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The Business of Family
68 minutes | Jun 20, 2022
Scott Peppet - Building a Family-Focused Office for Sam Zell
Scott Peppet serves as the President of Chai Trust Company LLC, the private trust company that serves as the family office for Sam Zell (https://www.egizell.com/people/sam-zell/) and his family. Equity Group Investments (https://www.egizell.com/), a division of Chai trust, provides investment management services on its behalf. From 2000 to 2018, Scott was a professor of Law at the University of Chicago where he focused on Bargaining, Dispute Resolution, Translational Law, and the complexities of multigenerational family enterprises. Scott speaks regularly on Family Offices, Private Trust companies as well as Intergenerational Leadership while also maintaining an active website (https://scottpeppet.com/). Scott is a G2 family member. He is Sam Zell's son-in-law, having married Sam's eldest daughter. Standout Quotes: * "Business works on short wavelengths and family works on very long wavelengths" - [Peter Evans, Scott] * "What does it mean to try and help family members really develop and really take ownership, so they can figure out how to deploy what they have?" - [Scott] * "There are many different kinds of wealth… you probably aren't put on the earth to grow the financial capital, there's lots of professionals who can help you do that" - [Scott] * "Too often, the implicit message sent to family members is 'this system is really here to steward the money" - [Scott] * “Families rarely fail for taking too much risk, they fail for taking too little risk” - [Scott] * "My goal is to create a family-focused office, not a family office, and a trusted company, not a Trust company" - [Scott] * "If you want to succeed you have to have a family that understands what you're doing" - [Scott] Key Takeaways: * Scott is the President of Chai Trust Company, LLC, the private trust company that serves as the family office for Sam Zell and his family. Equity Group Investments, a division of Chai trust, provides investment management services on its behalf. From 2000 to 2018, Scott was a professor of Law at the University of Chicago where he focused on Bargaining, Dispute Resolution, Translational Law, and the complexities of multigenerational family enterprises. He speaks on Family Offices, Private Trust companies as well as Intergenerational Leadership while also maintaining his active website. Scott is a G2 family member, as he is Sam Zell's son-in-law. * Scott got married to Sam's older daughter 20 years ago while he was already teaching as a Law professor. Since then he got increasingly curious about family enterprises till he fully transitioned into working in the family enterprise. After a few months of knowing each other, they started dating but Scott had no idea about her family wealth till she opened up about it. * About Sam Zell: Sam is a serial entrepreneur, who first built a business in Real Estate, following which he turned to distressed Corporate Investing in the 80s, and then in the 90s, he created some of the largest REITs in the US today. He has continued to work on REITs and corporate investing since then. He has done several businesses over the years. Sam is also known for his straight talk, always making his stand clear in any discussion. He is also very astute and broad in his thinking. * As a Law professor, Scott worked on conflict intervention with corporations all over the world. When he started having kids, he got curious about how the family wealth could be managed productively for the family, especially for the kids. Sam encouraged him to work on it. Some authors that stood out in Scott's study were Jay Hughes and John Davis. * Scott describes the family structure; at the time Scott joined the family, Sam was 59 years, his 3 children were in their 30s, and as of now, there are 9 grandchildren. There was a form of governance structure, a board with his 3 children which wasn't functional as Sam made most decisions. However, now there has been a need to rebuild the structure as the company has evolved and this has been a huge part of Scott's focus since he moved full-time into the family enterprise. He has had to put in a lot of work to fully understand how the family enterprise functions; to make things change in a family system that often moves very slowly, you have to know where you're going. It involves a combination of urgency and patience, while thinking long-term, steps need to be taken early and consistently. Most of the family members are not employees, some of them are on the board. There is one board with both independent and family directors. * The business continues to be eclectic, investing across all kinds of sectors, especially with the benefit of permanent long-term capital. At the same time, complex actions and decisions can be taken quickly. Also, family learning and development are being built as the kids grow to become adults. * In the inflationary period currently, the business finds smaller companies that need capital and expertise to grow to the next level; companies that would rather grow their equity than sell to a PE company. These companies are great partners for the business since their interests are already aligned to grow the equity. * While most families would rather have more joy over more money, the reality is that many family members Scott has met around the world don't have that much joy or self-possessed ability to do things in the world. They often feel enmeshed in a family structure they have little control over. This is not good for the family or the external world that could be benefitting from the good such families could accomplish. * Laying the foundation for the next generation practically, Scott uses some rules. The first is based on the 5 Capitals; Not everyone is supposed to grow financial capital but they can add to the overall well-being of the family by building on the other forms of capital. Unfortunately, the experience in most families is that stewarding the money is the main goal, which is an implicit frame that must be dissolved. The second one is that each family member should participate meaningfully in every learning experience. Doing this means creating activities or agendas that are not solely about financial capital or the enterprise, although as the kids get older they get interested in the business itself. * To assess how well you're building human capital, score how often you were talking about money over the last few years in your family meeting. Most times it forms a huge percentage of those meetings, but in a setting where money isn't the focus, there is a push to find other topics that can help people open up. Scott's family has started experimenting with these kinds of meetings interspersed with other activities. * These kinds of meetings expose several overlapping purposes, help family members connect, offer a chance for content transfer, and contribute to self-development and self-growth. Different topics are often discussed and it becomes obvious how they are related. Listeners are encouraged to check Scott's curriculum diagram on his website. * There is often a dichotomy between responsible stewards and lazy inheritors, however, managing inherited wealth can be complicated. The general goal is to cultivate engaged owners and integrate financial capital into their lives productively, but there is no concrete formula on how to do it. * Most family offices should just be Money offices because all their time is focused on financial capital and legal risk such that the family itself is secondary. On the other hand, a family-focused office is there to grow the family's human capital as much as the financial capital. * Trust companies around the world have become ubiquitous in wealthy families although they often don't have much life in them. However, a trusted company is a part of the family ecosystem which goes beyond managing money to a level of trust-building with the family. That forms the basis of how Scott decides on whether or not progress is being made; 'what is the level of trust in the system?'. Not to downplay the role of financial investment, but there has to be synergy within the system. * Over the long term, families rarely fail for taking too much risk, they fail for taking too little risk. They focus so much on preservation because they are afraid of taking risks, and they wither in the end. Sam Zell still takes as much risk as he used to, not as a gamble but with a critical assessment of each situation. It is important to preserve the investment company with its risk-taking culture, and at the same time grow a family that can continue such activity over time. * The family enterprise avoids governing by committee, especially on the investment side, so as to move quickly. Having family members behind an entity is not a bad idea but there's no point in having many family members making every investment decision. In Scott's family enterprise, this bureaucracy is avoided by ensuring decisions are narrowed down to the exact professionals. Other bigger family questions can be discussed by the family as a whole. Mike's family employs Adhocracy which encourages a culture to challenge the slow slide into bureaucracy. * The team behind the family enterprises consists of about 85 people and functions as one entity that is the trust company, the family office, and the investment management company. There are investment professionals, lawyers, a family office and operations group, and accountants. All of these are interdependent. The company is mostly focused in the US but there are also real estate investments in other countries. * As an outsider joining the family, it is easy to simply be a critic which will result in pushback from the family. From the onset, Scott acted from a place of love for the family and was concerned with how to continue to build productivity within the family. He intentionally took time to study the family business all the while continuing his profession as a Law professor. He advises inlaws to keep their jobs for as long as possible till they are sure they can add value to the family enterprise. He also understands that being an inlaw comes with restrictions from certain roles, but rather than get overly perturbed about it, he focuses on the
54 minutes | Apr 24, 2022
Peter Evans - Trusted Advisor to Legacy Families & Member of a 7th Generation Family Holding Company
Peter Evans is an advisor, consultant, and speaker to legacy families, family offices, and multigenerational enterprises all around the world. Peter creates the opportunities where affluent families have the greatest chance of flourishing. Peter is also part of a legacy family himself; he is a 5th generation member of a 7th generation American enterprise established in 1885. Peter married into this family and was astounded by the welcoming and inclusive nature of his wife's large family. The family enterprise is now a holding company with over 500 shareholders, all of whom are family members. Of particular interest are the Family Summits held annually, which are designed to re-engage family members, partake in family traditions and rituals, discuss philanthropy and reset for the year ahead. Peter shares his experience of what it was like to join a well-established legacy family and how he has used this unique experience to pivot his career and help other legacy families flourish. Standout Quotes: * "We can't really plan significantly for longer than 5-10 years, you just learn that along the way, things change; the world changes" - [Peter] * "I'm really interested in making sure that the family's values are aligned with their actions" - [Peter] * "To have some sort of formal way of telling stories, I think, is critical" - [Peter] * "The most important thing you'll do are these rituals" - [Peter] * "If we have the privilege of having wealth and means, we have an obligation to give back" - [Peter] Key Takeaways: * Peter is the 5th generation member of a 7th generation American enterprise established in 1885. He is an adviser, consultant, and speaker to legacy families, family offices, and multigenerational enterprises globally. He became a part of the family when he married his wife and was included. * The company began as a group of lumber companies started by two brothers who liquidated everything after 45 years to invest with their partner, Friedrich Weyerhäuser in 1901. Peter's family had continued to be involved with the business as it expanded, although there were no male heirs in the second generation, till the 3rd generation. The family later started a private trust company in 1964, at which point they became the 3rd largest retailer of building materials in the US. * Today with diversification, they are now a holding company with over 500 shareholders, all of whom are family members. Peter's children are already involved with the family business actively and eagerly look forward to partaking in the annual family meetings. * The Family Summit: This annual family meeting usually runs over 3-5 days, on the same weekend every year, with activities like the coming-of-age ritual and elders’ ritual, Olympic games, business meetings, philanthropy group meetings, and talks by guest speakers. The goal is to make it so interesting that people want to come back. * Planning Never Stops; the family forms a long-range planning committee every 5 years to have a clean slate to think through everything. A pattern of liquidating a significant resource once every 20 years was also observed; this 'Generational Harvest' would provide liquidity to each shareholder, giving them the freedom to make their own investments. * The family investments today are largely in Real Estate, like residence halls or low-income housing units, all intentionally inclined towards 'doing well by doing good' which is a value the family holds. * Peter left his role as president of the family enterprise in 2003 and has since then helped other family enterprises manage their multigenerational interests. He believes families with vast amounts of capital can make decisions that affect millions of lives and works to ensure that these families act in accordance with their values. "I can hold a mirror up to you so that you can begin to see yourself, your family system, and your footprint in the world; the other thing I can do is open the window so that you can look out into the world and see how other families made choices during different transitions" * Peter's most satisfying work is sitting with family members and watching the interactions; his work is focused on helping build bridges in communication and relationships. His role is a position between being a business consultant, priest, and therapist all of which require a deep level of trust and respect. At its core, his work is about relationships. * Peter’s role as a 'Personne de confiance': This is a confidential advisor based on their trust, respect, and honesty. The way to get into that role is to come into the family that needs help, taking time to build trust and confidence. Very often Peter has to model a way of doing things like chairing a meeting, inclusion, and effective decision-making while keeping in mind that the goal is to pass on the mantle of leadership. Most of the time, the G2 generation is the one that reaches out to him, however, in some cases when the patriarchs are comfortable giving up authority, this spurs the G2 to take up the mantle and learn how to hand over to G3. Sometimes, the G2 has even already made the transition in their lifetime, adapting to the values and culture while the G3 grows up having a completely different experience. * Storytelling is critical in documenting family history. Peter uses this both in his family enterprise and while working with others. His family works with a full-time archivist who helps research the lives of people such that detailed questions can be asked and stories can be told more deeply. It also offers an opportunity to share lessons from the failures, trials, and tribulations of family members. * While still active in his family he was always open to learning from other families and when he left his role, he wanted to be involved in creating the consciousness in families that they can impact the world. Based on Peter's background, he has the experience which gets him into those family spaces after which he starts work. * From Peter's experience, when it comes to cultural mindsets like having female leaders, and diversity, there is a lot more openness in the US than in most other places. Although he tries to encourage such views, some cultures are just not ready for it. However, families of significant or multigenerational wealth are naturally global these days, hence it is becoming increasingly difficult to avoid influence from other cultures. * Family Rituals are the most important way to bring the family together continuously over the years because they help young people feel acknowledged. Peter's family has a children's program packed with several activities that keep them eager to return. After the age of 14, they can start going to business meetings. These activities help the family familiarize themselves with teenagers and create a more welcoming environment in the business meetings. * It is necessary to identify who is family and the kinds of roles available to different members. Each family does this differently, but Peter's family has selected the option of Inclusion. * Building Family Governance starts with having a reliable cadence of meetings quarterly, as well as major annual gatherings; this goes hand and hand with excellent communication. The next step would be to memorialize family values and have a direction and then this can be the foundation of a constitution. The constitution is a living document and should be examined and changed as required. * Peter also uses the concept of the "5 Capitals" within his family and the families he works with. * Philanthropy is another tool Peter has been familiar with. It is fun to watch families come together to figure out ways to give back based on their different interests and drives. * Very often, families look at their business as heirlooms which begs the question "Is the business an heirloom or an investment?" Sometimes it is hard to sell a business because it's been our identity for years; thus, selling is easy if the business is only an investment but if it functions as an heirloom then it may not be advisable. In some situations, the business is on the spectrum in-between, which means only certain objects or aspects may be more valued as an heirloom. Mike's family takes pictures yearly on the same spot on a piece of land which over time has taken up the role of an heirloom too. * From Peter to his children: "This is your life, do what you love and do it often. If you don't like something, change it; if you don't like your job, move on. If you don't have enough time, stop watching TV. If you're looking for the love of your life, stop, they'll be waiting for you when you start doing the things you love. Stop overanalyzing; life is simple. All emotions are beautiful, when you eat, appreciate every last bite. Open your mind, arms, and heart to new things and people; we are united in our differences. Ask the next person you see what their passion is, and share your inspiring dream with them. Travel often; getting lost will help you find yourself. Some opportunities only come once so seize them. Life is about the people you meet and the things you create with them, so go out and start creating. Life is short, live your dream and share your passion." Episode Timeline: * [00:52] About today's guest, Peter Evans. * [02:44] Peter shares his family history. * [07:10] What makes your annual family meetings appealing to the younger generation? * [12:28] Does a value system guide the investment making decisions? * [14:00] Peter's work helping other family enterprises. * [18:40] Peters role as a 'Personne de confiance'. * [24:22] Family Storytelling as a tool in Peter's work with family enterprises. * [29:08] Was it your experience with your own family that led you to work with other families? * [31:39] What are some of the differences in culture that showed up during your work with different families across the world? * [34:50] How important is it to have traditions that bring the family together? * [38:41] Who is a Family member? * [39:17] Building blocks of Family Governance. * [44:10] Philanthropy in the family enterprise. * [46:16] How shared experiences come into family meetings. * [48:14] What is the role of Heirloo
