Latest / The Insurance Growth Lab / How Scott Tannas Turned One Small-Town Agency into a $775M Exit
Transcript
- Scott [0:00:00]: Look, I've got some money and I'd like to get in the business. Scott [0:00:03]: And would you be interested in selling me the business even though I probably can't afford it, and they said, well, how much money you got? Scott [0:00:10]: And I said, got a hundred thousand dollars saved up, and they said, well, tell you what. Scott [0:00:16]: Give us all your money, and we'll finance the rest, and we'll stick around for three years and we'll teach you the business, and that's how we did it. Callan [0:00:27]: Welcome to the Insurance Growth Lab. Where we go deep on the growth campaigns and strategies driving real results in the insurance industry. Callan [0:00:34]: I´m Callan Harrington, founder of Flashgrowth and in each episode, I sit down with marketing and growth leaders from carriers and shirt tech and top brokers to break down one specific initiative, whether it's how they marketed a product, scale a channel or solve a specific growth challenge. Callan [0:00:52]: It's no fluff, just tactical insights you can apply in your own company. Callan [0:00:56]: Scott, there's in doing research for this episode. Callan [0:01:05]: I mean, there are legitimately there are countless different areas that I want to Exploring, but one of the places that I would love to kick it off is when you are really in the t of building Western financial group. Callan [0:01:18]: Tell me about one of the days it's stuck out. Scott [0:01:22]: There were lots, but one that I've told before, it was a day in the late nineties. Scott [0:01:28]: We were rate in the thick of kind of getting up up the curve probably had about twenty stores still had clients. Scott [0:01:36]: I was still the guy in High River in the in the insurance office didn't have others that that could do things. Scott [0:01:43]: But we were raising capital and doing acquisitions. Scott [0:01:46]: I was building a profile larger than my community. Scott [0:01:50]: And there was just one day where I looked back at at at night when I was going to bed. Scott [0:01:55]: And the activities that I did over the course of that day. Scott [0:01:58]: I went to my uncles house. Scott [0:02:01]: My great uncle uncles house got up on a ladder to his roof. Scott [0:02:04]: And we spent a whole bunch time arguing about how much damage there was to this roof versus how much was was actually defective stuff because he had put some crazy topping on it, and how much was hail, etcetera. Scott [0:02:19]: And and it was a lot of work to keep him happy and and to climb back down. Scott [0:02:24]: I then drove into the city into Calgary, and I had three meetings to raise money And then I had to drive back out of the city to go to a farm and take a picture of the back end of a bowl for Lloyd of London. Scott [0:02:41]: And then I had to drive back into the city and go to a testimonial dinner for one of the Calgary business leaders that I've been invited to. Scott [0:02:49]: And then back to High River to go to bed. Scott [0:02:52]: And that was just kinda... Scott [0:02:53]: It was one of those days where I was doing everything all at once. Scott [0:02:57]: It's a day that stuck out. Scott [0:02:59]: There were others too... Scott [0:03:00]: But but that one is probably the most memorable. Scott [0:03:03]: When I realized that, boy, I was busy and things were happening, but I was also reminded to be humble and to stay focused. Callan [0:03:13]: Well, it's one of those things where I think it's super. Callan [0:03:16]: Well, one, think anybody can relate to when you've got your family as clients, especially in those early days. Callan [0:03:24]: It's like, you need your friends and family as clients, but they're the hardest. Callan [0:03:28]: They're always in my opinion, the the hardest of clients. Callan [0:03:31]: And that also, I... Callan [0:03:33]: You know, anybody that's been on... Callan [0:03:34]: That has to spend any time on the road going from place to place. Callan [0:03:37]: How many different times did you have to change for that day? Callan [0:03:40]: There's my question. Scott [0:03:42]: I wore the same thing everywhere? Scott [0:03:43]: I mean, I I spent a lot of time kind of thinking about, well, how am I gonna do all of this? Scott [0:03:47]: Because it was muddy at the farm, and but I had to look good for this dinner and for the capital meeting. Scott [0:03:53]: So... Scott [0:03:53]: I managed it. Scott [0:03:54]: It was Chinos nose, and a and a blazer, and I did bring an extra pair of boots. Scott [0:04:00]: That was it. Callan [0:04:01]: Here you go. Callan [0:04:02]: There you... Callan [0:04:02]: If the boots can protect a lot. Callan [0:04:04]: I'm sure many people that are listening to this are gonna be familiar with what with yourself and what you've built, but some of the highlights here are pretty impressive. Callan [0:04:14]: So during your tenure, you grew Western Financial group stock price by a thousand and thirty eight percent, that ultimately led to a seven hundred seventy five million dollar acquisition in twenty seventeen. Callan [0:04:25]: And then if that weren't enough, you were appointed by prime minister Harper to the senate of Canada in twenty thirteen. Callan [0:04:33]: When I hear those numbers, and one of the things that I've always endlessly curious about is as I understand that you acquired High agencies in nineteen ninety three. Callan [0:04:44]: When did you know that you really had something. Scott [0:04:48]: Well, not long after... Scott [0:04:49]: I mean, I I got into the business and the fellows that allowed me in. Scott [0:04:55]: I mean, I I was in the travel business for ten years and made a little bit of money through a project in ban where I did it on spec and and got paid at the end on success, and that was kind of my nest egg. Scott [0:05:10]: Went back to High river. Scott [0:05:12]: And my father law's said why don't you look at the insurance business? Scott [0:05:16]: I was trying to figure out what business I wanted to be in. Scott [0:05:18]: I was looking at a hardware store