Len Caric acquired Uncle Charlie’s Sausage in 2014 after the company faced a tragic business succession. Just six weeks after acquiring the company as the new CEO, he faced a significant industry challenge. Listen in as Laurie Barkman speaks with Len about how he overcame the crisis and the parallels to today with COVID-19. Len also shared his passion for teaching entrepreneurial alternatives and mentoring students at Carnegie Mellon. His insights for entrepreneurial resilience are sure to inspire.
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Welcome to Succession Stories, insights for next generation entrepreneurs. I'm Laurie Barkman. I've spent my career bringing an entrepreneurial approach to mature companies struggling with change as an outside executive of a third generation, 120 year old company, I was part of a long-term succession plan. Now I work with entrepreneurs, privately held companies, and family businesses to develop innovations that create enterprise value and transition plans to achieve their long-term goals. On this podcast, listen in as I talk with entrepreneurs who are driving innovation and culture change. I speak with owners who successfully transitioned their company and others who experienced disappointment along the way. Guests also include experts in multi-generational businesses and entrepreneurship. If you are a next generation entrepreneur looking for inspiration to grow and thrive, or an owner who can't figure out the best way to transition their closely held company, this podcast is for you.
Laurie Barkman (00:58):
On this episode of Succession Stories, I spoke with Len Caric, CEO of Uncle Charlie’s Sausage, a privately held brand distributing to 700 markets across seven states. Our interview was during the COVID-19 pandemic and his facility was open for production as an essential business. Len acquired Uncle Charlie’s Sausage in 2014, after the company faced a tragic business succession. Within six weeks after acquiring the company, they were then hit with a massive industry crisis. Len talked about getting through that crisis and parallels to today. I hope you enjoy hearing Len's experience as an entrepreneur through acquisition and his insights for resilience.
Laurie Barkman (01:39):
Len, thanks so much for joining me on Succession Stories. I'm really glad that you took the time to talk with me today. There's a really interesting story about Uncle Charlie Sausage that we'll dive into and your experience with the company and entrepreneurship by acquisition. It's a great topic. It's something that a lot about and I think our listeners are going to be really interested in hearing what you have to say. One of the things before we start is I wanted to connect the dots with one of the other episodes with Joe Bute from Hollymead Capital. [E08: Addressing the Transition Dilemma] He had talked about how his group had put the deal together to acquire Uncle Charlie’s Sausage from its founder, and you were part of that story. So thanks again for being here and for talking about your experience with the company.
Len Caric (02:25):
Well thank you for having me on the show. I really appreciate the opportunity. I always appreciate the opportunity to talk about Uncle Charlie’s Sausage. And I certainly appreciate the opportunity to talk about entrepreneurship through acquisition. I think it's a term that's being widely accepted now. Something that was different back when I first started out, but it's certainly a great path for a lot of people to become entrepreneurs without having to have that next great big idea. So thank you very much for having me on. And yes, this story started with a connection, Joe Bute, a friend of mine. We'd been friends for a long time. He gave me a call in 2013 and said, Hey, you want to take a look at uncle Charlie's? And I said, sure, because generally when somebody asks me if I want to take a look at a business, I say sure, because you never know what you're going to find out there. And so at the same time I got in touch with my business partner, Jim Rudolph. We were in a business together from 1998 to 2007. And so I asked him if he was interested in taking a look at it with me and his response was the same. Sure. So we did. And then, in January of 2014, we closed on the deal 2014.
Laurie Barkman (03:34):
So take us back to that time and tell us also about the history of Uncle Charlie’s Sausage and what brought you into it. We'll talk about all those details. I think starting with Uncle Charlie, who he was, what was he about, and his company.
Len Caric (03:50):
Charlie Armitage who started the business, this is a great American story. It's just great. Charlie did a lot of things in his career. His father was in the supermarket business. So he kind of had that little touch to it. But eventually he became a spice sales person. So he was selling spices to sausage companies all through Western Pennsylvania. And you have to remember, Laurie, that back in this time, this is in the 1980s, there were a lot of sausage companies. Charlie was going around selling spices. And again, you'd have to know Charlie to appreciate this, but he said nobody was making sausage right. He said, as a true entrepreneur, he decided to make his own sausage. And he was having it co-packed at a place in Altoona. And he would go around Western Pennsylvania, talk to the grocers, sell sausage next day, go pick it up and drive it down, and deliver it. So it started out his own garage, if you will. And eventually built this up to the biggest brand in Western Pennsylvania. We have the largest market share. And I don't mind talking about it like that, that we have the best sausage, that we have the best market share because Charlie's the one that did it. He gets all the credit for it. We've just taken on his legacy. So it's just a great story of how a person said nobody's doing it right. And now it's the biggest [sausage] brand in Western Pennsylvania.
Laurie Barkman (05:15):
Can I guess that Charlie was perhaps in his second part of his career when he started uncle Charlie sausage, is that correct?
