In this episode of the Family Business/Business Family podcast, Jon Vaughan, former president of Brand Vaughan Lumber Company, reflects on the emotional process of leading his third-generation family business through crisis, growth and, ultimately, sale. This episode also features part 2 of our interview with Deborah Jacob, owner and chairman emeritus of fifth-generation MJS Packaging, who discusses the importance of learning from other family enterprises. And Raffi Amit, the Marie and Joseph Melone Professor and a Professor of Management at the Wharton School, explains how prosperous families succeed through shared values, governance and a culture of entrepreneurship.
Support for this episode comes from Wharton Executive Education. Through world-class faculty and real-world application, Wharton’s Wealth Management and Family Office Programs offer participants a deep dive into the sophisticated financial concepts paramount to family office management. Learn more at whartonfamilywealth.com.
Interested in being a guest or have a topic you’d like to hear us discuss? Contact host Zack Needles, editor-in-chief of Family Business Magazine, at: zneedles@familybusinessmagazine.com.
Don’t miss an episode! Follow Family Business/Business Family on Apple Podcasts, Spotify, Amazon Music or wherever you listen to podcasts.
Guests
Jon Vaughan
Jon Vaughan established a successful career in the lumber and building materials sector. He began in sales at Georgia Pacific/BlueLinx and returned to his family business, Brand Vaughan Lumber, in 2006, eventually becoming President by 2017. After Brand Vaughan was sold to US LBM in 2021, Jon took on the role of Regional Vice President for the Southeast, managing $1.6 billion in revenue across 14 operating businesses, 54 locations, and a workforce of 1,540 employees.
Jon holds a degree in Business Administration from the University of Georgia and has completed executive education programs at The Wharton School, MIT and Kennesaw State. He builds on his academic insights through hands-on leadership and an empathetic ear to build relationships and cultivate cultures that lead to outstanding organizations. He now spends his time on non profit and for profit boards, doing leadership consulting, running a small holdings company and spending as much time with his family as possible.
Deborah Jacob
Deborah M. Jacob is Chairman Emeritus of MJS Packaging, a 140-year-old packaging, manufacturing and distribution company, headquartered in Livonia, Michigan. Ms. Jacob served as a director for 15 years and was elected chairman in 2001. Ms. Jacob retired in 2019 and maintains a Board seat. Her focus remains strategic development, product diversity, shareholder equity, governance, and philanthropy.
A fourth-generation company owner, Deborah has had a career outside the family business. She was a Senior Vice President and Director of Corporate Security for 14 years with Security Pacific Corporation, then the nation’s 3rd largest bank holding company, and then with Bank of America. She had worldwide security responsibilities for the corporations, its affiliates, & subsidiaries. She was one of the nation’s first female Sr. Vice Presidents of a major financial institution.
Deborah worked closely with the Rand Corporation and the Center for Strategic and International Studies, Georgetown, on numerous public policy concerns and was on loan to President Ronald Reagan’s administration for numerous projects.
In 1994 she became the first Senior Fellow at the United States Department of the Treasury, Office of Enforcement, in Washington D.C. working on strategic policy issues across a broad platform of regulatory and law enforcement concerns.
Following her tenure at Treasury, Ms. Jacob became Security chief at Bechtel Corporation for Asia Pacific and South America. Following 9/11, she was acting Director of Corporate Security for Bechtel and worked on a number of classified projects.
As an entrepreneur, she co-founded BizJet Security, an aviation security company.
Raffi Amit
Raphael (“Raffi”) Amit is the Marie and Joseph Melone Professor and a Professor of Management at the Wharton School. Dr. Amit founded and leads the Wharton Global Family Alliance (WGFA), a unique academic-family business partnership established to enhance the marketplace advantage and the social wealth creation contributions of enterprising families through thought leadership, knowledge transfers and the sharing of ideas and best practices among influential global families. (details on the WGFA are at: https:\\wgfa.wharton.upenn.edu). He has served as the Academic Director with overall responsibility for Wharton Entrepreneurship which encompasses all of Wharton’s entrepreneurial programs between 1999 and 2015.
Dr. Amit holds B.A. and M.A. degrees in Economics, and received his Ph.D. in Managerial Economics and Decision Sciences from Northwestern University’s Kellogg Graduate School of Management. Dr. Amit’s current research and teaching interests center on family business ownership, management and governance issues, on family wealth management, on venture capital and private equity investments, on entrepreneurship, on the design of innovative business models and on business and corporate strategy. He has published extensively in leading academic journals and is frequently quoted in a broad range of practitioner outlets.
Dr. Amit has held a range of management and Board of Directors positions in various companies. He served as Chair of the Board of Directors of Creo Products Inc. for 6 years. (NASDAQ: CREO. In May 2005 it was acquired by Kodak.) Professor Amit has helped form the Korean Global IT Fund, a $100 million VC fund and has served as the first Chairman of the KGIF Advisory Board. He has served on the Board of Directors of Alvarion Ltd. a wireless communication equipment company, and has been a member of the Audit and Compensation Committees of Alvarion. He has also served as the only external director of a private family owned and controlled firm in Hong Kong. Dr. Amit currently serves on the Board of Directors of a global family-controlled firm in the financial services sector where he chairs the audit committee and the enterprise risk management committee. He advises numerous private and publicly held family-controlled businesses on a broad range of strategic, governance and financial issues.
Podcast Transcript
1
00:00:00.000 –> 00:00:03.860
Support for this episode comes from Wharton Executive Education.
2
00:00:04.740 –> 00:00:09.160
Through world-class faculty and real-world application, Wharton’s Wealth Management
3
00:00:09.160 –> 00:00:14.460
and Family Office programs offer participants a deep dive into the sophisticated financial
4
00:00:14.460 –> 00:00:16.920
concepts paramount to family office management.
5
00:00:17.620 –> 00:00:20.700
Learn more at WhartonFamilyWealth.com.
6
00:00:29.350 –> 00:00:31.370
My father joined in 1976.
7
00:00:31.510 –> 00:00:35.230
Had he not joined and Mr. Brand was leaving, they were ready to let the business go.
8
00:00:35.230 –> 00:00:40.110
And so I needed to let go of that emotional piece of it that said, I need to hold on to
9
00:00:40.110 –> 00:00:43.730
this for my grandfather who was willing to let it go.
10
00:00:43.810 –> 00:00:45.770
And his life wasn’t defined by that.
11
00:00:47.550 –> 00:00:53.210
That was John Vaughn, former president of third generation Brand Vaughn Lumber Company,
12
00:00:53.890 –> 00:00:57.910
on gaining the perspective to understand that selling the family business was not a
13
00:00:57.910 –> 00:01:00.510
betrayal of the generations that came before him.
14
00:01:01.230 –> 00:01:03.290
We’ll hear more from John later in this episode.
15
00:01:04.050 –> 00:01:06.990
Welcome to the Family Business Business Family Podcast.
16
00:01:07.490 –> 00:01:11.130
I’m your host, Zach Needles, editor in chief of Family Business Magazine.
17
00:01:11.510 –> 00:01:16.050
In addition to my interview with John, this episode also features a conversation with
18
00:01:16.050 –> 00:01:20.410
Rafi Ahmed, the Marie and Joseph Malone professor and a professor of management at
19
00:01:20.410 –> 00:01:26.010
the Wharton School, as well as part two of my conversation with Debra Jacob, owner
20
00:01:26.010 –> 00:01:29.510
and chairman emeritus of fifth generation MJS Packaging.
21
00:01:30.450 –> 00:01:34.250
Support for this episode comes from Wharton Executive Education.
22
00:01:34.830 –> 00:01:38.250
Wharton’s wealth management and family office programs distill cutting edge
23
00:01:38.250 –> 00:01:43.010
financial research into real time knowledge that wealth managers, family
24
00:01:43.010 –> 00:01:47.070
office executives and ultra high net worth families can leverage as they
25
00:01:47.070 –> 00:01:48.250
prepare for the future.
26
00:01:49.790 –> 00:01:52.870
Learn more at WhartonFamilyWealth.com.
27
00:02:02.240 –> 00:02:06.220
In this segment, Rafi Ahmed, the Marie and Joseph Malone professor and
28
00:02:06.220 –> 00:02:10.400
management at the Wharton School, explains why the family office is the
29
00:02:10.400 –> 00:02:14.540
backbone of multi-generational families, how conflict can sometimes be
30
00:02:14.540 –> 00:02:18.700
constructive and why prosperous families succeed, not because of money,
31
00:02:18.960 –> 00:02:22.900
but because of shared values, governance, and a culture of entrepreneurship.
32
00:02:27.090 –> 00:02:27.410
Hi, Rafi.
33
00:02:27.430 –> 00:02:28.530
Thanks for joining me today.
34
00:02:28.690 –> 00:02:29.750
I’m glad to be here.
35
00:02:29.870 –> 00:02:30.770
Thanks for having me.
36
00:02:31.010 –> 00:02:31.210
Absolutely.
37
00:02:31.270 –> 00:02:34.630
So we’re talking family offices and wealth management today.
38
00:02:34.890 –> 00:02:38.390
Financial wealth management, of course, is a core activity of a family office.
39
00:02:38.390 –> 00:02:42.950
So what are the goals of the family wealth management process that enable
40
00:02:42.950 –> 00:02:48.270
financial prosperity while also preserving family unity and harmony in a
41
00:02:48.270 –> 00:02:50.170
multi-generational, multi-branch family?
42
00:02:50.310 –> 00:02:53.570
The family office is really the backbone of a
43
00:02:53.570 –> 00:02:56.410
multi-generational, multi-branch family.
