Latest / Construction ESOP Collective / From Marine Corps to CEO of a $750M Employee-Owned Contractor: Ben Nichols of Harkins Builders
Transcript
- speaker-0: ⁓ as he was was going through terminal cancer, he brought all the employees together. ⁓ I wasn't there at that point in time and I unfortunately never got to meet Blaze, but I understand from so many others that were there at that meeting, he he said, guys, ⁓ I I want to turn this into an employee owned company. And the reason I want to do that is is I want every single person that's sitting in this room today to not to not have to work again in retirement. and to be millionaires when you retire after a full career at Harkins Builders. And from what from what it was told to me, everybody kinda looked at each other and were like, Okay, all right, we'll we'll see, we'll see about this, but it's come true over and over and over again. It's been such an incredible program. speaker-1: Welcome to the Construction ESOP Collective. I'm Chuck Mazzanti, Senior Vice President at Christianson Group Insurance, and this is the show where we explore the wins, challenges, and real-world lessons of employee ownership in construction. Each episode brings insights from CFOs, former owners, and employee owners who are building something bigger together. Let's get into it. Today I'm joined by Ben Nichols, president and CEO of Harkins Builders in Columbia, Maryland. Ben is a third generation Marine and Naval Academy grad who led combat engineers in Afghanistan and served with the CBs before finding his way into construction. He joined Harkins in 2016, came up through its federal contracting group. and was chosen to lead the company through a deliberate succession plan that skipped a generation. Today, Harkins is a 100% employee-owned general contractor, closing in on a billion dollars in revenue. We talk about the legacy of Blaze Cook, who turned Harkins into an Aesop so his people could retire as millionaires. How Ben keeps the ownership culture alive across 350 employee owners And why he believes an ESA is built for long term stable growth. Ben Nichols, it's great to have you on the Construction Aesop Collective. speaker-0: Yeah, great to be here, Chuck. Thanks for inviting me on. speaker-1: Yeah, no, I'm I'm super grateful to actually it was ⁓ Stacy Hol Holzinger ⁓ that introduced us and and you were on their podcast the morning ⁓ huddle. So it's ⁓ LinkedIn keeps paying me back in spades connecting to me, ⁓ you know, great people such as yourself, Ben. speaker-0: That's right. Well it's really cool. It's it was fun being on Stacy's podcast and I de I guess I did a good enough job on there that she'd ⁓ referred me over to you, so that's pretty cool. speaker-1: Yeah, no, you you did a great job. It was a great, great podcast. ⁓ so I'd I'd like to kind of do a a ten thousand foot overview of Harkins builders. You know, you guys are in Columbia, Maryland. If you could tell the audience, you know, who is Harkins, the type of work you do, if you self-perform anything, union, non-union, geographical scope. speaker-0: Sure thing. So we are a general contractor. We've been around since nineteen sixty-five. About three hundred and fifty people. ⁓ right now we're doing ⁓ close to three quarters of a billion in revenue and have a growth trajectory that's really aligning right with our five year strategic plan where I think we could hit that billion dollar threshold before twenty thirty, which is really exciting. ⁓ we do do a little bit of everything. We're from ⁓ five offices, ⁓ Philadelphia. Columbia, Maryland being the headquarters, ⁓ Richmond, Virginia, Raleigh, North Carolina, and Charlotte, North Carolina. ⁓ I came up out of our federal contracting division, of which ⁓ you never know what type of project we're gonna get in the DOD space and the state contracting space. So it's been pretty cool to bid a bunch of different types of project and execute a bunch of different types of projects. ⁓ and then a big piece of our business, ⁓ going back to when we first started what has been the multifamily market. So across all of our regions, ⁓ doing a lot of multifamily, whether it's affordable housing, market rate, ⁓ senior living, or even renovation. So pretty, pretty well diversified and ⁓ an awesome company doing a lot of different things. speaker-1: That's awesome. ⁓ and then within that, do you do you guys self perform anything or is it are you a hundred percent paper G C? speaker-0: Yeah, w we don't self perform any major trades. We have a handful of ⁓ folks on board ⁓ and f finished carpentries to help out with any scope gaps or things like that and closing up a job strong, but we're not self performing any of the major trades at this point. speaker-1: Got it. That makes sense. And in the you know, the small stuff that you do do, is there any union workforce or all non union? ⁓ speaker-0: ⁓ no union workforce ⁓ on across our projects. ⁓ certainly use union ⁓ trade partners and non union trade partners, ⁓ but get kind of a merit shop philosophy, but ⁓ the best contractor for the right reason ⁓ gets the jobs when we're looking at ⁓ subcontracting work. speaker-1: A hundred percent. Great. ⁓ all right. So I I think we have a good overview of Harkin's, you know, started in nineteen sixty five. When did you guys go Aesop? speaker-0: We went Aesop in two thousand and one, and that was our second owner, a gentleman named Blaise Cook, ⁓ who is just a a Titan of Baltimore City from many different reasons. ⁓ amazing person. I every time I go out in Baltimore City and I go to any type of business event, ⁓ to this day, people will tell me about ⁓ Blaze Cook and and what he meant to the community from a philanthropy standpoint or what he ⁓ meant to them from a personal mentorship or whatever ⁓ whatever it might be. So it's pretty cool to be in the same lineage as somebody like Blaze. and so when Blaze, ⁓ in in that early two thousands timeframe, unfortunately got cancer and as he was looking at what to do, ⁓ as he was was going through terminal cancer, he brought all the employees together. ⁓ I wasn't there at that point in time and I unfortunately never got to meet Blaze, but I understand from so many others that were there at that meeting, he he said, guys, ⁓ I I want to turn this into an employee owned company. And the reason I want to do that is is I want every single person that's sitting in this room today to not to not have to work again in retirement. and to be millionaires