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Full Buildings, Happy Customers, Passionate Teams · The Expert Method

• speaker-0: Yeah, I stole the McDonald's model and that is the definition of stress on a system. Most companies don't fail because of a lack of opportunity. They fail from operational inconsistency. They don't fail from a lack of customers. They fail from sending away customer discipline. speaker-1: How do you create somebody who's passionate, who really cares, really, you know, gives a sh speaker-0: We all have one job. They know what to do when they see this. Happy customers and passionate team members. speaker-1: No matter what business you're in, your number one objective is to create happy customers. So how do you do that? At some point, the answer comes back to the people who are doing the work. You have to build a team that cares enough to serve the customer well. And that usually starts with how the leader treats, trains, and communicates with the team. So with that, I'm excited to be joined by Steve Harmon. Steve is the president of Spartan Logistics and the Harman Group, and he has spent decades building companies across logistics, real estate, construction. property management and restaurants. In our conversation, we discuss why happy customers come from passionate team members, what leaders have to do to build that kind of team, and how the right culture gives the business the ability to change and pivot when the old model stops working. If you get value from this conversation, be sure to subscribe and share it with a friend. And now here is my conversation with Steve Harman. Steve, thank you so much for being here. speaker-0: Great to be here. Thank you, Ian. speaker-1: Absolutely. So before we get into what Spartan became, I'd love to start with what the company looked like when you first joined. So what was the business at that point when you stepped in, you joined the company, and what role did you find yourself stepping into? speaker-0: It's a great question. What I found myself walking into the first time I walked in, the business was less than 30 days old. I was still in college. And my dad woke me up on the Thursday after Thanksgiving when I planned on on the Friday after Thanksgiving when I planned on sleeping until noon and said, Come on, you're get up, you're going to work with me. So he drags me into this work that I had no idea even existed, because I'd been away at college in ⁓ Washington, DC. This was in Columbus, Ohio. Takes me to this warehouse, sets me down at the office, and is like, okay, answer the phone. I I gotta go do I gotta go to some meetings. And I'm like, what is the well, okay, just one question. What do I say when it rings? What's the name of the company? He never even told me the name of the company. And I don't know if you've ever worked the Friday after Thanksgiving before at a business. But here's the one thing I learned that day is that the phone does not ring the Friday after Thanksgiving. So I got bored and started figuring out what was going on. Turned on the computer, went out in the warehouse and started talking to the guys. He had started from scratch a what is today called a third-party logistics company. ⁓ what at the time was just called warehousing, you know, outsourced warehousing. And he had one client and one warehouse. That he leased and hired two guys that were temps and one truck driver. So the entire business was him and three employees. And I was like started talking to guys in the warehouse, and I'm like, okay, what do you do? How do you do this? Tell me about this. And I am literally horrified, and I mean horrified, this is the late 80s to discover that the was running this whole company and billing and accountability for inventory. By keeping the inventory track of everything on note cards. Literally paper note cards. There was nothing so offensive to my 1980s computer-oriented brain. So I start clicking around on the computer and find a database program and start building a database. And I'm like, okay, they've only been in business 30 days. I can enter all the receipts, enter all the shipments, and start figuring out how to generate a report that tells me. Shipments minus receipts is inventory balance. Let's track it by receipt date and lot code and and obviously customer, so I can generate sort reports by all that. So by the time he comes back about two o'clock, I'm like, he's like, what are you doing? I'm like, sit down. I have questions. Let's talk about reporting and billing. And I thought this was fairly normal for a 19, 20 year old to just sit down and build a whole back end of a business in a morning. Apparently that was not normal. That was not normal at all. People just don't do that. By the time I went back to college, I had computerized his whole inventory. When I came back at Christmas, I worked on the whole putting in a whole accounting system and billing and hiring and training someone to do all those the sort of customer service back end. So that's how I got my start in the business and When I graduated college, I went to work for one of the big accounting shops, ⁓ the DC office of Arthur Anderson. And they taught me, they sent me to work for real estate developers and banks, which could not have asked for better experience, a better place to work, or smarter people. They were 100% invested in my training. I was a hundred percent sold out to learn stuff and add value. So when you walk into a real estate developer and they have 20, 30 years experience in leasing and operations and financing and construction, and they explain to you everything they do. It's an amazing experience. So when I returned to the company full the family business full time in nineteen ninety six, thirty years ago, next week, I'm told. So I'm pretty pretty excited about that. And and which obviously I must have started when I was twelve because I can't possibly be old enough for that to be the case. But when I returned, I returned as chief financial officer. speaker-1: Yeah. speaker-0: Company had about forty employees and three locations, two in Columbus, Ohio, one in