Latest / The Turn: Blue Collar to Billions / He Sold in Two Years. He Says He Probably Shouldn’t Have.

Transcript

He Sold in Two Years. He Says He Probably Shouldn’t Have. · The Turn: Blue Collar to Billions

• 0:01
  Baxter Fain: That's a great question.
• 0:02
  Baxter Fain: Because when you asked how would you do it now, I didn't really have an immediate thought.
• 0:07
  Baxter Fain: But then you're stuck at what would you have done the deal?
• 0:11
  Baxter Fain: And probably not.
• 0:15
  Kory Mitchell: Welcome back to The Turn.
• 0:16
  Kory Mitchell: I'm Kory Mitchell of Iconic Founders.
• 0:19
  Kory Mitchell: 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 done.
• 0:28
  Kory Mitchell: Today we have Baxter Fain.
• 0:30
  Kory Mitchell: The story that unfolds and the winding road that gets him there is pretty fascinating.
• 0:36
  Kory Mitchell: And when Baxter talks about his team and the fears that he had about letting them down after he sold the business, they just ring true for so many people that I know.
• 0:47
  Kory Mitchell: So I hope you enjoy the story.
• 0:49
  Kory Mitchell: And I think that we all have a lot to learn from it and how it ties across the companies that we talk to every week here on The Turn.
• 0:58
  Kory Mitchell: So let's get into it.
• 1:00
  Kory Mitchell: Baxter Fain, welcome to The Turn.
• 1:04
  Kory Mitchell: Thank you.
• 1:04
  Kory Mitchell: Good morning.
• 1:06
  Kory Mitchell: Good morning.
• 1:07
  Kory Mitchell: You know, there are two firsts that have happened today on The Turn.
• 1:11
  Kory Mitchell: One, um, it's it's our guest's birthday.
• 1:15
  Kory Mitchell: So, first of all, happy birthday.
• 1:17
  Kory Mitchell: Thank you very much.
• 1:18
  Kory Mitchell: Thank you for celebrating with us.
• 1:20
  Kory Mitchell: And second, no one's ever worn a suit on this show before.
• 1:24
  Kory Mitchell: You know, I figured I'd get all banked up just for you guys.
• 1:27
  Kory Mitchell: You got banked up.
• 1:28
  Kory Mitchell: And that's that's the thing.
• 1:29
  Kory Mitchell: That's what's so so interesting about this story.
• 1:32
  Kory Mitchell: Some people now call me an investment banker.
• 1:35
  Kory Mitchell: You know, I work on deals and I sell cut, you know, contracting companies and businesses that are in the built environment.
• 1:42
  Kory Mitchell: And you're now a banker, but you weren't always a banker.
• 1:46
  Kory Mitchell: So, like, we're gonna have to unpack the story and figure out how the hell we got here.
• 1:49
  Kory Mitchell: Why don't you take us back to the beginning?
• 1:52
  Baxter Fain: I was born in Warren'sburg, Missouri, and um moved to Jefferson City when I was a little boy.
• 1:58
  Baxter Fain: Um, my grandpa would build houses, generally two houses every summer.
• 2:03
  Baxter Fain: And some of my first memories of life are mixing concrete, and I think I was five.
• 2:10
  Baxter Fain: Uh, so that's when I started learning home building, even though I didn't know what it was.
• 2:14
  Baxter Fain: I just thought I was playing in the sand.
• 2:16
  Baxter Fain: And then moved to drywall and electrical, and all of a sudden we're building houses.
• 2:22
  Baxter Fain: And that's some of my first memories of life, and carried that forward for the rest of my life is building buildings and and buying buildings.
• 2:29
  Baxter Fain: So it's been a blessing to start that way.
• 2:32
  Kory Mitchell: So, would you call the environment that you were raised in entrepreneurial?
• 2:36
  Kory Mitchell: Uh, I would.
• 2:38
  Baxter Fain: You know, mid-Missouri is country, and in the country, what you find are very hard-working people and a big entrepreneurial spirit.
• 2:50
  Baxter Fain: And my grandpa and my dad were not an exception to that.
• 2:54
  Baxter Fain: My dad was an attorney, um, my grandpa was a judge, and uh on the side is you know doing construction.
• 3:03
  Baxter Fain: And I remember I was fishing at the Lake of the Ozarks growing up, and that's the first time my dad told me it's important to have multiple lines in the water.
• 3:14
  Baxter Fain: And I didn't really know what that meant.
• 3:16
  Baxter Fain: And as I went on in life, I realized that if you do and are able to have multiple lines in the water and still effectively run those lines, then it kind of can protect you from any of those one lines not working out so well.
• 3:30
  Kory Mitchell: So that's a that's a great like line to pull on, right?
• 3:34
  Kory Mitchell: This idea of multiple lines, because you know, we start out in this small town in Missouri and you know, raised by this entrepreneurial dad who had a, you know, would you call it a side hustle then, since he was a lawyer?
• 3:49
  Baxter Fain: You know, it was at first uh until we built our first 6,000 square foot metal building there on Missouri Boulevard and Jeff City.
• 3:58
  Baxter Fain: And I remember doing the leases with a plumber and an accountant, and we took the third space.
