Latest / The Turn: Blue Collar to Billions / What does it take for a family member to actually earn the top job?

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What does it take for a family member to actually earn the top job? · The Turn: Blue Collar to Billions

• 0:02
  SPEAKER_00: Welcome back to The Turn.
• 0:04
  SPEAKER_00: I'm Corey Mitchell of Iconic Founders.
• 0:06
  SPEAKER_00: The Turn is where blue-collar founders talk about the businesses they've built, the value they've created, and what comes next after they sell.
• 0:15
  SPEAKER_01: I think more times than not, family business takes for granted the family aspect of the business.
• 0:22
  SPEAKER_01: Give you a heads up.
• 0:24
  SPEAKER_01: If you don't get them out, it becomes a problem.
• 0:28
  SPEAKER_00: Welcome to part two of my conversation with Eric Guggeny.
• 0:32
  SPEAKER_00: It's really interesting because he talks about some of the lessons of family businesses and also what can make family businesses so hard.
• 0:42
  SPEAKER_00: We have so many listeners that come from a family company.
• 0:46
  SPEAKER_00: I myself grew up and was in a family business my whole life.
• 0:50
  SPEAKER_00: Not everyone in the family is cut out to run a company.
• 0:54
  SPEAKER_00: And sometimes the family in family business, well, it doesn't survive through running it together.
• 1:02
  SPEAKER_00: I want to go back in time now and start talking about this.
• 1:05
  SPEAKER_00: So, okay, you you you do this forced buyout of your parents.
• 1:12
  SPEAKER_00: What happens at that, you know, at that moment with your relationship with your parents?
• 1:18
  SPEAKER_01: We didn't speak for a very, very, very long time, extremely long time.
• 1:22
  SPEAKER_01: Um gosh, probably six years.
• 1:27
  SPEAKER_01: You know, COVID kind of helped solidify that because everyone's already pissed off at each other.
• 1:33
  SPEAKER_01: And now you move into a non-communicado.
• 1:36
  SPEAKER_01: But then it was also like, this is awesome.
• 1:38
  SPEAKER_01: Now we don't have to deal with each other.
• 1:40
  SPEAKER_01: And so there was a sense of relief in it, it sounds like.
• 1:43
  SPEAKER_01: Oh absolutely.
• 1:44
  SPEAKER_01: But yet more importantly, and if my dad was here today, he would tell you this.
• 1:48
  SPEAKER_01: You know, when my dad died uh uh almost two years ago, we ended up ended up being great.
• 1:54
  SPEAKER_01: And we both we had about a year and a half together of just what the hell were we doing?
• 2:00
  SPEAKER_01: What what in the absolute hell were we doing?
• 2:03
  SPEAKER_01: This matters not.
• 2:05
  SPEAKER_01: And it's like, yeah, dad, I've been trying to tell you that forever.
• 2:07
  SPEAKER_01: And we had a great talk one time.
• 2:09
  SPEAKER_01: He goes, it was my own pride of I taught you all this stuff, I gave you all the opportunity, I wanted you to have every single opportunity, and then you outdid me, and I was jealous.
• 2:21
  SPEAKER_01: And my response was, I outdid you because I thought you'd be proud of me.
• 2:25
  SPEAKER_01: And yeah, you got me the best golf clubs, and I'm a great golfer.
• 2:29
  SPEAKER_01: Now you're pissed off at it.
• 2:30
  SPEAKER_01: It's like I got all the golf lessons.
• 2:32
  SPEAKER_01: I don't play golf, but but that was my analogy was you gave me all the goods.
• 2:36
  SPEAKER_01: I did exactly what you wanted.
• 2:37
  SPEAKER_01: You set unrealistic targets, I surpassed them.
• 2:40
  SPEAKER_01: In the meantime, I enjoyed doing it.
• 2:42
  SPEAKER_01: And I saw and I picked up your vision, and then I put it on top of something bigger than you could see because that was where you were limited to.