Len Caric (05:23):
Oh yeah. Charlie was in his late fifties when he started this business. So, , he had been through a lot of things and stumbled on this. It always reminded me of, they talk about, I forget his name, the guy that started Kentucky fried chicken, the Colonel. I guess he was older too when he started that. So it's never too late.
Laurie Barkman (05:42):
And the founder of McDonald's was too.
Len Caric (05:44):
That's right. Ray Kroc had a long career before he took McDonald's to where it is. And to think about that. I mean, it makes sense, you learn a lot. Yeah. As you're going through your career, you learn a lot of things. And finally, when you're ready to the plunge were the plunges thrown on you, you have a lot of knowledge and you can run with it.
Laurie Barkman (06:03)
So Charlie started a sausage company and it grew and it was successful. And at some point he was ready to retire, right?
Laurie Barkman (06:11)
Did Charlie have a succession plan within the family?
Len Caric (06:16)
Yeah. Charlie did have a succession plan and unfortunately like a lot of great stories it has some tragedy to it too. Charlie started a business in 1988. He eventually bought an old gas station down the street here in Vandergrift and worked there for a while.
Len Caric (06:32):
And then in 1999 built the plant that we're currently in which is a very nice facility. He did a great job. I've seen a lot of sausage companies our size and we probably have the best setup and the best building that I've seen. And again, Charlie gets all the credit. So along that way, I mean, here's a guy who starts this out of the trunk of his car basically, and grows it to the number one brand in Western Pennsylvania. And along the way, his wife worked with him, Frannie, at the plant. The office used to be bigger. I cut it in half because Frannie was on one side. Charlie was on the other side. They looked at each other all day long, which is that true testament to their relationship. They work together and live together. And then in the nineties, Charlie had four children, his son Chaz came into the business.
Len Caric (07:18):
Chaz did some selling, eventually got involved in operations about 2005, 2006. Chaz basically took over managing the company. So there was a succession plan. Charlie and Frannie still came to work pretty much every day. I mean, they didn't technically retire. And then I think it was around 2008 or 2009. Charlie sold the business to Chaz. But again, Charlie and Fran still came to work. Charlie loved selling to the grocery stores. He loved talking to people and Chaz ran the operations. Unfortunately and tragically in 2011, Chaz was killed in a private airplane crash. There were three people killed. Here’s Charlie in his late seventies, he loses his son, which is as a parent, the absolute worst thing that can happen losing a child, his business partner, they saw each other practically every day. And he's devastated. I mean, who wouldn't be. The plane had gone down in the mountain woods and they didn't find it for a few days.
Len Caric (08:21):
So there was always this hope. It's such, it's just a terrible story. And so Charlie tried to pull things together for about a year and then he just decided he would sell the business. And that's when Joe called me and said he thought the business was coming up for sale and would we be interested? So like I said, it's a great American story about a person that started a business, grew it. He did have a succession plan, had three other children, and nobody else was interested in coming into the business. And so at that point, he decided to sell the business.
Laurie Barkman (08:56):
That’s a really tragic story. And thanks for sharing that background. You can feel for Charlie at that time, you can just sort of feel it.
Len Caric (09:02):
Well, and if I could tell this one other little story, I mean, you build these things on relationships. And I think that was one of the things when we were going through the process, I got to know Charlie pretty well. And I remember it was between the Christmas and New Year's holiday. We basically had the deal done. This is the end of 2013. We closed in January of 2014. I called Charlie and I said, Hey, you want to meet for lunch? And he said, sure. And, and I was just meeting with him to learn, we're going to do this transition and all of that stuff. And I got there and Charlie was always very upbeat. Always had this gorgeous smile on his face. And I got there and he was just, he was kind of down. I said, Charlie, what's wrong? And he said, Len, it just came to me. He said, at that time he had to move Frannie, his wife to a center for dementia. And he said, I basically lost Franny today and I'm selling my business. He said, this was like my whole life. And he said, this is all at once, it's going away. It was sad. Here's a guy who's at that time, it think now 80, 81 years old. And it was tough.
Laurie Barkman (10:09):
That was a nice moment that you had together where you were able to draw that emotion out of him. That was a lot of emotion. He had run this company for decades and lost his son. And then he was losing his wife, essentially. That is a lot to take on, especially for someone who was so tied into the business, he kept coming in every day. He was certainly part of it. He had a big emotional stake as well as a financial and personal stake in this business. It's his name on the door.
Len Caric (10:39):
Yes. And I'll just go off the rails a little bit here. I've been very, very fortunate to primarily deal all my career with small businesses. And this is what's so appealing about it. I mean, these businesses are personalities. These are not giant corporations that are technically faceless. These businesses are who these people are and the people are who the business is. It's like, people will say to me, because I've always been in small businesses, they'll say, well, you run a business, you must work a lot of hours. I have no idea how many hours I work. I have absolutely no idea. I could never pick it up because you're constant. It's you. It just becomes who you are and, and what you do. So, you're always thinking about it, but you're also able to balance, but it's hard to describe these businesses have personality because of the people that started at them or running them or whatever. It's fun. It's really fun.