Toledo, Ohio, operated about ten trucks. So, ⁓ and was doing about four million in revenues at the time in nineteen ninety-six. speaker-1: Amazing. So when did you and I mean, working for real estate developers and bankers, there's no group of people or industry that's gonna be more disciplined in the numbers and having a pulse on the numbers than those two industries. Like I have some brief exposure and experience in working with people in the real estate world. And even you find a solo successful real estate investor, those guys understand the value and the necessity of knowing your numbers. But I mean, if if you get to like a Real estate developer scale, it's even more than that, I can imagine. And the banking industry is literally that's what it's all run on. So incredible experience to take and learn and then apply to any business, that kind of discipline and the numbers. So when you stepped back into Spartan in 1996, you recognized that, hey, the business that we're in and the focus that we have, like you just kind of disagreed. Like you thought maybe there was a better way. So, like, what did you see that? That made you think that. speaker-0: I love to say I stole the McDonald's model and realized our real building business was real estate. We've all heard that story. But to be honest, my real realization was third party logistics is a service business. You work your tail off. And if everything goes right, you're able to eke out maybe five percent. You know, when you if you got some kind of customer claim or hiccup or Vacancy, you can very easily be upside down or have even tinier margins than that. It's just a brutal business that you have to be super hands-on every day to eke out a profit. And at the time, there was tons of excess warehouse space. The customers had all the pricing power. Well, my dad and I looked at each other and I'm like, look, we gotta understand what we're really doing with this business right now is making a job for ourselves. We can make an income and have stuff to do our whole careers, but we're never gonna have asset based wealth that we can sell. We're not building any a company that is ever really going to be sold for a hundred million dollars or something crazy like that. But the guy who gets paid every month, the guy in fact, the guy who gets paid first every month before I get paid by my customers or not, is the landlord. And so I think if we bought warehouses that we were operating, we would have pricing power over our space, and we would have we would amortize down the debt over our careers and have real asset-based wealth to sell as an exit strategy at the end. That was the original thought that led us to move into owning the real estate that we operate. speaker-1: I mean I guess when you say it there, it's just okay, we're gonna shift from renting the real estate that we operate in to owning it. That doesn't sound like that big of a shift. But it doesn't speaker-0: But so many of my peers didn't make this shift. Now again, they made different shifts. They put, you know, money into ⁓ technology and they put money into freight brokerage and they put money into, you know, marketing or new locations. They chose different investments in their companies. But for me and my background, this is where I wanted to put my money. speaker-1: And that was just because this is an asset that is sellable? Or like why was that your decision that this is where you wanted to put your money? speaker-0: Because I understood it. Like I knew that if I did the right things with real estate over a career, I would have an asset that was more valuable and paid for. So that multiplier effect of buying a warehouse for three million dollars, selling it for ten, and you know, only investing, I don't know, say three hundred thousand and paying it down to zero, that math speaks to me. Yeah. That is a consistency of return and certainty of exit strategy and cash flow that that I can sign up. speaker-1: Yeah. So where you're at now with the warehouse buildings that you own, are you operating Spartan out of all of those? Or is it just like you have some that that you own that you just have other tenants in? Like are you purely a real estate play now or are you only buying buildings that you're gonna have Spartan as the tenant? speaker-0: You've got it square on. The answer is yes and yes. Today we own seven million square feet in fourteen states. Of that, we lease about three million to Spartan, of which the operating company, the the three PL. And then they lease another two million square feet from third parties. So they operate, say five million square feet, and I lease another four million square feet, give or take. To third parties. So Spartan is by far my largest tenant, but not a majority of my space, and it's not our only strategy. We bought land and started our own industrial park. Most of that is now leased out to other people. But then I just bought a building because one of Spartan's customers needed more space, and I found a building to buy. Most 3PL would have gone and just leased the space, put the upside of that deal in the landlord's pocket. That's not what we do. speaker-1: Incredible. And ⁓ one of the clients that I had with our marketing agency, they had a real estate syndication and they specialized in buying tier two industrial properties. So I've heard the thesis and the case for industrial real estate for the last six years and I'm completely sold. Like I think it's the the best commercial real estate asset to own. ⁓ obviously you started that process back in ninety-six or early two thousands, so you've been riding that wave. And banging that drum for for a much longer time than they have. But ⁓ speaker-0: And we caught it at the right time too. The banking rules, you know, used to be a lot looser. I could sign a lease with my operating company. The lease value would generate an appraised value that was more than construction cost. The bank had loaned me eighty percent of value, which was a hundred percent of construction. So I got involved in a capital intensive business with no money. speaker-1: Yeah, wow. speaker-0: Incredible. You know, since