David Noël: Welcome to the Manitoba Business Podcast, featuring interviews with business leaders and entrepreneurs based in this great province. I’m David Noël.
Today’s guest built a business with his brother for 15 years before selling it in 2011. Now, they’re at it all over again and seem to be well on track for another success. In the interview, we cover the entire story, along with the whys and hows behind it all. There are several points where we get some insight into their investment strategy, which is both shrewd and refreshing.
I hope you enjoy this episode. If you do, please consider adding a review on iTunes. I would also encourage you to spread the word about this podcast—the website is www.manitobabusinesspodcast.com
Without further ado, here is Tyler Gompf:
[to Tyler] Tyler, thanks so much for coming on. It’s great to meet you.
Tyler Gompf: Thanks, yes.
David: So can you tell me a little bit about yourself, your background, and what you do now?
Tyler: Sure, how far back do you want me to go?
David: As far back as you want, a wee toddler.
Tyler: Yeah, great. So, yeah, I graduated at the U of M with an arts degree and then went through the whole faculty through the three years going to U of M. And then my brother joined the Bcom or the business faculty, and I had no idea it actually existed on the campus, for real, until he got in there. And I was not a very strong student. Although when he would bring home his business textbooks, I could literally read them cover to cover, just captured my imagination. And for whatever path, I went through to get into arts, I had no idea that that existed. And our family background isn’t from the business avenue. It was more social work and teachers. And so I was quite enamored by, I guess, commerce. And then graduated, traveled around in a school bus with my friends for a while and then came back to Winnipeg and had this idea to do something business-wise, but I had no idea what it would be.
And I guess what happened to me was I tried buying a stereo one night in a store and had a bad service experience and thought that my experience should go to the top level of management of this corporation, and I was gonna do something about it. So I came home and complained to my brother. And the idea for something called Tell Us About Us came about. And we set out, I guess, at that point to create a feedback system to connect customers and businesses together.
And to sort of shorten up the story a bit, that idea that night then turned into an, I guess, entity that we’re able to raise money into, and we invented a IVR-based, touchtone telephone survey platform and had our first larger…Customer was a casino in Montana that found our website. And then, I guess, Dairy Queen found it and then Popeye’s Chicken. And it just latched on to the feedback for franchise organizations. And we were able to attract some really talented people and grew that company over a 15-year period and sold it in 2011 to our biggest customer in the U.S.
Tyler: So that’s sort of my first phase of business. And my brother and I really enjoyed working together, so we kind of decided that our first phase of business had us flying all over North America, in an out of cities, that’s where our customers were for that first business, and that we wanted to focus more, we have families now, with something that was localized and ended up buying our first company that we bought. It was a metal fabricator, a company called Specialloy. And we’ve since bought another one called Slot Drain. And we are now in the manufacturing world with a production run of drain and custom work that we do for architectural and various customers for kitchens and commercial builds all over Winnipeg and, now, in Saskatchewan as well.
David: Okay. Okay, I have a million questions. Let’s start at the beginning. Well, first of all, you had this experience. You were at a store, and you had a bad experience. And you wanted to complain about it, and you couldn’t. And so then, were you and your brother looking to go into business together at that point? Were you looking for ideas?
Tyler: No, not really, no.
David: What kind of made that experience so compelling to you that you thought you would build a business around it?
Tyler: I was just really mad.
David: You just got really mad.
Tyler: It was like a 15-year rant.
David: It must’ve been a really bad experience!
Tyler: It wasn’t, actually. I just thought that, I don’t know, I saw an opportunity to connect the dots, I guess, from consumer to management. And I can articulate that now, but it wasn’t that way back then.
David: Right. And so how did you go about doing that? You said your first customer found your website.
Tyler: Yeah, well, so basically, I worked one full year. I bought a Visual Basic book, learned how to program on a computer, and learned how to attach a phone board to a database through trial and error. And I literally had this going, and we approached the local restaurant community and had six local restaurants sign up on this very rudimentary feedback system we had. And they would pay us a monthly fee. And at first, 30 locations was our goal. And if we hit that, we thought we would just be on easy street. And then so as I said, our first major customer was on U.S., so they found our website and opened our eyes to a bigger opportunity, which was down in the states.
