#366 - Walt Reynolds - Former CEO @ The Reynolds Company - From Family Business to Industry Giant

Chris Powers: Walt, welcome to the show. Thank you for joining me, man. 

Walt Reynolds: Thanks for having me. 

Chris Powers: So, for those listening, Walt and I have been very, very close for the better part of a decade. We've been in YPO together. We spent a lot of time together. So, today's conversation means a lot, and I think we'll be able to touch on areas I can't get to with every guest because I don't know them as well as I know you. 

Walt Reynolds: That scares me a little bit. 

Chris Powers: To know you, and I never met your father, but I've met a lot of people that knew your father, and I've listened to you talk about him, but to know you is to know your father. So, let's start there. Tell me about your dad. 

Walt Reynolds: Ah, my dad. My dad was a phenomenal guy. He had an interesting life, has an interesting story. He grew up in Fort Worth. He was the son of- my dad's dad traveled to Fort Worth with a traveling carnival. So my dad's dad was a carny. And my dad had an older brother Willard. And they grew up on Plum Street right over by Paschal High School. He went to McLean Middle School and he went to McLean Middle School and Paschal High School and then on to TCU and played baseball at TCU. Met my mother when they were in seventh grade at McLean. Dad was just, he was the life of the party. He was the guy that everybody wanted to be around. He was a joke teller. He was an entertainer. He was in a barbershop quartet at TCU. My dad was just- he'd just light up a room. He could do amazing things when people were down. I learned a lot about not taking life too seriously for my dad. As I was growing up, I always was a pretty serious kid. My dad tried to lighten me up a little bit. I can't say enough about- he was an incredible athlete. He sang the Lord's Prayer a cappella at all of our weddings. 

Chris Powers: That's awesome. 

Walt Reynolds: Yeah. So for a guy that can stand up, he was in the Fort Worth Boys Choir. So, he learned how to sing at a young age. And his dad was a little bit troubled. His mother was the breadwinner. His mother worked at the bank. She was a bank teller. And back then, to have a mother that worked and a dad that didn't was a very unique situation. I don't know a whole lot about my dad's dad. I never met him. He died when my dad was a sophomore at TCU. But he was a character. I’ve had people tell me stories about my dad’s dad. My dad was a great dad. I have two sisters and a brother. He raised four kids, and they all equally had a wonderful relationship with him. We miss him. 

Chris Powers: I love it. I can't imagine what it would be like to be on the road at a carnival all the time. That's got to be a crazy life. 

Walt Reynolds: Well, he stopped being on the road when he got to Fort Worth, because he got to Fort Worth and he actually stayed here, and that's how he met my grandmother. And so, he held down a few different jobs, and if my dad was here, my mom was here, they could really help me with this. But he was a hustler. I mean he hustled gin rummy, he was an incredible golfer, my dad's dad. But my dad and my uncle learned so many crazy things from, his name was Jigs. And Jigs taught them, he'd pull a quarter out of your ear, he would throw a card and it’d stick against the wall. He was that carny guy. I mean, he just had all the tricks. And another thing my dad and uncle used to do is they used to double talk people. And it was their favorite thing to do, to act like they were talking some gibberish language and get people to go, huh? 

Chris Powers: What's it called, double talk? 

Walt Reynolds: It's called double talking. They would double talk people. And my brother and I, when we knew it was going on, you just let it go. And it was how many times can they say, what? What? And they would just double talk. It would just be some gibberish weird ass sentence that they would make up. A few guys that you know have had it happen to them. 

Chris Powers: That's so funny. 

Walt Reynolds: Yeah, like Dozier and Nick and Shipman, all those guys, my dad used to double talk to them, and it was pretty good. 

Chris Powers: I think I just found a new favorite hobby. I'm going to start doing that to people. That, and like, we used to do that to people where it'd be like a crowd and you act like you're either talking to someone or waving to someone, which you are, but then when they kind of start waving back, you pretend like it's somebody right behind them. 

Walt Reynolds: That was a similar game. 

Chris Powers: All right, so grandfather ends up in Fort Worth, dad born in Fort Worth. Let's start talking about how the Reynolds Company came to be because you're, what, second generation family business, and we're going to talk about that, but let's talk about the origin. 

Walt Reynolds: Yeah. So, the origin is my mom's father, EC Cummings, started an electrical supply business in downtown Fort Worth in 1945. And my mom was adopted by EC when he was like 41 years old. So, my mother had an older brother Clay, and Clay and EC had Cummings Supply Company. My father, when he graduated from TCU, he moved to Dallas and he worked for a corrugated box manufacturing company. He was a really good salesman for them. He claims that he lost his job because his boss thought he was going to take his job. My dad had my older sister, my mom and dad had my older sister in 1965, and my dad lost his job. And so, he went to my grandfather and asked him for a job, and my grandfather said sure and shipped him to Odessa, Texas, in 1966. So, in July of 1966, my dad started an electrical supply business in Odessa, Texas, and my mom was pregnant with me. So, it's so funny because I was born in Odessa. 

Chris Powers: Oh, you were? 

Walt Reynolds: I was born in Odessa, and both my younger sister and my younger brother were both born in Odessa. So, I lived there for the first six years of my life, and a whole other separate story. But I just came through there this weekend because my son Duncan, who you know well, is living in Midland, and he's been there for a month, and he just started his job, and we were out there checking out the scene. I'm like, this is just, it's just crazy to see these little neighborhoods. I remember my house. I remember it's exactly the same as it was back then. But anyway, that was my dad's first job. He was out there for six years. He became the branch manager of Cummings Supply Odessa and then was promoted to the contractor sales manager in Fort Worth in like ’72. And so he spent from ’72 to the early 80s, like ’81, ’82, 10 years, being in Cummings Supply Company and actually was promoted to president of Cummings Supply Company. And my grandfather really appreciated my dad as a leader and as a president of the company, and my uncle really didn't want anything to do with the commercial industrial side of the business. He wanted to do the lighting side of the business. And my dad really didn't care about the lighting side of the business. So back in the day, electrical distribution, before LED and before Home Depots and Lowes, small mom and pop electrical supply companies had lighting showrooms. And you would go in there and you'd pick out your lighting, whether you were picking out your lighting for your business or your house or your school or whatever. So, there was a massive thing to show room lighting, and my uncle wanted to be in that business. Well, my dad- and so the lighting business wasn't doing so great. The utility and industrial commercial business was doing pretty well, but my dad really wanted to go open up in Dallas. And my grandfather really didn't want him to. And it turns out that my grandfather kinda had a gentleman's agreement with a company called Watson Electric, that you don't come east and I don't come west, and they represent some of the same manufacturers in the business. And so my dad never really knew that, but he went over and started calling on contractors in Dallas and realized that there's a whole nother market over there for what he wanted to do. And so, a couple years go by, he's calling on people in Dallas, he's starting to build a little bit of a business over there and my grandfather didn't want him to do it. And my dad said, well look, why don't I just go start a business in Dallas, and I'll leave Cummings Supply Company, and you and Clay can have that, and I'll start my own company. So my dad started a single location electrical distributor in Dallas in 1984 called The Reynolds Company. 

Chris Powers: And that break up with his father-in-law was cordial? 