a whole bunch of banks did a whole bunch of bad things, they they they've they've tightened those rules a lot. But in the nineties, we were able to make a lot of good deals on just our faith in ourselves that we would be able to keep it full and pay the mortgage. speaker-1: Yeah. Incredible. So in that moment when you have that conversation with your with your dad, obviously, you know, you don't just snap your fingers and this starts taking place. So it sounds like you started the operating business as a separate entity that then would buy and own the real estate that Spartan would be a tenant of. And then Spartan was still its own business that you're still growing and scaling today. And then the operating business just became a separate business. It's not that you turned Spartan into an operate like a a real estate company. Right, but you started a separate entity. Okay. speaker-0: we created separate LLCs along the way to hold each piece of real estate. And then in twenty nineteen I got the bright idea to roll all of those L L Cs into an umbrella limited partnership. with a single GP that is really streamlined control, financing, strengthened the balance sheet, and made s long term estate planning much easier because those LPs can be gifted to other family members. speaker-1: Yeah. Okay. So when you're talking about LPs, I recognize that term from the conversations that I would have when I was trying to understand what a real estate syndication was or a real estate fund. So are you operating it as a fund model or a syndication model, or are you just bringing in LPs to be investors into the operating company or how does that work? speaker-0: 30 years ago, when I had no money, I took on outside investors into some of these deals to be able to come up with the equity we needed to get a deal closed. Over the last probably eight years, their number one concern is liquidity and estate planning by the time they get into their late 70s and 80s. So I've spent the last eight to ten years buying out outside partners. And getting to where the real estate portfolio is nearly a hundred percent family owned at this point. speaker-1: Wow. And have you ever sold a property? speaker-0: I have. Yeah, I've sold three properties in the last two years, as a matter of fact. Some of them have been against my will. You know, some of them have been really specialty situations. Like it was a build to suit for a tenant and it was attached to their plant. So there was no way there was no exit strategy other than to sell it to that to that user. So that was baked into the deal from from the front. speaker-1: Yeah, 'cause I know ⁓ a lot of the the real estate guys that I talk to, they pretty much regret every deal that they've ever had to sell. So they don't they typically don't like to sell. speaker-0: In the never sell category, but look, it w the every real estate market evolves over time. You know, if you cornered the market in Youngstown, Ohio in nineteen twenty, you felt really smart. If you sold it before a hundred years went by, you also felt really smart. So there's a time to sell everything ultimately, but replacement costs are super high right now. You know, we used to be able to build a warehouse for 25, 30 bucks a square foot. Now it's a hundred. So rent growth is high. The underlying finance rates are higher now than they've been in the last five years. So there's not much new product coming into the market in most markets. And so holding on, it it gets me even more appreciation and rent growth. speaker-1: Yeah. Absolutely. That makes sense. You strike me as somebody who spends a lot of like I feel like you have really thought through and informed opinions on kind of investment philosophy and investment theses. So obviously you are committed to your thesis. So I guess maybe if we could start by you just kind of laying out your thesis, like your investment thesis, if that's the right term. Term to use. Like, why do you think the assets that you are investing in are the best asset to be buying in based on your goals that you have for your investments? speaker-0: I love investing in class B and C industrial real estate because I know my operating company can get it filled. There's always demand for public warehousing space at some price. Somebody's got some inventory that needs a home, and and if you have space that just has to be covered, then you can find that person and get that space covered. Is that a perfect model? No, but it does mean that the cash flow seldom goes to zero. Vacancy is the biggest challenge of most people in the real estate industry. What we've essentially done is bought long term assets and back them up with short term contracts. When I say that out loud, I acknowledge that sounds like the dumbest investment philosophy ever. But is that really any different than an apartment or a hotel? What am I really doing? I want to make sure the asset is attractive to the users and there's great service to back it up. And the operating company lets me control that. And that drives the value of my real estate company to a large degree as well. So we want to buy, you know, underpriced assets in good markets and operate the heck out of them for our customers. We're also willing to go anywhere our customers ask us to go. I bought a property in Arizona last year for the first time because a customer called me up and said, Hey, the building next to us just came up for sale. Corporate won't give me any money to do to buy it. They want to, you know, they want to put all the money in the inventory and a plan expansion. ⁓ will you buy this building and lease it to us? Ian, I was a hundred percent full on day one. With no lease commissions. Which means I got banks banging at my door to underwrite their credit and and strong credit tenants. So like that would might have been the easiest deal I ever did. From that first phone call to closed and getting rent was ninety days. speaker-1: Wow. speaker-0: I just bought ⁓ last week what I would describe as a class D property in Arkansas. And it needs a new roof, it needs sprinkler upgrades, it needs floors done, it needs the