Ann Rhoades headshot

Build Your Own Internal “United Way"

Life is full of surprises, not all of them good ones. If you run a company, you likely have had employees at every level encounter life crises that have temporarily affected their ability to survive, not to mention do their jobs. As a co-founder of a People First company, we wanted our team to find a way to help them, so we did.

When we started JetBlue, for my co-founders and me, a primary objective was to create a company with a culture of caring for its people and customers alike. Every aspect of the company is tied to this value, but one program in particular has contributed powerfully, in both concrete and philosophical ways, to communicating this mission, and that is the JetBlue Crewmember Crisis Fund (JCCF).

The mission of the JCCF is to assist crew members and their immediate families by providing short term support in times of crisis when other resources are not available. We started it 20 years ago, in the very early days of JetBlue when we were still a small company with 100 employees; we wanted it to be in our DNA right from the start. JetBlue made an initial contribution of $10,000 to get it started, and it has grown with us. Today it contains millions of dollars.

The JCCF grows through contributions from the JetBlue team. There are three primary avenues through which these donations come in. The first is direct, regular deductions from payroll. Employees are introduced to the program as early as the recruiting phase, and when they onboard, we hand them the forms to enroll. At the moment, about 53% of the employees, who now number over 26,000, participate in payroll donations to the JCCF. This is the most significant avenue for contributions to the fund.

Another common source of donations is a portion of bonuses. Management in particular has been very generous with this type of donation, which has helped the fund grow significantly. Finally, we have some employees who just cannot afford to give part of their pay, so they participate in fundraising, donating their time to organize events which benefit the fund. Fundraising events are typically organized by groups of employees, although JetBlue has grown large enough to have a fundraising committee now which helps with larger events. But many are still quite small scale.

For example, last year a group of teammates organized an ice cream social. They got a company to donate the ice cream, sold it for two or three times what it cost, and were able to raise over $1000. Another group organized a rooftop social. It was a happy hour, they had raffle prizes, and people paid a certain amount to attend. In addition to raising money for the JCCF, the event provided an opportunity for the team to get together socially and have fun. It’s been too long since we have all been able to get together, so everyone was thrilled by the opportunity. It was a wonderful event and raised over $5000.

You may think, JetBlue is a very large company, and mine is very small–how could I make this effective? Through our work starting and advising companies of all sizes, we can tell you that small companies can absolutely do this too. The strategies may look a little different, but they can be just as effective.

In small companies, alternate strategies are effective, especially in the early days. One powerful possibility is for employees to donate unused vacation days, which then get moved directly into the fund from the accruals. Fundraising can be effective in smaller companies as well. If you are willing to be creative, you can grow a significant fund, even if your team is small. At JetBlue, we ran a year-round raffle, with prizes that included things like spending a day with Don, our CEO, or tickets to sporting events. Small companies can absolutely do this too!

Regardless of your size, there are several important things you must get right as you set this up. Right from the start, your objective and your process must be transparent and extremely clear. First, you get the legal document to set up a 501C, and then you write the rules, clarifying very precisely what specific types of crises are eligible for grants. It’s a charity, so you need to send out an annual report to everyone who participates, so they can see how their contributions are being used.

As you build out the application process, you need to ensure that someone or a small group has administrative oversight of the program, but it’s not complicated – it’s not an add to staff. At JetBlue, an Office Manager has overseen the fund since its inception. Since it has grown so large, she does now spend almost half her time on it, but when it was small, it was much less. Then you establish a board. Today, JetBlue’s JCCF board is 14 members, though we started with just five. They are all A players, they are all respected people whose managers have recommended them, and they come from every area of the company. They meet once a month to review applications, and sometimes convene emergency meetings when there is an urgent need.

For the JCCF, common situations that create a crisis-level need include divorces and crew members who suddenly find themselves single parents responsible for the entirety of their rent or house payment. Natural disasters are also a common cause for crisis-level need. Health issues can also quickly become a crisis in a family.

All requests are reviewed by the JCCF board. The board’s job is to ensure that our process is uniform and fair and that we look at each application through the same lens.

Last year, for example, JetBlue had many crew members who were affected by hurricanes. They lost their homes, or their homes were heavily damaged. It was a year of high need; we received a total of 580 applications for funding, and we were able to grant 373, or 64% of them. That year we gave out $1.3M in grants, but we had actually collected $1.67M. In addition to the regular contributions that many of our team members make, when the crisis hit, many management members stepped up and gave significant amounts, and some board members chose to donate part of their cash comp to the fund. It seems that the generosity of our team always manages to keep up with and even outpace the need – that’s how much everyone cares for our team at JetBlue.

If you do this right and define the criteria carefully, you’ll see that once you have established your program, you are able to fund between 60%-70% of applications. People learn quickly what is appropriate to ask for and what is not.

Since its founding in 2002 the JetBlue Crewmember Crisis Fund has awarded close to $11M in grants. It is clearly important for practical reasons, but it is also an important way JetBlue communicates to the team what kind of a company they are. It’s a core value to take care of their people, and as we built this, we wanted to be sure we communicated and lived that value in everything we did. When you join the team, JetBlue will take care of you.

Mark Bernhardt headshot

How We Increase the Odds of Acquisition Success

Burgess & Niple (B&N) is a 111-year-old engineering and architecture firm. Over the years we have done more than a dozen acquisitions. I joined the company in 1997, and as I came up through the ranks and made observations from where I sat, my impression was that many of our acquisitions didn’t take very well. It seemed that the companies we acquired were kept at arm’s length and never really became part of B&N, or it took years for integration to occur. It took me some time to understand it, but it’s clear to me now that the reasons behind these unsatisfactory results could help drive future successes: culture and staff engagement.

As an Evergreen® company, B&N’s culture and values are paramount. Being a professional services firm, we don’t make widgets. Our people are our greatest asset, which is why Talent is one of the top priorities outlined in our Strategic Plan. When I took over my role of President & CEO in 2019, we had not completed an acquisition in a decade. As we prepared for the first acquisition under our new leadership team, we sought to increase our odds of success by focusing on cultural alignment and engaging more staff in the process through what we have termed our “integration partners” program.