when you retire after a full career at Harkins Builders. And from what from what it was told to me, everybody kind of looked at each other and were like, okay, all right, we'll we'll see, we'll see about this, but it's come true over and over and over again. It's been such an incredible program. So ⁓ we certainly thank ⁓ Blaze's vision ⁓ and and our founder before that, Tom Harkins for for what we had today. speaker-1: Wow. Yeah, what a I mean, sounds like an incredible guy by by all accounts. And then even you said it was terminal cancer, so even even on his ⁓ way out to the next life, setting up the people that helped him build the company, I think there's ⁓ that's quite the legacy. speaker-0: Yeah, it sure is. Really is. speaker-1: Wow. ⁓ now for you, Ben, can you tell the audience kind of your come up? It's my understanding that you were a Marine and and you did ⁓ a tour in Afghanistan. So I'd love to get into you know your come up in terms of of that ⁓ part of your story. speaker-0: Yeah, sure thing. I even happen to be wearing my Marine Corps polo for you today as well, but Marine Corps's been a huge part of my life. ⁓ I'm actually a third generation Marine, believe it or not. So my my grandfather was a Marine, my father was a Marine. I was born on Camp Lejeune in North Carolina while my dad was on active duty in the Marine Corps. So it's when I look at you know my early childhood and I look at all the mentors and the people that I really admired, my father and his friends that were Marines. ⁓ I s I certainly ⁓ just looked at them as the ultimate role models, the way that they spoke and the way they carried themselves and ⁓ and from an early age that's that's what I wanted to do when I grew up. So I was, you know, lucky enough to ⁓ get an appointment to the Naval Academy and got to got to wrestle at the Naval Academy for all four years and and and study ocean engineering, of which I'm doing ⁓ none of now. ⁓ but it's still a pretty cool major. and ⁓ upon graduating to the Naval Academy, ⁓ became a Marine Corps officer. as a Marine Corps officer you go through ⁓ about nine months of training, about six months of that is just basic infantry officer training at at the basic school and the and the Marine Corps prides itself and then no matter what you do in the Marine Corps, you're either gonna learn how to be an infantry. Men first or an infantry officer first, depending on if you enlist or become an officer. ⁓ so six months of running around in the woods in Quantico, Virginia, ⁓ fighting fake battles. And then I went to combat engineer school at Camp Lejeune for my follow-on training, which was my specific job in the Marine Corps. And when people ask me what combat engine what a combat engineer does, and it doesn't matter what degree you had in school, anybody can be a combat engineer, but you're basically doing ⁓ engineering support ⁓ for the infantry in a combat environment. And as a as a Marine, ⁓ my job in Afghanistan, ultimately leading as a platoon commander, was looking for IEDs as well as ⁓ building small patrol base to allow the Marine the b Marine Battalion that I was attached to to spread out its forces and drop you know 15, 20 Marines in each of these spaces throughout the cities that we were in to really lock down the city and and have marine elements operating and getting to know the local population in Afghanistan. So that was ⁓ that was my experience in the Marine Corps and ⁓ pretty pretty awesome experience doing that. And any questions on that before maybe we talk about the CDs? speaker-1: Yeah, well first of all, thank you for your service. ⁓ and second of all, when what year were you in Afghanistan? speaker-0: Yeah, I was in Afghanistan in two thousand and ten and two thousand eleven, and I was with Second Battalion, Ninth Marines, and that was the infantry battalion that my comp my engineer platoon deployed with. ⁓ and and my job was being the platoon commander for forty-four marines, as well as being the staff officer for the battalion commander for anything engineering related in the battle space of Marja, Afghanistan. So when we when we got to Marja, the previous battalion had done the push and invasion into Marja. And Marja is the was the Taliban stronghold at the time. And it's a a rural area that has a ton of farm fields. And the crop that everybody grows out there is opium. So and And the farmers are not doing anything illicit. It's just that is the cash crop that they're growing. But the Taliban were basically taxing the opium trade, and that's how they were funding ⁓ a big chunk of their operation. So our job was to go in there, ⁓ you know, figure out who was Taliban and who was not Taliban as our as the as the battalion ⁓ and try to provide ⁓ stability and win the hearts and minds of the local population. And to do that, you really had to spread your forces out because we got there and we were in our battalion of a thousand Marines was in three major positions. You know, think 300 Marines plus at each of those positions. And by the end of our deployment, we had spread out that battalion into 17 different positions. And that combat engineers and our platoon was really the main effort to making that happen. speaker-1: Wow, that's incredible. ⁓ well yeah, thank you for your service and then I'd I'd love to transition into the the CBs. speaker-0: Yeah, so my second tour of duty, I mean I remember being in Afghanistan, and you know, at it in in the Marine Corps, you get three years ⁓ in each in each ⁓ duty station that you had that you're at. ⁓ and my my duty station at that time was Okinawa, Japan, of which we deployed to Afghanistan from Okinawa, Japan. And as I was looking at the slate of openings of places that I could go, I saw a place called Port Wanimi, California. And remember looking it up and f and seeing it in between Santa Barbara and in Los Angeles. And I was like, that sounds pretty cool. Let's let's throw our name in the hat for that. And and I don't know that I even really knew what the C Bs were at that point in time. ⁓ but I'm so glad it worked out that way. I mean, I love the Marine Corps, but it was awesome to be with the CBs. And the C Bs are the Navy's construction force. Okay. And ⁓ they were huge in World War Two when we did the Island hopping campaign, and they would the Marines would invade an island and the Seabees would be right behind them building an airstrip and building out all the infrastructure you need to maintain a force. And in