rail brought up to code, it needs new bathrooms installed, and when I got some of the offices, it is a project. speaker-1: Yeah. speaker-0: But we bought it for thirty five bucks a square foot. So we can afford to put fifteen into it and still be at fifty when the replacement cost is a hundred. And we had basically pre commitments, not signed deals, but pre commitments from two customers who needed the space. That once I complete the improvements, we'll carry some vacancy until the improvements are done. But once I complete the improvements, I'll have customers that will move in there and operate forever. speaker-1: Yeah. No brainer. And I know again in the conversations that I've had with Brock and Jeff, I'll I'll shout them out. It's smart asset capital. Those guys are the best. But those tenants are everything, right? Avoiding vacancy, having those tenants ready to go. It sounds like in those situations where you have tenants ready to go for a specific property, like if you have that in place, it makes everything speaker-0: And that's where operating a three PL separates me from other real estate companies. Yes, I love my real estate investments, and that sort of asset based cash flow really is able to back up our little service company. But that service company is getting the phone call. That service company is the one that has the relationship with the client because we're doing their trucking and their their overflow warehousing and so they know who to call when they've got an operating problem. That always turns into a discussion about real estate that I'm not getting that call if they don't have a problem in their in their logistics. I'm not their first call. speaker-1: How have you built up the book of business so that tenants are calling you and telling you, hey, go buy this property and I will lease it from you? Like, how do you get to that point? speaker-0: By doing a really great job on the logistics side. You know, the first phone call I got was from a large company here in Toledo that says, our local warehouse provider is a one man shop. We really have all kinds of problems with inventory and shipping accuracy. Would you go down there and take over running that? We said, Yep, absolutely we will. So we went down there and fixed the people problems. All process problems are really training documentation. People problems, build a system that works and people will thrive in it. So once we fixed that, then we had credibility where we said, okay, we we're we're doing this, but we're still struggling on a daily basis because this warehouse is too small. Can we find you something new? They said, we'll entertain anything that you think is a great solution. So we went out and we bought another building in that town that they only took up ⁓ 25% of it the day we moved in. But we bought the whole building, moved them in. That building is now fully. lease to another tenant, as a matter of fact, because once you have the opportunity and the asset, anything can happen. So speaker-1: Yeah. Absolutely. So something you said there is that people problems are process problems, right? Or something along those lines. So what do you what do you mean by that? So speaker-0: Picture a complicated warehouse. There's 20 trucks in a day. There's 20 trucks in out a day. The orders are trucks are waiting forever. They're backed up. The parking lot's full. The carriers are complaining. It takes forever to get loaded. Well, on our end, we can't find the the inventory to complete the order. We got guys out there looking. Was that a put away problem? Was that a supply problem? Have we not even gotten that inventory in from the the customer yet, all these things can be happening. And when the carriers show up early and you know a load isn't picked in stage and waiting there in the dock for them to load, you know, there's ways around all these problems, but you can see how quickly that warehouse floor turns into chaos when there's not a plan for the day. And so, you know, replacing that level of chaos with dock scheduling, inventory management, And on down the line is what we have developed a repeatable process for, so that we are entering each day not as a fireman who's there to put out fires. We can't let the fires start. We're there to be Smokey the Bear. So And you know, that once you've built out that repeatable process, gotten people to understand and buy into that system and how it helps them, it really does become a solution the customer wants repeated every other places. The sad reality is that revenue always scales faster, slower than complexity. Like the business gets complicated faster than it grows to be able to do this. So we we just absolutely try and stay in our wheelhouse. We don't do big, complicated business to consumer shipping where all the orders are going outbound in small packages to the the you know, to FedEx to deliver to homes all over the US. A lot of three PLs do that. They do it very well. But you know, we specialize in giant rolls of paper and insulation and knockdown cardboard boxes and and things that require a date code, food grade handling, but are relatively simple. Empty glass bottles is the contract that put us in business. We still do a lot of containers like bottles and cans. speaker-1: Incredible. Yeah, my Brock and Jeff, they have their best tenant. Their best business, they said is the a pallet, like this this c tenant that just builds pallets. And I'm just like blown away. And I had sat next to one time I went into a bar, struck up a conversation with this guy next to me, got learning more about what he does. And he's in the real estate business and he said that he specializes in serving the tenants that make that manufacture or create the glue that keeps labels on bottles. Just never even thought about that before in my life. I'm like, ⁓ my gosh, there is a niche for everything. And something that you talked about is like you stay in your lane, right? You stay in your niche. You stay at what you're good at. Because every time you have to do you do something new, you go into serving a new customer, providing a new service, providing a new