It starts when we are vetting a company to see if we think they would be a good fit to acquire. We dig into all the financial details and technical capabilities of course, but we have added another layer to perform a deeper level of cultural due diligence. This starts in a joint Visioning Session with leadership from both firms. We are big fans of Simon Sinek, and in this session, we talk about our Why, our Purpose, and what we can achieve together post-acquisition. We also use a cultural assessment tool that is shared with the new team before we go into the meeting. This tool has 20-30 cultural characteristics that are aggregated into different categories. The B&N team and the leadership at the firm we plan to acquire complete the assessment and then we evaluate cultural compatibility together. This helps us identify where we have the most in common and where the soon-to-be-acquired employees are likely to see and feel the greatest differences. 

As we move forward with the acquisition, we start to lay the groundwork for assigning integration partners to reinforce cultural compatibility. Each person in the newly acquired firm is paired up with a B&N employee. Typically, a new employee’s integration partner is someone in a similar role, and often someone who has been through an acquisition as an employee of a company acquired by B&N. We dig into their staff’s resumes and develop a partner list as the first step. The B&N employees are then contacted and asked if they want to support the integration. We have found this is a great way to engage a wider cross-section of the firm in an acquisition and in our broader strategic planning goals. 

We coach the B&N employees who agree to help on how the process will work and ask them to introduce themselves within a week or so of announcing the deal. Initially, they have calls about once a month and check in to share a bit about how long they’ve been with B&N, their experiences at the firm–both good and bad–and let their partners know that they are available as a resource. They help them with technical and policy questions, but most important are all the pieces that are not written down, like the cultural norms, and how we speak to and behave with one another. We also use these partners to collect important feedback about the onboarding experience. I, or someone from the leadership team, checks in after a few months have gone by. What is it like to be acquired by B&N? What works well and what needs to be improved? Our hope is that they form a relationship, and while we do not require that they keep it going for a specific amount of time, I know there are some people who still meet quarterly, even three years later, just to check in.

Aside from honoring our culture and improving employee retention, this process helps us become stronger and more competitive. We are a mid-sized engineering firm with 470 employees spread across the country. We are often competing with publicly traded firms with thousands of employees. Our model is made up of a network of small offices, which sometimes have as few as 10 or 20 people. If we want to go after big projects, we need to bring in resources from all around the company to make one big, virtual team that can go head-to-head with our larger competitors. As we onboard the new employees, we encourage the integration partners to pull their partners into projects, which gets everyone working in the trenches together, creates trust, and makes us all feel that we are one team. This has been a highly effective program for accelerating that kind of teamwork and assimilating people into the culture and various projects quickly and effectively.

This is similar in some ways to assigning new employees a mentor, but it’s different because the integration partner is always a peer. It’s not about training; it’s about getting to know someone and helping them find their place at B&N, and then stay on as a significant contributor. It’s important for new employees to have someone who is not a supervisor in this role; new employees do have supervisors and oversight, but this is a different kind of relationship.

Our acquisitions typically range in size from very small–about 10 or so–to upwards of 40 people, so this program does require the investment of some time and attention. Even though so many people are involved, this program is relatively simple and easy to run. It creates so much value that any costs associated are far outweighed by the benefits. Each time we learn more and continue to integrate acquisitions more effectively. It’s been a wonderful tool for strengthening our culture and growing our team and our capabilities in a culturally aligned and Evergreen way.

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A Fresh Perspective in Leadership can be Powerful, if it Meets a Few Important Criteria

It is not uncommon for a company founder to be an operator. Nor is it unusual for leadership through the early years, while a company is setting its foundation and solidifying its identity and strength, to draw from the operators who have worked there since the beginning. But at a certain point, as a company grows, scales, and moves into its next phase, a leader who sees things through a different lens can bring new insight and help a company expand in ways it may not have seen before. A few critical pieces need to line up to make this a success: the new perspectives this person brings must solve problems that have been identified, his or her mindset must be in line with the values of the company, and the new leader must take the time to learn the business inside and out.

I like to think that I met these criteria and brought a fresh perspective to Performance Contracting Group, Inc. (PCG). My education and degree in finance as well as my experience and time as a professional baseball player brought two very unique perspectives to a company that was growing fast. My perspectives and how they would enhance the leadership of the company didn’t happen overnight; I first had to learn what I didn’t know to be an asset to PCG.

I joined PCG 20 years ago as they undertook the task of helping build out the finance department. I had no experience in construction. Up until that point, and for the better part of my career there, PCG had been run by operators who had come up through the trades or had a background in construction management. That made sense as the company set its foundation in pursuit of operational excellence. When I came on board, they were growing into their next phase, both in terms of complexity and geography. They were at the point where it made sense to complement the deep operational experience with financial expertise.

I did not step directly into executive leadership; that is an important part of this story. I spent almost ten years working in our branch offices as I worked to gain exposure to the various business units within the company. My mentors guided me in my own career path all while teaching me the business inside and out. And my background in finance allowed me to help the company and fellow employee owners understand the value and benefits of being 100% employee owned, something we are very passionate about today.

Over time, and through many conversations, questions, and connections, I came to understand how to see our operations through the eyes of all employees, no matter what their responsibilities were – what we did, how we did it, what the drivers of the company were, etc. I learned an enormous amount about construction, and I learned even more about the most important aspect of it all – PCG’s identity and purpose.

At PCG, we are in the construction business, but we are about people. With our ESOP and our People First orientation, we value relationships and connections above all else. This is what sets us apart from our competitors. Ultimately, we are more people-centric than product-centric, and you can’t understand us as an organization if you don’t understand that. This is where I think my background as an athlete helped make me a good fit.

Playing baseball in college and then in the minor leagues, I learned lessons that define how I view any sort of cooperative effort. On a great team, whether it’s on a field of play or inside a business, it’s critical to understand the shared values and goals, as well as the connection points that help you achieve them. It is recognizing that there are a lot of different skills you need to play a lot of different positions. You need quality, high performing people who are talented in their own respects. You need to bring all those people together to compete to win.

