Building Kanbrick & Businesses for the Long Term | Tracy Britt Cool & Brian Humphrey

Brent: Boy, I couldn't be more excited to kick things off. I feel like that you all are, like, the perfect blend, as I've gotten to know you all, of business and fun as you guys get going and start to build. And I actually want to kick things off, if you guys will be honest, maybe, about the question I just asked, which is, okay, there's a bunch of people in this audience who, I assume maybe one person in here could help you all.

But tell them, maybe the answer is different [00:01:00] for each of you, but tell them what is the single thing that they could do for you all to help? What's a problem they could solve? 

Tracy: Yeah, for us, we're always looking for high quality businesses and from the people we've met, there's some really amazing businesses in the room, but even more importantly, you know other people who are running really interesting companies who are thinking about partners.

So, uh, we love learning about businesses and talking to owners and founders and CEOs. So definitely, uh, would love to connect with people in your orbit who you, you respect. 

Brent: That's fantastic. Well, okay, so let's get back to the beginning. So when I met you all, you were still working for Berkshire and things were kind of rolling.

I remember Brian, you and I had a conversation. Actually, I think it was at the Berkshire annual meeting. Yep. We first, first really actually met in person and, uh, we, we talked for quite a while. And then since then. You have spun out and done this incredible thing building can brick. So it takes like what was the decision making process and how long did that take you all?

I think there's a lot of [00:02:00] people in this room that are doing something now that they don't intend to do for the next 20 years and or maybe itching to start something new. And I think they're curious about how do you build a firm? What does this look 

Brian: like? Yeah, it's been amazing journey. I think we had been within Berkshire running pampered chef.

It was a turnaround, so it was very intense, uh, a lot of fun, but a, a lot of work. And as we got to the end of that, the business was doing well. I think the learning curve had kind of slowed down and we stepped back and started to think about what do we want to do next. And I think, to your point, like, what do we want to do for the next 20 or 30 years?

Uh, and I think for us it was an opportunity to really paint our own painting. We've seen, kind of, Berkshire was an amazing place, very long term focus, great culture, but it had gotten very large, and we saw this opportunity of how do we kind of create something like that for, for smaller and mid sized companies.

Tracy: Yeah, and I would say that probably not dissimilar from a lot of people in the room, it usually starts with people [00:03:00] closest to us realizing it's sooner than ourselves that we're ready to do something new. I remember distinctly I was on vacation with my husband and we were, you know, having dinner and he said, you know, I want to say something to you that you may find a little weird.

And I said, Okay, it's not very all those conversations are easy. Those don't usually go well. But he said, you know, I think you might want to consider leaving Berkshire and doing something on your own. And I thought it was like an insult. I'm like, Are you kidding me? I love Berkshire Hathaway. It's amazing.

I want to stay my entire career. But I probably a year or two later, I came back to him and said, You know what I'm thinking about? You know, I think it might be time to start something on my own. Um, and like Great things. I tried to steal the idea for myself and he reminded me that we had this conversation two years prior.

But I think that it was one of those situations where, um, you know, and you're ready to start something new. And I think Brian and I had found each other in terms of, um, business partners and really felt like we could build something [00:04:00] unique and special, um, for a smaller size business than, than what, where Berkshire, uh, focuses.

I feel 

Brent: like you also got a gift there and that anything that goes wrong with Cambric, you can just blame your husband, which is, which is the easy, easy thing to do. Perfect. I know. Yeah. Well, so, so, so buildings easy, right? I mean, you guys have, you got a plan. You execute on that plan. Everything's going great.

Everything's winning. I mean, it's just nothing but rainbows and butterflies, right? 

Tracy: I think with anything, there's challenges. You know, we announced we were leaving in fall of 2019. We wanted to have a long transition, so roughly six months. Our last day was going to be March 31st, 2020. And we were off to the races on April 1st, 2020.