and different things. Scott [0:05:20]: And he said why aren't you why don't you look at general insurance? Scott [0:05:23]: So I thought about it. Scott [0:05:26]: I like inside warm jobs. Scott [0:05:27]: Every insurance guy Ever met was a great golfer, so I figured there was a, you know, leisure time and so on. Scott [0:05:35]: And and it was a a job in in my home community, trustworthy interesting. Scott [0:05:40]: So anyway, I went to Ray Wall who owned high agencies. Scott [0:05:45]: They were both at retirement age, no kids in the business. Scott [0:05:49]: And I just said, look, I've got some money, and I'd like to, get in the business. Scott [0:05:54]: And would you be interested in selling me the business even though I probably can't afford it and they said, well, how much money you got? Scott [0:06:01]: And I said, got a hundred thousand dollars saved up? Scott [0:06:04]: And they said, well, tell you what? Scott [0:06:07]: Give us all your money, and we'll finance the rest. Scott [0:06:10]: And we'll stick around for three years and we'll teach you the business. Scott [0:06:13]: And that's how we did it. Scott [0:06:15]: I worked pay them off, and I wanted to get them paid off as quick as as possible. Scott [0:06:21]: I grew the business within months of me starting, I had a game plan as to how I was gonna grow the business and in in town. Scott [0:06:29]: And just by going around and asking people for their business, especially business. Scott [0:06:34]: I I just... Scott [0:06:35]: I got the phone book out, actually, and I just went through and crossed out all the ones that were already customers and highlighted the ones that weren't in the business community, and then I visited them all. Scott [0:06:44]: I wrote them a letter saying I was coming. Scott [0:06:46]: And so I was growing the business quickly. Scott [0:06:48]: And I realized that there was even in a small town where you've been there forever. Scott [0:06:53]: You've got you know, leading market share. Scott [0:06:55]: There's tons of business. Scott [0:06:57]: Things are changing. Scott [0:06:58]: There's new customers to be had, and that was a real revelation for me because it it wasn't anything special about high river. Scott [0:07:08]: It's just the way that communities are. Scott [0:07:10]: Right? Scott [0:07:11]: Things change, and people leave and people come and, help, businesses get bought and sold. Scott [0:07:16]: And the reason you didn't have that client. Scott [0:07:18]: That was two owners ago. Scott [0:07:20]: Right? Scott [0:07:20]: And so You just just this renewal of of an energy in the community, I saw opportunity. Scott [0:07:27]: So then I start going to conventions, brokers conventions and whatever. Scott [0:07:33]: And I see a whole bunch of guys that look like Ray and Wall in from towns that just like High River, and I thought, man, there is an opportunity here, and and I don't see anybody doing anything about it. Scott [0:07:45]: And so I just kinda of quietly went around and look at how could I raise money to pay out Ran Wall and to start talking to others about their business. Scott [0:07:59]: The other thing I learned is that there's the leaders of the business and what makes it goal. Scott [0:08:04]: We're the ladies. Scott [0:08:05]: Ray Wall were were great guys. Scott [0:08:07]: They handled the the key customers, etcetera, but all the work got done by three or four ladies that were in the in the shop with with me and Ray Wall. Scott [0:08:17]: So I knew that that's the way it works and in all these businesses in these small towns. Scott [0:08:23]: And so if you could get the ownership, the talent was inside that business waiting to be unleashed So that was kind of the premise. Scott [0:08:30]: I got some friends together, and we did this little stock offering that you could do only in Alberta called the Junior Capital Pool. Scott [0:08:38]: You could raise half a million dollars, and they would give you a listing on the Alberta Stock Exchange. Callan [0:08:44]: This I I have found And we'll see interesting. Callan [0:08:45]: I heard the public... Callan [0:08:47]: The company went, you bought it ninety three and I heard went public in ninety six, and I could not wrap my mind around that. Scott [0:08:52]: It was half a million dollars. Scott [0:08:54]: You had to have two hundred investors. Scott [0:08:56]: So nobody On average, nobody got more than a couple thousand dollars worth stock. Scott [0:09:01]: And so that's what we did. Scott [0:09:02]: We created this little cool, and then we sold High into it. Scott [0:09:06]: And then by all of a sudden, I had access to capital and investors on a much broader scale, and I could go tell my story and people say, it's interesting. Scott [0:09:16]: And so we raised a million dollars in the first financing, and then we raised three when I spent the million and we went and raised three, and then it was five and and so on, And we just... Scott [0:09:27]: Were able to do it by me telling the story of what we were trying to do showing them. Scott [0:09:32]: We were profitable from day one. Scott [0:09:33]: And so because of High el. Scott [0:09:35]: And then everything that we bought were profitable agencies. Scott [0:09:39]: And we bought them at reasonable prices. Scott [0:09:41]: So we were consistently profitable. Scott [0:09:44]: I could show investors all the way along how we could either cover their interest on deb dementia loans or how this was an acquisition was acc, and their shares would go up, etcetera. Scott [0:09:57]: So was really, we went public in in May of nineteen ninety six. Scott [0:10:02]: We did a financing in the first follow on financing in the fall, and we were consistently about every six months raising money. Scott [0:10:10]: Because by the end of ninety six, we had three three agencies. Scott [0:10:18]: And by mid ninety seven, we had ten or twelve. Scott [0:10:23]: Like, it was just... Scott [0:10:24]: And then it just kept... Scott [0:10:25]: It was a flywheel. Scott [0:10:26]: Right? Scott [0:10:27]: That just the more we did, the more people heard about it, the more we were out talking to people there were