many ways, the Seabees are the Marine Corps' robust construction element that the Marine Corps just doesn't have because it's not really in the Marine Corps's mission. So so with the Seabees, ⁓ I was basically a Marine Corps liaison ⁓ with the Seabees and they treated me like gold. It was amazing to be ⁓ a part of their battalion. They allowed me to be a company commander, ⁓ c commanding a hundred and fifty CBs and ultimately ⁓ with the CBs ⁓ we would do construction projects on base in Port Wanimi as part of our training. ⁓ we would be building gazebos, renovating offices, ⁓ building roads and sidewalks ⁓ to keep the to keep the construction skill set fresh for the CBs, of which they have electricians and welders and carpenters and engineering survey folks and they really they they're like a little general contractor, a little hundred percent self performing general contractor, and it's pretty neat to see what they can do. ⁓ but we all we ended up deploying back to Okinawa, Japan and then on a second deployment went to Rhoda, Spain. And in each of those deployments, what the CBs do is they break out small detachments of maybe fifteen or twenty CBs. And and while we were in Okinawa, Japan, we sent CBs to all over Southeast Asia. ⁓ and when we were in Rota Spain, we sent these C B detachments all over Africa and Eastern Europe. And we were doing humanitarian service projects in the areas where we were sent. So For instance, we built a footbridge in the Philippines. ⁓ in Africa, we were digging water wells and building schools. ⁓ so you name it, ⁓ whatever that population needed, the CBs were a force for good and you know, helping to win hearts and minds and and you know ⁓ allowing the US to have some influence in areas of interest ⁓ through the CB's humanitarian efforts, which was a pretty cool mission to be a part of. speaker-1: That's that's amazing. How much of the CBs, like d I'm assuming there's some elements of construction in active, you know, combat areas or is it more peacetime? Is is there any kind of conflict type stuff that the CBs are are, you know, watching their heads while they're doing construction? speaker-0: Hundred percent. So the C B's motto is we build and we fight. And and ⁓ the the battalion that I attached with had done an Afghanistan deployment ⁓ previously, ⁓ I don't know, a year or two prior. And it wasn't they they just weren't in the rotation to go back to Afghanistan in the time that I was there. But the CBs were constantly getting deployed to the Middle East and and doing big projects, ⁓ big construction projects to support combat operation. So when they when they go out, they go out with all the gun trucks you'd expect them to have and every C V's got their weapon on ⁓ you slung behind their back while they're doing construction projects. speaker-1: Wow. Well then then you come back to the the US and do some construction and that makes it seem like it's vanilla compared to what you and and some of your teammates probably saw. That's that's incredible. speaker-0: Two different environments for sure. speaker-1: Yeah, I'm a I'm a huge military, you know, buff listening to podcasts, documentaries, and ⁓ before I came across you I never heard of the CBS. So I I think that's gonna open up a lot of people's eyes. speaker-0: Well make sure you check out an old World War Two movie. I think it's called the I think it's called The Fighting Sea Bees and it's it's famous and and I ha I was forced to watch it as I joined the Sea Bees and it's a pretty good flick, so check it out. speaker-1: Going to awesome. Now I got my weekend movie picked. So now you transition out of the CBs. How do you end up it it harkins? speaker-0: Yeah, as I was getting out of the military, I was thinking about, you know, what am I gonna do ⁓ in the civilian world and I looked at some different options. ⁓ but you know, ultimately I was like, all right, what you know, what is the best translation to what I've been doing? And clearly it was construction. You know, you know, whether I was a combat engineer in the Marine Corps or the time I spent with the CBs, ⁓ it was all construction adjacent work and leading people and planning operations and then executing those operations. So I just started networking ⁓ really ⁓ in in the Maryland area because I knew I wanted to be you know back home where my family was. And ⁓ you found a a small company that was doing all federal contracting. ⁓ they happened to have ⁓ a leader of that construction company be a Naval Academy grad and a a former ⁓ CD officer. They call them Civil Engineer Corps officers, C E C officers. ⁓ and I was able to connect with him, you know, through you know, through that network and ultimately ⁓ found ⁓ an opportunity being a quality con control manager out in the field on a project at Walter Reed National Military Medical Clinic. It was all it was Bethesda Naval Hospital at the time. And my first job ⁓ ever in construction was renovating the president's medical suite, which is ⁓ half residential wing of the hospital and a half, ⁓ full on ⁓ hospital, everything from a medical just clinic just to just a s look at the president or other VIP is using it, all on to st full on surgical rooms. And you can run you basically can run the country from from this wing of the hospital too. So pretty amazing project to be thrust into on my first on my first project ever after ⁓ leaving the military, but you know, super fun, very complex projects. I got to see, you know, the the elements of high security along with medical care all wrapped up in the one project. speaker-1: Yeah, that's insane. I'm assuming you needed some good security clearance to be able to be on that project. speaker-0: It luckily it didn't require I mean I had a security clearance anyway, but this one it didn't act didn't actually require a security clearance ⁓ per se. And a lot of a lot of projects, construction projects like that, don't require everybody that works on them to have a security clearance. So it just depends on the project. speaker-1: Got it. Okay. And then what ⁓ where'd you go from there? speaker-0: ⁓ from there did a a bunch of different federal contracts ⁓ thro with that company that I was with and ended up spending ⁓ three years there. ⁓ I was really blessed to be able to transition very quickly from a quality control manager to a project manager. and I had a gr some really good mentors within that within that company. That company was actually part of a l of a larger