Laurie Barkman (11:34):
It's really fun. And when you have a business that you're so into it, you don't have a concept of time. I felt a little bit like that and getting this podcast off the ground, it's back to grad school hours for me. I've but up to two in the morning, sometimes editing and reading and getting ready for things and I've enjoyed it. I really have, and I've had that experience at different companies where I've worked, where I didn't care how many hours I've put in. I was really enjoying what I was doing. And I can understand that for Charlie certainly. And it's great to hear for you too, because you have come into the business and feel like it's yours. It is yours. You've acquired it. And similar to Charlie, it's almost like you feel like your name is on that door as much as his name is on that door.
Len Caric (12:18):
That's true. And first of all, I have to say, when you're able to do, as you were talking about staying up, and you're not worried about the time because it's you and it's not work, it's just you. I think we're very fortunate to be doing that. Technically, I guess I would say if somebody said to me, how many hours a week do you work? I would say none because it's not really work. It's just who we are. And you're right. Stepping into the business, it becomes you. I always talk about this obligation that I feel that I have. I mean, there's always an obligation in running a business and take in business over, but to take Charlie's heritage and move it forward. And that's an important part of it.
Laurie Barkman (13:00):
What made this opportunity attractive to you? I'm curious to talk a bit more about that. You didn't have experience in the meat business, is that right?
Len Caric (13:10):
That's correct. And , when I got in the business, I was interviewed by one of the trade magazines called MEATING place. And I thought it's funny. I mean, I still get it. It's called meeting place, but it's M-E-A-T-I-N-G. And I think it was a cover story. And it said from the outside in or something like that, and the first question a person had to me is it was like, you don't have any background in the meat business. And how do you feel that you could come into this business? , it's like, well, first of all, business is business. You either make a product or provide a service and you sell it and you account for it, and you build it. I mean, it doesn't matter whether it's sausage, I've been in sporting goods. I've been in telecommunication, I've been in propane cylinder reconditioning.
Len Caric (13:57):
I mean, it's just business, but I do. I told him this story. I said, well, I do have a connection. My dad was a meat cutter for A&P for 27 years. And then when they left Pittsburgh, he went and worked for Shop & Save owners. So I do have sort of a meat heritage and I love to eat meat. So I said, that's my credentials. So it's worked out just fine, but I mean, you take the underpinnings of any business. It's basic, unless it's something that is truly technical, but two, you can always hire technical. So I think it's more, , businesses are businesses. You make a product, you provide a service, you account for it, you sell it. That's the most important thing you sell it, the product or service and you grow it.
Laurie Barkman (14:42):
From a financial standpoint, I would understand why this deal might be attractive to you and to your group as buyers. If you could talk a little bit more about that. Was there anything specific about the business that was appealing to you? And then likewise, if you could share what you perceive was important to the seller, what was important to Uncle Charlie and what ultimately made this the right fit together? I understand there was some competition for the deal. There were multiple bidders, maybe even up to 10. They had an investment banker involved in sourcing offers and ultimately it worked out that your group got the deal. So what was the magic in that?
Len Caric (15:21):
Oh, that's a good question because now that I think about how it all came together and who was our remaining competition kind of plays into that. When we first looked at the opportunity, the business was very stable, it was doing fine, it was making money so that was appealing. What was specifically appealing was that it was a local brand that, that was very popular that, and as we learned more about it, we learned how popular it was. Charlie had just planted some seeds that we thought we could take to move the company forward. So that was exciting. The facility, it was important that the bones, if you will, of the business was in good shape. It was a nice facility.
Len Caric (16:12):
Like I said, it had a strong brand. So from our point of view, there were a lot of checks that checked off that made sense for us to buy the business. There was an investment banker involved, Bob Ventura, was the investment banker. And I had known Bob before. I don't think that really played into it because he did a good job for Charlie. But it eventually came down to, there were two. There was us, Jim and I, and, there was what would be called a strategic buyer- a larger company that's in the meat business that was from somewhere in the Midwest. I could probably guess who it was, but it was never disclosed, but I knew that was our competition. So, it's coming down to a group that is in the business that could have other synergies with it and us.
Len Caric (17:07):
And what really helped us was number one: Charlie was looking out for not only the brand, but also for the employees and for the people here. He later told me after we bought the business, that one of his concerns would have been that this other company could have probably easily shut this plant down, moved production to their place. And then just sell the product in and build the brand. And a lot of times people who are shopping don't know Charlie Armitage owns the business, it’s local. Some people today are still surprised that we make our products in Vandergrift, Pennsylvania, and we're up the street. I remember the story when Rolling Rock in Latrobe was sold and Budweiser, Anheuser Busch bought it.