• 2:49
  SPEAKER_01: And now you're pissed at me.
• 2:51
  SPEAKER_01: And everybody looks to the air apparent who's now the president or the executive vice president as the role of authority, because a lot of the founders take that step, like my dad, and they do go to the golf course.
• 3:02
  SPEAKER_01: They do start taking the time off.
• 3:04
  SPEAKER_01: And next thing they know, they've disconnected from the business, even though stock-wise, they may be the majority shareholder.
• 3:10
  SPEAKER_01: Well, that leads into this.
• 3:12
  SPEAKER_01: I don't know what you're doing.
• 3:13
  SPEAKER_01: I see this going like this.
• 3:14
  SPEAKER_01: I get involved every once in a while.
• 3:15
  SPEAKER_01: I see it in the red, I'm freaking out.
• 3:17
  SPEAKER_01: I'm seeing it in the black, I'm freaking out, and I feel like I have no control, even though I haven't been in the office in six months.
• 3:22
  SPEAKER_01: And that's kind of what happened in our case.
• 3:25
  SPEAKER_01: Once it was all said and done, all of a sudden, doctor's like, hey, you're you're gonna die.
• 3:30
  SPEAKER_01: Like, is what it is.
• 3:32
  SPEAKER_01: I mean, we are gonna die at some point, but you're really, really gonna die.
• 3:35
  SPEAKER_01: And then it was, you know, like the Tim McGross song.
• 3:38
  SPEAKER_01: It's like, oh my gosh, oh my gosh.
• 3:40
  SPEAKER_01: But in that time period, because he was gone, he actually got to go do what he wanted to do.
• 3:45
  SPEAKER_01: My dad became a professor at AM and did all these academic things that he's really good at.
• 3:53
  SPEAKER_01: And it's like, man, I wish I had gone into academia 10 years ago.
• 3:58
  SPEAKER_01: Because then he started seeing his value to other people with his experience, even though he thought his value was only in the company.
• 4:07
  SPEAKER_01: And it's really sad to watch these family businesses when dad or mom or cousin could go do something else that they truly, really love.
• 4:15
  SPEAKER_01: Except they have to let go of those strings or let go of that pride or let go of that something that's really hard to do, but you give up this to gain this.
• 4:25
  SPEAKER_01: And that's also one of the things I like to talk about is just because you have a kid in the family business doesn't mean he's the best CFO.
• 4:33
  SPEAKER_01: Just because you have a kid in the business doesn't mean he's the best welder.
• 4:35
  SPEAKER_01: You know what?
• 4:36
  SPEAKER_01: You want them to all be executives.
• 4:37
  SPEAKER_01: They might be the best ditch operator, backhoe guy we got.
• 4:41
  SPEAKER_01: But that's what Tommy wants to do.
• 4:44
  SPEAKER_01: Tommy's like, I don't want to put a tie on.
• 4:46
  SPEAKER_01: I don't want to look at bound sheets.
• 4:48
  SPEAKER_01: I enjoyed, you know, at a pipeline company running the backhoe.
• 4:52
  SPEAKER_01: I want to run five backhoe crews.
• 4:53
  SPEAKER_01: And it's really hard sometimes for parents because they want their kids to be the owner, the CEO, the CFO, the executive.
• 4:59
  SPEAKER_01: And sister might have been a good one.
• 5:02
  SPEAKER_01: Brother may not.
• 5:03
  SPEAKER_00: Yeah.
• 5:03
  SPEAKER_00: Another brother may not want anything to do with it.
• 5:05
  SPEAKER_00: One of the coolest things that we've built at Iconic Founders is this amazing board of advisors.
• 5:11
  SPEAKER_00: We've got several folks that they look a lot like me.
• 5:16
  SPEAKER_00: They were in a business for many, many years.
• 5:19
  SPEAKER_00: They grew it, they acquired companies, they scaled, they put systems in place, and they sold.