57 minutes | Apr 3, 2022
Srinath Rajam - Separating the Family Conglomerate After 111 Years
Srinath Rajam is a Director at TVS & Sons, Chairman at Kwik Patch, and one of the four sons of the high profile TVS group of companies. The TVS Group is a long-standing family business, running for over 110 years, which has interests in everything from auto components through to finance. Now after over a century in business, the TVS group has decided to amicably separate. Srinath talks about this historical event and how by keeping it amicable, it sets the stage for the next phase of growth. Standout Quotes: * "The process of how you manage a company is not taught anywhere; the process for how you manage people is not taught anywhere so these are things you need to learn by watching" - [Srinath] * "Unless all of us are good human beings, we cannot work in a group" - [Srinath] * "If the family is not in one piece... the businesses are going to fall apart" - [Srinath] * "I don't worry about control, I worry about what's best for the business" - [Srinath] Key Takeaways: * Srinath is a 4th generation member of the TVS and Sons Family. He talks about a historic date when the family will finally be breaking up the company and separating after 111 years. Unlike many families which split with resentment and animosity, this breakup is rather amicable which sets the stage for growth in the next phase. * The seeds for the separation started in 1974, although from the onset, at a point when the Founder of the company had his influence waning as a patriarch, there was already a lot of mistrust. It was in 1974 that it became clear that there was no future for the company to continue as one large family which is now manifesting. * Over the 48 years since the first conversation was had about splitting up, the company has lost opportunities to advance in IT, however, they were able to structure the core competence of the existing companies. * The first phase was in 1927 when the company became the dealer for GM in South India. The next phase was automotive component manufacturing which continues to be the most profitable aspect of the business. The third phase is a two-wheeler operation, which is the largest and most valuable company. Most recently, the supply chain has also been racked up, which is the TVS Supply Chain. * About the two-wheeler operation: in 1972, as a young teenager, Srinath had discovered what looked like an electric bicycle which his grand-uncle was creating as a cheap way for people to move around. The engineers had said it would not be possible, but he invested energy, time, and money in it based on his conviction. By 1978, he passed on 10 days before the company was opened. The group was also into all sorts of automotive industries. * The strategy for the separation was that whoever is managing will continue to look after business till the separation, then the valuation was done in 2014, and the difference would be settled in cash. The Indian legal system encourages families to have such a business understanding, which was not initially accepted by all 64 shareholders but with persuasion, they agreed to implement it. The company also has very strict requirements regarding competence and experience to join in the business such that family members are not guaranteed an automatic seat. * Some of these requirements for joining the family business include Graduation from an Ivy League school, a minimum of 3 years of work experience outside the family business with no help getting the job. These and more only qualify members to apply, after which a competency board will assign a mentor who looks after the possible future leaders, and then they can grow from there. These new family members entering into the business start with a small responsibility like one of the smaller subsidiaries and are mandated to only report to a professional, not their parents. * Based on these requirements, most family members are only qualified to apply by their early 30s, which is beneficial for the company because emotional maturity is also critical. * Although G4 wasn't particularly groomed for management, they intend to identify those things they lacked and make them available for G5. Since the process of managing companies or people is not taught anywhere, G5 has to be properly introduced by participating as observers in top review meetings. Most of the methods and practices being implemented to groom G5 are ideas from John Ward. * Even though many families apply all sorts of family governance structures, not many are successful, meaning those structures do not guarantee anything. The question is "How do you make this work?". The first requirement is trust; without trust, none of these things can work. Next is transparency, and the third is to be Just and Fair. People working together must be good people who like being around each other. Additionally, fairness, compassion, and carrying people along, have been more efficient than any of these structures. * To address the issue of power grabbing in the 60s, a change in the business system was made such that no decision can be made without the unanimous consent of the members present. It protected the person managing the subsidiary such that they could not be fired easily but the bureaucracy at the same time restricted opportunities for risk and growth. Hence the success of the group depended on the competence and ambition of the people running each company. However, while the trust was lost and growth was delayed, the companies held on better to funds for reinvestment which promoted overall growth. This however created problems and resentment from the shareholders. * When John Ward came along, he increased the dividends to the non-working shareholders from 10 to 25%. Dividend taxes were also removed from the income. His approach was to make the family happy knowing that most of their problems could be addressed with cash. Some of the dividends were also used to take care of the educational needs of non-working shareholders. * The family has about 80 shareholders, and after the break-up, things will fragment, and there will not be the usual large family get-togethers. Nonetheless, there will still be some rearrangement because some of these small businesses will come together to work to be more efficient. The strength of emotional bonds will also determine the interaction between these subsidiaries in the future. * Unlike the previous structure of the large family where there was no exit clause, Srinath's family business will have one for the shareholders. The company will also take advantage of the newfound freedom from the bureaucracy of unanimous decisions, to take risks and opportunities to grow. * In Srinath's family enterprise now, G4 members are only allowed to pass the shares to the linear descendants. Spouses, sons-in-law, and other members cannot enter the family business. This doesn't necessarily guarantee any birthright for the G5; some G4 members have donated all their shares to charity. The G5 is guaranteed to get no more than a decent standard of living and good education. * When it comes to lineage, no differentiation is made between sons and daughters, it is simply a factor of competence. TVS has a balance between business and compassion, rather than overly tilting in any direction. * Unfortunately, the larger family has never compiled books, photographs, or formally tried to document the family history; this has been a huge disappointment. However, Srinath's uncles tell him not to worry about the past, but to focus on what he can now do in the future. * The logistics business was a brainchild of Srinath's cousin, Danesh, and started 10 years ago. The business supplies anything anywhere and unlike FedEx, they can design something and assemble it at the destination. The Rajam family only is entitled to the IPO; they are buying out the shareholding of everyone else. * One of the most important things to imbibe is to be fair and just, whether at work or in personal relationships. It goes a long way to make people trust you and builds the energy of people around you. * From Srinath to his children: Firstly, be fair and just, be a good person. Secondly, you must add value to the community; do not chase wealth, chase the creation of jobs. Be a positive person always. Episode Timeline: * [00:50] Meet today's guest, Srinath Rajam. * [02:33] What led to this amicable speciation agreement? * [05:54] What are the main pillars that have made up the conglomerate over the last 100 years? * [08:02] About the two-wheeler operation. * [13:50] How have you decided where and how to draw the lines in separating this conglomerate? * [16:42] What are the requirements for family members to join the business? * [19:56] Are there comparisons between the success or failure of G4 and that of G5? * [21:30] Where did the inspiration for this approach towards onboarding come from? * [23:30] What formal family governance structures do you have in place? * [26:32] What method hasn't worked well in keeping the family together? * [34:00] How big was the wider family assembly? * [37:50] After the split up, will you carry on the current family structures to your Family Enterprise? * [40:38] How do succession and shareholding occur in your new family enterprise? * [42:40] How do you view lineage in terms of sons and daughters? * [45:51] After the separation, how does the thread of family history and storytelling continue? * [49:22] Discussing the family logistics business. * [54:40] From Srinath to his children. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Srinath Rajam.
60 minutes | Mar 20, 2022
Chris Powers - How Big Of An Impact Do You Want To Have?
Chris Powers is the Founder and Executive Chairman of Fort Capital (https://fortcapitallp.com/) and the host of The FORT podcast (https://podcasts.apple.com/us/podcast/the-fort-with-chris-powers/id1410549811). Chris is a serial entrepreneur with more than 16 years of real estate development and investment experience. Since founding Fort Capital, the company has invested over $1.4B in Class B industrial, commercial, multifamily, student housing, and residential and land development projects. His drive to always remain curious, desire to connect with and learn from others led Chris to start his podcast, The FORT. In the FORT, Chris talks with leaders of businesses across real estate and a variety of industries and dives deep into ideas and topics that are not regularly discussed. Chris covers each guest's story and explores in detail the critical moments that led to success, failure, growth, and confidence. He has successfully published over 200 podcast episodes. Standout Quotes: * "You only are going to be on this earth one time, you really are not coming back again after the first time; let's make the most of it" - [Chris] * "Everything that you were mad at your parents for when you were a kid, is everything you respect them for when you're an adult" - [Chris] * "Money never mattered to my dad, being content and serving others did" - [Chris] * "I think it's a very special thing in life to really want to be good at something" - [Chris] * "If you're a parent and you actually can't give your kids the things they want, it makes it almost easy; what's tough is when you can give them what they want and you choose not to" - [Chris] * "How can you expect someone that grew up with everything easy and given to them, to ever have that burning desire" - [Chris] * "Kids don't learn by words, they learn by actions, so I can say everything I want to my kids but they're going to be watching what I'm doing" - [Chris] * "You don't keep families together, particularly with the amplification of wealth, if you're not intentionally practicing the values" - [Mike] * "We're living in a really cool generation where I think we're going to be able to tell our stories to our kids like nobody's been ever been able to do it before" - [Chris] * "There's just very few people that matter in this world that you remember because of how much money they had, it's really about what they did… you will be defined by how much people remember you" - [Chris] * "The majority of businesses that do really well hit singles and doubles over and over" * "When's enough enough?... it depends on how big of an impact you want to have" - [Chris] * The first great business decision you're going to make is who you marry" - [Warren Buffet, Chris] * "There's things in life that are either giving us energy or taking away energy" - [Chris] Key Takeaways: * Chris Powers is the Founder and Executive Chairman of Fort Capital. He is also the host of the podcast, "The FORT", as well as a serial entrepreneur with over 16 years of experience in Real Estate Development and Investment Experience. Chris is a first-generation entrepreneur with stories that shaped him down to his relationship with his children. * Chris's dad was a lawyer who valued education, however, after 13 years of being a lawyer, He decided to become a doctor. With two kids and a wife at home, He left law and started medical school at the age of 39 which took place over 8 years with a financial toll on the family. The experience during those years created the foundation for the impression Chris has about money, feeling fortunate to have been more deprived of things than his peers. Chris also learned the importance of doing things in life that give fulfillment. * Because of the experience of not having money over those years, Chris became an entrepreneur at a young age to get the money he needed. However, Chris has a fear that his success allows him to skip the chances to deprive his kids of the things they should be deprived of. * Following the passing of his dad, Chris witnessed a turnout at the funeral and stories that depicted the level of impact people felt while his dad was alive. Although it was a traumatic unexpected event, Chris felt equipped at the time to take the reins in the family because his father had trusted him very early on to do things. This taught Chris that there's a level of transparency that is healthy with children, for them to start learning early on how the family operates. * "If you study people who are extremely successful in life endeavors, there is a common thread among them where they were in a position to really want something while growing up". This has made Chris understand that it is hard but necessary to deprive kids of certain things even when they can be gotten. He is trying to teach his kids not to be overly reliant on his wealth but to forge their path. Additionally, having the nature to treat people very well even from childhood is a good foundation to build on. * Raising great children amidst wealth is a challenge, and the importance of transparency cannot be overemphasised, especially when it comes to treating people well, or other issues affecting family values. This is important to note because kids learn by watching the actions of their parents, hence the teaching values has to be transparently done through actions. This transparency also translates to work, as Chris tries to make his work fun and appealing to his kids rather than intimidating. * Chris has been very intentional about leaving content for his children to learn from, especially in recordings and this is one of the motivations for his podcast, "The FORT". * Currently, Chris is working to create intentional family traditions that build the family experience. The first of these is an annual talk recorded and kept to give the kids later in life. * Starting Fort Capital: While in school, Chris wasn't particularly trying to make a lot of money but came across someone in Real Estate who helped him learn and start Real Estate deals which resulted in his company "Fort Capital". It is a Real Estate private equity company based in Fort Worth Texas. It is focused on buying Class B industrial and multi-tenant properties, functioning as value-add buyers. As time goes by the desire to sell lessens because there have been great liquidity events from sales and holding cash from sales isn't very impactful anymore. This is beneficial especially for newcomers because Real Estate is a great tax tool. * It is easy to get overwhelmed by other companies that seem to be doing immensely well, and be tempted to keep taking high chances. However, the majority of businesses succeed by surviving and growing incrementally. * To be an entrepreneur you need someone supportive even when things aren't so great. Chris recalls how selfless his mum must have been to be supportive of his father's unexpected decision to study medicine. This played a major role in the success of his dad just like his wife plays to get him to where he is today. * Concerning his view on generational wealth, Chris believes the easy route for a lot of folks with money is to let their kids assume that it's all going to be theirs, as soon as they believe it, whether it's true or not it can alter their lives. He is yet to decide on what he will leave for his kids but currently focuses on shaping their mindset on money. "I want my kids to have something but I want them to earn it and I don't want them to live a life dependent on it; not because I think it would be bad for them to have money but I think it would rob them the joy of living a fulfilled life" * From Chris to his kids: The way they will be judged when they leave earth is by the impact they've had on others. For them to live a fulfilled life, they need to think each day, "if it was all over tomorrow, what did I leave the world"? An exercise for listeners concerning this is "If you were at your 80th birthday party, write down what you would expect people you care about to say to you". You've got one shot, make it count. Episode Timeline: * [00:49] Introducing today's guest, Chris Powers. * [02:25] Chris describes inspiring life lessons from his dad. * [12:24] How did you deal with the loss of your father? * [16:30] How do you create balance with depriving your kids of some things for them to learn key values? * [28:45] Are you being intentional about creating lessons for your kids to come across one day? * [33:39] Do you have any intentional family traditions to build rituals around the family experience? * [35:50] Chris shares his journey to success in his business. * [45:33] Was there a breakthrough point where you knew you could breathe? * [48:58] What did you learn from your mother and wife in the role they play to support the family? * [53:04] Have you started to think about Generational wealth? * [55:53] A letter from Chris to his kids For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Chris Powers.
