Latest / The Turn: Blue Collar to Billions / She Had Never Run a Company. She Bought One and Grew It From $32M to $129M.

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She Had Never Run a Company. She Bought One and Grew It From $32M to $129M. · The Turn: Blue Collar to Billions

• 0:01
  Kory Mitchell: Welcome back to The Turn.
• 0:03
  Kory Mitchell: I'm Kory Mitchell of Iconic Founders.
• 0:05
  Kory Mitchell: We've had a lot of interest in this show, and I'd really appreciate it if you'd like and subscribe to the channel.
• 0:11
  Kory Mitchell: If you could forward it to a friend who you think might enjoy this episode, Theresa Eaton is maybe in the hottest space in the entire world right now.
• 0:21
  Kory Mitchell: She is in the electrical space, and what's cool about her story is she didn't start the business, she bought a 40-year-old company that was doing over $30 million in revenue.
• 0:31
  Kory Mitchell: And by the time she sold it years later, it was $129 million.
• 0:35
  Kory Mitchell: The way she got there and the challenges she faced are pretty incredible.
• 0:39
  Kory Mitchell: Let's dive into our conversation with Theresa Eaton.
• 0:43
  Kory Mitchell: Theresa Eaton, welcome to The Turn.
• 0:47
  Theresa Eaton: Thank you.
• 0:47
  Theresa Eaton: I'm happy to be here.
• 0:49
  Kory Mitchell: I'm super excited about this episode for a bunch of reasons.
• 0:52
  Kory Mitchell: But one of them is that your industry is probably the hottest industry on the planet right now because you know, electrical in particular seems to be the biggest shortage there is when with all of the challenges we're seeing and now the protests we're seeing in the data center industry, so much of it is tied to power.
• 1:16
  Kory Mitchell: And so it's fun to be able to learn a little bit more about kind of what that process has been like for you.
• 1:25
  Kory Mitchell: I know you bought the business and then eventually you grew and sold that business.
• 1:29
  Kory Mitchell: And so super pumped to hear your story and learn some lessons along the way.
• 1:36
  Kory Mitchell: So let's start kind of at the beginning.
• 1:38
  Kory Mitchell: Uh, like, how did you end up in the construction industry to begin with?
• 1:43
  Theresa Eaton: Yeah, I had a very kind of circuitous random path, to be honest.
• 1:47
  Theresa Eaton: I would never definitely not recommend my path to anybody, but I definitely got there by just kind of pivoting along the way as I got blockaded in various things in my life.
• 1:56
  Theresa Eaton: So I'm a two-time failure as it relates to actually a big thing.
• 2:01
  Theresa Eaton: Um I was very nervous when I was younger to talk about it.
• 2:04
  Theresa Eaton: I had a big chip on my shoulder, but I went to law school, and I failed the bar exam not once, but twice.
• 2:10
  Theresa Eaton: And so I didn't really want to be a lawyer, but it was just one of those things I felt like I should do.
• 2:15
  Theresa Eaton: So I did all that, and then I failed the bar exam.
• 2:18
  Theresa Eaton: And after the second time, everyone told me, like, take it a third time.
• 2:22
  Theresa Eaton: And I was like, you know what?
• 2:23
  Theresa Eaton: No, I don't want to do this.
• 2:24
  Theresa Eaton: I want to quit arguing and start building.
• 2:27
  Theresa Eaton: So I kind of weasel my way in through just various connections to a very low-level job in private equity, but it was an energy-focused PE firm.
• 2:35
  Theresa Eaton: And we were really focused on buying kind of dirty businesses like oil field services and manufacturing businesses, all kind of targeting The oil field.
• 2:44
  Theresa Eaton: So I spent a lot of my time in The Permian Basin, literally going out, knocking on doors, meeting with, you know, kind of The American dream type mom and pop type shops and entrepreneurs that way.
• 2:55
  Theresa Eaton: And over The course of my career, I ended up staying there for 14 years.
• 2:58
  Theresa Eaton: I met and got to know over 3,000 different entrepreneurs.
• 3:02
  Theresa Eaton: It's a long slog, but I was focused on origination, so finding The companies for us to buy.
• 3:07
  Theresa Eaton: I also sat on a few of our boards.
• 3:09
  Theresa Eaton: So I was on a substation testing and commissioning board, and we were looking for additional add-on acquisitions.
• 3:16
  Theresa Eaton: So I went to two of our customers.
• 3:18
  Theresa Eaton: They were Nextera and Pattern.
• 3:20
  Theresa Eaton: So Nextera is part of Florida Power and Light, and Pattern Energy is um primarily in The renewable space.
• 3:26
  Theresa Eaton: And so I went to them and I just said, hey, if you, and these were ops guys, and I said, if you were gonna buy any business, any vendor of yours, who would it be?