• 5:26
  SPEAKER_00: And so those folks today work with us and all of our clients to be coaches and to help put value creation programs in place so that you can help make your business better, but also make it more valuable.
• 5:40
  SPEAKER_00: And so our value creation program is, I think, unique in this country.
• 5:46
  SPEAKER_00: And so, if we can ever help you by doing a consultation call, help you think through what your business could look like with the support of a coach, reach out to us at iconifounders.com or send us an email at info at iconic founders.com and ask us about the Board of Advisors program.
• 6:07
  SPEAKER_00: Let's dive into some of these rules, right?
• 6:09
  SPEAKER_00: You got these rules about family businesses, and this is something you spent a ton of time.
• 6:13
  SPEAKER_00: You went spent time at Harvard.
• 6:15
  SPEAKER_00: I think you studied some family business dynamics there as well.
• 6:18
  SPEAKER_00: So, like, yeah, help us think this through because it's such a common issue.
• 6:22
  SPEAKER_00: And if you've got lessons that we can all learn from it, we'd love to learn them.
• 6:27
  SPEAKER_01: I think lesson number one is family is not always the best option for a business in the future.
• 6:37
  SPEAKER_01: When a business is at a certain phase in a certain future, it needs to look at all players in the market and hire the best person for the best position to get to the vision that the founders or the owners want.
• 6:53
  SPEAKER_01: And sometimes that's not family.
• 6:56
  SPEAKER_01: So at some point, when it's time to make a transition or take chips off the table, too many families don't put the family member against best and qualified third parties and say, may the best person win.
• 7:09
  SPEAKER_01: And that has to be number one.
• 7:11
  SPEAKER_01: The company needs the best people at the helm of the ship for the for the transition phases.
• 7:17
  SPEAKER_01: Whether the transition phases, like I said, cashing out, growing, scaling, private equity, banking, whatever it may be, you need the best person.
• 7:26
  SPEAKER_01: Um, the second thing that I think most, and these are not in order, these are just things that have to happen, is not everybody was built for the company.
• 7:34
  SPEAKER_01: Like my kids, I've got kids in college, they don't have a clue what they want to do.
• 7:38
  SPEAKER_01: Not a clue.
• 7:39
  SPEAKER_01: I'm 50 years old.
• 7:40
  SPEAKER_01: I'm on my second round of figuring out what I want to do.
• 7:43
  SPEAKER_01: And you know, you've been there, you're probably in the same spot.
• 7:45
  SPEAKER_01: You're here, you started this, you started, you know, iconic.
• 7:47
  SPEAKER_01: Like, what do I want to do?
• 7:48
  SPEAKER_01: And and I think that also happens at 70.
• 7:51
  SPEAKER_01: I think there's three phases.
• 7:52
  SPEAKER_01: And family businesses need to recognize there's three phases in maturation of an adult.
• 7:57
  SPEAKER_01: It's the child may want to be in the business for a while, got a taste of that industry, doesn't like it, or saw something that else that was shining in the distance, said, I really want to go do that.
• 8:08
  SPEAKER_01: And I think that too many times the businesses aren't set up to allow them to leave or transition out.
• 8:16
  SPEAKER_01: One thing we did a whole lot, we we did a whole lot of testing, and we still do, of whether it's Myers Briggs, whether it's, you know, whatever, to figure out are we doing what we want to do?
• 8:25
  SPEAKER_01: You know, and if we're not doing what we want to do, let's bring somebody in, whether it's in the company or outside.
• 8:31
  SPEAKER_01: And every so many years, have an evaluation.
• 8:34
  SPEAKER_01: If your kid likes ranching and you're in the asphalt business, go find a way, figure it out, help them get a job, whatever it is.
• 8:41
  SPEAKER_01: Get them out.
• 8:42
  SPEAKER_01: Because most people, if you don't get them out, it becomes a problem.
• 8:46
  SPEAKER_01: So those are kind of my first two.
