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It’s a topic on the mind of many business owners, what to do when family members are not interested or not able to run the company going forward. Listen in as Laurie Barkman speaks with Jamie Van Buren, Managing Director of Generational Transfer Entrepreneurs about his search fund that acquires legacy businesses. Jamie shares strategies for successful transitions and managing in uncertain times. Jamie’s mantra is that hope is inspirational, but it is not a strategy, and that fuels them forward.
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Show Notes:
- Jamie Van Buren LinkedIn
- Generational Transfer Entrepreneurs (GTE) website
- 8th US President Martin Van Buren
- Tepper School of Business at Carnegie Mellon University
- Swartz Center for Entrepreneurship
Full Transcript:
Laurie Barkman:
Welcome to Succession Stories, insights for next generation entrepreneurs. I’m Laurie Barkman. I’ve spent my career bringing an entrepreneurial approach to mature companies struggling with change as an outside executive of a third generation, 120 year old company, I was part of a long-term succession plan. Now I work with entrepreneurs, privately held companies, and family businesses to develop innovations that create enterprise value and transition plans to achieve their long-term goals. On this podcast, listen in as I talk with entrepreneurs who are driving innovation and culture change. I speak with owners who successfully transitioned their company and others who experienced disappointment along the way. Guests also include experts in multi-generational businesses and entrepreneurship. If you are a next generation entrepreneur looking for inspiration to grow and thrive, or an owner who can’t figure out the best way to transition their closely held company, this podcast is for you.
Laurie Barkman (00:58):
It’s a topic on the mind of many business owners, what to do when family members are not interested or not able to run the company going forward. To explore this topic further, I spoke with Jamie Van Buren. Jamie is the Managing Director at Generational Transfer Entrepreneurs, or GTE. GTE runs a search fund that acquires legacy businesses and then places energetic operators as CEOs. We talked about how transitions typically unfold with minimal changes in the first year. But this has been a time when strategic plans last just a few days and managing unforeseen challenges is the new normal. I think you’ll enjoy Jamie’s story and his mantra that hope is inspirational but it is not a strategy, and what fuels GTE forward.
Laurie Barkman (01:46):
Jamie, thanks so much for joining me on Succession Stories. It’s great to be with you and I really look forward to learning more about you as a serial entrepreneur and your firm Generational Transfer Entrepreneurs- as you call it, GTE. In different episodes of this show, I’ve talked about liquidity options for privately held companies, particularly multigenerational businesses where there is not a transition or succession to a family member, or to management. It’s just not an option for whatever reason. And your firm provides a way for owners to transition the ownership of their company to a next generation entrepreneur through acquisition, and then they run that business as the direct management. And so I look forward to learning all about that. But before we jump in, there’s one thing I’ve been so curious to ask you about. Are you related to Martin Van Buren, the eighth president of the United States?
Jamie Van Buren
Yes. Yes I am.
Laurie Barkman
And that’s a fascinating thing. I looked up a little bit about him. I couldn’t help but ask. I was so curious.
Jamie Van Buren (02:52):
Well, he’s not one of the most famous Presidents. He got into office and about three months into his presidency, he hit a major Depression in the United States, which of course they say was caused by the prior presence. It’s tough to cause a depression in your first three months unless you shut down an entire economy in four days because of a pandemic, which wasn’t his case. So he is famous for his thoughts on railroads versus canals. He really felt the canals were the way to go. And the railroads were never going to make it in the United States. So he pushed for canals, which is probably why his home state in New York has some significant canal networks. Not one of the most famous presidents but as a relation, we believe he was one of the greatest ones for sure.
Laurie Barkman (03:37):
Absolutely. And I am from upstate New York and so the Van Buren name was very familiar to me. I did a little bit of research and I also learned that Martin Van Buren was known for being a good deal maker, and so you and he had more than just your last name in common. So I thought that would probably be a great place to start. I want to start with your background. You’re a serial entrepreneur with more than 20 years in the construction materials and heavy construction industry. And I’d love to hear about how you got your start as a business owner.
