Transcript 

 

Michael Palumbos (00:58.888)

Well, welcome everybody to The Family Biz Show. I'm your host, Michael Palumbos with Family Wealth and Legacy in Rochester, New York. And today we are joined by Eric and Scott White from Denver Machine. Welcome guys. 

 

Michael Palumbos (01:13.582)

Appreciate you spending some time with us today. 

 

Michael Palumbos (01:19.576)

So typically what we like to do is ask each of you just to give us the 30 second, one minute version of how you entered the family business, what generation you are, maybe even a little bit about how many family members are in the business today or have been in the business, and kind of go from there. And then we'll break it. Then we'll just jump into a history of Denver Machine. 

 

Michael Palumbos (01:49.45)

Eric, since you're on my left, I'm going to ask you, tell us about your journey before the family business, then into the family business, and how did that work for you? 

 

Eric and Scott White (02:03.482)

So, I went to college at the Colorado School of Mines for mining engineering. did my dad and so did his dad. And they're all in the chain of the four generations in this business. Scott's also an engineer for mines. And so we're all engineers, not business people. But I got started because I went to ROPC and took 

 

Eric and Scott White (02:32.382)

Job with the army for five years most of it in Germany in the Corps of Engineers and In Scott'll talk about his track, but when I got done with with that stick I joined the company that Scott was with which was caterpillar Tractor in in Illinois and after a few years of that I got Missing home because we live in Denver, which is 

 

Eric and Scott White (03:00.694)

beautiful area of the country with the Rocky Mountains and a lot to do and 300 days of sunshine a year. and so life was too short to live in Illinois. So I came back, I again followed Scott. He had come back a little earlier from Cap than I did. And I went to a company that was making auto bag or automobile airbags. They were on the 

 

Eric and Scott White (03:30.164)

explosive side and later side. Scott was there as an engineer and because of my army experience as an officer, I got put into an operations management job. My folks were of the point that they couldn't really, they didn't have room in the business for us when we got our careers going. so we didn't, I didn't get in until well 20 years ago. So I was 37. 

 

Eric and Scott White (04:00.814)

And Scott too, and about that time that I got in, I joined Scott, the company that I was with was moving to Mexico and I got paid an extra year's income to stay on with those guys. Scott had some more money in the equity of his house. So he bought the company and invited me and his 50 partner a year later. 

 

Michael Palumbos (04:27.66)

Nice. I appreciate that. So you guys both spent some time outside of the family business that was already in existence well before you came into it, had lots of experience on your own. 

 

Eric and Scott White (04:39.81)

That's true. And you know, I'd like to point out this is Scott, by the way, I would like to point out that Eric and I are identical twins. And so our paths have intertwined throughout our lives. And that's why we seem to wind up with the same businesses and, and so forth. So I also went to the Colorado School of Mines and I'm a metallurgical engineer. We're a big Mines family. Mines is a school similar to MIT or 

 

Michael Palumbos (05:02.318)

Okay. 

 

Eric and Scott White (05:09.036)

one of the other schools that people haven't heard of it, but it's it's a top-notch engineering school. And, you can tell that we have a family thing going on there. Eric's son just graduated from Mines in geological engineering, and he's taken off and going to work, doing that type of work. And my daughter graduated from Mines, a year ago and she's working for HP as a computer science engineer. you know, you mentioned that, that, yeah, we have some experience and 

 

Eric and Scott White (05:39.148)

In my particular case, I went to work right out of college for Caterpillar and I spent 10 years with Caterpillar. My wife and I are both metallurgists and then we decided to move home and kind of followed that path. And then when my folks wanted to retire, I bought the business and neither one of us was invited to join the business until we bought the business and we had to go to the bank and get the money and go that route. And that was by design because 

 

Eric and Scott White (06:09.516)

My mom and dad were very, you know, they felt very strongly that somehow they had been taken advantage of by having to work for his father for 30 years and run the business while the father was retired in Arizona and pulling money out of the business. And so they felt like that was not the way to go. And so that's what happened. It was a small enough business that we were able to make a fairly easy 

 

Eric and Scott White (06:39.352)

Transition and my dad is still involved as a consultant in the business even though he doesn't consult much, but he loves saying that he's a consultant. Actually, he ran into another consultant that was a senior consultant and he came back and said, Scott, he said, my card's not right. It has to say senior consultant. So he's still a member of the business, but that's how we came to own the business 20 years ago. 