44
00:02:56.770 –> 00:03:03.830
Now these multi-branch families, multi-generational families are complicated.
45
00:03:03.830 –> 00:03:09.310
They face numerous challenges and therefore, when it comes to family
46
00:03:09.310 –> 00:03:14.810
wealth management, it’s a holistic process that requires the balancing of
47
00:03:14.810 –> 00:03:18.050
multiple goals that sometimes conflict with each other.
48
00:03:18.650 –> 00:03:23.450
So obviously preservation and growth of financial capital is one of the
49
00:03:23.450 –> 00:03:28.450
objective, but similarly, a very important objective is the preservation
50
00:03:28.450 –> 00:03:33.310
of unity and harmony across generation and across branches, preservation
51
00:03:33.310 –> 00:03:38.290
of heritage, preservation of legacy, preservation of culture and norms.
52
00:03:38.570 –> 00:03:43.310
In fact, when we reviewed in part of our research that we have been
53
00:03:43.310 –> 00:03:47.770
engaging for many, many years, the mission statement of family offices
54
00:03:47.770 –> 00:03:52.730
turned out that in many, many cases, the preservation of unity and
55
00:03:52.730 –> 00:03:58.210
harmony comes before the preservation and growth of financial capital.
56
00:03:58.410 –> 00:04:02.490
In the context of a multi-generational, multi-branch family,
57
00:04:02.490 –> 00:04:08.010
you have to consider the very different risk tolerances and investment horizons.
58
00:04:08.010 –> 00:04:12.810
For example, the more senior, I would like to think, wiser generation
59
00:04:12.810 –> 00:04:18.630
has a shorter investment horizon and is more risk-averse than
60
00:04:18.630 –> 00:04:20.370
the younger generation, right?
61
00:04:20.370 –> 00:04:21.910
The more junior generation.
62
00:04:22.490 –> 00:04:27.310
There are spending habits differences across branches of a family.
63
00:04:27.570 –> 00:04:31.930
There are tax considerations because large families are dispersed as far as
64
00:04:31.930 –> 00:04:36.290
where they reside and that might reside in a very different tax agenda.
65
00:04:36.330 –> 00:04:39.730
Even if they are in the United States, there’s a big difference between
66
00:04:39.730 –> 00:04:42.170
taxes in Florida and taxes in California.
67
00:04:42.490 –> 00:04:47.710
So it’s complicated to manage the wealth of a family.
68
00:04:48.530 –> 00:04:53.050
And you know, the holistic process that is involved in family
69
00:04:53.050 –> 00:04:58.310
wealth management, there’s a constant battle between, or trade-off,
70
00:04:58.310 –> 00:05:04.630
I would say, and tension between a gross liquidity and control.
71
00:05:04.810 –> 00:05:05.850
Why am I saying that?
72
00:05:05.990 –> 00:05:06.990
I’ll give you an example.
73
00:05:07.270 –> 00:05:13.050
For example, one family I’m very close to, one branch works in the business,
74
00:05:13.490 –> 00:05:17.970
cares a lot about the competitiveness and vitality and viability of the
75
00:05:17.970 –> 00:05:21.930
business, and the other branch has never worked and always wants to
76
00:05:21.930 –> 00:05:23.050
increase distribution.
77
00:05:23.410 –> 00:05:27.670
So obviously the greater the distribution, the more money flowed out of the
78
00:05:27.670 –> 00:05:30.530
business, the less money is there to finance the gross.
79
00:05:30.930 –> 00:05:35.070
And the other alternative is to go to equity market, but that’s diluted
80
00:05:35.070 –> 00:05:40.290
for control, so you can see the tensions that often arise around
81
00:05:40.290 –> 00:05:45.630
distribution, but this is only one of the potential conflict that families
82
00:05:45.630 –> 00:05:51.530
face. There are also many challenges and threats to harmony and unity in
83
00:05:51.530 –> 00:05:56.350
a family, and that’s because when there are multiple generations and
84
00:05:56.350 –> 00:06:02.030
multiple branches and are dispersed across geographical areas, there are
85
00:06:02.030 –> 00:06:04.650
less interaction between family members.
86
00:06:04.810 –> 00:06:09.130
There are less common experiences that family members have, so to
87
00:06:09.130 –> 00:06:14.050
enable family harmony and prosperity, family must be proactive and
88
00:06:14.050 –> 00:06:19.390
take steps to hold family members together and to facilitate family
89
00:06:19.390 –> 00:06:23.610
members cooperating with family decision and family action.
90
00:06:23.950 –> 00:06:25.550
Doesn’t happen automatically.
91
00:06:26.350 –> 00:06:26.910
Absolutely.
92
00:06:27.250 –> 00:06:32.090
And you mentioned conflict among family members, which happens in every
93
00:06:32.090 –> 00:06:32.770
family, right?
94
00:06:32.790 –> 00:06:36.790
So what are the types of conflicts that you’ve observed and some
95
00:06:36.790 –> 00:06:38.710
ways to mitigate those conflicts?
96
00:06:39.930 –> 00:06:43.450
So first of all, there are many numerous sources of conflict.
97
00:06:43.690 –> 00:06:47.750
Obviously, there’s a traditional conflict if a family employs
98
00:06:47.750 –> 00:06:51.250
managers who are not family members between owners and managers.
99
00:06:51.630 –> 00:06:54.710
That applies to family businesses and to non-family businesses.
100
00:06:54.710 –> 00:06:58.810
I think the context of a family business, there might be a conflict
101
00:06:59.550 –> 00:07:04.070
between the controlling branch of the family and the non-controlling.
102
00:07:04.110 –> 00:07:05.430
I just gave you an example.
103
00:07:05.470 –> 00:07:10.810
There might be a conflict between the business, the family, and
104
00:07:10.810 –> 00:07:11.510
each creditor.
105
00:07:11.890 –> 00:07:16.390
I mean, so the only point I’m trying to make is that there are
106
00:07:16.390 –> 00:07:19.270
different types of conflict that occur.
107
00:07:19.810 –> 00:07:24.490
There is a relationship conflict, and usually those things are
108
00:07:24.490 –> 00:07:25.210
destructive.
109
00:07:26.210 –> 00:07:33.710
You know, their personal emotion, friction, personality clashes,
110
00:07:34.050 –> 00:07:35.090
not work related.
111
00:07:35.350 –> 00:07:39.910
Then there are procedural conflicts, like delegation issues,
112
00:07:40.350 –> 00:07:43.150
all in resource distribution, coordination issues.
113
00:07:43.370 –> 00:07:45.350
These are often necessary.
114
00:07:45.610 –> 00:07:47.390
And then there are task conflicts.
115
00:07:47.390 –> 00:07:51.650
And my point about task conflict is that they are potentially
116
00:07:52.210 –> 00:07:56.250
constructive, and these are work-based content debates.
117
00:07:56.790 –> 00:07:59.370
They’re not personal, they’re not emotional, they’re less
118
00:07:59.370 –> 00:08:02.890
emotional, they’re not emotional, they’re less emotional.
119
00:08:03.590 –> 00:08:05.710
And they are really focused on that.
120
00:08:05.770 –> 00:08:09.370
And your question about what can be done to mitigate those
121
00:08:09.370 –> 00:08:12.950
conflicts is an important one because, you know, a critical
122
00:08:12.950 –> 00:08:18.230
element for turning conflict into positive force within a
123
00:08:18.230 –> 00:08:22.610
family is having open, inclusive, and effective
124
00:08:22.610 –> 00:08:25.390
conversations between and among family members.
125
00:08:25.390 –> 00:08:28.790
And when I say conversation, I mean, two-way dialogue.
126
00:08:28.970 –> 00:08:32.370
It’s not about sending an email, I communicate it to you.
127
00:08:32.510 –> 00:08:36.990
It’s about a two-way dialogue, and having frequent,
128
00:08:37.190 –> 00:08:40.610
open dialogue and positive conversation is really the
129
00:08:40.610 –> 00:08:45.010
cornerstone of successfully managing family and business
130
00:08:45.010 –> 00:08:47.850
issues that may arise from time to time.
131
00:08:47.890 –> 00:08:48.450
Absolutely.
132
00:08:49.130 –> 00:08:50.950
And you mentioned the research that you’ve been doing.
133
00:08:51.090 –> 00:08:53.870
I know you’ve been conducting very granular bi-annual
134
00:08:53.870 –> 00:08:56.390
surveys of family offices for a very long time.
135
00:08:56.390 –> 00:08:59.850
And I’m curious, when it comes to investment management
136
00:08:59.850 –> 00:09:02.630
in a family office, what are the findings that were maybe
137
00:09:02.630 –> 00:09:05.950
most surprising or maybe most alarming to you?
138
00:09:05.950 –> 00:09:10.550
So, you know, over the past, we have been conducting these
139
00:09:10.550 –> 00:09:13.690
family office surveys among many other research projects
140
00:09:13.690 –> 00:09:15.090
since 2008.
141
00:09:15.270 –> 00:09:18.850
And I would say over the last eight years, I’ve tracked
142
00:09:18.850 –> 00:09:23.010
the rise of direct investment, direct private investment
143
00:09:23.010 –> 00:09:24.130
by family office.
144
00:09:24.250 –> 00:09:28.330
And it seems that this trend is not only here to stay,
145
00:09:28.570 –> 00:09:32.210
but it is becoming central to family office asset
146
00:09:32.210 –> 00:09:32.770
allocation.