Tyler: And we weren’t thinking that large when they found us. But they allowed us to…
David: How young was the company at that point, or how old was it at the point?
Tyler: It was probably a year and a half.
David: A year and a half, okay. So you’d been plugging away, found a few local customers.
David: And then the bigger opportunity kind of found you.
Tyler: Yeah, so we would work on the business, and at the time, I was working for an audio-video company here. And if anyone’s looking to start up something, I recommend doing this, because if you work for an audio-video company, typically, you’re setting up audio-video facilities between the hours of 6 a.m. and 8 a.m. before anybody arrives at a conference, right? So all this stuff is going on before you go to a conference. So then I could be back in my office and work a full day and then go back at the end of the day and take down all the gear and then maintain this sort of schedule.
David: So you didn’t raise any money to start the company at that point. You were working a separate job and then doing business. I see.
Tyler: Yeah, yeah, yeah. So we were still, I guess, working two jobs, following the passion and trying to pay the bills.
David: Totally. And how long did it take before following the passion took over and you didn’t need to worry about the second job.
Tyler: Probably a good year, I’d say. We were doing things with data to help along that took us at divergent paths from where we were trying to go, but we’re still doing data entry, doing whatever was computer-orientated to keep ourselves focused on that space.
David: I see.
Tyler: Yeah, but taking small contracts, I guess.
David: Yeah, yeah. And then you did that for 15 years. What was the progression there?
Tyler: Oh yeah. So we had local success with some restaurants, an opportunity with a larger casino in Montana. That fellow’s best friend owned 60 Arby’s locations, which gave us our first franchise opportunity. So we probably bulked up to about 100 locations. There was probably four of us working at the time.
And then we did a cold call down to Atlanta into a chain we’d never heard of called Popeye’s Chicken that had 1,500 locations. And they said, “Can you be here in Atlanta tomorrow?” And we said “Oh, let’s check.” So we looked and we had $5,000 in our bank account and a round trip flight to Atlanta next day at that time was $5,000.
We went for it, flew down, understood what they were looking for, which was not what we had. They were looking for a call center solution. But we knew that our feedback, our database engine, we could lend it to what they we’re doing. We saw an opportunity. So we came back, sat, and decided, “All right, well, if we’re really doing this, we have to hire some professional people to do it. We need to raise some money.” So we wrote a plan and looked for some venture backing and found a partner in a group that’s no longer around, but a group called Ensis here in town that became GrowthWorks. And we knew we had our first million dollar opportunity on this hand with the client. And we were looking to raise some money over here. We had a six-month window that if we could fulfill what we told the client we could do, raise the money, hire the people, tie the knot together, then we could launch.
So it was a stressful of six months of sort of feeling our way between not really know what we were doing to thinking we knew what we were doing to having a big customer try us out. And it sort of took off from there.
Tyler: And then that branched us into having a surveyed platform, a call center platform. And then as you mentioned, 15 years, we then evolved into having a mystery shop platform, where we eventually had about 100,000 shoppers that would shop on our behalf, go into stores with a specific mission, bring back data. We would then have customer feedback data, which is different than the specific shopper data. And then we had call center data, which was reactionary. And we had an engine that could tie this all together and then allow corporate to see their corporate entity, regionals to see their stores, location managers to see their stores. And we would serve back this rich feedback data. And that was the goal.
David: Wow. What did the competition look like at the time? And actually, what does the market for customer feedback type stuff and all the related stuff look like now?
Tyler: Yeah, great question. So back in the day, it was via paper-based survey that you would have at the table a comment card.
Tyler: So we kind of digitized that with a phone-based survey and then eventually morphed its way into the web. And at the time, I think we can say we really were a pioneer of that. If you look at any major chain now, there’s always a survey at the bottom of the receipt.
Tyler: Well, ourselves and a group out of Kansas called SMG were probably the first two that were doing that. And then over that time period, it really took off and evolved. This technology became easier. And we differentiated because we had three platforms tying into one. And a lot of the other groups would focus on one side and maybe not the other.