Jamie Van Buren (04:11):
Well, so it didn’t start in that organization, but that was a family business that I joined back in early 90’s as a family member to a family owned heavy construction and construction material business. And for 20 some years while I was there, we grew the business through acquisition organically, as well as strategic acquisitions. We made many, many acquisitions over the years, large and small. So that I guess is where sort of that entrepreneurial minded spirit of buy a business, grow a business, make it bigger, buy another business, grow it organically, merge things together, see whether you can get one plus to one equal three, instead of one plus one to equal two. And so we did a lot of that and that gave me the fundamental basis to then make the next career move, which is really where we are now. So in 2013 I left that business.
Jamie Van Buren (05:11):
There were a number of family members in the business, so I left it in very good hands and I wanted to do my own thing. And so I left and I looked for a business to acquire or to go look for somebody that was going to be, successionary-less so that I could perhaps be that next person to take over and run the business myself and wound up buying a division of my former business because they were looking to do something different with that division. And that became the platform really for which we’ve built the current Generational Transfer Entrepreneurs model. So after a year and a half of searching to buy a business, I acquired our PennStress business and we continue to run that. And so I learned a lot about searching or search as it is, as I found out I was a searcher.
Jamie Van Buren (06:06):
But that’s not what you do when you’re being entrepreneurial. You don’t go, oh hey, I’m going to be a searcher. You go, hey, I’m going to go do the next thing and get a business and be the guy and take responsibility and live with the decisions you make, which is kind of I guess what entrepreneurs do without like, I don’t think there’s many entrepreneurs that go, hey, I’m an entrepreneur and that definition is I have to do the following. I think you just go out and do what your heart tells you should do and run a business and provide leadership. So that’s what we did. And then, I have a family. I have a son and he was working with me at the prior business, came to the new business with me, and then he went off to business school. And then that becomes the genesis of the story of how do you get from owning one business and leaving your family business to doing this GT Entrepreneur thing.
Laurie Barkman (07:01):
Yeah. So let’s just pause there because you covered a lot of ground. So you had a history with family business, you were involved with it, you ran it, and then you divested, and then reacquired all in a span of 20 years or so. So that was a lot happening. But you continued to want to be on that entrepreneurial journey and didn’t want to start something from scratch. So you started to look for a business and as you said, you were looking for a company that was, I think you made up a word here, successionary-less. I like that. You could go with that. So I’m curious to know about this next piece. So your son goes to business school and I understand that’s the Tepper School of Business. I’m also an alum from there – from Carnegie Mellon– a very good school here in Pittsburgh. And so he’s going to business school and at this time you’re looking for a business. You’re learning how to search, is that right?
Jamie Van Buren (07:52):
Yeah. So I had bought my business and brought him into that business and then we decided, Hey, you know, you should really have your own business and you’ve learned a lot of what you know from your dad at the prior place or people that have worked with your dad. So kind of what we know is what we know, go to business school and learn other things. And one thing that he learned was there’s a better, more specific way to search. I did what I call “old man country club search.” You network. I wasn’t sending out thousands of emails looking for people. You know you do the networking thing, you talk to your accountant friends, your lawyer friends, your business friends, and you try to find the place that may be available to acquire. But the search methodology as we’ve now learned is pretty well defined.
Jamie Van Buren (08:48):
And so the whole search fund thing start is one of the main things that he brings back from Carnegie Mellon to dad. And we start talking about and should he do a self-funded search, should he do a search fund and raise a fund or, because one of the things that I’ve done my entire career is analyze for efficiencies and we started looking at what is the search fund process? Who’s putting money in, who’s taking risk where, is there ways to do a search that would perhaps remove risk by putting it in the right buckets? If you put the risk in the appropriate buckets, could you actually just eliminate some of the risk out of the entire equation? And so when we really started breaking that whole thing down, as he learned more and more about raising a search fund, we determined that a company like what we ultimately call Generational Transfer Entrepreneurs could do exactly that.