147
00:09:32.770 –> 00:09:38.590
What I find concerning in that context is that about half
148
00:09:38.590 –> 00:09:43.170
the respondents to our survey engage in direct private
149
00:09:43.170 –> 00:09:47.550
investment without staffing up with private equity
150
00:09:47.550 –> 00:09:48.230
professionals.
151
00:09:48.410 –> 00:09:52.170
Now, the reason I’m saying that, that family capital
152
00:09:52.170 –> 00:09:56.210
is unique, it is both permanent and proprietary.
153
00:09:56.630 –> 00:09:59.510
You know, there’s no limited partner like there is
154
00:09:59.510 –> 00:10:00.810
in a private equity firm.
155
00:10:00.810 –> 00:10:04.770
So because of that, it allows for maximum flexibility
156
00:10:04.770 –> 00:10:07.710
in implementing such a direct investment program.
157
00:10:08.470 –> 00:10:11.950
So direct investment is a strategy that can offer
158
00:10:11.950 –> 00:10:14.790
the potential for higher return, lower fees,
159
00:10:15.010 –> 00:10:17.590
and possibly a chance for direct involvement
160
00:10:17.590 –> 00:10:18.590
with companies.
161
00:10:18.890 –> 00:10:22.110
Yet it requires a team of experienced private equity
162
00:10:22.110 –> 00:10:25.350
professional, qualified processes and discipline.
163
00:10:25.490 –> 00:10:29.730
So it can be very difficult for family to consistently
164
00:10:29.730 –> 00:10:34.450
succeed with their direct private investment program,
165
00:10:34.790 –> 00:10:39.430
if they haven’t engaged with private equity professionals.
166
00:10:39.730 –> 00:10:42.310
So there are two other, I would say,
167
00:10:42.770 –> 00:10:46.270
rising findings about the direct investment program
168
00:10:46.270 –> 00:10:46.970
in particular.
169
00:10:47.130 –> 00:10:51.090
First, families stay in those direct investment
170
00:10:51.090 –> 00:10:53.230
for relative short duration.
171
00:10:53.590 –> 00:10:57.010
You see, I just said, family capital is very unique.
172
00:10:57.010 –> 00:10:58.550
They have total flexibility.
173
00:10:58.990 –> 00:11:01.310
By staying longer in the transaction,
174
00:11:01.450 –> 00:11:03.410
this can be a competitive advantage
175
00:11:03.410 –> 00:11:06.910
because a private equity firm needs an exit
176
00:11:06.910 –> 00:11:09.430
in order to pay back its limited partner.
177
00:11:09.550 –> 00:11:11.430
The family doesn’t have that.
178
00:11:11.590 –> 00:11:12.450
That’s one thing.
179
00:11:12.750 –> 00:11:16.190
The other issue is there’s no single industry
180
00:11:16.190 –> 00:11:19.450
where families are focused on or type of business.
181
00:11:19.970 –> 00:11:22.730
Surprisingly, they don’t just invest in family business.
182
00:11:22.730 –> 00:11:27.830
In fact, 40% of the direct private investment
183
00:11:28.340 –> 00:11:33.210
are in the pre-seed and seed and series A of companies.
184
00:11:33.350 –> 00:11:35.970
And this is the highest risk segment
185
00:11:35.970 –> 00:11:38.030
of the venture capital industry.
186
00:11:39.730 –> 00:11:41.210
And half the families do so
187
00:11:41.210 –> 00:11:43.030
without staffing with professionals.
188
00:11:43.210 –> 00:11:45.750
So that to me is surprising and concerning.
189
00:11:46.010 –> 00:11:48.510
And so taking even a bigger step back,
190
00:11:48.550 –> 00:11:51.530
just looking at what you’ve learned from your research
191
00:11:51.530 –> 00:11:53.610
and from your ongoing engagements
192
00:11:53.610 –> 00:11:55.690
with substantial families around the world,
193
00:11:55.870 –> 00:11:58.230
what have you learned about multi-generational,
194
00:11:58.450 –> 00:12:00.610
harmonious and prosperous families?
195
00:12:00.730 –> 00:12:03.830
What attributes do they have or maybe lack?
196
00:12:04.030 –> 00:12:06.170
Right, so there are a number of things
197
00:12:06.170 –> 00:12:12.590
that I think come up as we look over many, many years,
198
00:12:12.870 –> 00:12:17.010
both at research and my own engagement with families.
199
00:12:17.110 –> 00:12:20.470
Number one, harmonious and prosperous family
200
00:12:20.470 –> 00:12:23.890
emphasize family shared values, mission and vision.
201
00:12:24.090 –> 00:12:27.310
This is really the glue that keeps families together.
202
00:12:27.510 –> 00:12:28.770
Let’s be very direct.
203
00:12:28.970 –> 00:12:30.550
Money is not the glue.
204
00:12:30.870 –> 00:12:33.830
Money causes conflict very often, right?
205
00:12:34.590 –> 00:12:37.110
But it is those shared values
206
00:12:37.110 –> 00:12:43.450
that are very, very important in sustaining harmony
207
00:12:43.450 –> 00:12:45.250
across branches and generations.
208
00:12:45.530 –> 00:12:48.910
Secondly, those harmonious and prosperous families
209
00:12:48.910 –> 00:12:52.610
communicate effectively and frequently.
210
00:12:53.810 –> 00:12:57.510
They have, all these families have a family constitution
211
00:12:57.510 –> 00:13:02.390
that has been developed through an inclusive process
212
00:13:02.390 –> 00:13:04.490
and is actually implemented.
213
00:13:04.750 –> 00:13:09.170
Those families also have established succession processes
214
00:13:09.170 –> 00:13:11.890
with clear roles and responsibilities
215
00:13:11.890 –> 00:13:15.190
that have been developed by the family,
216
00:13:15.470 –> 00:13:17.210
have been accepted by the family
217
00:13:17.210 –> 00:13:20.250
and have been communicated to the family, right?
218
00:13:20.450 –> 00:13:23.830
And also they employ experienced professionals
219
00:13:23.830 –> 00:13:26.110
and have a team of trusted advisors
220
00:13:26.110 –> 00:13:28.930
that stay with the family for a long time.
221
00:13:29.610 –> 00:13:32.430
Importantly, what characterizes these families,
222
00:13:32.530 –> 00:13:34.690
these harmonious and prosperous families,
223
00:13:35.090 –> 00:13:37.070
that they have ownership structures
224
00:13:37.070 –> 00:13:39.550
that enable liquidity and exit.
225
00:13:39.910 –> 00:13:41.770
The distinction between liquidity and exit,
226
00:13:41.950 –> 00:13:43.430
liquidity might be a situation
227
00:13:43.430 –> 00:13:45.890
when one family wants to take some money out
228
00:13:45.890 –> 00:13:47.570
but wants to be an exit
229
00:13:47.570 –> 00:13:51.230
when the branch says, we want to go it alone.
230
00:13:51.790 –> 00:13:52.030
Sure.
231
00:13:52.210 –> 00:13:55.430
And the other issue that I think is characterized
232
00:13:55.430 –> 00:13:57.450
with these families based on the research
233
00:13:57.450 –> 00:13:59.830
and my own engagement is that these families
234
00:13:59.830 –> 00:14:04.090
have a clear delineation of roles and responsibility
235
00:14:04.090 –> 00:14:08.530
within and between the family and the businesses.
236
00:14:09.290 –> 00:14:12.790
They have a well-functioning family office
237
00:14:12.790 –> 00:14:15.310
and well-functioning institution
238
00:14:15.310 –> 00:14:17.290
and decision-making processes.
239
00:14:17.590 –> 00:14:19.430
And they have governance structures
240
00:14:19.430 –> 00:14:23.230
that are well-coordinated among family members
241
00:14:23.230 –> 00:14:26.810
but also governance structure of the business
242
00:14:26.810 –> 00:14:30.670
that are consistent with the governance structure
243
00:14:30.670 –> 00:14:31.570
of the family.
244
00:14:31.910 –> 00:14:33.750
And lastly, and this is perhaps
245
00:14:33.750 –> 00:14:35.910
the single most important characteristics
246
00:14:35.910 –> 00:14:39.150
of those families, that there is no sense of entitlement.
247
00:14:39.430 –> 00:14:42.730
There is a entrepreneurial culture
248
00:14:42.730 –> 00:14:45.830
that promotes and supports innovation
249
00:14:45.830 –> 00:14:49.110
that family members in each generation
250
00:14:49.110 –> 00:14:51.890
view themselves as a wealth creator.
251
00:14:52.550 –> 00:14:54.470
I think these are the main findings
252
00:14:54.470 –> 00:14:57.330
that we derive from both the research
253
00:14:57.330 –> 00:14:58.330
that we have been doing.
254
00:14:58.850 –> 00:15:01.990
And in the programs here at the Wharton School,
255
00:15:02.310 –> 00:15:05.470
both the family office program geared at families,
256
00:15:05.930 –> 00:15:07.890
multi-generational, multi-branch family,
257
00:15:08.450 –> 00:15:12.030
as well as the family wealth management program,
258
00:15:12.030 –> 00:15:14.010
which is really for advisors,
259
00:15:14.270 –> 00:15:17.770
addresses more advanced topics in investment management,
260
00:15:18.010 –> 00:15:22.030
which is really a central activity of the family office.
261
00:15:22.230 –> 00:15:26.530
And this is more geared to the advisors or professionals
262
00:15:26.530 –> 00:15:28.850
that deal with asset management.