company. And it was a construction subsidiary. And the larger company, after three years of me being there, even though that construction company had been around for 20 years, decided to get out of construction. So I got to be part of the team that was closing out a construction company, which is a challenge in and of itself, ⁓ for the larger company, which was more of an engineering company. So aft after doing that for ⁓ three years, I found my way over to Harkins Builders. ⁓ in our in our federal construction group. And my role was project executive leading that team. And you know, luckily Harkins had three decades worth of federal construction expertise and a real team that was chasing those projects. And I got to integrate into that team and lead that team. ⁓ we had a number of years of of of really good growth and good team building within that sector. ⁓ and ⁓ a few years down the line, Harkins was going through succession planning ⁓ for because knowing that they had an executive team that a large portion of them are getting to retire and notably the CEO and COO, the one in number one and number two folks in the company were both retiring within a year from each other. ⁓ and I and I think they kind of just threw me in the mix of succession planning along with eight other ⁓ Harkins ⁓ speaker-1: Well speaker-0: you know, young executives or or you know kind of seasoned project managers and the company made a really concerted decision to skip a generation and to give their next ⁓ leadership team ⁓ a longer run leading the company. And after three years of working together as a succession planning group, ⁓ amongst my peers, ⁓ working on a strategic plan together. They shifted us around into different elements of the company and had me do a A stint with our estimating department and a stint with human resources, all while doing my normal job leading the government team. ⁓ and you know, after three years of doing that, ⁓ they they I'm blessed that they picked me to to lead the company. and even more blessed that every all eight other people are still within the company at Harkins and doing amazing things. And we just got a really great cohesive leadership team that ⁓ is driving growth and driving a great culture. So I and I gotta pinch myself all the time. Just couldn't couldn't be more lucky in that regard. speaker-1: I I have to assume when they're they're looking at it and they're weighing the decision, it it had to be all right, well Ben's obviously sharp, but he also did a tour in Afghanistan, then was part of the CBs. I I think your pedigree behind you probably gave him a little bit of ⁓ reassurance. Like if he could do that stuff, he's obviously been successful at Harkins. ⁓ he's got the pedigree to to steer the ship, and obviously that was the right decision by by them and and you answer the bell. So congrats on that. so if we could rewind a little bit. You join Harkins, how old are you at at that point about? speaker-0: ⁓ let's see. It was ⁓ yeah, I was in my early thirties at that point when I joined Hark joined Harkins. I've been now in my early forties, so I've been in Harkins yeah, ten years. speaker-1: Okay. So it was like twenty sixteen ish? speaker-0: Twenty sixteen I got the Harkins. speaker-1: Okay. So I I wanna focus on twenty sixteen, Ben. You're joining Harkins, you got experience in construction. What if anything do you know about employee ownership? speaker-0: I didn't know anything about employee ownership at that that point in time. ⁓ it was ⁓ it was something I learned about during the interview process at Harkins. ⁓ but I truly think it's one of the things you need to hear it like five times and have it explained to you five times before you really grasp what it means and and what it can do. And you know, I I don't think I fully grasped that ⁓ in you maybe until my first full year at Harkins. speaker-1: Yeah. Well, and it's it's a super interesting perspective, right? Because as you guys continue to grow, ⁓ you're gonna have pr potential new hires, like what's you keep saying the C Sop stuff so great. Like, is it? You know, and you you have the benefit to say, Hey, I was in your shoes too, and I didn't it sounded good, but I really didn't know is it too good to be true or whatever. And now, you know, ten years later you could say, Hey, this is what it's meant to me personally. So it's not just giving lip service. I think you sit in a really your perspective is super interesting and I think it has to carry weight as as you guys grow with ⁓ new employees. speaker-0: For sure. And like one of our values that we really hold dear is communication. And ⁓ you know, if you haven't told somebody something four or five times in four or five different ways, they haven't heard you yet. And that's true of the ESOP. So we make a really good concerted effort and pull in our marketing department to internally market the ESOP to our employee owners and Probably one of the best ways of doing that is having them hear the stories of the people that have been here 40 plus years. ⁓ and many of them are very open with show with sharing what their ESOP accounts are worth at this point. ⁓ and then that's pretty eye-opening for some of the the folks that are younger in the company that haven't been here too long to see what that can grow to. And I and I'm really cognizant to tell them when I hear those stories about those people that told them that. And I said, well just imagine what that's going to look like with inflation alone, you know, in thirty years when ⁓ when ⁓ that that eSop account is yours and like inflation inflation alone should close to double that over that time period. And you're gonna have growth in the company and share price growth. So it should be much more than what those people are are experiencing now, which is unbelievably life changing. ⁓ values in their Aesop to help them retire with with you know with wealth that they're gonna be able to give back to their kill children. speaker-1: Yeah, I mean it's it's story after story. I'm I'm early on in this this podcast journey and you know we're also an Aesop owned company and I'm you know go to the NCO and ESCA and ESOP Association, ⁓ different conferences, but the same story continuously comes up that not only does it make a huge difference in the employee owners' lives, right, to take care of them and their family and and help with their legacy, but then it keeps the wealth in their communities too. And so I it's not for