The Weekly: Edition #60 - August 28th, 2020
Eliminate The Waste
"My whole life is about trying to treat the working man fairly and give him a good opportunity." - Ken Hendricks
Every so often, we are reminded of how big our economy is, and how great family-led businesses can hide in plain sight for years. ABC Supply Co. is a great example of the type of 'boring business' we enjoy partnering with for the long term. We noticed the article resurface this week on Twitter (h/t @TheSamParr) and wanted to share the thread highlighting Ken Hendricks' journey building a billion dollar blue collar business.
Back in 2006, Ken Hendricks was named Inc.'s entrepreneur of the year, but unfortunately passed away later in 2007 in an unfortunate fall. Hendricks, a high school dropout, worked as a roofer alongside his father for several years until deciding to start his own roofing company. A sign of what was to come, he had 500 employees working for his business within 7 years. While growing his business, he began to notice the fragmented nature, the wasteful practices, and the low quality of service of the roofing supply industry. Through his experiences with the roofing supply industry, his famous 6-word mantra of "create jobs, eliminate waste, preserve value" was born. We were particularly drawn to the elimination of waste as it applies to the SMB space.
Hendricks was known for his thrifty ways and worked hard to cultivate an owner's mentality among his employees:
"On his visits to distributorships, Hendricks is forever astonished at how much waste he sees. Many businesses fail, he believes, because management doesn't value the right things. "Maybe somebody nicked a little bit of roof edging in a warehouse, and they say, 'Ahhh, it's scrap. Throw it away," says Hendricks. "Well that's $30 or $40, and at a 20 percent margin you've got to sell that five times before you're back to breaking even. You've got customers who are building a shed or something and they'll pay 80 percent for that."
Underscoring Hendricks' focus on eliminating waste, he had a unique ability to reuse 'junk'. He repurposed dilapidated real estate, refurbished old manufacturing equipment, and bought scrap materials at auction because he could see value where others couldn't. Hendricks embodied a belief in 'waste not, want not' and focused on finding creative uses for what others viewed as 'waste'.
"Hendricks believes almost anything can be salvaged. I ask him for reasons not to buy a business, and he swats away the question. "Wrong location? Move it," he says. "Wrong people? Replace 'em. Wrong industry? I don't believe it. I've got a company in the machine tools industry, and we're doing great. I'd happily go into the coal business. It's how you look at something and how it's managed that make the difference."
During the pandemic, most businesses have had to take an honest look at exactly where their hard-earned dollars were being spent and what resources were being used (or not). Pandemic or no pandemic, it's never a bad idea to approach your personal and professional life with a healthy focus on what you are wasting (time, money, relationships). If we all focused a little more on eliminating the waste in the good times, there'd be much less to cut in the hard times.
Sam Parr on ABC Supply Co's success in the roofing supply industry (@TheSamParr)
+ "“Walk in the back room and talk to the warehouse guy or the forklift operator and say, ‘If you were running this business, what would you do differently?’ ” says Hendricks. “I guarantee if you fixed what they tell you, 95% of the time that would be a successful business."
Amazon is delivering nearly two thirds of its own packages (CNBC)
+ "According to data from ShipMatrix, Amazon shipped 415 million packages in July compared with a monthly average of 389 million between April and June. The e-commerce giant also delivered 66% of its own packages in July, compared with 61% between April and June."
Silicon Valley's eccentric real estate king, Stanley Lo, has sold over $6B worth of property (The Hustle)
+ "In 1968 — at the height of the Vietnam War — Lo secured a US student visa and boarded a plane to study electrical engineering at San Jose State. “I landed with $100 in my pocket,” he says. To financially support himself, Lo took on any odd job he could get, working as a busboy and a nightclub cleaner — often late into the night. After work, he’d study until 1 or 2 am, get a few hours of sleep, then wake up at 6 and commute from San Francisco to San Jose for classes. He says he ate hot dogs for nearly every meal."
The 2020 San Francisco exodus is real, and historic, report shows (SF Gate)
+ "Online real estate company Zillow released new statistics shining a stark light on the issue this week. Their "2020 Urban-Suburban Market Report" reveals that inventory has risen a whopping 96% year-on-year, as empty homes in the city flood the market like nowhere else in America."
The pandemic startup surge, by the numbers (Marker Media)
+ "111,680: that's how many applications were filed to start new businesses the week of August 10th, a 69% increase over the same week last year."
Walmart's e-commerce explosion by the numbers (Marker Media)
+ "97%: that's how much Walmart's online sales grew in the second quarter of 2020, compared with the same period last year."
The e-commerce surge (Benedict Evans)
+ "As I wrote here, we’re in a period of both forced experiment and forced experimentation. In January everyone was online and willing to try anytime online: now we have no choice. So, some of this is the future happening more quickly, with years of growth being pulled forward, but some of it also is an experiment that won’t stick. We’ll find out which in the next six months or so."
The Nielsen total audience report (Nielsen)
+ "While the level of engagement may be similar, perceived productivity while at work varies between those who worked from home prior to versus as a result of the pandemic. Unsurprisingly, those with more experience working from home have, in most cases, had less upheaval to their daily routines, and 89% feel that they have been equally or more productive working from home as a result. However, 72% of new work-from-home respondents have also maintained or increased their productivity during these trying times."
The wildest insurance fraud scheme Texas has ever seen (Texas Monthly)
+ "As records from banking and telephone companies arrived, Reed uncovered even more instances of what he believed to be criminal activity. He learned that in March 2014, T. R. had crashed his Lamborghini, which he’d bought for $76,000, into a water-filled ditch. His insurance company gave him $169,554. In October 2014, T. R. bought a 1998 Hunter Passage sailboat in Hawaii for $50,150. He “sold” it a month later to a man in Honolulu named Edward Delima for $193,500—money T. R. had “loaned” Delima through a mortgage company he and his business partners created. The boat sank in a marina under mysterious circumstances. In 2015 Delima, who had insured the Hunter Passage for an increased value, handed over the $180,023.80 insurance payout to his mortgage company, held in the name of T. R. Wright."
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