263
00:15:29.210 –> 00:15:32.070
But the point that I’ve made at the beginning here
264
00:15:32.070 –> 00:15:34.850
is that family office is a lot more
265
00:15:34.850 –> 00:15:37.150
than just a private asset management company.
266
00:15:37.570 –> 00:15:39.310
It’s the backbone of the family
267
00:15:39.310 –> 00:15:41.910
and is engaged in a range of activity
268
00:15:41.910 –> 00:15:45.470
that enable harmony and prosperity
269
00:15:45.470 –> 00:15:48.310
across generation and across branches.
270
00:15:48.930 –> 00:15:49.150
Absolutely.
271
00:15:49.790 –> 00:15:53.190
Well, Rafi, thank you so much for your time and insights.
272
00:15:53.430 –> 00:15:54.390
I really appreciate it.
273
00:15:54.590 –> 00:15:56.150
Thank you very much for having me.
274
00:16:00.430 –> 00:16:02.710
This segment features part two of my conversation
275
00:16:02.710 –> 00:16:05.650
with Deborah Jacob, owner and chairman emeritus
276
00:16:05.650 –> 00:16:07.970
of Fifth Generation and JS Packaging.
277
00:16:08.210 –> 00:16:10.570
This time around, Deborah discusses the importance
278
00:16:10.570 –> 00:16:12.430
of learning from other family enterprises,
279
00:16:12.910 –> 00:16:14.410
the vital role of patients,
280
00:16:15.130 –> 00:16:17.490
why she mandated executive retirement policies
281
00:16:17.490 –> 00:16:19.190
to make room for the next generation,
282
00:16:19.190 –> 00:16:21.990
and how philanthropy and employee loyalty
283
00:16:21.990 –> 00:16:24.910
form the backbone of her company’s enduring culture.
284
00:16:30.650 –> 00:16:31.930
I love that you talked about
285
00:16:31.930 –> 00:16:34.250
outside family business programs.
286
00:16:34.590 –> 00:16:37.670
And I wonder if somebody were to say to you,
287
00:16:37.690 –> 00:16:39.010
what’s the point of these programs?
288
00:16:39.050 –> 00:16:41.050
Why do I need to talk to other family businesses
289
00:16:41.050 –> 00:16:41.890
about what they’re doing?
290
00:16:42.050 –> 00:16:44.110
You know, my family is unique and whatever.
291
00:16:44.770 –> 00:16:48.190
Why is it important to have these kind of like safe spaces
292
00:16:48.790 –> 00:16:51.270
to talk about these sensitive issues?
293
00:16:51.370 –> 00:16:53.550
Deval, Zach, you know, and I know,
294
00:16:53.850 –> 00:16:57.370
you try to talk about those issues within the business
295
00:16:57.370 –> 00:17:01.670
and you’ll be booted out on your keister, as we say.
296
00:17:03.210 –> 00:17:04.250
That’s number one.
297
00:17:05.010 –> 00:17:07.490
You cannot speak of them in public.
298
00:17:08.170 –> 00:17:10.130
When you go to a program like this,
299
00:17:10.270 –> 00:17:12.089
and one was Transitions West,
300
00:17:12.490 –> 00:17:15.310
it gave you an opportunity to sit with other people
301
00:17:15.310 –> 00:17:16.450
just like yourself.
302
00:17:16.710 –> 00:17:19.609
And by the way, when you said my family’s unique, no.
303
00:17:20.450 –> 00:17:24.109
One thing I found is all these families have similarities.
304
00:17:24.730 –> 00:17:27.069
All of them in many ways are the same.
305
00:17:27.150 –> 00:17:29.350
It depends on which generation they’re in.
306
00:17:29.650 –> 00:17:33.330
Each generation becomes a little different.
307
00:17:33.750 –> 00:17:37.090
And if you happen to be lucky enough to survive
308
00:17:37.650 –> 00:17:39.410
past the third generation,
309
00:17:39.410 –> 00:17:41.570
which we’re in the fifth generation,
310
00:17:42.670 –> 00:17:45.250
you normally find that successful family businesses
311
00:17:45.250 –> 00:17:48.030
by that time have taken on,
312
00:17:50.370 –> 00:17:53.830
have taken on the mantle of having professional management.
313
00:17:54.690 –> 00:17:57.370
The family still owns the business,
314
00:17:58.090 –> 00:17:59.210
still controls the board,
315
00:18:00.070 –> 00:18:03.190
but your management oftentimes at that point
316
00:18:03.190 –> 00:18:04.390
is all professional.
317
00:18:05.070 –> 00:18:06.190
And there’s a reason for that.
318
00:18:06.190 –> 00:18:08.450
You’ve grown, you’ve thrived,
319
00:18:08.450 –> 00:18:12.330
and now you wanna continue to the next decade
320
00:18:13.610 –> 00:18:16.250
or 140 years as it is.
321
00:18:16.830 –> 00:18:19.850
But I think that safe place and those family businesses
322
00:18:19.850 –> 00:18:22.150
are extremely important for anybody,
323
00:18:23.410 –> 00:18:26.190
whether they’re first generation, second generation,
324
00:18:26.310 –> 00:18:28.250
third generation, fourth generation,
325
00:18:29.030 –> 00:18:31.850
particularly second and third generation
326
00:18:32.190 –> 00:18:34.730
to go to a family business program.
327
00:18:35.120 –> 00:18:37.630
At least one, maybe, fourth,
328
00:18:39.120 –> 00:18:42.730
and to learn what you can learn from other people.
329
00:18:45.970 –> 00:18:46.010
Absolutely.
330
00:18:46.410 –> 00:18:49.230
And what are some practical lessons
331
00:18:49.230 –> 00:18:53.270
that you recall bringing back from those experiences?
332
00:18:56.390 –> 00:18:57.590
Practical lessons.
333
00:18:58.430 –> 00:19:00.270
Number one, patience.
334
00:19:01.810 –> 00:19:02.750
I don’t particularly,
335
00:19:02.850 –> 00:19:05.960
I’m not a particularly patient person, never have been.
336
00:19:06.980 –> 00:19:09.180
And working in the public sector,
337
00:19:10.140 –> 00:19:12.080
I wanted quick results.
338
00:19:12.860 –> 00:19:15.480
But I found that that was not true
339
00:19:16.000 –> 00:19:20.500
and that if you wanted to be successful in our business,
340
00:19:20.520 –> 00:19:22.420
and I think probably a lot of businesses,
341
00:19:23.060 –> 00:19:25.420
you have to be very cautious.
342
00:19:25.420 –> 00:19:28.580
You have to look at that double-edged sword
343
00:19:28.580 –> 00:19:30.320
on every decision you’re making.
344
00:19:31.160 –> 00:19:32.500
Remember, it’s your money.
345
00:19:32.620 –> 00:19:33.880
It’s a shareholder’s money.
346
00:19:34.880 –> 00:19:39.060
So therefore, it’s extremely important to have patience.
347
00:19:39.080 –> 00:19:43.740
That would be my number one lesson that I learned.
348
00:19:44.900 –> 00:19:46.900
And I learned that from a lot of my mentors.
349
00:19:48.140 –> 00:19:52.120
I also learned that every family has a culture.
350
00:19:53.140 –> 00:19:55.920
The business has that culture.
351
00:19:56.740 –> 00:19:58.220
The business has a legacy.
352
00:19:59.540 –> 00:20:01.560
The business has a founder,
353
00:20:01.560 –> 00:20:04.360
and that founder, he was five generations ago,
354
00:20:04.800 –> 00:20:06.060
there’s a legacy there.
355
00:20:06.720 –> 00:20:09.160
That legacy is extraordinarily important.
356
00:20:10.080 –> 00:20:14.800
And I’ve learned that while oftentimes
357
00:20:15.380 –> 00:20:18.020
our board, your board members in family business
358
00:20:18.020 –> 00:20:21.120
do not necessarily have the skill sets
359
00:20:21.900 –> 00:20:25.800
that you find in the publicly traded companies,
360
00:20:26.200 –> 00:20:28.960
they do have something that those people don’t have.
361
00:20:29.390 –> 00:20:31.280
They have a respect for that legacy.
362
00:20:32.160 –> 00:20:33.880
They understand the family.
363
00:20:34.440 –> 00:20:39.460
They understand what it is to keep that history
364
00:20:39.790 –> 00:20:41.300
and that legacy together.
365
00:20:41.900 –> 00:20:43.380
I know that in our company,
366
00:20:43.500 –> 00:20:46.940
that is absolutely imperative to us.
367
00:20:47.400 –> 00:20:50.960
Our philanthropy is extremely imperative to us.
368
00:20:51.300 –> 00:20:53.500
Our connection with the city of Detroit,
369
00:20:54.020 –> 00:20:55.640
with Wayne State University,
370
00:20:56.040 –> 00:20:59.300
and our philanthropy with the Ronald McDonald House
371
00:20:59.300 –> 00:21:00.960
with Friendship Circle and others,
372
00:21:01.360 –> 00:21:03.720
we give a tremendous amount of money to charity.
373
00:21:03.800 –> 00:21:07.260
And that’s very, very much a part
374
00:21:07.260 –> 00:21:11.520
of what makes this important.
375
00:21:12.100 –> 00:21:14.920
Not to mention that the number one thing,
376
00:21:15.680 –> 00:21:18.720
most important asset we have is not money.
377
00:21:19.120 –> 00:21:20.080
It’s our employees.
378
00:21:21.220 –> 00:21:21.600
Yeah.