more ambassadors that I could... Scott [0:10:34]: That I could call on to say, hey. Scott [0:10:35]: Do you know this person I think this sounds really great. Scott [0:10:38]: Let's go there next. Scott [0:10:39]: All of that. Scott [0:10:40]: So it did not take long before I realized we were we were really onto something here. Callan [0:10:47]: You said a bunch... Callan [0:10:48]: I... Callan [0:10:48]: There's about fifty things I wanna jump back into on that. Callan [0:10:50]: But one one of the things that really stands out to me is I had heard you say before that you didn't have a an agency or brokerage in a major metropolitan area until you had over a hundred locations or one hundred stores. Callan [0:11:09]: I find that incredibly interesting because, you know, oftentimes, and it's easier for me, I guess to say this now because when you look at a lot of the platform agencies nowadays. Callan [0:11:18]: Right? Callan [0:11:19]: They're buying up other very large agencies. Callan [0:11:23]: But I've always liked this model of... Callan [0:11:26]: And I always thought it was underserved, which is why I'm... Callan [0:11:29]: Now there's comes to me unique challenges, and I'm super curious about is buying all these local agencies. Callan [0:11:34]: Now hit on one thing that I thought was interesting in that it's almost that you had these people that were ready to retire, and you gave them a path to retirement, and you gave the people within the agency, the path to be able to move up. Callan [0:11:49]: Because a lot of times you're kinda stuck if you're working up an agency, you need need to start your own or go work for a larger agency in order to to move up. Callan [0:11:59]: I'm curious, how did you get this buy in from so many different local stores where you're getting larger. Callan [0:12:09]: Of course, the, you know, I think the thought that's on a lot of people's head is that you're going to bias us and you're going to cut the people and you're gonna make it more efficient and and so on and so forth? Callan [0:12:20]: What was your process for that? Callan [0:12:22]: And what was your process for scaling that with the people that were already there. Scott [0:12:26]: So first of all, it was thoughtful targeting. Scott [0:12:29]: We said... Scott [0:12:31]: We wanna buy... Scott [0:12:32]: I said from the beginning. Scott [0:12:33]: One of agencies that looked just like High alta in towns that looked just like High River. Scott [0:12:38]: And because, I I saw what I did in a short period of time in High river to in an already profitable, strong agency by just going out and employing basic sales skills that hadn't been done in a long time. Scott [0:12:52]: Right? Scott [0:12:52]: And So the focus was all around building small a network of small town. Scott [0:12:58]: I never thought we'd would get to two hundred stores or, I guess we got to about a hundred and forty when I was you know, over the course of my leadership. Scott [0:13:06]: It it was about getting to maybe twenty, you know, in our wildest streams. Scott [0:13:10]: And so we had a a big list of pounds in Alberta to start with. Scott [0:13:17]: And then what's the best... Scott [0:13:19]: Agency in the town. Scott [0:13:20]: And I just got... Scott [0:13:21]: I got my pickup truck, and I I drove to all those places, and I would ask to have a cup of coffee with the guys, and I just say, listen, you know, you've probably heard about me, and here's what we're doing, and, you know, we've now got day We now got Linda and Na that we bought her store and we've got Dave and Strat moore bought his store, etcetera. Scott [0:13:40]: And and so people knew and they'd heard about it. Scott [0:13:43]: Right? Scott [0:13:43]: And so I just said here's how we work. Scott [0:13:46]: Here's here's what we're trying to do. Scott [0:13:48]: We're trying to bring a bunch of us together that all have common challenges, common interest. Scott [0:13:54]: We'd like you to stay. Scott [0:13:55]: So sell now don't wait till the last minute. Scott [0:13:58]: Sell now, take a little bit of stock in the company, not enough that you're laying awake at night, but enough that it helps you get up in the morning, and let's do this together. Scott [0:14:09]: And that was attractive to guys who were kind of at the end of their careers that were saying, Callan [0:14:14]: yeah, Scott [0:14:15]: And then I I would say, if they had the wallet, who and your staff would you sell this business to? Scott [0:14:21]: And they always had an answer like that. Scott [0:14:24]: It was invariably a lady. Scott [0:14:27]: And I'd say, well, let's make her the manager. Scott [0:14:30]: You know, make her officially the general manager, and you go out and do your thing to help gently... Scott [0:14:39]: You know, grow the business and let that person manage and mentor her. Scott [0:14:44]: But you don't have to worry about the money. Scott [0:14:46]: The money will be home and dry. Scott [0:14:47]: As much money as you want versus taking shares, we don't care. Scott [0:14:52]: And and that was the other thing. Scott [0:14:53]: Mean, there was a lot, initially, a lot of thought around all we should sell. Scott [0:14:58]: We should try and give them more shares. Scott [0:14:59]: And use it as a currency. Scott [0:15:01]: And in the end, we decided, nope. Scott [0:15:04]: We're not gonna use it as a currency with purchases. Scott [0:15:07]: We're gonna use it as something strong, something that isn't enough affirmation. Scott [0:15:12]: And we'll pay cash for the rest because we can we can find investors. Scott [0:15:17]: There was no shortage of investors. Scott [0:15:18]: So that was a process, and I had a book and the book went for a decade, where we wrote down notes every time I visited somebody, and they'd say I'm not ready yet. Scott [0:15:31]: You know, I... Scott [0:15:31]: I wanna get this out of the. Scott [0:15:32]: I wanna get that out of the way, Etcetera. Scott [0:15:34]: Come back and see me And and I... Scott [0:15:36]: I mean, I would always say, can I go back and see you in one year, two years, whatever? Scott [0:15:40]: And I worked the long wave with