Monthly Archives: July 2019

Trade Wars

July 31, 2019 • 11 Replies

By Lloyd Graff

Today is the last day of the Major League Baseball trading season. I am a nutty baseball fan, Chicago Cubs variety, who follows such folly with a fanatic’s intensity.

Maybe it’s the machinery dealer in me, but I love the trading. Every team is looking for that player who with change of scenery turns into a butterfly from a caterpillar. Other times non-contending teams will trade a star at the end of his contract for a potential star at the beginning of his career. The classic case of this was in 2016 when the Cubs traded their best young minor league player, Gleyber Torres, for the services of Aroldis Chapman, the hardest throwing relief pitcher in the game who was at the tail end of his contract. Chapman, who could throw 105 mph, helped the Cubs win the World Series in 2016. Gleyber Torres was an All-Star this year for the Yankees. Chapman left the Cubs after 2016 and re-signed with the Yankees.

These “deadline deals” can be transformative for a team. The Cubs made a great deal with the Texas Rangers in 2012 trading Ryan Dempster, a once great relief pitcher, and a decent catcher, Geovany Soto, for pitcher Kyle Hendricks, then a minor league pitcher out of Dartmouth who had a fastball that could not break the proverbial “pane of glass.” In a little less than a year Hendricks had become one of the best pitchers in the game, and Dempster had retired.

As I was preparing to write this piece I had a heretical thought for a baseball fan. Does the act of trading a player make him a kind of high-priced slave? The player usually has no say on where he might be sent. He has to uproot himself and maybe his family on a moment’s notice. He immediately has to acquaint himself with an entirely new group of teammates, some of whom may be hostile because he threatens their position.

The NBA players are pushing back on the notion of easily trading players. Star players like LeBron James, Kawhi Leonard, and Anthony Davis can almost call their own landing places and influence whom they would like to play with. In football the Le’Veon Bell holdout at Pittsburgh is a precedent for important players to command more leverage in their employment, though the NFL seems to be very hardline in resistance.

I don’t know exactly how things will play out, but the players are destined to get a say.

Question: What are the best or worst sports trades in history for you?

Ep. 47 – Bo Burlingham on Successfully Exiting a Business

July 26, 2019 • 3 Replies

By Lloyd Graff

Bo Burlingham has spent much of his career writing about the lives of entrepreneurs. I recently interviewed him at his home in the rustic hills of Oakland, California.

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We talked about the need to plan for a strong and successful conclusion to a business career, as described in his recent book, Finish Big. Bo discussed seven factors that characterized owners who had happy exits:

(10:55) You must know who you are, what you want and why.

(11:44) You have to build a sellable business—a business that you could sell when you wanted, to whom you wanted, for an amount you considered fair.

(11:20) You have to give yourself enough time. Most people don’t start thinking about exiting early enough. You need to find a successor, and it takes a long to time to get that right.

(13:15) You have to get the right advice from others who have exited their own businesses in the past.

(13:50) You have to become very clear in your own mind about what you want to have happen to the people in the company for you to feel at peace afterwards.

(14:20) You must do as much do diligence on the buyer as the buyer is going to do on you. You want to find out why they really want to own the company. Otherwise you are in for some bad surprises.

(14:44) You have to figure out what you are going to to do after the exit, who you are going to serve. Bo found that many people after they leave their company don’t know who they are anymore. They no longer know what their purpose is in life.

Question: What will you do after you are finished with your current work?

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At the Track Every Day

July 24, 2019 • 8 Replies

By Lloyd Graff

Trading in used machinery is sophisticated gambling. Some people find it strange that I am utterly indifferent about sports gambling. It has no allure for me. I once lost $25 playing 21 at a casino in Vegas and felt stupid – not for losing, but just for walking into the smoke-filled room. Yeah, it was a long time ago.

And now, after such a long, long time in the screw machine trading and refurbishing business, we have the exhilarating and scary opportunity to reinvent a new business by finding a new cohort of machines to gamble on. I’m finding it exciting, even enthralling at times, and pretty damn scary, too.

A very smart guy once told me that “if you don’t feel ‘it’ in the pit of your stomach, you aren’t bidding enough to get a deal.” He was right, but that doesn’t mean fear guarantees your success. It only guarantees doubt and restless sleep.

