Painful Lessons From 4 Company Acquisitions | Tim Calderala COO, Collins Builders (Podcast 318)

Kind of a balance of confidence. Right. Where cocky can. Your confidence can go into cocky if you can just throttle it back a little bit. But I love that, like learning from some of the wisdom of those that go before us too. It's profound how people that are older can just bring a level of wisdom that we discount because like, oh, they don't know how to use technology. Yeah. But they understand the people side of the business and strategy and the day to day more than we will for the next 10, 15 years. Right. Our guest today is COO alliance member and Collins Builders COO Tim Calderalla. Born in Chicago and raised outside of Columbia, South Carolina, Tim has spent his entire career involved in all aspects of residential construction and real estate and he has his BS in Business management with a minor in psychology from the University of South Carolina. Tim has worked with four different home builders over his career. Four of them actually gone through acquisitions, being acquired by public companies. He's going to talk to us about the experience of being acquired, working with inside of public companies and now running a high end custom home builder and what differentiates them with the rest of the people in his industry. He's also going to talk a lot about how he's growing his people and how to retain people in an industry that is notorious for people quitting and moving on quickly. They've built quite the company. You're going to love his lessons and we'll see you on the inside. Tim, welcome to the Second In Command podcast.

Thanks so much for having me, Cameron.

Yeah, nice to see you. And also you're a COO alliance member so it's nice to have you back and helping to grow this. We've had over 310 podcast guests now over the last six years and welcome to the show. Looking forward to learning from you. Why don't you before we talk a little bit about Collins Builders and you know, some of the stuff that you're working on day to day. Why don't you give us a little bit of a helicopter tour as kind of your bio. How did you get here?

Yeah, it's funny, I had family around the construction industry growing up and against all advice and my own initial will, I went to school for business to get away from it and ended up in it anyway. So right out of school, got an opportunity with a family run company in Nashville, cut my teeth in the industry there for five or six years, had the luxury of going through an acquisition for the first time, got to experience new corporate structure and approach. So that was unique. A young age at that, moved my family down to Jacksonville, Florida and did it again. I went, joined a small mom and pop local company, was part of a team to grow it, sold, and went through a corporate transition again. I've done that four times now. Finally in a position now where my commitment with my current CEO is to be able to see some of the fruit of our labors over a longer term.

Do you think that those companies, the four companies that you helped build to sell, did they know that going in? Like, did they know that that's what they were their plan was, or did that just happen?

In two cases it was extremely deliberate. They knew all along that was going to be the case. That wasn't necessarily mentioned to me when I began with them, but it was certainly the intent. The other two, I think, happened more organically.

When did they tell you? Can you walk us through kind of each of the four? And were there any lessons like, did they? Because there's a bit of an art and a science to that in terms of, you know, loose lips sink ships, right? When do you tell the employees? When do you tell your key employees? And maybe where were you in each of those companies in terms of your role? That might help us to know why they told you or didn't.

I learned a lot and all four situations have been handled very differently. So I gained a unique perspective in understanding ways to handle that. To your point that I think are well managed and executed and I think there's certainly been a few instances where that has not been the case. In all cases I was in managerial role. The two cases that were far more intentful, there was much more tight lipped last minute, not super effective communication and as you can imagine, decent fallout and turnover as a result, terrible anxiety within the team and anxiousness and all those things that are fairly counterproductive to a company. On the other hand, the two that were more focused on the future and growth and continuity building off of what they were purchasing, there was far more notice, far more integration into the process with the existing team, more collaboration and best practices and how to work together to make the transition as smooth and effective as possible.

Going through one acquisition is big learning, right? When you're in a company and you've gone through one acquisition, you go through some big learning. Going through four, you could effectively write a book on what it's like to go through that and what the ups and downs are and what some of the pros and cons are. What were some of the lessons that you learned in the companies that were acquiring you what do you think they did well and what could they have done better? And then in being the acquired company, can you give us any lessons there as well?