Walt Reynolds: It was relatively cordial. My grandfather passed soon after that. My uncle sold the business pretty soon after my grandfather passed to Rexel. And so, my uncle was a great guy. He just really, I don't know how much he really liked the electrical supply business and the lighting business. So he got out at a relatively young age. And so, Cummings was sold to Rexel, or most of Cummings was sold to Rexel. And the Reynolds Company started as a single location. I was a senior in high school. 

Chris Powers: Is Rexel still around today? 

Walt Reynolds: Rexel's a global company, yeah. The two biggest electrical distributors in the world are Rexel and Sonepar. 

Chris Powers: And they've been around forever. 

Walt Reynolds: Sonepar's a little bit newer than Rexel, but Rexel's been around for a long time. 

Chris Powers: All right, so 1984, dad moves back to Dallas, sets up the Reynolds Company, an electrical distribution company. What did an electrical distribution company in 1984 look like? What did the Reynolds Company look like when they opened up? 

Walt Reynolds: Yeah, so he didn't have the industrial line. So, really, the verticals in electrical supply are industrial, commercial, utility, and residential. And the manufacturers are not all the same. So, if you're a utility distributor, you're going to be with Phelps Dodge, and when you're a commercial distributor, you're going to need a switchgear line of like a panel board, power control conditioning stuff, which is like Square D, Cutler-Hammer, Eaton, Siemens, GE. And then on the industrial side, it's more of automation and control, manufacturing control, manufacturers that work more in process. So, Cummings had all three. They didn't do much residential, but they had utility, commercial, and industrial. And so, my dad opened in Dallas really as a commercial distributor, calling on contractors, selling electrical supplies to large commercial construction projects. In fact, one of the first projects he did was the Reunion Tower, the Reunion arena, and then the ball that's above the tower there. So that was one of my dad's first projects he sold to a company called Fisk Electric. So started as that, and then Rockwell Allen-Bradley quickly came along and asked him to open an industrial group. And so, he picked up the Rockwell line in like 1986, and we were a GE and Siemens- we were a Siemens gear distributor and a Rockwell Allen-Bradley automation control distributor in those early days. So, it was two divisions, one location, maybe 30 employees, and revenue 15, 20 million bucks. 

Chris Powers: And it's just like car dealerships or anything else? You have Rockwell, for example, manufactures stuff and then they come and pick whoever their distributors are going to be for certain territories? 

Walt Reynolds: Correct. 

Chris Powers: And there's multiple different- how many manufacturers are there in the electric space today? Hundreds, tens? 

Walt Reynolds: Hundreds. Yeah, there's hundreds. 

Chris Powers: But at your level, at the stuff that you're selling even today, how many are there? Still hundreds? 

Walt Reynolds: Well, so if you take out LED lighting, because there's so many different lighting manufacturers now, so there's some large consolidated up lighting manufacturing businesses that we represent, but as far as the big manufacturers, they're starting to consolidate, but there's switch and plug, like there's Leviton Hubble in the switches and plugs world. In the gear side, there's Siemens, ABB, ABB bought out GE, Eaton and Square D. So that's pretty much it. So, one of those four lines, you need one of those four lines to be in the business. And then on the automation side, there's Square D, there's Siemens and Rockwell and then some other smaller companies. And that business continues to evolve, like all businesses, more into software than hard gray boxes sitting in a manufacturing plant. They're really- a lot of the manufacturing processes are now being run by a software system. And Rockwell and Siemens, they all have investments into companies that sit under their brand that do that. 

Chris Powers: This is a dumb question, but is there like anything that could ever take the place of electricity? Or is this like the greatest business ever? It's never going away. 

Walt Reynolds: Everything needs power, Chris. No pun intended. 

Chris Powers: Okay, so I'm not going to put you on the spot, but if I asked you the question, like what is- you know so much about electricity, what is something you know about electricity that like the common person, if you were to tell them, they would just be blown away? Is there some stat or something you've dealt with that's like, man, if people really knew how important electricity is…? Obviously, it's all around us all day, but is there anything that comes to mind? What's something that the average listener that's not in the electrical business would find interesting? 

Walt Reynolds: Well, whether it's a renewable or an old school wired up system or even something's burning off of some type of fuel, it has to be transformed into some type of usable power that does something. And electricity is, I mean, it's the engine behind everything. It's everything. And if you don't have enough electricity in the grid to keep the communities and cities and things thriving- but the way it is, electricity is generated with very large voltage, and then it's broken down into substations, which are these huge fenced in things where you see transformers and pipes and things, you see them on the side of the highway. You would see one in Fort Worth. There's one right over there off Huela and behind Trinity, the Trinity River that sits back in there. So those substations are basically providing the power that goes through the power lines, either underground or overhead, and they sit next to a transformer that transforms those cans that sit on the top of those – this is the very simplest explanation I can give you. And from that transformer, it comes into a building, and then there's switch gear that takes that transformer power from 600 volts down to 220 or 110, which is what we use for all of this. But a manufacturer might run their plant with a high-voltage system. A water treatment plant is going to have some medium-voltage stuff and some low-voltage stuff and some high-voltage stuff. So there's different capacities or loads of electricity depending on what you're trying to do. You're trying to turn on that lamp right there, you need 110. If you're trying to rev up a water-waste water treatment plant that's running a neighborhood of 6,000 houses, you're going to need some medium voltage, high powered stuff. 

Chris Powers: Where is it created before it goes to the substation? Some bigger station that's even more hidden? 

Walt Reynolds: Yeah, well, it comes from the power lines. I mean, there is- have you ever been down to Glen Rose to see that huge power plant with those huge-? So there's nuclear. And there's several sources that it comes from. It can come from many different sources, but the nuclear power, it can come from natural gas, it can come from coal, there's several ways that you're generating the turbines that is running the electricity. And I'm no engineer. I've just had to study a basics 101 electricity class. I'm a salesman, Chris. I'm just going to tell you why my switch gear is better than anybody else's. 

Chris Powers: Okay. Now we have a little more on the origin of electricity. So 1984, open. We kind of know what the business looks like. When did you- Tell me your entry into becoming interested in the business. Spoiler alert, you ended up, you and your brother ended up taking over the business in due time. But I really want to focus on how that began to be. 