An example at PCG where a different perspective can facilitate big change is an initiative that is currently underway. PCG is in the process of realigning and reorganizing a 35-year organizational structure. Our branch operations were split between two divisions, a structure that served the organization well and led to its success for many years. But to continue to grow and best serve our clients we needed a change. With my unique perspective, I felt it was important to leverage the entire organization. I wanted to find a way to create more of a One Company approach. One team. The internal walls we had built up over time no longer provided value to our identity and purpose and they were not helping our clients reach their goals. We are working to break those walls down, we are collaborating more, we are connecting more, and we are asking ourselves what value and solutions we can bring to our clients across the country. We are working as one unified team.

In the time I have been with PCG, we have grown from a $500M company to an almost $2.5B company. Today, we have over 9,000 employees. With that kind of growth come a great many challenges across the board. I like to think I bring a different perspective to the table as a leader, because I can straddle the fence between the finance and operations side of the business, all while being a team player. In any company it’s important, but often extremely difficult, to identify areas of weakness and be willing to work to improve them. With my different perspectives, I hope I am able to identify some blind spots or some areas we need to look at closely.

Above all else, I took the time to learn the culture of Performance Contracting. I joined PCG in 2003, became President in 2019, and then CEO in 2020. By this point, I had deep experience in, connection with, and understanding of the company and its values, which happen to align with my own mindset. It’s about recognizing that every single individual plays a critical role in the value we bring to our employees and our clients. It’s recognizing, acknowledging, and lending appreciation and gratitude that makes us who we are. It takes everybody–our corporate departments and our branch operations–rowing in the same direction, unified around our culture and a drive to improve and strengthen PCG for future success. I hope that as a leader, I have made space for that to happen.

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Balancing the Challenges and Advantages of our Small-Town Location

The headquarter offices of Chatham Financial are located in Kennett Square, Pennsylvania. It’s a relatively small, suburban town about an hour outside of Philadelphia. It’s horse country and it’s beautiful. The schools are great, the community is strong, and life is good for families, children, and recreation. The core of our business is advising on derivatives trading and consulting in the capital markets, which are fairly sophisticated areas of financial service. It’s definitely unusual to do that work in a location like ours; most of our competitors are located in big, urban centers. For many years, however, our small town location has served as a net advantage to us. With all the recent shifts in the world and in the markets, the balance of advantages and challenges presented by our location has reshuffled significantly, but as we emerge into the new landscape, we are still finding ways in which being in Kennett Square helps, rather than hurts us in our effort to recruit world-class talent and build a strong, excellent team.

Chatham Financial was founded by a man who left his Wall Street job because he saw an opportunity to bring transparency to the derivatives markets. He and his wife lived in NYC, but as they embarked on this new adventure, they decided to move back home to a place that was more conducive to raising their family. Everyone said he was crazy to set up a financial services firm in rural PA, but he wanted Chatham to be a different kind of company. Today, our culture is firmly grounded in that same mindset. We value work-life balance, we honor our employees’ lives outside of the office, and we communicate this value to both current employees and potential new hires consistently.

For many years, we were appealing to employees at a certain phase of their career. Once they started a family, or as they were about to, the prospect of being able to live 10-15 minutes from work, send your kids to one of the great schools nearby, and join a culture that values individual respect and balance sounded far better than commuting into New York City every day. In addition, the cost of living was lower, so while it wasn’t the high NYC salary, it all worked. We mostly recruited for mid-level employees for a long time, who were at this phase of their careers.

Once people arrived in Kennett Square, the risk of losing them to a competitor was slim to none. We are by far one of the biggest employers in town, and one of the only financial services companies, so our turnover rate was very low. People stuck around, staying for 10+ years, which allowed us to grow and develop tight, experienced teams. We felt strongly in those days that our location was an advantage in all the ways that mattered most to us.

The first shift we encountered came about before Covid arrived. We were growing and needed to scale, so we needed to recruit more entry-level employees, right out of college, than we had previously. The prospect of moving to a beautiful but sleepy town an hour outside of Philadelphia appealed to this population a lot less; recent college grads want to be where the action is, in the city. We kept at it but realized that our location was starting to present some challenges.

And then, suddenly in 2020, work moved online. At Chatham, we aim to be a team that is tight, that is together, and that knows one another well. Although we now have eight offices worldwide–in Kennett Square, Denver, New York, Toronto, London, Krakow, Singapore, and Melbourne – we try to have our teams together as much as possible. We have had to expand geographically to manage client coverage; we need to be in the same time zone as our clients and they are now all over the world. But even as we spread out over several offices, we’ve worked hard to keep our teams in each location highly connected. The derivatives trading is best done in the office for risk and regulatory reasons, but even the work that could be done elsewhere is executed in office because we have a “one team” mentality. The value of being together, overhearing conversations throughout the office, and just being present and in the mix is highly valuable to our business and our culture. No one questioned this at all, until suddenly everyone could work from home. Then our recruitment landscape shifted again.

On top of the fact that people can now do many of the jobs we offer from home, the people who are interested in the lifestyle of Kennett Square can now move here anyway, and work remotely for someone else. Our small-town advantage seemed to transform into a problem to be solved.

What have we done in the face of these challenges? Like everyone, we have made several moves to try to mitigate the downsides of the new landscape. First, especially at the junior level, we expect higher turnover and so we hire more than we know we will need down the road. As we build our junior bench, the natural turnover tends to result in the highest talent employees, who fit our culture best, being the ones who love it and stay. Those who don’t, move on. It’s a more labor-intensive and expensive strategy, but it is working.

Second, we have made a few concessions to hybrid work where we absolutely had to. As anyone running a business right now knows, the pressure to hire good tech talent is exceedingly tight. Our tech team is a critical part of our business, but most tech opportunities are remote or hybrid. Therefore, despite how highly we value in-person connection, we compromised to offer a hybrid situation to our tech team in order to be able to build a great team. For the rest of employees, our principle is to be in the office full time, though we offer ad hoc flexibility to balance life needs. We are also working hard to make the in-office experience as appealing as possible by offering perks like free lunches and investing in our office amenities.

We are also leaning into some of our other locations. Denver is hot right now, so we have been ramping up there. Our entire leadership team used to be concentrated in Kennett Square, but as we are growing in alternative locations we are now spread out between Denver, Kennett Square, and London. Again, I would prefer we were all together, but having leaders in each of our largest offices has helped build the cross-office connections. We have also had to come up in salaries and benefits a bit to be more on par with our urban competitors, but again we see more upside with these shifts than not.