• 4:06
  Baxter Fain: And realizing that these people running small businesses and a building that we built, and then paying us rent to do that, that also made us money.
• 4:15
  Baxter Fain: And that at a very young age taught me that you know, going from the right hand to the left hand feeds a lot of families.
• 4:22
  Baxter Fain: Uh, so he got out of the law business and really focused on the real estate business after that building.
• 4:29
  Kory Mitchell: Let's start tiptoeing our way through your journey.
• 4:32
  Kory Mitchell: Uh so you're you're in in Jefferson City, and uh what do you do next?
• 4:40
  Baxter Fain: You know, I knew that I wanted to do something different uh after my first summer working at a block and brick plant.
• 4:49
  Baxter Fain: And when you spend the summer fixing pallets and painting the mechanic shop and cutting grass and loading trucks with block that have fallen off, and you have to cut slits in your jeans because you're sweating so much you get a heat rash.
• 5:04
  Baxter Fain: I knew that I needed to get an education and get the heck out of here.
• 5:09
  Baxter Fain: So I just started applying to schools outside of Missouri.
• 5:12
  Baxter Fain: And um, I my counselor at my high school got a flyer for Southern Methodist University, and I saw Dallas, Texas.
• 5:21
  Baxter Fain: And I thought this might sound silly, but I thought, well, I like that TV show Dallas, I should look at this.
• 5:28
  Kory Mitchell: It's funny the things that we think of when we're that age.
• 5:30
  Baxter Fain: He does, and ironically, the setting for that show is miles outside of the city of Dallas.
• 5:35
  Baxter Fain: But so we went to Texas and fell in love with Texas and the people of Texas, and um, so we applied and ended up getting a partial academic scholarship, and I packed up my Mazda and which was basically a duffel bag, and uh maybe a set of golf clubs and drove to Dallas.
• 5:53
  Baxter Fain: So, what'd you study?
• 5:55
  Baxter Fain: So at first I thought, hey, I'm gonna be a doctor, until I took calculus and chemistry in college and went, hmm, I'm not gonna be a doctor, and quickly switched to a finance degree.
• 6:08
  Baxter Fain: And I I learned very quickly that I I love finance and real estate, and and then it occurred to me, wait a minute, I've been doing this my whole life, selling these houses we would build, helping our accountant work on our first commercial building when I was in middle school and high school.
• 6:25
  Baxter Fain: It occurred to me that, oh, I've been doing this already.
• 6:30
  Kory Mitchell: All right.
• 6:30
  Kory Mitchell: So do you go on to a finance career?
• 6:34
  Baxter Fain: You know, I I had a big, I would say, turning point in my life uh while I was in college.
• 6:42
  Baxter Fain: In November of my junior year, I um got a call from my mom in the middle of the night um saying that dad's plane had crashed.
• 6:52
  Baxter Fain: Oh my god.
• 6:53
  Baxter Fain: And um that really changed my whole world.
• 6:57
  Baxter Fain: I went home for six weeks and immediately started looking at everything in our family business and had high school friends help me clean out his office, and I wasn't really quite sure if I was going to go back to college.
• 7:10
  Baxter Fain: And uh my mom said, Look, your dad was so proud of you going to SMU, you need to finish college.
• 7:15
  Baxter Fain: So I went back to school and pretty lost, pretty broken, and um became president of my paternity about three months after I got back to school.
• 7:26
  Baxter Fain: And to me, that was sort of a big lesson in life is hard, and you're either gonna let it take you down or motivate you.
• 7:38
  Baxter Fain: I ended up finishing up my finance degree and graduated in four years, and I really didn't know what I was gonna do because I was running the family business, and so I was playing golf with my fraternity little brother and met a guy that worked for Amresco, which is an old RTC workout company in Dallas working out non-performing assets.
• 7:59
  Baxter Fain: And by the end of the golf round, he said, I want you to come to my office on Monday.
• 8:03
  Baxter Fain: You need to come work with me.
• 8:04
  Baxter Fain: And so I went and interviewed with him, and that's I got my first job.
• 8:10
  Kory Mitchell: There's a lot of through lines as Baxter's talking about his story, and a lot of different events created these turns along the way.
• 8:20
  Kory Mitchell: One of them was the unexpected death of his father.
• 8:25
  Kory Mitchell: He died in a plane crash, and it shook him to his core.
• 8:30
  Kory Mitchell: But when he went home and he talked to his mother, she said, you know, your dad would have been devastated if his passing caused you to drop out of college.
• 8:40
  Kory Mitchell: And that decision really kept him on the road that led him down the path of owning a business and ultimately selling it.
• 8:49
  Kory Mitchell: So tell us about that.
• 8:51
  Kory Mitchell: I mean, that experience, that first job.
• 8:53
  Kory Mitchell: Um, you know, what did you learn in that role?
• 8:57
  Baxter Fain: I learned that there are people in the world that are just dishonest, is what I learned.
• 9:03
  Baxter Fain: Not often, but let's just say one out of ten.
• 9:07
  Baxter Fain: And my years at Amresco, all we did were buy non-performing loan pools from the RTC.