73 minutes | Mar 6, 2022
Anthony R Contrucci - A 5th Generation Member of the Schrage Family, Owners of the 126 Year Old Centier Bank
Anthony Contrucci is a proud 5th Generation member of the Schrage Family. He serves in many roles within his broader family enterprise including his role as President and Board of Director of First Bancshares, Inc. (FBS) a bank holding company located in Merrillville, Indiana. FBS’s primary operating asset is Centier Bank (https://www.centier.com/). Founded in 1895, the Schrage family has owned and operated the financial institution for 126 years. From humble beginnings, today they are the largest private, family-owned bank in the State of Indiana with approx. $5.8 billion in total assets, over 60 branches, and in excess of 900 associates. As his career has evolved, he has developed a true passion for governance and operations. One of his current focuses is the codification and institutionalization of the key elements that differentiate his family’s enterprise. At its core, this speaks to their desire to remain a purpose driven enterprise focused on the preservation of their servant heart culture for generations to come. This spans the continuum of the impact that they have on their associates, their clients, and the communities that they serve overlayed by a holistic approach which incorporates environmental, social, and governance considerations. In addition, his passion for governance and operations has evolved beyond that of traditional corporate. For the better part of the last decade, he has led their family’s formalized family governance efforts. As they continue the transition from the 4th to the 5th generation, it was paramount to Anthony, and his generation, that they build the requisite operational and governance structures to ensure success in succession not just for their generation but for generations to come. With the collective support of the 4th and 5th generations, He has allocated a considerable amount of my time establishing their family office and formalized governance structure and framework. Although he feels blessed to be able to serve his family and family enterprise in a variety of roles, the role he is most proud of is that of a devoted husband and loving father. He is married to his best friend and soulmate, Melissa Contrucci (nee Schrage) and has been blessed with two loving children. Standout Quotes: * "I really believe our success as a family kind of exists at the crossroad of this desire to be civically involved" - [Anthony] * "That formula of putting people before profit is how you build long term sustainable value that transcends generations" - [Anthony] * "In order to be successful in succession, you have to be intentional and you have to be strategic" - [Anthony] * "If you think about the destination, you'll never start the journey" - [Anthony] * "If you're trying to solve a problem that you can solve during your lifetime, you're thinking too small" - [Anthony] * "Success requires action" - [Anthony] * "You can't appreciate something if you don't know how hard it was to have or you didn't have to work for it" - [Anthony] * "During times of dislocation, there's always opportunity" - [Anthony] * "The most important investment I've ever made is my time in my children" - [Anthony] * "Never try to replace your net worth for your self-worth" - [Anthony] Key Takeaways: * Anthony is a 5th generation member of the Schrage family currently serving in the role of President and Board Director of First Bank Shares, a bank holding company with a primary operating asset "Centier Bank" which was founded in 1895. They are now the largest private family-owned bank in the state of Indiana. * The Schrage family came over from Germany into the US in the 1800s, and over time the family has always been passionate about the community. This alongside the risk tolerance accounted for the success of the family because being involved with the community helped identify needs and create solutions. The name "Centier" Bank was coined intentionally to represent a century of service, the founding of the bank on Center Street, and that the bank strives to be the premier provider of financial services for the communities. The headquarter is in Merriville Indiana. * Despite the pandemic, banking is a good business to be in right now. Data from the bank shows that Centier Bank tends to outperform during times of market dislocation or pain. Clients are put even before the shareholders in the business, and this is how long-term sustainable value is built over generations. 2020 has been the best year financially in the history of the bank. * This success was achieved by consciously and emphatically considering the safety of clients and workers physically while also keeping them confident about their finances. They set out to help communities through different programs, mortgages, credits, and low-interest loans. * Anthony met his wife and her family at the age of 20 and she was his best friend before becoming his wife. Anthony had no intention of working in the family business but wanted to chart his course in life. He had always been in the financial sector, including commercial banking and investment. Later he started with wealth management in the family business, and then the investment services division. After a while strategic intentional steps were taken to ensure an impact in the community. Currently, Anthony spends time in the financial holding company level, family governance, and the family office. * Although the family has grown since the first generation, there are 27 family members and 16 shareholders. There is a family assembly every year, and also a family governance structure. * The goal of the family assembly is both business and to bring the family members closer together. One of the main reasons for starting the family assembly was communication flow. Success and succession in a family business is literally the equivalent of fighting gravity; only about a third of family businesses make it from generation to generation. * As a broader family, the family meets monthly with specific agendas and occasionally invites subject matter experts. There is also a family business consultant and a family psychologist as well as other subcommittees. There are G5 monthly check-ins with no formal agenda. * About the Family Portal: While trying to organize family documents that have piled up over many years and made work inefficient, Anthony came up with the idea of the Family Portal. This has been a great tool for increasing efficiency and improving workflow. * When it comes to starting Family Governance, "you've got to go slow to go fast". Even it is a small start, it's about building the behavior; for Anthony's family, the starting point was about Mission, Vision, and Values. This is where to start to build a foundation with simple things like a code of conduct or attendance policy. It gives some wins and then these goals can be dialed up to more complicated plans. * The Emergency Transition Planning (ETP): This refers to very detailed planning done such that in the event of the demise of a leader, things can be set in motion to instill confidence in multiple audiences across multiple mediums. It's a succession plan on steroids. * The family psychologist has been very valuable especially in helping family members communicate effectively. This also includes constructive conflict, which is the most important thing in communication and trust-building. Additionally, having a facilitator around when the family constitution was created was very helpful. However, the values or by-products of this exercise are less important than the journey. Families are encouraged to start this process and take their time. * After attending a family business conference where he was introduced to the concept of a Family Book, Anthony applied it in documenting the family history to ensure that future generations would understand how hard the journey was. While collating different materials to create the family book, an enormous collection was accumulated and Anthony had the idea to get a corporate historian to manage the collection. This brought the next idea to have a "Centier Museum" for these family artifacts. * Using the idea of cohesion dynamics which include the family aspect, as well as the business, financial and emotional aspects, Anthony understood that it was paramount to use the family history to keep family members emotionally tethered to the family business. This determines the filter they would use in making decisions regarding the family business because rather than simply thinking like investors, they would think like stewards if they felt emotionally tethered to the family enterprise. * The 6th generation is currently between the ages of 8-18years. For a long time, the family legacy was the bank, but now there's so much more opportunity for the G6 to get involved with the family enterprise and create an impact. * Advice for someone looking to lay the foundation for a Family Enterprise: Slow down; "you have to be patient and focus". The other thing is to save; "live below your means and always have reserves because having that additional financial capacity allows you to be opportunistic". * There has had to be a shift from being a family that operates a business to a family that has an enterprise. "We had the belief for so long that the legacy was the bank but now I believe that the legacy is the culture that fuels the enterprise" Thinking about it this way gives the motivation to lean into Family Governance and Family Office. It also shifts the mindset from being competitive to being more collaborative. All of this takes curiosity, communication, working through conflict, and never being afraid to fail, knowing that growth comes from failure. * Anthony's letter to his kids: Happiness comes from the important things in life; love, health, the time spent, and experiences created with loved ones. True fulfillment comes from finding something you're extremely passionate about, that is meaningful but extremely hard; if you don't grind, demonstrate grit, fail, and pick yourself up, you will never find fulfillment and self-actualize. If you always lean into what's important in life and push yourself, you'll find that fulfillment. Episode Timeline: * [00:50]
80 minutes | Feb 13, 2022
James (Jay) E. Hughes, Jr. - Family Wealth: Keeping It in the Family
Mr. Hughes (http://jamesehughes.com/), a resident of Aspen, Colorado, is the author of Family Wealth: Keeping It in the Family (https://www.amazon.com/gp/product/B08XLLDYGX/ref=dbs_a_def_rwt_bibl_vppi_i4), and of Family – The Compact Among Generations (https://www.amazon.com/Family-Generations-James-Hughes-Jr/dp/1576600246), both published by Bloomberg Press, and is the co–author with Susan Massenzio and Keith Whitaker of The Cycle of the Gift: Family Wealth and Wisdom (https://www.amazon.com/gp/product/B009TGASQM/ref=dbs_a_def_rwt_bibl_vppi_i1), The Voice of the Rising Generation, and Complete Faith Wealth, all published by John Wiley & Sons and is a co-author with Hartley Goldstone and Keith Whitaker of Family Trusts: A Guide to Trustees, Beneficiaries, Advisors and Protectors". In addition, he has written numerous articles on family governance and wealth preservation and a series of Reflections which can be found on his website jamesehughes.com. He was the founder of a law partnership in New York City specializing in the representation of private clients throughout the world and is now retired from the active practice of law. Mr. Hughes was a partner of the law firms of Coudert Brothers and Jones Day. Standout Quotes: * "The first asset a family owns is its spiritual capital; if it doesn't have it, it better develop it" - [Jay Hughes] * "If we're learning together and we're sharing what we learn, guess what? we're likely to make better joint decisions" - [Jay Hughes] * "A family that's nothing but quantitative capital is toast" - [Jay Hughes] * "You don't have entitled children and you will know how much is enough if you're concentrating on growing your qualitative capitals" - [Jay Hughes] * "The two great obstacles to adjustment for a human being are sex and money; money is the worst of all because no nice person will speak of it" - [Jay Hughes] * "Every family has ghosts" - [Jay Hughes] * "Almost always, the plan that they have for transition...is a liability" - [Jay Hughes] * "Way too much time I think is spent on saying we need to be resilient, that's good but the real question is we need to be enduring" - [Jay Hughes] * "There's no such thing as financial resources, there are only things that are the representation of someone else's dream; anybody who doesn't get that right just misses the problem of the recipient" - [Jay Hughes] * "It astonishes me, Mike, that many families with huge resources have never studied the fact that human beings don't learn the same way" - [Jay Hughes] * "You don't just start; you start by building up those cells are going to make up the team on the journey" - [Jay Hughes] * "Storytelling is incredibly important to discover our history" - [Jay Hughes] Key Takeaways: * Jay's book "Family Wealth" was a huge inspiration over a decade ago for Mike's interest in the concept of Family Business. * After a major midlife crisis, Jay realized that his work in the law had a major flaw being that he was the only person who could use the structures he was creating for clients. He understood that the responsibility of a professional is to make clients more capable and liberate them but he had made them less capable. He started focusing more on ideas to make families more independent and also shared these ideas. Jay started to shift away from legal structures which were focused more on the 'How?' questions, and move towards the 'Why?' questions which had more impact on families. He also spoke publicly on different platforms about it and the message was well-received, encouraging him to start his book. * With the clients however this approach was challenging, but Jay understood that if he simply did what clients asked, it would not help them achieve their goals. He learned to wait for clients to gradually open up to the approach. It had also become needful for Jay to have a beginner's mind with this new approach, not assuming he had all the answers as usual but showing concern and the desire to help families. * Wealth comes from the Anglo-Saxon term "Weol" which means "well-being"; Financial capital is a form of wealth but it is not wealth. In trying to figure out the assets of a family to understand them better, a Balance Sheet has proved to be a humane tool. * Using this tool, there are 4 qualitative forms of capital; the first is Spiritual Capital. This refers to a common purpose where every member of the family by affinity seeks to enhance the other's journey of happiness. The next is Social Capital; can you make really good joint decisions together over a long period of time? To make good joint decisions, there has to be Intellectual Capital, meaning the family has to be a learning system where what is learned is shared. Another form of capital is Thriving Human Capital which is followed by the only quantitative capital; Financial Capital. Financial capital is the engine that grows the others and does not simply function as accumulated wealth. It is critical to understand that the qualitative forms of capital must always be kept in focus above the financial capital that is meant to support them; a family that simply focuses on putting financial capital into consideration is not likely to succeed together. * There are now assessment organisms for a family that is thoughtful to annually assess the states of its capital. Sigmond Freud in his work realized that the most adjusted or happiest people were those who learned to love and work as a vocation, not labor. The vocation is often a dream which takes a while to manifest and forms the stories about how the aspiration of that dream inspires people to perspire towards achieving it. When parents ask their children more about their aspiration rather than debunking it, the kids realize how inspiring it is to them and if they can perspire towards it. * The Ghost Liability on a Family's Balance Sheet: As much as the balance sheet shows the assets, it also shows the liabilities, and one of the liability questions is "What's our big obstacle?". When looking at the internal obstacles, there is a high tendency to assume that the people in the room are the obstacle but it is pivotal to note that these aren't the only people in the room. Every family has ghosts which may be good ones brought up in stories or the "Hungry Ghosts" whose goals were unfulfilled and have lingering problems. Other kinds of ghosts are stories that are untrue but are told as if they are true. Surprisingly, another form of ghost is the plan for the transition itself and preexisting family structures which are often a liability. This is particularly because the transition plan would not have been able to consider people in the future who would later be constrained by it; in other words, usually, the plan is too small. To fix the problem, the old constraining plan must be shed, creating room for fragility and risk to form a new larger plan which will be used until it becomes too small for another generation. The qualitative capitals are groomed and grown in this process such that the new larger plan can accommodate growing those capitals. All the ghosts must be noticed and addressed accordingly so they don't cause problems in family transition. * Inevitably, beneficiaries will at some point realize that they're playing a role they didn't sign up for, and this will be a huge reveal that will hit them like a meteor. When this happens, parents need to be extremely caring and deeply understanding. The question now becomes "is the meteor a gift or a transfer?"; because a transfer is easy but gifts come with love and are very hard to make. The parents and other professionals have to work hard to ensure this comes across as a gift rather than a meteor of obligations. * Despite this, the burden that comes with it cannot be ignored and must still be recognized with love. The key is for the kids to understand even from childhood that the purpose is to grow themselves; preparing early for this revelation increases the odds of a successful outcome. It should be noted that it can be very disastrous to justify this burden by saying "By the way, you never have to work" as if it is handled poorly this meteor could lead to some form of post-traumatic shock. Hence the people who do well are those who take time to explore it and grow because what is being received is not just money but the consequences of someone else's dream, and the goal is to use it to aspire to achieve the dreams of the recipient. Again, it is emphasized that this gift should be a consequence of magnanimity given with love to the recipient and the hope that it helps them find their happiness, anything else is a transfer that comes with ambition and expectations which may have a poor outcome. * A starting point in this approach of a successful family enterprise journey is for families to understand the different ways by which members learn, knowing that a thriving human capital defines Intellectual Capital. This also applies to trustees. Working on this helps the family identify whose skill is needed at different points in time. It also helps to disseminate information for joint decision-making in ways that are best absorbed by individual family members. Another very useful tool is Enneagrams; they help understand how different personality types determine how individual family members view situations or react. The aim of this phase is to properly prepare by equipping the family before starting the journey. * Storytelling for families isn't simply for the joy of the story; it helps understand time. A good way to foster storytelling is to have reunions where each person is asked "who is the oldest person you knew and what did they tell you about somebody older?". This also applies to those married into the family and helps them weave into the family. * Jay's letter to his kids; that they are loved and he would ask for their forgiveness. Episode Timeline: * [00:51] Meet today's guest, Jay Hughes Jnr. * [03:10] How Jay's book 'Family Wealth' came about. * [06:49] How did the families receive your approach of asking the "why?" questions? * [15:20] Defining Wealth and the different forms of capital. * [23:21] Is there a measuring stick for success in qualitative c
