Podcast: Bob Chapman and Kyle Chapman, a Legacy of Leadership

So, we're not doing this to try and hit some profit number or some liquidity goal to sell it. We're doing it because we think the combination of exceptional financial performance and exceptional culture will cause people to pay attention that we can care for people. It validates our message beyond just words. Okay? It shows that you don't have to give up financial performance to care. In fact, like Karen, you actually enhance the potential of the company.

Got a little bit of history. My dad worked for Arthur Anderson and he was called to do the audit by the banks. Banks wanted it audited to lend them money because they were fragile. And so my dad got involved with the Waymillers and in the course of that relationship they offered him to become general manager and treasurer. And so I don't know why my dad did it. You know, he was doing well at Arthur Anderson. It scared my mother to death because the company was so fragile. But my dad took that position and joined the company in about 1953.

He was kind of general manager treasurer initially. And then the company was the family was tired. There was no real family. Fred Wayimler was still involved but the family was looking to sell the company and was engaging investment bankers to find a buyer but nobody wanted to buy it. So my dad invested which to him was a lot of money $30,000 in the mid-50s to buy some small piece of the company just as an investment. So our first investment was and our only investment was that $30,000 in the mid-50s and then Mr. Way Miller died in 57 I think right around mid-50s. So my dad became president but it was still a Way Miller family the Barry family was gone. So, it was about 1963 or something like that that a company out of Chicago, a receivables factoring company that lent money against your receivables, approached my dad and said, 'You know, you could buy the company. We'll lend the company, I don't remember the amount of money, maybe it's $2 million, whatever it was. We'll lend the company the money against its receivables and then your $30,000 will be 57% of the company.' My dad thought, wow. You know, it wasn't his idea. It was he was approached by investment bank. He actually went to the other executives and said, 'I'm not trying to control it. If you want to put in some more money to participate in this,' they said, 'No, I think I'll avoid that.' So that's how our family became controlling investor which was in the mid-60s. So our family became control from the Way Miller family in mid-60s with this kind of challenging lending source. I think it was called Talet out of Chicago.

The interesting thing to me, I think about this a lot, and I was never that close to my dad. We just didn't have a lot of interest. I was close to my mother, happy kid, but my dad had health issues. The company was struggling, and so I wasn't that close to him. And it wasn't until I passed my CPA exam my senior year in college. And I remember my dad walking down the driveway holding this letter I got because it took him three times to pass it, and I passed it the first time. So the sun all of a sudden blossomed in about 1965 and so all of a sudden my dad had a language but we never talked about working in the company. I wasn't interested. We didn't talk about it and then one day in 1969 probably January February 69 he approached me because he had started asking me for my thoughts on the company because I was working at Price Waterhouse doing perfectly fine wanted to be a partner. He said, 'Well, what do you think about setting up a plant in Arkansas where we could do conveyors?' So, I'd give him my opinion. And one day he said to me, 'Would you consider working at Barry Whimler? I need somebody I could trust.' So, my title when I joined the company was somebody he could trust.

It was that bad. My dad was concerned with his executive group that they were trying behind his back to sell the company because it was struggling. And so, he just lost his trust in his team. And so I was my title was somebody he could trust.

Yeah. It kind of came in with an unstructured he had no idea what I was going to do, but we had a project with Owens Illinois at the time and he said, 'Well, maybe you can work in engineering and help the relationship between Owens, Illinois and our research department develop this product.' I said, 'Okay.' So my first job was in engineering. But the beauty in hindsight is that while my dad was running the company, I started working in manufacturing, license agreements, customer service, finance. So it's kind of like I always say if you look at a clock and you look at the hands, it's pretty simple what time it is. But behind those hands, there's a bunch of gears that are working that allow it to create time. So I got to look behind the company and I looked at manufacturing, engineering, sales, customer service. So I had my kind of unintended management development program that gave me the richness of all these experiences in a pretty broken company at the time. And eventually I think because of given how you were essentially running the company having without the title but at some point he was going to make you CEO or made you CEO. When did he do that and what did you think that first day?