• 3:35
  Theresa Eaton: And each of them gave me a list, and there was one name that was on both lists, and it was Wex.
• 3:41
  Theresa Eaton: And so I was like, I kind of want to get to know that company.
• 3:43
  Theresa Eaton: And this is, I'm sorry, it's a bit of a long answer, but it's kind of important to understand the sequence of things.
• 3:49
  Theresa Eaton: So I got to know the founder; he was an 82-year-old electrical engineer, and this was a really good inflection point for me to meet him in his life because he was sunsetting kind of into the business, you know, out of the business.
• 4:01
  Theresa Eaton: He still loved the business.
• 4:02
  Theresa Eaton: He had started the company 40 years earlier, but he was starving out of capital and didn't really know what to do with it or want to keep, you know, grinding the grind.
• 4:12
  Theresa Eaton: And so I went back to the board and I said, you know, let's figure out a valuation.
• 4:17
  Theresa Eaton: They they provided a very low valuation.
• 4:20
  Theresa Eaton: And part of that was because of two things, really.
• 4:23
  Theresa Eaton: One, there was no succession plan.
• 4:24
  Theresa Eaton: So this guy was 82.
• 4:26
  Theresa Eaton: And then two, the company was headquartered in California, which, if you're a Texas-based PE firm, used to investing in Permian Basin businesses and services and manufacturing, California is scary.
• 4:38
  Theresa Eaton: It's not nearly as um commercial or business friendly.
• 4:41
  Theresa Eaton: They were right on that.
• 4:43
  Theresa Eaton: But on a succession plan, that was something that could be solved.
• 4:46
  Theresa Eaton: And so they did make an offer, but it was a very low ball offer.
• 4:50
  Theresa Eaton: It was four times trailing EBITDA.
• 4:52
  Theresa Eaton: So they kind of applied a, or we at the time, a service, you know, oil field service type multiple of a small mom type pop type business to this business, which was in a hot space, not as hot as it is now, but was in The electrical world, and it's a distributor.
• 5:07
  Theresa Eaton: So we provide medium voltage cable and accessories that go into infrastructure for utility scale solar, battery storage, wind, and then I'll get to it later, but data centers ultimately, which became the biggest piece of the business.
• 5:23
  Theresa Eaton: So along the way, uh I made the proposal to Bruce, the founder, and he laughed and he said, Thanks, but no thanks.
• 5:32
  Theresa Eaton: Um, four times trailing doesn't do it for me.
• 5:34
  Theresa Eaton: And so I said, Well, what does it take, Bruce?
• 5:37
  Theresa Eaton: And he got back to me a few weeks later and he said, five times trailing.
• 5:42
  Theresa Eaton: So I thought he was gonna say eight times, but instead he said five times.
• 5:46
  Theresa Eaton: So um I went back to the board and I said, Let's try to buy this.
• 5:50
  Theresa Eaton: And they said, No, for those reasons we're worried about, we're done.
• 5:53
  Theresa Eaton: Like, we're good.
• 5:54
  Theresa Eaton: So about three months went by and Bruce and I stayed in touch.
• 5:59
  Theresa Eaton: And I said, Bruce, you know, what if I tried to buy you on my own?
• 6:04
  Theresa Eaton: And he said, I'd rather sell to you than to private equity, but I didn't have the funds to do it.
• 6:10
  Theresa Eaton: So I went to two local banks, Cadence and Origin in Houston, and I knew them through my years in private equity, and I just said, I'd really like to buy this business.
• 6:22
  Theresa Eaton: And they said, maybe we we like you, but uh, you're a first-time CEO owner.
• 6:28
  Theresa Eaton: We don't know anything about how you actually run and operate a business.
• 6:31
  Theresa Eaton: You just sat on some boards.
• 6:32
  Theresa Eaton: And so then I negotiated with them, I got a term sheet, but I had to take out really big personal guarantees, or at least for me, they were breathtaking.
• 6:41
  Theresa Eaton: So um I ended up doing that and then bought the business five years ago in April from Bruce, which was super exciting at the time.
• 6:50
  Kory Mitchell: So you took on a personal guarantee, that's a huge, huge risk.
• 6:54
  Kory Mitchell: You've never actually run an operating company before like this.
• 6:59
  Kory Mitchell: That had to be really uh scary.
• 7:04
  Theresa Eaton: It was um it was exciting, and I definitely underestimated the amount of pressure that I was gonna have on myself for that.
• 7:13
  Theresa Eaton: So it was a big leap of faith.
• 7:15
  Theresa Eaton: I had been a partner, I was very comfortable in my PE firm.
• 7:18
  Theresa Eaton: They had treated me well, but I definitely felt stagnant.