Len Caric (17:59):
And the first thing they did is shut the plant down and moved production to New Jersey. And so Charlie didn't want that to happen. Now that said, a lot of times, I used to do acquisitions for a while, when we were acquired one time. The owners always say, it's not about the money, it's about the people, the customers. In the end, it's about the money. And that's fair. I mean, let's face it. This is people's retirement, this is their net worth, et cetera. It is about the money. So we certainly were in a competitive position there and we paid, but Charlie was concerned that these people from outside would shut it down and employees would be out of a job and that was important.
Len Caric (18:49):
And I do think too, through the process, I got to know Charlie, I got to know him pretty well. We had several meetings, just him and I sometimes. And I think that was probably part of it too, ? I remember when we bought the business, we had somebody who did a press release for us. And I remember reading that press release, and I said, oh, we can't send this out because the press release said McKnight Capital Partners. My business partner, Jim Rudolph, has a company called McKnight Capital Partners. They were teaming up with Tecum Capital, which is the group that found the business that Joe Bute was working with, and they have a minority share, acquired local...
Len Caric (19:41):
and I said, what? We can't put that out! I said, that sounds like these miserable- I guess not to disparage, but I will - private equity groups are going to come in and they're going to slash, and they're going to sell off the assets. I said that's not us. It’s Jim and Len bought the business and let's go with that. We'll give Tecum credit because they deserve credit, but I didn't want to go to the market and take a local brand that maybe people recognize as local and make it sound like it's this big corporate. It’s not, it’s a couple of guys that bought a local sausage business and are going to continue to do what the original owner did. So fortunately, that's the way we got it in.
Laurie Barkman (20:29):
That's how you got it in. That makes a lot of sense, especially as you talked about Charlie, and what ultimately was important to him was that legacy, and the employees, and his name is still on the door. And I know he has since passed away. But he would be very proud of what you guys have done with the business, I'm sure.
Len Caric (20:47):
Well, thanks. Thank you.
Laurie Barkman (20:49):
And the story that you shared earlier about getting together with him and meeting with him and building that relationship, that probably went a really long way. I'm sure, as you said, the financials worked out, but ultimately it was the right thing for him and his family to choose a local solution. So that's great.
Len Caric (21:08):
Yes. I agree with you. Now looking back and having told that story, the fact that Charlie was willing to talk to me that one day, like he did. We didn't talk about the business at all. We talked about what he was going through, and it was a long time, a couple hour lunch, but, the fact that he was willing to talk and the deal was done by then. But that relationship was important to both of us.
Laurie Barkman (21:34):
How did that relationship continue after the deal closed? What was that like regarding the transition? Was he still in the business for a while or was he out at the close?
Len Caric (21:43):
I have to tell you, Charlie, to his credit, he was one of the best business sales persons that I ever run into. Because he was able to, this is the legacy, the business had been around 25 years maybe, or something like that, his name. He's Uncle Charlie it's on there, people know him. But he was able to break from the business. Now we hired him on as a consultant. I asked him to be around for 30 days to do a smooth transition, which he agreed to. And after that he was going to be available by phone call whenever we needed them. And that's a great way to do this. The owner needs to get away. When we sold McKnight Cylinder, the company that bought us was a strategic buyer.
Len Caric (22:41):
I had a very good relationship with the CEO. That's how we put the deal together. And he said to me, well, I want you to come work for us. I wasn't doing anything at the time. So I said, sure. And he said, I'd like you to do acquisitions, or called corporate development, but it was acquisitions. And the company was located AmeriGas they were located near Philadelphia. And he says, but you don't have to move to Philadelphia. You could work out of the office at McKnight Cylinder, the business we were selling. And I said, no, Gene, you don't want me there. And I don't want to be there because I'm going to see things. You're going to run this business different than I did. And I'm probably going to tell you that. I'm going to say, you don't want to do that.
Len Caric (23:25):
You don't want to do this. But you're going to have your reasoning. And I said, and at the same time, I don't want to be drawn in. I don't want, when there's an issue, somebody running to me because I have the history. I said, we got to break apart. And Charlie, I didn't have to tell him that story. He just naturally did that. But Charlie and I were friends. So after the 30 days and a few phone calls, we started having lunch every other week. And we got together and it was great. We got together as friends we talked about, we talked about the business. He was curious, and I would ask him things, I'd say, Charlie, what about this? And he would say to me, Len, it's your business so you do whatever you want. And I'd say, well, what would you do?
Len Caric (24:09):
And he'd tell me, but he'd say, , it's your business. I'm not telling you how to run it. And that was so refreshing as opposed to say, well, I heard you're doing this and that's really stupid. what I mean? It was never any of that. It was just, , it's whatever you want to do with it. It's yours. One of the first things, it took us about a year- over a year - but one of the things we did is we wanted to refresh the brand. And that was to update the label, which had been around for 20 years. Certainly the website needed help. I think that there was postings on there from like 2008 or something like that. The goal was to upgrade the brand, to give it, working with the marketing people, to give it the recognition of a premium brand that it deserved and to do some things that had changed over the 20 years, that, that the brand needed. Basically refresh it.