 

Eric and Scott White (07:07.598)

We're 107 years old now and my great grandfather started it. Four generations and there may be a fifth, but in every single case of all the generations, everybody had to go out in the industry and work for five years or more before they were invited to join the family business or before they were able to come into the family business because we just felt like that was a really important part of our success. 

 

Michael Palumbos (07:11.534)

Okay. 

 

Eric and Scott White (07:34.99)

to able to bring something to the table and also to also not be the SOB, so to speak, you know, that just comes in and, you know, doesn't have to show up on time and, you know, hasn't had a real job where they had to, you know, where they know that they have to make it or break it, you know. 

 

Michael Palumbos (07:55.564)

Yeah, and for those of you who might not have heard of what the SOB is, that's the son of the boss, right? 

 

Eric and Scott White (08:00.844)

That's correct. Yeah, so be sent of the bus. 

 

Michael Palumbos (08:04.404)

So I just want to point out something that was really interesting. There is no right or wrong way for a family to do their transition or succession plan. You just do what works for the family. But based on something that didn't work, your parents, like you said, they felt taken advantage of that grandpa 

 

Michael Palumbos (08:31.852)

was taking money out of the business, even though he was retired. And they were doing most of the work, or all of the work, as the case may be. And that prompted that set of circumstances, prompted them to say, hey, you know what? We're going to do something different when we do this. And we want you guys to cut a check for it. And by having to cut that check and go to the bank and be responsible for that, my gut says that, you know, 

 

Michael Palumbos (09:01.804)

That makes a big difference. Your investment mentally is way different than the SOB. It's your business, and you're responsible. And the buck stops here from that moment that you took over. That sound and feel right to how I explain that. 

 

Eric and Scott White (09:19.086)

Yeah, that's exactly right. And matter of fact, I didn't pay myself the first year because I was worried and I couldn't see how it would possibly work. But, you know, it did. And my folks were there the whole way, making sure that we did not fail. And but that's absolutely right. From the very beginning of us owning the business, we make, you know, the buck stops with with us. But 

 

Eric and Scott White (09:48.17)

On the other hand, it doesn't mean that, you know, as, as a father, you know, my father, the first three years that I, you know, that he stayed on for a couple of years and then was kind of almost three years actually. And, know, it just seemed like that, you know, you had to do everything that he said, even though he wasn't the boss, he was still kind of in control. And, and it took me a while. And finally I learned to say, Hey dad, I appreciate your vice. And, I'm going to. 

 

Eric and Scott White (10:18.274)

consult with a couple other advisors that I've got and I'll let you know which way I'd cite. And once we got that figured out, then things got a lot easier. 

 

Michael Palumbos (10:31.31)

Eric, would you mind taking us through when your great grandfather started the business? What was Denver Machine doing at that time? What was the business? How did the business make money when it first started? 

 

Eric and Scott White (10:45.678)

Sure thing. My great grandfather was from California originally and when they found gold in Colorado up near Central City, he landed in Central City trying to find gold because he was a young man and he was eager and he didn't have much left in Northern Colorado at that time or LA for him. He basically did not find gold. 

 

Eric and Scott White (11:12.416)

And rather than starve, he learned how to take a job as a blacksmith putting shoes onto the burrows, which would carry the ore carton in and out of the mines. 

 

Michael Palumbos (11:23.306)

Okay, what year is this? 