• 7:22
  Theresa Eaton: Like I wasn't doing anything new.
• 7:25
  Theresa Eaton: I had visited, like I said, over 3,000 companies, and I felt like I'm in my at the time 41.
• 7:31
  Theresa Eaton: Is this really what I want to do for the next 40 years?
• 7:34
  Theresa Eaton: I'm just doing the same thing over and over again.
• 7:36
  Theresa Eaton: I need a new challenge.
• 7:37
  Theresa Eaton: And then coupled with this company, it was like a dusty diamond.
• 7:41
  Theresa Eaton: It was really interesting to me because it hit a whole bunch of the value chain in terms of construction.
• 7:48
  Theresa Eaton: The preponderance of the business was focused on construction, but we also had a maintenance product side of the business.
• 7:53
  Theresa Eaton: So I liked that that had various parts of the cycle that it touched.
• 7:56
  Theresa Eaton: And then also the number one reason, just to be honest, and this is where I felt like I could add value despite my lack of experience, was the company was full of subject matter experts, nerds, if you will, but really well-respected dudes in the industry.
• 8:11
  Theresa Eaton: So um, electrical guys, and people trusted them and they called them all the time.
• 8:17
  Theresa Eaton: But as a result, my guys, who were the guys who became my guys, never called anyone.
• 8:22
  Theresa Eaton: So there was zero outbound business development, like literally order takers.
• 8:26
  Theresa Eaton: Order takers.
• 8:27
  Theresa Eaton: To me, I felt like, okay, this business has been around 40 years.
• 8:31
  Theresa Eaton: If I could just do what they're already doing, but then add in a whole business development piece, that would be awesome.
• 8:37
  Theresa Eaton: Like all the bones were good.
• 8:39
  Kory Mitchell: Theresa Eaton is a really different profile than what we've seen on the show before.
• 8:45
  Kory Mitchell: Theresa actually worked at a fund.
• 8:47
  Kory Mitchell: She came up in a completely different way than in the construction industry, and she found herself out actually trying to source deals for a private equity fund.
• 8:57
  Kory Mitchell: And what that did for her is first of all, it gave her perspective because she had seen 3,000 businesses.
• 9:04
  Kory Mitchell: She was literally out talking to founders, and she ultimately bought a business that it was a 40-year-old company, it was owned by an 82-year-old, and she called it a dirty diamond.
• 9:15
  Kory Mitchell: And I love this phrase because I hadn't heard it before.
• 9:19
  Kory Mitchell: And you know exactly what it means.
• 9:21
  Kory Mitchell: It's like a diamond in the rough.
• 9:23
  Kory Mitchell: It had such an opportunity, but it needed to be polished up.
• 9:28
  Kory Mitchell: I think that the way she talks about finding a business through this incredibly, you know, hard work of pounding the pavement and literally talking to 3,000 founders, it's really telling on how hard it is to find the right business if you decide to go buy one instead of start one.
• 9:45
  Kory Mitchell: And she obviously had the right intuition, but she had to get through a lot before the exit.
• 9:50
  Kory Mitchell: You know, it's so funny.
• 9:52
  Kory Mitchell: This, like, it's so familiar to my personal story because, you know, go back 25 years, and when I rejoined my family business, it was a little same thing, very dusty, very, very dusty diamond.
• 10:08
  Kory Mitchell: Um, amazing small business, $8 million in revenue, very profitable, but no, no marketing.
• 10:15
  Theresa Eaton: Yeah.
• 10:15
  Kory Mitchell: And so essentially, same thing inbound, um, doing estimates, making really good money.
• 10:20
  Kory Mitchell: Yep, ultra slow growth.
• 10:23
  Kory Mitchell: And when I came in, it's like, how do we start building a story on this past, right?
• 10:26
  Kory Mitchell: You've got in in that case, I had all these great customers, Union Pacific Railroad, and all these.
• 10:31
  Kory Mitchell: And I'm like, we have to tell this story because if we can work for Union Pacific, we can work for anybody because they're really hard to work for, safety and all that.
• 10:39
  Kory Mitchell: And so I had that same journey of building up like a sales plan and a business development plan and marketing.
• 10:45
  Kory Mitchell: And actually built, we had no website, so I put a website up.
• 10:48
  Kory Mitchell: All the basics that were just pure potentiality.
• 10:53
  Theresa Eaton: Yes.
• 10:54
  Kory Mitchell: Um, so so get you get in there, maybe tell us what.
• 10:57
  Kory Mitchell: I mean, I guess first of all, what were some of the things that were most shocking when you start running your own business that you didn't expect at all?
• 11:09
  Theresa Eaton: Well, I can definitely tell you the most immediate and very memorable one, which happened my very first week on the job as CEO and owner.