• 9:16
  Baxter Fain: And there was a home I went to look for, and I got out of my car, had the map on my hood, and I could not find this house.
• 9:24
  Baxter Fain: And I look over and see a mailbox, and the mailbox had the house number on it, and looked over.
• 9:31
  Baxter Fain: They had literally taken the structure of the home and moved it.
• 9:35
  Baxter Fain: And I quickly realized, well, that's probably going to be a total loss.
• 9:40
  Baxter Fain: But with that job, I learned that you need to trust your underwriting, trust your gut, and really dig a little bit deeper to make sure that everything is what it appears to be.
• 9:52
  Baxter Fain: And I've been sort of an optimist my whole life.
• 9:55
  Baxter Fain: So that was a tough lesson for me.
• 9:57
  Kory Mitchell: That first time when you realize that someone it literally with intention screwed you over.
• 10:05
  Kory Mitchell: Yeah.
• 10:05
  Kory Mitchell: Um, it it changes how you think about business and risk.
• 10:10
  Baxter Fain: I remember when I got my job at Goldman and I was 24, and I walked into the building, and in the lobby, there was a shoeshine guy.
• 10:20
  Baxter Fain: And over time we got to be friends and talking and talking, and he asked if he could borrow $200.
• 10:25
  Baxter Fain: I said, sure, and you know, how soon could you pay me back?
• 10:30
  Baxter Fain: He said, you know, in the next couple of weeks.
• 10:32
  Baxter Fain: And the next day, the shoe shine stand was gone.
• 10:36
  Baxter Fain: And I then got an email, our entire building did that this person had been working buildings up and down that area of Dallas and had done that to dozens of people.
• 10:47
  Baxter Fain: And that was the first time in my life, I obviously was 30 years ago, that I felt, wow, I need to do a little better job of I'm not trusting is the right word, but it was a hard lesson.
• 11:02
  Baxter Fain: Diligent liked very much.
• 11:05
  Kory Mitchell: Yes.
• 11:05
  Kory Mitchell: Well, okay, so Goldman, that's kind of a big deal.
• 11:08
  Kory Mitchell: You know, you kind of nonchalantly say Goldman, you know, Goldman's a really hard place to get a job.
• 11:13
  Kory Mitchell: It's full of really, really smart people, incredibly shrewd business people there.
• 11:17
  Kory Mitchell: What were you doing there?
• 11:19
  Kory Mitchell: I'm assuming this, you know, also was probably an educational opportunity as you make your way towards your business.
• 11:25
  Baxter Fain: Yeah.
• 11:26
  Baxter Fain: You know, I love surrounding myself with people that are smarter than me, which is not hard to do.
• 11:35
  Baxter Fain: And that's Goldman Sachs people.
• 11:37
  Baxter Fain: And yeah, the first person I met at my first job out of college at MRESCO, we became friends, and he said he was going on a sabbatical and he was leaving to write a book.
• 11:48
  Baxter Fain: Well, a year and a half later, I get a call from him saying, Hey, Goldman is starting a CMBS conduit lending operation.
• 11:57
  Baxter Fain: Come work with me.
• 12:00
  Baxter Fain: And I had accepted a job in Kansas City just to be closer to my mom.
• 12:05
  Baxter Fain: He said, Well, I'm not gonna hang up the phone until you tell me what it is gonna take.
• 12:10
  Baxter Fain: And I had no idea what to say, and I said, Well, how about doubling my pay?
• 12:15
  Baxter Fain: And he said, Give me an hour.
• 12:17
  Baxter Fain: And he he called me and said, Check your fax machine, and there was a fax letter, and he did it, and I about had a heart attack.
• 12:25
  Baxter Fain: Um, so connectivity, people, relationships to me are absolute definers of success, in my opinion.
• 12:34
  Baxter Fain: I've made friends with him, and because of that is where this came from.
• 12:39
  Baxter Fain: Now I had to interview and go through the whole process and all that, but that was a big part of that.
• 12:44
  Baxter Fain: And I think without that connection, I don't get that job.
• 12:48
  Kory Mitchell: It's it's amazing.
• 12:49
  Kory Mitchell: Like relationships are everything in business at the end of the day.
• 12:52
  Kory Mitchell: I've spent all my life building relationships with people that can refer me business, even if they don't give it to me themselves.
• 13:00
  Kory Mitchell: And and I'm sure in you know the business that you have today, it's it's incredibly powerful that that relationship game, but we'll get there in a minute.
• 13:07
  Kory Mitchell: Um so you go into Goldman, you surround yourself with these brilliant people.
• 13:13
  Kory Mitchell: Um, I remember going to a party in New York City one time, 25 years ago on this rooftop with all these Goldman guys, and I was like, holy sh like these dudes are smart.
• 13:26
  Kory Mitchell: Like I'm pretty, pretty confident in my own skin.
• 13:29
  Kory Mitchell: And I remember very clearly feeling intimidated that day.
• 13:34
  Kory Mitchell: And they were all young guys like I was back then, but they were smart as hell.
• 13:39
  Baxter Fain: Yeah, I had a similar feeling.
