with many businesses going through the process, it gave you a unique perspective when you were getting ready to transition. In looking back, top one or two things that you did really well and the top one or two things that you wish you’d done differently. Do you have any of those?
I’ll tell you the things we didn’t do well. We underestimated the difference in culture. Culture is important and the other thing is compensation. Those two things, culture and compensation drive a lot of services businesses, which we were. We were expertise. We were selling our brainpower or intellectual power and the people that we had hired. We had a model that was like a lot of smaller firms that was a larger beta if you will. If you had a good year, you got paid well. If you didn’t have a good year, you didn’t make so much money. The larger firm had more of you’re going to make more. All of us get big increases in our salaries when we went in there.
The bonus component of it was going to be smaller. There was less of an opportunity to hit that home run or knock it out of the park and that had an impact. The culture was less risk-taking. I’m not saying one is bad and one is good with no judgment. It’s different. When you’re a firm of over 20,000 people, there’s more consequence to screwing up than getting that new opportunity. You’d rather not screw up. We didn’t understand the extent of the 100 in-house attorneys and the 50 people in risk management, which is appropriate for sometimes a large firm. That’s all about their reputation and everything else. It was a culture that was a little bit of a mismatch. What happens is you start to lose some of your people. They decide that they’d rather be in a different environment than that. That was difficult.
You’re unique in that you’ve seen lots of businesses come to market. You’ve seen lots of successful transactions occur. You have the benefit of looking over lots of shoulders and you go, “I get this. I’m getting ready to go to market with my business. Even knowing what I know, it’s still a challenge.”
I’ll say another thing that was a big deal and we didn’t think of it at the time, but we had the physical layout of our office. We had a nice office and we had people in offices with a closed door and other things. We went over there and their approach was we’re all in bullpens. That’s how we do it. No matter how senior you are, you’re in a bullpen with the divider. That was a challenge for some of our people. I was thinking at the time, “Who cares? I don’t care what my office looks like,” but some people do. It’s a chance of differences. With some firms, that’s a culture that they had. Even the CEO of Cisco, Chambers, was in a bullpen. That’s the way they ran it and it was hugely successful. It isn’t a judgment, it’s differences.
When you sold the business, was it sold the business? Did you stick around for a period of time?
I stayed for a few years.
From going from an owner to going from I’m presuming to earn out. What was the earn-out period like?
There were some great things about it. I enjoyed going to all the training and the resources and going to conferences where there were thousands of my colleagues. Having great speakers come and all of those resources you have being part of a big firm and being able to take clients to the masters. We got a client to meet with Phil Mickelson. I never could have made that happen. There are those things that were positive. There were some challenges around not being in charge and having oversight, which was totally appropriate. People making decisions about what business we were going to pursue and what we weren’t and some of those things. It was like everything in life, there are pluses and minuses.
I wanted to circle back a little bit. You’ve been married to the same woman since day one. You have five kids in your family. You look at a successful business operation. When you look at your family, what is the crossover on that you would think the family principles or business principles that somebody could learn from you in having a successful family?The most important time of your day is when you are leading, listening, and lifting up other people. Click To Tweet
The key things in both are the ability to listen. Not think that you have all the answers and to validate the worth of the other people. Business and leadership are about relationships. It’s the same thing about a family. The husband and wife in a traditional family are the leaders of the family. You make decisions together. You communicate with each other. You’re honest with each other. You respect each other. You’re faithful to each other. You do those things that are the basis of a long-term sustainable relationship when there are lots of pressures in nowadays society not to do that. I have a grandfather who was successful and my parents divorced when I was young. He was a lot of ways like my father, even though he was my mother’s father. He used to say, “The best thing you can do for your kids is to love their mother.” That’s by far the best thing you can do. That comes with work. It just doesn’t happen. You have to work at it. We tried to love our kids and teach them the right things but let them govern and make decisions and fail on their own but be there to support them.
How did you see be versus do either play through the business environment or play through your family?
In the business environment, it was around, “What leader do I want to be? What characteristics or values do I put forward that I want my team?” I’m responsible as a leader, primarily to my team and then to the customers and others. How do I model that? It’s the same thing in a family. A father is an example to his children. Most of my kids have thought I’m a good example, it’s not universal. I still have those challenges sometimes at home where I’ll have a list of things I want to get done and you have interruptions. You have to be flexible.
I saw a t-shirt years ago that said, “Parenthood, it’s the first 40 years that are the hardest.” The husband and wife change through the years, experiences, training and influences. You learn a reason to fall back in love with your wife again as you change. For the kids, my firm belief is not what you say, it’s what you do. A lot of people say things they don’t do and the kids notice. For you, there was that point circling back to the business a little bit. You’ve done your earn out and you’re going to be done whatever week it was. You’re not affiliated with your business or the acquiring firm anymore. What was that morning like?