41 minutes | Dec 12, 2021
Joe Pohlen - Caring for Elders & Why it's Important to Have Daughters
Joe is the owner of Cardinal Senior Management (https://cardinalseniormgmt.com/), an operator of assisted living communities in the Untied States. Joe started the company with his business partner in 2015 and hopes to continue their growth in the coming decade with a focus on affordability and decentralized leadership. Joe lives in Grand Rapids, MI with his wife and 4 year old son. Standout Quotes: * "Unless someone's livelihood and their family’s livelihood depends on what you're doing, you're not an entrepreneur" - [Joe] * "Unfortunately, the US gets a reputation for not caring for our elderly the way a lot of other countries care for their elderly" - [Joe] * "If you want your family interacting with you in the US, I would recommend having daughters or making sure that you're close with your daughters-in-law" - [Joe] * "No one really cares what you have to say, it's your actions and your consistency" - [Joe] Key Takeaways: * Joe Pohlen is the owner and Partner at Cardinal Senior Management, an operator of assisted living communities in the U.S. with a specialty in affordable assisted living. * Joe started his career in Student Housing which was doing well but he wondered if that was his purpose in life. Knowing a few people who were working in assisted living and doing well, Joe started to figure out how to get into this field with his partner, Chuck. He started his journey and grew successfully. * Joe manages assisted living facilities where inhabitants pay ahead covering housing, activities, and care; the big challenge, however, is that more seniors lack the financial resources to move into the facility. The solution to this would have to involve the federal government. For families who cannot afford the cost, they would first be moved in with a roommate, and Medicaid will be involved to pay a lower price to help retain the care of the elderly. There are plans to implement other strategies to help improve the care for the elderly especially for those who do not have the financial capacity required. * The majority of decisions in a family are made by the oldest daughter and also most visits are usually from daughters, hence it pays to build good relationships with the daughters to encourage visits from the families. * Families also need to have conversations about steps to be taken to address issues related to the welfare of the elderly in different scenarios. People move into assisted living for two reasons, one is that they decide it's the right thing for them, and the second is when they lack a choice in the matter because the decision has been made for them. Those who decide on their own have a more successful experience. * Joe and his wife had previously decided not to have a kid but they changed their decision in the lockdown, deciding to adopt a kid who they were strongly emotionally drawn to, without anticipating it. He hopes his son will learn from him especially through his actions. * From experience, Joe observed that most families hand down wealth to the next generation very poorly and it often fails, hence he has always planned to spend his wealth rather than go through the same ordeal in trying to pass it down. His focus is on giving more of an education to equip his kid with the right tools to live successfully. * Joe's letter to his kid: "You are enough, your accomplishments are not the definition of who you are. Your mom and I love you. Continue to treat people how you want to be treated. If you go through this world doing the right thing even when it's hard, it will work out just fine for you" Episode Timeline: * [00:50] Introducing our guest for today, Joe Pohlen. * [01:41] About Joe's background * [05:27] How did you build your team to provide care rather than just storage? * [11:56] How do you handle families that cannot afford the cost of assisted living care? * [18:20] How do you encourage more frequent family visits? * [21:06] How can a family discuss the topic of assisted living for their elderly? * [26:44] About Joe's personal and family life. * [38:50] Joe's letter to his kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Joe Pohlen.
44 minutes | Nov 28, 2021
Bradley J Franc - Increase the Value and Maintain the Values
Bradly J. Franc (“Brad”), is the creator and author of the Amazon best-selling book entitled The Succession Solution (https://thesuccessionsolution.com/): The Strategic Guide to Business Transition. His firm The Succession Coach LLC, works with business owners to create as well as execute on their succession plans. Brad is an attorney, entrepreneur, and business strategist who specializes in the transfer of family and closely-held businesses. He is also a former board member of Catalyst Connection. Brad began his professional career by becoming a CPA and working for the international accounting firm now known as EY. From there, Brad became an entrepreneurial strategic business adviser and a business lawyer representing every aspect of the closely-held business. Standout Quotes: * "Writing is the highest form of thinking" - [Brad] * "It's not that there's a particular process but you pick a process" - [Brad] * "The longer you wait, the fewer the options you have, with respect to succession planning" - [Brad] * "You can't do strategic planning unless you understand the company's culture" - [Brad] * "It is incredible how many times people think they know what they have, and they don't" - [Brad] * "Conflict is good, it gets things out" - [Brad] * "All progress begins with honesty" - [Brad] * "Most people overestimate what they can do in a year, they underestimate what they can do in ten" - [Brad] * "If you want to improve something, measure it, if you want to improve something exponentially, measure it and have a report on it" - [Brad] * "Succession planning is a form of strategic planning" - [Brad] * "For things to stay the same, things must change" - [Brad] * "I try to tell that next gen, 'your job is to increase the value and to maintain the values' " - [Brad] Key Takeaways: * Bradley is the author of the Amazon bestseller "The Succession Solution" and his firm, 'The Succession Coach' works with business owners to create and execute their succession plans. Brad is now an entrepreneurial strategic business adviser and a business lawyer representing closely-held businesses. * Brad had started as a CPA with the goal to reduce taxes, and later he went on to go to law school. He realized he was helping but not solving the problem so he merged strategic planning with Estate and Succession planning which formed the Succession Solution. * Initially, his goal was to simply put down the strategy so he could convince himself that it was feasible, however, he realized someone else could also benefit from reading it. This was how he went ahead to write his book, The Succession Solution. * After starting a business that had made losses for two years, Brad employed strategic planning and the difference was clear; the business bounced back. * There are 3 types of succession; Succession of Knowledge, Management, and Ownership. It is unlikely to be able to ensure the succession of management and ownership without the transfer of knowledge. However, more often than not. Succession involves the transfer of ownership with closely held business owners. * The Succession Solution: Brad usually starts by discussing with the significant stakeholders to understand what is on the ground before getting fully involved. He also ensures the family is willing to cooperate and gets commitment upfront. * The 6 stages of the succession plan: The first stage is the Purpose stage; identifying the basic values, the vision, and the "Why?". Next is the Discovery stage; understanding where they are before starting. The third step is the Challenge; to identify their strengths, opportunities, and most importantly, the obstacles. Most of the time what people want to get from the 6 steps is certainty because uncertainty creates anxiety. * Brad emphasizes that conflict is good however, how that conflict is managed is critical. Communication and trust are the reason most companies fail. * The fourth stage of the succession plan is the Mission stage. This is where the group sets milestones and creates strategies to overcome the obstacles previously identified. The Annual stage is next, and here the group decides steps that need to be taken within the next 12 months, to get closer to the milestones already set. The last stage is the Quarterly Review stage where the question is "what do we do in the next 90 days to get closer to the objective for the Annual stage?" * The conversation of succession planning is a function of the board, hence, while members of the younger generation can have a personal conversation with their parents as the business leaders, it is fundamentally expected that the board is well suited to answer these questions. It is also helpful to talk to the professionals. * Giving purpose to the outgoing generation of leaders in the family business is highly essential as it is a part of their transition. A good step is to create a family council for them to transition into, allowing them to offer more insight particularly on the culture and values of the business. The family office and council would also need succession planning. * Succession planning is a form of strategic planning, as such, families should consider commencing strategic planning right after planning for succession. * "The job of the incoming generation is to increase the value and to maintain the values" it is the job of the senior leadership to educate the upcoming leaders on the values of the business. * Lack of planning for succession can ultimately lead to a closure of the business or loss of key employees due to uncertainty. * Listeners who want to know how to get started with succession planning are encouraged to educate themselves first; Brad's book, "The Succession Solution" is a good resource. With adequate knowledge, they can also discuss with professionals. * Brad's letter to his children: Never stop reading; if you want to improve yourself, read books. Episode Timeline: * [00:49] Introducing today's guest, Bradley J Franc. * [01:53] Brad shares his backstory. * [04:25] What inspired you to write your book, "The Succession Story"? * [05:52] Discussing the importance and role of Strategic Planning. * [09:10] At what point do you typically get involved in the business? * [10:50] The Succession Solution (6 stages of the succession plan) * [26:10] How can the upcoming generation approach the conversation of succession planning with the leader in the business? * [32:13] Do you also create succession plans for the family council? * [36:04] Consequences of poor succession planning. * [40:21] What do you suggest as a first step in succession planning? * [42:00] Brad's letter to his children. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Bradley J Franc .
54 minutes | Nov 14, 2021
Dave Specht - Preserving Families and Perpetuating Businesses
Dave Specht (https://www.linkedin.com/in/dave-specht-a881147/) is the Director of the Global Family Business Institute at The Drucker School of Management (https://www.cgu.edu/news/2021/05/drucker-school-global-family-business-institutes-new-director-aims-to-preserve-families-and-perpetuate-businesses/). Dave is the author of, "The Family Business Whisperer (https://www.amazon.com/Family-Business-Whisperer-David-Specht/dp/0996597921)." Prior to joining the Drucker School Dave helped lead a Family Dynamics team at one of the largest Private Banks in the United States where he trained over 2,500 advisors. Dave is married and he and his wife have 6 children. His personal mission is to, "Preserve Families and Perpetuate Businesses." Standout Quotes: * "The path to helping families is not in having the right answers for them, but it's about having the right questions for them" - [Dave] * "Clients know if you're genuinely curious about their lives, or you're genuinely trying to get into a transaction with them" - [Dave] * "What is your ambitious pursuit, what is it that wakes you up in the morning that you want to chase?" - [Dave] * "Ultimately if we can stay grateful, entitlement can't sneak in… gratitude and entitlements are incompatible roommates" - [Dave] * "One of the bigger challenges that families of wealth have is creating a rising generation with ownership mentality" - [Dave] * "Most of the family wealth that we see lost is due to breakdown in relationships, not poor investment planning" - [Mike] * "Fair does not mean equal" - [Mike] * "You either define what it means to be wealthy or you will be defined by your wealth by others" - [Dave] * "One of the biggest mistakes advisors make is discounting the spouse or not involving the spouse early; they're the ones that are going to nudge the process forward" - [Dave] * "Your worth is not measured in dollars and cents" - [Dave] Key Takeaways: * Dave is the Director of the Global Family Business Institute at the Drucker School of Management. He is the author of "The Family Business Whisperer". His personal mission is to preserve families and perpetuate businesses. * After selecting Family Business Management as an elective to finish his Masters, Dave realized that several nonfinancial issues were keeping families from making good decisions and this piqued his interest. * Dave worked for a few years with a broker/dealer till he decided to focus more on working with the families directly. He later worked on his own in Family business consulting while creating a Family Business Program at the University of Nebraska. * Asking Inspired Questions: What question are we going to ask that will get the person storytelling so we can learn what they care about? This idea was inspired by the effort he had put into the questions he asked his kids to understand them better. Dave describes the framework for Inspired Questions: Avoid yes/no questions; ask open-ended questions that lead people to tell a story. Secondly, don't ask questions you know the answer to. Lastly, ask questions that don't have a right or wrong answer. Having genuine curiosity is much more important than just seeing the interaction as a transaction. * Although not from a wealthy family, Dave had learned some dynamics of wealth from his family, watching and understanding their actions in regards to finances. * Dave encourages his kids to have an ownership mindset and not limit themselves, even while keeping the values of a good honest job. What is your ambitious pursuit? If we focus too much on giving the best to our children, we may only pass on valuables rather than values. * Raising children amid wealth (The 3Gs): Gratitude, Goals, and Grit are tools Dave recommends. Gratitude prevents a sense of entitlement. Having goals helps kids translate lessons learned as they grow while having a worthy pursuit more valuable than money. Grit involves knowing how to say No to your kids, when yes is always an option. How do you bail your kids out when they have trouble? * Driven by his motivation to have as large an impact as possible in the world, Dave wrote his book titled "The Family Business Whisperer", targeted at both families and their advisers. * Families often don't train the next generation to become owners because we don't want them to fail while we're watching. However, part of this training can be done by co-investing with kids to meet some of their smaller needs. Additionally, building a working shared ownership mentality among kids can be difficult but is necessary, so it helps to start with small shared decisions. * It is important to start to see wealth in the different forms it takes, from money to values and now, wellbeing. Parents need to define what it means to be wealthy, particularly understanding the different dimensions there are to wealth as it would be a mistake to simply focus on financial wealth. If we can get people to budget time and resources to develop other forms of capital in the family, it would improve the relationship with financial wealth. Half the battle is just showing up, making out the time to focus on the family, even though it is usually messy in the beginning. * Mothers of Influence: Often a patriarch is spearheading the family business, however, it is necessary to recognize those who played a support role. These groups of people are often the story keepers of the family business, and ultimately their perspective of the business determines the kind of story passed on to the kids, which affects the mindset of the kids towards the business. Advisors often make the mistake to discount the spouse; no better person is as motivated in pushing the process than the mothers that are fully invested in their kids. * Determining the role of spouses in inheriting a family business can be very tricky, however, it helps to put in perspective what the goal is, regarding the spouses. * Families should first identify their hopes and goals concerning the family assets, after which the technical expertise can be invited to achieve those goals. Unfortunately, most families always start by inviting technical expertise to manage the asset before realizing the goals of the family members vary significantly. * The first step to successfully managing multigenerational wealth is to find someone that will ask the tough questions to identify the hopes and fears of family members. * Dave's goal at the Drucker school is also to have a global impact, using principles attached to management that align with the methods already employed by the school. It also provides a noncommercial environment to bring families together to be vulnerable and learn together; particularly the rising generation of family business leaders. * From Dave to his kids: Your worth is not measured in dollars and cents. Happiness is found in ambitiously pursuing worthwhile goals, and that has nothing to do with money either. Episode Timeline: * [00:50] About today's guest, Dave Specht. * [01:40] Dave shares his backstory. * [08:15] Asking Inspired Questions. * [15:13] How has your understanding of family dynamics played out in your family? * [18:21] How to appropriately raise children amidst wealth. * [22:42] The inspiration for Dave's book, 'The Family Business Whisperer'. * [24:55] Ownership vs Stewardship * [34:42] Did you introduce this idea of passing down different forms of wealth asides from money? * [39:18] Mothers of Influence. * [43:10] Discussing identity as it relates to multigenerational family business and wealth. * [48:00] How can a family new to substantial wealth start working towards multigenerational success? * [50:00] What do you hope to achieve at the Drucker School? * [52:00] Dave's message to his kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Dave Specht.