And finally, we are leaning into our Evergreen® culture. The downside of remote work is that the line between work and home is more blurred than ever. If you work at Chatham and come into the office every day, that is not the case. And when you go home, you are still in the beautiful, peaceful, and comfortable community, with the great schools and the light traffic, that has always defined Kennett Square. We might have to work harder to get the right people here, but we feel confident that our location will, over the long term, continue to set us apart from the rest of our industry and help us draw the best employees who share our values and who are excited by the unique opportunity to do big-city work in our small town.

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Onshoring as an Evergreen Strategy

As businesses evolve and market conditions change, we as leaders adapt our strategies, experiment with new initiatives, build and rebuild our structures to maximize opportunities. In recent years, the shifts in the market have been dramatic and have caused us here at DEMA Engineering Company, like so many of you, to adapt and even roll back some initiatives that had seemed so right just a few years earlier. Some of these reversals have caused us to learn powerful lessons about what is right for an Evergreen® company in the long term, regardless of market conditions. Our journey to and from offshoring is a great example of this.

For us, the move toward offshoring started all the way back in the 1980s, when we started exploring some partnerships with companies who made injection molding parts in Taiwan. The reasons were clear; the cost of steel to make the tools and the cost of labor–and therefore the parts themselves–were far less than in the US. It was quickly becoming the case that making the tools necessary for running the injection molding parts, even more than making the parts themselves, was so expensive in the US that very few companies were doing it anymore. We found we had no choice, so we made the smart and obvious move.

This shift was happening on a huge scale, in manufacturing as well as a great many other industries. We chose to work with partners in Taiwan, with brokers who managed our relationships, instead of in China because we found that we were able to establish better relationships and communicate more easily, even though costs were higher there then in mainland China.

All of this became easier, even in China, in the 1990s. With the rise of email, communication became easier and more barriers to doing business in Asia fell. We were able to start doing direct sourcing, in Taiwan especially, and bypass the brokers, thereby reducing our costs even further. I don’t mean to minimize the role of China in all of this; we did and still do buy parts from China. It’s difficult to avoid. But it was not our primary market. For the last 20-25 years, our partnerships with suppliers in Taiwan became the core of our business for bringing in injection molded parts.

For obvious reasons, everything shifted suddenly and almost entirely in 2020. The biggest problem for us, as for so many, was the cost of freight, which had skyrocketed overnight. We went from a 40-foot shipping container costing $3,500 to costing over $28,000. You can imagine how much was dropping straight from the bottom line. Between the freight cost that had skyrocketed and the strikes in the ports, labor shortages, unreliable delivery timeframes, and all the mess we saw around covid, it was no longer workable and was imposing extremely challenging and unpredictable circumstances on our business. Add the price increases worldwide, geo-political challenges, tariffs– the uncertainty became too much. This is what pushed us to start to imagine a change.

As we started to imagine ways to mitigate this series of issues, we faced several challenges. One of the most significant grew out of the fact that, over the last 30 years, because of the situation I have described, production of certain products and processes, especially in injection molding, vacated the US almost entirely. For the molded parts, which were also hard to find, we made the decision to start molding them in the US ourselves, even though the cost was higher. We have done this in several ways.

We are able to source some of the parts right here in Missouri. We have a number of small partners here that we work with locally and we are growing that network. It’s not cheap, but we are saving on freight, and we have regained reliability when it comes to delivery times, which is huge for us. We also acquired a subsidiary company in Pennsylvania in 2006 that does injection molding, and since 2020, we have invested in that too, to help increase production. We are basically buying those parts from ourselves, so that helps mitigate the higher cost there, as we are supporting our own business. When we used to start a new project, we would go to Taiwan to get it going. Now, we are starting our new projects at home. We are carrying less inventory and we are being more strategic about the parts we do still ship from Taiwan, being conscious of the size and nest-ability, so we are shipping containers with less empty space.

All of this has helped us reduce our lead times, reduce the amount of money tied up in inventory, and regain consistency of both pricing and delivery of our products. Eliminating the wild uncertainty we were experiencing has been extremely important. But it’s a process; it will take time to truly complete this shift.

Today, we have brought back about 20% of the product we had been sourcing overseas. This number is going to continue to grow. Especially for new projects, we are bringing the tools themselves that make the parts back onshore, and then we can start making the parts here, in Missouri or in Pennsylvania. For the last three big projects we’ve done, we’ve been able to onshore most of the parts.

We regularly share this onshoring strategy with our largest customers and they are very supportive of these efforts. They also understand the benefits of reducing lead times and gaining predictability. Our business will never be entirely domestically sourced, but more and more is moving back home, and we feel very good about our decision.

I keep the Evergreen 7Ps® principles right here by my desk and I have been thinking about Paced Growth and Private in particular a lot recently. We wouldn’t be able to do this if we weren’t Private; it will take time for the investments we are making, especially in our Pennsylvania company, to yield results and return us to strong profitability. If we had a short-term mentality, we would have to follow the lower prices, like many of our competitors are doing. But we are diversifying and integrating at the same time, which will, in the end, make us a stronger company, better prepared to weather whatever the next 100 years have in store for us.

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Taking Employee Training to the Next Level

Not just at my very first job, but at the first few, I had an experience that I figured was normal; I was hired, I arrived to start work, I was shown a few brief basics, and I was left to figure the rest out on my own. Like many other first-time employees, I was lucky if I even got any training. In the best-case scenario, someone took me under their wing and taught me a few things, but for the most part, I was left to my own devices to understand what expectations were, how things worked, and what pitfalls to avoid. When I left the job, any learnings that I took away were the things that I had stopped to consciously consider and understand, all on my own, and which may or may not have been beneficial to my next work experience.

The young employees at Amy’s Ice Creams have an entirely different experience.

Because of the nature of our business, making and selling ice cream, we employ a great many young, part-time employees, many still in high school. We get some folks who stay with us for a long time, but mostly there is high turnover in those employees for obvious and very good reasons – they are preparing to launch their professional lives and scooping ice cream is just the first step on the way to an eventual career.