 

Eric and Scott White (11:25.516)

This is about 1910. 1907. we know that he got his apprenticeship down in Denver as a machinist. In the day, an apprenticeship was a, you become a complex machinist in a shop and then the owner of the machine shop writes you a letter that says, whom it may concern, 

 

Michael Palumbos (11:31.245)

I love this. 

 

Eric and Scott White (11:53.346)

You know, Fred White, who's my great grandfather, he is an accomplice machinist and I vouched for him and this is my whatever. We still have that letter hanging, that exact letter hanging on our wall right now. anyway, so the great grandfather saved all of his money. When he could afford it, he brought his girlfriend back by about 1915. 

 

Eric and Scott White (12:21.962)

or so and they were able to purchase our shop in 1916. We did it with a partner. Back in 1916, the shop was probably the only and largest machine shop. If it wasn't the only one, the machine shops of the day were very specialized because people didn't have machine tools. So when mining equipment broke, 

 

Eric and Scott White (12:50.472)

And he had his contacts up there and railroad equipment and even the farmers capsule broke. You know, then they could actually do a, do business by getting a part repaired or a new one made because there wasn't anything on the shelf. Back then they didn't have any telephones. So everybody worked on a, in, what was, what would be now lower downtown Denver. They would all walk to lunch at one of the. 

 

Michael Palumbos (13:16.91)

Okay. 

 

Eric and Scott White (13:20.758)

One of the surviving old hotels is the Oxford Hotel. And the story goes that he would go to lunch every day at the Oxford Hotel. was a two hour affair where everybody was wearing suit and ties and the steel supplier would make a deal with the guy that needed the work that would make the deal with the machine shop to do the work and so on. And that's how business got done before telephones back in those days. 

 

Michael Palumbos (13:47.95)

Stuart was like a networking event. 

 

Eric and Scott White (13:50.278)

It was, it must have been a really fun time to be around. We have a picture of my great grandfather above my desk right now in line with all of the generations. And he's sitting with a three piece suit on a vertical lathe. It's like a potter's wheel. But it turns and then the tool comes down on whatever he's turning and he's, he's got a cigar in his mouth and it's just a really neat picture. 

 

Eric and Scott White (14:18.584)

chose the sign of the times, you know? so he did get his wife back and his wife had, well, eventually they had children and they had three children. And one of them was my grandfather Ed White, who would go to the Colorado School of Mines. And then he went to Sullivan Compressor Company. 

 

Eric and Scott White (14:44.888)

back in the day, which kind of the sole air for anybody in the audience that knows who that company is. And he worked there for three or four years. My great grandfather in, you know, started becoming ill and he was getting tired. And so, so he called up and invited my grandfather back into the business. My grandfather came back, but he always had his 

 

Eric and Scott White (15:14.848)

is interest in this new technology, pneumatic tools, which were air compressors and rock hammers. And in the mining industry, they used them with jack leg drills. And with the air compressor would use a jack leg drill where a miner would sit on it and drill a hole pattern into the rock, which they would then blast. And so, 

 

Eric and Scott White (15:40.482)

He actually got a call from the Sullivan compressor company after he left the company and he said, you know, we don't have a distributor ship. So our machines in Denver, you wouldn't happen to be able to have a corner of that shop that you would put a sign on your window. And from that came the second business for the company at that time, which was, which was called Denver air machinery company, which is similar to Denver machine shop. had a separate location. 

 

Eric and Scott White (16:08.91)

My grandfather became very interested in that company and the whole distributor distribution business. was the same size as one of the caterpillar distributors or one of the American harvester distributors at the time. So that's, those are the guys he liked to rub elbows with the guys that didn't have their hands greasy. And so he hired a couple of guys. The time that my great grandfather died and passed the business to him, he hired a. 

 

Eric and Scott White (16:37.718)

a couple of guys that would run the machine shop. And because they ran that machine shop for most of my grandfather's career, they were part owners at that time and they very small part of the ownership, but they basically would keep the old machinery running because we're a big repair shop. 