• 11:16
  Theresa Eaton: I showed up, so I was commuting back and forth between Texas and Palm Springs, California, which is where the company is headquartered.
• 11:23
  Theresa Eaton: And I showed up on the first week of work, you know, all excited and kind of did like a team pep rally and everything was going well.
• 11:30
  Theresa Eaton: And on the second day, I think it was the second day, I found out that one of the guys in the warehouse there was bullying people.
• 11:39
  Theresa Eaton: And on the day that I was there, he had brought a gun to work.
• 11:42
  Theresa Eaton: So I had just left this, you know, kind of posh PE firm.
• 11:46
  Theresa Eaton: And granted, I'd spent a lot of time with oil field folks in the Permian Basin and other places all around the world, but I had never had to deal with a gun situation before.
• 11:54
  Theresa Eaton: So the backstory is he had had an issue, a personal issue where he had actually inadvertently accidentally killed somebody outside of work.
• 12:05
  Theresa Eaton: Um, hit a pedestrian.
• 12:07
  Theresa Eaton: He is spiraling, he had gone through divorce, he was really in a bad emotional state, and he came into The office and started bullying other folks in the warehouse.
• 12:16
  Theresa Eaton: And so we had to change The locks immediately because we didn't want him coming.
• 12:20
  Theresa Eaton: The warehouse is like a couple blocks away, didn't want him coming over to corporate and shooting all of us.
• 12:25
  Theresa Eaton: I had to get on the phone, find a local lawyer, and get him get a release drawn, and then offer him a small sum of money in exchange for signing the release.
• 12:34
  Theresa Eaton: So he did, I gave him till 1 p.m.
• 12:37
  Theresa Eaton: and he wasn't there at 1 p.m.
• 12:39
  Theresa Eaton: And then at 102, he walked in and I gave him the release.
• 12:43
  Theresa Eaton: We gave him the money, and then he left.
• 12:46
  Theresa Eaton: But that was a very eye-opening shift from going from you know finance to then the world of operations, and frankly, not something I ever anticipated.
• 12:56
  Kory Mitchell: How nervous were you like waiting for this dude that's capable of like pulling a gun on you to like get a release that he doesn't really want to sign?
• 13:04
  Theresa Eaton: Nervous.
• 13:05
  Theresa Eaton: I was nervous.
• 13:07
  Theresa Eaton: I had my um COO, who's a very strong big dude there with me, but we both were nervous, frankly.
• 13:13
  Theresa Eaton: We just didn't know what to expect.
• 13:14
  Theresa Eaton: And we're just hoping that the money was enough to make a dent and change his his path.
• 13:20
  Theresa Eaton: So it did, luckily.
• 13:21
  Kory Mitchell: Welcome to The world of HR and and in your case, with a gun in the first week.
• 13:27
  Theresa Eaton: Yeah, exactly.
• 13:28
  Theresa Eaton: So that was one unexpected thing.
• 13:30
  Theresa Eaton: You know, a second unexpected thing that was really tough along the way was like the market turned on us at the time we weren't in data centers, and the market did turn, particularly in solar.
• 13:41
  Theresa Eaton: There were a lot of tariffs put on modules and things like that.
• 13:44
  Theresa Eaton: And so even though we weren't providing modules, we were providing all the you know medium voltage cable and accessories, that impacted the broader market.
• 13:53
  Theresa Eaton: And so our business started declining pretty rapidly, and we busted covenants with our banks.
• 14:00
  Theresa Eaton: I had to put in a little bit more capital just as a sign of good faith.
• 14:04
  Theresa Eaton: And then they gave us kind of, you know, a waiver for a little while, and that was super stressful.
• 14:09
  Theresa Eaton: And that's when I really started feeling the pressure of, oh shit, this is real.
• 14:12
  Theresa Eaton: You know, this is not sitting on a board anymore.
• 14:15
  Theresa Eaton: This is every day.
• 14:17
  Theresa Eaton: And all these people, at the time I had 50 employees and they were all uh relying on this to work.
• 14:23
  Theresa Eaton: So there was a lot of different stuff sitting all on my shoulders, which obviously every entrepreneur faces, but it's one thing to make it theoretical, another thing to feel it in real life.
• 14:32
  Kory Mitchell: Yeah, I mean, covenant breach is one thing when it's like some billion-dollar private equity fund going through it and renegotiating because they have some leverage and they also have capital.
• 14:42
  Kory Mitchell: Yeah.
• 14:42
  Kory Mitchell: Um, when it's just little OU, um, it's God, that's uh, you know, that's like welcome to business ownership, right?
• 14:50
  Kory Mitchell: Having to make payroll on Fridays and getting your paycheck last, all of those things that go with it.