• 8:48
  SPEAKER_01: Then also, I think it's extremely important that family businesses have a very specific, drawn-out scale of progression from the lowest part of that job, almost like an org chart.
• 9:01
  SPEAKER_01: And we use this in our company, I still do.
• 9:03
  SPEAKER_01: My new hires know exactly what it takes to become the CEO of this company.
• 9:07
  SPEAKER_00: I think one of the mistakes that businesses make today is they think about their company as giving people jobs.
• 9:15
  SPEAKER_00: And one of the things that Eric talks about is actually building out a career path.
• 9:22
  SPEAKER_00: And so he talks about this idea that even the lowest employee in your organization should have a clear roadmap to where they can end up.
• 9:31
  SPEAKER_00: There should be a clear roadmap to how they're going to progress all the way up to the CEO level.
• 9:36
  SPEAKER_00: And what that does for people is it makes them feel like they're part of something and not just taking a job.
• 9:42
  SPEAKER_00: Because a job is something that, you know, you'll leave tomorrow.
• 9:46
  SPEAKER_00: But a career, that's something you take more seriously.
• 9:49
  SPEAKER_00: And if you're building out a family business and a family culture or any kind of business, you want people to think about it as a place where they can work for a long time.
• 9:59
  SPEAKER_00: And that's going to ultimately build value.
• 10:01
  SPEAKER_00: It's going to reduce turnover.
• 10:04
  SPEAKER_00: And that makes it a much better business.
• 10:07
  SPEAKER_01: In the family, it needs to be the exact same way.
• 10:09
  SPEAKER_01: I've always had the idea and practice of the family member should be unanimously voted by the employees that they work for to move up.
• 10:20
  SPEAKER_01: It's got to be unanimous.
• 10:22
  SPEAKER_01: And that typically means that family member has worked twice as hard.
• 10:25
  SPEAKER_01: I told my stepson the other day, I said, hey, if you want to work for me, you got to work twice as hard, get paid half as much, and everybody hates you.
• 10:34
  SPEAKER_01: But so many times I've seen it, you know, I and I did tell my stepson this as I said, first day of work uh on the cruise, you're probably gonna get punched.
• 10:42
  SPEAKER_01: Just give you a heads up.
• 10:43
  SPEAKER_01: Just yeah, I'm telling you.
• 10:46
  SPEAKER_01: And then when you do get licked in the mouth, you stand right back up, you fire them, and then you go back on.
• 10:52
  SPEAKER_01: But you are only as great as the lowest guy on this company.
• 10:56
  SPEAKER_00: And that's right, all the way up.
• 10:58
  SPEAKER_01: And too many times, I think people start jumping them too fast.
• 11:01
  SPEAKER_01: They start jumping family members way too fast, as opposed to forcing them with a drawn-out plan, this department, this division, to being the absolute expert in everything.
• 11:12
  SPEAKER_01: And I've always said, with the underlying that they're gonna quit at some point or go to something else.
• 11:17
  SPEAKER_01: So I want them to leave at some point during this because it just sucks.
• 11:21
  SPEAKER_01: It was too hard, it wasn't fun.
• 11:24
  SPEAKER_01: So if they finally get to the top, it's like I got nothing to tell you.
• 11:28
  SPEAKER_01: And that's what my dad's my dad's last words to me.
• 11:30
  SPEAKER_01: He's like, you know, you got to the top, and he goes, I'm proud of you.
• 11:34
  SPEAKER_01: I really got nothing to tell you.
• 11:36
  SPEAKER_01: And I was like, You gonna you gotta have something.
• 11:38
  SPEAKER_01: You're dying.
• 11:39
  SPEAKER_01: You gotta have something.
• 11:40
  SPEAKER_01: He was like, No, he's like, You have proven out, you know, now that now we've had these two years, I'm proud of you.
• 11:46
  SPEAKER_01: I got nothing.
• 11:47
  SPEAKER_01: And that's where you want to be in a family business transition to the point where I got nothing.