The chuckles in the room, like, uh, What happened around that time? Exactly. So, um, I told my husband, I'm going to be on the road. I'm like, I'm not going to be around. We're going to be meeting with companies and investors. It's gonna be, you know, a long road and then about June or July, he said, like you're here all the time.

Like, why haven't you left? So things happen right in your world. [00:05:00] For us, COVID happened, which dramatically sort of shifted the way we were thinking about how we would. start a firm. Um, but those are external and there's also internal challenges and learnings along the way. But I think that's what makes us stronger.

Um, how do you build a company? How do you be resilient through those internal external challenges? And I think working in the trenches is where you build the both best relationships with your partner, with your team. Um, so it's been an immensely valuable experience. experience and one day we'll look back.

Well, it's already fun now, but in 10 or 15 years will be even more fun to say we started, you know, in 2020 two weeks into covid. 

Brent: So you talked about how you wanted to paint your own canvas, which I think is a really great way to think about it. Um, you saw somebody else very famously and publicly paint his own canvas for a very long time.

Um, how are you painting your canvas? differently than Berkshire? Like, what would you say are the things that you took away that are the things you want to incorporate? And what are the things that you're maybe doing differently than 

Brian: Berkshire? Can [00:06:00] you 

Tracy: start? Sure. Uh, so, we really focus on how do we think long term?

How do we build a firm for not just five years or ten years, but in decades? And that very much is similar in something that we focus a lot on of how do we do that. I think where we are a little bit different is we really focus on smaller businesses. So in essence, businesses where we can go in, help the companies, help grow them, we feel like you can find high quality businesses at reasonable valuations, and we don't have sort of the pressure of having to do larger businesses.

And so that is a distinct, uh, approach. And then lastly, we're really focused on being hands on operationally. So we built our Canberra business system, which is how we add value in the companies we work with. And being hands on, um, with the companies is, is very different. Uh, then the approach that they take and this has been, I think, very valuable for us and very fun and very much aligned with sort of our own philosophy and approach to, to building companies.

Brent: Maybe you can give us a little, I mean, there's [00:07:00] people in here for the most part, like operators and people who are, you know, the owners, maybe investors or. You know, in this area, the market are going to be have to be hands on, right? The idea that you can buy a small to medium sized company and just like leave it alone and it'll just give you mailbox money or whatever the where the kids call it.

Um, this is there's no way. And so maybe you can get us into like the cambrick business system. Like, what is that practically? What does that look like when you all get involved with the company, like share anything that you can about about how that work? 

Brian: Yeah, so when we started at Pampered Chef in 2015, uh, the business was, was very challenged.

It was also a, you know, pretty stressful time. Tracy and I had never run a business, and we were, she was CEO, uh, I was CFO, so we were leading a, a challenged business, and there was a lot to learn, and part of what we like to do is go learn from people that have, have come before us. Uh, and we kind of looked out and saw this set of companies, Danaher, Marmon, 3G, Toyota, that had kind of built [00:08:00] business systems or consistent ways of operating across the organization, and they'd driven great results for a long period of time.

Uh, and we're shameless cloners, so we went out and learned from those businesses, spent a lot of time with them. Uh, and I think there were consistently some things that came, came out of that with getting really clear on strategy, having the right metrics and KPIs, being disciplined on budget and, and capital allocation, having a management system to kind of track and execute and, and manage progress, and then a real focus on people and hiring and, and creating the, the right culture.

Uh, and and kind of bringing those things back together. The challenge was a lot of those businesses were really big, and we were running a, you know, mid sized business. And so how do we right size that, uh, and and kind of create it for an organization? And we have lots of mistakes and learnings, uh, still learn on it.

But we kind of built over three or four years the business system, which is really focused on getting the right people in culture, defining the [00:09:00] strategy, having clear kind of outcomes where we're executing towards. Having operational excellence, so freeing up cash to invest in growth, and then picking the right areas to grow.