• 14:56
  Theresa Eaton: I I reduced my salary for about six months meaningfully and just kind of wrote it through.
• 15:02
  Theresa Eaton: And then we we got lucky.
• 15:04
  Theresa Eaton: Um, you know, I would say as I think about this, the ability to be nimble and pivot is key and to always keep The eyes open because it was really dumb luck.
• 15:14
  Theresa Eaton: It wasn't like we had some amazing foresight as it relates to our core product lines just happened to go into data center infrastructure, but it took us a little while to even notice that.
• 15:24
  Theresa Eaton: So suddenly after we kind of found out about it by happenstance, then we pivoted really hard.
• 15:30
  Theresa Eaton: But I would say again, that was just being opportunistic and making sure we would pivot once we identified something exciting over there on that side of the street.
• 15:38
  Kory Mitchell: So, how big was the business when you bought it?
• 15:40
  Kory Mitchell: Revenue top line.
• 15:41
  Theresa Eaton: Yeah, top line, it was 32 million.
• 15:44
  Kory Mitchell: Oh, it was pretty big revenue-wise.
• 15:45
  Kory Mitchell: Okay.
• 15:46
  Theresa Eaton: Yeah, you know, it's a distributor, so the margins are somewhat thin.
• 15:49
  Theresa Eaton: But I did take out, as I mentioned, a lot of debt because I'd been in PE for 14 years.
• 15:53
  Theresa Eaton: I had not a lot of capital, but I basically put everything I owned into this business in order to buy it.
• 15:59
  Theresa Eaton: And then they matched the bank, they matched it with 50-50 debt to equity.
• 16:02
  Theresa Eaton: And then um, when so it's two times levered.
• 16:06
  Theresa Eaton: Yep.
• 16:06
  Theresa Eaton: And then when we sold five years later, which was this past May, um, I'm still a big shareholder in it, but I sold the majority of the company.
• 16:15
  Theresa Eaton: Um, we were 129 million.
• 16:18
  Kory Mitchell: 32 million to 129 million.
• 16:21
  Kory Mitchell: That's um that's pretty decent ramp in five years.
• 16:24
  Kory Mitchell: Theresa bought this business with debt.
• 16:26
  Kory Mitchell: She literally signed a letter of personal guarantee.
• 16:30
  Kory Mitchell: And that really changes The dynamic.
• 16:32
  Kory Mitchell: When you sign on that bottom line, The decisions you make become that much more meaningful.
• 16:38
  Kory Mitchell: And one of the first things she faced was a challenge in The business environment.
• 16:44
  Kory Mitchell: You know, electrical contracting today is probably The hottest area in The market because of AI and The tech boom.
• 16:52
  Kory Mitchell: Back then, it hadn't quite started yet.
• 16:55
  Kory Mitchell: And so, pretty early on in her ownership of The company, she actually had a default in her loan covenants.
• 17:02
  Kory Mitchell: And I think that's when The gravity of her owning this business really set in.
• 17:07
  Kory Mitchell: But that's also The point where she really had The Turn where she started launching The business towards growth.
• 17:15
  Kory Mitchell: And sometimes it's those hard things that teach you The tough lessons that take you to The next level in The business's evolution.
• 17:24
  Kory Mitchell: So walk us through like, okay, first of all, market changes, right?
• 17:30
  Kory Mitchell: Things go south.
• 17:31
  Kory Mitchell: You've got loan covenant breaches.
• 17:34
  Kory Mitchell: Um that sucks.
• 17:37
  Kory Mitchell: Like there's The hard stuff you have to get through to fix maybe some things and then make some pivots to actually grow.
• 17:46
  Kory Mitchell: What are some of those things like that you did in that say first year where you actually changed some fundamentals about how The business was operating?
• 17:56
  Theresa Eaton: I really focused on figuring out who was willing to get in the boat with me and go the way that we needed to go, as opposed to who was gonna be, you know, that's not how we've always done it.
• 18:09
  Theresa Eaton: Like, or you know, we've always done it this way.
• 18:11
  Theresa Eaton: Um, because The mindset of the team has to be aligned with you.
• 18:15
  Theresa Eaton: And if they're gonna be naysayers, you cannot keep them around long term because they will be a cancer.
• 18:21
  Theresa Eaton: So there were a few of those, and I had to clean house pretty quickly, not a huge number, probably four kind of mid-level people, but were they were influential enough that the culture wasn't gonna change without them being in, you know, in the boat.
• 18:38
  Theresa Eaton: And so that was pretty critical, really than implementing and getting buy-in for the biz dev culture.
• 18:44
  Theresa Eaton: Again, we had a great reputation in the market with our customers.
• 18:47
  Theresa Eaton: So people are like, well, why do we need to change?