• 11:51
  SPEAKER_01: Because what's up happening is when you have nothing, they'll come back to you with a a situation that's probably internal, mental, emotional, probably not with the company, something else, because now you've removed the third person that was a wedge between y'all, and it's just back to the family dynamic.
• 12:09
  SPEAKER_01: But then it's like, hey, man, dad, mom, when you were here at this situation with your kid, which is me, you're now relying on your parents to help you on your next transition as your kids are getting involved in other things in their life, and they don't make a book on that one.
• 12:27
  SPEAKER_00: Any more, any more lessons you want to share?
• 12:31
  SPEAKER_01: Um, you know, uh those are really the the top ones I would say is is because very few people, very few people do that part right.
• 12:42
  SPEAKER_01: All the other stuff that I'm working on goes to this, but you have to get that right.
• 12:48
  SPEAKER_01: Because everything else is not if they don't want to be there, they're not the most qualified, and you don't have a set deal, it's gonna fall apart at some point.
• 12:59
  SPEAKER_00: Eric has these rules.
• 13:01
  SPEAKER_00: He spent a whole bunch of time studying family business dynamics, and of course he lived it himself.
• 13:08
  SPEAKER_00: And one of them I thought was, you know, just dead on.
• 13:12
  SPEAKER_00: So many founders I see, they you know, they sort of force a square peg into a round hole.
• 13:18
  SPEAKER_00: You know, one kid maybe doesn't fit in this role, but he might fit in another.
• 13:24
  SPEAKER_00: One maybe doesn't belong in the business at all.
• 13:28
  SPEAKER_00: And so, really thinking through whether it's really your children who should take over your business, and if so, what seat they should really sit in.
• 13:38
  SPEAKER_00: It really matters.
• 13:39
  SPEAKER_00: Because one of the things Eric says is look, you don't have to pass it on to your kids.
• 13:44
  SPEAKER_00: Sometimes it might just be better to sell, take the capital, invest in your children, and move on.
• 13:51
  SPEAKER_00: But the main thing is you gotta get the right people in the right seats, no matter if they're family or not.
• 14:00
  SPEAKER_00: You know, this this weight, the weight of the family in your life has been very, very powerful.
• 14:06
  SPEAKER_00: What do you do today to try to stop that kind of cycle, right?
• 14:14
  SPEAKER_00: Where you you put unnecessary pressure, you do something similar.
• 14:18
  SPEAKER_00: What thoughts do you have on doing it a little different than maybe you had it um to to lessen the animosity within families?
• 14:30
  SPEAKER_01: So, yep, number one, uh that's why that's why I'm transitioning out of the business.
• 14:35
  SPEAKER_01: That's why the business is gone.
• 14:36
  SPEAKER_01: I have a daughter who's in construction management uh uh architecture at CSU.
• 14:42
  SPEAKER_01: And I said, here's the deal, you're not getting it.
• 14:45
  SPEAKER_01: You're not getting any of this.
• 14:46
  SPEAKER_01: So uh what do you love to do?
• 14:50
  SPEAKER_01: And that's where we're going.
• 14:52
  SPEAKER_01: And I don't believe really in legacy and businesses.
• 14:55
  SPEAKER_01: I believe in transitioning because I don't know a company out there that's doing 30 years ago or today what they did 30 years ago.
• 15:02
  SPEAKER_01: So it's like if one of the things I do is I take lessons from the godfather.
• 15:06
  SPEAKER_01: Uh, don't talk to me about my business, Kate.
• 15:10
  SPEAKER_01: My wife has no idea what I do.
• 15:12
  SPEAKER_01: I walk out of the office, I shut the door, and that's the end of it.
• 15:16
  SPEAKER_01: I'm always available, I'm always working, but I don't, I don't have a customer or a balance sheet that's more important than a conversation about tiddly winks that my daughter has from school today.
• 15:26
  SPEAKER_01: One of my one of my mentors at Harvard, uh Clayton Christensen has a probably one of the best TED Talks ever is how are you gonna measure your life?