Len Caric (25:10):
And I would ask Charlie about it and he'd say, Hey, Len its yours, whatever you want to do is fine. And one of the things we did is have a person on our new label and it's an older person. And at the time when we were doing that the marketing group, I was working with Andrea Fitting, and she said that when you have a label, you have a nanosecond on a shelf for somebody's attention to get there. And she said that it's been proven that if you have a face, particularly eyes, that that attracts people. And she used the example of the Trix bunny. I think it's a bunny who, if you look at it, I don't even think the eyes are attached to its head. But she said that it's been proven that people go to that face because it's a face.
Len Caric (25:57):
And she said, we need to put that on here. So I went to Charlie and I said, Charlie, we want to put you on the label. , you deserve, you built this company, you should be on label. And he said, no, I won't do it. And I'm like, Charlie, it's your label, it says Uncle Charlie. Come on, we’ve got to put you on there. And he's like, Len, it's your company now. It's not mine anymore. And we did argue about it over a couple of lunches. And finally I said, okay. He said, put your face on it. I said, well, I'm not Uncle Charlie. He said, well, pick somebody out. So we do have, and this is a business show so I could tell, that person on there is nobody. It was kind of generated to give this look as if it's your trusted uncle and all of that. But that's how Charlie was about the business. He did start it. So he wasn't one of these like grandiose, yes, I'm wonderful, I created this, it's me. He was able to do what he did and step aside, it was great.
Laurie Barkman (27:02):
The transition with Charlie sounded like it went really well. And he was ready at that point. He had crossed the chasm and was ready for that step back. And it sounds like you and your team did a good job together of transitioning in. What was it like with employees, and your management team, and vendors and suppliers? How about the whole ecosystem? Did that take a while? Was there any particular thing now, as you look back and you'd say, oh, I wish I did that over?
Len Caric (27:30):
Well, first of all, I work very, very hard at not looking back and say, I wish I would have done because that will just drive you crazy. There's a movie I love it's called The Gumball Rally-- the Cannonball Run with Burt Reynolds became a bigger story. It's about people that race across the country.
And there's a great scene where two people are going to get in this car and this Italian grabs the rear view mirror and he breaks it off and he throws it out of the car. And the guy with him says, why'd you do that? He said, "because whatsa behind me does not matter." And so I kinda go with that. The biggest thing you got to deal with in a transition number one is employees and number two are customers.
Len Caric (28:19):
Because when you're doing an acquisition, you're basically buying employees and customers because the brand is supported by the customers. The people that are doing the service are making the product that's important. Those are the two things you're buying. Jim and I could have gone out and bought a bunch of stuffers and put a line up, bought some trucks, and opened up Uncle Len's Sausage, but it would take a long time or would fail. You're buying a brand, you're buying customers, you are buying employees. And unfortunately, when change happens, everybody doesn't like change pretty much, and when change happens, everybody gets negative. Going into an acquisition, I know that the employees are going to be nervous.
Len Caric (29:13):
They think, we don't know you, and you’re change because you're the new owner. We don't like change therefore, by transitive property, we don't like you because you're probably going to fire us all, or you're going to cut our wages, or you're just going to be mean, and there's all these things around that. So the first thing you have to do is in an acquisition is do nothing. Don't come in and rock the boat. We knew there were things we were going to do, but you have to wait so that everybody can just settle down, get to know you, get to know who you are. Get to know that you're not a big ogre, that you're not going to cut salaries. That you're not. So the first day, the first thing to do is have an employee meeting and explain, look we, we need you, we want you.
Len Caric (30:07):
I have no experience in the sausage business. I don't have any experience in a meat business. So I need you. And then the second thing, of course, our customers. Customers aren't quite as bad as, employees, I mean, they're not there, but the word on the street was we were going to make a less quality product and we were going to raise prices. And so the first thing we're doing is we're not changing. And I got emails. I eat your sausage and I why did you change it? We didn't, why would I change a good thing? That recipe we use today is still the one that Charlie started in 1988 and the meat’s the same, let’s just say everything, the vendors are the same. But that's what people think.
Len Caric (30:55):
So then we're where we get this business in late January. And, and customers are saying, they're going to raise prices, be mean all that stuff. And our largest cost, which is pork gets hit with this PEDV, an epidemic going through that's killing piglets. Number one, our largest cost in his business goes up in price like 78%. And it's like, well, what do we do? If we raise prices, then everybody's going to say, see, they bought this business. They raised prices. And I'm like, Holy cow, this happened from late January to early April. And it was, that was like, I've heard people saying, well, you picked a fine time to buy a sausage business. This was our first catastrophe a few weeks into it.