You don’t wait until that morning and then decide what you’re going to do. You start thinking about it ahead of time. As I started coming up on that date, I started thinking about, “What do I want to do?” I had an experience, a partner of mine that had left our firm and he’d established a CEO coaching practice and lives up in Aspen. I’ll give a shout out to him, Peter Feer. He’s fantastic at this. He has twenty CEOs or the high-level people that he’s coaching at any time. He’d be fabulous for you to talk to. He’s the oldest person to ever go through the simulated BUD/S training. Some of the SEAL team guys came out and they thought that people would pay $15,000 to go through basically hell week. A week of three hours of sleep and in the surf and whole and he did it at 53 years old and was on the cover of Outside Magazine a couple of years ago. He’s still with us and he’s a couple of years older. He called me up and he said, “Doug, there are about a few months left in my employment contract. Can I come in and visit with you? You may have clients or others?” I said, “Sure.” It’s a busy day and that’s funny how random things happen that impact your life.
We sat in the conference room on twentieth floor of Tabor Center downtown or across the Tabor Center, whatever that building is but downtown Denver. He said, “Tell me about what you want to do? What’s your low-risk path? What’s your high-risk path?” I’d always been interested in making a difference in change. I had some relatives, my family, that had been involved in politics. I’ve seen people make a difference at that level. My grandfather was a three-term governor of Michigan, the city I grew up in. I said, “High-risk would be to run for governor.” This was in November or so of 2016, maybe December of 2016. Our governor’s race was going to be in 2018. It takes a while to get ready and gear up. I had until a few months where I was going to be for sure at KPMG. I was thinking about what I am going to be doing. Option one is to stay working and do this. Option two is to get on some boards and teach which I wanted to do. Option three might be this crazy thing to do, which would be to try to run for governor of Colorado.
As we talked through that together in that session, I felt like, “Maybe I should do this.” It was totally out of the box. I hadn’t been elected to public office before. I was elected as a delegate once to the National Convention. I’d been involved in the political stuff. I’m on the board of the Expenditure Finance Committee for the Republican parties and things like that, but I hadn’t run. Over the next few months, I went back to DC, talked to everybody I knew. I tried to gather information and finally made a decision to do this. I started our campaign on April 25th of 2017. I hired a team. For several months I crisscrossed the state. I spoke over 250 times. I did dozens of radio interviews and TV interviews, six televised debates of which they said I was the winner of five of them but I lost. I was one of the four. There were twelve candidates that started. There were four of us that were on the primary ballot on the Republican side and four on the Democrat side. I lost in June, a couple of months before to where I was headed. That was a fascinating experience but painful experience too. That’s what I did. I recovered from that and said, “What am I going to do next?” That’s where I am now.
I think about the highs and lows and intuition and experience, the expenditure of building the team and going through and trying to make a difference by running for governor. Looking back over that experience, what would you have done differently in hindsight, if anything, other than win? For your family too because when you said, “We run,” we decided to run. It’s not just you.
It is a huge effort for everybody. When you put yourself out there publicly like that, everything’s fair game to look at or to talk to or whatever. My kids were asked about it and involved. Diane, my wife, was speaking with me at events all the time. I was gone all the time. I’d worked hard through my career but never as hard as this. The thing that was different was just about every night of the week, I was speaking somewhere and it often wasn’t down the street. It was in Pueblo or Montrose or Grand Junction or Burlington.
If you’re not from Colorado, you don’t know what that means. It’s not a simple drive.
These are two or three-hour drives. I made a rule if it was three hours or more, I’d stay in a hotel room. Otherwise, I’d prefer my own bed. I had an intern who was a driver for me. I try to sleep but you don’t really sleep. You have your pillow and we’d come back from these places and then you’d start. Physically, it was exhausting. There were a few takeaways that I didn’t understand prior to that. This is a whole other conversation.
This is the business of running a campaign. There’s a business there too.
I didn’t understand how the media has changed. I’m going to use the word been decimated by the internet business model. It used to be even several years ago that there were newspapers and reporters in all of these towns around our state and around the country who cared about who was running for office. There’s virtually nobody now in the print media because nobody under 35 subscribes to a paper. There isn’t the economics there. An example, I’m in Lamar, which is a town in Southeast Colorado. I’m talking to the guy. He is interviewing me. He says, “I’m one of three employees. A year ago we had sixteen. I’m the reporter and everything. We have a guy who runs the printing press and does all of that. We have a guy who’s advertising, who tries to get revenue. That’s where it’s become. What do people read in the paper? High school, sports and the obituaries. That’s what sells our newspaper in Lamar, Colorado. I barely have time to talk with you.”