Walt Reynolds: Yeah. So, I went to the University of Texas. I got a business degree. When I was a senior, or actually, after my junior year, I did an internship with Rockwell Allen-Browley out of Milwaukee that my dad totally set up for me and thinking that this is what I was going to do. But I did an internship, and I was six weeks in Milwaukee, or no, six weeks in Dallas, two weeks in Milwaukee; six weeks in Dallas, two weeks in Milwaukee. So I would do two weeks of product training, I'd come live in Dallas for six weeks and travel with sales guys. And so I did that internship, because that was my first kind of formal entry into it. I worked in my dad's electrical warehouses for several summers as a young kid. So I knew a little bit about it and wasn't sure that this is really what I wanted to do. But anyway, I graduated from Texas. I got an interview with several different companies through the business school and ended up getting a couple of job offers through that. And then I got a job offer from Rockwell, a permanent job offer to go into their advanced management training program. And the vice president of sales of the company at the time called me. I remember I was living at the fraternity house as a senior, and I would pick up the phone, and he really put the hardcore press on me to accept the offer. And so I almost did, but I'm like, Mr. Sheldon, let me get back to you. So, I immediately called my dad, and he was in his office up in Dallas, Reynolds Company's going, it's 1989, and he's like, why don't you fly up here and see me today? And I'm like, okay, what for? He goes, I just want you to come over here and talk to me. I'm like, okay. So, I get on a Southwest flight out of Austin, and I fly to Love Field, and literally Love Field, our office is five minutes from Love Field. He picks me up, takes me over to the office, and sits down with me and says, what's their offer? And I said, I really, I got to call him back like tomorrow. And he's like, okay, well, what's the offer? I told him what the offer was. He was like, that's pretty neat. It's great. He says, I want you to sit down and talk to this guy and I want you to talk to this guy. And I'm like, is this an interview? He's like, yeah, maybe it is. So anyway, Chris, I'll never forget this day, I spent three or four hours with my dad, and he takes me back into his office, and he said, I really think you ought to try to, you ought to come to work here. I said, Dad, I didn't know that was what we were doing. I thought I was going to go get some experience and work for Allen-Bradley for a few years and then see where it goes from there. And he's like, well, I don't think that's what I want you to do. I think I want you to come here. And I said, okay, well, I have this formal job offer. That's classic, my dad. And I said, would you- are you offering me a job? And he said, yeah. I said, well, okay. And he said, well, he said, here's the deal. He said, from one to five, you cost me about $5,000 a year. And from five to 15, you cost me probably $10,000 a year. And these last four years has cost me about a hundred thousand dollars. So, I'm going to tell you what, as soon as you make me a half million bucks, I'll start paying you. I said, I'm going to work for Allen-Bradley, man. 

Chris Powers: So you went and worked for Allen? 

Walt Reynolds: No, no. I said, let me think about it. Anyway, I felt for the first time, my dad really put the full court press on me to do it. And then he went on to say, it's really, really cold up there in the winter, man, you're going to hate that shit. And I'm like, okay, dad, enough is enough. I'm going to call Mr. Sheldon back, I'm going to let him know. I'll let you know in a couple days. So anyway, I called Mr. Sheldon, I said I'm going to go to work for my dad. And he said, okay, if you would reconsider. He really worked me again and said just come do this for a couple years and you'll show up there a lot more valuable. I said, well, I do really appreciate it. He wants me to come now. And if I had my pick, I would probably do that, but I really I respect my dad, and it feels like he needs the help and wants me to come there. So, I did. So, I started work in September of 1989 and in the single location, Reynolds Company in Dallas. I was living in Dallas, living in an apartment in the village. And I think I did it for- I knew after about six months, I'm like, there's no way I'm doing this. I'm like, no, no way. This is awful. I mean, it was everybody smokes, everybody's drinking, the environment inside the office was just, it was just strange to me. And I'm like, I have a business degree from Texas, and I know my roots and I know that this could be something great someday, and this is just not for me. I left. I moved to California to be a golf pro. So, Mike Wright at Shady Oaks introduced me to a guy named Steve Snyder, another guy named Glenn Mahler, and I went to be a golf pro at the Meadow Club in San Francisco, and I left the Reynolds Company. 

Chris Powers: A few things. One, your dad had to be good at negotiating to get you to take a job that he actually wasn't going to pay you from one that was. The second was, I can't imagine what it was like for a job applicant to call a fraternity house. You probably had to be sitting next to the landline making sure- because I wouldn't have trusted anybody to call our frat house and offer me a job while I was living at the frat house. Thank God for cell phones. 

Walt Reynolds: The funny story is the reason I was in the frat house as seniors, usually there was underclassmen, but we had just redone it and it was brand new. All the rooms had their own phone line. 

Chris Powers: Oh really? 

Walt Reynolds: I had my own line in there. 

Chris Powers: I'm like dude, talk about job sabotage. 

Walt Reynolds: The house had just been completely remodeled, and we were the first class to live in it. So they offered it to seniors first. And it was an incredible deal. And it was so fun. And I lived there with like 14 of my pledge brothers as a senior. 

Chris Powers: It sounds like the Reynolds Company would have been a next evolution of the frat house, getting to just smoke cigs and drink on the job, just slide right in. Okay, so you go out to San Francisco, you're a golf pro. Oh, and one other thing. Had you really ever talked to your dad about working there? Like, was there a decision that you would go work? Because you hear that a lot in family business. There's maybe some rules set or some things kind of set in the family that like you’ve got to go work somewhere else to come back or you’ve got to do something, or was it always kind of a loosely held discussion, or was it ever even mentioned? 

Walt Reynolds: No, it was mentioned. Again, it's been so long and there were so many different conversations. My dad and I, we were really close. So it really would be like, he was like a best friend, he was a dad, he was my boss. But I remember telling him that I'm not going to do this, I'm going to go do something else, and he said, okay. And he's like, go do the best you can. And so I was only out there for like a year and a half. And he quickly sicked his people on me, came back out there, came to San Francisco. I was living in San Francisco. And we used to have every other year, it moved from San Francisco to, there was like three different, or three or four different sites where the National Association of Electrical Distributors, NAED, would move their annual meeting. And so it was always in May, and I'd been out there for a while, and he comes out in May, and he brought his team with him, his construction manager. So I worked with the industrial manager, and then I knew I wasn't going to work for him anymore. So, the construction manager comes out, and the construction manager made me a job offer at dinner in San Francisco that was like, okay, this is more like it. And I'm starving as a golf pro. 

Chris Powers: Were you getting paid more than zero to come back? 

Walt Reynolds: I got paid a little bit more than zero. I ended up doing okay with my dad. Eventually, I got to go negotiate with his CFO, and he put me on the payroll. It was not my Allen-Bradley offer, but it was fair enough. It was, I'll tell you, it was $24,000 a year and a car. 

Chris Powers: Which at the time was bangin'. 

Walt Reynolds: Pretty good, yeah man. I was rollin'. So anyway, he comes out, the construction manager came out and offered me a job as an outside salesman, and he goes, I want to train you to do what I do. 

Chris Powers: Did you say yes on the spot or did you think about it? 

Walt Reynolds: I had to think about it. And I said, I won't be back for a while, I mean, it's going to be a few months. But he's like, take your time. He was a no pressure guy. So I think I came back again, I think I came back in October of ’91. Yeah, I came back in October of ’91 because that's actually my tenure at the Reynolds Company. I didn't get to include my first year and a half, ’89, so ’91, so 33 years I've been employed by the Reynolds Company this year. So in October 1st, I'll be there 33 years.  

Chris Powers: You going to get anything? A watch or Peter Chamber’s old company going to hook you up with something? 

Walt Reynolds: I know that we- I think since we went to the ESOP and sold into the ESOP- anyway, I'm getting ahead of myself. But anyway, I went back to work for the construction sales manager, and that's another crazy story. I love this guy, he was so fun to hang out with, but it was a wild, wild west, man. And we're calling on contractors and Dallas is starting to explode, and I'm inside meetings watching the biggest buildings, the EDS headquarters, the JC Penney headquarters, the ballpark in Arlington, the Parkland Hospital, there's massive construction projects which have massive dollars to the electrical contractor and massive flow dollars to the distributor partner that's going to get that business for that contractor. So, I began seeing the potential of this business, and quickly my boss at the time, I was only back like maybe a year, a year and a half, training with him, waking up every day, looking forward to going to work. I was playing a lot of golf, taking customers to play golf, taking these contractors to play golf, these project managers. He wasn't a very good golfer. He loved that I could take these guys to play golf and entertain them. And it was just a combination of playing golf with these guys, and my dad would come sometimes, and my dad would tell jokes and tell stories, and my dad was a good golfer. And we were just, and all of a sudden, we started writing some big projects. And then the construction manager decided to make some bad decisions. And the construction division at the time had a little bit of backlog, and they came- and then my dad and his treasurer came to me and said, the construction manager’s not going to be at the company anymore, and we want you to take his job. And I said, okay, let me think about it. And there was another opportunity to go back to work in the industrial division, pick up an account package, and be an outside salesman working for the other guy, or take this division. And I was 25 years old, I think. 