Our visionary founder, Amy Simmons, decided long before I got here that she wanted these young people to go away with learnings that would benefit them throughout their lives, so she built a culture and a program that ensure this happens.

The foundational piece of this is the requirement that every new employee participate in two classes: Open Book Management(OBM) and Company Culture. To be eligible for raises or promotions, these classes are a must. Before covid, we taught these in person, and each was a few hours long. We have since moved to zoom, but the requirement and the content remain unchanged.

At Amy’s, we practice OBM. Right off the bat this marks a huge difference from any of the places I worked early in my life. For the most part, I had no clue about what was going on in the businesses I worked in. Like many young people in their first jobs, I think I imagined that the company was making lots of money and it was all going straight into the pockets of the rich owners. Period. I had no sense of the nuance and complexity of running a business, from the necessity of accounting for each dollar to the importance of deep, careful planning and execution. About ten years after Amy founded the company, she adopted OBM because she thought it would make us a better company, and because she wanted ALL employees, even the young, part-time ones, to truly get to learn how a company operates from a financial perspective.

In addition to this class, we invite all employees, even those who have been with us for only a week, to attend our quarterly huddle. At the huddle we look at every metric associated with the previous quarter. We review the big questions through the details: what were our targets in our key KPIs? Did we achieve these targets? How did we perform in this area, how about in that one? Where are our opportunities? We explain Capital Expenditures, including refurbishing our stores, buying vehicles for deliveries and catering, new equipment, etc. We decide what to prioritize, and we go through all of that in our huddle. We hope employees will understand key decisions like why we maintain surplus funds and how we allocate profits at the end of it all. Once it’s all said and done, they should walk away with a decent understanding of the fundamentals of business, which they will carry with them wherever they go next. Most of all, we hope they will take away the importance of being very diligent with money, whether in their personal life or in the business.

The second class we require of all new employees is Company Culture. In this class we teach employees about our values, what we believe in, how we treat each other, how we respect each other, and how much we value serving our communities. We hope that the message is clear: to us, this is just as critical to running a successful business as the financials are. At Amy’s, everyone is welcome, no matter who you are. We have no biases or judgements.

Let me give you a personal example that I think illustrates what kind of a culture we are working to create and maintain here at Amy’s. Every year we participate in the Austin City Limits Festival. It’s a huge undertaking for us as a company. For three days, two weekends in a row, we shuttle four crews a day to and from the festival. One year, soon after covid, we were a bit short on staff and our Director of Operations asked if I would drive the van. I did, and it was so much fun that I now do it every year! I love spending that time with the young kids who work for us, talking about their experience, and what’s going on in their lives. Sometimes, at the end of the ride, one of them asks me what I do at Amy’s. They have no idea who I am, and frankly, I think it’s better that way. I don’t need them to know I am the CEO; it might make them uncomfortable and less open and this way it’s just so much fun. This is the culture that Amy has created–we are all important and no one is better than anyone else. I get to benefit from this amazing culture now, and I Iove it.

I have been here for five years and feel incredibly lucky to be part of such a wonderful, People First organization. Amy and I have experienced it as a great privilege to build and steward this exceptional company in partnership with our leadership team. As a team, through discipline, focus, and a shared vision, we have achieved more impressive results than if our leadership was concentrated in just one or a few top executives. This reflects our culture of sharing, and for us, the cultural piece is everything. We are proud to be able to educate our young employees about the fundamentals of business and the importance of counting each M&M and hope they will carry the lessons on finance and on culture forward into their lives. And we are grateful for our cohesive and dynamic leadership team, which has driven the growth, strengthening, and solidifying of the foundation that will serve us into the future, 100 years or more.

Tugboat Gathering of Teams sign

Tugboat Institute Gathering of Teams 2023

Last week, we hosted the fourth annual Tugboat Institute® Gathering of Teams. This extraordinary experience was significant in a number of ways. For the first time, we celebrated Gathering of Teams in its fabulous new location, Nashville, Tennessee. It was the first time we were able to host the event 100% in-person since the very first year, in February 2020. Turnout was fantastic; we were thrilled to welcome hundreds of Evergreen® leaders and their teams, from Evergreen companies across a broad range of industries, sizes, geographies, and generations.

Our three days together offered both structured and unstructured opportunities for attendees to connect, learn, explore, and celebrate. Energy was high throughout, as key team members got to engage and share with other leaders from Evergreen companies.

The formal centerpiece of the experience was our six TED-style talks. Two Tugboat Institute members were joined on stage by three distinguished friends of Tugboat and our own resident researcher to share their Evergreen insights into business and life.

Don MacAskill, Co-Founder, CEO, and Chief Geek at, which owns the brands SmugMug and Flickr, kicked off the talks by sharing his insights on Pragmatic Innovation. As they built their company in the highly competitive technology industry, they learned powerful lessons about innovating wisely, and not falling into the trap of constantly chasing the wrong, flash-in-the-pan trends.

Ann Rhoades is credited with shifting the way people think about Human Resources. Through her work as Vice President of People at Southwest Airlines, Co-Founder at JetBlue, and now PRES of People Ink, she is largely responsible for establishing the people-centric mindset that a growing number of companies are now adopting. Her profoundly People First perspective has changed the way many business leaders think about how they treat, honor, and support their employees.

Jim Weddle served as Managing Partner at Edward Jones for 13 years, after a long career in the company. One of the most influential clients that he served in his time as a personal Financial Advisor at Edward Jones was Peter Drucker, creator of The Drucker Principles and author of The Effective Executive. In his talk, Jim shared some of Drucker’s important lessons on effective leadership, through the lens of his experiences as a leader at Edward Jones, and he added some of his own hard-earned wisdom as well.

Dr. Gary Kunkle is VP of Consulting Service and Research at Tugboat Institute and has built his current practice on mountains of private company data collected over many years, first as the leader of a company in Rotterdam that advised companies on geographic expansion strategies, and then as a researcher on projects for the states of Pennsylvania and Maryland as he earned his doctorate. In his talk, he addressed some of the most pervasive myths around growth.