product, right? And that can be like, okay, yeah, on the outside looking in, okay, this is just a building. This is just an industrial building. Like what could be so different? But there are anytime you're serving a new kind of customer. You have to then create those established workflows or established processes for every little thing that happens within that business. So you're just kind of reinventing how you do what you do every single time you're doing something new. So you're making it so much harder. You're scaling the complexity unnecessarily just because maybe this idea looks great on paper, but the actual execution that will go into doing this well is completely brand new to you. And you're just gonna have to. kind of create that manufacturing process for how you deliver that service, which is that documented process and established workflows that every individual who's operating within that business is gonna have to follow in order to do a great job. speaker-0: And the best systems reduce decision fatigue. The best systems are things where the person in it doesn't have to think about it. They know what to do when they see this. speaker-1: Absolutely. And I also think about the idea that okay, so like I have a much different business than you do, but I think that this philosophy, this idea can apply where if you want somebody to actually use like a problem that I ran into with our marketing agency is like, okay, we had this document that had the step by step process of exactly what you needed to do, how you needed to do it in order to deliver this to do this thing, to perform this function, whether that's writing captions for a client or whatever, but nobody would ever use them. Nobody would look at them. Right. Like you'd have these established processes, but nobody uses them. I think you need to find a way to make it easier to complete this task, perform this function using the documented process, using the asset that has the step by step guide than it would be otherwise. Right. And that can look different for everybody. But like simple thing for us is like, okay, we'd have the the templates like existing right in there. So it could just copy and paste, just make it easier. But is that something that you've seen or I guess. What have you learned? speaker-0: One of the most interesting things I realized early on in my career is that outbound inventory shipping mistakes happen on the inbound. When a customer gets shipped the wrong thing than they ordered, that is the cardinal sin of warehousing 101. You never want to do that. But you can become really inefficient because your database shows there's one palette of this product in the warehouse you have to have to complete this order, and you it's not where it says it is, and you can't find it. That is the definition of stress on a system. And the reason you can't find it is. Because the inbound person didn't enter the location right, didn't scan it right. It might not even be there. He might have scanned it as the or entered it as the wrong product. And so we think we have a palette, but we don't. That's why we can't find it. He thinks he put it in this spot. He didn't put it in that spot. So the shipping accuracy and efficiency is all covered in inbound put away training and discipline. That alone is the moment once you realize it. Because now, in order to run an accurate and efficient warehouse, I have to put so much time not on triple checking every outbound order, but on training the crap out of the person who's doing the receiving and put away. speaker-1: Yeah, there's something there where that idea rhymes with so many other principles, right? It's like or so many other applications to that idea. It's that, okay, if you want to find the root cause of this problem, you have to look at maybe a couple steps even before. Like you even talked about it, it's like, Hey, we don't want to be firemen, we wanna be smokey the bear, right? We'd we want to prevent fires from even happening, not get really good at putting fires out. Right. We want get really good at preventing them from ever even happening, so we don't even have to worry about it. But ⁓ Yeah, there's something there to that idea of, okay, if we wanna fix the outbound problem. speaker-0: But that's true because most companies don't fail because of a lack of opportunity, right? They fail from operational inconsistency. They don't fail from a lack of customers. They fail from sending away customer disappointed. speaker-1: Absolutely. And what do you think, what do you see goes into making happy customers? speaker-0: I have an expression I use that I say all the time to our employees, our teammates, to make sure they understand we all have the same job. We all have one job. And I I sum it up this way: full buildings, happy customers, and passionate team members. That's it. Those are the three things we have to worry about every day. And if we do those three things, we don't have to look at the PL. We'll we know we're making money if we have those three things. I say them in that order because, you know, fill buildings come from happy customers, come from passionate team members. Team member who likes their job, likes their team, knows that the company's compassionate about them, cares about their safety, cares about their family, is committed to its core values. That's a person who doesn't mind coming into work every day and doing their job the way it's asked to be done. speaker-1: Absolutely. And you know, when somebody's a passionate team member, they're going to be willing to do whatever it takes to make a happy customer. And then when that's the case, that's going to keep the buildings full. speaker-0: That's my secret sauce right there, Ian. I hope nobody watches this or everybody'll know how I how I do it. speaker-1: Right. Yeah. Well I it's one of those things that's easier said than done, right? So you you kinda hinted at it, you kind of gave us the high level view of what goes into making passionate team members. But if you could double click into that, dig a little bit deeper into how do you create somebody who's passionate, who really