Jamie Van Buren (09:46):
Search is a long lonely journey when you’re doing it by yourself. And so one of the prime things that our platform does by having two, three, or four people search at a time with an Operations Manager, with a mentor like myself, is it takes some of that heartache out of it. We’re trying to find people that are going to be good presidents, CEOs, entrepreneurs. Search is a completely different animal and it’s something that most people that ultimately are going to run a company, it’s not the most thrilling thing in the world. It’s something you just have to do. So if we could make that better and have more motivational days, then the updates will outnumber the down days. Because entrepreneurs like to be successful. Leaders like to have successes and if the success while you’re searching is measured by finding a company in closing, you do that once out of the entire time period.
Jamie Van Buren (10:43):
So by definition, every day that you don’t do that is in itself a failure. So having a good support team around you, is a real benefit to having the search platform that we’ve created a GTE. So that’s how you get from having one company. Son comes in, goes to Carnegie Mellon and we start slicing and dicing what a search fund raise actually is and we created what we believe is a good quality platform to allow a couple of people at a time to be searching efficiently so that they can get their search process started and finished quicker.
Laurie Barkman (11:20):
I think that’s a really good point. Sometimes innovations can be dramatic and sometimes innovations can be sort of a step function forward. This is a case where you experienced the process, you went through it in kind of a one to one to one, and then your son recognized, hey, you know what there’s a way to do this in a one to many and the folks who are listening to this show and maybe do digital marketing and are putting out content and are used to email campaigns and social and a sense of kind of building out this funnel, helping build a pipeline for the sales team. I’m sure it will resonate with them, and just conceptually for process improvement, it just makes sense. How can you take inherently what has been, as you said, traditionally kind of a country club process to democratize that a little bit more and give you some scale and bring in some people on the ground as you call them.
Laurie Barkman (12:14):
You are really honing in on the efficiency side of that equation. So it starts with the searching and I know that’s not an easy thing to do, but I wanted to talk about that a little bit. So your equation is let’s search for companies and then there’s this dance, right? There’s a negotiation with the owner. So let’s talk about the owners a little bit and the types of companies that fit your investment criteria for your limited partners. You know, what types of companies are you looking for? What are some of the industries or geographies or maybe it’s the size of the company, revenue, or EBITDA, what have you.
Jamie Van Buren (12:48):
I guess from a macro sense, let’s talk 25,000 feet. You have to have something that’s going to parse out this is an acceptable inbound call or an unacceptable inbound call. And so small sizes get weeded out pretty quickly. We look at $750,000 to $2.5 to $3 million EBITDA range. So when we get an inbound call and find out that the EBITDA is $10 million, generally the conversation is going to end pretty quickly. But we do have some private equity companies that are interested. So we have certain questions that we want answers to relative to transition. And if it really just looks like someone’s just really looking to exit and have a sale, we will suggest to them a couple of the “private equity company partners” that we have that they might talk to and we might facilitate a conversation on the smaller end.
Jamie Van Buren (13:45):
We sort of do the same thing but with a different slant. So if it’s less than $750,000, and we have bought and are in the process of buying another company that that is less than $750,000, I really have the searchers vet out what the growth opportunities are. And this has nothing to do with smaller companies being good or bad and having to have growth from the equity or LP investor side of things because that’s not the requirement. We have young, energetic, endless energy kind of searchers. And if I put them into a company that’s too small with not really fantastic growth opportunities, I honestly think they’re going to get in there and after 12 or 18 months of transition, they’re going to be bored. And so we’re trying to avoid the this is just too small and it’s not going to go anywhere syndrome.
Jamie Van Buren (14:42):
So we have bought smaller companies that pass the litmus test of no, we really think we can do some really good dynamic things. Either there’s a big aftermarket to add on bolt on acquisitions or we just see the organic growth opportunities as being abundant. We require three to five really solid growth strategies for us to acquire any company. Again, just to make sure that we’re not buying a company and the person’s going to be bored because they’re just there. You have to be of the right size, 25,000 foot view, there have to be three to five really good growth strategies of which will allow us to go a little bit smaller on the spectrum sometimes. Then we just have to fundamentally make sure that the strategies have true tactical things that can be executed on because selling more by selling more is not a strategy.