the guys that I really wanted to acquire in the towns. Scott [0:15:47]: And some of them... Scott [0:15:49]: I mean, because there was kind of this pent up opportunity, there were enough that we were busy with high quality acquisitions. Scott [0:15:55]: But at the same time, I was doing this route and developing relationships that I knew would pay off one, two, five years later. Scott [0:16:03]: And all in small towns. Scott [0:16:05]: And then as we found the first one in Saskatchewan, then it was saskatchewan. Scott [0:16:09]: And then we found one in B and that... Scott [0:16:11]: You know, it just kind of... Scott [0:16:13]: We went into the other provinces, and at some point, we decided that High El wasn't going to be a brand. Scott [0:16:20]: We needed a brand, we had kept all the agency names the same. Scott [0:16:25]: So they were Fred insurance. Scott [0:16:27]: They were, you know, whatever, it was all individual. Scott [0:16:30]: We never changed the name. Scott [0:16:32]: And then we decided we we were big enough. Scott [0:16:34]: We need to change the name. Scott [0:16:35]: So, that kinda came next. Scott [0:16:38]: But the the methodology was always good towns, the best agency, How do we do that? Scott [0:16:46]: And and targeting those people, And however, long it took, we hung in there and built the relationship in the trust. Callan [0:16:54]: I think that is super interesting. Callan [0:16:56]: Because anybody that's tried to acquire an insurance agency. Callan [0:16:59]: The great businesses arguably some of the best businesses from a cash flow perspective, That said, it's a long process. Callan [0:17:07]: If you wanna buy the right agency that really fits that that target. Callan [0:17:12]: It's competitive, and it's gonna be a relationship chip that ultimately wins that unless somebody's just paying an outrageous amount of money. Callan [0:17:21]: One of the things that I'm really curious about is, you know, when I think of Mcdonald's and a franchise model. Callan [0:17:27]: And that's very simple for Mcdonald's to put up a location in a small town, and they're gonna be operating exactly the way that you want them to be operating from day one. Callan [0:17:40]: Otherwise, they they'll lose their ability to be a franchise. Callan [0:17:43]: When you're acquiring all of these businesses and you're really scaling that. Callan [0:17:49]: On a smaller level, I think it's probably... Callan [0:17:51]: I don't... Callan [0:17:52]: It's not easy, but it's easier. Callan [0:17:54]: But when you're starting to get to fifty sixty, seventy storefront fronts and where those processes sees and the culture really matter. Callan [0:18:02]: I've I've heard you specifically talk about this on the culture perspective. Callan [0:18:05]: When they're all used to... Callan [0:18:07]: From an acquisition, they're all used to doing things... Callan [0:18:10]: I don't wanna say completely unique, and you've got some things going for you that they're in a small town. Callan [0:18:15]: So they know the small town operates, and they probably have some things that are familiar, but how do you really drive uniformity of that culture when you have such a distributed workforce like that. Scott [0:18:29]: So, yeah, First of all, all those things that we're appealing to some people around the independence. Scott [0:18:37]: Keep your own computer system, run your own accounting and report in keep your name, etcetera. Scott [0:18:45]: We had to slay all that stuff. Scott [0:18:47]: We said we were gonna slaughter a bunch of sacred cows at about twenty five stores. Scott [0:18:52]: We just... Scott [0:18:53]: We had to sit down. Scott [0:18:54]: We had to be brave. Scott [0:18:55]: And say, look, if we're gonna go anywhere, we've gotta start doing stuff together. Scott [0:18:59]: What are the not negotiable things that we have to start doing now if we're gonna continue to grow? Scott [0:19:05]: Because then, it was the fly always turning and we just knew we were gonna go keep going. Scott [0:19:11]: So we had a... Scott [0:19:13]: We had the fight about the about the, the operating system and came to a decision. Scott [0:19:18]: Lots of people were unhappy about it There was lots of, you know, through the through the conversion pain. Scott [0:19:25]: There was lots of guys with folded arms and red faces that were told you, so we should have gone with mine and all that. Scott [0:19:32]: But we got it done. Scott [0:19:32]: And got that one done. Scott [0:19:34]: We confronted the whole name change. Scott [0:19:36]: That was a big one. Scott [0:19:38]: And we got through that because actually, y k helped us with that. Scott [0:19:44]: We sent notices out to people and around white two k. Scott [0:19:48]: There was a big law. Scott [0:19:49]: You had to send an noticed every customer and tell them what you were doing about y two k, etcetera to make sure. Scott [0:19:56]: We got all these notices back from people saying, who the hell are you? Scott [0:19:59]: Hi l to what? Scott [0:20:00]: We never heard of you. Scott [0:20:02]: I deal with Fred insurance. Scott [0:20:03]: What are you talking about? Scott [0:20:04]: And so we had... Scott [0:20:06]: It just highlighted this thing that we were... Scott [0:20:09]: You know, we were now gonna be treated, and we were we were a big, a fast growing company, and we were subject to national laws and different things. Scott [0:20:17]: And we nobody knew our name. Scott [0:20:19]: And so because we were all these distributed names. Scott [0:20:23]: So we just... Scott [0:20:24]: We said, okay. Scott [0:20:25]: We got a a focus group together customers and said, how hard is this gonna be for us changed the name. Scott [0:20:31]: And the customer said, we don't care about the name. Scott [0:20:33]: We care about the people. Scott [0:20:35]: So we were we were like, oh, wow. Scott [0:20:37]: Okay. Scott [0:20:38]: So then we we changed the name. Scott [0:20:40]: We did a whole bunch of, you know, marketing. Scott [0:20:42]: We created a magazine that told stories Western candidates and it to all the customers for a few years so that that helped build with the clients, an