51 minutes | Oct 31, 2021
Matina Agio - The Inheritance Muse
Matina Agio (https://www.matinaagio.com) is a personal inheritance consultant. Her work inspires a deeper perspective into inheritance - beyond the legal and financial. She provides niche counselling, facilitating her clients- often in midlife, to resolve inheritance-related dilemmas, manage their possessions and create a meaningful legacy. Through her signature method - THE INHERITANCE MUSE METHOD™ (https://www.matinaagio.com/), she addresses both the tangible and intangible aspects of their inheritance, heritage & wealth. Matina’s clients include art collectors, historic home owners, affluent individuals and family office members around the world. Matina’s experience of living & working in England, France, Germany, Italy, US, Canada and Greece, allows her to address their varying backgrounds. Standout Quotes: * "For me, the main wealth of our inheritance lies in the intangible inheritance because it is that which is not vulnerable, and it is that which probably the most influential" - [Matina] * "A bad experience may turn out to be a very wealthy experience, it depends on how we process that...sometimes we receive good gifts in bad packages" - [Matina] * "Objects are storytellers, they contain memory" - [Matina] * "We just give our kids things, but we should give them stories with our things" - [Matina] * "The value of something to us is always what our experience of it is" - [Matina] * "Our ownership is a symphony of things put together, and we as good conductors have to master that symphony... so we can have harmonious wealth" - [Matina] * "It's not what happens to you but what you do with what happens to you" - [Matina] * "There are people who own a lot of things and experience very little value and then there are people who have very little things and they experience a lot of value" - [Matina] * "The legacy of someone and the effect that they have in your life can never be taken away... that's the most meaningful part of the wealth that you can give others" - [Matina] * "Research shows that family wealth is almost never lost due to poor financial decisions, its almost always lost by a breakdown in relationships and communication with co-inheritors" - [Mike] * "You cannot make decisions without understanding who you are because who you are will affect how that thing will play out in your life" - [Matina] Key Takeaways: * Matina describes an "Inheritance Muse" as someone who inspires others in relation to their inheritance. Inheritance can either be tangible or intangible. The intangible inheritance is more important because it is more influential and less vulnerable. It affects our beliefs, attitude towards life, abilities, and self-confidence. * Since parents are not perfect, sometimes we get good gifts in bad packages, so to understand intangible inheritance, sometimes we have to open our minds and look at what is there and how we can manage it so it adds value to us. * Describing how she started her work with inheritance, Matina shares her back story; although born in Athens, her family had to relocate to Canada following a political event that made the family unsafe. A key determining factor in her career was the heritage and culture her parents brought from Athens, which influenced her greatly. * This spurred her on to study interior design and renovation of historic homes and eventually become a cultural entrepreneur. Following the death of her parents, she inherited the home in Athens and had to curate everything by herself and started to work on also curating the influence her parents had on her as part of the legacy for her children. * Storytelling is the center of Matina's work; using the stories behind objects owned by clients to resolve issues. Parents need to tell stories about their things to their children because it is unlikely for a child to sell something that has a story to it. * When navigating inheritance and trying to be a custodian of what has been left behind, employing the concept of "Gratitude" is highly efficacious, in that it helps to understand the value of these things. This gives a reason to own these things and helps us know what our relationship was like with those who left them behind. * The Legacy Scale: This is a process to understand the personal value of any property to a person irrespective of the market value. * 2 classes of Real Estate: Objective Real Estate is the first type and it includes properties that have value but no particular personal relationship. Assets such as family homes on the other hand make up the second type of Real Estate which is usually more complicated and may involve co-inheritance. * There are 3 ways you can value something: First is the intrinsic value which is the value of that thing for itself without the market value. The second is the synergetic value which is the value of something in relation to the other properties owned by a person, or the impact it may have on other aspects of wealth. The last is the subjective value which is the question of "what does this mean to me? * Matina shares that she only works with individuals and not groups, because with an individual, issues can be dealt with in-depth and with speed. Even if the inheritance involves other people, by working with one person you change the constellation because the most important thing for a person to understand is " "What do I want?". The goal is to empower the individual to see how the inheritance fits into his life purpose and what action needs to be taken. * Matina describes the idea of "Life closure by design"; preferably the age of 50 is the ideal time to be more conscious about life closure, especially having light ownership and getting clarity on what will be left behind using "the Inheritance Muse method". * For the younger generation who are about to receive, it is very important to create conversations with your parents on things they feel strongly about, their lives, and their values. * When we have a relationship with something, the value of that thing is the value to us, not the monetary worth. Rather than keep that thing locked away, Matina advises people to use it in their lives in a more natural way. * What we do with our inheritance has two aspects; the first is to optimize it and use it so we can create happiness for ourselves, the second is to preserve what we can so we can give it to the next generation with stories and history. * The work of the Inheritance Muse is to help people understand where the real value is, in their assets. Matina explains a term called Wealth Dyslexia as the inability to grasp the scope and range of your wealth in a way that will give you value * Regarding the sale of property with a history, Matina highlights that it may not be possible to keep everything but properties can be sold with the story which adds value to it. Selling a property can help the owner feel lighter and focus more on things that have particular value to them. * Legacy is the effect that our lives have on other people's lives whether good or bad. Daily, we are curating our legacy, by who we are, what we do, and what we say. It's never too late to work on this. * The awareness of the certainty of death is empowering as it should give the ability to live life more intentionally and assess the impact of our ideals in our lives. * Inheritance is a gift given, we have to look at this and say, "what do I want with this?" It is important to look at it in a nonmonetary way, so we can know its effect on our lives. This is also covered in the "Inheritance Muse method". Understanding who you are is as simple as finding out where you are in your life and what you want. * From Matina to her kids: Resilience is very important and also finding time to tune into your deeper voice within. You have a choice in every moment. We are free to choose how we see something and how we respond. Episode Timeline: * [00:50] Meet today's guest, "Matina Agio, a personal inheritance consultant. * [01:43] Matina describes what it means to be an "Inheritance Muse". * [03:39] What separates intangible inheritance from pure legacy? * [06:28] How did you find yourself on this path? * [16:56] How do you navigate inheritance? * [19:00] Is Real Estate more difficult to manage than other items of value? * [23:32] How often are you working with individual inheritors compared to co-inheritors? * [26:35] How do people engage you, and when? * [36:44] How do people go about deciding to let go of an asset with family history? * [39:35] Matina's insight on 'Legacy'. * [45:31] How should one approach inheritance? * [48:15] Matina's letter to her kids For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Matina Agio.
64 minutes | Oct 17, 2021
Moses Kagan - On the Shoulders of Giants
Moses Kagan (https://www.kagansblog.com/) has been buying, renovating and managing apartment buildings in Los Angeles since 2008. His company, Adaptive Realty (https://www.adaptiverealty.com/), along with its investor-partners, owns approximately $200MM worth of high-quality buildings in interesting neighborhoods. Unusually for a real estate private equity firm, Adaptive and its partners do not fix and flip; instead, they act as permanent holders and stewards of the assets under their control. Standout Quotes: * "Rich families that own good assets generally don't look to sell them to maximize Pre-tax IRR" - [Moses] * "If you do not lose the building, the rents will recover" - [Moses] * "When you start to think about things indefinitely, and you're not in a rush, it kind of opens up other possibilities in terms of structure and strategy" - [Moses] * "It's very hard to go from zero to something… and it takes an entirely different set of skills to go from something to something much larger" - [Moses] * "I do not believe that we as individuals live our lives for ourselves" - [Moses] Key Takeaways: * Moses has been buying, renovating, and managing apartment buildings in Los Angeles since 2008, through his company, Adaptive Realty, alongside investor partners. He focuses on sub-institutional deals. * The most important part of the strategy is that rather than buy, fix and sell buildings to maximize pretax IRR, they buy properties, make them high-quality assets, manage and refinance them to get higher returns. The strategy was born from his family values as they had always been involved in Real Estate but never engaged particularly in sales of property. * There are two reasons why people sell; firstly investors have a mindset too focused on Pretax IRR, and secondly, the sponsor gets their money after selling. If you just hold on and keep the building, the rents will recover. * The initial funds for the business came from friends and family of Moses, and later from another family office who partnered with them. This partnership helped them build a track record that encouraged other investors to feel comfortable with them. * The structure for the business model is not to buy, renovate and sell like the typical model with PEs, but rather they partner with wealthy families with the explicit assumption to hold on to the property not sell, however, liquidation rights goes to the family that put up all the capital. The primary strategy has been to refinance the property to pull the capital out and give it back to the investors who still retain ownership and cash flow from rents. Adaptive Realty only gets fees for their work but not cash flow from rents, sales or refinance until the investors have got their capital. * Describing his family history, Moses shares how his first building was bought with capital from the family money dating back 4 generations. The wealth he enjoyed from his family was mostly in form of basic needs being met and, particularly education. * When starting a business with a partner, it is critical to have a decision-maker or tie-breaker irrespective of how profits are split. The relationship between Moses and his partner in terms of how earnings are split is quite stable even for the coming generation but open to discussions if need be. * There is currently no long-term family structure for his family, however, Moses spends a lot of time with his kids, to instill the values of passing on to the next generation what was done for them. * Discussing Storytelling, Moses emphasizes that your forebearers are a living part of your life, and tries to make those people present for his children even though they will never meet them. * Gaining exposure and immense assistance from his friends to succeed, Moses was also motivated to start finding ways to help people who didn't have the kind of opportunities he had. * Advice from Moses to those aspiring for multigenerational success: Don't put yourself in a position where one investor can wake up one day and force you to restart your career. This involves having different capital providers rather than being completely dependent on one. * From Moses to his kids: We owe everything to those who came before us, however, we can't repay them. We can only try to do for those coming after us what has been done for us, if not more. Episode Timeline: * [00:48] Meet today's guest, Moses Kagan. * [01:53] About the business, Adaptive Realty. * [13:50] How do you get investors to join you with your strategy of holding properties permanently? * [16:45] How have you structured Adaptive Realty to be different from the typical P.E model? * [21:55] Moses shares his family background. * [32:36] What's your perspective on multigenerational wealth? * [38:28] What does the future look like in terms of the next generation? * [41:07] Do you expect your children to get involved in the business? * [46:15] Is there any form of family governance structure? * [48:18] Moses shares his approach to storytelling as a method to pass on values. * [52:55] How Moses works to help others who haven't had the same privileges he enjoyed. * [57:06] Advice from Moses to listeners aspiring to build generational legacies. * [01:00:33] From Moses to his kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Moses Kagan.