everyone, it's not easy, and we'll get into some of those things in a couple minutes here. But when when done correctly, I mean, look at the political environment. It's hard for either side of the aisle to come together. And on ESOPs, they come together. So I think that speaks volumes that when done appropriately, it's it's just a win-win-win for the company, the employee owners, and the communities they serve. speaker-0: Yeah, fully agree. One one cool thing that happened in the state of Maryland last year was they introduced a pilot program where ⁓ eSops would have ⁓ some preferential procurement preferences at certain Maryland state agencies. ⁓ and that it's it isn't a price preference, it's a quality preference because they realize that esops have really good retention, have really good cultures, ⁓ and they want to do business with more eSops, which is really, really cool to see. speaker-1: Yeah, isn't there I still have to track this down, but I thought with the Department of Defense or I guess the Department of War now, there's some preferential treatment for Aesops too, but I don't know if it's capped at a certain size for maybe follow on work. It doesn't have to be rebid. I don't know if you're familiar with that. speaker-0: I am familiar with that. I know the state of Maryland looked at that program as well as they were implementing ⁓ their law. But yeah, I think it's a pilot a pilot program that DOD at the time, department award now put out. And it it makes ESOPs eligible for sole source awards in a similar way that eight A or minority owned companies, socially disadvantaged companies are ⁓ eligible for sole source awards too. But the ESOP has to self perform forty percent of the contract that they're awarded so sole source through the through the government. speaker-1: Got it. So that's the caveat. Well, thank you. I I knew it was there. I didn't know the intricacies. So thanks for clarifying that, Ben. with with the work that you do, have you seen that Harkins being 100% employee owned? Is has that been the tiebreaker? Because construction's super competitive, right? ⁓ you guys obviously have the history, you've been around since 1965, your reputation precedes you, but Do you see it where you're in a neck and neck battle with maybe some of your biggest competition and ever all things are equal and they say, Hey, you know what? The fact that you guys are employee owned kinda kinda nudged you in in getting a job. speaker-0: I I absolutely, yes. It's something that we talk about at every single project interview that we go to with a client as we're chasing work. And I think once explained well, ⁓ it's a huge value add because I do think s people that don't understand ESOPs may say, ⁓ I don't know if I wanna work with an eesop, ⁓ th their leadership won't be able to make decisions and which is a complete fallacy and myth. because an Aesop is run just like a public company would be run with a ⁓ with a slate of officers and a board of directors and normal business decision making and, you know, fast decision making depending on the depending on the company. But there's nothing inhibiting an ESOP to make effective decisions in business. ⁓ because we're an ESOP, that's a complete myth. I mean then when you talk about like the better retentions that you see in an ESOP and a client no has a better feeling that the project manager and superintendent that they're gonna be working with that have been with the company a long time and have and are so bought into the company's culture are gonna be there throughout the length of the project. And just the fact that they're contributing to a company that is, you know, sharing wealth and making the community a better place because they're sharing wealth in a in a more effective way, ⁓ I think means a lot to many clients. So yeah, I think it makes a big difference as you're competing for projects. speaker-1: Yeah, that you bring up a really good point. ⁓ because you know, we talked offline before we started this, and I told you my understanding of Aesops before I came over to Christianson Group, and now being a hundred percent Aesop, and you talk to ten different people on what an ASOP is, you're gonna get ten different responses. So your point is well noted that you can't just say, Hey, we're a employee-owned GC, do work with us. You really have to be deliberate on how you communicate that message. To your prospective customers and clients to make sure they understand it. And then also put yourself up, maybe even above other ESAP-owned companies. Cause again, there's really well-performing ASOPs and then not so much. And so you want to make sure that you position yourself in the the upper echelon of even the ESOP contractor community. And the other thing that I think is super cool is. You as a general contractor, you're setting the tone for the whole project, right? You're the quarterback for that whole project. So every other sub that comes on and and you guys are instilling that that employee-owned culture, on top of doing obviously being a top-tier GC and and having the project run smoothly on time on budget. But all the other trades are probably kind of like, I heard about Aesops, but now I'm doing work with Harkins and They're not holding payments. They're a pleasure to work with. The project's getting done, you know, seamlessly is best as it's still construction, of course, but I I don't know. It's just a great example to kind of show what employee ownership looks like on on the job side, I have to assume. speaker-0: Yeah, I think inside an ESOP, people truly feel like owners in the company. And when they truly feel like owners in the company, they are way less inclined to make a short term decision that's gonna benefit their own self interest. And they're way more inclined to think long term and say, What's in this challenge that I'm facing right now? what's the best decision for the company and what's gonna increase the company's long term reputation, even if it means taking a short hit, short term hit to the financials, what's the right decision to advance this long term relationship or advance Harkins' reputation? And we beat that drum all the time and I see our people buy into it wholeheartedly and continue to make those decisions. And it's a cool thing and I something I hear all the time. is you know, you talk to a client that maybe just recently got introduced to Harkins and they're like, Yeah, I met one person at Harkins and they were great. Then