• 13:42
  Baxter Fain: My first meeting in a conference room with a lot of them, and they were saying terms and investment banking world.
• 13:48
  Baxter Fain: I had no idea what they meant.
• 13:50
  Baxter Fain: And I asked a question, and one of the heads of the group looked across the table, and I don't know if I can say foul language here, but I'm just repeating what he said.
• 13:59
  Baxter Fain: He said, Who in the f is this guy?
• 14:02
  Baxter Fain: And I was terrified.
• 14:05
  Baxter Fain: Um, but you know, it was a wonderful career there that you know started out in the securitization and selling bonds part of it.
• 14:14
  Baxter Fain: And you know, I raised my hand and said, you know, I'd really like to be on the origination side.
• 14:18
  Baxter Fain: How do I do that?
• 14:19
  Baxter Fain: So I became an analyst and then a senior analyst.
• 14:23
  Baxter Fain: And my my message was, well, I'm not gonna outsmart these people.
• 14:28
  Baxter Fain: I'm gonna be the first one to turn on the lights and then the last one to leave every day.
• 14:34
  Baxter Fain: Yeah.
• 14:34
  Baxter Fain: Because I'm not gonna outsmart them, but I will outwork you.
• 14:37
  Kory Mitchell: And yeah, that's what I did.
• 14:39
  Kory Mitchell: There's a tremendous humility in being open and willing to surround yourself with smart people, right?
• 14:45
  Kory Mitchell: I think a lot of people get really intimidated and they they they run from it because they feel stupid.
• 14:50
  Kory Mitchell: They don't want to be the the the guy, the dumb guy in the room, or whatever you want to call it, but you have to surround yourself by people to elevate yourself up.
• 14:59
  Kory Mitchell: So so walk us to starting your business.
• 15:01
  Kory Mitchell: Like, how do you get from Goldman to something else?
• 15:04
  Kory Mitchell: A blind date is what did it.
• 15:07
  Baxter Fain: I took my car to get serviced and the uh car service manager because I think you'd really love my friend.
• 15:13
  Baxter Fain: She's from Colorado, she's fun, she's just a good person, and like, sure, why not?
• 15:20
  Baxter Fain: So October 2nd, 1999, uh, which is when Amy and I went on our first blind date and just knew immediately.
• 15:30
  Baxter Fain: Uh proposed February of 2000, and we got married April of 01.
• 15:35
  Baxter Fain: And that was 28 years ago that happened.
• 15:40
  Baxter Fain: And so we got married in Dallas, and um finally after years of infertility and miscarriages and going through that hell.
• 15:49
  Baxter Fain: Um, our son was born, who ironically is in the office here today.
• 15:53
  Baxter Fain: I gave him some stuff to give to Amy.
• 15:56
  Baxter Fain: Um, we died old.
• 15:58
  Baxter Fain: Uh he'll be 22 in a couple weeks.
• 16:01
  Baxter Fain: So we adopted him, and we were fortunate enough to be in the delivery room and took him home.
• 16:06
  Baxter Fain: And I came home from a trip to New York.
• 16:09
  Baxter Fain: This was December of 04, and I walked in the house and Amy's crying, Connor's in her lap, crying too.
• 16:16
  Baxter Fain: And I sit down next to her and said, What's going on?
• 16:19
  Baxter Fain: And she said, Well, it's you know, I miss my family, I'm alone.
• 16:24
  Baxter Fain: And I said, Well, are you are you unhappy here?
• 16:27
  Baxter Fain: And she goes, Well, I guess so.
• 16:29
  Baxter Fain: I don't have any help.
• 16:31
  Baxter Fain: I said, Well, screw it.
• 16:33
  Baxter Fain: Let's move to Colorado.
• 16:35
  Baxter Fain: I'm sure they have real estate and finance in Colorado, so May of 05, we moved to Colorado.
• 16:42
  Baxter Fain: So that's what took me away from Goldman to here.
• 16:46
  Kory Mitchell: I thought it was pretty cool how important the women in Baxter's lives played on the trajectory that he took.
• 16:54
  Kory Mitchell: Every founder I talk to has a partner at home.
• 16:59
  Kory Mitchell: And the way that they show up for their partner and with their partner, it's probably the most important thing there is.
• 17:08
  Kory Mitchell: And Baxter, it starts early on when his mom told him, look, you got to go back to school.
• 17:14
  Kory Mitchell: And then his wife, she was suffering while he was at work.
• 17:18
  Kory Mitchell: And they decided to uproot completely.
• 17:22
  Kory Mitchell: He had this amazing job, and it was so much more important to him that his family be happy than you know being where they lived.
• 17:32
  Kory Mitchell: And so they moved to Colorado.
• 17:34
  Kory Mitchell: And that ultimately created the opportunity to start something new.
• 17:39
  Kory Mitchell: That takes uh a lot of courage to go and kind of start from scratch.
• 17:44
  Kory Mitchell: Um, how did you find your footing so that you could you know support your family?
• 17:49
  Baxter Fain: We looked at Colorado and I was like, well, I wonder if there's mortgage bankers in Colorado.
• 17:54
  Baxter Fain: And back then there was you know GMAC and LJ Melody and you know the old shops from the 70s and 80s here.