• 18:49
  Theresa Eaton: We don't want to, we don't want to change.
• 18:51
  Theresa Eaton: The other thing that we used to do is we would provide everything to everyone.
• 18:55
  Theresa Eaton: Like if somebody wanted to buy medium voltage cable and buy six water bottles, you know, six can both bottles of Evian with us, we would do it.
• 19:04
  Theresa Eaton: And, you know, that was all part of the like, oh, well, they asked for it.
• 19:07
  Theresa Eaton: Right.
• 19:08
  Theresa Eaton: But, you know, the margins would stink, or it just wasn't didn't make sense for us to do it that way.
• 19:13
  Theresa Eaton: And so we really uh zeroed in on our core four product lines that we just knew we were badass at.
• 19:20
  Theresa Eaton: And then we really got rid of a lot of the other extraneous stuff.
• 19:23
  Theresa Eaton: And we wouldn't bid on the extraneous stuff either because it was a distraction.
• 19:27
  Theresa Eaton: It would take so much bandwidth and time to get chased down something that wasn't core to our business model.
• 19:33
  Theresa Eaton: So I think that was important.
• 19:35
  Theresa Eaton: But the main thing was really just making sure that the players that I had were aligned with me and then supplementing, because eventually you really need new ways of thinking in order to drive growth.
• 19:47
  Theresa Eaton: And so I had a new way of thinking, not necessarily the right way, but a different way.
• 19:52
  Theresa Eaton: And then bringing in key people from the industry who were much more technical than I was, but who had experience was also really important for me, having come from out of industry.
• 20:03
  Kory Mitchell: So, you know, these are really hard sort of change management pieces that you had to tackle.
• 20:10
  Kory Mitchell: So, first off, you you fire four people or so, then you start like making some fundamental shifts.
• 20:16
  Kory Mitchell: Okay, we're gonna simplify our offerings, right?
• 20:18
  Kory Mitchell: I'm not gonna sell water, I'm gonna sell these four, you know, core offerings, whatever they may be.
• 20:24
  Kory Mitchell: Um, how do you win with your team to get cultural buy-in?
• 20:30
  Kory Mitchell: And then was there any blowback where they're like, hey, this is not how we operate?
• 20:34
  Kory Mitchell: Like, I'm gonna quit if you don't do it the old way.
• 20:37
  Kory Mitchell: Was there any of that kind of crap going on?
• 20:39
  Theresa Eaton: Yeah, there was.
• 20:40
  Theresa Eaton: There was somebody who worked with us who had been really probably our very top salesperson.
• 20:47
  Theresa Eaton: And I spent the first couple of years bending over backwards to accommodate this person.
• 20:53
  Theresa Eaton: That included multiple increases of the salary, making special allowances for him to work from home, special allowances for his truck, all these things.
• 21:02
  Theresa Eaton: Like every six months there was some ask, and I just kept doing it because I was petrified because we had so much customer dependency based just on him.
• 21:10
  Theresa Eaton: Um, our largest customers were with him, et cetera.
• 21:13
  Theresa Eaton: But I really lived out of fear.
• 21:15
  Theresa Eaton: Um, and then I brought in enough new people who were equally rock stars and frankly better positioned for us with the way that we were going in the business in terms of the target level of customer that we were trying to target.
• 21:31
  Theresa Eaton: So this person was really good at field ops sales.
• 21:35
  Theresa Eaton: And then I was also looking to do more long-term contracts and add that into the business.
• 21:39
  Theresa Eaton: So at the corporate level.
• 21:41
  Theresa Eaton: And so I realized I needed an additional skill set for that.
• 21:44
  Theresa Eaton: Then when I brought that in, it lit the business on fire in a good way.
• 21:49
  Theresa Eaton: And so then I realized I wasn't so beholden to this one guy who was just jerking me around, to be honest.
• 21:55
  Theresa Eaton: And so finally I just said I didn't care.
• 21:58
  Theresa Eaton: He left ultimately.
• 21:59
  Theresa Eaton: Did take several years.
• 22:00
  Theresa Eaton: And then when he left, he brought a number of my people with him that had supported him from an inside sales perspective.
• 22:06
  Theresa Eaton: So in one day, I had really almost half my sales team, at least in my key producing division, leave.
• 22:14
  Theresa Eaton: And that was terrible.
• 22:15
  Theresa Eaton: Um, and that was about midway half, you know, through my ownership period.
• 22:19
  Theresa Eaton: So it happened on April Fool's Day.
• 22:22
  Theresa Eaton: So I remember thinking it was a joke at first, and then I realized it was not.
• 22:26
  Theresa Eaton: And that was pretty petrifying.