Brent: So, maybe we could just like double click into some of that. So let's say that, um, the acquisition is completed, like, do you all have like a 30, 60, 90 day plan? What does that look like, and then what are you trying to accomplish, and how different is that in the companies over the first, call it six months?

Tracy: Yeah, we definitely have sort of approach that we take with each business that we work with. And I think to really like hone in on it, we really try to understand, um, first we have the right people in the right roles. And oftentimes in, in companies, especially midsize and smaller businesses, what's most important is do you have the right people?

And what we find oftentimes is that the hiring systems in those companies aren't very robust. So, um, you know, they're just based on gut or feeling or who is available or we're in pain and we need to hire someone now. So we come in and say, okay, how do we improve our hiring process? So we follow, there's a book called [00:10:00] Who, if you haven't read it, it's an amazing book on hiring and just having a more disciplined, you know, scorecard process, um, more robust approach in terms of case studies or behavioral assessments and we've built our own hiring system.

System. And so we'll utilize that in the companies and work with them on it. Um, same thing on strategy. You know, most mid-size companies, you know, the strategy when you start off is, um, sell more products, sell more x, sell more y, but over time you need to evolve. And what market should you be in? What geographies, what categories, um, your customers are asking you for?

products, but should you move into those and how do you think about that? And so a lot of what we're focused on is how do we really assess the business from the outside? How do we think about what, where the strategy is today and where it should be going forward? And then how do we bring the team together to sort of build that strategy, uh, and focus on where we need to go.

And then once we have the strategy, how do we sort of change or take that strategy into action? execution. And so a lot of companies, I think, struggle with, Hey, I know what I need to go do, but I struggle with actually [00:11:00] achieving it. And so we really think about what are the KPIs we should have? How do we drive accountability?

How do we shift from, uh, we want to go do this too. We're going and doing it. And so we're working with the company very hands. Uh, hands on, um, in our approach to really help support the businesses. Um, we're never gonna know as much as the management does about the industry or the business or what to do, but we can help bring these frameworks and these are experience that helps accelerate our growth in the companies.

Um, as well. That's 

Brent: really interesting. So, you know, in my experience, you know, these, these companies have long cultures. I mean, typically you're buying, you know, fairly aged companies in a good way, right? There's a lot of great things that come along with them. A lot of great systems. There's also some baggage and there's, in my experience, some resistance to change, right?

Especially for people that have been there for a long time. https: otter. ai

Somebody once told me it's like the scariest word in the English language. I don't think that's probably true, but maybe it is. [00:12:00] Um, but it's scary. So, like, how do you think about change management? How do you think about when people are resistant to change? When do you work with them to help ease them down the path?

When do you decide that, hey, this is This is not going to work out. 

Tracy: Yeah, I'll start and turn over to Brian, but I'll start by saying, I think we try to put ourselves in their shoes and change is scary. I mean, you know, when iPhone updates and the system changes, like I get really stressed out. I'm like, you change the size of the font, the clock is different.

Like, you know, why did you change? This is terrible. And that's usually my first reaction to any technological change for a day or two. And then a little bit longer, you go through it and you're like. Oh! This is actually helpful. I sort of like this. And then you're like, why did it take me so long to adopt this?

And I think if you think about that experience, and that's a tiny example, you know, personally, but I think that's what we all go through when change happens in our lives at different scales. Um, and I think for us it's really trying to understand what's happening behind it emotionally and, you know, can we help understand, um, what [00:13:00] the resistance is.

Since maybe is it, you know, stress, is it, we've always done it this way? Is it we're afraid? Is it we don't have the resources? Is it 'cause we're nervous? And then how do we help them unlock, um, what's possible? And what we find is you start with some smaller changes as you make those changes and see positive results.

Oftentimes people. build more trust, and then you can sort of work on more change within a business as well. I don't think we try to go in and boil the ocean. I mean, I think that's very challenging with the businesses, but I think starting with change is hard for almost all of us. Maybe not you, Brent, for the rest of us.