I would say from the perspective of the company that it was acquiring us, I certainly understood in two cases that pace and effectiveness in putting their agenda into the new market was absolutely number one, the top priority. Keep in mind all four companies that were involved in these acquisitions were publicly traded purchasing privately owned entities right out of the gate. By default you've got a conflict in principles and ultimately goals. Generally speaking, the companies that I started with working for were very client oriented, service based companies just as much as they were delivering a product being acquired by publicly traded companies that are motivated by shareholders, units and profitability. I think understanding that now, having gone through it, gives me a certainly a different perspective than I had in the moment. And I think conveying that to the team at the time, just open, honest, transparent communication and conversation in the two instances where it was done very effectively made all the difference in the world in short and long term success. In contrast to really just trying to beat the group over the head and force your will, push your way into the market and let the chips fall where they may.

How about being acquired? When you're the company that's being acquired, what do you think you guys did well at the leadership, team, management team level, you know, in terms of communication, in terms of organization, in terms of the like merging in or was it, was it out of your hands and you were just kind of doing what you're told at that point?

Yeah, I think in the two cases where it was far more collaborative, certainly exponentially more effective, not only in employee retention, continuity, even the transition and the buy in and shift from one product to another. This case, both cases we were higher in luxury, custom home building and we were converting to more production cost effective type components. And so in that transition, it takes a little buy in. You're selling a new product all of a sudden. And so those, from my perspective, being able to have a voice in that, to understand it, especially through the transition as you're out with the old product and in with the new. Two companies that were sensitive to that, that listened, that allowed us some leeway to make that a proper and smooth transition, the client ultimately was the one that benefited the most versus the other two where we had little say or input and it was just a mandate.

How long do you think it took for those acquisitions for you or companies to feel like you were a part of their team, for you like to Feel like, okay, we're all one now. Is it like a one month thing, six month thing, two years?

Yeah. I think the two that did it, well, I think because they integrated themselves physically into the process, I think that made a big difference too. Now keep in mind this has been 15, 20 years ago, so technology wasn't quite what it is today. However, I think just the physical presence, the humanizing of the experience. Think in 30 days really got a team bought in, committed and traveling in the right direction. I would chalk that up to strong leadership really as much as anything else.

What about being a part of a publicly traded company? What is that change in terms of the culture and what are any lessons that you can impart from those?

I'm back working for a privately held company again for a reason. Certainly has its place and I certainly admire those folks. We need those kind of companies. Right. But I personally am, I favor a more intimate relationship with my clientele, having a little more flexibility and collaborative type environment that I think the lack of hindrance of certain processes, procedures, mandates, if you will, in our environment allows us really to thrive more versus being in that corporate.

You're with Collins Builders now, you've been there for nine years. What do you guys focus on? What's the rough size of the organization just so we can get a bit of a feel for that?

Oh, it's been amazing. I'll be 10 years this next year. Ironically, I came on to a company that was building a lower price point value driven type product and they were doing it well. My intent was coming out of the recession to diversify the company. My background in higher end luxury custom building offered an opportunity to do, to expand our footprint to go into a new niche in the marketplace. It was very well received very quickly in the past 10 years we have increased our average sales price about 1800%. So it's been a phenomenal ride building the team. We now do exclusively high end luxury custom homes and we have a team of just over a dozen people. Obviously a large team beyond that of subcontractors, trade partners and vendors. But our core group is 12, 13 people. Continuing to grow a little bit. But what's really shifted in the dynamics for us as a company in the last few years has really been scale, price point, specifically, how do you get.

All of the sub trades or do you worry about the sub trades lining up with your core values and you know, the way that you operate, is it more you just let them do their thing and as long as they get it done on price and on budget, that's okay. Like, do you just kind of keep them in a black box or. Or how does, how does that approach work?

The world as we know it has changed, I think, even beyond our industry, but specifically in our industry, we have a unbelievably massive labor shortage. That combined with the fact that we are very specialized in what we do, being kind of at the high end, top of our market, we've got a unique skill set which requires a unique skill set to boot. Collaborating with our trade base, our vendors, ultra critical. We hold on to our quality people with both hands, treat them extremely well, get them bought into our experience, what we're doing, and we want them to be a part of that, be proud of the work that they're producing along with us.