cares, really, you know, gives a sh about the work that they're doing on a day to day basis, like it's engaged in the work that they're doing. speaker-0: It's funny, my background is as an accountant. And when I moved from CFO to president of the logistics company, it became very clear to me that the idea of running a company by the numbers might be quite honestly the dumbest expression in corporate America. A company is run by people for people, and without the core values, without the commitment to those people. The numbers, it's not that they don't matter, but you can never achieve greatness until you have that level of investment and passion. And that's really the only way to scale as well, is passionate leadership. So we've done a really great job at building in transparency, compassion, and respect for each other, commitment to teamwork. I've had guys like volunteer to pack up and fly to a startup operation on Thanksgiving week and miss their family so that a new customer can be operational in Georgia in Macon, Georgia on December 1st. That actually happened. I mean I had 10 people volunteer to go do that and get this customer launched on time. I couldn't believe we were able to get it done, but it was all because We have enough people that put up their hand and say, Yeah, I'll do that. I'll go work sixteen hour days out of town on a holiday weekend. Gosh, I'm so honored by the work our team does on behalf of Spartan Logistics and and our real estate group, Harmon Group as well. speaker-1: Yeah. I mean, that is a unique you do not hear those stories. Like I talk to a lot of people ⁓ on this podcast. You do not hear those kinds of stories every day. And I think you you mentioned one idea that, you know, transparency, right? Being a transparent leadership team and just being open and in conversation with the people on your team, I think is the big part. Like it's a conversation. It's not like an authoritarian regime where you're just dictating and you're, you know, you're demanding certain things, but it's a conversation where it's Here is what we need from you, or here's the expectation. Here is what we are trying to achieve, right? Here is the vision that we are casting of what we want to create. And here is everybody's responsibility. And in order for us to ever get to that point, it's us together in conversation. So you're not going to I don't mean it's not sugarcoating, but it's not like you're just gonna demand speaker-0: Get it. So the core things whenever we're talking to our team are are respect and honesty. Right? I'm not gonna I'm gonna give it to you straight. Good news, bad news, whatever it is, I'm gonna treat you with respect, I'm gonna treat you honestly. And believe me, we've lost customer contracts, we've had to close locations before, we've had to let whole teams go through no fault of their own. It is the worst meeting I have to have with people. But when you, you know, take on a new customer and a new contract, and by definition it's relatively short term, that is that risk is always out there. And I think that's why I get so passionate about being delivering success for our our customers so I don't have to so it doesn't end badly, right? 'Cause the impact on people, ⁓ it hurts my soul. So we do the best we can for ⁓ and buy ⁓ and Again, ⁓ we don't sugarcoat bad news. Bad news in fish do not get better with age. speaker-1: Yeah. That's good. Man, you gotta one day put together a book of these ⁓ these little sayings. That's that's good stuff. I never heard speaker-0: I know my team keeps a word document somewhere on the network of all the pithy Steve Harmonisms that I'm sure is going to be used to ridicule me someday, so Yeah. ⁓ I at least I know it's coming. speaker-1: Yeah, if you ever if you ever do want to step away and retire, that retirement party will be a will be a hoot for sure. I love it. Amazing. So we've covered your story about entering Spartan, what you saw from a different lens and how you needed to pivot the business in order to create something that was actually a monetizable asset, a sellable asset, how you affected that change and kind of branching, creating a separate operation to owning the real estate, and then dug into a little bit on how you create people that actually care. which is the foundation of creating happy customers, right? Is creating a team that cares. I think that's a unique insight that I've never heard anybody talk about, right? Everybody talks about, okay, creating a happy customer is all about setting expectations, then meeting those expectations. But how do you do that? It's actually starts with the people and the team that you build, which I think is a beautiful insight. Are there any other speaker-0: And I use that example on warehousing, but it's true in real estate too. I started my own real estate leasing and property management company to serve my own portfolio, sure, but mostly because I didn't think most of the people in the real estate business were putting my needs ahead of their commission. And so that's the one thing that I ask our real estate team to do is you put your customers ahead of the revenue of this company and we'll be just fine. Don't you worry about it. We also own some restaurants here in the Toledo, Ohio area, and that sense of hospitality and service to the customer because of how much our team loves the product and the customer and the food and the service. It's all fundamentally the same thing. A great team is leading to great results. speaker-1: Yeah. Incredible. Is there anything else that goes into creating that great team? So we talked about the transparency. We talked about being in conversation. We talked about the dialogue of like, is there any element of like the vision that you cast, like as a leader? Like what do you think what do you see as the responsibility of the leadership team in creating and fostering a great team? speaker-0: We talk about our core values all the time. At Spartan Logistics, our core values are safety, teamwork, integrity, respect, and service. We run our hiring process by those five core values. We fire by those same core values. We