Len Caric (31:55):
And it was funny, the end of that story is what I learned about the food industry. Everybody knows everything. So finally we decided we would be a follower in price. And when we saw the national brands start to raise prices, we did. And I was so I was nervous about it. And I remember the first customer we called. We said, Hey, we have to take a price increase because of the pork costs and we're giving all these excuses. And they said, well, we've been waiting for this. We know pork’s up. It taught me a lesson, the industry understands, we're not gouging, we're not doing anything, we're working at this. So that was an interesting time coming into this.
Laurie Barkman (32:33):
Interesting is an understatement. I mean, you were six months into your business and then you had a massive health and the pork industry and drove up the price of pork almost 80% for you. That's incredible. You had to deal with that right out of the gates. There's a lot we can probably talk about in terms of today and dealing with today's pandemic. And by the way, I know you're recording at your operation and you're considered an essential business and you and your company remain open. And I wanted to thank you and your team for doing that and being present as part of the solution here. I think that we should talk about this because maybe there's lessons learned for today and how can small businesses weather this storm. Now, obviously not every company is going to have the same solution or outcome, but I'm curious to know, do what happened on the other side was the position of the company better because you had sort of some belt tightening and essentially, how did you bridge from the crisis to recovery?
Len Caric (33:36):
Well, I haven't always been in small businesses. The first thing I recognize is cash is the most important thing. I mean EBITDA is great and income's great. All of that's good stuff, but boy, it just comes down to cash. It's how much money do you have in the bank and what are you going to do about it? So when we started and by the way, just to be clear, that all happened in six weeks, not in six months, that pork thing. So it was kind of real fast, but by that time, boy, I could just go way off on so many things at that time I had brought in Charlie Gabriel, he's our CFO. Charlie had worked with me at another business. And I can't talk about how important it is to have a bench that you go into one of these things and you could call somebody up, you worked with them before. They know you and they come in.
Len Caric (34:32):
So day one, everything's working. You don't have to recruit. I believe that resumes should have some disclaimer at the bottom previous performance is not an indicator of future performance, because you never see a bad resume. But not having to go through that and just bring somebody in. He started later in the spring, but we just picked up. But the thing we did is we just watch cash. I mean, even now, I mean, I watch cash every day. I know what's in our bank, what's our receivables. That to me, that's like the fundamentals of everyday knowing what's going on. So back in this crisis, we looked at cash, and just did what we could to preserve it and maintain it and manage it. The other thing, and kind of tying it into today, with this epidemic that's going on is that I think you have to stay calm because, I don't take that lightly, because it's real easy not to stay calm and, you have to take time to think. You have to take time to not do anything. Just think, just sit, and think.
Len Caric (35:40):
And finally, you’ve got to talk to other people and get help. People that are running successful companies are not doing it because they know everything. They're doing it because they know people who know a lot more than they do. So the quick story there is when we got hit with that pork price, I'm new in the business. I don't know anything, but I had met a person through due diligence that was running a bigger facility that had been in the meat business for 40 years. And so I called him up and his name's Jim as well. He was one of the guys who said, “Well, you picked a great time to get into the meat business.” And we laughed. And I said, well, now what do I do?
Len Caric (36:25):
He talked to me through cycles. He says, We've seen things like this before. And he named a few other things and he says, here's what's exactly going to happen. And he laid out what was going to happen. And a year later, what he laid out happened, and it gave me some direction. It gave me hope. It gave me a path to follow. And I think, even though today, this virus thing is something new to everybody, but I think there's a lot of advantage in talking to people and talking to experts and, and just thinking about what they're saying and getting a path. And what I'm doing right now is I'm on the board of the North American Meat Institute. It's our trade group or lobbying group, whatever, but they have been so proactive in having conference calls, as a lot of people are, and just giving direction specifically to the meat industry.
Len Caric (37:25):
And this has been so helpful. And I would tell anybody, whatever their job is, whatever they do. I teach a class and I tell these kids the same thing.
Mr. Rogers said, find the helpers. That's true in business too.
It's like fine. I tell the kids as students, I say, I don't care what you do when you graduate. Go find the people that have been there that have done this. The older people, they know a lot. They experienced a lot and you can learn, and bystep a lot of things, or at least be calm because you could talk to somebody that knows more and has experienced things. And it's very beneficial.
Laurie Barkman (38:04):
So looking at the cycles, sitting down, thinking, taking the time, thinking about a path to follow, talking to experts, but ultimately having hope. I think that's a great message. That's a great message. And trying to stay positive and to stay calm. And I want to learn more about your class. That's how you and I met. We were introduced because of Carnegie Mellon University and the Tepper School. You teach a class there. What class is that?