I met another person at Harkins and they were great. And then the fifth and sixth time that I met at Harkins, they're all great. It's like, How are you guys doing this? And and that I get that story all the time, which makes me so happy and which means we're doing our culture's in a really good place and we're doing right things and people are buying into that ownership culture. speaker-1: Yeah, no, that's great. And you started at Harkins in in twenty sixteen, so ten years later, what were you guys in revenue roughly when you first started in twenty sixteen, do you recall? speaker-0: Yeah, probably two hundred and fifty million, if I had to guess. speaker-1: And now you're three quarters of a billion. speaker-0: Now three quarters of a billion with a a really good chance to crust a billion dollars ⁓ be you know before twenty thirty. speaker-1: So if if it's okay with you, I'm gonna put you on the spot. When you guys hit a billion, I'm having you back on as a celebratory episode. Can't wait. ⁓ okay. So ⁓ and I think that's proof, right? That you you hit one of the biggest fallacies on on Aesop's people thinking, you know, there's there's all Indians no chief, right? Like, no, it's very well structured. I would argue more structured than some privately held speaker-0: So make it happen, agreed. speaker-1: Companies, you know, that you have to have the governance and the board of directors, and it still has to be a very well-performing business, construction or otherwise. And then the ESOP just adds another layer to make sure it's it's structured. But the the other thing is ⁓ it inhibits growth, right? Because now you're paying people with the repurchase obligations and so on and so forth. So I kind of want to land the plane on that, but Clearly you guys are an example that you went from, you know, two hundred million to now three quarters of a billion. And all the while, I mean, you went east up in two thousand one. So I'm sure in the past five, ten years you've had some serious repurchase obligation events that were capital calls, right? You had to pay those people out. And clearly it's not inhibiting growth. So I'd like to for you to dig in on that if you don't mind. speaker-0: Yeah, yeah, certainly you have to as part of your governance, have to do those repurchase obligations and be able to look down the line at where you think your projected growth is going into and you can get a good idea of how the share price is gonna move associated with that. And you have a good idea of when your people are gonna start diversifying and or taking distributions ⁓ once they once they retire and leave the company. So when you when you look at all those things, you ⁓ you you need to plan for it and need to make sure that you're constantly feeding the ESOP with cash so that you can you can meet those repurchase obligations. One way we do that is paying dividends to our shareholders. So in addition to everybody getting 10% of their total compensation in stock value each year, all the shareholders are paid about a third of our profits ⁓ in dividends, and we're constantly pumping cash into the ESOP. So that way you can do a lot of those repurchase obligation within the ESOP because people that aren't retiring have cash accounts in addition to their stock account and are purchasing those stock from the people that are distributing and d and diversifying inside the ESOP. So that's an important thing to pay attention to and look down the line and make sure that you're you're staying healthy from a cash perspective to deal with those things. So it's but it's it's certainly not something that's insurmountable. But You know, it takes a little bit of planning. speaker-1: Yeah, a hundred percent. And I'm assuming at this stage you guys have done both, you know, the repurchase obligation study, but then you also have the sustainability study that's a little bit more extensive and kind of balancing both of those. speaker-0: Exactly. And we have a group, ⁓ we have an ESOP committee that is constantly in tune with that, and that's part of their collateral duties to to keep to to keep those studies going and ⁓ and you keep an idea of where we're gonna be. When when you when you think about eSOP growth, ⁓ you you you need growth. You know, growth gives opportunity to people, ⁓ and it and that's what increases the share value and really can generate wealth. One thing that I love about the eSOP is that It's it does it it really promotes ⁓ a long term stable growth, which is which is what I think is a great way to run a company because it enables you to grow at the same pace that you can develop people and maintain your reputation. I don't think the ESOP really incentivizes you to do explosive growth in the short term. ⁓ because then you end up really having troubles with some of those you know repurchase obligations and then you're basically investing into that short term growth and you have and and within people with an eSOP you have people that are getting ready to retire that are ⁓ you know if you when you're putting in those big investments you're kind of taken away from from their ⁓ potential you know dividends and potential earnings through the eSOP. ⁓ and then if you have people at the beginning of their journey that ⁓ you know that are gonna look at a long, you know, long long-term growth cycle. So if you're investing in growth, you're you're maybe benefiting the the earlier the people earlier in their career while taking away some value from people at the very end of the line. So you really gotta take a balanced approach when it comes to growth and grow at a long-term stable rate that's always more than inflation. ⁓ but that you don't outgrow your reputation. And then I think if you do that, you're taking care of everybody on their ESOP spectrum, whether they just joined the company or whether they've been here for forty years. speaker-1: Yeah. Well and and the fact that you're saying slow and steady growth, but that doesn't mean, you know, single digit, 'cause you didn't do single digit to go from two hundred million to three quarters of a billion in ten years. So I I think it's I mean, you guys are a perfect example of you could still have really good growth, you could get to that billion mark and beyond, but do it sustainably. ⁓ and and so that's that's just proof one of the many reasons why why Aesops if done correctly could could be great. And it's it's funny. I had I don't know if you know Sessa sheet metal