In our machinery business, we are confronted with the wrenching reality that our traditional customers are not very interested in buying what we’ve always sold. It’s a bit like a car dealer specializing in sedans and convertibles in a pickup truck and SUV world. Not much action. The obvious path is to switch to pickups and SUVs, but the downside is that almost everybody else has done the same thing. For a used machinery dealer, the analog is to jump into the used Haas lathe and vertical machining center market. But that is awfully boring and terribly competitive. There is an auction every Tuesday and Thursday with Haases in it. The only sleepers are in sofa beds.

Our strategy has been to go to Outer Mongolia searching for bargains and hauling them back to civilization. My son Noah likes to travel to Outer and Inner Mongolia so he wants to try this approach.

I also want to search for the guavas and jackfruit in the produce department, the exotics that only the people with weird tastes dare to inhabit? This is a long jaunt from the Acmes and New Britains of my youth that we once sold by the truckload.

Our real niche seems to be in the European descendants of the Acmes and New Britains, the CNC multi-spindles like Index and Schutte that are so darn complicated and daunting that they confuse even people who have grown up with their simpler, now often discarded, cousins.

When you place bets on machinery you don’t know like family, you are going to lose some of the time. Try to tell your banker, “Well, I bought that washer, that robot, that Hydromat thing, to experiment.” They may get the intellectual gambit, but they get rather annoyed about losses. They think you are always supposed to win in business. This is when resilience and being part of a team that understands the value of defeat as an educational tool, one that realizes that business is a continuum, are so vital. To succeed in the long game of business you have to build in defeat cushions. If you are going to gamble you are going to lose. If losing is “unacceptable,” which seems to be the position of football coaches like Urban Meyer and Jim Harbaugh, you are going to end up desperately needing a shrink or a sabbatical.

I hate losing or being wrong, but I also love the action of being in business and trying really hard to win every day, knowing that setbacks are inevitable, and dealing with change is maddening.

I think about the option of leaving the game. Noah often asks me, “Dad, was it always this hard?”

Honestly, I can’t even remember, Noah. Let’s just get it on.

Question: Do you view business as gambling?

Better With Age?

July 17, 2019 • 5 Replies

By Lloyd Graff

I watched one of the greatest tennis matches ever played on Sunday. I suppose you are thinking, who cares about tennis on the TMW site, but give me a chance on this.

Roger Federer, perhaps the greatest tennis player of all time with 20 Grand Slam titles, dueled Novak Djokovic, perhaps the greatest tennis player of all time with 15 Grand Slam titles (at the time). It was Wimbledon, in London, England, the biggest tournament of the year, perfect weather, playing on a grass court. Both players had their parents attending. Federer’s wife and their four kids were in the family box seats, and Djokovic’s parents were with his son.

It had all the ingredients of a classic. These guys have played each other almost fifty times. They respect each other, but they don’t really like each other. They are lions in the tennis jungle. The biggest of rivals, these matches are what they live for. They are wars. The winners have the most endurance, focus, and luck.

Sunday they played 5 sets and were tied 12 games each in the 5^th when a newly installed tiebreaker rule went into effect. Federer and Djokovic are old men as singles tennis players go. They are 70 years old between the two men. Federer has been playing major tournaments for 20 years, Djokovic 15 years.

The point is that age is overrated today. In business, the arts, politics, sports, talent is what counts. If you can do it, you do it. If you can’t, get out, but don’t let “them” tell you when you are finished.

The crowd Sunday was almost entirely for “Rah Jah, Rah Jah,” as they indicated by chanting between many of the points. Novak said after the match that he attempted to hear the crowd chants as “No Vak, No Vak.” He said it worked most of the time. Djokovic is used to being the hated favorite and has learned how to use it for himself rather than an excuse to lose. There is a lesson for us all in his toughmindedness in the biggest matches with everybody against him. He would glance at his family box to see his parents, sometimes holding his young son, cheering avidly for him.

These men are “all in” regarding training, fitness, nutrition, and the mental game. They know their bodies. Between matches they use intravenous hyperalimentation to get the extra nutrients to recover from the previous match and be in top shape for the next one. Sunday, after five hours of the most grueling exertion, they were both hitting 120 mph serves on the lines, playing long rallies, and going to the net and racing back for lobs. Their concentration was immaculate—and astounding.

A match like Federer-Djokovic is an inspiration. It says to me that just because other folks are retiring or cutting back it does not mean I have to. Just because I had a heart attack 11 years ago it doesn’t mean I can’t be active now, at 74. It also tells me that if I am serious about business or fitness I have to be committed to it.