McCarthy Holdings, Inc. is led by Chairman & CEO, and Tugboat Institute member Ray Sedey, who delivered a talk about the work he has done at McCarthy to bring about an important culture transformation. When he stepped into leadership, Ray realized that while McCarthy had always been an excellent performer, the culture of the company needed an overhaul. He shared the process they went through to become a healthier, more People First company, and importantly, he connects the shift to concrete and vastly improved results.

Our final speaker was the New York Times bestselling author Daniel Pink. Daniel’s important work includes the widely acclaimed WhenTo Sell is HumanA Whole New MindDrive, and most recently, The Power of Regret. With our ability to accurately predict and forecast even for the near future severely hampered by the increased pace of change in today’s world, Daniel focused on some strategies that will help us shift our perspective and better prepare for the future by doing our best to focus on improving our position, both personally and professionally, today.

Outside of the talks, most of which will be made available through our Evergreen Journal® in the coming months, attendees participated in a variety of smaller group discussions and spent time celebrating together as well. Whether the focus was professional or personal, the centerpiece was intimate and authentic connection.

Beyond the numbers, the less measurable ways in which Gathering of Teams 2023 marked its significance were perhaps the most wonderful and the most important. Being an Evergreen leader in today’s world can be lonely and challenging and can make you feel like you are swimming upstream. But when we come together, everything changes. To a person, we collectively gained strength from the knowledge that every member of our tribe, which is growing in numbers and in momentum, confirms our shared commitment to building companies that will last and that will contribute, in many different ways, to making our communities and the world a better place. If, in the beginning, it seemed like our vision was shared by a select few, it is becoming increasingly evident that our tribe is, in fact, significant and powerful, with Evergreen companies in every industry and geography. The Evergreen movement is gathering strength, and as we grow, so does our hope and belief that together, our impact that will make a dent in the universe.

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The First $25M are the Hardest

I went to work for my father’s company, Wisenbaker Carpet, in 1991, 21 years after he and his brother had founded it. I had my fresh new college degree in Industrial Distribution, and I was ready to make an impact. In my first stint with Wisenbaker, after learning the business, I piloted new programs and initiatives, and we grew, over seven years, from a $25M company to a $75M company. I felt pretty good about my accomplishments. But it wasn’t until I embarked on my next venture, outside of Wisenbaker, that I learned a humbling lesson: the first $25M are, in fact, the hardest.

My father and his brother founded Wisenbaker Carpet in 1970. As a kid, during the years when they were growing slowly, I worked in the company in the summers doing a lot of different jobs, from working in the warehouse, to driving a forklift, to installing carpet and learning the trade. By the time I came back to work full-time for my father after college, I had a sense of the business, along with newly minted business skills and a pretty good understanding of industrial distribution and installation. I was ready.

As soon as I got there, I started to notice aspects of the business that seemed antiquated and outdated. For example, we had a paper system for taking orders and filing them in the various places they needed to live. It seemed old and inefficient; I had been learning about the power and efficiency of computers, so I decided we needed to computerize our process. After doing some research, I launched and led an initiative to create a new Enterprise Resource Planning (ERP) system, putting together a team and even writing some of it myself on Disk Operating System (DOS). The process of duplicating what had been a pretty good paper system in DOS took about three years, and when it was done, we were streamlined and able to manage a higher capacity than our paper system had allowed.

Another project I undertook was a reorganization of the sales function from a staffing standpoint. Through my experience working in sales, I had realized that we were asking people to do more than one job, and that it was not possible for them to be fully successful as a result. Our salespeople were also doing the work of account managers, and they not only didn’t have the time for that, but they also lacked the skills. The reorganization allowed us to scale the company and leverage our people. The leap from $25M to $75M in seven years represented the fastest period of growth the company had seen by far. By the end of this period, I had been promoted to President, and my father was CEO.

During this time, in addition to carpet, wood, and vinyl floors, we added tile, countertops, and showers to our product and service line. We changed our name to reflect this expansion and became Wisenbaker Builder Services. Corian for countertops was all the rage at the time; in short order, we became the largest fabricator of DuPont Corian in the United States. But a few years in, demand started to shift toward stone countertops. I was interested, so I did some research and settled on quartz as the right product for us. We started to bring it into our product line, which did not make our suppliers at DuPont happy. They threatened to cut us off. At Wisenbaker, it was clear that we had to provide the products that our customers were asking for, so we decided to risk losing the relationship and chose fidelity to our customer over fidelity to our distributor. We were going to diversify if that is what our customers demanded.

Throughout the negotiations with the DuPont distributor over this disagreement, I had been the point person on our side, and the person on their side was a young man about my age – early 30s. As we sought a solution to the conflict, he had an idea: What if Wisenbaker stuck to DuPont Corian, and he and I left our respective companies and together, started a new one, selling the quartz countertops I wanted to bring in?  His company agreed, my father agreed, and we took the leap.

My partner and I started a company called US Stone. We didn’t bootstrap it; we were able to leverage the two parent companies, which enabled us to negotiate with Bank of America, take out a sizeable loan, and get to work. We got an office trailer and started building a factory.

As we built our business, the challenges and the demands on our time were extreme. We struggled to find a supplier that would work with us and still allow us to own our own brand. We settled on one in Italy, which meant frequent trips overseas. Meanwhile, I had four kids under seven at home. We had plans to create the industrialized fabrication process that didn’t exist, but the hurdles were endless, and included things that I would never have imagined.

Here’s a simple story that illustrates how it went in the early days. One day, my partner and I were sitting in the office trailer we had rented. The sun was coming in the windows and making it hard to see our computer screens. We decided we needed blinds for the windows. There was no one to send on this errand, so we eventually found time to go to Home Depot and buy them, and then they sat of the floor for months because we were too busy to put them up. We also ran out of toilet paper – there was no one to go buy it but us. Little things like this made me realize how much we take for granted in established companies. Starting a new business, you have to be responsible for every little detail, including the tiny and very un-glamourous ones. It was exhausting.

Keep in mind that we were not bootstrapping this business like my father and uncle did. We had money and we had a plan. But we had no systems, no processes, and in the early days, no people. We were starting from scratch, and we had to do everything. Suddenly that paper system I had replaced at Wisenbaker looked pretty good.