contractors in Baltimore, but I had I'll I'll connect you guys. So Bobby Sigmund, I hope I didn't butcher his last name. They're ⁓ Aesop, you know, sheet metal contractor, and I had him on ⁓ just this last episode, and he made a really good point that. When they're talking to the the older guys and gals that are looking to retire and how they're building the culture is, hey, you want to make sure that you're helping the younger generation because they are your retirement plan. If you don't have that good ⁓ diversity of ages in the Aesop plan and it starts getting top heavy, you need that that fresh youth to to prop it up. So his sound bite, which I thought was was great, was hey, you're training your retirement plan. And so it's kind of a self-policing or self-correcting system if everyone understands the the mechanics of it. speaker-0: Yeah, it makes pr I fully agree with that. It makes perfect sense. speaker-1: Yeah. ⁓ so ⁓ when I'm talking to other newer Esop contractors or even people that I'll call ⁓ ESOP curious, it everyone seems to be like, How do we get the workforce, the employee owners, to really understand the benefit that that they have? Because you we tell them, you know, your employee owners now or maybe you're four or five years in, the balances aren't that big yet. In the workforce is kinda like they're just giving us lip service. So what advice would you give them, or even maybe what advice would you give your your twenty, sixteen year old self to really get people bought in to understand the benefit? speaker-0: Yeah, yeah, I think I think you gotta just really be relentless in your communication internally ⁓ around the Esop. The the best thing is those stories from the people that have been there forty years and you know, the love they have for the company and what the Esop has done for them in terms of their their their share price value that they now have in their ESOP account. ⁓ and then, you know, use your marketing team to create videos that you know, showcase some of those stories. We do ESOP lunch and learns on a quarterly basis where our ESOP committee ⁓ you know, sits down and ⁓ in the main office here we have lunch and then on the job sites they're ordering lunch and they're tuning in ⁓ remotely and it's an opportunity to talk about the ESOP, you know, and we'll we'll take some ESOP accounts and have the name blacked out and show how that ESOP account has grown over time and each per and use an example of somebody who's been here five years and 15 years, 20 years all the way up the line. So people can really understand, you know, what that that eSop account can mean at the end. You know, I and I always find that people that have worked at for a few different companies and then come to Harkins almost have more appreciation for Harkins than the person that's been there for 30 years. ⁓ just because they've seen dysfunctional companies and they come to a place where it's not dysfunctional and the culture is really strong. And they're like, I just I just can't believe how good this is. And you know, when I first got here, I didn't believe how good it was. And you know, I'm here I've been here for a year and it's still like that. And so on and so forth. So I think that's a good ⁓ bellwether for anybody just to see some people that have spent time at three or four different companies and They can see what a really good company looks like that is rooted in that ownership culture. speaker-1: Yeah. No, I mean you guys are deliberate, obviously, and and you execute and it's planned. Nothing nothing's done by chance. Everything you guys do is planned out, and that's why you're successful and why you're growing. in terms of the future, what what's we know you're you're gonna get to a billion. so aside from a revenue goal, what what's the you know the five year, let's call it future Harkins? What does it look like? Are you adding different scopes of work outside of what you're already doing? speaker-0: Yeah, you know, obviously a big thing in the ESOP is making sure that we can stand the test of time so that the ESOP's still as good as it is now, fifty years from now, and hopefully way better than it is fifty years from now. And and the and the people that haven't even yet entered their workforce that are gonna be Harkin's employee owners one day are are are gonna have a really great career. at Harkins because of the decisions that we're making right now. So just looking it's important for us to constantly be doing strategic planning and lurking looking way out down the line and how do we protect the company. And I think one of those ways is is continuing to to to be a diverse builder and be building different types of product types. So that's something that's that's very important to us so that we can shift no matter what the economy's in doing is that we can build ⁓ what people are building at that time. And having the right processes and having the right sophistication, whether it's you know, BIM modeling and a project controls team that does and helps all of our teams with scheduling and and V D C and every you know, drone programs and just staying ahead of the curve ⁓ when it comes to technology and AI. ⁓ so that's th those things are really critical. And then continuing to be ⁓ to grow geographically. It it It it's in a big investment every time that we open up a new office in a new geographic territory. And it often takes taking a a seasoned employee ⁓ at one of our core offices and having that person raise their hand and say, Hey, I'd like to take the opportunity to go somewhere else and and then hire an a key person from that new local area. And then ultimately it really works well if we can get 50%. you seasoned Harkins people and fifty percent local hires so that the c the culture meshes as well as the local knowledge meshes meshes. And when we do that and we resource it well, I think we find that the geographic expansion ⁓ works really well as well. And that's something I think that we have the bandwidth to do every five, seven years as we have those people that have reached that level of ⁓ knowledge and wisdom and leadership ability to rate and and the entrepreneurial spirit to say, Hey, I'd like to give this a shot. speaker-1: It's super interesting. Marrying someone that's already living, breathing, and the beneficiary of the the Harkins culture and the Aesot, you know, benefit they've received and helping them kind of launch a new market. We we found the exact same thing