Jamie Van Buren (15:40):
And we’ll hear that from a lot of business owners when we ask how could you grow this company? They’ll say, well, we think you could sell more, which is an appropriate answer for round one questioning. But round two questioning is very specific. How would I sell more? And when they can’t figure that out, we can’t figure it out. But a lot of times they know exactly, put a sales person here, put a sales person there. So that’s just examples of tactically we need tactics that are going to support the strategies. And so at 25,000 feet, that’s the first cut when calls come in and say, hey, I might be interested in selling to you.
Laurie Barkman (16:19):
That makes sense. And I really appreciate that you’re looking for the growth opportunities and isn’t a quick flip and probably that’s meaningful for owners whose name is on the door and who still have that pride and relationships with their employees. Does that come up in conversation where they are curious about this ongoing longer term view, what will happen to their company after they leave?
Jamie Van Buren (16:45):
Yeah. And so they’re not talking to me almost ever. It’s rare that I would get involved with an owner. Occasionally I’ll go on a site visit because I think they’re fun depending on what the actual industry is that they’re in. And so they’re discussing this with an individual who’s searching for what they hope is their legacy family business of the searchers. So that discussion really always goes the same way. And that is, I’m looking for a business to acquire that I can run and move to Charlotte, North Carolina and spend the rest of my life, meet somebody, raise a family and be there. I mean that is the purpose of this. If something else happens, they get down there and find out that the trash hauling business wasn’t their life’s mission because now that they spent five years doing it, they realize this isn’t really what I wanted to do. Or my son, bought a fence construction business. He may find in five or six years that that really isn’t that exciting to him.
Jamie Van Buren (17:56):
But we go into these things that they are going to be that they are exciting. That’s why they pursue them. We have conversations with owners, and I guess again from 25,000 feet, I ask two questions fundamentally when it comes back: can you see yourself in that business long-term and would you enjoy living in Raleigh, North Carolina? If the answer to either one of those is a big hesitation, then I’m like, I think you ought to take a pass. It could be a great deal, but if you’re not inspired to go to Raleigh, North Carolina and be in the widget manufacturing business, it’s probably not going to be the biggest success in the world. You can’t just chase, hey, it modeled out great and the money looks fantastic. That’s not inspiring five years, six years, seven years down the road. So those conversations with the owners always occur and they always occur early because the owners are always interested in that.
Jamie Van Buren (18:53):
Have you ever been to Raleigh? Yeah, I traveled through there. It was really nice. What makes you interested in widgets? Well, I really liked manufacturing and it’s one of the things that’s been high on my list. And so that’s, that’s an early discussion. The owners almost always bring them up and our people pass those discussions because they’re sending out lists specifically in industries that they are interested in. And generally we’re sending them out in areas that the searchers would be interested in living in. So they’re not getting lots of calls back from, if you don’t want to go to Nevada, you’re not sending letters to businesses in Nevada.
Laurie Barkman (19:35):
So it’s a fit. You’re trying to find that fit early. And so there’s a lot of dimensions to fit because you have the process, you have the search process, then you have these Entrepreneurs-in-Residence, or Operators-in-Residence. Tell us a little bit about who they are and why are they doing this. It looks like they’re interested in buying a business and having that as an exciting opportunity. Are they people who have worked in a privately held company before? What type of criteria do you see makes them successful going forward?
Jamie Van Buren (20:06):
The hiring process is a very fickle process and there’s some people that are good at it, but generally you’re just looking for somebody. So our first cut is we need somebody that’s been an operator before. They’ve been in operations, they don’t have to have run the company. Then they go to business school and they get their MBA and then they may have spent a year or two still trying to figure some things out. Or they’re now looking to become entrepreneurial. And we’re really interviewing people to see is this something that they’re passionate about? Some people leave business school and they’re still not sure what they want to do and this could be something and we’re not in the business of taking that risk. We’re really looking for people that typically went to business school because they thought they wanted to do this or they definitely wanted to do this.