69 minutes | Sep 19, 2021
Sean Lang & Jeff Watters - Appointing a Non-Family CEO & Selling a 5th Generation Business
The Lang family recruited Jeff Watters as the first outside CEO to lead Ainsworth Pet Nutrition in it's 5 generations. Sean Lang and Jeff Watters worked together, partnering with a private equity firm to scale the $100m per year business into a $2 billion dollar exit over the space of a decade. This story covers not only leadership succession within a family business but also ownership succession and how the family have stayed together and united around a family office in the absence of an operating company. Standout Quotes: * "What's gotten us here, isn't going to necessarily get us there" - [Sean] * "As a family, we realized that we would have to make a pretty major change in the journey... And we made the choice to start that journey from family-owned and family-run, to family-owned and professionally-run" - [Sean] * "I think in any family business, there's a certain level of distraction or disruption that comes from the family, and if you can move that into the family council and outside of the board room, it seems to be better for everybody" - [Jeff] * "The family office is being driven by a stewardship theme; Leave it better than you found it" - [Sean] Key Takeaways: * Sean Lang and the Lang family represent a 5th generation business family who owned Ainsworth Pet Nutrition, while Jeff Watters is the first outside professional CEO recruited by the family to lead the business till it was finally sold. * The business started small, with deliveries made to "mom and pop" stores, expanded over the years, and all interested family members worked in the factory. After school, Sean started as a sales manager and worked his way up to be president. * The family realized that there was a need to make a major change to move with the competition and this would require great talent, moving from family-owned and family-run, to family-owned and professionally-run * Although Jeff was in a place where he wanted more in his life personally and professionally, his relationship with Sean was initially not a professional one. Following further interaction, Jeff realized the family was committed to the business, and they were authentic and intentional about their growth. * The average tenure of a Public Company CEO is about 4 years, and a Family Business CEO is about 6years, even if you think you're going to be there longer than that, you have to plan according to the statistics. * The introduction of professional leadership after 5 generations took some time, however, this had been tried previously and even though it failed, the family had started to get used to the idea. The goal had become to keep the family culture but adopt the benefit of big company thinking and growth capabilities. * The notion of an organic, natural but very transparent onboarding process is extremely helpful for professionals outside looking to join a family business. * Jeff also encourages professionals considering entry into a family business. You just have to bet on yourself to a certain extent. Once you're satisfied that the other party has high integrity and will deliver on their promises, have the conviction that you're going to deliver on yours, and if it doesn't work out, it doesn't work out. There will be other opportunities. * While Jeff's transition into the business had its hiccups, there was a lot of intentional effort from all sides to communicate effectively and create ways to tackle arising issues. This was made easier by the family culture of transitioning where the older generation completely let go of the business which allowed Sean to give Jeff the space needed. * Working with a Private Equity Company was pivotal in driving the rapid growth of the company moving from a 200 million-dollar company to a 2 billion-dollar company in 4 years. * Jeff describes that the main factor that drove growth while working with the PE Company, was a deep cultural alignment * Between the family and the company. It was all about a long strategic view of the business. * The family council was started by Sean's father, and one of the policies laid down was that incoming family members needed to work somewhere else for 2 years or until their first promotion whichever came later, before joining the business. * In the absence of an operating company, Jeff wanted to still have a family enterprise that could act as glue for the family, and help be a driver for education for the rising generation. This would also foster the creation of mechanisms to share the family history and culture with coming generations. * It's not always easy to leave it better than you found it, given the mathematical fact that families almost grow faster than businesses and assets, that means each family member needs to be self-sustaining and look at any help from the family later in life as icing on the cake, not the cake itself. * Sean shares he now has more time for family and personal relaxation, while also finding businesses to invest in. Jeff also tries to have fun, works with his wife on philanthropic projects, and serves on a number of boards. * Jeff's letter to his kids: Jeff tells them to be bold in the pursuit of what they love, hopefully, it will be something that allows them to leave this place a better place. He encourages them to take a leap of faith, the financial fortune is an opportunity for them to invest in their future in a way that can be fulfilling for them and differentiating for their community. * Sean's letter to his kids: The family business cocktail of money, love, and power is trouble. It can rip families apart easily and needs to be proactively managed within the family with the help of professionals. Episode Timeline: * [00:52] Introducing today's guests, Sean Lang and Jeff Watters. * [02:30] Sean shares the history of the family business. * [08:00] What was the reason for bringing in outside leadership? * [10:00] How Jeff got involved with the business. * [15:18] Were there any surprises while bringing in the idea of getting professional leadership after 5 generations? * [20:21] Jeff describes his transition into the role of CEO. * [29:30] Discussing the growth of the business, involvement of a Private Equity, and the decision to exit rather than transition to a 6th generation. * [42:02] When did the Family Council begin? * [52:25] What was the transition like after the final decision to sell the company? * [01:00:22] Before the company was sold, there were plans to continue the Family Council? * [01:03:51] What Next? * [01:06:00] In a letter to your children, what is one lesson or idea you don't think many parents would mention but you consider important to understand? For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guests: Jeff Watters and Sean Lang.
51 minutes | Apr 19, 2021
Frazer Rice - Decision Making for Wealthy Families
Frazer Rice (https://frazerrice.com/) is a Regional Director for Pendleton Square Trust Company (https://pendletonsquaretrust.com/). In that capacity, he focuses on trustee, fiduciary and family governance issues for wealthy families. He is the author and podcast host of "Wealth, Actually (https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT)" which centers on decision-making for wealthy families The podcast interviews wealth experts and entrepreneurial families and individuals. Standout Quotes: * "Something that's happening industry-wide or at least in the US is the concept that being a corporate trustee is a different business than the asset management side of wealth management" - [Frazer] * "Most of the trust planning is articulating a move at the minimum from Gen 1 to Gen 2" - [Frazer] * "I view the Trust and the planning around the Trust to be an outgrowth, when done correctly, of a solid communication structure that has been developed within the family" - [Frazer] * "What the family bank approach is offering to families is a way for them to pass on their intellectual capital...to their human capital, the next generation by having them apply for the financial capital" - [Mike] * "If the kids see what's important to the other kids early, and attach a dollar manifestation around that, I think that you're building the context so you have fewer blow-ups later on" - [Frazer] * "I think the most important thing anyone can have in their lifestyle is the ability to be comfortable in their own skin" - [Frazer] Key Takeaways: * Frazer shares his background and experiences so far, from college to working in politics, after which he decided to study law and gained exposure while working in different firms. His career started down the path of wealth management when he worked with a Trust company. * He is also the author of the book "Wealth Actually" and the host of a podcast that discusses topics related to finance and wealth management even though that was not the initial plan for the podcast. * Pendleton Square Trust is an administrative Trust company that fulfills the function in a Trustee role aimed at helping families get access to good Tennessee jurisdiction. * 3 main Functions of a Trustee: First is the administrative function which includes safeguarding and reporting on assets, paying the taxes. The Second is the distribution of the asset to beneficiaries. The third function is the investment management of the asset which is excluded at Pendleton, Frazer believes most places don't do everything well. * A trustee does not have to be a corporation, it can be an individual acting as a trustee with the ability to perform all 3 key functions, however, it may be difficult to find one person who is great at all functions. * A lot of families would prefer to have more control, and a private trust company allows them to control the aspects they're comfortable with and outsource the rest. * There is a possible conflict where corporate trustees who also provide asset management services invariably provide their asset management services. * The most common customer for the company is a US family that is either actively transferring wealth from the first generation to the second generation or generally has a multi-generational approach. * For those families that have taken their hands off the wheel in terms of managing the wealth, the Trust company operates more like a family office but for those still actively engaged in the continuation of the business, that business becomes the real center of the family office. * One of the real destroyers of wealth is bad communication amongst the family, this leads to conflict, which leads to litigation and litigation is expensive * There's a lot of good work that needs to be done ahead of building the structures so that you're not only setting something up that takes care of the money for the family, you're also getting the family ready for the money. * Family or Shared Philanthropy is one of the tools that helps to work with families as it gets the family members to express their interests and helps them work together while considering the needs of each other. * The Vacation Fund Concept: This is another tool, and the idea is to have the kids make a joint decision around the investment of money by getting them to plan the vacation based on a particular amount available. It helps identify which kids have aptitude and interest, the aggressive or conservative ones, and other responses exhibited by the kids towards the task. Summarily the kids get involved in financial planning and learn critical points related to it. * The idea of a Family Bank is putting structure around the request of money for projects so that it forces preparedness in front of real people who have to make a decision. Learning that persuasion is important helps the next generation to deal with the real world. * It also provides an opportunity to combat the situation of assets growing linearly being overtaken by liabilities growing geometrically, as more opportunities explored can increase the growth of assets. * There's a big difference between Operational succession and Ownership Succession of a family business, the difference in roles may mean some people get paid more but this needs to be discussed earlier on before the transition period. * From Frazer to his kids: I think the most important thing anyone can have in their lifestyle is the ability to be comfortable in their skin. The concept of trying to please other people's sense of success is a difficult road because you're never going to please everyone all the time, more so you will be running from things that could be your path to success. o * Run your own race, be comfortable in your own skin. Episode Timeline: * [00:46] Introducing today's guest, Frazer Rice, Regional Director for Pendleton Square Trust Company. * [07:26] About Pendleton Square Trust Company and Wealth Management. * [08:46] The 3 main functions of a Trustee. * [11:21] In the US, do families have to appoint a company to act as Trustee in an administrative capacity. * [12:16] The concept of a Private Trust Company. * [18:54] Who would you say is your most common customer? * [28:02] Frazer shares tools used when working with families. * [32:51] The Vacation Fund Concept. * [38:40] Frazer's insight on a Family Bank. * [47:57] Frazer's letter to his kids For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Frazer Rice.
51 minutes | Apr 12, 2021
Ben Grossman - Co-President Siblings Stewarding a 111 Year Old Family Business
Grossman Marketing Group (https://grossmanmarketing.com/) was founded as Massachusetts Envelope Company in 1910 by Maxwell Grossman (https://www.bengrossman.info/), whose lifelong dream was to own his own business. Now, 111 years since its founding, Ben Grossman, along with his brother, David, are the 4th generation of family leadership. Today, the company is a full-service resource helping clients with a broad range of traditional and digital marketing needs. Ben Grossman holds a BA from Princeton University and an MBA from Columbia Business School. Prior to Columbia, Ben worked as a strategy consultant to Fortune 500 clients, as well as started and sold a sportswear and marketing firm. Ben is also deeply involved in sustainability and how it relates to business, and writes and speaks frequently on the topic. Standout Quotes: * "Our prices make friends and our service keeps them" - [Ben] * "What he was really saying was that life is made up 3 things; Family, Career, and Community, and education has always been of critical importance to our family" - [Ben] * "Find a way to generate revenue as soon as possible because numbers speak for themselves and no one will ever question your existence at the organization if you generate sales and gross profit" - [Ben] * "Learn the business, understand exactly what's going on in the business, so when you speak up you know what you're talking about, and you're right!" - [Ben] * "What our grandfather and our father tried to impart in us is that although business is incredibly important, nothing in business is important enough to ever risk jeopardizing your family relationships" - [Ben] * "That sort of value of just 'try and treat people the way you'd want your family to be treated' has been passed down from generation to generation" - [Ben] * "Regardless of how successful you are, or your family's been over the years, you need to recognize that markets can change and you must always remain responsive to customers' needs" - [Ben] * "Ultimately, we have to be willing to evolve because if we don't evolve, we will get left behind" - [Ben] * "Always do right, this will gratify some people and astonish the rest" - [Ben] Key Takeaways: * The company has always had a service-driven culture and this has kept the business going for over 110 years. * Ben explains that the company had initially started as an envelope company and had also bought up different companies during its growth, with the investment in promotional products being the most notable that boosted growth. * Following his education, Ben had decided to step out and gain some experience although he was passionate about finally going back to join the family business. * Ben explains that based on lessons from his great grandfather, Life is made up of 3 things, Family, Career, and Community. Education has always been of critical importance to the family. * The "Start, Stop, Continue" Review Method: Ben had asked workers to review the company's methods to identify processes that needed to be implemented, stopped, or continued for better productivity. * Ben shares that following political engagements, his father moved on from the family business and is fully engaged in public service. He adds that working harmoniously with his brother is aided by the understanding that every win is for the company and not the individual, and also their roles tend to be complementary to each other. * Understanding that it was necessary to establish credibility by generating profits immediately after joining the family business, Ben reached out to some prospects and started to achieve his goal within a month. * One of the critical values imparted by their grandfather was the understanding that business should never jeopardize family relationships. * Another key value learned was the importance of treating colleagues the way family would be treated in a workplace. * You need to be willing to adapt to ever-changing business environments and conditions. Ben remembers how the family had always focused on the customer, and that what differentiated their company was the incredible customer service. * Highlighting the involvements of different family members in service to the community, Ben explains that service to the community is one of the values that have been passed down each generation beginning from the Founder. * Considering the future, the most meaningful investment made in recent times has been expanding into e-commerce. * Ben shares he would give his children the same advice he got from his grandparents regarding joining the business, and this is to do what their heart wants to do, follow their career path, and not be constrained to join the business based on the financial implications. * From Ben to his kids: Always do right, this will gratify some people and astonish the rest Episode Timeline: * [00:49] Introducing today's guest Ben Grossman, and Grossman Marketing Group, the Massachusetts envelope company. * [01:40] The history of the Grossman family business. * [07:05] Ben narrates how he and his brother joined the business. * [11:52] As brothers, how do you get along and what roles do you each play today in the business? * [21:54] A listening tour: Using the "Start, Stop, Continue" Review Method. * [25:36] Do you have any apparent failures that have set you up for later success? * [32:15] Ben describes the family history of service to the community. * [37:58] Has the family been intentional about documenting its history? * [39:30] How do you pivot and evolve a marketing group like yours into the 21st century and beyond? * [43:43] Are you nurturing your children to be the 5th generation of the business or leaving it to them to find their path? * [48:35] A letter to Ben's Kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Ben Grossman.