• 18:00
  Baxter Fain: So I reached out to those shops and ended up uh getting a job at LJ Melody here in town, uh, which was C.B.
• 18:09
  Baxter Fain: Richard Ellis.
• 18:10
  Baxter Fain: I started working in the commission world.
• 18:12
  Baxter Fain: This was May of 05, and 2006 was a better financial year than my last year at Goldman.
• 18:20
  Baxter Fain: That's wild.
• 18:21
  Baxter Fain: It was awesome.
• 18:23
  Baxter Fain: And 2007 was even better until June of 2007 when Bear Stern's uh residential hedge fund went belly up.
• 18:35
  Baxter Fain: And one year later, that's when I started thinking about starting my own company.
• 18:41
  Kory Mitchell: Yeah, it's these these these moments of crisis um that turn into some of the biggest opportunities sometimes.
• 18:48
  Kory Mitchell: But you know, I don't know.
• 18:50
  Kory Mitchell: Like, how do you feel when the whole world around you is crumbling?
• 18:54
  Kory Mitchell: Yeah, everyone's afraid.
• 18:55
  Kory Mitchell: How do you pull up your pants that morning and say, you know what, it's time for me to hang up a shingle and start a business in the wreckage of the financial crisis?
• 19:06
  Baxter Fain: Yeah.
• 19:06
  Baxter Fain: It's a good question.
• 19:09
  Baxter Fain: I remember 2007 compared to 2008, my income dropped about 90%.
• 19:16
  Baxter Fain: And going into the summer of 09 and thinking, huh, this feels like this is gonna last longer than any of us thought.
• 19:26
  Baxter Fain: Um, so this is September of 09, and I told Amy, I go, you know, I'm not making any money anyway.
• 19:34
  Baxter Fain: And we've got some savings, so I think I should start a company.
• 19:39
  Baxter Fain: And I said, you know, we're young and a lot of wonderful, successful people have started things at the bottom.
• 19:48
  Baxter Fain: So I formed the entity and I told Amy that I will leave CB the first month that the jobs report is a positive and not a negative.
• 20:00
  Baxter Fain: And that was March of 2010.
• 20:02
  Baxter Fain: In April and May of 10, I basically built my models and Trinity One Group started.
• 20:09
  Kory Mitchell: I was terrified.
• 20:11
  Kory Mitchell: I bet.
• 20:12
  Kory Mitchell: Yeah.
• 20:12
  Kory Mitchell: But yeah, you you must have faith.
• 20:14
  Kory Mitchell: So tell us about those early days of trying to make payroll.
• 20:19
  Kory Mitchell: Oh god.
• 20:20
  Kory Mitchell: People, you know, people have this idea like, look, I can start a business.
• 20:24
  Kory Mitchell: I if if so and so can do it, anybody can.
• 20:27
  Kory Mitchell: But the reality is the balance sheet part of that equation is one of the hardest things because you got to make it through.
• 20:34
  Kory Mitchell: You got to survive payroll.
• 20:35
  Kory Mitchell: Like it's hard.
• 20:36
  Kory Mitchell: So tell us how you how you did it in those early days.
• 20:39
  Kory Mitchell: Yeah, no matter what happens, the first of the month comes every time.
• 20:44
  Baxter Fain: And that's payroll, rent, that's insurance, and it all comes due.
• 20:49
  Baxter Fain: So I took out a HELOC on our house.
• 20:52
  Baxter Fain: It's terrifying.
• 20:54
  Baxter Fain: And uh there were so many mistakes I made, you know, hiring people too fast, growing for the sake of growing.
• 21:04
  Baxter Fain: There's top line growth, but then there's bottom line struggles.
• 21:07
  Baxter Fain: Um bringing on too many support people, and you know, you learn from all of it.
• 21:14
  Baxter Fain: And who knew that the Great Recession would last well into 2011, in my opinion?
• 21:20
  Baxter Fain: But we then we closed our first deal.
• 21:22
  Baxter Fain: It was fall of 2010.
• 21:26
  Baxter Fain: That was enough to cover the nut.
• 21:29
  Baxter Fain: And then we closed our next deal, and then all of a sudden 2011 came along, and we were closing a bunch of deals and actually made our first distribution and thought, okay, I think this can get some legs.
• 21:43
  Baxter Fain: Um, but those first I would say the first 12 months, I'd leave the house pretty much every morning at 4 30 and get home at seven, eight o'clock at night.
• 21:55
  Baxter Fain: And and then as we got into 2011, you know, things started to take off.
• 21:59
  Baxter Fain: I thought I worked a lot at Goldman.
• 22:02
  Baxter Fain: Nothing compares to the stresses, anxieties you have owning your own business.
• 22:10
  Baxter Fain: And that's just if it's you, throw on top of that employees that you care about and their families.
• 22:16
  Baxter Fain: I can't say it's 24-7 because you got to sleep, but it's pretty darn close.
• 22:22
  Kory Mitchell: I always say this.
• 22:22
  Kory Mitchell: People have this image of these fat cats that own businesses that they're they're uh jet setting around to Hawaii all the time.