we talk about them all the time. It's built into our employee review process. We give away core value awards to employees who've identified, represent our core values. I don't just talk about it. I hold myself and my leadership team accountable to our core values. I'm really, really proud of that. In theory, if we live up to and operate by those core values, we don't need a 50 page employee handbook that nobody's going to read. I'm told we still have one. The HR people said I had to have one, but honestly, I've never read it. I don't expect anybody else to. I'm gonna conduct myself according to those five values and treat others as I wanna be treated. And it'd be a lot less ⁓ HR complaints if ⁓ if everybody did that. speaker-1: Yeah, absolutely. So you operationalize the core values that they set, right? The core values go from a lot more than just something that you have on the world. Yeah. Right. Into something that, you know, is reinforced, something that you talk about relentlessly, right? That's something that Steve Jobs just said that he literally was just like the like he probably repeated the mission and the vision of what Apple was going to become more than anything that he's ever said in his life. Or like you're just kind of constantly beating the drum of why we're here, what we're here to do, and how we're going to do it. speaker-0: Well right. speaker-1: nonstop or you're just that beacon, that standard bearer. And that standard is represented by the core values that you have articulated. And then that becomes the the mechanism in which people are evaluated, which people are hired, which people are fired. Yeah. So you really operationalize the core values throughout the entire system, throughout the entire organization. Is there have you ever done any thinking or have you put into practice the idea of setting the right incentives, right? Like this is something that Warren Buffett or or Charlie Munger ⁓ it's like you show me the incentives, I'll show you the outcome, right? So how have you thought about incentive design and setting that and putting that into practice within your organizations? speaker-0: I think economic incentives matter everywhere. If I could figure out how to put every team member on some sort of incentive system, I would. We have a bonus program, we have some profit sharing programs, but it's just really hard in a team environment where one person brings it in, sets it down, three weeks later somebody else picks it, loads it, somebody else is doing the paperwork, somebody else delivers it to the customer. It's very hard to say who added the most value in that chain, what value they added, what profit they brought to the company. We've had some piece picking operations before where we were able to identify specific productivity of specific employees and put in incentives. And of course it worked. It always works. But it's it's extremely hard to determine in most of our processes. So that's why we've gone to ⁓ more of a profit sharing and ⁓ and bonus model ⁓ than a strict operational this is mine, I did this, and that's that's measurable. Hard to pull off in most environments. speaker-1: For sure. Really hard. ⁓ absolutely. Yeah. But I think that profit sharing and having that mechanism within the organization is a good kind of catch all to establish that economic incentive for every individual without having to have like some insane, insanely complicated. speaker-0: Yeah. It would require a level of investment in technology that may not pay back, quite honestly. speaker-1: Yeah, for sure. And the profit sharing does as good a job as anything. It buys everybody into not just their role, but the greater organization. So people are going to be more likely to kind of step outside of what their role and their responsibilities are to kind of put their hand up and say, Hey, you know, while this wasn't in my job description, I'm willing to kind of go to Georgia, right? And kind of help set up because I know that that's what's going to be best for the company, greater, which is going to grow the pie that I'll get my own piece of. I love it. We talked about, you know, some broader business principles, but behind every business is a great Is an entrepreneur, right? Is the one individual that kind of took the bet on themselves to go out and solve a problem, create value in the world. And they are, you know, the engine that brings this thing into reality, right? And we talked a lot about what goes into like the mechanics and the things that need to exist for a great business to create happy customers, which is the objective of any of every business to create happy customers is the people. Responsibility is that leadership team. But what do you see are the characteristics or the traits? Of great entrepreneurs, of those people that are creating these machines, creating these organizations in the world. Like what are the characteristics of those great entrepreneurs? speaker-0: Well, you don't have to be crazy to start your own business, but it sure helps. and I say that a little bit jokingly, but the reality is, is the failure rate for startups is huge. The need for capital is for a startup business is really hard to come by. So I can list a long list of problems, but the reality is an entrepreneur has to have a total commitment to the deal. They have to take every dime that they have, every hour of time, and be intimately involved in every aspect of the operation and the business at first. You're gonna be involved in purchasing and hiring and firing and sales and accounting. I mean, at the entrepreneurial level, there's like I said, originally on my day one, there were only four people working there. Just that psychopathic need to focus on everything all at once is a little bit crazy, but that is what it takes to actually launch a business. There's a lot of great books ⁓ written on this. The e myth is probably one of my favorites that talks about the entrepreneurial myth and what makes people walk away from a job and say, I can do that. I I think that's a really great vision. We run our companies according to a system called EOS, based on the