Chris Powers: I mean, it was like Groundhog Day. 

Walt Reynolds: So I took a day, I came back the next morning, I'll take the job. And literally got my first job in management. I mean, I went from being a college kid to a year and a half of totally screwing around, I'm not going to do this, to a golf professional, assistant golf pro at a club, to okay, I'm a manager. I think when I started, I had 11 employees working for me and started my job in management, and that was 1993, ’94. I started building the construction division. So, the other guy was building the industrial division, I was building the construction division, and Reynolds Company started to grow pretty significantly. 

Chris Powers: All right, so you come in as manager, probably don't know a ton about management, but probably learned it on the fly. Did anybody train you, or did you just kind of learn as you go? 

Walt Reynolds: Yeah, so I went back to UT, and I got a management, so they have those executive MBA programs, and they are on weekends. And my brother and I both went to two different programs, one management training and one was accounting, CFO type stuff. And so that helped. I had a business degree; I had a marketing degree from Texas. But as far as the management and leadership training and all that kind of stuff, no, man, I was just thrown to the fire. It's probably what really set the foundation of me really getting into leadership training and how important that is because how much more effective and less stressed out you can be if you have those skills. And that's a big deal. 

Chris Powers: And we're going to talk about that. Let's kind of skip forward a little bit. So, you get into management at 25. I'm assuming there was- at that point, did you know this is my career, or was it still like this is a great job, I'm working for my dad? What was the point where you're like, this is it, this is my home? 

Walt Reynolds: So, I'll tell you what it was. We had a three or four year run, and I hired a couple of big time sales guys from the competition that nobody thought I could hire. I brought them in and they brought their business. They came from a competitor and that year's three and four, I mean, we went from, I'm not going to give you these numbers exactly right, but we went from 15, 20 million in construction revenue to 100 million like that. So I guess I am maybe 27, 28 years old. I still had not joined YPO. I talked about it a little bit. I had not engaged in any type of training. And we were approached by a buyer. We were approached by the General Electric Company. I don't mind saying that. We were approached by the General Electric Company. And my brother and I flew to New York and got put up in the highfalutin GE palaces up there. And they wanted to buy our company. And I went through my first process. 

Chris Powers: Oh, so you had thought- at that point, you thought-  

Walt Reynolds: I took the meeting. It was-

Chris Powers: Was dad involved? 

Walt Reynolds: No. 

Chris Powers: So he let you guys go run this. 

Walt Reynolds: Correct. 

Chris Powers: This is juicy. 

Walt Reynolds: We went up, we were in Connecticut. I think we were in Connecticut. And anyway, spent two days up there and had an interesting conversation. And anyway, just to move through it fast, we come back, they throw a valuation range at us. We throw them some numbers, they throw a valuation range at us. And I remember I was driving home from Dallas, and I called my brother, and I said, I know this sounds like a lot of money, and I don't know about you, but if I could have a company that we have now and I could go raise the money to buy this company for this price, would we do it? Like, would we do it? And he's like, yeah, I think we would. And I'm like, I think we know the answer to this. And so, it was in the moment of calling that guy back and saying, thank you, but no thanks. And I mean, like a year later, Donald and I were on the cover of Electrical Wholesaling Magazine and we get a- He cuts off the cover of the magazine and he puts his signature on there, and he goes, congratulations, you made the right decision. And he was a super nice guy. He was the CEO of GE Supply. And he was- So that's when we kind of were getting the affirmations and the feeling that, okay, we kind of got this. 

Chris Powers: Two things. One, was there anything besides the price during that process that you either took from it or you learned or was like a turning factor, or was it just kind of the number at the time? 

Walt Reynolds: Yeah, I mean, it was interesting to see the way they put the valuation on the company, to really understand EBITDA and add backs and all that kind of stuff was for the first time. And then there was an interesting conversation about platforming rentals over all of their regional companies where we were. So, I knew that they were going to pick up a bunch of synergies, and I learned a lot about I could go build this company up too. Like I know what they're trying to do here. And they wanted us to stay with the company. I was going to be the regional vice president and my brother's going to be the regional ops VP for that region. 

Chris Powers: And real quick, when did Donald enter the mix? He’s younger, right? 

Walt Reynolds: Yeah, he's younger. So I think Donald came in the company in ’93 or ’94 and immediately took to- so we did a diversification play we called the Intelligence Sensing Division, and Donald was put into that division as a salesperson and was cold calling, trying to sell barcode devices and labeling systems and that kind of stuff, that was kind of a playoff of our industrial and automation business that we install these other products, and we had companies come to us as a distributor that already had infrastructure and bricks and mortar and said, would you try selling these products? He started there, and he quickly got very educated on software platforms and ERP systems. Donald’s always been kind of a curious technical cat. Dad would come in and go, you guys are figuring it out. I mean, you're the full of shit and he's the one that backs you up. Dad would say stuff like that. Donald became very intelligent at the business platform and the backup systems and the ERP. We were one of the first distributors of our size to go to barcoding our warehouse completely. I mean, we used to be on paper tickets. 

Chris Powers: Okay, everything's on a code. 

Walt Reynolds: Everything's on a code, yeah. And we did that in the mid-90s, late 90s. 

Chris Powers: God, it's crazy. At the time, that was like revolutionary. 

Walt Reynolds: Yeah, it was, and we thought we were crazy. And Donald, it was always known to be the guy that would, we called it bleeding edge, we called it Donald's bleeding edge. Like he's just going to go put us out there and we're going to suffer through this. And we suffered through it and we got on the other side of it, and a lot of the companies today that we own just wouldn't step up and do that stuff as fast as we did. And then when we started really building the business up, we had a skill set and a knowledge with Donald and his team about how to do it. We weren't afraid to do it. We knew it was a much better way to protect our business and our inventory and our receivables and everything. 

Chris Powers: When was the torch officially passed on to you and Donald? 

Walt Reynolds: Okay, so now we're backing up again. Don and I, I think when we turned down the GE supply deal, again, I'm not going to get these years exactly right, but we went and hired a valuation firm out of Chicago, and we got the company valued, and we went to our sisters and our parents because we all had ownership in the business and said, okay, here's the deal. This is the valuation of the company. We're willing to take it. And if you're not willing to take it, we're willing to sell it to you, and we can find somebody to run it. So, that was maybe ’98, ’99. 

Chris Powers: Yep, and dad was ready. 

Walt Reynolds: Dad was ready. Dad was ready, and it was the right thing to do. 

Chris Powers: Had that been building up for a few years? 