379
00:21:25.080 –> 00:21:26.780
And since we’ve been talking so much
380
00:21:26.780 –> 00:21:30.720
during this conversation about learning from others,
381
00:21:31.040 –> 00:21:32.460
being influenced by others,
382
00:21:32.960 –> 00:21:34.080
drawing inspiration from others.
383
00:21:34.080 –> 00:21:35.800
I wanted to talk about Elaine Jacob,
384
00:21:35.860 –> 00:21:38.340
who’s your cousin and was a pioneer in business.
385
00:21:38.580 –> 00:21:41.240
What lessons or inspiration have you drawn
386
00:21:41.240 –> 00:21:44.080
from her leadership in your own leadership journey?
387
00:21:46.420 –> 00:21:48.980
She was an absolutely amazing woman.
388
00:21:50.120 –> 00:21:51.840
And unfortunately, as a woman,
389
00:21:51.840 –> 00:21:55.400
she never got the kudos that she deserved.
390
00:21:55.400 –> 00:21:57.900
Remember, it was 1953,
391
00:21:58.220 –> 00:22:01.360
when she came to work for an all-male company.
392
00:22:01.740 –> 00:22:04.060
That’s why they call her Damn Jacob and Sons.
393
00:22:04.660 –> 00:22:07.780
She was the niece of Ben Jacob.
394
00:22:09.140 –> 00:22:12.020
And he thought, oh, it’s okay, we’ll give her a job.
395
00:22:13.400 –> 00:22:14.900
She kept her head down.
396
00:22:16.580 –> 00:22:19.560
She had, and I think this is important,
397
00:22:20.360 –> 00:22:24.600
any young woman or any woman
398
00:22:24.600 –> 00:22:27.020
that’s gonna go into a family business,
399
00:22:28.180 –> 00:22:32.880
please, you must develop a really good sense of humor.
400
00:22:33.780 –> 00:22:38.220
You must become like a duck and let it flow off your back.
401
00:22:38.960 –> 00:22:39.480
Yeah.
402
00:22:39.960 –> 00:22:41.160
So important.
403
00:22:42.060 –> 00:22:44.460
And I don’t know if young women today
404
00:22:44.460 –> 00:22:46.680
really understand that.
405
00:22:47.080 –> 00:22:49.520
Elaine and I both clearly understood,
406
00:22:49.580 –> 00:22:51.080
I must have picked up her genetics,
407
00:22:51.800 –> 00:22:56.480
but I always adored her and respected her and watched her.
408
00:22:57.180 –> 00:22:59.400
And she became the president
409
00:22:59.400 –> 00:23:01.880
of the National Association of Container Distributors.
410
00:23:02.440 –> 00:23:05.040
There wasn’t a female in that room,
411
00:23:05.540 –> 00:23:07.140
except for the wives of the owners
412
00:23:07.140 –> 00:23:08.980
of other companies like ours.
413
00:23:09.660 –> 00:23:12.960
She was by herself, but that never bothered her.
414
00:23:13.060 –> 00:23:14.200
She loved art.
415
00:23:14.660 –> 00:23:17.680
She donated a fabulous art gallery
416
00:23:17.680 –> 00:23:19.020
to Wayne State University.
417
00:23:19.440 –> 00:23:20.700
She was a pilot.
418
00:23:21.940 –> 00:23:23.200
She flew a small plane.
419
00:23:24.500 –> 00:23:29.840
So in essence, she was an example for any young woman
420
00:23:30.220 –> 00:23:32.620
to look up to and to try and follow.
421
00:23:35.860 –> 00:23:36.020
Absolutely.
422
00:23:36.260 –> 00:23:37.780
Yeah, it’s an amazing story.
423
00:23:38.960 –> 00:23:40.820
And so as we wrap up here,
424
00:23:40.820 –> 00:23:42.740
I wanna talk a little bit about
425
00:23:42.740 –> 00:23:45.580
the process of generational transitions
426
00:23:45.580 –> 00:23:48.080
and planning those transitions at MJS.
427
00:23:48.780 –> 00:23:50.240
What is that process?
428
00:23:50.240 –> 00:23:52.360
What does it look like and what does it look like now?
429
00:23:52.500 –> 00:23:54.360
And what have you learned along the way
430
00:23:54.360 –> 00:23:56.680
about what to do and what not to do?
431
00:23:59.840 –> 00:24:02.240
When I went to work for the company,
432
00:24:02.280 –> 00:24:05.240
it became probably my highest priority
433
00:24:06.020 –> 00:24:09.120
because one thing I always understood,
434
00:24:09.700 –> 00:24:14.820
and I learned this from a lot of family business patriarchs
435
00:24:15.240 –> 00:24:16.640
who wouldn’t let go of a company,
436
00:24:17.500 –> 00:24:19.760
you have to make room for young people.
437
00:24:20.180 –> 00:24:21.180
You have to.
438
00:24:21.640 –> 00:24:25.640
And that’s why I put a policy in place in our company.
439
00:24:25.700 –> 00:24:27.040
This is kind of an aside,
440
00:24:27.840 –> 00:24:30.700
that executives in our company have to retire
441
00:24:30.700 –> 00:24:31.920
at 70 years old.
442
00:24:32.660 –> 00:24:35.880
Now, when I did that, I think I was maybe in my 50s,
443
00:24:35.880 –> 00:24:38.780
and I realize now maybe that was a little too young.
444
00:24:39.660 –> 00:24:43.380
But whether it was or not, I think it’s a great policy.
445
00:24:43.780 –> 00:24:46.400
You’ve gotta make room for younger people coming up.
446
00:24:47.160 –> 00:24:50.280
In my case, I started to look around
447
00:24:52.200 –> 00:24:54.940
and there’s one lesson to be learned
448
00:24:54.940 –> 00:24:57.380
is if you don’t succeed, try, try again.
449
00:24:57.940 –> 00:24:59.860
That’s why that phrase is a cliche
450
00:24:59.860 –> 00:25:03.280
because it is true and it lasts your time.
451
00:25:04.780 –> 00:25:08.000
But then I found a young cousin of mine
452
00:25:08.560 –> 00:25:10.620
who was in the nutraceutical business,
453
00:25:10.820 –> 00:25:12.640
which was a similar business stars.
454
00:25:13.300 –> 00:25:15.420
So I started with his mother, my cousin,
455
00:25:15.860 –> 00:25:18.440
tried to convince her that he wanted,
456
00:25:18.520 –> 00:25:19.820
he lived in California.
457
00:25:19.820 –> 00:25:21.680
Matter of fact, he still does.
458
00:25:22.800 –> 00:25:26.760
But eventually, I think I coerced him pretty well
459
00:25:27.320 –> 00:25:31.320
and got him to come to work for us.
460
00:25:32.460 –> 00:25:33.920
I put him on the board of directors
461
00:25:33.920 –> 00:25:35.660
and he became my right hand.
462
00:25:36.380 –> 00:25:37.600
And over the years,
463
00:25:38.420 –> 00:25:40.500
I kept giving him more and more things.
464
00:25:40.540 –> 00:25:42.160
And I found that he was,
465
00:25:43.140 –> 00:25:49.140
he is such a talented, talented, skillful young man.
466
00:25:50.380 –> 00:25:54.780
That he is now, I stepped down several years ago
467
00:25:54.780 –> 00:25:57.780
as chairman and kind of co-CEO.
468
00:25:57.940 –> 00:26:01.220
He is now the CEO and chairman of our company.
469
00:26:02.380 –> 00:26:04.920
And I must tell you, Zach,
470
00:26:05.620 –> 00:26:08.040
I hammer him over the head all the time
471
00:26:08.040 –> 00:26:09.440
about succession planning.
472
00:26:11.200 –> 00:26:15.180
Because he’s in his 50s
473
00:26:15.900 –> 00:26:17.160
and I keep telling him,
474
00:26:17.260 –> 00:26:18.600
Matt, you’re not getting any younger.
475
00:26:19.080 –> 00:26:21.440
And this is the time to be doing it.
476
00:26:21.640 –> 00:26:24.020
And I suspect, as I said earlier
477
00:26:24.020 –> 00:26:25.640
about the fifth generation
478
00:26:25.640 –> 00:26:28.040
going into professional management,
479
00:26:28.620 –> 00:26:33.240
I suspect that our next CEO will be an outsider.
480
00:26:34.040 –> 00:26:34.980
That’s just a guess.
481
00:26:35.840 –> 00:26:37.200
Yeah, yeah.
482
00:26:38.340 –> 00:26:38.760
Absolutely.
483
00:26:39.300 –> 00:26:41.680
And I think it’s great that he has somebody
484
00:26:41.680 –> 00:26:44.020
kind of on his shoulder
485
00:26:44.020 –> 00:26:45.980
reminding him about succession planning
486
00:26:45.980 –> 00:26:47.060
because that is something,
487
00:26:47.060 –> 00:26:49.460
we talk a lot about that in the families
488
00:26:49.460 –> 00:26:52.500
that we write about and talk to and work with
489
00:26:52.500 –> 00:26:55.880
about why don’t people prioritize succession planning?
490
00:26:55.960 –> 00:26:58.000
But it’s easy to get wrapped up in the day to day,
491
00:26:58.180 –> 00:27:00.660
and to not have that longer view.
492
00:27:00.700 –> 00:27:02.000
So it’s good to have somebody
493
00:27:02.460 –> 00:27:04.380
giving a gentle reminder every once in a while
494
00:27:04.380 –> 00:27:05.140
that, hey, this is something
495
00:27:05.140 –> 00:27:06.280
you need to be thinking about.