• 22:29
  Kory Mitchell: And the reality is the business owns you for a lot of the business's life, and you just you don't have a lot of freedom.
• 22:36
  Kory Mitchell: You have often and usually uh less freedom than anybody else in the company.
• 22:41
  Baxter Fain: Yes, 100%.
• 22:42
  Baxter Fain: You know, as 2011 starts going on, the market just was healing and healing.
• 22:48
  Baxter Fain: And I never had any thought about selling anything.
• 22:52
  Baxter Fain: We made it.
• 22:53
  Baxter Fain: Like we're cash flowing and we're reserving a little money.
• 22:56
  Baxter Fain: And you know, in the December of 11, we closed the joint venture equity deal with the family office, and all of a sudden the idea of selling a company came to me that really I wasn't expecting.
• 23:14
  Kory Mitchell: So tell us about that.
• 23:15
  Kory Mitchell: How does that even if you weren't expecting it, how did it happen?
• 23:19
  Baxter Fain: Uh you know, at that point we closed this deal.
• 23:22
  Baxter Fain: It was a ground-up construction deal, and it was a family office in Dallas that my managing broker in Dallas met at an SMU function, and we were at a restaurant in Dallas having dinner, and I said, Would you ever consider selling your company?
• 23:36
  Baxter Fain: And I think I laughed.
• 23:38
  Baxter Fain: So they said, Well, give us a number.
• 23:41
  Baxter Fain: So I just said a three multiple on the money that I had in the business.
• 23:47
  Baxter Fain: I had no idea what to say.
• 23:49
  Baxter Fain: And the next day they sent over a term sheet.
• 23:53
  Kory Mitchell: So you just pulled a number out of the sky as uh you know, three times what I got in the business?
• 23:59
  Kory Mitchell: Yep.
• 24:00
  Kory Mitchell: No, no reason.
• 24:02
  Baxter Fain: I might have heard in a movie somewhere.
• 24:04
  Baxter Fain: I wish I could tell you, but that felt like something that was reasonable, and I knew what our net income number looked like as an office, and that was roughly one and a half times you know that what I expected 2012 revenue to be or in net income to be.
• 24:21
  Baxter Fain: So that felt kind of fair.
• 24:23
  Baxter Fain: I have no idea if I way undercut myself or not, but in March of 2012 we closed the amount of anxiety that I went through with all of my people, all their families, and them not knowing it was horrible.
• 24:44
  Baxter Fain: I knew that this would change things.
• 24:49
  Baxter Fain: But the anxiety of changing all these people's lives when they didn't ask for it was really tough.
• 24:57
  Kory Mitchell: You know, this is very common.
• 25:00
  Kory Mitchell: Um, it's the the fear for your team and how they're going to be treated and what comes after for them.
• 25:06
  Kory Mitchell: And I mean, so what did come?
• 25:10
  Baxter Fain: Uh we closed.
• 25:13
  Baxter Fain: Um, so the transition, you know, even even from benefits, that alone, because I paid for a hundred percent of people's health care, and they didn't have a uh a premium to pay.
• 25:28
  Baxter Fain: And that changed.
• 25:29
  Baxter Fain: And there were a couple folks who worked with me that their spouse and other somebody other had health issues, significant ones.
• 25:37
  Baxter Fain: So I immediately said, all right, well, let's put together some cash reserves for you and your family to cover these premium payments, because I knew they couldn't afford it.
• 25:49
  Baxter Fain: Just one by one, issues like that.
• 25:53
  Baxter Fain: Um, but then it was exciting because they pumped in capital, you know, new equipment, growth, location, closings, you know, expenses, which to me as a business owner, all of a sudden it wasn't my checkbook.
• 26:10
  Baxter Fain: So that was all wonderful.
• 26:11
  Baxter Fain: And after about the first 90 to 120 days is when the, you know, we just aren't gonna do that anymore.
• 26:19
  Baxter Fain: Those statements started coming out.
• 26:21
  Baxter Fain: And commission splits, and I gave my people higher commission splits than market, and those changed, and which was market, I get it, but it still changed.
• 26:35
  Baxter Fain: And it got to a point where the change was the constant.
• 26:40
  Baxter Fain: And my people coming to me saying, When is it gonna stop?
• 26:45
  Baxter Fain: It was tough.
• 26:50
  Kory Mitchell: Baxter talks about the fact that he really didn't negotiate a lot of important things before he closed his deal.
• 26:59
  Kory Mitchell: An example he makes is he didn't negotiate the benefits for his team.
• 27:04
  Kory Mitchell: So all these things his team had gotten used to, you know, whether it be either healthcare benefits or 401k or just the vacation policy, whatever it might be, those are things you got to get right up front.
• 27:17
  Kory Mitchell: Once you take the check, you don't have any control of what's gonna happen with that company.
• 27:22
  Kory Mitchell: And so ultimately you need to make sure you negotiate the terms of your team and of your own compensation, by the way.
• 27:30
  Kory Mitchell: If you're planning on staying, you might have been giving yourself a low salary all these years and taking your money and profit.
• 27:36
  Kory Mitchell: If you're gonna stick around, you want to make sure you're paid what you're worth because you're incredibly valuable to the company.