 

Eric and Scott White (17:03.054)

So they didn't always have new equipment because my grandfather didn't necessarily want to reinvest. And they got really heavily involved in repairing mining equipment. And they just kind of kept that business afoot for about 40, 50 years there. And then it wasn't until my father, Jim White, he had gone to the Colorado School of Mines, graduated in 64. And he basically took a job for Shell Oil Company. 

 

Eric and Scott White (17:32.416)

and spent his career first with Shell for a couple of years. Then he owed time to the Army. During the Vietnam era, he was in for two years and was got, I were born and then he came back and worked for Shell for another couple of years. And then he joined the family business upon being invited. But he joined on the air machinery side too. Back in the 80s, the mining industry, 

 

Eric and Scott White (18:00.824)

People might remember that there was a really bad recession in the early 80s and it took out a lot of industry. So one of the companies that out, which would be their distributor, which was dresser industries at the time, and that air compressor and with rock drill and rock hammer company went belly up. And when they did that, the air machine had no distributors. They had no choice but to shut that down. 

 

Eric and Scott White (18:29.164)

In the meantime, the machine shop wasn't doing well because it was 90 % hedged into mining industry and the mining industry was shutting down at that point. was no money in the ore to be able to afford to keep the mines open. So they stopped needing to repair their stuff until things recovered. And my dad took over that machine shop when he shut down the other one. And eventually the other guys, one by one, they kind of left and then 

 

Eric and Scott White (18:58.146)

The shop was in shambles and it almost went out of business back in the early eighties when they did that. And, my dad tells a story about one, one guy, his name was Chuck Sparrow and he was a machinist and one by one when he couldn't afford to pay anybody. It, you know, the paychecks went a week to week without, without, being cash because no, there was no money in the bank. 

 

Eric and Scott White (19:27.5)

He got down to that one guy and it was my dad trying to make the sales and that one guy trying to do the machining and a guy worked for no money for five months. Wow. And we later found out the true story about it was that is I guess the one guy I saw him a couple of months ago, he walked into our shop as an old guy and his during that time when it got so bad, his wife said, well, you wouldn't believe what happened to our family that 

 

Eric and Scott White (19:57.368)

First of all, I wouldn't let him come back and stay in the house. He got to stay to stay working. He had nothing else to do. But then it made her go out and get a job for the US Postal Service. So she says, you know, ever since that time, we've had a really good living. We never really had a good living before that time. Anyway, that's a fun story. But my dad worked hard. They were building a new airport here in Denver, and he focused on many industries. 

 

Eric and Scott White (20:23.988)

Other than the mining industry, the construction industry, anywhere he could get a dime, the food machinery industry and the steel making industry down in Pueblo, which would which he could repair that equipment or make a spare part, which was unavailable on that appointment. And then he eventually grew himself out of the debt of the other company. And he my mom joined him at that time. So it was basically then. 

 

Eric and Scott White (20:52.856)

They owned the real estate at that time because he was able to buy the first building. and so they didn't even pay themselves. They just paid themselves rent for the real estate and it kept on going. and then, you know, and then it kept it really small. So our company did well under a million dollars of revenues a year and only had a handful of men, you know, and then, they had always kept it that way because I guess 

 

Eric and Scott White (21:21.786)

more my mom than my dad, but they were insecure and thought that, you know, if they tried to grow it too big again, that they would lose it. anyway, hasn't gotten started out to be that big until Scott came in and bought it and realized he didn't want to do it, I guess by himself, because he invited me to join him. And then, you know, we've grown it over the last 20 years. 

 

Eric and Scott White (21:48.824)

quite a bit because we really had to hit the ground running that year and we had to grow because we were now having to support the rents for the parents plus two incomes. We both took a huge reduction in pay from our professional careers to come to the company. And then we said, well, and then we paid back Scott's original amount that he had to put into the SBA note. And then we started growing and building and growing. 