Will Roger and Novak eventually be supplanted by great new players? Yes, but nobody appears to be ready to beat them now.

They aren’t going to make it easy, either.

Question: Have you gotten better with age?

Ep. 46 – Zak Pashak on Building Bikes in Detroit

July 15, 2019 • 10 Replies

By Lloyd and Noah Graff

Our guest on today’s podcast is Zak Pashak, founder of Detroit Bikes, the largest bike frame manufacturer in the United States. All bikes that the company sells are assembled in Detroit, and its high-end models have frames constructed of high quality American Chromoly steel. Zak lamented to us that he couldn’t find many companies in the U.S. to supply parts for wheels and other bike components. We told him we would take on the mission personally to find him some.

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Zak hales from Calgary, Canada, where he had success in the bar business and organizing one of Canada’s largest music festivals. He eventually developed an interest in politics and urban planning, which would inspire his next venture. In 2011, he sold all of his assets in Canada and moved to Detroit where he started Detroit Bikes in the building of an old sign company.

Zak said he chose Detroit because he saw the city as a place with rich history. He remarked that it was where cars were first mass produced, where great genres of music were invented, and a place with talent in the manufacturing field. He also said he wanted to go to a challenging place where he could be part of positive change.

We could feel a real sense of purpose when Zak talked about his company. He takes pride in assembling bicycles in the U.S., a country where most of them are imported. He appreciates boosting the economy of a revitalizing city. But Zak said his primary mission is changing urban landscapes. He really wants to contribute to changing the paradigm of how people get around in cities, making them less congested and more environmentally friendly. He said this ultimately will be decided by governments who invest in new types of transportation infrastructure—including bike lanes.

Question: Does it make you want to buy a product more if it is made in the U.S.?

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A Killer Family Business Saga

July 9, 2019 • 5 Replies

By Lloyd Graff

I just listened twice to a podcast with Dave Dahl, creator of Dave’s Killer Bread. It was the most recent “How I Built This” podcast, conducted by the finest interviewer I’ve heard, Guy Raz of NPR.

Dahl slowly recounted his story of almost forty years, much of it about misery, depression, and failure, culminating in enormous financial success and more disappointment.

From a journalistic viewpoint the podcast was a masterpiece of storytelling – a slow, meticulous, layered presentation of a man’s life of pain and, particularly, family resilience. From a business standpoint it was fascinating and revealing.

David Dahl’s parents had a small family bakery in Portland, Oregon. They were Seventh-day Adventists. His father slowly moved the business toward whole-grain products. David started working in the bakery when he was tall enough to reach the dough table. He was nine years old, earning 25 cents an hour, some of which he was forced to use to pay for school and clothes. He describes himself as almost always angry and rebellious, suffering from being bipolar and having ADD. He dropped out of high school, experimented with drugs and alcohol, and joined the Marine Corps, ultimately dropping out. He said he was always running away from something. After the Marines he got hooked on cocaine and meth, which pushed him into car theft and armed robbery.

Dahl spent a total of 15 years in jail, despondent, angry, and frequently suicidal. He shunned treatment but eventually consented to taking Paxil, an antidepressant which he says had an almost immediate positive effect on him. He was offered an opportunity in 2002 to take a class in computerized drafting, and he loved it. He finally left jail in 2003, and his brother Glenn, eight years older than him, who had taken over the family bakery, offered him a $12-an-hour job as a baker, which he accepted.

The Dahl family was not a happy, jolly one. The relationship between Dave and Glenn was strained from the beginning and did not get easier when Glenn’s son Shobi, an Economics graduate of Brown, came into the business around the same time.

But Dave Dahl had finally changed from the drug-dependent, despondent criminal. He had accepted himself and had a passion to do something with his life, and bread was his vehicle.

Glenn and Shobi gave him the time and oven space to develop breads of his own creation. He used seeds and nuts and whole grains to develop unique breads. He sold them at local farmers’ markets around Portland and quickly developed a following. He created a bread made with bluish cornmeal, called Blues Bread, and then his trademark, “Dave’s Killer Bread,” which concisely told his personal story of jail, dependency, and resilience on the label, with a cartoon picture of Dave with enhanced biceps.

The business grew spectacularly, getting clients like Safeway and Costco. Dave and his nephew developed the Dave’s brand independently, buying equity into the entire family baking business run by his brother Glenn. It was an enormously successful, yet extremely unhappy and contentious, family business.