And now it’s fairly competitive. I did just see a group out of New York has raised a bunch of money and are basically doing the exact same thing we did 15 years back, just a little bit different. And so I think there’s always a market for it. Customer transactions happen every day in different ways [inaudible 00:10:53].
David: Right. But I guess it’s a more competitive space now than it was when you started?
Tyler: Oh, 100%, 100 %.
David: Right. Interesting.
David: Okay, and so then you were trucking along there, and at some point, the acquisition happened. What were the events leading up to that? Were you looking to sell? what was the thought process?
Tyler: Yeah, so we probably got into a time horizon with our investor where they were looking to realize on their investment.
Tyler: We had stiffer competition, new technologies, even as basic as, say, Facebook. That isn’t really a market research company, but it allowed people to gather feedback in a different way than they could’ve even five years before. We’re merging. There was just all these factors coming into play. So we actually hired a company out of Toronto to put together a package and market us out to various different groups. And we were running a process, I guess, to be acquired.
David: I see.
Tyler: And in the end, the group that acquired us was looking for an entry into Canada, as they were doing their own bigger strategy. So we were a good tie-in for them. And it all unfolded. It took about a year from start to finish for it to happen. And it was sort of planned in the way it went.
David: Interesting. So you hired a firm to kind of shop you around?
David: How did that go?
Tyler: Well, there’s various firms that are focused on different technology or different spaces.
Tyler: And they are paid for performance and have the ear of different buyers.
David: They take a commission on the sale?
Tyler: Yeah, definitely, there’s a fee that’s paid for the transaction.
David: I see, but is it percentage-based?
Tyler: Yeah, yeah.
David: I see. Okay. Interesting. Okay, so you did the acquisition. I’m going to jump ahead a little bit here just in the interest of time. So then you sold Tell Us About Us. You and your brother and your business partners did quite well for yourselves. Then you decided to jump right back into business. What was the thought process there? Why not just go to a beach somewhere?
Tyler: Well, we did for two years.
David: Oh, good.
Tyler: Well, we did for one full year. And then we started to plan for a year. And it took probably that full year to have something come about. And we probably looked at 25 different opportunities. I guess if you happen to sell something, then you realize that, well, not all of your friends have done the same. And you still value. You still want to create value somewhere, right? So we chose to get back into something. We were pretty young still. And we wanted something totally different. And we ended up with something totally different.
David: No kidding. Okay. So tell me a bit about Specialloy and Slot Drain.
Tyler: Yeah, sure. So our premise was that we wanted succession stage companies. Our first company here has been around since the ’70s. Our second one has been around since 1984.
Tyler: And we were looking for the owner/operator that was looking to retire and didn’t necessarily have a plan. And we thought we would come through. And our original premise was to build a portfolio. So that’s where we got the two. But we’ve really uncovered something that we’re very excited about in Slot Drain. It basically maintains most of our focus because it’s got a lot of runway ahead of it.
David: I see. I’m gonna get back to Slot Drain in a second, but I’m interested in the thesis there, looking for succession stage companies that basically don’t have a succession plan.
David: Why that?
Tyler: Well, I guess, reading all the data on the baby boomers, where we are in Winnipeg, you have a population of baby boomer age owners that are going to retire. They have to at some point. In Winnipeg, typically, if the kids stay here, maybe they’re in the business, maybe they’re not. A certain generation would move away to Toronto or Calgary, not leaving behind a family opportunity. Typically, if you try and sell to your management team, it doesn’t always work out because it’s hard for someone to rise up and run it. So we kind of wanted to look at the opportunities that are out there. And there’s some really nice companies that run for many years and are very consistent and quiet [inaudible 00:15:44].
David: Did you see that as kind of an opportunity to maximize your dollar because these are people that were looking to sell anyway or that were kind of in a position where they sort of needed to sell?
Tyler: Yeah, I think we were looking for that. Yeah, of course, we were looking to buy on a value and go from there, as opposed to buying in a bid or a process [inaudible 00:16:04] trying to maximize power position.