No, never. It is, it is something we focus a lot on. 

Brian: Yeah, and I'd say a big focus on co creation. So I think strategy process is a good example where it's not, we come in and here's the strategy, but it's let's go through a process together over a couple months and build the strategy together and then execute on it.

Uh, and I think it was one of the, for me, one of [00:14:00] the most helpful things of actually going and running a business was, I'd sat in a boardroom and said, right, let's improve margins and I'll change the number in an Excel file and it'll, it'll magically happen and that's very different than running a budget process across a large organization and changing how you do it and bringing people along and, right, learning from a lot of mistakes I made doing that and then being able to, to bring that, uh, to our approach going forward at, at Cambric.

Brent: Well, so one of your first platforms that you guys went after is, of course, in the great state of Missouri, right? I mean, that's where all good things originate. Um, maybe you can talk about how did you find, what is it, how did you find it, what are you trying to accomplish? 

Brian: Yeah. You wanna start? Yeah. Uh, so it is in, in Missouri, uh, it's a business, uh, marine concepts, so they make a patented high end boat cover system.

It was part of a, a broader thesis to build a marine, kinda [00:15:00] enthusiast aftermarket, uh, platform. Uh, and, and Missouri's great, I was telling Brent before that. Uh, I spent a lot of time growing up in, in Columbia. Uh, my parents both went to Mizzou, and, and so lots of great memories, and it's fun to, to get back to the Lake of the Ozarks and, and sea marine concepts.

It was a business that we'd done a lot of work on, the kind of thesis. We were fortunate to, to meet the owner, uh, Randy, uh, through some of our, our outreach, and he had built a great business, uh, but he had this challenge of, he couldn't produce a, enough product. Uh, to sell, and that was just to keep up at Lake of the Ozarks and and a little bit in Florida, and he really wanted a partner, uh, that could kind of take a longer term view, but help kind of scale the production and then build out the the geographic platform, and I think like a lot of our owners wanted to remain a partner in the business, wanted some help to build it, uh, and wanted to diversify a [00:16:00] little bit.

And so it's kind of a, you know, wonderful niche business. Uh, with a great growth avenue looking forward. 

Brent: So what are the, like, if you could weigh the magic wand in your five, seven years from now, what does that business look like? And like, what was the, you know, are you guys going to go tangential to that business to expand it or grow it?

Is it just more of a market penetration thing? How do you think about that? 

Tracy: Yeah, this business is a remarkable business predominantly on the lake of the Ozarks. They had one. small sort of outposts in Florida and really our view is how do we build a dealer network and how do we extend into other markets geographically and rather than do that ourselves directly we want to partner with dealers.

So um, existing dock dealers or sort of mom and pop dealers on different uh, lakes or bodies of water where we can sort of come to them with the resources and the support. What we find with this product is it's got a super high NPS, it's in the 70s, uh, customers love it, it solves a pain point, if you've ever tried to put a boat cover on, uh, a boat, it's very challenging, you're hitting all the little buttons, it's, you know, very [00:17:00] difficult, and it makes the experience of boating less fun.

And so, our product, you, you install it, and then it, it takes two minutes to cover the boat. So at the end of the day, after you've been out and you've had a great time, you can, you know, cover your boat easily, which sounds little, but if it's one of those products that You know, oftentimes you don't do the activity because you're like, I don't want to cover the boat or uncover it.

And so that's the type of product that we like is great product, but opportunity to expand. And so for us in 10 years, we want to be on, you know, significantly more lakes and other bodies of water. And so how do we build this dealer network? But I think like many people in the room, you know, you've got to start out with that's the vision of what we want to go do.

So how do we actually go do it? You know, we need to set up a, you know, a system that's repeatable. We've got to be able to identify dealers, sign them up, make sure it works for them from an economic perspective. And then we've got to go, um, and partner with them to effectively sell these products. Um, so really interesting business, lots of opportunity and one that we've really enjoyed building.