Walt Reynolds: It had been building up for a few years. We were starting to take some risk. There wasn't a whole lot of- we put some significant debt on the company. We were taking a lot of risk, and we had opened up in Austin and Houston. So, our second operation, we came back to Fort Worth, so we were in Dallas, and we came back, second Reynolds Company operations back to Fort Worth, and then we opened in Austin and then we opened in Houston. And while we were doing this, the company wasn't making a whole lot of money, and we were taking a lot of risk. And it just wasn’t- I didn't think it was smart for my sisters and my parents to have to go along this ride and take on this debt. We had no idea where it was going to go. It obviously turned out to be a really successful business. We have a wonderful relationship with our sisters now and they're some of our biggest fans. 

Chris Powers: That's awesome. Did you know you were taking a lot of risk at the time, or in hindsight as you look back, it was a lot of risk? Or were you just being an entrepreneur? 

Walt Reynolds: Well, so when they took the buyout, the business was scaling, and they took the buyout. So, we had personal guarantees. We were way out over our skis. It was $60, 70 million worth of debt that my brother and I took on. 

Chris Powers: And what was that debt being used for, inventory? 

Walt Reynolds: Yeah, so you could- so a typical line of credit in the business is they'll loan you somewhere around 50% of your inventory value and somewhere around 70 to 80% of your under 90 day receivables. So, it was a line of credit formula, and we were way up out of that, and so the rest of it was personally guaranteed. 

Chris Powers: Any lessons from that, or just it is what it is? 

Walt Reynolds: It makes you get up and go to work every day. Yeah, I mean, I think, I do believe that a certain amount of leverage is really healthy, especially early on, because it just keeps you really focused. And if you have a desire to work yourself out of debt, and then to operate in the world when you're out of debt after you've been in so much debt is such a freeing place. It's like I correlate it to a golfer winning a major. It's like, now I go to my next major, I got the big hump off my back, I'm going to be way more relaxed than this. And as we went on, we continued to take on more and more as opportunities came to buy companies, do acquisitions, and take over territory. 

Chris Powers: Under your leadership, y'all became the largest independent electrical distribution, one of the largest independent distribution companies in the US with 34 locations. So now we'll go back to what you just said. Was somebody, was one of the big manufacturers pushing you to keep growing? Was this from within? Was this you and Donald scheming in the background, how do we get rich? Like what was driving this, let's take this thing to the moon? Or was it all of the above? 

Walt Reynolds: Yeah, it was all of the above. I mean, we were totally opportunistic. We had a couple of major things that drove it. We had a very large contractor customer that wanted us to go travel with them. That's how we got into Austin and Houston. And they started doing huge work for Dell and Samsung down in Austin. And then they picked up the Reliant Stadium job in Houston. And they had done- we had done the ballpark in Arlington, a couple of other stadium projects with them. And so the general contractor likes to keep the same kind of recipe sometimes on large projects. So if you've done one all the way through the supply chain, you kind of have a good position to do another one. So we grew with that contractor, and that was a big part of our growth. Our construction group, our industrial group used to be two times the size of our construction group. Then our construction group grew two and a half times our industrial group. And today, we're probably more like three to one industrial in the business because we have taken on more territory for a single manufacturer called Rockwell Automation. 

Chris Powers: And I should have asked this earlier, what falls in the industrial category, and the new construction’s just anything new construction? 

Walt Reynolds: Industrial category would be all the facets of oil and gas. It'd be all the stuff that's going in a refinery, a pipeline, even a wellhead. It would be anything that goes into an automotive plant like General Motors plant in Arlington. Think about a Procter & Gamble plant that's making Tide and toothpaste. All of those plants have very highly automated control systems that is manufacturing all that stuff. And so, you have the power coming into it, which is part of our business, and then you have the, it's called the programmable logic controllers that are running the manufacturing process through that. 

Chris Powers: Got it. Okay, we have to take a sidebar to talk about our friend Dozier. When did he enter the business? And what was his role to come on and do? Was he part of the business pre-you taking over or was he part of that early on? 

Walt Reynolds: David was later. David came into the company, into our national accounts group. So it was another kind of a diversification play. As our construction business got going, we started to really be able to package gear and lighting, so switch gear and lighting together, and provide that to an owner direct without a contractor. And so we got asked to do that a few times, and I saw a little bit of a market for it. David had a lot of connections in the real estate world through his brother, and David came to work for us as our national accounts manager for construction, for commercial construction projects. And so, we got the Container Store, we got a few Walgreens, we got Cinemark Theaters. So, we had, David had five or six customers that he was servicing, and we were basically- they were doing a cookie cutter building. It's a cookie cutter piece of gear, it's a cookie cutter lighting package, and we would package all that up and sell it directly to the owner, and they would owner provide it to the contractor. And so that's how it got going. David was probably doing that for like a year and a half, really built it on his own. I worked with him a lot, and we had a great time building that out. And then we had a senior executive of the company decided to try to- that was going to leave our company. And he did leave our company, and he took a bunch of people to a competitor. And David quickly got promoted into his job. 

Chris Powers: Clean this up. Okay, one thing that's unique about you is you work with your brother, which is not totally unique, that's family business, but you've also worked with some of your best friends. And there's one part of the business world that's like, don't work with friends, it can end up really tough, you can't hold them accountable like you could somebody else. I mean, all the reasons why it's tough to lead people that you're also very close with outside. But there's a few folks that have done it really well. Y'all, the Double Eagle guys come to mind. There's some companies that when they get it right, it really works. My question is like, how did you think about working with friends, and how did you, did you ever think of it as two separate worlds, or was it always one world where you could almost be one way at work and then one way on the golf course? 

Walt Reynolds: Yeah, so this is interesting because what I would say is they all kind of came in different ways. It was never a planned deal to have Don and I's friends or my friends run the company with us. It was never part of a strategic vision or anything. I think I was very conditioned by watching the guys that worked for my dad not treat the company like it was their own, and they didn't- they were friends and they had a personal relationship, but they weren't good friends with good personal relationships. So, I guess I was probably conditioned by the lack of trust, and I wanted somebody that I could really, really trust. So, it was a combination of, it just so happens, some of the people that were interviewing for jobs that needed jobs at the time were my friends, and they were really talented people. And so, you’re kind of like, can we figure this out? When people ask me today, would I advise to do it, no, I wouldn't advise that via strategic vision or a direction of a company. I would say that if it fits and it works out, give it a shot, but you’ve got to know how to communicate with each other and you’ve got to know your relationship is going to change and it's going to grow and it's going to be different over time. So, David, Nick, George Mehaffey has become a very good friend. He runs our Gulf Coast region and does many incredible things for the company. Alan Shipman had a stint with the company. And then my brother and I have always been pretty damn open with each other, and it hadn't been easy. We've had disagreements about things. And putting good advisors around you and always staying in the mentality of this isn't about you, and it's not about me. It's about the company. And if you always think about this is about the company, man, and what is best for the company, and whether it be a conversation, whether we- David and I have been pretty lucky. We've seen things pretty similarly, not 100% but a lot of things very similarly. And Nick came along. The funny story about Nick is I was actually trying to hire Robert Smith. Robert Smith, he was out in the market, and I needed a CFO, and I called Nick for Robert's number. And Nick said, what do you need to talk to Robert about? And I'm like, well, I'm going to talk to him about maybe coming, I need a CFO. He's like, why don't we have lunch tomorrow? And so, Nick was very forward about, look, you look no further than me. I can be your CFO. And he at the time had had a bunch of experience. He'd worked with Robert on a bunch of stuff. And so you have that moment. And so, I looked no further, and Nick became part of our team. And it's been a heck of a run with Nick and David and my brother and George and myself. But I wouldn't advise that that be somebody's strategy. I mean, find the best person that can fit into a role and put them in there and go grow with them and communicate with them and see where it goes. It doesn't always work out. 