496
00:27:08.790 –> 00:27:11.830
Let me wrap on this question here
497
00:27:11.830 –> 00:27:14.990
because I think it’s a big one,
498
00:27:14.990 –> 00:27:17.150
but when you look back on your business,
499
00:27:17.150 –> 00:27:18.450
what makes you proud?
500
00:27:18.470 –> 00:27:20.310
What makes you proud about the business
501
00:27:20.310 –> 00:27:21.210
that you helped build?
502
00:27:25.650 –> 00:27:26.230
Many things.
503
00:27:26.490 –> 00:27:30.210
I’m proud that I was able to take over from my father.
504
00:27:30.830 –> 00:27:32.830
My father taught me something, Zach,
505
00:27:32.870 –> 00:27:34.850
I don’t know if you’ve ever heard this one before,
506
00:27:35.270 –> 00:27:36.830
but he used to tell me,
507
00:27:38.370 –> 00:27:41.210
there are three kinds of animals in the stock market.
508
00:27:42.070 –> 00:27:44.330
You can be two, but you can’t be the third.
509
00:27:44.810 –> 00:27:48.130
There are bulls, there are bears, and there are pigs.
510
00:27:49.270 –> 00:27:53.370
One thing he taught me, and when he was chairman,
511
00:27:53.930 –> 00:27:55.350
and it’s very important,
512
00:27:56.210 –> 00:27:58.150
and that’s one of the also big differences
513
00:27:58.150 –> 00:28:02.510
between family businesses and publicly traded companies.
514
00:28:02.950 –> 00:28:03.770
We’re not pigs.
515
00:28:04.850 –> 00:28:07.090
We give back, and we give to our employees.
516
00:28:07.150 –> 00:28:09.530
That’s why our employees stay with us so long.
517
00:28:10.270 –> 00:28:11.970
So that’s one thing.
518
00:28:12.650 –> 00:28:14.510
I’m proud of our history.
519
00:28:15.310 –> 00:28:17.490
I’m proud of our philanthropy,
520
00:28:18.570 –> 00:28:21.410
but mostly I’m proud of our employees.
521
00:28:22.350 –> 00:28:24.650
I’m proud of the job that they do.
522
00:28:24.950 –> 00:28:28.650
I’m proud of the contributions they make,
523
00:28:30.190 –> 00:28:34.110
and I’m proud that we were named
524
00:28:34.110 –> 00:28:36.070
one of the best places to work,
525
00:28:36.370 –> 00:28:40.150
by cranes, last year and this year.
526
00:28:41.130 –> 00:28:44.890
I’m proud that we’re a national donor
527
00:28:44.890 –> 00:28:46.630
with the Ronald McDonald House.
528
00:28:47.590 –> 00:28:50.070
There’s so many things that I’m proud of,
529
00:28:50.410 –> 00:28:52.770
and I’m hoping I live long enough
530
00:28:53.290 –> 00:28:58.550
to enjoy the 150th anniversary of our company,
531
00:28:58.850 –> 00:29:01.330
because I suspect we’ll have a big party then,
532
00:29:01.670 –> 00:29:05.370
just like we did in the 125th.
533
00:29:06.490 –> 00:29:07.170
Awesome.
534
00:29:07.310 –> 00:29:08.590
Well, that sounds great,
535
00:29:08.590 –> 00:29:12.590
and it’s a really incredible story
536
00:29:12.590 –> 00:29:15.870
and a great career to look back on,
537
00:29:15.870 –> 00:29:18.330
a lot of lessons that our listeners can take from it.
538
00:29:18.330 –> 00:29:20.070
So I just really appreciate you
539
00:29:20.070 –> 00:29:22.690
sharing your story and your insights.
540
00:29:24.050 –> 00:29:27.050
Zach, it’s been a pleasure to be with you today,
541
00:29:27.690 –> 00:29:29.390
and I’m available anytime.
542
00:29:30.310 –> 00:29:30.770
Excellent.
543
00:29:30.930 –> 00:29:32.690
Well, I know I’m gonna take you up on that,
544
00:29:32.710 –> 00:29:34.750
because there’s plenty more that we can chat about,
545
00:29:34.770 –> 00:29:36.050
and I think our listeners
546
00:29:36.050 –> 00:29:37.490
would love to chat with you as well.
547
00:29:37.490 –> 00:29:39.350
So thanks again for your time.
548
00:29:39.850 –> 00:29:40.910
Thank you.
549
00:29:46.100 –> 00:29:47.800
In this segment, John Vaughn,
550
00:29:48.020 –> 00:29:50.420
former president of Brand Vaughn Lumber Company,
551
00:29:50.880 –> 00:29:53.300
reflects on leading his third-generation family business
552
00:29:53.300 –> 00:29:56.400
through crisis, growth, and ultimately, a sale.
553
00:29:57.440 –> 00:29:59.800
He shares the emotional and practical complexities
554
00:29:59.800 –> 00:30:01.280
of selling a family enterprise,
555
00:30:01.880 –> 00:30:04.500
why stewardship sometimes means letting go,
556
00:30:04.500 –> 00:30:07.820
and how he balances honoring his grandfather’s legacy
557
00:30:07.820 –> 00:30:10.440
with preparing his own children for the future.
558
00:30:15.000 –> 00:30:16.470
Vaughn, thanks for joining me today.
559
00:30:16.850 –> 00:30:18.050
Hey, Zach, really good to be on.
560
00:30:18.110 –> 00:30:19.750
Thanks for letting me be a part of it.
561
00:30:20.230 –> 00:30:20.650
Absolutely.
562
00:30:20.850 –> 00:30:23.750
Tell me about your family business,
563
00:30:23.750 –> 00:30:25.150
which you have since sold,
564
00:30:25.170 –> 00:30:26.690
and we’re gonna talk about that in a little bit,
565
00:30:26.710 –> 00:30:28.330
but tell me about your family business
566
00:30:28.330 –> 00:30:30.670
and how you ended up first getting involved in it.
567
00:30:31.850 –> 00:30:32.710
Well, the family business
568
00:30:32.710 –> 00:30:34.390
is called Brand Vaughn Lumber Company.
569
00:30:34.630 –> 00:30:37.410
It was started in 1946 by my grandfather,
570
00:30:37.710 –> 00:30:40.370
Cy Vaughn, and his cousin-by-marriage R.L. Brand,
571
00:30:40.710 –> 00:30:42.570
and it was started in the southwest side of Atlanta
572
00:30:42.570 –> 00:30:44.850
to supply building material supplies
573
00:30:44.850 –> 00:30:48.590
to builders really in the southwest Atlanta market.
574
00:30:49.910 –> 00:30:52.150
My grandfather and Mr. Brand started.
575
00:30:52.210 –> 00:30:54.950
My dad bought Mr. Brand out in 1976,
576
00:30:55.030 –> 00:30:56.830
so 30 years later after the founding,
577
00:30:57.510 –> 00:31:00.790
and so it was just an all-Vaughn company from 1976 on.
578
00:31:01.770 –> 00:31:04.650
I came into the business full-time in 2006,
579
00:31:05.810 –> 00:31:08.150
and I grew up in the business, though.
580
00:31:08.290 –> 00:31:10.310
Working on a forklift when I was 13 years old,
581
00:31:10.310 –> 00:31:12.750
can’t do that anymore, riding and unloading trucks
582
00:31:12.750 –> 00:31:14.650
when I was 14 and 15,
583
00:31:14.690 –> 00:31:17.210
and then after I went to school at the University of Georgia,
584
00:31:17.310 –> 00:31:19.470
part of the family rule was,
585
00:31:19.630 –> 00:31:21.650
if you wanna work inside the family business,
586
00:31:21.650 –> 00:31:24.190
you gotta go work outside the family business first,
587
00:31:24.530 –> 00:31:25.790
and not just work outside,
588
00:31:25.870 –> 00:31:28.150
but you have to actually have to get promoted
589
00:31:28.150 –> 00:31:29.470
a couple of times,
590
00:31:29.490 –> 00:31:32.350
and so I went and I worked at George Pacific
591
00:31:32.350 –> 00:31:34.510
and their building products distribution side,
592
00:31:34.550 –> 00:31:37.050
and so I stayed there for four years,
593
00:31:37.170 –> 00:31:38.250
a little over four years,
594
00:31:38.250 –> 00:31:42.870
and then I came back to Brand Vaughn in December of 2006.
595
00:31:44.250 –> 00:31:45.810
Okay, and so as I mentioned,
596
00:31:45.890 –> 00:31:48.430
ultimately you sold the business.
597
00:31:49.070 –> 00:31:51.410
What led to that decision,
598
00:31:51.410 –> 00:31:55.250
and who was involved in actually making that decision?
599
00:31:55.450 –> 00:31:56.550
That’s a great question.
600
00:31:57.050 –> 00:32:00.390
You know, when I joined the business in 2006,
601
00:32:00.650 –> 00:32:03.050
we were single location.
602
00:32:03.590 –> 00:32:08.190
We had about 110 people, $58 million in revenue,
603
00:32:08.690 –> 00:32:10.270
and the global financial crisis
604
00:32:10.270 –> 00:32:12.170
hitting the housing market just crumbled,
605
00:32:12.190 –> 00:32:15.530
and we went from that 110 people down to 31.
606
00:32:16.130 –> 00:32:19.790
We went from 58 million in revenue down to 16,
607
00:32:20.290 –> 00:32:22.150
and we walked around our location,
608
00:32:22.210 –> 00:32:23.510
we looked around and we said,
609
00:32:23.690 –> 00:32:25.030
what are we gonna do with this place?