 

Eric and Scott White (22:18.318)

Today, we are now at, 20 years, we're now doing close to seven million in revenues, and about 45 people. We keep it fairly tightly held. Nobody owns stock but Scott and I, and so we can really treat it like a family business. We're not having to pay off anybody that's not involved directly with the business. 

 

Eric and Scott White (22:47.79)

But that's the story of the business. 

 

Michael Palumbos (22:50.562)

But Eric, it's obvious that you're really proud of that family history and all the things that the people that came before you have done to kind of set you guys up in the position that you're in today. It wouldn't have happened at some levels unless everybody else did their part through the years. The other thing that I find really interesting is 

 

Michael Palumbos (23:20.108)

you know, your father, make sure I got this right, your father saw what your grandfather had went through when the mining industry was kind of falling apart a little differently or didn't have the kind of work available that he needed to keep the machine shop going. And he diversified. And he went out and said, you know, what other industries are out there that we can serve to make sure that we don't go through that same thing that he went through? 

 

Eric and Scott White (23:50.828)

That's an absolute family lesson, which is passed down. You know, and I think that what really made the machine shop almost go belly up back in the early eighties, late seventies was when we were too invested in one mine and one mine in Southern Wyoming was doing 80 % of the business for Denver machine. And then 

 

Eric and Scott White (24:18.946)

You know, when they got over that, my dad taught us that never have more than 20 % of your business invested in any one customer or industry. And so we've diversified today. We do work for the food machinery industry, steel making industry, the oil and gas industry, the railroad industry, the, of course, the mining industry and aggregates and a lot of 

 

Eric and Scott White (24:48.076)

a lot of that. And we are proud of our family's history, both Scott and I, and it's a sacred thing, this company. We're not, we're hoping that we have kids that are eagerly wanting to join and we have kids that are educated enough in our opinions to join. Now they gotta get the experience and they're working on that. 

 

Eric and Scott White (25:17.582)

So, I would say that chance of survival of this company over is probably as good or better than other family businesses in America today. 

 

Michael Palumbos (25:33.646)

Great. Scott, let me turn it over to you for a second. What I'm curious about is Eric gave us the 3,000 foot version of what you guys do today. But you've been doing this for 20 years. So talk about, if you would, some of the decisions that worked out really well for you over the last 20 years. 

 

Michael Palumbos (26:02.838)

And if you don't mind, you know, there's some things that didn't work out well and, you know, what you would have done differently or, you know, what you learned from those, you know, those experiences through the years. 

 

Eric and Scott White (26:16.77)

Sure, I'd be happy to. I think when we first got started, Eric said we had to figure out how to grow. And so we had a growth mindset. And we still have a growth mindset. It's kind of like you're either growing or you're dying. And so that means constantly looking for the next opportunity. And I think when I got to the point where I was 

 

Eric and Scott White (26:44.366)

specifically concentrating on strategy rather than operations in the business to try and understand what are the good industries to go after and what type of businesses. And you know what, what really propelled us was the great recession in 2008. I think the business in 2002, but in 2000, 2008, was a great recession and we didn't have any work. 

 

Eric and Scott White (27:11.63)

But we had one customer, we violated our rule, and we had one customer that offered us a huge job and we needed space. So we took the job and I was looking for space and I ran into a company that was, they were very concentrated on one industry, which was aggregate mining. But we were doing repair work on pole pulverizing equipment and they were doing repair work on aggregate crushing equipment. 

 

Eric and Scott White (27:41.76)

And it looked to me like it was very similar. And I ran right into a company that was going out of business because of the recession and was in the middle of an auction. And so we made a deal with the owner and we bought all the critical equipment at auction value and we hired their top seven people and we brought them in and then we found a location. 

 

Eric and Scott White (28:05.734)

and we rented space in another building and just found a welding work or whatever the heck we could find those first couple of years. And it really defined us because it got us into the mindset of, you you don't just have to grow internally. we were able to grow during that time. And so we're constantly looking for opportunities for growth and what else we can find. Another opportunity we ran into was a business that's of similar 

 

Eric and Scott White (28:35.746)

similar customers to ours, but not necessarily doing exactly what we do. We do precision machining and we found a business that does forming and welding and fabrication. And they're about the same size as us and their owner had had a stroke and he really wanted to sell that business. And we figured out a way to buy that business and it doubled our size. 