Chris Powers: Yeah, kudos to you, man. I think it's got to be really cool to work with some of your best friends, and when it works, it's probably awesome. You spend 33 years somewhere, it's cool you get to share it with people you're super close with. Okay, going back a little bit, so you were opening up offices, but I'm assuming that's organic growth, like when you opened up Houston, opened up Austin. Was it advisors, was it again you guys scheming? When did you say we're going to start buying companies? And I kind of just want to ask, what was it like to buy your first company? You never really bought one. How did this all come to be? Because that became- that's most of the time I've ever known you is when you were in M&A mode, just starting to gobble things up. But how did that start? 

Walt Reynolds: Yeah, so, you probably weren't around in 2000. You're probably a little bit young for that even. 

Chris Powers: I was a freshman in high school. 

Walt Reynolds: He had to stab me with that one. That was a good move. Yeah, so there was the year 2K and there was all this groundswell around what was going to happen to people's business systems and if you're not at a certain level with your ERP and the market. So, I think it was our business grew significantly because we invested in business systems and we rode cycles with a ton of variable costs. And so, we were always in a position in a downturn to gobble up companies that didn't survive them. And so the vast majority of our growth came from three companies going bankrupt in contiguous territories that Rockwell needed a distributor for. And so I can tell you a bunch about bankruptcy law. I can tell you about how that works. So, we actually- one of our first transactions that we did was we bought two old Cummings Supply locations, Abilene and Odessa, Texas. 

Chris Powers: Back to Odessa, baby. 

Walt Reynolds: Back to Odessa. It all comes back to Odessa. We bought them out of bankruptcy in 1998, and so we went through kind of our first transaction with doing a bankruptcy deal. My dad and his CFO at the time were involved in that and myself and David, my brother, and Nick actually wasn't with us yet, and we went and did that, we did that deal. And I think Abilene was doing a couple million bucks, and Modesto was doing five million dollars in revenue. We took these two companies over, and we bought them for about 60% of the asset value, and we didn't have to mess with receivables. So, we bought them for 60% of the inventory value, and then assumed the leases, and then hired the people. And those two operations now are, together, they're probably $150 million in revenue. 

Chris Powers: And it was purely just a cash crunch for these, like it was good businesses that couldn't match costs? 

Walt Reynolds: It was a downturn in the oil and gas market. It was, they hadn't diversified at all, they didn't have the right people, they were getting less and less of the pie. They did have the Allen-Bradley Rockwell line, and Rockwell needed somebody to come in and take those over. We were immediately approved for that. And that's another kind of shining star that we got at the beginning of our growth is we showed the world what we could do with a turnaround. And so, we turned around that, and then, Chris, there's three more companies down the Gulf Coast and in East Texas. The company that I told you about, Watson Electric, got bought by Warren Electric, and both of those companies ended up not making it financially, and we took over all of their territories. So, that's how the business really got big to 2007, ’08. Then ’08 happened, and then some more trouble came for companies, and we survived it very, very well. So, most of what Reynolds Company was built on is we built our business taking over financially dysfunctional or turnaround, bankrupt. 

Chris Powers: Have you ever bought a healthy business? 

Walt Reynolds: We have, yeah. 

Chris Powers: Do you have a preference, bankrupt over healthy, or both different? 

Walt Reynolds: Ah, good question. It's so different. It's very different. I mean, there's some things that are different. Some things are the same. Now, the company has, we ventured off into the PVF world. So, we own a company called Flow-Zone. So we're not just electrical now, we're also into PVF. That's been an incredible story too, that transaction. Now, that was after we did our transaction to ESOP the business. 

Chris Powers: Are there really- has there been a downturn since ’08 or ’09 that would mimic some of the other downturns that you gobbled them all up or not really? 

Walt Reynolds: There was a brief hiccup at COVID, 2020. 

Chris Powers: Enough to put companies out of business or? 

Walt Reynolds: It was enough to really impact the oil field. I don't know if you remember, but oil went to zero. 

Chris Powers: Yeah, it went to negative, like 43 or something. 

Walt Reynolds: It was negative. We actually closed on Flow-Zone in February of 2020, and 95% of the revenues come from the oil and gas business. So, that transaction was- but we immediately go in and put our business systems in. We immediately go in and put together our variable cost model. We got to clean it up really, really fast. So these things are, they're not blessings, and people that are listening that were in the early Flow-Zone days may not agree with this, but it's the best thing that ever happened to us in Flow-Zone. Flow-Zone today is a $285 million business. And we bought it at $55 million. 

Chris Powers: And at one point, it went to what? 

Walt Reynolds: We actually bought it at $100 million and it went to $55 million like that. 

Chris Powers: This might be too broad a question, but does something come to mind if I said, if somebody listening to this was going to buy a bankrupt company, here is something you should look out for immediately? Or is it just all over the board? Is there a lesson in there that's attributable to other people buying bankrupt businesses? 

Walt Reynolds: I would say two things. I'd say number one, there's probably some really good people in there that were doing things that were against their, like they didn't want to do. So, there's probably- don't automatically assume that there’s not really good people still left in there. And the second thing is, when you take over companies like that, they have a mentality about cost watching and the fear of this happening again. That creates a whole different level of understanding of how to be tight and run a business really, really tight and smart, even in significant uptimes. And I'll tell you that Dozier and Nick and those guys were amazing at picking up on information that came from these people, and not that they're not also very good, wise, but I would say incredibly tight, running the business tight, have processes in place for every penny that you spend. They also recognize the, and my brother did also, recognized the people in the organization that were working in the accounts payable department that were putting checks in a drawer where you couldn't find them and things like that, that caused the manufacturers to come in and put the hard clamp on them. And then in our business, the thing that causes the biggest problem is you lose track of your information. You lose track of really what your inventory's worth. You lose track of what your margin really is at a customer or in a customer contract because we have a lot of business that flows through contracts. And if your business system is not up to speed at tracking that and tied into your general ledger and your accounting system, you can lose track of what your cash really is. And that's something we understood very well early on, and we knew immediately what was happening to these businesses when they were losing track of their cash flows. 

Chris Powers: So you might have just answered the question, did you have like a 90-day plan or a six-month plan every time you'd buy a business, or was each one different? 

Walt Reynolds: There's some very foundational checklist stuff that we would do, for sure. And then you just take the curveballs that come to you, and then, we were just so fortunate, and we still are, that when we did these deals, the market just comes flying back. I mean, the market after COVID, and especially when you run the business with a ton of variable costs and you don't have to go do a huge reduction in force because your backlog just went to zero and six months of revenue is just like, it's not there, you can really wait that out. And then that didn't happen. I mean, it turned back on after COVID, and our business went from, and I'm not going to get this exactly right again, but our business went... it went 1, maybe 1.2 billion back to 800 million, and then today, the total company’s going to be close to three billion dollars with all of the parent company and our company. So we both, the parent company that we did the deal with, they shrunk significantly, we shrunk significantly toward the end of 2020, and 2020 was a rough year. And then we came out of it in ’21, ’22, and now in ’24, I mean, the McNaughton-McKay, Reynolds Company businesses are going to be somewhere around three billion in revenue. 