David: Right, right. Okay, and so then you looked a lot, and Specialloy was the first one that you chose?
Tyler: Well, we were left with a few legal bills where we had offered on some things, and it didn’t come about. But it was the first one that all the stars lined up and we were able to gather it. And once we did, then we realized, “Wow, this is quite a different world than we came from”
David: Oh, no kidding, it’s a totally different industry. I guess the organization is structured entirely different. Even the finances, there’s a totally different overhead when it comes to this kind of business. To some extent, you must’ve been anticipating that. What were the bigger surprises?
Tyler: I think culture was probably the biggest one, where we had created our own culture without even noticing in our first entity. And it was very much a stereotypical software culture. We were 65 to 80 people of software engineers and researchers, etc., professional staff. And then we came over here to a group that’s more entrenched in shop culture. Not that one’s better than the other, they’re just totally different. And we hadn’t grown up in a shop culture, so we had to adapt our styles to that. And we won some respect, lost some respect, and just tried to [inaudible 00:17:38].
David: How do you navigate that? That seems like a pretty big challenge. You’re kind of just describing it as a thing that happened. But you bought this business and you need to get everybody bought into you guys. Otherwise, it’s not going to work, right? How do you do that?
Tyler: I guess you just lay out a plan and be consistent with it. Everyone’s scared of change. We had gone through being bought out. So we knew what it was like to have a new owner come in. So we were sort of mindful of maybe some of the things you wouldn’t do.
David: What are some of those things?
Tyler: Just quick change. We were mindful of it but then we did all of the things that you shouldn’t do.
Yeah, quick change. You need communication strategy. You need to allow people to feel that there’s gonna be some disruption, and it’s okay. That’s the way it is. And some people mourn the fact that maybe the old group is gone. Now, there’s a new group in town. So you have to just let that play out, and then slowly, that was the forming, storming, norming when groups come together, right? That naturally has to happen.
David: Right. Okay. Now, let’s circle back to Slot Drain now. What’s the huge opportunity there? Why are you so excited about Slot Drain?
Tyler: Slot Drain was…It was patented back in the ’80s. It competes against the traditional grated trench drains. So if you’re in a car wash or somewhere, an automotive shop, you see this big heavy grated drain system. That’s the standard in the industry for linear drains. And Slot Drain, I like to call it the iPad of the drain industry. It’s a very simple and sleek design. It can do the exact same hydraulic performance as a grated system. And it’s just a way better way of doing drain. And the fellow who invented it lives here in Winnipeg. And he was a construction person for many years. And at the age of 50, he patented this system and ran it for 30 years, just sort of knocking on doors and getting it up there. And I like to say we actually bought a website. His website was entrenched in Google since the ’90s. So we get calls from architects and engineers all over looking for a product from Googling it.
So the first year that we had it, we didn’t change a thing. We just left everything as it was. And it was sort of an experiment to see what would happen. And then as we started to have some success, we put a different marketing spin on it. We’ve now revamped. And what we originally had bought was a couple of designs for an industrial slot drain. And as we sit here, we’re now rolling out a full product suite of drains from pedestrian drain, which is a low traffic drain, to brick slot drain to our industrial line, our stainless line, our galvanized. So we’re coming out with a full product suite of drains. So look out, world, Slot Drain is coming.
David: So linear drains are a really weird niche. How on earth did you come across that?
Tyler: Well, it happened to be a customer of this first business, especially we always built stainless drains for this group.
David: I see.
Tyler: And then the opportunity just came about I guess after we were here for a year. So right now, we’re traveling all over North America, going to trade shows and almost back to our old world where we didn’t want to travel but we travel[inaudible 00:21:16] system.
David: So that’s seen a lot of growth then? Just Slot Drain by itself?
Tyler: Yeah, Slot Drain is really doing well. We do a lot of work in Napa in California with wineries there.
Tyler: Yeah, we have a sales agent out there that’s pushing drain for us, and it’s working out well.