Jamie Van Buren (21:06):
Not that they went to business school to find themselves because they graduated from undergrad, now they’re going to business school and during business school at that point they heard something about entrepreneurship and thought this might be fun to try. Most of the people that are doing this really have some background in entrepreneurship. Maybe a family member started a business or a family member bought a business and grew it and that sort of inspired them and they were working in a middle management or a low end management job for five or six years. Saw what other opportunities might present themselves in the higher ranks and thought this would be a way to, hey, I can do that. So, if I bought a business that was as small as the division of the people that are above me in my company, I think I could run that myself.
Jamie Van Buren (21:55):
And so it’s that inspiration that drove them to MBA school cause they didn’t think they were strong enough financially or they didn’t think they were strong enough operationally. And they went and they did that and they undertook probably a little bit of debt in some instances. And now they have this, a burning desire to get their debt paid off, get into business and lead the teams in the business. And so this smaller end effort fits really how they view themselves. And so what we’re really trying to figure out is the President / CEO role something that they truly can and have been visualizing themselves as doing? And then does the background of what they did do, even though it might’ve been only five years as a project manager at a company does that, will those skills transfer over? And so that’s the way we are looking for people. Not everybody that does a search fund has that background.
Laurie Barkman (22:59):
Right. And I would assume they need to have a kind of fire in the belly to really want to do this. This is not easy, especially, you have the dance, you find the company, you negotiate the deal, you signed the deal, and now day one starts. And I’m really curious to learn more about that. So new management’s coming in, these newly minted MBAs who hopefully have some awesome experience under their belt, as you said, as an operator previously. But now they’re coming in. That cannot be an easy thing necessarily. I’m curious about the transition with the prior owners to those owners typically stay on, are they gone upon deal signature? Is there a transition period and what have you seen in terms of some of the challenges? What have you learned in terms of when the operators come in as new management, how it can go the wrong way. I’m sure a lot of things go the right way, but if you can share some of the things that you try to avoid, that would be interesting to hear.
Jamie Van Buren (23:46):
All of our owners have stayed for a three to six months and some of them are still around working a year, two years later in a consulting role. Nobody’s full time after a year or two years. But they’re all still around consulting, helping, doing projects. I think we’ve avoided any catastrophes relative to transition. Our model is for the first six months to a year, we really don’t change much. There’s too much stress having a full time owner that’s still there full time for the first three to six months, which is usually what we negotiate.
Jamie Van Buren (24:41):
And having a new full time young person that may have great aspirational dreams and during diligence we see things that we’d like to change, be them just technical tweaks around HR stuff that looks inconsistent or strategies that we’d like to move in a slightly different direction. That’s problematic if you try to do that in the first three to six months. The biggest challenge is the tension between having some really cool good ideas and not doing them early. And the businesses, if you look at it very pragmatically, the businesses have been doing very well because we’re buying good businesses. So the businesses have been doing very well without the little tweaks that we want to do without any big strategic steps. And so to sit back be patient, learn what the owners know, get to know the people, which is very, very important.
Jamie Van Buren (25:38):
If the owner knows every person in the 50 man company that works there, then the new owner better also know that. If there’s 200 people in the owner new first and second tier management, then the new owner better know first and second tier management. So we have to spend the time so that our new guy, at least fundamentally relationship wise, looks like the old guy. Six months later, a year later you want to start, buying other businesses and bringing them in, changing philosophies a little bit. You can start doing that. But I think we’ve avoided really any bad news in the first three, six, nine months because we just don’t change things. We try to run the businesses the way the old owner ran the business and again, they were very successful. So change is either going to be good or it’s going to be bad.