Len Caric (38:32):
Yeah, I teach a class there that now has become a program. So I'm going to give my pitch for those people who might think about going to business school. The class that I'm teaching right now is called Entrepreneurship Alternatives at Carnegie Mellon. The Tepper school got kind of ahead on this years ago in giving, Carnegie Mellon, which if you get me started talking about Carnegie Mellon, that's another show because they've done so much for the city. They're always recognized for high tech startups. I mean, the amount of startups that have come out of there, the high tech startups are just phenomenal. OK. But, they took a different tact on this Entrepreneurship Through Acquisition, and it starts with a class called Alternatives. And what that class involves is I give an overview of becoming an entrepreneur by either finding a business and buying it or buying a franchise, buying into a franchise, because in both of those cases, you can end up running a business where you don't have to have the next great idea or anything like that, or be able to make the better sausage than everybody else in the market.
Len Caric (39:47):
So that's sort of an introductory class to the whole idea of this difference as opposed to doing a startup. I also do a little pitch, a little bit on social enterprise in that, because that of course is another thing that's growing. So the idea is to give students at the business school, this kind of a broad base of other things that are out there, that's followed by a class called Entrepreneurship Through Acquisitions, where we get very specific on going out, looking for a company, maybe starting a search fund. How do you look for companies? How do you finance the purchase? What's it like to start as day one as the CEO and start running it. And then the third class that piggybacks off of that is a workshop where we hope to get eight to 10 students that really want to do this, that want to come out of Carnegie Mellon and start to search for a business. They can actually do their capstone project, their last semester there to go out and find something and buy it. And it's just a great program. And it's getting a lot of, there's a lot of the schools that have it, and Carnegie Mellon and The Tepper School have done a great job on creating a program all the way around it.
Laurie Barkman (41:00):
I think that sounds awesome. And just full disclosure that I'm teaching a class with Sean Ammirati and the Corporate Startup Lab. So I've gotten to know you and Chris Cynkar [E04: Entrepreneurship Through Acquisition] and some people in the other pillars of the Swartz Center, which is fantastic. And it's great that you give back that way. You've turned into one of those helpers. You said to find the helpers, but you are one of the helpers, Len. I think that that's true.
Len Caric (41:24):
Well, thanks. I appreciate that. I tell my students too. I had a call with two of them last night, and I tell them in class, I say, look, I believe in this. I tell him, why would you want to go be a consultant? Why wouldn't you want to step out of this graduate program and be President of a company and run a company. I said, that's so much cooler than being a consultant or an investment banker or whatever. And I do tell him that I'm theirs for life. So a lot of them, they get enthralled with that big paycheck from the consulting companies and the signing bonus. I say, go do that for a couple of years. I say in three to five years, you'll call me and say, I'm tired of this boloney, and I want to do it. And they can call me and I'd be happy to help them. Anytime.
Laurie Barkman (42:07):
One of the things that I love to work on with clients is exploring innovation and especially in legacy businesses. And I'm curious what innovation initiatives that you've undertaken at Uncle Charlie's to position the company for growth and competitive advantage now that you've had the business for several years.
Len Caric (42:27):
The things that we have done are - I almost don't think of them as innovative because I'm not the first one to do these things. I mean, I like buying companies because I'm not very creative. But I could tell you some of the things that we've done, that have really helped. The first thing we did was we got SQF Qualified. Safe Quality Foods is what SQF stands for. And there's this global push, it's a global quality and foods initiative that's going on. And we recognized when we were doing due diligence, that the big grocery stores are going to start to require everybody to have some level of safe quality foods. Safe quality foods is sort of like ISO 9000 where you have an independent audit or command audit. What you're doing it's the classic write down what you're going to do, do what you said, you're writing down and recording it.
Len Caric (43:28):
And so there's this piece in the food industry that you could get certified as SQF. Uncle Charlie's at that time was not, back when this all started a lot of smaller companies, because there's a cost associated with it. There were a lot of smaller companies sort of got a pass. But we knew that coming in it was going to get to be a requirement. And it is now, I mean, if you want to deal with Walmart and ALDI and Giant Eagle and all these big retailers, you’ve got to be certified. And so that was our first thing. This goes back to my bench story because we wanted to do this and we wanted to do it fast. And I had heard it takes 18 to 24 months. And I'm like, well, that's not fast.
Len Caric (44:19):
I went through my bench strength. I called Phil Conti who ran our operations at McKnight Cylinder and had gotten us ISO Certified. And I said, Phil, I want to bring you in. And I'm going to start you in maintenance. Eventually, you're going to run the plant, but we got to get certified in SQF. So put all your attention there. Phil came in, he started, I remember it was March 17th, cause it's St Patrick's Day. And by November we were certified. So he did this thing in a little over seven months, eight months, he got us certified. And that was a huge step for us because now we were no different than then a national player. So that was number one, doing that. And I talk about Phil - bringing him in - and Charlie our CFO. Somebody recently was interviewing me and they said, “What's your biggest accomplishment at Uncle Charlie's?”