You mentioned the labor shortage, and I had written down hiring complexity, that there really is a hiring complexity in your industry. I mean, the sub trades kind of take care of itself because they're dealing with their own hiring. But, but you have to, I stay, I guess, stay on top of that. To know, like these electricians we're bringing in, is it the same team that was on the last three jobs, or is this a different team? So do you oversee that? And then secondly, you know, you've got your, your core team of the 12 or 14 kind of at the head office. I'd say there's a little bit of risk at losing, you know, one or two of those people. So how do you make sure that you've got those people handcuffed to the company so they don't go anywhere much.

More cut and dry and straightforward. We treat our trades and our sub base much like we do our employees, even in the onboarding process. It is a pretty intensive vetting. There is reference checking, not just, I think, as you mentioned in one of your books, not just for fear that we're going to check references. We actually go check references and we walk current projects, we talk to other folks that they're working with. It's pretty intensive before we bring them on and making sure that the alignment's there, expectation for quality is there, and that they're going to service us to the extent that we're going to serve our clients. That part is pretty well streamlined, organized and efficient for us, though, a constant wheel in motion to make sure that we're shored up as time goes on. The second part of that question is far more challenging. One, because we're so specialized, Two, because we're a small company, every individual here plays an extremely critical part of the whole culture is unbelievably critical as I imagine it is with all companies. But the impact of it here can be unbelievably positive or turn things on their head very quickly. So we work really hard as a management team in particular to make sure that we keep folks shored up, engaged, love one on ones, love perpetual OKRs, personal and professional training and development. I think investing in our people above all things is really what makes a big difference.

It's interesting, it's even why I launched my course invest in your leaders. It's why I even called it invest in your leaders was I think that if you grow them, if you invest in them, if you keep working on growing their skills, not only do you get more productivity out of them, but they feel more loyal to the company, they like working the company they feel cared about. Right? So, so it's critical. These people though that are at your head office, I mean a friend of mine in Vancouver, when I was doing the second home build that we did, I became friends with the contractor again, higher end contractor, and he would talk about some of these key employees. I'm like, dude, if you lose them, you're like, this is not a good thing. So how do you know, like what is it that you do to know for sure that you've got these people handcuffed to your company, that they're not going anywhere? Is it, is it just money? Is it a combination of seven things?

Honestly, I'd say money is distant for us, important to everybody, right? We all got to make a living, to eat and live because we're specialized. Compensation here is, is aligned with a specific skill set. But I think the environment, the culture, the encouragement, the coaching, the training, the personal development, those are really the things that tie them into what we're doing as a whole for as a company going forward. We're actually in the middle of crafting our vivid vision currently for the future. We have touched on that. We just had a staff meeting this week and talked about high level, what that means to start the process of first of all understanding as a whole team what the point of all this is. And two, to start to shape the understanding of how each individual here will contribute to the betterment of the whole.

I like that. And it is true that you kind of mentioned we've all got to live, we all have to pay bills. And I think of Maslow's hierarchy of needs, right? It's just as long as that base is what is supposed to be, everything else is what starts to matter.

Right.

It is what starts to align because you could be overpaying people and they'll still quit because they don't like the team, they don't like leadership, they're frustrated, they don't see value. So it sounds like you're stocking up all those different areas for sure. What keeps you there? I mean, it's, you know, you're not, you're not 65 years old, you're not 25, but, you know, what keeps you in a company for nine or ten years, that's a, that's something that the baby boomers used to do.

Yeah, it's. It's amazing. I'm a little bit old school in that regard. I've been an old soul my whole life. I've been on my own since I was 17 years old. So very driven, very motivated. I'm very blessed to be in an industry that I love and a profession that I love. I've got a CEO that has been incredible in letting me really have the reins and a lot of regard to start moving the company in the direction that we wanted to go in since the day I stepped in.

You've been out of the house since you were 17?

Yeah.

Have you got kids?