61 minutes | Apr 5, 2021
Berry Liberman - Using Financial Capital as Force For Good in the World
With one of the most recognisable family names in Australian business circles Berry Liberman is using her financial capital to make a positive impact in the world. Her family office, Small Giants, is 100% invested in Impact ventures - challenging the traditional notion of "do anything to make it and then give it all away" philanthropy. Berry Liberman (https://www.dumbofeather.com/people/berry-liberman/) is the co-founder and Creative Director of Small Giants (https://www.smallgiants.com.au/) and the Publisher and Editor of Dumbo Feather (https://www.dumbofeather.com/) magazine. Small Giants was founded in 2007 to create, support, nurture and empower businesses that are contributing to the world in a meaningful way. Dumbo Feather is a labour of love. Designed, edited and printed in Melbourne, Australia, it is a quarterly journal highlighting the stories of extraordinary people, living lives of passion and commitment to changing the world we live in. "We spent our first decade growing a collective of businesses committed to positive change, including Impact Investment Group, The Sociable Weaver, Dumbo Feather and The School of Life. Our focus has been moving capital from the old economy to the next. We’ve sought to prove that a business can be profitable while remaining purpose driven and ensuring value for all stakeholders, including the environment. Likewise, we’ve found time and time again that value can be created without investing in extractive industries." Standout Quotes: * "Family was Business, and Business was family, it was one thing" - [Berry] * "Both my parents in a way saw work as service, you contributed to the society that you were lucky enough to live in" - [Berry] * "When you go to your grave, you go with only one thing, and that's your name" - [Berry] * "If you know your shadow self, there isn't anything that can take you by surprise " - [Berry] * "I wanted to do big work, and I didn't want to be afraid, and I knew that the thing that scared me most was everything that was happening on the inside of me" - [Berry] * "One of the things about family businesses is they're often a massive spaghetti ball, and all of the spaghetti is interwoven into all the other spaghetti and it's very hard to separate" - [Berry] * "Business and Financial capital can be a force for good in the world" - [Berry] * "We didn't have the language for it at the time but we had the intuition, that growth at any cost, that the extraction economy, was coming to an end" - [Berry] * "Money in families is complicated, and Family Business is complicated, and it's never about the money, it's about the people and the relationships and the emotional maturity of those people" - [Berry] * "We are the custodians, not of financial capital that is our entitlement, but the financial capital that is handed from one generation to the next, much like fresh air and fresh water, we are custodians" - [Berry] * "Impact investing is a paradigm shift, it's not an asset class, and once you make that shift in your mind, you can't do anything but invest that way" - [Berry] * "You are the company you keep" - [Berry] * "I would tell them not to hate anyone, ever, and to love hard, I don't think you lose anything when you love" - [Berry] Key Takeaways: * In a true 'rags to riches' story of how the family clothing business began, Berry describes how her grandfather alongside the family, used to recycle the unsellable silk stockings discarded by a company, and eventually caused a shift in demand in his favor. * Berry shares that she was raised perceiving business as fun, and something that involved the whole family. Unfortunately following the crash in 1991, the impact weighed equally upon the family. * She narrates how she was able to forge her path outside the norm, because there was very little attention on her, especially following the passing of her father and ensuing family changes. * As for her psychotherapy, It became clear there was a need to answer pertinent questions about herself and sort through unresolved issues personally. "I wanted to do big work, and I didn't want to be afraid, and I knew that the thing that scared me most was everything that was happening on the inside of me". She also disclosed that ultimately she wanted to be her own person but she didn't want to do it at the expense of family harmony. * By the time Berry stepped in to join the family business, seeing how it was being run, she knew she wanted to do things differently. * Narrating the events surrounding the inception of the company "Small Giants", Berry highlights the deep concern that was born following her knowledge of very critical climate issues, and this ignited a passion to create a better world for her kids to live in. * It's an intergenerational project and the main goal is to become a good ancestor if you're a person of privilege and you have the resources. * Much like with the financial capital that is handed from one generation to another in family businesses, we are also custodians of the fresh air and water handed down to us. * Mike shares that the phrase "Stewardship" comes from environmental sustainability and so aptly applies in the context of this conversation. * Berry explains that Philanthropy means "love of humankind" and in her view should be a whole portfolio vision; love of humankind with everything you have. * "The Doughnut Economy" by Kate Raworth: This book describes a metaphor that likens the outer part of a doughnut to the bounds of the environment, and the inner part to society. Kate suggests living in the sweet spot between the bounds of ecology and human flourishing, such that you can engage in business but with more accountability built-in. * The pillars of investments by Small Giants include Food and agriculture, Energy, Finance, and the Built environment. * While Berry admits that little effort has been put into planning for the future as regards her kids being involved in the family office, she notes that doesn't want them to do Small Giants necessarily. She would rather they had the same freedom she had, to go on their journey, with full support to become themselves fully. * Berry emphasizes the importance of talking to her children; "No topic is out of bounds, and I will let myself be challenged by my children because they've got a pretty good compass" * Recent research shows that Kids that know where they come from, and particularly the trials and tribulations of prior generations, are usually resilient as a result. * From Berry to her kids: "I would tell them not to hate anyone, ever, and to love hard, I don't think you lose anything when you love" Episode Timeline: * [00:54] About today's guest, Berry Liberman. * [02:30] Berry describes her family origins. * [09:07] What were the key building blocks along the path to the growth of the business empire? * [15:00] Could you tell us where you started, and what you wanted to do with your wealth as regards the impact you wanted to have on the world? * [25:37] Berry describes the structure at the family table when she stepped in. * [38:58] What are some of the impact investments you have made? * [41:55] How do we ensure there is a return so that we can keep on doing good? * [47:36] Small Giants' Pillars of Investment * [51:22] Do you anticipate your kids getting involved in the Small Giants family office? * [56:50] Has the documentation of your family history been intentional so far? * [59:50] A letter from Berry to her kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Berry Liberman.
63 minutes | Mar 29, 2021
Denise Logan - Work, Money & Meaning: How to Let Go When the Time Comes
An award-winning professional speaker and author of The Seller’s Journey (https://deniselogan.com/the-sellers-journey/): A Business Fable about Navigating the Emotional Obstacles to Selling Your Business, Denise Logan (https://deniselogan.com/) has addressed audiences on three continents about the psychology of business owners and how to make it easier when the time comes to let go. Known as The Seller Whisperer, she draws upon a twenty year body of work focused on the intersection of work, money, and meaning and how it is reflected in the legacies of today’s business leaders. She has rightly observed that while work is where we spend the majority of our time, much of it is spent wishing we were somewhere else, doing something else. Divorcing meaning from our work too often leaves us blindly trudging through a mediocre life using money as the miserly arbiter of success in matters of soul and meaning. It leads to an endless chase for more, hoping to outsmart death and desperately prove that our life somehow mattered. Even worse, when work is how we define ourselves and we are faced with job loss or impending retirement, it can seem terrifying. What happens when your old answer to the question “What Do You Do?” no longer fits? If you thought you are what you do, and suddenly you don’t do it anymore, do you not exist? Standout Quotes: * "Every family's dynamic is slightly different and always the same" - [Denise] * "So as fear starts to escalate, our thinking is disrupted" - [Denise] * "The best transitions happen 5 years before someone is ready" - [Denise] * "The reality is that every owner will exit their business, voluntarily or involuntarily... so you will either transition to someone or you will leave your business with it being unprepared" - [Denise] * "if we look at mortality issues, often the more mortality resistance that someone has , the higher the likelihood is that they will also be avoiding succession planning" * One of the questions I start early on with an owner is ''what does work provide for you, beyond the money?... where will you get those needs met outside the business?" - [Denise] * "Succession happens at all different ages" - [Denise] * "Are we simply creating roles in the business so family members have work to do, as opposed to are they the right people in the business?" - [Denise] * "Change is hard at first, messy in the middle and gorgeous at the end" - [Mike] * "Transparency always works, it is always better" - [Denise] * "The arc of the journey for an owner is the same, whether we're talking about a $50000 hair salon or 500 million-dollar company, the arc of transition that's happening for someone is the same" * "Transition will happen no matter what, so the question is 'what kind of transition do you want to have as a business owner?'" * "Success is often determined by how prepared you are rather than just letting it be" - [Mike] * "Our legacy comes from our daily actions, it is not just the amount of money that we leave behind or the money that we have accumulated" - [Denise] * "We can often get completely spun up on what our number is, the number is not the number in the bank account, the number is the number of memories that we have left behind because that is truly how we will be remembered" - [Denise] Key Takeaways: * Denise started as a mental health professional and then moved into practicing Law where she started her firm but sold because she lost interest in the business. This prompted her to start a road trip till she was invited to help build a friend's business before the sale, an experience that kick-started her work of helping owners transition during the sale of their businesses. It also inspired her book, "The Seller's Journey". * Using the analogy of a fist, Denise likens the fear center in the brain, 'the Amygdala' to the thumb of the hand, pointing out that while the other fingers could restrict the thumb's movements the same way the frontal cortex can restrict the Amygdala, excessive pressure from the thumb or the Amygdala, in this case, can break free of the restraint, leaving the fear to roam free. This explains the chaotic nature exhibited by people, typical of family dynamics. * Another description using the hand involves the 5 ways through which fear shows up, the 5 fingers are used to represent them; Fight Flight Freeze Fawn, and Submit. Individually, there are often 2 or 3 of them that function more as natural go-to responses when facing fear, anger, or stress. * The anchor, Wave, and Island styles of attachment: An Anchor attachment is someone who can tolerate too close or too far. An Island attachment is the type of person who pulls away or isolates themselves when things get rough. A wave attachment describes a person who reacts to disruption by continually checking on others. * It is necessary to identify needs that are met by the business beyond the money because there is concern about how these needs will be met outside the business, and this could often form the basis for the continuous attachment to the business. * Addressing the handling of messy parts of the conversation, Denise emphasizes the importance of honesty and transparency in allaying the fears that may misguide people's actions in the family. * The 'O-MY' syndrome (One More Year) occurs where a seller repeatedly creates reasons to delay their exit from the business whenever they get closer to the agreed time of sale. This is a signal that something else is going on, a different existential crisis and there are needs to be met. * The moment that you cease to exist is when the last person who has a story to tell about you passes. * Money matters, but it's not the only thing that matters. * There will always be a story that is told about you, the question is "is it the story that you would like to have told about you?" * From Denise to her kids: The way you will know that you were loved was by how you were held and how you were cared for, not by what I left you. Episode Timeline: * [00:49] Meet today's guest, "Denise Logan" a.k.a 'the Seller Whisperer'. * [01:45] An overview of the journey to becoming "the Seller Whisperer". * [08:52] Denise's 'fist' analogy in describing the role of fear in the brain. * [11:30] The 5 Appearances of Fear. * [14:10] The anchor, Wave, and Island styles of attachment. * [18:10] Do families typically find you when a transition is already underway or as they're contemplating a transition or an exit? * [33:23] How do you handle the messy aspects of the discussion? * [45:30] How often do sellers get caught up on a particular figure that they will only sell at? * [50:39] Discussing the success of transitions generally. * [01:00:56] A letter from Denise For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Denise Logan.
38 minutes | Mar 22, 2021
Julie Charlestein - The First Woman & 4th Generation Charlestein to Lead Premier Dental
Julie Charlestein is a fourth-generation CEO and president of Premier Dental (https://www.premierdentalco.com/), a global dental development and manufacturing company serving the worldwide oral health professional market since 1913. Julie is the first woman and the fourth generation of the Charlestein family to lead the company. Since accepting the position as CEO, Julie has implemented changes to adapt to the times, and advanced its product line to advance Premier's market impact. The Charlestein family have adopted an interesting ownership and control structure for Premier which Julie has kindly agreed to discuss with us today. Standout Quotes: * "Even though I had proved myself and worked in the company for 15 years before I became CEO...people were still looking at me like did I deserve to be there?" - [Julie] * "The way that the transitions are the easiest is when everything is written down" - [Julie] * "Giving one person control, I think, removes a lot of the family bickering" - [Mike] * "Remember who you are" - [Julie] * "The dollar is Round" - [Julie] * "I think giving the next generation members the opportunity to opt-in, rather than have an expectation, often creates the greatest want" - [Mike] * To start a revolution, the only solution, evolve" - [Julie] * "Don't let perfect get in the way of good" - [Julie] * "Science doesn't always sell" - [Mike] * "Family is family and that's where you should be connected" - [Julie] Key Takeaways: * The company was started by Julie's grandfather while working for his boss as a Dental Instrument Sharpener and has transitioned from the marketing of dental consumables for other brands to focus on their brand. * Joining the family had never been an expectation by the family or part of Julie's plan, but it was looked upon as a thing of pride for the family. * Julie explains that when it came time to join, she took conscious effort to familiarize herself with the general goals and ideals of the family business * Highlighting factors like her young looks and family background, Julie describes the impression she got when she joined the family business, who thought she didn't deserve to be there. and after working hard, she proved them wrong. * The transition of the business from her father to her was seamless, and void of the typical situation where the prior generation holds on to the business even after completing the transition process in writing. Julie also notes the critical role of ensuring all processes involving transition are penned down in legal documents. * While getting together as a family is pivotal for a family business and is being inculcated, there is room for improvement. * Julie's Family Value: "Remember who you are", you need to have a sense of who you represent including your family, your community, the company. * Another family value from Julie: "The dollar is Round"; this means you can have money now and it can just as easily roll away from you, then roll back towards you. * Describing the evolution of the business under her, Julie explains her goal to make the company more data-driven and consumer-led, through branding, marketing, digitization, and social media. * One key lesson from a significant failure while running the family business was that "Science doesn't always win", as the scientific * superiority of a product does not guarantee sales. This was realized following the creation of a multipurpose dental product, which seemed like it could do everything, but the product only ended up confusing consumers due to a lack of specificity in function. This experience had a strong impact on the parameters surrounding any development within the company. * From Julie to her kids: Remember who you are, The dollar is Round, Respect, and Family ties. Episode Timeline: * [00:49] Meet today's guest, Julie Charlestein, a 4th generation CEO. * [01:37] The backstory of Premier Dental Family Business. * [09:28] Growing up, was joining the family business always an expectation? * [14:22] Julie describes the transition of the business from her father to herself. * [24:16] Does the family get together regularly for a family meeting or family council? * [25:27] Are there any key values passed down through the generations that still hold today? * [26:52] Do you do anything intentionally to document the history of the family? * [28:10] Is there a 5th generation already involved or interested in the business? * [29:40] The Evolution of the family business under Julie. * [32:58] Julie describes one of her most significant failures. * [37:25] Is there potentially another chapter for you beyond your journey with the family business? * [38:10] Julie's letter to her kids For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Julie Charlestein.