• 22:28
  Theresa Eaton: But then to the point I made, at that point I have backfilled enough where I just didn't have all of my eggs in one basket.
• 22:34
  Theresa Eaton: And so we did scramble for a few months.
• 22:37
  Theresa Eaton: We even added more to the team, but then now we have an exceptional team that I just can rely on like nothing else.
• 22:44
  Theresa Eaton: And I don't have to always be making concessions and worrying about whether they're about to walk out the door.
• 22:50
  Kory Mitchell: I had a really similar experience where, you know, my entire sales team left, which was in our case, was all estimators and project managers.
• 23:00
  Kory Mitchell: This this one rogue operator basically went to take them the entire team.
• 23:05
  Kory Mitchell: And I was left in the building with my brother alone.
• 23:10
  Kory Mitchell: Okay.
• 23:12
  Kory Mitchell: And so I remember this was like the biggest crisis that I could have possibly fathomed because it was like all the people that bid the work, all the people that run the work, they're literally all gone.
• 23:21
  Kory Mitchell: And it's me and my brother looking at each other.
• 23:23
  Kory Mitchell: And, you know, when you have those crises that happen, in my case, and my guess is also in yours, suddenly it was actually now I could actually like take ownership in anybody that was hired because some of those people I'd inherited, right?
• 23:41
  Kory Mitchell: And they weren't my people and they didn't care about my culture, and you were having the same issue with this guy where he wasn't buying your culture.
• 23:48
  Kory Mitchell: Now you've got your own people who are also outstanding, but they can that also allows you to sort of do it your way.
• 23:55
  Theresa Eaton: Yes.
• 23:56
  Theresa Eaton: Um, so it accelerated the business threefold.
• 24:00
  Theresa Eaton: Part of it, of course, we had a great market we were entering, but we needed a new way of doing things to enter that market, and we really needed a hundred percent buy-in.
• 24:07
  Theresa Eaton: So to your point, bringing in a team that was really my team was essential.
• 24:13
  Theresa Eaton: Now, I will say we have some what I call legacy people who are absolutely amazing, and I'm so thankful for them.
• 24:20
  Theresa Eaton: But when you have one that's disruptive, um it's hard to get them, you know, everyone rowing in The same direction.
• 24:27
  Kory Mitchell: Oh, yeah.
• 24:28
  Kory Mitchell: So you you now have this good sales team.
• 24:31
  Kory Mitchell: I'm wondering, did you change any of the ways that you incentivized the team?
• 24:36
  Theresa Eaton: Not really, to be honest.
• 24:38
  Theresa Eaton: We kind of kept it for continuity purposes pretty similar again, because we wanted to preserve the really terrific legacy team that we had, and then we didn't want it to be disruptive with the new team.
• 24:48
  Theresa Eaton: And the new team kind of came along, you know, piece by piece.
• 24:51
  Theresa Eaton: There are a few that we did at once, and then others kind of along the way.
• 24:54
  Theresa Eaton: So, no, we kept things pretty pr pretty much the same.
• 24:59
  Kory Mitchell: Okay, so you've got this, you know, now more robust sales team and you're starting to grow.
• 25:04
  Kory Mitchell: Tell us about that journey because it's also really expensive to grow.
• 25:08
  Theresa Eaton: Yeah, right.
• 25:09
  Theresa Eaton: Like it is.
• 25:10
  Kory Mitchell: I mean, from a cash from a capital standpoint, those things are really stressful.
• 25:14
  Kory Mitchell: A lot of times growth it creates some of the most stressful times you have because it's like if you don't have access to like a really good line of credit or some other form of capital, growth is incredibly expensive.
• 25:25
  Theresa Eaton: Well, you know, I do think the experience with the busted covenant and then me putting in more capital really resonated with the bank.
• 25:34
  Theresa Eaton: So it built a relationship of trust.
• 25:36
  Theresa Eaton: So they, as things really started to pick up following that trough, they were very supportive.
• 25:42
  Theresa Eaton: We probably went through three different credit line expansions with them.
• 25:47
  Theresa Eaton: And each time was a bit of a negotiation, but they were really supportive.
• 25:51
  Theresa Eaton: Um, so that was helpful.
• 25:53
  Theresa Eaton: But what we were doing externally too is trying to kind of safeguard some of our big capital investments.
• 26:00
  Theresa Eaton: And what I mean by that is we were entering the data center market, we were targeting the hyperscalers, we started with one in particular.
• 26:08
  Theresa Eaton: We got to know them, and this is kind of like a pattern for me where when I was buying WEX too, like I got to know the end user, the customer, and then back, you know, backed up from there.
• 26:17
  Theresa Eaton: So we got to know the hyperscaler themselves.
• 26:19
  Theresa Eaton: Then they introduced us to their general uh contractors, and then we got to know them very well.