I have three daughters and I now have five grandkids.

Are your three daughters out of the house?

They are.

What was it that got you to leave at 17?

A lot of challenging family dynamics, for sure. I just realized for whatever reason early on in my life that I, I knew what I didn't want for the future more so than I knew what I did want as a young punk teenage kid. So, you know, I, I never had a problem with work ethic. I was in sports growing up my whole life. Played soccer through high school and into college. Very much had that competitive drive and nature in me to begin with. Like I mentioned, I was around the construction industry in various asp growing up. And so when I got locked in, I think I was just really driven and motivated to do all the things in life that I otherwise would not have had the opportunity to do.

So when you said that you worked in a family business, was it your family's business that you worked in or was it family like family run construction companies that you worked in?

Yeah, family run construction companies all around. Everything I was involved with growing up.

What are some of the differences with the family run companies? What are some of the dynamics there? There's a big organization up in Canada called the Canadian association of Family Enterprise, kind of like the COO alliance, but only for family run companies because of all these idiosyncrasies that they have. What were some of the dynamics that you had to navigate? You know, working inside of a family.

Run company by default, typically these are smaller companies, so generally speaking there's a ceiling. In most cases you've got set positions and you got a certain dynamic at least entering the situation. Regardless of acquisition or anything that may happen in the future. If you're dealing with 10, 15, maybe 20 people at the most, and you're positioning yourself as purchasing manager or construction manager, you're pretty well committing. Pending your superior's age, experience and desires for their future careers, you're pigeonholed a little bit. And what you can do as far as opportunities go.

Do you sit back and watch some of the family dynamics as well? Like do you just watch the tempers flare and then they're best friends again an hour later? Like do you watch or do they, do they hide that stuff?

Not so much. Tempers, flair, I think, I think there is more emotion to it because everything is very personal. It's kind of the double edged sword, right? When the highs are unbelievably high, the lows tend to be a little bit lower. So I think with a positive mindset and outlook that I've been thankfully able to participate in focusing on those victories and the positives and the forward momentum have been kind of a constant mantra for me in life.

You're back to a smaller company again. It kind of, it kind of oscillates with the up and down sizes. Any differences there in terms of working with the smaller, smaller firms? Are you able to be, to stay more nimble? Like I like this whole like small head office with lots of sub trades. It almost is the more modern way to run all companies. Is there any lessons that you can give us there? How would a marketing agency do this or a, any other kind of company do this where they've got a few people at the head office and lots of fractional, you know, outsourced suppliers in all the different areas.

It's a constant challenge. And a little bit of the debate that we're having with our division going forward is what is fully integrated. Knowing that we're in a position where the product that we're producing and the clientele we are serving, frankly, requires a very significant amount of hands on personal interaction, support, guidance, coaching between us and our clientele. Even so, to provide an extremely high level of service that that takes people, right? We can automate a lot of things. Our communication process is very effective. And succinct. But at the end of the day, being a very high level, service oriented company, that just takes folks. So how much of that we do internally versus subcontract? We've actually started, believe it or not, as small as we are, we've kind of gone the other way. We have brought architecture in house, we've got interior design in house. Most of our competitors are more fractured. And what I find in selling against that, frankly is the breakdown in communication, ineffectiveness of playing the telephone game between multiple parties throughout the duration of the process versus us keeping it all under one roof, around one table. And much more succinct allows us to create a whole much more predictable outcome when it's all said and done.

Yeah, I was actually going to ask you about some of that, some of the differentiation between you and some of the other, you know, people in your industry or in your market. There's, there's a lot of high end homebuilders out there. How do you differentiate yourself? How do you stand out from the rest? Is it winning awards? The work that you do? Is your marketing?