Jamie Van Buren (26:34):
Not changing is going to be status quo. The banks want to see status quo. The investors want to see status quo. At the upper level of the senior guys, myself, my CFO, we want to see good, solid status quo performance and we can make all the changes we want once we really understand what the businesses that we have. You clearly learn things in the first 30 days that you didn’t pick up on in diligence and some of them are good surprises and some of them aren’t, they’re built into the financial statement you bought. So even the bad surprises can’t be that detrimental. They just give you a good opportunity. And when I hear about them, I just tell the guy, put it in your notebook, we’ll deal with it in six months. But it’s not worth creating that change or turmoil now.
Laurie Barkman (27:23):
I used to work with a CEO that used to say when everything is changing you can’t change everything. And I think there’s a lot of truth to that, and I think that’s a big part of what you just talked about. So that makes a lot of sense. I want to ask also now in this time of COVID-19 and the pandemic, what you think about, there’s a meme going around the internet of EBITDAC. So EBITDA then EBITDAC, it’s a non-gap accounting term, but the acronym now that’s going around is “earnings before interest, depreciation and taxes, amortization and coronavirus.” And there’s probably some truth to that in terms of business valuations. And so what impact do you think that the coronavirus is going to have on business owners and how they view their business and then likewise longer term changes and how buyers are going to evaluate those businesses?
Jamie Van Buren (28:26):
I guess I could answer that question perhaps with, by not answering that question. Four weeks ago, all businesses’ business plan on a Monday lasted until Wednesday, I don’t know, Wednesday lasted till Friday. So that was about as long a business plan as you could actually be operating under a strategic plan for a business lasted sometime into the next week. And so we now know more. Rules were changing very rapidly. We had days where rules at 9:00 in the morning were different than the rules we were allowed to operate by 3:00 in the afternoon. As soon as this happened, all of our, I lived through 2007 in a very, very difficult environment in a difficult way. And, and so things that we didn’t do, we learned we should have done things we did do or were apprehensive about doing, we understood we shouldn’t have done.
Jamie Van Buren (29:22):
And so collectively my CFO and I have lived through that and so we put our heads together the day this whole thing happened sometime in mid-March. I was away and I came back and I’m like what is the plan? And so we called up everybody and we said this is the operating plan that we are now under and the rules are going to change every day. But, but fundamentally these businesses will now be operated until further notice like this. Understanding full well that none of the operators, I mean in 2007 all of our operators were probably in high school, maybe college at best. And so we had to and nobody had lived through this before. So we were applying fundamental business rules in a calamity situation to an environment that we knew nothing about. We’re seven weeks into this now.
Jamie Van Buren (30:21):
And so rule number one was you must be able to shut your business down in one hour. So if the call comes in from the Governor, or the President, or us, saying you have to be closed, you have to have thought through a business plan B, that closes your business instantly. So you start layering all of those things on a business. And now we, we pretty much fundamentally believe on a Monday we can plan through and into the next week. And strategically to the extent that we have PPP money and Cares Act money, we’re running strategic plans halfway through that with the hope that we will then halfway through the eight week term of that be able to roll out something that would be more strategic in a three to four month period. Just hoping that we know more strategically at that point.
Jamie Van Buren (31:13):
So our business plans now last into that period and our strategy will be recast then. So getting back to business valuations and fundamentals, I have no idea what business values look like right now. I don’t know when we will actually start searching again. I believe morally, I think moral is the right term there. It really, it would be disingenuine for us to be sending out letters, asking people that if you’re the actual target market of ours. So fundamentally you created your business, you love your business like a family, that guy who we absolutely want to reach with our email. I don’t want to bother him right now. I just feel like that would be like a moral intrusion into this person. Cause I know the businesses that we’re involved in and the business that I personally own. If somebody called me up right now and said, are you willing to sell your business?