Chris Powers: Unbelievable. Okay. GE approached you in the late 90s about selling and you passed. And then you ended up selling the company, but not until decades later. Can we talk about how that came to be and why this time was different than the GE time? 

Walt Reynolds: Yeah. Thanks for asking that. So we never wanted to sell the company. We had a great company, and we had put it in a great position with the manufacturers. We had a great reputation. We were attracting incredible talent, making great investments in technology. What happened was a manufacturer came to us and said they wanted us to significantly expand, and how would you do that? And so, I came up with a plan to try to make this manufacturer understand what my appetite for leverage is and there is a way to do this with private equity and good private equity, that we could go acquire a bunch of these companies and we could use our business ERP platform. So we'd be the platform business, we'd teach them all that we can teach them, but that would be in a separate group with a separate capital structure, but I'm not putting Reynolds Company in that risk profile. And I didn't really think there was a way to do it at the pace they wanted to do it, but I knew that they had- the manufacturers all of a sudden got on board with massive consolidation. And I'm like, okay, here we go. So that was in my mind, and then I served on a couple of boards and have known the CEO of McNaughton-McKay for many, many years, and he was also approached about expanding his business with this manufacturer. And so he called me, he said, what'd you tell him? I told him what I just told you, and I said, what'd you tell him? And he said, I told him that I would expand, but I'm starting with one company. And if you'll let me merge with this company, we'll go build the world for you. But I need to do it with these guys. I knew what was coming next. And he's like, what do you think? What do you think about that? He was like, we need- 

Chris Powers: You were the company we want to come in with. 

Walt Reynolds: Yeah. And he knew our leadership team, he knew our management team, he knew David very well, he knew my brother. We were all engaged in industry meetings and manufacturing meetings, and we also incubated a global electrical distributor company called Edge that both Reynolds Company and McNaughton-McKay had invested in. And I was a founding board member and so was he. And so, we had a rhythm conversation all the time about what was going to happen in the industry. Anyway, that was a good conversation. He said just think about it. But leading up to that, Chris, I mean, yeah, we were approached so many times by big time global buyers. And like especially if they weren't in Texas, their number one target was the Reynolds Company. And I knew these guys pretty well, too. I didn't- I knew that I probably never wanted to sell the company to them, but they were good guys and they were smart guys and the CEOs of those companies, I mean, they just had me on speed dial. They would call me all the time. So finally one guy got a little aggressive with me, and I said- he called me one day and he said, will you consider, I got a question for you, and I think I know the answer, but I got a question. I said, what's the question? He said, would you consider selling the Reynolds Company to us? And I said, yeah, I would. I said, you promise me that if we're doing something better than you're doing it, you'll do it our way. You promise me that the manufacturers like this. You promise me that my employees are going to be better off long-term. And you promise me that my brand lives as long as your brand. And he said, well, you could have just said no. I said, I think you know what to do with my phone number. That was a hard phone call, but I felt really- after that phone call, I felt good about it. That's when we went and another thing we did is, I've always believed in marketing something through the business and building a culture through the business. I’ve got to plug Stuart Balkman here because he came up with one of the coolest things we ever did, but we started, we rebranded our company, the Reynolds Company, and our tagline was, It's On. And it was before Southwest Airlines did it, it was before the NFL did it, it was before Disney did it, all of it, and we did not trademark it, but it was the Reynolds Company, It's On. And I had similar conversations like we're having right now with Stuart, and he's like, tell me about the business, tell me about anything, and he's like, I got it. 

Chris Powers: And he's so good at that stuff. 

Walt Reynolds: Yeah, and so we did the It's On. And that was a run from probably 2010 to 2016. And the Reynolds Company just started taking off. And again, hiring good people, investing in great technology, the markets were there for us. We made some really good decisions. We all got a whole lot better at the business. And so that business that I look back on, that single location supply house that had all that dysfunction and all that stuff in it, and there's still a lot of companies out there like that. There's still a bunch. 

Chris Powers: Probably more than not, to be honest. 

Walt Reynolds: I mean, there's probably a bunch of companies. I mean, I drove past a ton of them coming through Missoula and Odessa. The supply houses out there with just the little field and the single location pipe and supply business and single location service company stuff. And there might be some really good ones. But from there to building a business out of that to where we are now, it's been an amazing journey. And to encourage, when I look at people that want to start companies and do things, I mean, there is so much opportunity out there. You’ve got to have the market, and you’ve got to chase something that's real. But there is good leadership, good investment in technology, fiduciary responsibility, good financial advisors, good legal advice. You can do it. You can build it. 

Chris Powers: Okay, so we know the reasons why you said no to the gentleman that called. I'm assuming the group that you ultimately merged with or sold with said yes to those questions. They also introduced the concept of an ESOP. Was that important to you at the time of selling, or was that just something that as you were already having a great conversation with a buyer came up and you bought into that as well? 

Walt Reynolds: Yeah, so we for sure had started educating ourselves on ESOPs, because if you're not going to sell to one of the big consolidators, and you're not going to sell to private equity, you better understand the ESOP game. And one of the things I started presenting on several years ago was I've always been extremely enlightened by companies that say we're just in this for the long haul. What does that mean? I mean, 100 years, 1,000 years, what does it mean? And then I saw a presentation and I read this book called The Infinite Game. And I started thinking about how do I position the Reynolds Company as an infinite player. And the ESOP was certainly a contributing strategic thing in that. I’ve got to say that Don Slominski, who was the CEO of Mc and Mc at the time, was fantastic at helping me understand it. And he had several strategic statements that he made to me early on that really made sense to me and helped me understand that process. They allowed us to come in and be a partner just like them. It was more of a kind of merger than it was acquiring a company. The Reynolds Company and the companies that are under the Reynolds Company are now bigger than the parent company, but we're both really strong. We're way stronger together. I mean, one plus one equals way more than two and Mc and Mc and Reynolds Company together. And then the employee ownership has gone on. It was tough for the first couple of years, I'll be honest with you. I mean, we had a good culture and people loved working for myself and Donald and David and Nick and the team. We had no issues with, I mean, it wasn't perfect, but we had a- if we wanted to interview somebody, we'd get them. We'd get them to come talk to us. The ESOP, after the first couple years, everybody got comfortable with that, those statements started coming in, the stock price started going up significantly, the merging of our two companies, the energy and the synergies that happened, and now what's happening is even more and more and better and better as I continue to play a role in that, and our new CEO Mark Bourne has done an incredible job of trying to pull the companies into a one directional cultural thing, and we pulled some stuff from Mc and Mc, they pulled some stuff from us, and it's been great. But now the ESOP is a massive competitive differentiator when it comes to hiring people, if you know how to explain it, and people are going to do their research. And we have an incredible board, we have a great fiduciary that represents the employees, we run it by the book, and the company doesn't pay any federal income tax, zero. And it makes a lot of money. And so you can pay down debt so fast, and then all of that income that would go to the government goes to the employees' retirement plans. And then when they retire, they pay the tax. So they get paid out over a term, and when it comes out, whatever tax bracket that puts them in, they pay the taxes. But it grows at a tax-free rate. 