So as 

Brent: you all have dug into [00:18:00] that, um, what are the things that you all are kind of helping step in? And like, how does that practically work? I think this is something that we struggle with as a firm is like, you know, the more that we want to do, the less that we take away from the companies, the more that this struggle of like, do you own that?

Or do we own that? Or how, so how have you all, as you think about expansion, you know, are you locating a lot of the talent into the company and trying to recruit in? Are you helping kind of build that? Are you all trying to build like kind of a layer at the Canberra level that will kind of help drop in 

Tracy: some of these companies?

Yeah, so we really partner with the business. So first we sort of work to say, do we have the right people in the right seats? In some cases we need to help bring in some talent. So we brought a CFO into this business ahead of sales. We partnered with into the organization, uh, and we sort of work with them to help build a strategy.

So on the strategy side, we could go sell through the OEM on the manufacturing side. We could go to rack. and open up our own locations or we could do dealer. So we said, okay, let's do dealer. Once we identify that, then we say, okay, how do we actually build the next layer down in terms of that strategy?

How many dealers do [00:19:00] we need to sign up? How many boat covers do they need to sell each quarter, each month, each week? How do we help equip them to be successful? And we're having that conversation. The team is definitely driving it, but we're helping sort of facilitate and provide feedback or input. We usually bring on an outside board that helps with that.

So we have a former president of another boat cover business who's helped us help the management team and partner there and another outside board member who's built a dealer network in the RV space. So we're bringing in resources, insights, perspectives that can help sort of that, um, that conversation, but also as we move to execution, help support that as well.

Brent: Fantastic. Yeah, I want to talk about building a firm because I think that's something that a lot of people in this room are interested in, you know, Um, how have you guys experienced? I mean, you had a plan for how the firm is going to build, you know, I assume there's been some challenges. We talked about COVID as being one of them, but there's always lots of challenges.

Maybe like what are some unexpected things [00:20:00] you didn't think about building the firm and how have you had to kind of pivot around those? 

Brian: Yeah, I think there have definitely been a number of challenges, COVID, COVID being one. I think Cambrick as a business probably has a lot of the same challenges that everyone in this room has, and the same ones we had at Pembroke Chef.

How do we find the right people to work in the business? How do we, you know, Covid remote type environment, create the right culture, uh, and and bring people together and and navigate that. Uh, I also think there's just a, when you're starting off, uh, a lot of activation energy and, you know, you may be compounding, but you're compounding on a really low base and so you see where you want to be and it takes time to get there and being patient.

Uh, with that, uh, I think we've spent a lot of time trying to get the people right and feel really good about our team, uh, and then a lot of time on the back office, the compliance, all the things that kind of let [00:21:00] us run effectively, but you don't see every day. 

Tracy: Yeah, I'd also say we, we started very early on with what's our vision, you know, what's the difference we want to make in the world.

And we ultimately said, you know, we want to help organizations and people reach their full potential. That's what we're focused on. Our companies, you know, our management teams, our investors, our team members, um, is very much what we're, we're working towards. And then from that, you know, what is our goal?

And we want to help, you know, 100, 000 people, 100 organizations. That'll take us 50 years plus to get there, but that's what we're building towards. And that's where we start with our companies, right? What is our sort of purpose? What is our mission? What is our vision? And then how, what's our strategy to support that?

So we want to be longterm in our thinking, in our structure. We want to be business builders. We want to add value in the companies that we work with, and we want to be the trusted home for families and owners. We want people to think about us before they're ready to transact and have a good experience.

We want to add value. And then when they're ready, um, we hope that, you know, they think about us and give us a call and give us [00:22:00] an opportunity as well. And then from that, you know, a lot of sub sort of priorities, but we always recommend companies start there, um, and then revisit that periodically. We're about to go into 2024, um, more detailed planning and Brian and I have time carved out next week to really think through, Hey, is our longterm purpose and goal still makes sense?