Jamie Van Buren (32:16):
Or when salespeople call me up and ask me anything that they’re trying to sell me, I’m offended. I’m personally offended. I’m trying to look out for the health and the welfare of our employees, as are all the Presidents and CEOs of all of our businesses. And for someone to call me up and ask me, do I want to sell my business right now just is absurd. So I don’t know when we’ll be able to start doing that again. And I don’t know what that will, I don’t know what that ask will look like. So I don’t know whether that’s August. Like in the very beginning of this, I was thinking as sometime in the summer, this will loosen up. I don’t know whether this is worse or better than I envisioned, but I don’t have a great vision that frees up in August or September but it could.
Jamie Van Buren (33:04):
Strategically, I would guess next year at this time we would probably be full blown search cause you have to have some level of long term plan and so sometime between August and next May, and the market will start figuring out what valuations look like. And you know, if this is a real quick down and up from an economic standpoint, then I think we’ll just erase this six month period off of people’s books. If this leads to a long drawn out depression, then it’s going to be a marketplace where people are buying things on speculation that someday the business may recover. And that sounds like a lot of workout and we don’t do workout with search fund people. Some search funders do, our platform doesn’t support workout.
Laurie Barkman (34:03):
Right. There’s a lot of important things you just talked about there. And I think one of which was your experience from 2007– the resilience, the learnings and how you were able to apply that to today and then immediately go into a planning mode from a business standpoint, recognizing that your operators did not probably have that hindsight as a benefit and as a way to focus forward. So I’m guessing that your businesses are obviously complying with all the restrictions in place. I don’t know if any of them are food production or a necessary business, essential business. And I appreciate that you’re also sensitive to the reach outs of others and not pushing at a time when, you’re right, it can seem unsavory and that’s not your brand.
Jamie Van Buren (34:52):
Like I’m trying to be opportunistic in a face of a catastrophe. Like that certainly wouldn’t be our meaning, but I would take it that way if I was an owner that I was reached out to. I mean, in times of uncertainty, Rule Number One is get as much liquidity as you possibly can in all scenarios. And uncertainty in this case is everything from our Governor suggesting that all people that don’t want to work should stay on unemployment unless your employer can pay you more money to try to incent you, which is absolutely blatantly illegal. So we’re not following that. But every other edict when the Governor said, you’re shut down unless you’re essential. My son’s company shut down completely – President to the janitor, all laid off, done. It was shuttered until companies started getting waivers that my son was doing business for and they were requiring him to come back.
Jamie Van Buren (35:54):
We didn’t make the rules about what was life sustaining and what wasn’t. And so if a business was deemed to be life sustaining, it’s operating because we believe fundamentally that somebody in the government made a decision that the economies of that business should be running. And so we’re running that essentially at any cost with employees. If employees don’t come to work, we’re trying to run because somebody made the decision you are supposed to be running. I don’t know why. And we passed the word to all of our companies. We’re not going to question why. We’re just going to do it. And so that’s the essence of what we’ve been doing. But in order to survive through difficult times in uncertainty, you have to maximize your liquidity availability. So we’ve gone out and we’ve gotten the loans that we can get and we’ve asked for liquidity from the banks and we’ve done all of those things that you should do in an uncertain time.
Jamie Van Buren (36:51):
And three, four or five months from now, we’ll be hopefully able to look back cause it’ll be subsiding and we’ll be able to look back and say, well, we overdid it or we under did it. But in the current time with what you know, any of these businesses could be shut down again in a heartbeat. And businesses don’t last very long without income. So we’ve hedged completely about maximizing our liquidity and that was edict rule number one, after comply with all the rules and laws. And so we’ve tried to do that the best that we can, which is difficult when they change the rules every hour on you. We just fundamentally believe we have to follow those rules, even if we don’t like them. And we don’t, we try not to complain too much about them. We didn’t create the pandemic like we didn’t run our business fundamentally wrong and now have a problem, someone else is, for whatever reason, this exists. And so we’re just going to live with the rules that are given. And if that means that one or two of our businesses go out of business, that’ll be a shame. But that’s what will have to happen.