Chris Powers: Did you know what your role would be in the company the day after it was closed, or did that have to evolve, or did it change even from what you thought it would be? 

Walt Reynolds: No, so yeah, when we closed, we had an agreement, we're not changing anything. I was still the CEO of Reynolds, you're the CEO of Mc and Mc. I report up to you, but everybody in the Reynolds Company reports up to me. And both my brother and I got a board seat in Mc and Mc. And so, the only thing that changed, I got a board seat, and I used to laugh with people because if I was doing an interview or talking to somebody, I'm like sitting in front of the company, I go, there's only one person, I got a new boss. 

Chris Powers: Were you ready for that? 

Walt Reynolds: Yeah, I mean, I had great trust in Don. I mean, we didn't agree on 100% of the stuff that kind of came at us post-sale and integration world, but we agreed on most. And I mean, we had a rhythm conversation, we had a weekly call, we were always talking. It wasn't like I kind of went off and did my thing, he did his thing. And then we had the board that brought us together. And I was always presenting on the Reynolds Company stuff, he was presenting on Mc and Mc, and then we would combo the presentation of where we're coming together. In an ESOP, you have to kind of offer similar healthcare benefits to everyone, even though our plan might have been a little different than Mc and Mc's, but over time, the fiduciary says, these employees can't be treated differently than these employees. There's our payroll automation, our software for our payroll, we kind of got into it about using ours or using theirs. They've always been better at gross margin management than we are, so we kind of picked up some things from them on that. Our company probably had a little bit more of a leadership training culture. So they've adopted that. So we're running our fourth FLP, which is Foundation Leadership Program. There's now been 130 managers put through Stegen. And half of them have been Mc and Mcs. Some of them are Flow-Zone, some of them are [Medco?], some of them are Caniff. So these are all companies that we've acquired since Mc and Mc and Reynolds came together. 

Chris Powers: We're going to end on leadership. But real quick, so the day you closed, the plan was to go roll up more of the industry. Was that the... 

Walt Reynolds: It wasn't the immediate plan. The day we closed, it was you run Reynolds and you keep producing this performance result of EBITDA and asset management and those kind of things. We're going to do this the same way. So we're holding ourselves to the same. How you get there and how we get there are two different ways, but you just keep doing that. And there was a couple of targeted companies, and then there was, over time, there was a desire to diversify outside of electrical, which we went PVF. So there was some stuff out there, but it wasn't immediate. But I guess that was 2018, so we're now going into our seventh year, and I guess we have four or five more companies that we've acquired since we came together. 

Chris Powers: How many more companies are there to acquire, hundreds in theory? 

Walt Reynolds: There's a bunch out there, yeah. But it remains to be seen. As a privately held ESOP, we're not under the gun to massively grow. We have a desire to responsibly and rationally grow the stock price every year. But we're not under any pressure to go from 3 billion to 10 billion just to get our stock price. So there's a lot of talk about the strategic direction of the company, which I'm very involved in, and I enjoy that a lot. And I couldn't tell you that our desire is to, I think we'll probably do some more acquisitions over time, but we don't have one on the burner right now. 

Chris Powers: If you're listening to this, and you're considering selling, I just want 1% of whatever deal gets made because of this podcast. I want to end on kind of two things that are beliefs of yours as it relates to leadership that I thought were interesting, and we'll bring it home on this. What makes you different between being a CEO in a monkey suit versus a CEO of just who you are? And when I read this, and maybe it's always been this way, but there's so many books on what a CEO must do and how they must be so polished, and they do all these things. And then you actually sit in YPO or you talk to 10 different CEOs, and yeah, there's a lot of similar stuff, but you realize everybody's fighting different battles. They all have different strengths. And so, when I read that, I read like the one you'd read about in a book that's perfectly polished and does all these CEO-like things, and then the CEO of just who you are. How do you think of them? 

Walt Reynolds: Yeah, so years ago, I was working with a guy named Jamie Wheal, and we had a lot of fun around how to be an authentic leader, how to really develop a mindset, and sometimes as a CEO, you can feel like an imposter. You do have to button up and get up there in front of people and not tell them the whole story. Being a presidential CEO type leader, and if you're engaged, you know more than everybody else, but it's how do you present it and how do you present it in a way that makes people want to follow you and they trust you. And it's hard to always be an imposter and it's hard to always put that monkey suit on and do that, but it's also equally hard to just settle into yourself. But once you do, once you rip that, once you know where that zipper is on that monkey suit and you rip that thing off, you find some very free- you're able to collaborate with yourself, you're able to collaborate with people better. It's okay to let your guard down. It's okay to be vulnerable. It's okay to say, I don't know. One of the best stories I've ever heard is I had a Rockwell executive call me all the time on stuff, and I'd tell him a lot, I don't know. And he goes, well, you know what, I love it when you tell me that you don't know. Because when you do know, I believe you. Because I don't always know. So, I think over many, many years of leadership, that you come into a place where you strip down to you and you rip it off and you never put it on again. And I don't know if I'm there yet or not, but I do understand the value of confidential conversation, I understand the value of being a great listener, I understand the extreme importance of trust. And if you know how to communicate, you know how to listen, you don't have to put the suit on very often. 

Chris Powers: Oh man, there's so many times I could've used that. Like what you said, you kind of know, but how you deliver and present the information. It's like what they say, the words that come out of your mouth when you're speaking are like 5% of what somebody actually feels and hears. It's like your posture, your tone, everything else matters more. I've totally said the right thing and missed the point a million times because I forgot the other part. All right. Organizational development is different and more important than organizational training. I actually have no idea what that means. 

Walt Reynolds: So, every organization of any size and scale is going to have some type of training program. You're not going to put a guy in the warehouse and not teach him how to put the safety belt on when he gets on the forklift. You're not going to allow a person to fill out their own direct deposit without going into the HR manager and sitting down and doing that. So there's fundamental training stuff that has to be done. And a lot of organizations have pretty good training programs. But that's what they are, and they call them development. Development programs are really the evolution of a company and knowing every single employee, what they want to do next, whether that is retire, stay in this job forever, be promoted, run the damn company. How do you know what this person wants unless you ask them? And what are companies doing to be in continuous development with their employees? And it's another element of The Infinite Game. 

Chris Powers: Do most people know what they want? 

Walt Reynolds: I don't think everybody knows what they want, no. But if you never ask, you’re never even get them thinking about it. So we as an organization, and I'm tasked with trying to get people developed. I mean, I get the reputation of being developed, even overdeveloped. I stand in front of this company every year and I do this leadership program and this leadership training, and I get on these calls with people, and I mentor these leaders, and they all say, how do I get to where you get? I'm like, I haven't gotten anywhere, I'm still going, I'm still learning. But we have a collective responsibility as an organization to know what you want and know how to develop you. And development goes back to that significant amount of self-awareness, helping people understand when their ego's getting in the way. There's no place for how to teach a guy that's getting ready to get on a forklift about his ego. But that's a huge part of an organization. And whether you're getting on a forklift or you're getting up in front of a group for your first sales meeting as your first time as a sales manager, the more you're developed, the more you're trained to know how to handle that, and the more you have spent time learning about your authentic self, the better you're going to be received. 

Chris Powers: Well, thank you for joining me today. 

Walt Reynolds: Chris, thanks for having me. Yeah, appreciate it. That was a lot of fun. 

Chris Powers: That was awesome.