Len Caric (45:20):
There were a lot of accomplishments and I'm trying to think. And as I started to talk about it, what really came through was the fact this team that I have here. I’ve got Phil. I have Charlie. Now I have Paul Beranek, who's running sales, these three, they're just great. I mean, they run their individual areas. It's my job just to keep them calm and be there to assist them in their challenges, but they can run with it. It's just a wonderful thing to be able to work with people that you really like and love, and that they're good at what they do. And so as far as an accomplishment, I know it's not too innovative, but to be able to pull that team together like that.
Len Caric (46:09):
And again, having that bench strength, being able to call two guys that you used to work with who know you. They could step right in. What they're capable of. It's just huge. Those were two of the big things. And then, like I said, we did want to upgrade the brand and that took some time to get a new website up, to get the refresh of the label. And then we worked on the plant, Phil who runs operations is a genius as far as being able to come up with processes to help improve and change things. There was a new regulation that serving size had to change. It had to match the USDA was saying serving sizes had to match what the people were eating.
Len Caric (47:00):
So here's the example. When Uncle Charlie, when Charlie Armitage has a business, he's running Italian hot sausage. Okay. So that comes in a link, that comes in bulk, and that comes in a patty, comes in different forms. Well, Charlie's, back when he did the labels, you can say serving size because it's two ounces, here's the nutritional panel. So now you have one label for every product that's hot Italian sausage. Well, the USDA said, that's just crazy because two ounces of one of our grillers is two fifths of the size. I mean, nobody eats two fifths of a sausage. So we had to go to link then. What's your nutrition for link, which are nutrition for the patty, what's your nutrition in bulk. All of these things. And so we had to figure, how are we going to do this systematic?
Len Caric (47:54):
How are we going to make sure we get the right labels on. So we had to put in all of these processes. So again, these are not big, great ideas that you could write up in a textbook but they were very, very important to us as far as making sure that we could get everything under USDA regulations and also be able to still perform and make the plant run in a cost effective manner. So there were a lot of little things like that. But again, I have to give credit to Phil and I have to give credit to the people that I'm working with. I'm a sounding board really for them to help us get where we need to be.
Laurie Barkman (48:35):
You have a great team around you. And that sounds like it's been one of the critical pieces of the formula and keeping the recipe the same has been critical and innovation doesn't have to be dramatic transformation. Innovation can still inherently be changes. And that's what you did. You changed the management team, you changed the processes, you brought in certification that enabled the company to get to the next level. So those are all accomplishments for sure to be proud of. And, in and of itself, that's an innovation.
Len Caric (49:05):
Well, thanks. I appreciate that. I appreciate you recognizing that.
Laurie Barkman (49:08):
So last question. I like to ask all of my guests, if you have a favorite saying, or a mantra regarding entrepreneurship.
Len Caric (49:16):
Wow. I don't know if I have a mantra. I guess the first thing I would tell you is I'm very, very fortunate. I've known all my life since I was a little kid that had truly had a Kool-Aid stand. I didn't have a lemonade stand. I use Kool-Aid cause it costs less. And I had a paper route, and now that I've always wanted to do what I'm doing. So I'm very, very, very, very fortunate that I get to do what I I've always wanted to do, which was run businesses. Sometimes you feel it's a curse, because I know I can tell you two specific examples where I was driving home and screaming in my car. Why can't I be like my brothers? Why can't I just go get a job and work somewhere and just do, I mean, they both are very successful and why can't I do that?
Len Caric (50:11):
And I can't. My wife, her definition of an entrepreneur is somebody who will do anything not to get a regular job. So I guess, I don't know that I have anything to offer as a mantra or anything.
I absolutely love what I do. I feel very fortunate that I get to do what I love to do. I'm one of those, I guess, five percenters or whatever they are that are doing what they love. I don't know that I have anything other than to say, I love it.
I mean, we're going through a crisis right now, an absolute, this whole country, and we don't know how bad this crisis is. And we're open, we're an essential business. So I'm battling making sure our plant is safe.
Len Caric (51:00):
I mean, that's our number one concern right now. We don't want that stupid virus in this plant. And I'm working with the employees and I'm doing it, I'm reading, I'm trying to figure out what do we do to keep us safe. And we have people that if they say, Oh, I feel sick - Oh, okay, don't come here. I mean, we're working very, very hard at this and I wouldn't change this for the world. I mean, this is just like, I dunno, it gets the energy going and having issues to deal with and working on them. It's just that it's so much fun, even though we're in a crisis for heaven sakes. I don't know that I have an absolute mantra to tell you or anything like that about entrepreneurship rather than I would say, boy, it's just a wonderful thing. It's a wonderful way to work.
Laurie Barkman (51:49):
Len, thank you so much for being here today and sharing your stories about Uncle Charlie, your experience with entrepreneurship by acquisition. And I really appreciate you and your company for everything you're doing during the crisis. Thanks for your words of hope about getting to the other side of this transition.
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