610
00:32:25.190 –> 00:32:26.430
And so there was that moment
611
00:32:26.430 –> 00:32:28.210
where we were even standing
612
00:32:28.210 –> 00:32:30.370
in a bankruptcy attorney’s office saying,
613
00:32:30.470 –> 00:32:32.110
are we about to lose everything
614
00:32:32.110 –> 00:32:35.050
because of external factors that are around us?
615
00:32:36.290 –> 00:32:38.710
And so we were to rebound from that.
616
00:32:38.830 –> 00:32:41.670
We grew from the single location to six locations.
617
00:32:42.270 –> 00:32:46.810
We grew back to 250 people, over 200 in revenue,
618
00:32:46.910 –> 00:32:48.370
and all of those sorts of things,
619
00:32:48.930 –> 00:32:50.750
but kind of in between that,
620
00:32:50.870 –> 00:32:53.070
we had COVID that hit in 2020,
621
00:32:53.670 –> 00:32:55.410
and all of a sudden our builders said,
622
00:32:56.130 –> 00:32:57.510
hey, we’re not gonna pay you
623
00:32:57.510 –> 00:32:59.310
until we figure out what’s going on,
624
00:32:59.750 –> 00:33:02.850
and we had that twinge that took us back to 2009
625
00:33:02.850 –> 00:33:04.610
because we started doing our cash burn rates
626
00:33:04.610 –> 00:33:07.830
and we said, wow, the stakes are higher
627
00:33:07.830 –> 00:33:09.010
because we have six locations,
628
00:33:09.050 –> 00:33:10.190
we have 250 people,
629
00:33:10.710 –> 00:33:13.470
our inventory, our accounts receivable,
630
00:33:13.690 –> 00:33:15.050
we’re all significantly higher
631
00:33:15.050 –> 00:33:16.450
than they had been in the past,
632
00:33:16.450 –> 00:33:19.970
and so all of a sudden we were trying to figure out
633
00:33:19.970 –> 00:33:21.530
how do we make it through
634
00:33:23.430 –> 00:33:26.670
another 2007, 2008 global financial crisis
635
00:33:26.670 –> 00:33:28.650
if that’s what COVID turns out to be.
636
00:33:29.630 –> 00:33:32.090
It obviously ended up not turning out like that.
637
00:33:32.170 –> 00:33:34.030
It was the greatest thing that ever happened
638
00:33:34.030 –> 00:33:34.650
to our business,
639
00:33:34.750 –> 00:33:36.570
and that’s kind of what catapulted us
640
00:33:36.570 –> 00:33:39.290
to new levels of sales and profitability,
641
00:33:39.390 –> 00:33:40.590
but at the same time,
642
00:33:41.010 –> 00:33:42.350
now our risk was higher,
643
00:33:42.510 –> 00:33:43.890
our size was bigger.
644
00:33:44.130 –> 00:33:45.990
I have a older sister and two younger brothers,
645
00:33:46.050 –> 00:33:47.330
they weren’t in the business,
646
00:33:47.790 –> 00:33:48.890
it was me and my dad,
647
00:33:48.970 –> 00:33:51.270
and so the risk was not spread very wide,
648
00:33:51.690 –> 00:33:54.430
and we knew that if it were for us to scale and grow,
649
00:33:54.470 –> 00:33:56.550
which is what we wanted for our team, for our people,
650
00:33:56.550 –> 00:33:58.710
it was going to require additional capital outside,
651
00:33:59.030 –> 00:34:00.050
because we weren’t going to continue
652
00:34:00.050 –> 00:34:02.390
to be able to finance the size of the business
653
00:34:02.390 –> 00:34:03.870
that we were with the,
654
00:34:04.370 –> 00:34:07.110
building product distribution is pretty small margins,
655
00:34:07.350 –> 00:34:10.370
and it’s high capital and highly capital intensive,
656
00:34:11.110 –> 00:34:12.750
and so we just made the decision to say,
657
00:34:13.070 –> 00:34:16.550
okay, let’s look at alternative capital funding sources,
658
00:34:16.610 –> 00:34:18.409
whether it’s bringing in a partner,
659
00:34:18.510 –> 00:34:21.650
whether it’s going to PE and becoming a platform company
660
00:34:21.650 –> 00:34:24.210
and rolling for or doing a full purchase,
661
00:34:24.210 –> 00:34:26.290
and we ended up going with USLBM,
662
00:34:26.290 –> 00:34:28.070
which was a Bainback Consolidator
663
00:34:28.070 –> 00:34:29.989
of Building Products Distribution Companies,
664
00:34:30.530 –> 00:34:31.610
and that’s the partner we chose,
665
00:34:31.610 –> 00:34:33.110
so we did 100% sale,
666
00:34:33.130 –> 00:34:34.429
and the decision was really,
667
00:34:34.790 –> 00:34:35.690
it was me and my dad,
668
00:34:35.870 –> 00:34:37.070
and it was my mom and my wife.
669
00:34:37.710 –> 00:34:39.510
We walked through that together to understand,
670
00:34:39.610 –> 00:34:40.449
what are the options,
671
00:34:40.570 –> 00:34:41.570
what are the alternatives,
672
00:34:41.750 –> 00:34:43.090
what are the upsides and downsides,
673
00:34:43.489 –> 00:34:45.389
and ultimately came to the decision
674
00:34:45.389 –> 00:34:47.770
as father-son, as business partners,
675
00:34:47.770 –> 00:34:49.949
and then with my wife and my mother
676
00:34:50.610 –> 00:34:52.449
as the family in total.
677
00:34:53.010 –> 00:34:54.949
Yeah, and as we know,
678
00:34:55.170 –> 00:34:57.590
it could be the most logical decision in the world
679
00:34:57.590 –> 00:34:59.650
to sell the family business, right?
680
00:34:59.650 –> 00:35:01.090
It makes total sense on paper,
681
00:35:01.090 –> 00:35:02.250
it has to be done,
682
00:35:02.430 –> 00:35:04.630
but it’s still really difficult
683
00:35:04.630 –> 00:35:05.990
from an emotional standpoint,
684
00:35:06.070 –> 00:35:07.570
and I’m just curious, you know, for you,
685
00:35:07.650 –> 00:35:10.370
what were the emotions like around that decision?
686
00:35:11.410 –> 00:35:13.530
Man, Zach, it was tough.
687
00:35:13.950 –> 00:35:14.470
Yeah.
688
00:35:14.890 –> 00:35:17.670
We looked at it through the lens of,
689
00:35:17.670 –> 00:35:20.110
I mean, a very stewardship model, right?
690
00:35:20.190 –> 00:35:20.410
Yeah.
691
00:35:20.410 –> 00:35:24.570
So my grandfather was humble and generous
692
00:35:24.570 –> 00:35:26.930
and such a good steward of what he’d been given
693
00:35:26.930 –> 00:35:28.490
and just kind of built that into us.
694
00:35:28.590 –> 00:35:30.190
So all of a sudden we looked at it and said,
695
00:35:30.490 –> 00:35:31.850
hey, if we’re owners of this,
696
00:35:31.890 –> 00:35:33.910
that’s one construct to look at it,
697
00:35:33.910 –> 00:35:34.830
but if we’re stewards,
698
00:35:35.370 –> 00:35:37.750
then what’s the right stewardship thing to do?
699
00:35:38.310 –> 00:35:40.270
And so, I mean, you know,
700
00:35:40.270 –> 00:35:43.010
you think about our name was on the building
701
00:35:43.010 –> 00:35:44.190
and still is on the building,
702
00:35:44.210 –> 00:35:45.630
and I have shirts that say it,
703
00:35:45.730 –> 00:35:47.650
and so, you know, it’s on their invoices,
704
00:35:47.690 –> 00:35:49.130
it’s on our trucks that are going around,
705
00:35:49.130 –> 00:35:51.390
and so there’s a pride in the family side of it
706
00:35:51.390 –> 00:35:53.110
that we had to kind of decouple from.
707
00:35:53.450 –> 00:35:57.050
There was the purpose and identity piece of our livelihood
708
00:35:57.050 –> 00:36:00.050
that was like, well, we’re the owners of this business,
709
00:36:00.330 –> 00:36:02.850
we’re the CEO and president of this business.
710
00:36:02.930 –> 00:36:05.190
There was so much identity tied into that
711
00:36:05.710 –> 00:36:08.330
and meaning in like really all of our lives.
712
00:36:08.470 –> 00:36:11.310
And so we had to kind of come to terms with,
713
00:36:11.830 –> 00:36:15.630
what does it look like if this is not our identity,
714
00:36:15.810 –> 00:36:17.090
our meaning and our purpose?
715
00:36:17.570 –> 00:36:20.210
And we still find meaning and purpose outside of that,
716
00:36:20.210 –> 00:36:23.050
and we really were intentional, thoughtful,
717
00:36:23.270 –> 00:36:23.870
prayerful through that,
718
00:36:23.870 –> 00:36:25.630
and we felt like on the other side of it,
719
00:36:25.770 –> 00:36:28.230
it was clear to us that the path
720
00:36:28.230 –> 00:36:29.610
that we were supposed to take
721
00:36:29.610 –> 00:36:31.270
as stewards of Brand Lawn Lumber
722
00:36:31.270 –> 00:36:33.550
and stewards of the 200 plus employees there,
723
00:36:34.030 –> 00:36:35.930
that we needed to make this decision.