• 15:36
  SPEAKER_01: And he wrote, he wrote a very famous book called The Innovator's Dilemma, but changed all of business to this day.
• 15:42
  SPEAKER_01: And I got to come back and study with him.
• 15:44
  SPEAKER_01: And and he said, you know, his thesis was who at Great Fortune 100 companies decide to fail them?
• 15:51
  SPEAKER_01: Well, who at Kodak said we're gonna fail this company?
• 15:55
  SPEAKER_01: And Clayton spent his whole career doing this, and he said, but yet most businesses fall apart through families breaking up.
• 16:03
  SPEAKER_01: He goes, even if they don't work in the business, dad's personal problems affect his job problems, affects his kids' problems, even if they're not in the business.
• 16:11
  SPEAKER_01: So why are we letting the business affect our family?
• 16:17
  SPEAKER_01: And so that I took that real personal.
• 16:19
  SPEAKER_01: I was like, you know what?
• 16:20
  SPEAKER_01: I've seen a lot of businesses fail and the family fail together.
• 16:25
  SPEAKER_01: And I've seen a lot of them be real successful.
• 16:28
  SPEAKER_01: A lot of folks I know who are really successful have very successful home lives.
• 16:30
  SPEAKER_01: And I'm not talking divorced, marriage, that whole that's a whole nother game.
• 16:34
  SPEAKER_01: But it's if you don't have a good family network, because at the end of the day, I believe that and this may be insane.
• 16:43
  SPEAKER_01: I do believe at whole at the end of the day, most families want to help the family out.
• 16:48
  SPEAKER_01: Other than a dynamic situation where you may have had a crappy home life as a whole, most siblings, like you know, to some point until something gets involved.
• 16:56
  SPEAKER_01: And I've seen business get involved more than anything else.
• 17:00
  SPEAKER_01: And and mom and dad bringing home.
• 17:02
  SPEAKER_01: And so that's one of the things that I tried to not do, is I try to bring nothing home.
• 17:06
  SPEAKER_01: They can see it all over you, they know that.
• 17:09
  SPEAKER_01: You know, we're fly fishing and I'm on my 15th call, but then when my kids were younger, that happened a lot.
• 17:15
  SPEAKER_01: We got up at the end of a trip and they're like, Dad, we hardly even saw you.
• 17:19
  SPEAKER_01: And yeah, great that we got to stay at the four seasons.
• 17:22
  SPEAKER_01: That's awesome.
• 17:24
  SPEAKER_01: As opposed to dad, we'd have been, and and my oldest daughter said, I'd have just been just as happy at the ranch if we'd just gone and sat on horses for a couple days, and that would have been us like, ugh, I thought I was providing, I thought I was giving it.
• 17:35
  SPEAKER_00: Yeah.
• 17:36
  SPEAKER_00: Would have been happy at Motel 6 if you were in the pool with her.
• 17:39
  SPEAKER_01: If you're in the pool with me.
• 17:41
  SPEAKER_01: And and that happened.
• 17:42
  SPEAKER_01: I mean, that that happened to me.
• 17:43
  SPEAKER_01: Like, you know, we're at Disney World, and Dad, we'd have been happier sitting in the pool in the hotel than you know, you having to go to meeting, meeting, meeting, meeting, meeting.
• 17:50
  SPEAKER_01: And, you know, I I I think more times not, family business and takes for granted the family aspect of the business.
• 17:58
  SPEAKER_00: Yeah.
• 17:59
  SPEAKER_00: Thanks for joining us on the turn.
• 18:02
  SPEAKER_00: Eric's episode reminds us you can't forget about the family and family business.
• 18:08
  SPEAKER_00: And also, why are we all working so hard?
• 18:12
  SPEAKER_00: We have to remember what's truly important in our lives.
• 18:15
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• 18:20
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• 18:24
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• 18:31
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• 18:37
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• 18:42
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