David: What does the sales process look like for drains? I guess you got to get in like in the building phase, right?
Tyler: Yeah, that’s right.
David: So how do you do that?
Tyler: Yeah, there’s a couple of ways. So architects, engineers will look for the product and spec and then want to know the technical opportunities that it has. So that’s one group. Then another is a contractor, someone that has to actually install it. So once they use it once, and it’s easy to install, then they get excited to use it again. And then even an older operator, someone that owns a building and might want a nice aesthetic look or all the benefits that Slot Drain brings, hope they’ve heard of it, and ask for it to be put in through the architect/engineer. So there’s three or four different approaches that we’re having to promote the Slot Drain awareness to.
David: Right. Before the interview, you mentioned that you had been interested in combining some of your technical expertise from before, with the stuff that you’re doing here. Tell me about that a little bit.
Tyler: Yeah. We’re a custom shop, so we manufacture anything you want type of thing. And we really like that and sort of have this Internet of things, and embedding sensors into our processes was part of our original fabric. But as we got in here, we realized that company probably needs a couple more cycles of not changing too much until we can get there. And also, the way that the staff is orientated, we are still doing things a certain way. But we absolutely have the mindset of pushing the boundaries of what can we do with technology into some of the things we fabricate.
David: I see. So more about using technology to improve the processes or actually the products as well?
Tyler: Just to potentially come up with new things, right? So things that don’t exist, how can you, either through a sensor or through some sort of cloud technology, interact with the things that we’re putting out. A lot of stuff is in the public realm that we build, and it gets placed out there. So can you enable different functionality to happen with things that people walk by all the time don’t notice still?
David: Right, okay, I see, interesting. So you’re saying that’s kind of a longer term thing. It can’t really be something, you can’t just take over a company and tell them [inaudible 00:24:04] right away.
Tyler: That’s sort of the long goal. We’ve just been distracted by the reality of what we’ve got. So we’ll get there.
David: Well, it sounds like reality is going well with Slot Drain.
Tyler: Yeah, Slot Drain is more exciting than technology now.
David: Good, good. We still have a little bit of time but we’re running kind of close. I’m gonna switch the focus a little bit. In general, I think you’re interesting, to me anyway, because you didn’t have necessarily a business background going into things. And now, you’ve got more experience than just about anyone in terms of you’ve been through all sorts of different phases of a business, three different businesses now. What would you say to someone who’s just getting their feet wet, jumping into their first business, trying to build something from nothing? What are some of the important things that you think get overlooked by people a lot of the time?
Tyler: Henry Ford’s credited with saying, “Whether you think you can or you can’t, you’re right,” right? And I came across that statement early on, and I hypothesized who or what I wanted to be. It’s never left me. If you get it right in your mind, that’s it. There’s no other, anything else, right? If you’ve convinced yourself you can do something, that’s all it takes. Now, the path in the end after you’ve convinced yourself is really long and windy, but just go for it!
And then the other one I always like thinking about is nobody has to buy anything from you ever, right? So it’s up to you to figure out a way to create value so that they want to part with their money, feel good about it, or do commerce with you. But nobody has to buy a thing from you, just because you thought of something. So you got to do it. That’s it.
David: Are there any people you know or people that you’ve kind of observed from afar that influenced your approach to life and to business?
Tyler: When I was probably three or four years in the business, I happened to see the fellow, Paul Orfalea is his name, who founded Kinko’s. And he had just this shooting from the hip, no nonsense, get it done type of attitude, and he ended up growing Kinko’s from nothing in his college dorm to a billion dollar entity that he sold to FedEx. And I just always really appreciated every word that he said. He’s written a book about his journey. So if you’re looking to read something, it’s a good one.
David: Oh, interesting. That was going to be my next question, book recommendations. What’s the fellow’s name again?
Tyler: Paul Orfalea.
David: Paul Orfalea.
Tyler: So he was definitely instrumental. And, yeah, there’s probably a few out there. Can’t think of anyone else.
David: Very cool. Well, we’re right on time here. So, Tyler, thanks so much for taking the time to chat. It’s been a pleasure.