Yeah, we are having so much fun actually. I think marketing is one of the things we need to work the most on. Our industry in general is pretty poor on the marketing side of things. We have been since the beginning of time. In fact, when I came on here we had an F rated Google website was one of the first tasks I took on and now we're, now we're A rated and flying high. So we have such amazing opportunity to set ourselves apart. I read the book Blue Ocean Strategy not long ago talking really about how you, how you differentiate yourself in the market, how you separate distance yourself from the competition. That really rung true with me. Not only did we bring architecture in house and became a design build firm about four years ago, we went ahead and bit off the whole thing and went virtual and 3D with our architectural design process. We're now for a company our size, one of the only companies in the country that is integrating as a home builder, 3D and virtual design. In fact, we just brought in the Oculus headsets into the office and we're getting ready to put our first clients in them and let them virtually walk through their home before we start construction.

Wow, is that, is that kind of part of the sales process or is that post sale?

It is. It's really, that's really where it all starts with us now really architectural design and now we're watching so many other industries kind of fall in line with us. Restoration hardware just put out a furniture line that's tied into our software. Thermador appliances have done the same thing. So now we're getting product integration and creating an even more predictable experience from the virtual design into construction.

That's crazy. So literally from like, I'm giving, giving you the vision for my home, you guys are creating the, the blueprints and the elevation drawings and everything. And then you're actually doing like the 3D rendering. And I can actually then walk through my home with a headset.

It's like being in your own video game.

How, how realistic is it? Like, pretty darn good or is it.

It's getting better and better. Lumion is the software that we used. It's kind of that last layer of technology that really integrates that gaming type software and integration. So textures, materials are just getting better and better all the time.

In terms of differentiation, that makes sense. You mentioned some of the people. Is there anything that you're doing specifically to grow the people inside of your company? Is there anything you're working with them on?

Yeah, and I can thank you for most of this. Actually put my two primary managers, my operations manager, construction manager, through our invest in your leaders course earlier this year, along with myself, they immediately bought in and, and started reaping the benefits of a lot of fundamentals that we took for granted as a small company over time. So formalizing. We've always done OKRs really for a long, long time. And it's always been a very collaborative effort to the benefit of the team member. But I think taking that next step and integrating the one on one process in conjunction with creating agendas prior to every meeting and getting collaboration and organization in advance, those two things have been absolutely massive for company.

It's pretty amazing when you give the people the basic skills to do their job, how much more they excel. Right. Like, I just don't understand, you know, we would never send our kid off to play little league baseball without teaching them the basics of how to, you know, hold the bat and how to catch a ball and how to toss the ball. Otherwise they'd come home and go, daddy, baseball sucks. It's like, no, Johnny, you suck at baseball.

Right?

And then we have all these businesses out there saying, oh, business is difficult. Business is really simple if you give people the skills and the tools to grow their job. But so then what about you as a leader? I mean, you've been in the industry for a long time. The danger, because you've been in the construction industry, what, for like 30 years now?

Just about, yeah.

So the danger is to say that you've got 30 years experience, right? Because some people have five years experience six times in a row. They're doing, they're doing the same thing that they've always been doing. I talked to a CEO and I said, you know, have you ever been trained on how to do a job interview? And he goes, no, but I've done like 100 interviews. I said, yeah, but you might have done 100 of them all wrong. And he goes, oh, like it didn't even dawn on them, right? Like, just because we've been doing it doesn't mean we're doing it right. You're in the COO alliance as a member and you've gone through the invest in your leaders course. But I would imagine you've been working on your skills as a leader for a long time. Where have you had to grow yourself to, you know, stay successful as a coo?

It's constant. I've always had a voracious appetite for learning, particularly as it relates to our industry. It's one of my biggest challenges in work life balance is my time management and what I do to continue to look forward, to reach, to explore, to grow. In a lot of ways between my CEO and I, I share a lot of that vision side of things. So I'm always kind of looking for the next step of how do we get better, how do we improve and in doing so myself, I don't know a better way than to engage with communities like the CEO alliance to enjoy my one on ones on a monthly basis with other members, to have small group breakout sessions. That has been a game changer. I've got an amazing group of folks that are scattered around the country in similar industries, but just in an hour, pretty amazing. I love being around people that are smarter than me. It doesn't take much, but it's great to just not only hear the reality of the perspective that they bring and shared common struggles really shores me up. But then I've always been of the mindset to take away from that and try and figure out where do I go next to shore myself up, to strengthen those weaknesses and to continue to find ways to grow. So there was a follow up book to Blue Ocean Strategy which is how do you keep distance distancing yourself from the group once everybody starts to realize what you're doing and starts to catch you? I use that also as kind of a motivator to continue to find ways to do things different to branch out and expand.