Back in the old days? I don't think we had CEOs. We had presidents. He was president. And so we were having dinner at Steak and Shake, a local drive-in. And he was leaving the next day with my mom to Australia. And we're having dinner at Steak and Shake, a hamburger, and he looked at me and he said, 'You know, you're really running the company. When you get back from Australia, I'm going to make you executive vice president.' And then he died the next morning. So, he never got the chance to do that. But the six years we worked together and I worked in every aspect of the business. And the interesting thing is when I joined the company, because I've been through so many challenging years, the amount of talent was limited. If I didn't have a brilliant idea every day, I knew I missed something because the opportunity to bring fresh thinking into the company was exciting and rewarding because you saw the immediate results. So when dad passed away, I was kind of ready to step in to this leadership role.

18 million in sales when he died

You know, when dad suddenly passed away, I didn't think about it, but my behavior said, because the first thing that happened when dad passed away was the banks pulled our line of credit. They said, 'Look, it was one thing for us to lend to a 60-year-old gentleman we worked with, this 30-year-old kid, we're going to back out.' So, in hindsight, that was pretty traumatic to lose your dad and your banking in the same situation, but my reaction was, I ain't going down like this. I mean, I didn't think of it, but my behavior was and I grabbed a hold of that company that had never made its budget. It was struggling financially. The banks were asking to be taken out. And he died in October. He died three months into the financial year. And the first year that I first nine months of a 12-month period I ran it, it was the most profitable period in the history of the company because in reaction to dad's death, in reaction to the banks, I just grabbed a hold of the company and I brought incredible intensity. I cut cost, you know, I brought intense focus and our cash flow improved and we paid off our banks. And so again, it was that intensity of dad dying and the banks pulling on us. The company looked like it was dying and dad did die. And so my reaction was I put everything I could in and turned the company around.

You know, I was raised in an environment where going public was a major event, a big celebration on Wall Street. And we had asked for and as you know we took spun off two-thirds of the company on the London Stock Exchange in '87 not because we're trying to get out of family ownership we were trying to get out of debt so we went public in London with two-thirds of the company in '87 because it gave a chance to pay off our debt take two-thirds of our company so we retained 30% of the public company so 35 million went public and 20 million stayed private and the goal was really survival. You know, we'd been through some really tough times trying to transform an old company into a modern company with no resources and not a lot of talent. And so the ultimate goal when I was a young guy was boy taking the company public. It gets great notoriety mainly because it creates in theory great wealth. And in my career, I've seen many companies go public, and I've talked to many public CEOs, and I've never met one that likes being public because your ability to run for the long term is compromised by these short-term quarterly earnings and activist shareholders and analyst expectations. And being a good steward of people's lives is more challenging in a public environment than it can be because you can take a longer term view as a privately held company and you can do the right thing for the long term as opposed to running it quarter to quarter to quarter meeting expectations. So I again after the public offering in '87 that was so unbelievably successful on the London exchange. I think people sent in $1.1 billion in cash trying to buy our $28 million of stock we were selling. So it was incredibly successful. I thought well we'll do it again. We'll take the $20 million company. We'll do these acquisitions and then we'll take it public because it was such a positive experience. Having lived 10 years with our punk company, we spun off being on the board of the public company. There's no way I'd want for our people to take this company public. People say, 'Well, don't you want to take it public?' I said, 'Absolutely not. I've never met a CEO that I think likes being public. They might be public and have to deal with that, but they don't like it.' So being private gives us a chance to make good long-term decisions for the right reasons.

Initially, I just wanted to have a future. Probably something I want our team to realize. In 84, this was a turning point. In '84, we just got refinanced by an asset-based lender because the banks pulled on us again in '83. So, we now had a strangle hold on us, but at least we had a financing package. I went to my finance team and said, you know, look at I'm proud of our history that almost hundred years our history, but our history does not give us a future. And inspired by Emerson Electric and their growth through acquisitions, I said and not being an engineer, I couldn't design a new product. I said we need to do acquisitions to give us a future. That's why we began doing acquisitions to get us into product lines. It had a greater future. I had no experience, you know, in acquisitions. I just studied Emerson Electric and did it. And that aspiration to begin doing acquisitions and the other thing when we began doing acquisitions we had no money. So if we failed on any one of them, it was all over. You know, we would fail financially. So we had incredible. So when we began doing acquisitions, the DNA we created was well, we can't fail. We've got to make sure this is good. So again, became part of our DNA when we said we got to create a future. We didn't do acquisitions for any other reason than to get into markets that had a better future.