 

Eric and Scott White (29:03.372)

you know, that business has done very well. It's paid for itself and it's become, you know, they're right within our family. And here recently, just this last year, Eric and I, we bought a third business, which is a very small business, but it does metal cutting with flame, like oxy-fuel and plasma. And so we cut up, you know, we cut up to six inch piece of using that into different shapes. And so I would say that 

 

Eric and Scott White (29:32.002)

having this growth mindset and always looking for the next opportunity around the table has been one of our secrets to success. We've moved locations into a much larger facility and combined our operations and that's helped us too. But I will talk about some of the lessons learned over the years. So over the last 20 years. 

 

Michael Palumbos (29:53.866)

for a second, because there's some things that you said that I just want to unpack them a little bit, because I don't want people listening. want to make sure that they caught this. So number one, when 2007 and 2008 came into play, you guys were obviously in a financial position that you had been storing up, and you had some dry powder. So even though there's a recession coming, you took advantage of some opportunities that were available. And I tell people, both you know, 

 

Michael Palumbos (30:23.918)

I'm a wealth advisor and a business coach. I do both. And it's this weird skill set that comes together really nicely for us. But like my favorite time is 2020, March of 2020, I help people make a boatload of money because we did a really good job of buying some things and taking dry powder, the cash that was available on the sidelines and utilizing it. And you're talking about exactly the same thing. Warren Buffett says, 

 

Michael Palumbos (30:53.55)

You make money when others are fearful. And you get greedy when others are fearful. And get fearful when others are greedy. That's the Warren Buffett philosophy. And that's what you're talking about. But I think it's really important to understand that you had to be ready. You had to be looking. And it's that growth mindset that you had. And it's that, you know, 

 

Michael Palumbos (31:18.178)

that looking for those right opportunities and then having the ability to be able to cash in on those abilities when you're doing it, nicely done. 

 

Eric and Scott White (31:26.232)

Thank you. I think the piece that you're missing is you have to step out on faith. okay. When you're making a huge investment, you know, there's risk. There's risk attached to it, but there's also reward. And so if you're willing to take the risk and step out on faith and realize that you can do it, that's the big part of it for me. 

 

Michael Palumbos (31:46.764)

Okay. So then you were going to talk about some of the lessons learned through the years. 

 

Eric and Scott White (31:52.414)

yeah, so you know, there's only a few things that can really shut you down. know, like one of them is, is our, you know, is the safety stuff, you know, with OSHA and then walking into our industry and we've met those guys a few times and, and, know, so we had to work really hard on safety and, you know, your banker, your banker is a super important relationship. And if you don't know your banker personally know your banker. 

 

Eric and Scott White (32:18.126)

you know, that can get you in big trouble. And Eric and I got in trouble in 2016. I had fallen from a ladder and broke my back and I was out of work for about six months and made some decisions. We didn't have quite have things maybe in order for the bank and we didn't, we were with a very large bank at the time. And that large bank treated us like a number and forever more, we will always go with a small local bank. And it was a small local bank that actually helped us out of the situation that we were in. 

 

Eric and Scott White (32:48.122)

And I think, you know, every business is going to go through these, these types of bumps in the road. You know, we've been, we've been in situations where we thought we were going to get sued by a very large company and they were going to force us out of business. You just kind of take these things one step at a time and, you know, realize that you just put one foot in front of the other and you can judge through it. And, and as long as you just keep working. 

 

Eric and Scott White (33:15.054)

You know, there's a perfect storm that can take anybody out, as long as you just keep working hard and keep moving forward, think that's the lesson learned that, uh, and that now today, of course, you know, I'm very confident in our future. We've been through a lot of, a lot of this type of stuff. You know, we've been through the recessions in 2016. had a very, very difficult recession here in Denver because the oil industry fell out and, uh, and nobody really predicted it. And. 