Like you Mentioned you're also getting idea, I call it ideas having sex. You know, you're talking to people that are inside of your industry in an accountability group and the CEO alliance. Then your breakouts, you're meeting with lots of COOs from other industries. So you do have this kind of cross pollination of ideas from different industries, which is good as well. Well, it's funny that you mentioned, you know, everybody's smarter than you. I disagree because I think everyone in the CEO alliance feels like everybody else in the CEO alliance is smarter than them. So it's like, well wait, this is like, it's almost regression to the mean. There's something that happens when you're in these, these mastermind communities where you start to shed the imposter syndrome and you start to gain a level of confidence that I think is important and powerful as well. So now you've mentioned one on ones a couple times. Can you walk us through what your typical one on one looks like with your direct reports?

They have become quite proficient in this. It was, I couldn't believe how short the learning curve was. And the adaptation of this was. I mean we truly went from a sit down meeting as a team talking about the concept to 30 to 45 days later. We're weekly, week in and week, week out, integrating this with high level effectiveness. You talk about getting shit done, man, that has been the most impactful part of this. You know, things that historically projects that may not be as fun or might be tedious or a little more time consuming, you know, historically get shoved to the back burner. Well now with weekend and week out accountability in conjunction with just general support and me being able to clear the path, we've become exponentially more effective and we're getting a lot more done.

So you're using the one on one structure that I cover in the Investing youg Leaders course then?

Absolutely.

Yeah, it really works. I got introduced to it 30 plus years ago when I was part of College Pro Painters and it was massively impactful where you're there doing a one on one with any of your direct reports, but you're there doing a balance of three things, right? Direction, development and support. So you're giving them skill development, you're giving emotional support, you're making sure they're working on the right stuff. Removing obstacles. You're not sitting there managing them and holding them accountable. You're almost sitting there supporting them and growing them. So.

So it's awesome.

You're doing it. All right, I want you to go back and give the. Well, we'll go to the 17 year old because you moved out at 17. I usually ask the 21 or 22 year old Tim, some advice. What advice would you give the younger Tim that you know to be true today, but you wish you'd known when you were getting started in your career?

That is. It's unbelievably easy for me because I consider this all the time. I did. I had very little respect and some of this is just from my, my youth and upbringing. I had very little respect for experience and wisdom at a young age. I was very cocky and arrogant. I've always been incredibly hard working and so I found myself in a position I was managing by the time I was 22 years old, folks that were 20, 30, 40 years older than me at the time. And so that will make you a little big for your britches. But I think if I had to go back and do it all over again, I would absolutely listen. Ask, engage exponentially more with those folks that I had around me at the time. I think I would have grown up a lot faster and certainly my learning curve within the industry would have been a lot quicker.

I love that it's kind of a balance of confidence. Right. Where cocky can. Your confidence can go into cocky. It's if you can just throttle it back a little bit. But I love that like learning from some of the wisdom of those that go before us too. It's profound how people that are older can just bring a level of wisdom that we discount because like oh, they don't know how to use technology. Yeah. But they understand the people side of the business and strategy and the day to day more than we will for the next 10, 15 years. Right. Tim Caldera, thank you so much for sharing with us on the Second Command podcast. Really appreciate the ideas and the wisdom and Collins Builders, certainly lucky to have you as our CEO and we're pleased that you're with us as a co alliance member as well.

No, it's absolutely my pleasure. Cameron, thank you so much.

You're not as smart, cool, intelligent or badass as you think you are. 95 times out of 100, whoever is trying to speak into your life is going to have some value to add and having the humility and the tenderness of spirit to actually receive that while not going too far the other way and being a total pushover.