The family sold it to a private-equity firm in 2012 and became quite wealthy, but still unhappy, rarely speaking to one another other than nodding at family gatherings.

I was enthralled by Dave Dahl’s saga and his candor. Putting his story on the bread packaging was the brilliant, counterintuitive move that struck me. His marketing consultant thought he was crazy. But he did it anyway.

I get it. I want to know something about the life stories of people I do business with. I like to check out their websites for at least a glimpse into who they are. I very rarely get anything juicy or substantive to grasp. If there is anything at all it’s usually a predictable, frothy story of happy success.

We all know enterprises are built from failure and conflict. It may not be jail and drug addiction and family drama, but life is a struggle. Nobody gets a pass.

Dave Dahl, the miserable, 15-year prison veteran reveals himself on his signature bread. We eat it up.

Question: What is the story of your business? Has there been drama?

Fruitsposé

July 2, 2019 • 15 Replies

By Lloyd Graff

I just bought the first fabulous cherries and peaches of the 2019 farmers’ market season.

The following blog is a past favorite of mine. I give you Fruitsposé!

Every day another prominent guy is forced to admit how his desire got the best of him. Today I must reveal my secret passion. I have had a lifelong affair with fruit.

I was reminded of this a couple days ago when I was in the produce department of Bizio’s, my local fruit seller of choice. He had THE BLUEBERRIES. I am very fussy about all my berries, and I usually shun blueberries in December in Chicago because they shlep them in from Argentina or Mexico and by the time I buy them they are flat and tasteless. But occasionally in December and January Driscoll Blueberries arrive and they are plump and taste like the best of Southwest Michigan berries in July. Really, they are even better, because they come so unexpectedly, and from Mexico no less.

When I find them I’m like a bear with a honeycomb. I want them all. So I buy almost every little carton on the shelf, price be damned, because these are my treasures of winter.

I love almost every berry at its peak. Frankly, I love almost every fruit in season.

This past summer I went absolutely bonkers over watermelon — Black Diamond seedless, to be specific. For almost eight weeks I was virtually delirious for those 15 pound bundles of dark pink joy. I sliced the melons into big sensuous chunks and pigged out for breakfast, lunch, and after dinner. Probably gained five pounds over two months on my Black Diamonds, but worth it.

Then there is my apple period. August, September, October, I infest the local farmers markets checking out the reddish treasure. Honeycrisps are my faves, but I’ll accept anything except the most vile apple on the planet, “Delicious.” Has there ever been a more inappropriate adjective for a fruit? If a farmers market seller even grows Red Delicious I will avoid them like Measles. Why even have a tree if it gives fruit as utterly cardboardy as that sickly variety that should only be exported to China for Pandas.

If there is an antidote for awful apples it is perfect pears. Bartlett’s are rather prosaic for me, but they are succulent and tasty, sliced any way you want. Wonderful with a soft cheese. Anjou are a little Franco, but just as marvelous, and a Bosc if peeled will duel the best of them. But for me the princess of pears is the Comice. The skin is a little rough like the Bosc, but if you hit the ripeness on the button, that pear has no peer. They sell for a premium, but the flavor of a Comice puts me in blissful state. Can you ask for more from any fruit?

I am a nut for fruit from trees. Oranges are back in season now and I am going bananas for Mandarins with the stems left on them and the spectacular Cara Cara orange, which is a cross between a grapefruit and a blood orange. Sweet and a little sour at the same time with a marvelous pink color.

I cannot leave out the often overlooked grapefruit. Texas Ruby Reds are back in season and I am an avid buyer. They take a little time to section, but nothing good comes without effort.

I’ll finish my fruity ode with my love of strawberries. I am suffering at the moment because I haven’t had any decent strawberries in months. Unlike the blessed blueberries that come out of nowhere for a week or two in December, winter strawberries are invariably crappy.

Our family is taking our annual pilgrimage to San Diego over President’s weekend this year. February is right at the beginning of strawberry season in southern California. I pray that the berries won’t be late because we devour a flat each day. We buy them at a local farm stand, and they are “to die for.”

My regrets to peaches which I adore over their oh so short season, but I had to leave out something.

And Pomegranates. Sorry, you are just too seedy.

Tell me about your fruit fetish. I am still exploring.

Questions:

What are your favorite fruits? Why?

What fruits do you hate?