for us. You know, we we had ⁓ a guy who just he's a great guy, his name's Joe Blee. He was in our Minnesota office, which is our headquarters, and he was just quite frankly, sick and tired of the winners, Minnesota winners. So he's like, I want to go to Kansas City. And so he launched our Kansas City office. And and now we have dozens and dozens of employee employee owners there. And it was him being able to say, hey, this is legitimate, you know, and and br imp bring that culture from Minnesota at the time to Kansas City. And now that office is flourishing. So it's interesting to hear that's kind of your guys's motto as well. speaker-0: Mm-hmm. It's a great way to do it. speaker-1: Awesome. Well, as as we wind down, I like to say, you know, play devil's advocate and then bring it back to to why it's good. But why shouldn't a contractor, you know, there's a it's the silver tsunami, right? In the next 10 years, we keep hearing these statistics of people have to have some sort of succession plan, whether they like it or not, whether it's transition to their kids, sell to private equity, sell to a you know, a competitor strategic. Do an asset sale and and close up the doors sometimes. So I think more and more people are Aesop curious, but the last thing we need is people doing it if it's not the right fit. So in your opinion of of being in it for the better better part of 10 years now, when shouldn't a contractor go Aesop? speaker-0: Yeah, it's ⁓ I think it's probably very similar to ⁓ any no matter what company you are, ⁓ when you probably Aesop isn't a great fit. You know, if you you have to have a certain number of employees and maybe that number's a hundred or more, ⁓ to able to enable you to have that age of diversification that we talked about. So you have some people, you know, a good mix of people at the early part of their career, the middle part of the career, and towards the end of the career. So that you can get that cycle of employee ownership as people are retiring and distributing, that the that other other people are are then buying those shares and getting that cycle going. And I and I you gotta you certainly have to have a stable business that has a you know long term, you know, stable backlog ⁓ and an ability to continue that backlog and continue those profits coming in. Because if you have an owner that's leaving And maybe they're ⁓ a single owner that doesn't have a great leadership underneath of them and they're the key person that with client engagement. You know, if they if they if the company's taking out a loan to pay that person so that they can go then retire and you don't have people that are ready to to to continue to run the company, that's a recipe for disaster because then the then the company can't pay its debts off to ⁓ to pay off the ⁓ the debt it took to To go into ESOP in the first place. So those are probably some of the big things to look out for to make sure ⁓ is ESOP the right move for you. speaker-1: Yeah, no, continuity is a huge piece. I always tell people if you're just looking for a check and you you close the transaction, you're off to Florida, if you don't have the right leadership team that could sustain you leaving overnight, it's it's probably not not the right fit amongst the other reasons you highlighted, which I agree with. On the flip side, let's say I'm a Chicagolan general contractor doing a hundred million in revenue and I got 150 employees and I'm Trying to figure out what I want to do in the next five years. And I got private equity hitting me up. And I got a strategic competitor wanting to buy me, but to be honest, I don't like him. So I don't want to sell to him, but his offer's good. And then I I listen to Ben Nichols podcast and this Esop stuff sounds pretty good. Why why should I go Esop? speaker-0: I think there's some tax advantages to becoming an Aesop. You know, I wasn't in those shoes like like Blaze was, says pro but there's probably some pretty good tax advantages to to becoming an Aesop. But the best reason is is you're setting your people up for an opportunity to have a really significant piece of the pie when it comes to ownership. And just like Blaise said, you know, he was giving his people an opportunity to spend a career at Harkins Builders and never have to think about working in retirement, no matter what position they held in the company. And ⁓ time and time again, you know, last time I checked, it was probably several years ago. We had, know, over 40 people with over a million dollars in their ESOP account. And I know that's much more than that now. And you know, Blaze said he wanted everybody to be a millionaire through the ESOP. while when they retired after spending a career here. And that's come true countless times. So I think those are the reasons if you, you know, just giving your employees that opportunity and setting them up for a long term success, I think that's your biggest driving point if you're an owner in those shoes and have the opportunity to pursue that ESO model. speaker-1: Yeah. Well I think ⁓ if if we were able to talk to Blaze and and say what do you think Ben's doing, I think he'd be super proud of of what you've done and and way to give him, you know, credit for if it wasn't for him making that decision, you guys, you know, aren't Aesop. And so ⁓ you know, his memory's living on, that's for sure. Sounds like a great guy, and and ⁓ I think you're doing right by him. So I I really appreciate you coming on, Ben. Before we sign off, how can you know people get a hold of you? ⁓ speaker-0: You can hit you can find me on LinkedIn, ⁓ or my email is all over the place. So feel free to send me an email. It's b nichols at Harkins Builders dot com and be happy to answer any questions that anyone might have on on the eSop construction world. speaker-1: Awesome. Well, thank you for coming on, Ben. I think our audience is definitely get a they're gonna get an Aesop education. It was super entertaining as well. And ⁓ I got my movie picked out this weekend. So ⁓ appreciate you coming on and hope to talk to you soon. speaker-0: Welcome Chuck. Nice talking to you too. speaker-1: Alright then. We'll see ya. Thanks for listening to the Construction Aesop Collective. If this was useful, follow the show and share it with a colleague. Join the conversation with me, Chuck Mazzanti, on LinkedIn and find all episodes at constructionesopcollective.com. Until next time, keep building ownership one conversation at a time.