identity about who Western was. Scott [0:20:54]: And the name was very deliberate. Scott [0:20:56]: You know, we were all over small town Western Canada. Scott [0:20:58]: And that's where we were continuing to grow. Scott [0:21:01]: But the the other side were the people in those offices distributed workforce. Scott [0:21:07]: And as we brought more and more people on. Scott [0:21:11]: We not only needed to grab the hearts and minds of those that we were just acquiring, but we had to do the same thing with those that were there and had come along with us and seen all... Scott [0:21:23]: Seen all the development, listen to their bosses talk about the fights and everything else. Scott [0:21:29]: Right? Scott [0:21:29]: And we decided we needed to build the culture all the way back to employee number one. Scott [0:21:34]: So we did a number of things. Scott [0:21:35]: We started with an employee convention. Scott [0:21:38]: And we had it once a year, we closed our doors on a Monday. Scott [0:21:42]: We started on a Sunday. Scott [0:21:44]: Everybody came in to high rivers, stayed motel, etcetera. Scott [0:21:47]: And we had this little employee convention team building. Scott [0:21:50]: We talked about the aims of the of the group. Scott [0:21:52]: And we started a tradition of of a kind of a bear pit session where we said what's wrong? Scott [0:21:59]: What's going on that's wrong, and that's... Scott [0:22:03]: Doesn't make sense or that, you know, you're you're... Scott [0:22:05]: And Quote where I love small town people for that. Scott [0:22:08]: They get up. Scott [0:22:09]: And they'd say it, this is crap. Scott [0:22:13]: This isn't working. Scott [0:22:13]: And so we would make a list. Scott [0:22:15]: And then say, alright, we're gonna we're gonna take this list and we're gonna work on it, and we'll report back as we do. Scott [0:22:22]: And then the next year, we'd, you, we'd be that much bigger. Scott [0:22:24]: Had it again in High River, some new employees that were at the last one. Scott [0:22:29]: Right? Scott [0:22:29]: And again, we'd start... Scott [0:22:32]: Here was the list from last year. Scott [0:22:35]: We fixed that. Scott [0:22:36]: Right? Scott [0:22:36]: Fix that. Scott [0:22:37]: Right? Scott [0:22:38]: We didn't get that done. Scott [0:22:39]: Did we... Scott [0:22:40]: And we're sorry. Scott [0:22:40]: We tried this and that didn't work. Scott [0:22:42]: It's still on the list. Scott [0:22:44]: So it was team building, but there was this real accountability process that we went through. Scott [0:22:50]: And we did that tradition for fifteen years as we brought people on. Scott [0:22:53]: So that was... Scott [0:22:54]: There was always this connection between the leadership of the company and everybody had a chance to talk to me to talk to the other leaders, even as we grew into the, you know, hundred plus that was a tradition, And we could... Scott [0:23:08]: We ran out of hotel rooms in High River, and it just the logistics of it became so much. Scott [0:23:14]: We... Scott [0:23:14]: The last one in High River I think we had three hundred people at it, and it just So what we decided to do was we would hold regional meetings, and the management team would get on the airplane, and we do them all in a week, but we would fly to the different regional meetings and... Scott [0:23:30]: But same process. Scott [0:23:31]: So the employee convention was a big, big thing. Scott [0:23:35]: The same thing with onboarding. Scott [0:23:38]: So what we decided to do is if we made an acquisition or new employee anywhere in the system, they didn't get paid their second paycheck until they came to High river to what we called Boot camp. Scott [0:23:49]: And basically, they came in. Scott [0:23:51]: They learned about the computer system. Scott [0:23:53]: They learned about their benefits and all of those kinds of things, and they heard the story of our company and what who we were what our principles were and I'll get to that in a second. Scott [0:24:04]: And what we were trying to accomplish and how it related back to them. Scott [0:24:10]: It was something that you can either allow your culture to be dictated by the office cy or you can be authentic and forthright about it and choose to tell that story yourself, take the time. Scott [0:24:25]: So it was a big commitment for me as we were growing the company, and I was all over the country and doing lots of different things. Scott [0:24:33]: But I I missed. Scott [0:24:35]: I think out of other fifteen years we ran it. Scott [0:24:38]: I probably missed a handful of boot camps, and they ran every second week. Scott [0:24:44]: In the end because we were hiring lots of people, you know, turnover fresh employees plus new acquisitions. Scott [0:24:51]: The other thing that was really, really important was guiding principles, and they had to be real. Scott [0:24:58]: It wasn't just some thing that an advertising agency dreamt up for us. Scott [0:25:02]: We had real principles that were designed around the people we admired the most in the company. Scott [0:25:09]: We did it when we were about fifty employees, and did it because I realized I wasn't gonna be hiring everybody, and I probably wasn't gonna get to know everybody as the company grew. Scott [0:25:21]: And so we we went through an exercise led by a my mentor and coach for and har from the Us around developing guiding principles, and it was a simple exercise. Scott [0:25:33]: Think of the five best people in the company. Scott [0:25:36]: What are their attributes? Scott [0:25:38]: And so we did this little little group of us, You know, and we we all had a lot of doubles and triples where we picked the same person. Scott [0:25:45]: We talked about those people, and we put their attributes on a whiteboard, and then we grouped them around so that we came up with through their attributes, we could see what their values were, and it was around truthful and fairness, you know, good advocate truthful being people that were obsessed with with accuracy. Scott [0:26:06]: Because in our business, that's really important. Scott [0:26:09]: The data that gets exchanged between