US Stone made it; we were able to build and scale it quickly, in great part thanks to the financial backing our parent companies had facilitated. It was a real lesson in building something from the ground up. After seven years, I was ready to leave this now-successful venture behind and return to my Evergreen® roots at Wisenbaker.

When I came into Wisenbaker as a punk kid out of college, thinking I would be the one to turn this small little company into something big, I failed to give my father credit for the work he had done to get the company where it was. I learned through my experience at US Stone that the journey from $0-$25M is incredibly hard. In many ways, it’s much harder than the journey from $25M-$75M, because the foundation in this second phase was solidly in place and the resources to do the work existed. I gained a whole new appreciation and respect for the incredible work they did.

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Why I Work With Lobbyists and Why You Might Consider it Too

In 2019, a fellow Tugboat Institute® member shared a short talk on working with lobbyists. Up until that point, I had engaged with lobbyists twice, to work on issues specific to a school district and the Federal Communications Commission (FCC), respectively. Each time, I was already deep into my work solving the two problems involved, and the lobbyist work was something we tacked on partway through because it became apparent that we had to. But when I saw this talk in 2019, I got to thinking–maybe this could or should be a more regular part of our process?

There are many different reasons to engage a lobbyist, and there are many different types of lobbyists. Some specialize in working with county governments or school districts, some work exclusively with agencies or alliances, some are partisan and some are not, some work at the state level, and some at the federal level. The landscape is complex and can be intimidating, but it comes down to this; there is virtually no industry that is not significantly influenced by regulation. Would you prefer to be at the whim of the regulating agencies, or would you like to have a chance to ensure that they understand the issue from your point of view?

Gaggle operates in the education industry, providing solutions to help K-12 districts manage student safety and well-being on school-provided technology. Our whole industry is driven by government funding. The state departments fund their districts, the federal government funds the Department of Education, and both distribute a great deal of money through annual budgeting and grants to fund our public education system. Sometimes the goal in engaging lobbyists is simply to ensure that your legislators fully understand the issues on the table, and structure grants and programs in such a way that your product is eligible.

Like many smaller Evergreen® companies, we often face competitors who are huge and well-funded, but who do not deliver the product they promise, in great part specifically because they are not Evergreen, and prioritize profit at all costs. If we don’t engage lobbyists and enter the conversation, the legislators and politicians crafting the regulations will only understand the issue from the point of view of our loud and wealthy competitors, who have a significant presence in the state and federal houses. They need to be educated, and most of the voices who seek to educate them have their own self-interest at heart.

Once you start to think that entering the lobbyist ‘game’ may be important, your next question might be, how? I admit that it can get complicated pretty quickly. In short, there are lots of different types of lobbyists, but no matter who they are, once you engage them, it is their job to become an expert on the issue you are dealing with. Some are independent, but most work with firms. And it’s a game of conversations. If the issue on the table has to do with state regulations, they will travel to the statehouse and meet with the staffs of legislators and committee members, and sometimes, with the elected officials themselves. If it’s a federal issue, the layers of people between you and the legislators multiply, and you will find that most of the lobbying happens with the staffs of the people who will be signing the legislation. It’s a little shocking, by the way, to what degree our country’s regulatory structure is shaped by these staffers, who are typically just a few years out of college!

The bottom line is this; it’s best to stay out in front of the regulatory shifts that are in the works if possible. Our first experience working with a federal lobbyist was a time when we were on the defensive and forced to react. As the pandemic took hold and online education took center stage, our industry was suddenly under much more scrutiny than ever before. We received an accusatory letter from the office of Senator Elizabeth Warren, requiring that we answer ten very specific questions about the ways we were (or weren’t) protecting minority and LGBTQ+ kids. We are in the business of protecting kids, so this was something of an affront, but it made us realize that the new privacy policies that were in the process of being shaped were operating on a number if ill-conceived assumptions, because the legislators only had a limited perspective on the issue. We hired a federal lobbyist to help them understand who we were and what we did.

Many in my industry are backed by Private Equity, and they just said, “Oh, let’s lay low and wait until this blows over.” But we were not willing to do that. We are part of a system–and in fact helped create that system–that is specifically trying to protect those kids, so we had to make them understand that. We are on a mission. We need people to understand and join us on this mission.

When it comes to regulation, there is a pendulum that swings one way and then it swings the other. Right now, we are swinging heavily toward more regulation, and I expect we will be here for about another half decade. Enormous, important decisions are being made about how government money is rewarded, what the criteria are for entrance into certain markets, what level of tariffs or taxation we will experience, and even, especially in my industry–education–what exactly privacy means and how tightly it is controlled.

I know the reputation of the lobbying world is largely negative. Maybe people see it as a war of self-interest, where the entities with the most money typically prevail. I suppose to a certain extent that is true, but here again, the advantage of being an Evergreen company is significant. Governments at all levels like to feel they are doing the right thing. Once they understand the value proposition of your Evergreen company, with its People First orientation and its commitment to adding value to the communities it serves, they can feel good advocating for your point of view. They hear from corporations all day long and they can see the difference between us and them. Further, as the leader of an Evergreen company, I can step into this ‘war of self-interest’ with a clear conscience, because I know that the interests I am trying to protect extend beyond my bottom line and even my employees. I am working for the good of every student and district we serve and everything we do is aimed at improving their experience in the world and protecting them from exploitation.

With this mission, if hiring lobbyists is the most effective way to share it and ensure that we have the space and funding to do our good work, then hire lobbyists we will. And I will sleep better at night knowing I am doing everything I can to help advance this mission and help students across all of the states and districts we serve.

Bald Mountain Idaho

Making Sense of Evergreen Leader Optimism Going into 2023

Dear Friend of Tugboat Institute®

As we step into a new year, I carry with me interesting insights from our recent Tugboat Institute Member Pulse Survey from early December. These members span 20+ industries across the United States, Canada, and Mexico. 

Contrary to what others are saying in the media and elsewhere, most of our members surveyed do not think we are heading into a major recession, or even a hard landing. Overall, over 60% of our members are expecting 2023 to be a growth year and nearly 20% think it will be flat. 45% of our members view the current economic environment as good to very good and 51% view it as ok--not good but not bad. Few view the current economic environment as very bad. 