book Traction by Gina Wickman. Strongly recommend that for any entrepreneur ⁓ because getting it right from the outset is much better than wandering around in the desert for forty years. speaker-1: Yeah, absolutely. Yeah, we ⁓ tried kind of doing it on our own for the first year of our marketing agency and then we stumbled into we found Vern Harnish is scaling up and that kinda had its own operating system for a business. And yeah, you pick something like that up and it's like ⁓ It's just like a breath of fresh air. It's like holy sht. speaker-0: And none of it's voodoo, it's just best practices like transparency and accountability and people management that work literally every time they are tried and a process for using them and documenting them. Cool. Let's go. speaker-1: Absolutely. Yeah, then I think that comes from a willingness to know that you don't know everything. Right. So you'll learn very quickly in your journey of starting a business that ⁓ you'll be humbled basically very quickly to the point where it's gonna force you to seek for help, ask for help in books, other people, whatever that is. But I think that is another characteristic of successful and great entrepreneurs are people that are willing to ask for help from others and seek out help and a humility in knowing that you don't know everything and just kind of that constant learning that never ends, right? It's just but it takes some humility. speaker-0: But no entrepreneur ever admitted they didn't know everything. They have to act like it. speaker-1: Right, right. A hundred percent. I love it. Steve, thank you so much for the time today. Before I get to the final question, ⁓ how can people get in touch with you? speaker-0: Spartanlogistics.com is our website, and we have a team there that is amazing for our customers. That will also contain links to our other operating companies like NAI Harmon Group, Benchmark Restaurant Group, and Logan Creek Construction. speaker-1: Amazing. I'll have all the links to the to those in the description. My final question for you, Steve, is a recurring question that I ask every guest. But if you had a giant billboard that everyone in the world could see for ten seconds, what would it say and why? speaker-0: It would say, trust Jesus, read the Bible, pray daily. These things work every time they're tried, and I don't know how I would manage life and stress without my faith. speaker-1: Yeah. And ⁓ to add to that, if I could, I was somebody who was not raised with any faith like in our household, and I'm grateful for that because it was a it enabled me to kind of go on my own exploratory journey. ⁓ and about a month and a half ago I picked up a book called A Return to Love by Marion Williamson, which uses a lot of Christian terminology to kind of represent the broader, bigger idea of some of your connection and our return to a higher power. whether that in Christian terms is to God and Jesus to the Holy Spirit. And I had never had a kind of intentional faith practice in my life before picking up that book and, you know, you know, trying trying it out. And ⁓ you know, in the last handful of weeks that I've started to do that, it's been pretty miraculous the things that have appeared in my life, things that have started to happen for me. Now it's probably, you know, twenty podcasts in a row that without me intentionally steering the conversation to this direction, it's come up in conversation. So it seems just like a sign. speaker-0: But yeah, A giant billboard sign. speaker-1: Right, exactly. Yeah, exactly. Yep, to stay on that path and ⁓ continue the conversation and the invitation to bring God into my life. Yeah, and like the one part of it that really stuck with me is that, you know, God gave us free will because it's the greatest expansion of his creative power for us to have free will. And, you know, God, the universe, whatever you want to call it, is there on our side, like there to help us. ⁓ but he's not gonna show up or or do so. uninvited or unasked. So that's the intentional act of doing so through prayer. And it's pretty unreal how ⁓ the types of things that have started to happen in my life in the last week and or month and a half. So I would ⁓ yeah have a billboard right behind yours that said what he said ⁓ is for sure. So Steve, thank you so much for the time. speaker-0: Thank you, Ian. Appreciate the candor. speaker-1: Thank you for listening. The main thing that I took away from my conversation with Steve is that culture has to show up in the work that your customers can feel. Steve kept bringing this back to a simple chain. Passionate team members create happy customers and happy customers create full buildings. Right. There's some way that you can rework that sequence, right? So passionate team members create happy customers. That's where you start. And happy customers creates blank. You can apply that to your business. And that puts leaders on the hook for more than just creating a strategy. Right. The leader has to build a place where people know what matters, they feel respected and care enough to do the work well. That also gives the business more room to change. Because when the model needs to shift, when you make a need to make a pivot in your business, you need everyone in your organization to be bought in and care about that change. Right. These are the people that are gonna have to really carry out and and live and affect that change that you're making in your business. And a strong company culture will give you and the reason to do it and people bought into making that shift. If you want to get connected with Steve Harman, you can find his links in the description of his episode, including SpartanLogistics.com and all of his other companies. And if you're an author and you want to increase the probability of somebody engaging with your ideas, download the free program execution system toolkit in the description. It'll show you how to install what I call execution infrastructure for your book that helps people engage with your ideas in a more personalized and dynamic way. Thank you for listening, and I'll see you in the next one.