• 26:25
  Theresa Eaton: And then the general contractors introduced us to their electrical contractors.
• 26:28
  Theresa Eaton: So we really knew up and down the chain, all the constituents involved.
• 26:33
  Theresa Eaton: And then when it came time for us to do our first big data center project, which was in the southeast, that hyperscaler said, We really need you to have brick and mortar here.
• 26:45
  Theresa Eaton: So it was a big, you know, 157,000 square foot warehouse that we had to erect and get operational in eight weeks.
• 26:52
  Theresa Eaton: That was a challenge and a big investment.
• 26:54
  Theresa Eaton: We didn't buy it, but you know, even the lease is expensive.
• 26:56
  Theresa Eaton: But what we did by that point, because we had such a great relationship with The electrical contractor, they needed some space for some prefab opportunities.
• 27:04
  Theresa Eaton: And so we subleased for 24 months part of the warehouse to them.
• 27:09
  Theresa Eaton: And that provided us some protection too.
• 27:11
  Theresa Eaton: So we knew, okay, uh in a worst case scenario, this is what it looks like for us.
• 27:16
  Theresa Eaton: And then we knew that we'd be also servicing some of our other markets that were non-data center out of that.
• 27:22
  Theresa Eaton: So, for example, solar maintenance products that we service and provide to the southeast, we could operate out of there.
• 27:28
  Theresa Eaton: So there were a lot of different kinds of things that we are considering.
• 27:31
  Theresa Eaton: But to your point, it is scary every time you make a big bet like that.
• 27:36
  Kory Mitchell: Yeah, I mean, you're locking in fixed overhead for a period of time with a lease.
• 27:40
  Kory Mitchell: And that sounds like a big, big, big lease.
• 27:42
  Theresa Eaton: Yeah.
• 27:43
  Kory Mitchell: Yeah.
• 27:43
  Kory Mitchell: So you you essentially you launched a greenfield location by following a customer.
• 27:48
  Kory Mitchell: Yes.
• 27:49
  Kory Mitchell: Um did did that location stay in business?
• 27:53
  Kory Mitchell: And did you start like actually building it out by like adding sales to it and getting other customers in that location?
• 27:59
  Theresa Eaton: Yes.
• 28:00
  Theresa Eaton: So it's been a great investment for us.
• 28:02
  Theresa Eaton: We launched that about a year and a half ago, and we just um are getting ready to renew the lease again.
• 28:08
  Theresa Eaton: And um we've expanded, we've gotten some other buildings nearby that frankly aren't even enough.
• 28:14
  Theresa Eaton: It does help, I would say, in the electrical world, if you're working in the data center market, because as long as you don't f up your first building with them, then you are kind of the incumbent to uproot for somebody else because you've already got infrastructure there, you've got the people there, you've got the track record.
• 28:32
  Theresa Eaton: So I don't want to sound too cocky on that because I don't want it to bite me in the butt, even still.
• 28:36
  Theresa Eaton: However, I would say the trajectory for the data center buildings are is pretty healthy.
• 28:41
  Theresa Eaton: So we have kind of visibility on seven to eight years there in that location.
• 28:45
  Theresa Eaton: And then to your point, we've opened up into other customers and markets too, and markets.
• 28:49
  Theresa Eaton: So that's all been very helpful and stuff that we consider.
• 28:52
  Theresa Eaton: We also just since then launched a new Texas warehouse.
• 28:57
  Theresa Eaton: We weren't in Texas, even though I personally am based in Texas.
• 29:00
  Theresa Eaton: And so we just did that about four weeks ago, and that's a hundred and six thousand square foot warehouse, and we went through the same sort of analysis.
• 29:08
  Theresa Eaton: On that, one of our primary manufacturers for our product on the medium voltage cable has a facility 10 minutes away.
• 29:15
  Theresa Eaton: And so that was also a consideration that was appealing to us.
• 29:18
  Theresa Eaton: There's a lot of cross-pollination and easy back-and-forth interactions that go on.
• 29:22
  Theresa Eaton: But also that you know, the Texas market is so huge for all the markets that I'm in.
• 29:27
  Theresa Eaton: But every time we do that, it's a little breathtaking and scary.
• 29:30
  Theresa Eaton: Um, and then you just have to take the big leap.
• 29:33
  Theresa Eaton: And if you wait around too long, someone else is gonna do it.
• 29:36
  Kory Mitchell: Thanks for joining us on this week's edition of The Turn.
• 29:39
  Kory Mitchell: I loved our conversation with Theresa, and we're gonna continue it next week.
• 29:44
  Kory Mitchell: So make sure you tune back in.
• 29:46
  Kory Mitchell: And until then, let's win.