• 27:42
  Kory Mitchell: When you take the check, you lose control of the destiny of the business, you know, and that's that's the thing, is you just don't know what shape that's gonna take.
• 27:54
  Kory Mitchell: Um and so how would you how would you do it differently now?
• 28:00
  Kory Mitchell: Or would you have done the deal?
• 28:05
  Baxter Fain: That's a great question.
• 28:07
  Baxter Fain: Because when you asked how would you do it now, I didn't really have an immediate thought.
• 28:12
  Baxter Fain: But then your second was would you have done the deal?
• 28:15
  Baxter Fain: And probably not.
• 28:19
  Baxter Fain: I look at where we were, I know what our pipeline was gonna be, and you look back from 2012 to 2022, I think what would have happened would have been unbelievable.
• 28:36
  Baxter Fain: Now, having said that, I did bring in two partners for the business, um, two very dear friends.
• 28:46
  Baxter Fain: Um, but there were some partnership things going on that were not going in the right direction either, that were unplanned, unforeseen, that made it challenging at the ownership level, let alone the day-by-day making money level, to where like this came along and then immediately solved that.
• 29:09
  Kory Mitchell: Another theme we see on this show is this sort of fear of figuring out how am I gonna get out of this company.
• 29:16
  Kory Mitchell: And sometimes it's burnout, sometimes it's family dynamics.
• 29:20
  Kory Mitchell: But another one that comes up often is it's a partnership dynamic.
• 29:25
  Kory Mitchell: Partners are hard.
• 29:26
  Kory Mitchell: I see this over and over again that folks come to me and they say, I want to exit my business, I don't know how to do it.
• 29:33
  Kory Mitchell: And when I say, Do you want to exit the business or do you want to get rid of your partner?
• 29:37
  Kory Mitchell: People have probably heard me say this before on the show, and that comes up here with Baxter.
• 29:43
  Kory Mitchell: So he leaves a business that actually was growing, and it had a lot of opportunity to continue growing, and he may have left a little bit too early.
• 29:53
  Kory Mitchell: And when he did it, he was gripped with guilt, and he hated the fact that he did that to his team, and he said if he had to do it over again, he wouldn't have.
• 30:07
  Kory Mitchell: So now you're a banker.
• 30:09
  Kory Mitchell: Um, you know, like like what the you know, which explains why you're wearing a suit, of course.
• 30:15
  Kory Mitchell: You know, I like I started this episode.
• 30:17
  Baxter Fain: I put it on today for you.
• 30:20
  Kory Mitchell: Yeah, no, it's it's uh I feel honored.
• 30:22
  Kory Mitchell: Um, you got you on your birthday, I got you in a suit.
• 30:25
  Kory Mitchell: But in any case, um, so you're this banker now.
• 30:28
  Kory Mitchell: What are some of the similarities you see between what you do as a banker, as a market leader, and what you see your clients that are guys like me that are like you know, these contractors that are building businesses, do you see a lot of similarities between your business and theirs?
• 30:52
  Baxter Fain: Banking, I would say, particularly after what we all went through in 2008, nine, ten, the amount of regulation that banks have to deal with is so punitive that it ultimately impacts the customers uh in an almost unstoppable way.
• 31:15
  Baxter Fain: I've been here for two and a half years now, and this is a company that I've loved my whole life, and I get the blessing of now being part of leadership.
• 31:26
  Baxter Fain: It's gone too far.
• 31:30
  Baxter Fain: And folks, whether it's a construction industry or consulting, accounting, legal work, you name it, uh, banks have become so challenging to navigate for customers that translating it becomes almost impossible.
• 31:50
  Baxter Fain: And in the construction industry, you know, they have the same issues, budgets, customers, counties, cities that they have to follow through on, inspections, timelines, budgets.
• 32:06
  Baxter Fain: And I think where we are succeeding here is being able to hold on to those relationships and help them as best we can.
• 32:19
  Baxter Fain: Um in a market right now where everything is skyrocketing, materials, labor, logistics, $6.50 diesel fuel, it makes contractors' jobs really, really tough right now.
• 32:36
  Kory Mitchell: Which is similar to the banks.
• 32:38
  Kory Mitchell: It's very paradoxical, right?
• 32:41
  Kory Mitchell: Because everything we see, you know, the stock market's been going up forever, people's 401ks are higher than ever, wages are higher than ever.
• 32:51
  Kory Mitchell: Um, but at the same time, wages haven't kept up with the cost of living.
• 32:55
  Kory Mitchell: And people feel the pain everywhere.
• 32:59
  Kory Mitchell: And so it's such a strange market.
• 33:01
  Kory Mitchell: People ask me all the time, it's really, really weird because we work with businesses in the built environment in general, all across construction and the trades.
• 33:12
  Kory Mitchell: We work with them to sell their companies, and people ask, is it a good time to sell your business?
• 33:18
  Kory Mitchell: Because they feel this pain in the market.
• 33:21
  Kory Mitchell: And the reality is, it's the best time ever to sell a business in this space because everyone has got all this capital.
• 33:30
  Kory Mitchell: There's not that many places to put it that are sort of AI resilient, and construction is one of them.