Even the Denver Post since they were founded probably, every governor’s race they interviewed the candidates. They had a write up on the finalists for the primary. They made a recommendation or an endorsement. They didn’t do this. It’s the first year ever they never did it. Why did they not do it? They didn’t have the resources. They didn’t have the team. They didn’t have the ability. They’re hanging on by their fingernails. They’re in a fight for their life, same with the TV stations. I talked with a guy like Bruce Benson who ran for office in 1990. He said he had eight or nine reporters everywhere he went, the same with the other candidates. They were picking up on inconsistencies or problems or digging into your background or all of this stuff. It’s not happening now. Where does the average voter get their information? From paid advertising. They’re getting it from the candidates because the media is not able to do that work. The person who raises the most money has a distinct advantage. We’re going to see more and more of the self-funding candidates. Jared Polis, our governor, put in $20 million of his own money in essence in my view by the governorship. How do you compete with that?
Even in this podcast, effectively it’s a radio station. Who controls the content? Typically the guest, but you can have your own newspaper. You can have YouTube, which is your own TV station. You can have your own blog post, which is your own newspaper. The typical, traditional print media is competing against hundreds of those every day, if not thousands. There’s the lesson. How does that take now that you’ve transitioned from St. Charles Capital through the transition of the business and you ran for the governor? There’s got to be some, “I’ve got to catch up on my sleep before I do something next.” You went from there to Dry Fly.
The first thing I did was cry. It was painful to lose.Your job as a leader is not to get all the tasks done. It is to inspire other people to reach their potential. Click To Tweet
If you by and large win all your life, you go, “I’ve got good kids. I’ve been successful in business. I’ve done lots of things well. I’m a good guy, why didn’t they vote? I’m not sure that has a lot to do with it.”
The best person does not always win. What I could’ve done for Colorado, I didn’t get that chance. It was painful to get that black and white not you. I had 52,000 Coloradans that voted for me. That wasn’t nearly enough. I failed. I didn’t get my message out. That’s a whole other thing. All lessons learned and things that I would’ve done differently.
If you’d run for governor three times in Colorado, if you had a history of running for governor and you got the rules, you get it. This is what you do, this is what I learned but you didn’t. You were for the first time trying to make a difference. You try to bring what you knew and your message and you go, “That’s not enough.”
I cried for the first little bit. I like to ride a bike and I went up in the mountains. I did all that stuff. I recognized all the deferred maintenance around the house, the trees are overgrown and all that stuff. I threw myself into that for a while. I started to think about, “What am I going to do?” I always had this desire to teach. I called up the local schools. I had a relationship with them because we hired some of their graduates. I talked to DU and I talked to CU and they both said, “We’d like you to come and teach a class.” It worked out. Both are great institutions that it was better for me to do this finance class at CU. I’m going two days a week to Boulder to teach 30 CU seniors about corporate finance.
I’ve had a longtime friend, a multiple client, Bob Ogdon, who’s my partner here at Dry Fly Capital. He’d sold his business. I was on his board of directors. I advised him through that process. He wanted to invest in other businesses to use the skill set that he had. He said, “Let’s have breakfast,” and I kept up. We started talking about it and I decided, “This would be a lot of fun,” and I’m enjoying it. Basically, what we’re doing now is evaluating companies, deciding which ones we want to invest in. Bringing our networks that both of us have created over the years of investors to invest alongside us into these companies. We often recruit in a new leader and we take businesses that have been going for a long time, that have a long operating history that isn’t quite optimized. We bring in some new energy and some new leadership to try to take them to the next level.
Many of the Baby Boomers that might have sold in 2008 due to the market decline didn’t. Many of them are in that slot several years later thinking, “I don’t want to do that again.” There’s a significant transition problem for many of the Baby Boomer-owned businesses. Would you have the same opinion? Do you see that when you’re looking at companies?
I heard a stat. There are eleven million to twelve million Baby Boomer-owned businesses. Probably a number of those are going to transition to family members or others. There’s still a number that is looking for an exit. We see this all the time, an entrepreneur that started the business. I’ll give you an example. One of the businesses that we bought called AiA Industries, they’re the leading manufacturer of skylights in Colorado. They were a $10 million-plus business, about 80 or so employees. The founder started the business in 1974 and he’s still around. He’s in his 80s. He’s got a son and a daughter. One’s a doctor, one’s an attorney and they’re not interested in dad’s business. He cares a lot about the legacy that he’s created. He’s had this business a long time. The employees are his family. He wanted to make sure that they’re treated right. We understand that and we want to promote that. He still has an office at our company. We have a new CEO and he’s there as a consultant. He doesn’t have a position of authority. It was funny, the CEO was telling us that the former owner came in and said, “I want to take two weeks of vacation to go on this cruise.”
I knew a guy that had rented space after he sold his business or he had somewhere to go. You think about this business owner, his routine since 1974 showing up at work, the ability for him still to show up at work.