the customer and the insurance company, it's critical that that be accurate. Scott [0:26:15]: And that's our job. Scott [0:26:16]: And so people that were obsessed with accuracy were people we really admired. Scott [0:26:20]: There were other elements of that, telling it like it is, you know, being forthright. Scott [0:26:25]: Right? Scott [0:26:25]: That was all kind of in truthful. Scott [0:26:27]: It's a passion for the truth. Scott [0:26:29]: And then we had fairness, which was the advocacy piece around claims, and also making sure that both the insurance company and the customer got treated fairly in the transaction because there's lots of moments when you can lever something and make it not fair for one side or the other. Scott [0:26:47]: And then value was just about... Scott [0:26:49]: We need to do stuff that matters in, and you know, it drove me crazy about the business when I first came in that it seemed like there was... Scott [0:26:58]: Everybody put their value on the idea of getting the bill out quickly. Scott [0:27:02]: That was kind of it. Scott [0:27:03]: Yeah. Scott [0:27:03]: You know, We're we're we're... Scott [0:27:05]: We always keep the paperwork up. Scott [0:27:06]: Right? Scott [0:27:06]: Well, how is that valuable to a customer. Scott [0:27:09]: And so we, you know, we kinda said, we gotta we gotta remember. Scott [0:27:13]: Nobody owes us a living, and and it's gotta be really valuable at the end of the day, and we gotta think about that and and always try and figure out how we can add value. Scott [0:27:22]: And then loyalty because small town people that is just the most important thing. Scott [0:27:28]: So when we had people come to Boot camp. Scott [0:27:31]: We talked through these things. Scott [0:27:32]: They saw themselves. Scott [0:27:33]: And if they didn't see themselves, they left quickly. Scott [0:27:36]: So we we developed this culture that attracted people like us, and repelled people that weren't like us. Scott [0:27:43]: They just weren't comfortable hanging around in us... Scott [0:27:46]: In that kind of a culture. Scott [0:27:48]: That is really, really important. Scott [0:27:50]: And we had it. Scott [0:27:52]: I've been out of the company for ten years now. Scott [0:27:54]: I get lots of people talking to being about boy those were wonderful days and they're still kind of... Scott [0:27:59]: There's that feeling residual feeling even though it's a massive company now well over a billion dollars of sales and couple thousand employees, but there's still that kind of and lots of metro people that are different now. Scott [0:28:12]: I mean, it's Metropolitan and people, the values are a little bit different, but it's still... Scott [0:28:17]: It hasn't changed. Scott [0:28:17]: Not a word of it has changed from from those days. Callan [0:28:22]: You really had to put in processes in... Callan [0:28:26]: Here's how we operate, which is where you're getting into the rebranding of the local stores when you're getting into the actual operations, the systems that they're they're operating on, the way you're tracking things, and and then I'm also hearing about how you system ties, the vision, the vision, the values, Ver, who wrote... Callan [0:28:48]: Who you mentioned wrote scaling up. Callan [0:28:50]: The lot it allow the Rockefeller habits, which I think is a great system and creating that system to make sure everyone is bought, and I think you hit on one of my personal favorite things is... Callan [0:29:01]: And this goes for anything. Callan [0:29:03]: This goes from pull... Callan [0:29:04]: I my opinion goes from employees. Callan [0:29:05]: This comes for the customers you're trying to get in the messaging from your website, how you talk everything else is going to attract as much as it's going to repel, and that's not a bad thing. Callan [0:29:15]: That's a that's a good thing. Callan [0:29:17]: Did I capture that correctly? Callan [0:29:18]: Is that is that what I'm hearing? Scott [0:29:19]: Goes Yeah. Scott [0:29:20]: I think so. Scott [0:29:20]: You know? Scott [0:29:21]: We had lots of other, you know, things that I think we did we did well. Scott [0:29:27]: We focused on a single number. Scott [0:29:30]: So all of our branches we ran separate P and Ls for every branch. Scott [0:29:34]: Separate customer data for every branch. Scott [0:29:37]: So we had what we called a critical number, again and har thing. Scott [0:29:42]: What's the most important number you could measure it hourly if you needed to that is a predictor of whether your business is growing or not or if it's being successful, the health of the business. Scott [0:29:52]: And for us, it was simply policy count. Scott [0:29:55]: How many policies do we have in force today. Scott [0:29:59]: And so every one of our our branch leaders could dial that number up, intra day if they wanted, but every day, they could look and see. Scott [0:30:09]: And... Scott [0:30:09]: But every Monday, we did it centrally, and we put it out as what was called the flash report. Scott [0:30:16]: Oh, man. Scott [0:30:17]: How are my number's gonna look and and did I grow from last week, did I not. Scott [0:30:21]: And doing it weekly was important because there's always an excuse. Scott [0:30:25]: Well, we lost this customer. Scott [0:30:27]: We didn't get this one put in or whatever, you know, the the system, Susie was away, and she didn't do her a renewal. Scott [0:30:34]: So, you know, But over time, it told you everything you needed to know about each individual branch as well as the collective. Scott [0:30:41]: And I watched that number. Scott [0:30:44]: Everybody in the system wash that number. Scott [0:30:46]: It was the only number. Scott [0:30:47]: One number was great. Scott [0:30:49]: So that was really important. Scott [0:30:53]: Having a one page plan every branch had a one at the rockefeller habits, The one page plan, what are the top five things I gotta get done this year to move the needle on the growth and development of the business. Scott [0:31:08]: My business. Scott [0:31:09]: We also paid branch managers very well. Scott [0:31:12]: You know, they were... Scott [0:31:13]: Most of the people, eighty five percent of our branch managers were women, and most of them, it was the second job in the household when they started. Scott [0:31:22]: And by the end of it, I dare say most of them were making more money than their spouses. Scott [0:31:28]: And we tied it to profitability, and we tied it, we gave them actually a a long term incentive based on the growth of their office over time so that they got a little bit of a market. Scott [0:31:42]: Look at the value market value of their office on a stand basis. Scott [0:31:46]: So it's almost like they became many owners. Scott [0:31:48]: And at the... Scott [0:31:50]: And their retirement that was paid out in shares in Western. Scott [0:31:54]: So there was there was a plan where a number of branch managers got quite wealthy as a result of doing great job. Scott [0:32:03]: And that was That was a big piece. Scott [0:32:07]: The whole financial discipline and how simple it was, and it was consistent. Scott [0:32:11]: You knew what you needed to do. Scott [0:32:14]: You needed to manage your office well and you needed to grow the business profit. Scott [0:32:18]: And all of those things were... Scott [0:32:21]: We made them as simple as we possibly could. Scott [0:32:24]: We reinforced them with regular meetings, lots of team building, this culture that we were building that everybody felt comfortable in. Scott [0:32:32]: That to me, when all that was was going on in the, in the, you know, late nineties and through the odds through the to ten to probably twenty eight, twenty o eight, Man, it was... Scott [0:32:47]: I left out a bed every morning. Scott [0:32:49]: I just couldn't wait to get to the office couldn't wait to to confront the challenges. Scott [0:32:54]: It was was really, really magical off was privilege. Callan [0:32:59]: What was it about that time specifically over any other time that made you feel that way personally. Scott [0:33:08]: Well, it really was just... Scott [0:33:10]: I love the people. Scott [0:33:11]: I love the people. Scott [0:33:12]: In all those communities, I had seen them, you know, most of them develop from being the second banana in the in the office to you know, a charismatic backs slapping rotary club going guy, And here they developed and blossom into these proficient managers, some of which were great salespeople. Scott [0:33:35]: Others were great managers sales salespeople. Scott [0:33:38]: And I know that and I still hear from them. Scott [0:33:43]: You know, a lot of them are retiring, and it just... Scott [0:33:47]: That was it. Scott [0:33:48]: It was... Scott [0:33:48]: I really felt like I was I was the captain of a very very happy ship of people. Callan [0:33:57]: When you look back at the different stages of the business, and you look at your role as the leader personally, Can you think about... Callan [0:34:09]: Or, right... Callan [0:34:10]: Remember, what were some of those things that as you grew and hit these different stage gates that you had to stop doing? Scott [0:34:19]: Lots. Scott [0:34:19]: I think I had... Scott [0:34:21]: I transformed myself. Scott [0:34:23]: A number of times. Scott [0:34:25]: And again, it was it was made evident to me by ver har, these valleys of death where you, you know, you you have to realize that when you have a five person business one person business, and you get to five people, you gotta do it differently, then you do at twenty, then you do it fifty, then you do it a hundred that you do it five hundred. Scott [0:34:48]: And there were those moments when I had to stop doing stuff And early on, probably the biggest one and the smartest one I ever, moment was when I realized that we had to figure out how to to set the culture, set it through principles, say, this is who we are and this is who we wanna be going forward, and it was around that fifty person spot where I just knew. Scott [0:35:17]: My was gonna meet everybody, I think we're all gonna get to know me I wasn't gonna get to know their families and all that kind of stuff. Scott [0:35:24]: And so we had to figure that out, and it was an obsession for a while, and then it then we got it system ties. Scott [0:35:32]: But that was probably the biggest change where I became the brand. Scott [0:35:37]: I dressed in logo wear. Scott [0:35:39]: Whenever I went anywhere, we got you know, we did the the employee convention, we did the boot camp. Scott [0:35:46]: We eventually got to the point where we had our own Tv studio, and we did satellite broadcast whenever there was a big issue that was coming up or something happened. Scott [0:35:57]: We figured out the culture and that was... Scott [0:36:00]: That happened at fifty people, and then system ties so that when we got to a couple of hundred we had to change the system to make sure it was all around that culture piece. Scott [0:36:11]: Acquisitions, you know, I worked really hard to stay involved in that. Scott [0:36:17]: And the more we grew, the more people wanted to meet the man. Scott [0:36:21]: They wanted to meet me, even if So I was the closer that came in. Scott [0:36:26]: There were very few deals that were done where... Scott [0:36:30]: And then and I had a great guy who Tom Du, who was our first acquisition in Saskatchewan. Scott [0:36:36]: He was a well known guy in the industry. Scott [0:36:39]: We also had a lot of other high profile people that we had acquired that were well known by others in the brokerage business. Scott [0:36:47]: They helped to surface acquisition opportunities set the table so that I could go in very effectively and get them closed. Scott [0:36:55]: That was system attached as well from the days of me just driving around on my truck, spending lots and lots of time on highways and coffee shops and or motel, etcetera. Scott [0:37:07]: So there were a number of those things that we did consciously and unconsciously to get through those valleys of death, and it got harder as we got bigger a big organization is a different animal. Scott [0:37:20]: It's harder to keep the culture. Scott [0:37:22]: It's harder to... Scott [0:37:24]: You know, politics starts to come in. Scott [0:37:27]: You've got, you know, you've got a whole bunch of executives. Scott [0:37:29]: Executive officers and, you know, they've all got different ideas, etcetera. Scott [0:37:35]: So you spend a lot more time in meetings trying to hire and everybody out, keep them on the... Scott [0:37:40]: It became harder to keep the company looking and feeling the same as we got bigger, it's natural. Scott [0:37:45]: And it came to the point actually, when we got to about eleven hundred people, thousand people where I started saying to the board, I don't think I I don't think I'm the right guy anymore. Scott [0:37:56]: So we gotta start thinking about who's next to lead the company because, it's a different type of person, and... Scott [0:38:04]: And I've remade myself enough times to know that I'm not the right person long term for this. Scott [0:38:10]: But it was always in my mind because as Vernon said, he had a little graphic that said, ninety nine percent of businesses in in America had less than three employees, and point zero zero zero nine percent of companies ever got beyond five hundred people. Scott [0:38:32]: And there were only a micro percentage that were above a thousand. Scott [0:38:37]: And so you knew that you were in pretty verified error, and it it was gonna take different talents. Scott [0:38:44]: Just was Callan [0:38:45]: you couldn't stay out of the business world old. Callan [0:38:48]: You started a western investment company. Callan [0:38:51]: Talk us a little bit about that. Callan [0:38:53]: You know, I mean, I'm curious, what was it that just drove the itch to get back in. Scott [0:38:58]: Well, a couple of things. Scott [0:38:59]: I guess, I spent a few years in the senate. Scott [0:39:01]: Just focused on the senate and also, you know, on my kind of slow transition out of Western financial group. Scott [0:39:09]: And there was... Scott [0:39:12]: I had way too much time on my hands. Scott [0:39:13]: Frankly. Scott [0:39:14]: And I also... Scott [0:39:16]: I really missed being able to, drive something. Scott [0:39:20]: And you find in politics in particularly in national government that things move slowly. Scott [0:39:27]: And if you're not the prime minister, you can't snap your fingers and get things done. Scott [0:39:33]: And so I really found that that was... Scott [0:39:36]: I was having difficulty you saying this is how it ends for me. Scott [0:39:40]: I I don't feel right. Scott [0:39:42]: And so I gathered up some of the people that had been great mentors at Western Financial Group and just said, I'd like to do something in private equity maybe in the insurance business, but not necessarily. Scott [0:39:56]: And, I'd like to go back and do another junior capital pool style thing with two hundred of our best friends and and we throw a little bit of money in and let's see where we can take it. Scott [0:40:07]: And so that's what I did in twenty sixteen after three years in senate. Scott [0:40:13]: And we just slowly built that up, made five different acquisitions over the course of about three years. Scott [0:40:20]: And found a real gem in the insurance business fortress insurance that was actually just a little captive of of some budget rent car franchisees and they just had this insurance company for their sole purposes. Scott [0:40:33]: And they were investors in Western through friends of friends. Scott [0:40:37]: And they said, hey, could you make something out of this little insurance company and kinda looked at wow. Scott [0:40:43]: This got everything? Scott [0:40:43]: Yeah. Scott [0:40:44]: Let's see what we can do. Scott [0:40:45]: So we put some time into fortress and put some money in and and it started to grow. Scott [0:40:51]: And so we attracted a a a brilliant guy, Paul Rev vet from who was president of Fairfax financial. Scott [0:41:00]: Who had stepped out of the industry. Scott [0:41:02]: Kinda like me. Scott [0:41:03]: Thought it was time to to do something else and then realized he really missed the business. Scott [0:41:08]: And so he came he came to to us and said, hey. Scott [0:41:11]: I like what you're doing a fortress. Scott [0:41:12]: I think there's an opportunity to grow something really big. Scott [0:41:16]: What do you think? Scott [0:41:17]: Man, let's let's get together. Scott [0:41:20]: And so we we have now are are now, I believe on our way. Scott [0:41:26]: I'm on my way to helping to build my second billion dollar company. Scott [0:41:30]: This is a really exciting little venture. Scott [0:41:33]: And I'm looking forward to the next ten years to see how far we can take it and working with Paul, who... Scott [0:41:40]: As I say, is brilliant, great leader excellent capital all and it really on a straightforward guy. Callan [0:41:48]: And the last question I have for you is then if we're sitting here in ten years time, everything goes to plan, What are you doing? Callan [0:41:55]: Where's the business at? Callan [0:41:56]: What are you doing? Scott [0:41:57]: Well, I really would like to see Western investment company with half a dozen specialty insurers that are successful, not only in Canada, but potentially venturing further afield That's really what I want where I think Western investment company can be successful is not trying to compete with intact. Scott [0:42:17]: But actually looking at those those niches that have become wider because of consolidation of insurers. Scott [0:42:23]: There's, you know, there's some big, lumpy specialty insurance lines that, where there's opportunities for growth for experts that have disappeared from the landscape to become expert again and and be really profitable in the long run. Scott [0:42:40]: So I'd I'd like to see a little constellation of specialty insurance companies under one umbrella. Scott [0:42:46]: And if we can develop that over the next ten years, be very, very happy and I think I think shareholders will be very happy as well. Callan [0:42:55]: Well, I'm excited to to follow along and and to watch and and just wanna say thanks for coming on today. Callan [0:43:01]: It was great here in your story and all the lessons learned, and I really appreciate it. Scott [0:43:06]: You bet.