The difference between their cautious optimism and what we are seeing and hearing on the national stage may, in fact, reflect the differences between Evergreen® companies and public, PE-owned and VC-backed companies that dominate the media and capital markets. Let me explain.

Inflation, supply chain uncertainty, and labor shortages are just a few of the issues that have presented challenges to most businesses in the past year or more. These pressures are certainly real, for Evergreen companies as for all others, and I do not mean to downplay any turbulence or headwinds they are currently causing you. However, I think that a look at the difference between the way Evergreen companies operate and, for example, the way private equity (PE)-owned and venture capital (VC)-backed companies operate might explain this relative optimism in the face of today’s challenges.

PE firms are highly competitive, with over a trillion dollars in dry-powder as an industry. To win the deal, they must pull every lever they can in their modeling, post-acquisition planning, and use of leverage to maximize their offer price while still earning a PE-level return for their investors. This leads to substantial amounts of debt relative to equity in their purchase prices, often 2:1 and even 3:1. In a low interest environment, more leverage is a great way to boost equity returns even higher. To further maximize every dollar of equity return, PE firms often stretch for the lowest possible interest rates, even during our recent period of historically low rates, which means variable interest loans.

After closing the deal, the typical PE playbook is to raise prices and cut costs as much as possible to generate cash to service the debt, typically through layoffs and elimination of any spending that does not feed immediately back into the bottom line. They will also move to squeeze suppliers on costs and payment terms, cut long-term investments, cut charitable giving, reduce product and packaging quality, sell off real estate, sell off divisions, reduce benefits, replace expensive, tenured managers with young go-getters, etc. 

But what happens when the economy unexpectedly slows? Post the massive COVID-related stimulus, and with interest rates rapidly spiking up as the Fed belatedly fights high inflation, conditions can change very quickly, as we have seen in the second half of this year. For these companies, there is a further cash crunch as revenues soften, costs rise, and the earlier pursuit of super-low variable interest rates becomes a time-bomb, significantly raising the amount of cash flow directed to debt service as rates reset. It’s ugly. 

I bet many PE-backed CEOs felt forced to take actions in 2022 that they despised, including moves against their employees, customers, suppliers, and communities. They undoubtedly viewed every move as necessary to preserve their jobs and the companies they lead so that ultimately, a small number of PE owners can continue to financially benefit, along with the pension funds that provide half their funds. How would it feel to be an employee in those PE-backed firms? Remember Doug Tatum’s analysis that over 20% of all jobs in America are working for firms with PE ownership, thus living under this tough playbook. 

A VC-backed company faces a different set of challenges today, but they are daunting as well. Instead of the debt that funds so many PE buyouts, the VC playbook for over two decades has depended on willing and generous investors funding continued losses in the pursuit of get-big-fast (GBF) and market leadership. While the VC industry pre-Netscape IPO was remarkably capital efficient (recall that the three trillion-dollar winners of Amazon, Google, and Microsoft hardly needed any equity capital pre-IPO), that was no longer necessary as money flooded VC firms. With the exceptionally low interest rate environment and excessive liquidity from quantitative easing created by the US Federal Reserve after the Great Recession, the return on fixed income portfolios dropped to almost nothing, and institutional investors had to move to riskier assets, like VC and PE, to find higher returns than the stock market to achieve their return goals or obligations. VC promised, and for a time delivered, these increased returns, enjoying the tailwind of a public market with overinflated asset values in tech, software, and crypto due to those same near-zero interest rates, and therefore attracted even more money from all sorts of sources. 

Today, with valuations of unprofitable tech companies getting destroyed and the FAANG stocks down by half since the end of 2021, VC and later-stage speculative investors (Tiger Global, Softbank, for example) have pulled back their investments, as public companies quickly become worth less than private ones. The mantra now in the VC circles is get to profits, since funding risk has gone exponential and an unprofitable firm cannot count on raising new rounds at anywhere near the current paper valuation, if at all. Layoffs abound in both private and public technology firms as they try to find a profit discipline. Through this process, they are also destroying their once fun, lavish, and friendly cultures. It is going to be really tough to change a culture from playful and undisciplined, with prolific spending and questionable employee effectiveness, productivity, and accountability, to a culture where every dollar matters, there is tremendous Esprit de Corps, and Pragmatic Innovation reigns. Most of the private GBF companies won’t make the shift successfully. 

In contrast, Evergreen companies are not beholden to outside investors. They are typically debt-averse, and if they do carry debt, it is in a reasonable amount, and often backed by hard assets, not the goodwill of outside investors. Evergreen companies grow steadily over time and from their own profits. While this may mean slower growth at times, if you compound their growth rates over decades, it leads to large, meaningful, well-run businesses. Evergreen companies are grounded in a foundation of actual, real value, delivered to employees and customers, and profitability. This equates to far greater stability than their PE and VC backed competitors. Evergreens are better positioned than anyone to weather downturns and therefore, to survive and thrive into the recovery. 

I certainly do not mean to suggest that Evergreen companies are not facing headwinds in today’s economy, nor do I intend to diminish the reality of the struggles you are facing in your company. Simply, as I listen to your feedback and hear the cautious optimism that stands out against the backdrop of a much more pessimistic message from the collective non-Evergreen community, I see strength in our difference. 

Because of the decisions you made not to fall for the sirens’ song and pressure of raising outside money, overleveraging, selling out to PE, or going public, during the past decade (or even further back to the beginning of the 40-year march in declining interest rates), your foundation is strong today. You have an incredible competitive advantage, existing for a deeper purpose, growing slowly and steadily from your own fuel, investing in the future when others are on defense, taking care of your people, and protecting your values and independence. 

For over a decade, it felt like money was plentiful and cheap; between low interest rates, excessive government liquidity, and an abundance of aggressive investors, it was. Therefore, companies who were willing to take massive investments and grow as fast as possible to get as big as possible as soon as possible appeared to be winning. Today, the winds have shifted, and I believe they are blowing in our favor. It may not be intuitive to most to be optimistic at this moment, but if we think about the difference between an Evergreen company and its competitors, it does make sense why you are. 

Wishing you the very best in 2023 and deeply grateful to you, your teams, and your families for being the quiet, stable backbone of our economy.


Dave Whorton

CEO & Founder, Tugboat Institute