724
00:36:36.850 –> 00:36:38.230
Yeah, I love that point
725
00:36:38.230 –> 00:36:39.950
because a lot of times people think
726
00:36:39.950 –> 00:36:42.350
if we’re gonna steward the family legacy,
727
00:36:42.410 –> 00:36:44.090
it means we have to hold onto this thing
728
00:36:44.090 –> 00:36:45.430
no matter what, right?
729
00:36:45.430 –> 00:36:48.570
We can’t let it leave the family’s grip.
730
00:36:48.910 –> 00:36:49.910
And I think to your point,
731
00:36:50.070 –> 00:36:51.270
sometimes the best thing you can do,
732
00:36:51.330 –> 00:36:53.290
especially when you’ve got a lot of employees
733
00:36:53.690 –> 00:36:56.610
who are like family, but are outside your actual family,
734
00:36:57.170 –> 00:36:58.970
sometimes the best thing you can do for everybody
735
00:36:58.970 –> 00:37:00.490
is to let go, right?
736
00:37:00.510 –> 00:37:01.610
So I think that’s an important point.
737
00:37:02.230 –> 00:37:03.410
Well, and one of the things, Zach,
738
00:37:03.870 –> 00:37:06.370
that we went through was in that emotional state,
739
00:37:06.510 –> 00:37:08.190
we were kind of, we’d gotten the LOI,
740
00:37:08.190 –> 00:37:09.650
we were about to sign it and send it in
741
00:37:09.650 –> 00:37:10.710
and started the due diligence.
742
00:37:10.930 –> 00:37:13.070
And so my grandfather passed in 2007.
743
00:37:13.130 –> 00:37:14.430
I just went to,
744
00:37:14.430 –> 00:37:15.610
I mean, it may sound morbid,
745
00:37:15.610 –> 00:37:17.490
I just went to his grave site.
746
00:37:17.810 –> 00:37:20.090
And I just wanted to kind of talk to him and say,
747
00:37:20.810 –> 00:37:22.210
hey, you know, talking through
748
00:37:22.210 –> 00:37:23.150
what we’re thinking about.
749
00:37:23.330 –> 00:37:25.190
And I got there and on his headstone,
750
00:37:25.410 –> 00:37:27.970
it said, Cranston Hayden Vaughan Senior,
751
00:37:28.130 –> 00:37:30.630
Cy Vaughan, loving husband,
752
00:37:30.910 –> 00:37:32.810
loving father, loving grandfather.
753
00:37:33.310 –> 00:37:34.470
And as I looked at that, I said,
754
00:37:34.550 –> 00:37:35.870
it doesn’t say anything about owner
755
00:37:35.870 –> 00:37:36.990
of Brand Vaughan Lumber Company,
756
00:37:37.270 –> 00:37:39.090
wonderful businessman, anything like that.
757
00:37:39.110 –> 00:37:40.110
And then I thought about,
758
00:37:40.510 –> 00:37:42.350
when my father joined in 1976,
759
00:37:42.350 –> 00:37:44.410
had he not joined and Mr. Brand was leaving,
760
00:37:44.430 –> 00:37:46.310
they were ready to let the business go.
761
00:37:46.690 –> 00:37:49.730
And so I needed to let go of that emotional piece of it
762
00:37:49.730 –> 00:37:51.650
that said, I need to hold onto this
763
00:37:52.230 –> 00:37:55.230
for my grandfather who was willing to let it go
764
00:37:55.230 –> 00:37:57.270
and his life wasn’t defined by that.
765
00:37:57.890 –> 00:38:00.650
And so what is the right decision for me and my family,
766
00:38:00.730 –> 00:38:04.410
for my dad and my mom and for the team members
767
00:38:04.410 –> 00:38:06.750
of Brand Vaughan Lumber Company for the long-term legacy
768
00:38:06.750 –> 00:38:08.310
and sustainability of the business?
769
00:38:08.970 –> 00:38:10.290
I love that story
770
00:38:10.290 –> 00:38:12.330
because people get hung up on that.
771
00:38:12.790 –> 00:38:15.470
What would my grandfather or grandparents think
772
00:38:15.470 –> 00:38:16.890
or great-grandparents or whatever?
773
00:38:17.030 –> 00:38:19.470
And I love that you were able to kind of
774
00:38:19.470 –> 00:38:20.550
put that into perspective.
775
00:38:21.090 –> 00:38:22.610
We were just at a conference last week
776
00:38:22.610 –> 00:38:23.610
and somebody said something else
777
00:38:23.610 –> 00:38:25.010
that was really interesting, which was,
778
00:38:25.450 –> 00:38:28.130
it’s not just about what would your grandparents think,
779
00:38:28.490 –> 00:38:30.990
it’s what will your grandchildren think?
780
00:38:31.030 –> 00:38:32.930
And it’s like, if you hold onto something
781
00:38:32.930 –> 00:38:35.270
that you should be letting go of
782
00:38:35.270 –> 00:38:37.130
and you pass it down to them,
783
00:38:38.270 –> 00:38:39.770
you’re doing more harm than good
784
00:38:39.770 –> 00:38:41.850
for the future generations as well, right?
785
00:38:41.850 –> 00:38:43.210
That’s such a great saying.
786
00:38:43.710 –> 00:38:45.190
And something that, it’s funny you say that
787
00:38:45.190 –> 00:38:46.570
because there was somebody that also told me
788
00:38:46.570 –> 00:38:47.690
something about that time.
789
00:38:48.150 –> 00:38:49.490
And I don’t think they even knew
790
00:38:49.490 –> 00:38:51.090
that we were kind of wrestling with,
791
00:38:51.230 –> 00:38:53.370
do we sell the company, do we maintain the company?
792
00:38:53.430 –> 00:38:54.490
And they said, you know,
793
00:38:55.070 –> 00:38:57.650
people try to do things to make their ancestors proud
794
00:38:57.650 –> 00:38:59.650
when they really should be making their descendants proud.
795
00:39:00.150 –> 00:39:02.710
And so it was just like this, oh, wow.
796
00:39:03.390 –> 00:39:05.250
So, I mean, I’ve got three kids of my own
797
00:39:05.250 –> 00:39:08.170
and the chances that they would have the desire
798
00:39:08.170 –> 00:39:10.710
and the competency to keep the company going,
799
00:39:10.710 –> 00:39:14.610
because by the, I mean, my kids are 15, 13 and nine right now.
800
00:39:14.650 –> 00:39:16.910
And so by the time they’re, you know,
801
00:39:17.170 –> 00:39:19.130
the age when I came back to the business 25,
802
00:39:19.150 –> 00:39:21.790
10 years from, we may be a half a billion dollar business.
803
00:39:22.630 –> 00:39:23.890
Man, there’s not a whole lot of people
804
00:39:24.430 –> 00:39:27.250
that have the desire and the competency to do it.
805
00:39:27.290 –> 00:39:29.230
Are we doing a service both to my kids
806
00:39:29.230 –> 00:39:31.550
and to the team members at Brandvon Lumber Company
807
00:39:31.550 –> 00:39:33.330
if we hand over a business
808
00:39:33.330 –> 00:39:35.370
that somebody just doesn’t have the desire
809
00:39:35.370 –> 00:39:36.830
or ability to take care of.
810
00:39:53.100 –> 00:39:56.320
We’re excited to introduce Family Business Compass,
811
00:39:56.600 –> 00:39:58.680
the premier national membership community
812
00:39:58.680 –> 00:40:01.800
designed exclusively for family business CEOs,
813
00:40:02.480 –> 00:40:03.880
family business chairs and directors
814
00:40:03.880 –> 00:40:05.560
and family council chairs.
815
00:40:06.140 –> 00:40:09.120
Our focus is what makes these roles different, family.
816
00:40:09.700 –> 00:40:12.300
We’ll provide the connections, insights and resources
817
00:40:12.300 –> 00:40:14.040
you need to navigate leadership
818
00:40:14.040 –> 00:40:15.980
and governance challenges with confidence.
819
00:40:16.760 –> 00:40:20.260
Built on 35 plus years of strengthening family dynamics
820
00:40:20.260 –> 00:40:21.900
and driving business success,
821
00:40:22.440 –> 00:40:25.680
Family Business Compass is created for leaders like you.
822
00:40:25.980 –> 00:40:28.300
Apply for membership today on our website,
823
00:40:29.200 –> 00:40:33.700
familybusinessmagazine.com slash family-business-compass
824
00:40:33.700 –> 00:40:36.580
and take the next step towards stronger governance,
825
00:40:36.960 –> 00:40:39.060
better leadership and lasting success.
826
00:40:43.040 –> 00:40:44.960
We hope you’ll also consider joining us
827
00:40:44.960 –> 00:40:46.720
at Transitions Fall taking place
828
00:40:46.720 –> 00:40:50.220
November 5th through 7th in San Diego, California.
829
00:40:50.640 –> 00:40:52.660
For more information on both of those events,
830
00:40:52.660 –> 00:40:57.020
visit familybusinessmagazine.com slash events.
831
00:41:01.470 –> 00:41:02.690
That’s it for this episode
832
00:41:02.690 –> 00:41:05.170
of the Family Business Business Family podcast.
833
00:41:05.770 –> 00:41:07.470
If you have ideas for an episode
834
00:41:07.470 –> 00:41:09.770
or you would like to be a guest on the podcast,
835
00:41:10.410 –> 00:41:12.270
please reach out to me, Zach Needles
836
00:41:12.270 –> 00:41:17.130
at zneedles at familybusinessmagazine.com.
837
00:41:17.830 –> 00:41:18.550
Talk to you soon.