Um, you know, what, what have we done to achieve that? What's worked well? Where are there opportunities to improve? And then what do we want to go accomplish in the next 12 months to support our overarching goals? 

Brent: When you, uh, first started talking about building Cambric, uh, what was the, sort of, criteria, roughly, that you were interested in buying?

Because, I mean, obviously, a hundred companies over a long period of time, I assume that, that, that buy box is gonna change. Has it already changed? Or are you all, sort of, going after exactly what you wanted to originally? Or how, how do you think about criteria? 

Brian: Yeah, I think the criteria to this point is has been pretty consistent.

So we looked at partner with one or two companies a year Family founder owned businesses where they they want a long term partner They want to kind of help build the [00:23:00] business and remain partners and then we focus consumer business services manufacturing, but I'd say much more business model focused Uh, I think when you're a long term investor, uh, good businesses are your friend.

And so there's a just a high focus on quality and finding businesses that have boats, good returns on capital and then reinvestment runway and growing 

Brent: markets. All right. So in the couple minutes we have left here, what is the top advice that you would have for somebody who's sitting in the audience and saying, Hey, I'm, I'm thinking about building some sort of hold co structure, you know, buying multiple businesses, whatever the structure actually is.

What's the best advice you have for them if they're trying to think about starting out? 

Brian: Yeah, probably the best advice I got was, uh, from one of my dad's high school friends that went and has built a business. And he said, just go get started. And I think you can spend a lot of time thinking about structure and, and all these different things and I think that the best way [00:24:00] to make progress is, right, go find a great business to invest in or start building your business and then from there continue to, to figure it out, uh, and so I think, I think that's probably the, the best advice in my 

Tracy: mind.

Yeah, I would add, um, you know, be really thoughtful about who you, who you work with, who you partner with, you know, who you build on your team. I think Brian and I are very fortunate we found each other. We're very, uh, aligned from a long term perspective on what we build, but we're also very complementary in terms of our skill sets.

And it's been very easy and natural working together, um, which has been great. And then I think we have an amazing team that, um, we work with and that we're fortunate to partner with as well. But I think just the importance of team and if you get the right people, uh, you know, working with you. Uh, how much you can accomplish together, and it's a lot more fun, uh, along the way.

Alright, so 

Brent: last question here, um, let's say that you could find, have a conversation with an acquisition target that you really want to get involved with, but you could have the conversation with them five years before and they could work on a bunch of things prior to you partnering with them. Let's say they're in the audience.

What are the things you're telling [00:25:00] them to work on for the next five years in order for you all to be able to come in and work with them? 

Brian: Yeah, I think it's a good one. I'd say focus on building the business and the advice at Berkshire was kind of run the business like you're going to own it for 50 years and it's your family's only asset.

I think that's really good advice. Do the right things for the business. Don't overly focus on selling the business. I think it's more focused on building the business and doing the right things. Evaluation and the other pieces tend to take care of themselves. 

Tracy: Yeah, I would just, um, add on to that. I think that, um, you want to think about how do I build the best business for the long term, not how do I build the best business to sell it, because I think you make dramatically different decisions, and I think, um, you know, really great investors will value you thinking about the company long term, and you're investing in, you know, your people, you're investing in your culture, you're investing in your systems, your customers, uh, and you're able to really build something that's unique and differentiated, and I think related to that is.

[00:26:00] Why are you different? Why are you unique? Why, what are you building that's difficult for someone else to replicate? And a lot of that takes time and effort, you know, we're building our own sales force or we're building our technology or we have brand and IP or whatever it may be, but what's your moat?

What's your competitive advantage that's different than, than other people, uh, in, in the, in your space? 

Brent: I just gotta say, thank you all so much for being here. I know there's a very high opportunity cost, like I said to the audience before, but you all are doing a lot. I just want to say for being here.

Brian: It's awesome. It's an honor. Thank you.

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