52 minutes | Mar 15, 2021
Carl Bates - High-Performance Family Boards from New Zealand to Africa
Carl Bates (https://carlbates.com/) is Africa's leading educator, appointer and guide of High-Performance boards. As the Founding Partner of Sirdar (https://sirdargroup.com/), he is world renowned for his practical understanding of governance and is constantly invited to share his knowledge and insight on the subject - in Africa, Sirdar is the largest provider of independent non-executive directors to private companies and family businesses. As a G2 entrepreneur, Carl works closely with his Mother and spouse in his family property business in New Zealand, bringing real world insights to his professional service clients. Carl is particularly passionate about how boards can transform and scale-up privately-held and family companies. Standout Quotes: * "There's a difference between craftsmanship and entrepreneurship" - [Carl] * "And I like the term 'Contribution', it's all about what we have to give and finding ways of being more effective in that" - [Carl] * "I think having a purpose as a business is fundamental to what building longevity in any business is about" - [Carl] * "In businesses, we can see a direct correlation between the makeup of the group of people at the top and the financial performance of the business" - [Carl] * "It is a privilege that a family has when they're right at the beginning of the journey, and they make the decision to become a family business... and they put in place the structures at that point because it's a lot less emotional to argue about something that is 10 or 20 years out, than being in the middle of that thing in 20 years time" - [Carl] * "Families need to define 'well, what does family mean to you?' - [Carl] * "The larger the number of beneficiaries of the family, the bigger the governance framework needs to be at a family level" - [Carl] * "There's no such thing as an 'Original Mistake', there are so many families and so many boards around the world who have done this so many times before you, that rather than try and make an original mistake, go and see what other people have done" - [Carl] Key Takeaways: * Carl recalls he initially had no desire to live in Africa, a few years after this, he repeatedly had cause to travel there on business and realized he had to stay, creating offices all around Africa which help families and companies to develop their boards of directors. * Starting University at 15 years and becoming a chartered accountant by 21 years, he had always wondered why even though each generation of his family had successful entrepreneurs, there was no build-up and transfer of wealth to the next generation. * Knowing most of his great grandparents personally helped instill values that formed the foundation for the role he currently plays in business generally. * Carl shares that the purpose of his family business is giving people a place to call home. * Explaining the benefits and process of introducing new family members. Carl notes that the disparity in the energy levels between him, his wife, and other family members, allows for productivity to be maximized in different areas. * So often the succession planning is focused on when the person passes away, but if we don't take other family members on a journey of understanding the business over time, when the time comes they won't have the understanding of it to enable a successful transition. * The Contribution Compass is a tool used to understand family members as individuals, their personalities, and predict the expected roles they would play in the family. It is also used in business as a commercial tool since there is a direct correlation between the make-up of business leaders in any business and the success of that business. * Regarding the formality surrounding the entry of other family members into the family business, Carl discloses that nothing would be gifted and members would have to buy into the business. He also emphasizes the need to legalize every aspect of this entry as he recommends for his clients too. * I encourage family members to deal with things when they're not topical because that's when it's least emotional. * Regarding planning ahead for families, the best place to start is to understand that being a shareholder doesn't necessarily mean sitting around the board table. It is also important to understand Family Governance from the perspective of defining what family means to each member. * The Governance structure is predominantly focused on determining directly family-related issues but the Operational Board side is driven by the underlying Family business. This is where families go wrong; when they cannot differentiate between Family Governance and Governance of a Profit Generation Entity. * While sometimes the family traditions do serve the purpose of bonding, in other cases, there is some resentment on the expectations from different family members based on such traditions. * From Carl to his kids: It is important to spend time with your grandparents and great grandparents or people connected to them from that generation because there are threads that enable you to understand how your family has developed, and what the core values or cornerstones of success for you family are, through that time of engagement. Episode Timeline: * [00:49] Introducing today's guest, Carl Bates * [04:04] Carl shares his professional backstory. * [14:28] The purpose of Carl's family business. * [16:17] Apart from you and your mother, are there other family members involved? * [22:43] The Contribution Compass * [28:00] In terms of families planning ahead, where do we start? * [30:39] Where does the distinction lie between a Family Council and the Operating Board? * [34:33] Differentiating between a Family Council and a Family Forum. * [36:45] What is one of the biggest challenges that families have when trying to put a governance structure in place for the first time? * [38:12] Comparing an Operational Family Business with one that is just "stewarding the wealth". * [43:50] How are families celebrating their uniqueness and traditions over the years? * [48:50] Carl's letter to his kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Carl Bates.
46 minutes | Mar 8, 2021
Juan Carlos Salame - Scaling a Third Generation Ecuadorian Retailer & Credit Provider
Juan Carlos Salame’s family business began in Guayaquil in 1944. Domingo Salame, his grandfather, began selling at the local market prepaid vouchers so his customers could buy products at different local stores and, then, pay Mr. Salame in installments. A revolutionary idea that many decades later evolved to what we know today as credit cards. He later put in place a retail shop to sell the products himself. This business was transitioned to his son in the late 70s. A couple of stores have grown into a corporation with over 70 stores in Ecuador and a strong ecommerce presence. The business model focuses on financing products to a population, many of whom, do not have a credit history yet. Juan Carlos and his brother have taken over the business in the last few years putting in place top technological systems and curating an innovative culture. Standout Quotes: * "Be respectful of everyone regardless of their position, their role, or what they do with their lives" - [Juan] * "Be very low profile...with your life, with your business, Humility in that sense" - [Juan] * "I would seriously encourage anyone to look for a mentor in the early stage who will help guide them through the different opportunities that they would face in their lives" - [Juan] * "I would encourage anyone in their twenties or early thirties to form their own business, especially if they want to be like a CEO... they have to quickly learn and fail on a smaller scale" - [Juan] * "Founding your own business is like 3 MBAs in one" - [Juan] Key Takeaways: * Juan describes the original business model which is still in play today. His grandfather had started selling coupons which allowed customers to buy products from other stores now and pay back in installments to him. He later opened his store to sell those products, in effect, he was a credit provider. * The business model is targeted at customers who don't get credit from their banks or lack a credit history to support them getting it. * The biggest aspect of the business is now e-commerce, especially following the lockdown in the pandemic * Describing that he was not forced into the family business, there was always some level of expectation that he would join the business, and he had already started getting involved at an early age. However he had left to get an MBA in the US, and decided to start his business rather than return to the family business, but after a few years, his father called him back. He stayed for a while and quitted since his working relationship with his father was poor. * Juan shares that he finally went back to the family business with conditions given; the first was to have a board member to sort out rifts when they come up, the second was not reporting directly to his father. * The most challenging aspect of the business they had to change, upon joining the family again, was the culture of the company in order to attract new talent. Some managers also had to leave, as there was a need to work with people who were more aligned with the goals of the company. * Discussing his process of implementing change, Juan shares that his first step is to work with the people already in the company, if this fails, he then persuades the workers to make the necessary changes, and if that also fails, he would find someone else who can work with him. * History did repeat itself as Juan's father also had issues with his father regarding joining in and transitioning into the family business. * A key source of his knowledge was starting his own business, and also putting in the effort to be exposed to different industries by participating on their boards. * Investing in time with the kids has become a top priority on the list of worthwhile investments? * The family decided to assemble a book 2 years ago, which would tell the story of the family business and the family as well as the future of the business. * Key lessons from Juan's journey: Be very strategic in how you go about implementing change. Being intentional about communication in the workplace and within the family is also very necessary as part of a family business. * From Juan to his kids: Look for something that you want to do in life, something you enjoy, and something that adds value to the world. Juan would also encourage his kid to put the best effort into anything worth doing, find a mentor, and within the early twenties start a business because the knowledge gained is like 3 MBAs in one. Episode Timeline: * [00:49] About today's guest "Juan Carlos Salame" * [02:00] Juan narrates the origin of the family business. * [08:30] How did you come to join the Family business? * [18:36] What changes have you been able to implement since you and your brother joined in? * [21:40] Juan shares his approach to making drastic changes in a company. * [27:56] Is there a multi-generational family plan in place for your children? * [30:15] Have there been any transition issues since the business started? * [31:45] How have you learned and grown on your journey? * [35:12] What is the most worthwhile investment you have ever made? * [36:13] Highlighting Values instilled in Juan which he passes on to his children. * [37:09] Does your family invest in anything intentionally to try and document its history? * [38:28] Juan shares lessons from his growth process * [41:45] What would you say is your legacy? * [43:05] Juan's letter to his kids For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Juan Carlos Salame.
62 minutes | Mar 1, 2021
Nike Anani - Building a Generational Bridge in African Family Firms
Nike is the founder and CEO of Nike Anani Practice, Ltd., in Lagos, Nigeria, where she helps second-generation family business members collaborate with the founding generation in an effort to build sustainable family enterprises in the region. No more than 2% of African family businesses successfully transition power to the second generation, and Nike has made it her mission to facilitate this generational merge. With over a decade of experience working with select business families in Africa, Nike Anani (https://nikeanani.com/) helps owners lead their family organizations to long-term impact and legacy. Her clients choose to engage her, not only because of her extensive professional training, but also because of her practical experience as both a business founder and a NextGen (https://nikeanani.com/nextgen-the-turning-wheel/). This allows her to uniquely empathise with both generations and act as a connector to the Founding generation. Standout Quotes: * "And that's an observation I have of founders and entrepreneurs, they're just amazing people that have an eye for opportunity" - [Nike] * "As most founders do, it was about giving me the best opportunity to set me up for success and often in their minds, success is going as far away from the business to get the best experience...so they can come back" - [Nike] * "In Nigeria, 90% of indigenous businesses are family businesses, but only 2% survive beyond the founder" - [Nike] * "Family businesses are so key to the community, if they keep failing after a generation, then what's that doing to the economy?" - [Nike] * "I think that starting from a relatively small base, the best way to build anything is with community, and actually building what that community wants rather than just dictating something that you found off the shelf from another culture" - [Mike] * "If you've seen one family business, you've seen one family business" - [Nike] * "A friend of mine says whenever you wake up is your morning, some people don't wake up until they're 85, they don't know what they want" - [Nike] * "I need to be in the best version of myself so I can serve people to the best of my ability" - [Nike] * "There's always something new to learn, we've never arrived, we're just on this ongoing journey of endless learning, in my view" - [Nike] * "There's no position that's guaranteed in life, whether it be a position of material success or honor, today you might be celebrated but it doesn't mean tomorrow you will be" - [Nike] * "It is important to ensure that people's external projections don't become your internal story, because your story is the most powerful thing that you can give yourself" - [Nike] Key Takeaways: * Nike is a 2nd generation family business owner, and she narrates how her father started the family business initially as a side-hustle. * Describing events around her entry into the business, she shares the plan was to only stay for a few months in Nigeria, gain exposure to business in general, and move back to the UK eventually. However, she was drawn to the spirit of entrepreneurship there and felt more liberated as a young black female. * Nike explains that while her father had expressed general support for her in any field she was planning to go into, she had never expected she would work in the family business. * A glaring disparity in the decision-making process between her former place of work and the family business was the time taken which could be much shorter or longer in different scenarios, leaving her befuddled about family business as a whole. This encouraged her to get professional education at the Family Firm Institute in Boston. * Employing her knowledge in her family business, Nike started the process of "Governance" which involved her siblings more, intending to avert the typical dissolution that plagued most Nigerian family businesses after the founding generation. * Another strategy adopted involved starting the conversation by creating a community called "African Family Firms" for African families facing similar challenges to meet and navigate through these issues. * Nike highlights various peculiarities of African families, noting how these have to be put into consideration when trying to find solutions to the survival of family businesses in Africa. * You won't know what you want until you come together as a family, have open conversations, and plan for different scenarios. Get clear as a family on who you are, what your values are, the goals of the family, and the purpose of the family business. * Emphasizing the importance of continuous learning, Nike embraces the process as a part of being the best version of herself. * A significant failure that set her up for success took place in school, where the result she got at some point would not be good enough for the jobs she wanted, and this motivated her to push herself harder than ever before to achieve her desired goal. * Nike’s parents impressed upon her certain values described as 4Hs and 2Ps. The 4Hs are Honesty, Hard work, Humility, and Harmony while the 2Ps are People and Places. All of these were included in the family constitutional value system when the formal family enterprise was set up. * It is important to understand that while people can project their weaknesses onto you and vilify you, their external projections should not become your internal story because your story is the most powerful thing you can give yourself, and you have to hold on to that story. Episode Timeline: * [00:50] Meet Today's guest, 'Nike Anani'. * [01:56] Nike's personal and professional background. * [08:30] How did the family make the jump from medical consumables to construction and building hospitals? * [16:55] How were you inspired to learn more about the Business of Family? * [23:00] Since the wake-up call that you received, what did you do about it for your own family or your friends' families? * [29:50] Do people document entitlements for kin or rather more of a bloodline lineage? * [32:53] Challenges surrounding Real Estate planning in Africa. * [39:18] An overview of Nike's different roles in family business generally. * [50:15] Has there been a specific failure that you've learned a great deal from? * [56:00] Apart from education, what else came through as fundamentally important from your parents? * [59:40] Nike's letter to her kids. For more episodes go to BusinessOfFamily.net (https://www.businessoffamily.net/) Sign up for The Business of Family Newsletter (https://www.businessoffamily.net/newsletter) Follow Mike on Twitter @MikeBoyd (https://twitter.com/MikeBoyd) If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes (http://getpodcast.reviews/id/1525326745), I receive a notification of each review. Thank you! Special Guest: Nike Anani.
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