Laurie Barkman (38:08):
Yes. And you’ll deal with it just like you’ve dealt with so many other things, there’s been other things that are bad. That’s right. That’s right. Well, I want to start to move into sort of little bit of the lighter side towards the end of our interview and ask, what is something you’re most proud of in your career?
Jamie Van Buren (38:24):
So this really is almost kind of off topic from entrepreneurial, but for six or seven years, I was involved in a group, an industry group for heavy highway construction and construction material in Pennsylvania. And we worked to try to fix the funding situation for highways and bridges in the state of Pennsylvania, which required, educating a lot of people, marketing, various and sundry, just educational pieces so that we could improve the funding scenario. And in, 2013, 2014, 2015, the Act 89 [Transportation Plan], but we passed a significant gas tax in the State of Pennsylvania and I was part of the leadership team that spent six or seven years, a lot of time, a lot of effort in getting that done. So it was one of the largest tax increases in the State of Pennsylvania. But fortunately for the way our state is structured, all of that money has to be spent on highways and bridges and safety and improvement. So that really was one of the greatest things that I’ve ever been able to work on and help from a leadership standpoint. You just don’t get involved in something that large, you know.
Laurie Barkman (39:44):
I’m sure a lot of time and that was not easy. And infrastructure is something we all care about. And Pennsylvania I understand as a state has, if it’s not the most or it’s very high up there. in terms of ranking of the most roads for all states. Is that correct?
Jamie Van Buren (40:01):
Yeah, there’s like, I knew all of these off the back of my hand when we were working on this, but there’s like 68,000 or 72,000 miles of state and local roads in the state of Pennsylvania and they all get some level of funding from the state. And it was just really necessary. And then we also were cooperative with mass transit because, as in central Pennsylvania, we don’t have a whole lot of reliance on mass transit, but I am from Philadelphia. Philadelphia doesn’t move if you don’t have subways and buses and rail. And so you have to look out for them. So we were able to raise a significant amount of money for the mass transit operations as well for their capital needs, not for their operational needs. And so, that was a very difficult thing to get done. It took a long time. We had a four year plan, it took six. So it took a little endurance. Once you got past the line that you’d sort of said, hey, we think we should be able to get it done by now.
Laurie Barkman (41:06):
Endurance does not shock me because off of the call prior to us talking, you had told me that you run Ironman races. So endurance is probably a good word for you, Jamie. Last question for you. I like to ask all my guests, what’s your favorite quote or mantra regarding entrepreneurship?
Jamie Van Buren (41:24):
So it kind of is the step two after– I don’t know whether this is entrepreneurship or not, but the guys have heard me talk about it an awful lot of times. Because when we ask them what’s the strategies for growth and somebody says, well I would hope that we could do this. They’ve heard me say more than once.
Hope is not a strategy. Hope is inspirational and it’s great to have hope and we need hope. It’s what a lot of times keeps us motivated in downtimes. Strategies are backed by fundamentally executable tactical tasks.
And so I believe if you ask those people that work with me and for me that more than once they’ve heard me say that’s a great idea, but hope isn’t a strategy. And normally they’re just mixing terms. But when I start pushing them fundamentally in, okay, that is a good strategy, but what are the things that are going to go to support that. Hoping more is not a tactic. So having more hope isn’t a tactic. So that’s when they start talking about the things that can be executed on. And so probably, I would say that that’s something that in the entrepreneurial realm, in the halls of CMU, which is where GTE is located in the Swartz Center for Entrepreneurship. I’ve said that more than once and I’ve said it in more lectures than probably I could count.
Laurie Barkman (42:58):
it resonates with me for sure. As somebody who does strategic planning with clients, and I have literally uttered those same words and it does make people pause and think about what they just said, and then you’re right. When they echo it back to you, you know you’ve reached them at a different level and that they totally get it. Jamie, thank you so much for being with me today. It was great to speak with you and thanks for sharing your experience about succession and transitions and talking to us about Generational Transfer Entrepreneurs. Thanks so much.
Jamie Van Buren (43:31):
It was fun. Thank you. Great meeting you.
Laurie Barkman:
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