• 33:38
  Kory Mitchell: Yeah.
• 33:38
  Kory Mitchell: And so, what a weird way place right now to do business at kind of the crossroads of those two things.
• 33:46
  Baxter Fain: When interest rates triple in less than a year, all these companies, all their borrowing lines, all their inventory, everything gets smashed.
• 33:56
  Baxter Fain: So, right now, what we are seeing out there, people are struggling.
• 34:00
  Baxter Fain: Businesses are struggling.
• 34:02
  Baxter Fain: And interest rates going up, inflation continuing to go up.
• 34:06
  Baxter Fain: The way regulations look at unsecured lending or somebody that's new to a business, quote unquote, new, is very challenging.
• 34:15
  Kory Mitchell: Well, and that hits home for all of our listeners in so many ways, you know.
• 34:20
  Kory Mitchell: Whether it's their line of credit or the construction job they're working on, and then you talk inflation and fuel, has never been a tougher environment to be in contracting.
• 34:31
  Kory Mitchell: If you've got any materials or have any trucks on the road, uh, and you didn't price this in, which how the heck would you have priced it in to your job?
• 34:41
  Baxter Fain: Right.
• 34:41
  Kory Mitchell: You're getting squeezed.
• 34:43
  Kory Mitchell: So I I want to go back to something.
• 34:46
  Kory Mitchell: You said I've loved this bank my whole life.
• 34:48
  Kory Mitchell: What what were you talking about?
• 34:50
  Kory Mitchell: I did so there's a connection from you to this bank from like your whole life?
• 34:56
  Baxter Fain: Yes.
• 34:57
  Baxter Fain: So central bank is based in my hometown in uh Jefferson City.
• 35:03
  Baxter Fain: Uh my dad's best friend was head legal counsel for the bank.
• 35:07
  Baxter Fain: I had memories maybe three, four, five years old, going up to the top floor of the central bank building in Jeff City and getting free candy from them.
• 35:16
  Baxter Fain: Yeah.
• 35:17
  Baxter Fain: And they asked me in 18, I think, to do some consulting in Missouri.
• 35:22
  Baxter Fain: And then I got a call from them saying, Had you ever thought about doing banking?
• 35:28
  Baxter Fain: And I said, uh, no, I've done that once.
• 35:32
  Baxter Fain: I I am not good at sitting at desks.
• 35:35
  Baxter Fain: I I need I want to be out and about and meeting with people and my relationships.
• 35:39
  Baxter Fain: And it was the fall of 23.
• 35:42
  Baxter Fain: Um, and I said, We've got an idea.
• 35:46
  Baxter Fain: What would you think about being our CEO for Colorado, North Carolina?
• 35:51
  Baxter Fain: And I started laughing.
• 35:53
  Baxter Fain: I I said, I'm flattered, I'm humbled, but I don't know how to run a bank.
• 35:59
  Kory Mitchell: Yeah.
• 36:00
  Baxter Fain: And I said, Well, we've got a thousand people in Jeff City that run the bank.
• 36:04
  Baxter Fain: It's like, we want you to build locations, culture, people, productivity, that you've known our culture your whole life, profitability.
• 36:14
  Baxter Fain: I looked at Amy and I said, This is gonna change everything.
• 36:17
  Baxter Fain: Like, I'm gonna have to wear jackets and like pants and shoes.
• 36:21
  Baxter Fain: Pants.
• 36:22
  Baxter Fain: Yeah.
• 36:23
  Baxter Fain: God forbid pants.
• 36:25
  Baxter Fain: I know.
• 36:26
  Baxter Fain: And I called back, I said, you know, it'd be my honor to do this.
• 36:32
  Baxter Fain: So yes.
• 36:33
  Baxter Fain: And I've I've been here two and a half years, and uh, we have gone from 420 million in assets to just under 900 million in assets, and our deposits have gone from just over 50 to just shy of 300 million in deposits, and we've built a culture that this bank has had my whole life, but now we have it here.
• 36:59
  Baxter Fain: And it's as if I have my own company again that I get to impact people's lives every day, and that to me is is a full circle thing that I just can't be thankful enough for.
• 37:13
  Kory Mitchell: Thanks again for joining us this week on the turf.
• 37:16
  Kory Mitchell: I'm really grateful for all the support we've had.
• 37:18
  Kory Mitchell: I've had so many amazing comments, text messages, emails saying I'm learning every week from the show.
• 37:25
  Kory Mitchell: We have a bunch of regular guys like me, and a lot of times they didn't know what they were doing.
• 37:30
  Kory Mitchell: They just figured it out as they went.
• 37:32
  Kory Mitchell: And so that gives so many people the courage to do it, to go out there and start it, or to know that they're normal, that the things they're struggling with, the challenges they face, they're not alone.
• 37:45
  Kory Mitchell: Owning a business, being a CEO, it can be the loneliest job in the world.
• 37:50
  Kory Mitchell: And so I hope that you'll share this story with others that you think might enjoy it.
• 37:54
  Kory Mitchell: And just keep tuning in.
• 37:57
  Kory Mitchell: So until next time, let's win.