We made that available. It’s a small cost to us. The employees still see him there. Some of the changes we’re making for years all of his salespeople were on salary. We said, “We’re going to give you an incentive plan and you’re going to use a CRM. You’re going to put in your prospects and you’re going to think about the sales process.” There is some change and with that four salespeople and three of them all excited about learning something different but one not so much.
People think about when you’re acquiring a business you go, “There must be all this magic you do.” You go, “No, blocking and tackling CRM, incentive plan too and behavior.” They go, “That’s new, is it?” Often a lot of companies don’t.
We ease into it fairly slowly but you make those changes. You try to optimize and use technology and do some things that can help make a business run better but try to keep that legacy and culture. That’s the thing that when we’re acquiring, we’re not merging them into another big company or something where there’s a change of culture. We’re adopting the culture that has been there, making some tweaks to it, trying to bring some energy to it and some new ideas and try to grow. In my experiences, people want growth. They want challenges. They want purpose. They want meaning in what they’re doing in their jobs. They welcome that.
Your career from bicoastal work in the big city, coming to Denver and then starting your firm and then trying to take and give back in the community. You’re also not only with Dry Fly, but you’re doing some nonprofit work. What are you doing in the nonprofit space?
Along the way, I’ve started three nonprofits all around kids, which has been my passion. I have five of them. One is called KidsTek. We founded this several years ago when I saw most of my clients were technology companies. If you saw that there was this digital divide, kids mostly from disadvantaged backgrounds that didn’t have technology skills to thrive in this world. It still persists. Even with all the resources that are out there. We’ve taught about 15,000 kids over the years. We’re right now about 800 kids and about twenty schools. It’s a project-based curriculum to learn how to use Excel or Word or PowerPoint to supplement what they learned in school. That’s part of jobs now and they don’t have computers at home most of these kids.
We go into schools that are 75% or more free and reduced lunch. It’s a successful organization. We had our annual dinner. I spoke at our annual dinner and we had 280 people there at the Ritz Carlton and we honored the Daniels Fund, which is one of our supporters. My wife and I started another nonprofit called BraveTracks, which was to give opportunities to high school kids. We saw with our kids that businesses aren’t integrated into the high schools, more so with the colleges. There are a lot of kids that would benefit from having an internship or an experience or a connection between business and high school.
That wasn’t how you were in your high school, was it? Did you have shop class, woodworking? The same thing for me, you could take and learn a hard skill.
Not so much now. We started that and we merged that into another organization called Colorado Young Leaders, a vibrant nonprofit. It’s taking kids and hooking them up to businesses also service opportunities at the high school level. The one that we stumbled into, which is had been more of my time is after marijuana was legalized, commercialized in Colorado. We’d had in our own extended family seeing how a kid can get sidetracked through marijuana use and we’re concerned about kids. My wife went down to the organizing meeting with Governor Hickenlooper who put together a panel of 25 to come up with the rules for this new industry. He had a facilitator come in because they were educators, law enforcement and a lot of people from the industry itself. This new industry to say, “What are our priorities that are going to guide our rule-making process?” He had them rank six. I can’t remember all of them but you can look this up if you’re interested, google it. The first was after they voted was to create a consumer-friendly experience for the pot enthusiast. Last was to protect the kids and public safety. My wife came out of there and said, “Who’s going to be looking out for the kids?” We sat in our living room and we said, “We’re going to do it.”Culture and compensation drive a lot of services businesses. Click To Tweet
We started an organization called Smart Colorado, which has been at the forefront. It’s a point of a spear because the marijuana industry has a lot of resources, a lot of money. We’re saying let adults do. In Colorado, it’s not about legalization. It’s already legal here. It’s about let’s protect our kids and let’s make sure that they are not involved and we’re not promoting this drug to our kids. That’s an organization that’s a nonprofit that has been both educational as well as lobbied for sensible things like marking the edibles and putting disclosure around how much THC is in the products. Making sure their dispensary is over 1,000 feet away from schools and some of these sensible things which people hadn’t thought of. We have brought this compliance and more education so that we can make sure that this doesn’t negatively impact our kids.
If people want to reach out to you, how do they find you on social media?
You can go to my Facebook, which I still have up. I need to check it more often, which is @DougForCO. You can go there occasionally. I’ll tweet the same way. You can find me on LinkedIn at Doug Robinson in Denver. You can send me an email or something. Those are the best ways.
Doug, we’ll be doing another episode because there are more things I’d love to dig into. I can’t tell you how much I appreciate you taking the time to share your wisdom and experience.
Thank you, Bob. I’ve enjoyed it.
- Dry Fly Capital
- St. Charles Capital
- Peter Feer
- Bob Ogdon
- AiA Industries
- Colorado Young Leaders
- Smart Colorado
- @DougForCO – Facebook Page
- Doug Robinson – LinkedIn