 

Eric and Scott White (33:42.542)

regardless of what industries we're in, somehow they're all tied to oil, at least in this part of the country. And then you have to tighten the belt and you have to make those decisions to save the company rather than the individuals. it's a tough road. Eric pretty much went down that road when I was out and having to make those decisions. And interestingly, lot of those people are back with us again. 

 

Eric and Scott White (34:11.564)

But yeah, but anyway, so those are some of the lessons learned that you really can make it. You know, when the even when the going gets really tough, you can still trudge through. And I think it helps to know, well, my business is 107 years old. We're going to make it. 

 

Michael Palumbos (34:26.722)

Yeah, nope, I appreciate it. Eric, what are some of the, from your perspective, what are some of the tough parts about being part of a family business? 

 

Eric and Scott White (34:41.101)

Eric and Scott White (34:41.521)

Well, I think one of the, one of the hardest things is to try to avoid talking shop during all family activities and, you know, and so the ability to leave it and check it at the door is, it's instrumental. Scott and I both 

 

Eric and Scott White (35:10.766)

put in our buy sell that our wives could not work in the business. So that was by design. They have their own careers and they work hard too. And we just don't, we've avoided some of those kinds of confrontations that have happened earlier on in our company's lives. My dad's brother joined the business and you know, it just, didn't work out. There was a lot of argument. There was a lot of... 

 

Eric and Scott White (35:40.02)

of things and people ask Scott and I how we can work together as a 50-50 relationship. Most people can't believe that can be done, but we're always looking out for each other's family first. So, you know, I think that that helps a lot. I think that the ability to understand the others involved in the business 

 

Eric and Scott White (36:11.79)

really helps out. Scott and I really understand. My mom passed on a few years back, but we understand my dad at 81 and he's still involved. And so we still really make him feel a piece of it when we're at, say a function at one of our, or his birthday party or something, or one of our functions outside of the company. And even inside the company, he's invited to come to the 

 

Eric and Scott White (36:41.26)

the Christmas parties and stuff like that. 

 

Michael Palumbos (36:45.198)

That's awesome. No, I appreciate that. What are some of the other, let me think about, I had it on the tip of my tongue. Scott, from your position, what are some of the best parts about being part of a family business? 

 

Eric and Scott White (37:06.094)

Well, first of all, I think the very best part of being part of a family business is the fact that you have an opportunity to create your own destiny. And all of us have gone out and worked for the man, so to speak, and got the golden handcuffs. But who gets that opportunity to say, hey, maybe I could be a millionaire someday? Maybe we don't become a millionaire, but we have the opportunity to. 

 

Eric and Scott White (37:34.594)

to do that. And so I think having the family business is a much easier road to that type of success than having to start from scratch. the guys that have to start from scratch have to get past being an owner operator of whatever it is they do. And it reminds me of a seminar I went to. There was a guy that wrote a book, Michael Gerber, and it was 

 

Eric and Scott White (38:04.238)

The E-Myth, right. I read that book and I thought, wow, this is awesome. And I had just bought the business and he was coming to Denver to give a seminar. So I went to see his seminar and he asked, hey, who in this room has more than one employee or has less than one employee and three fourths of the people raised their hand. And he said, well, who in here has, you know, two or five or whatever it was. By the he got to 10, there were very few of us. 

 

Michael Palumbos (38:04.398)

The emas, the emas! 

 

Eric and Scott White (38:34.006)

in that room that had that many employees. you know, it's just like, you know, joining a family business is difficult because of all the challenges, it's, but it's, it's, it's a great opportunity for the person who wants to own their own business because of the, somebody else has come and paved the road before. 

 

Michael Palumbos (38:53.676)

Yeah, and to your point, I just, again, I like taking what people say and just making sure that we make it plain as, know, clear as glass, you know? When you're building and working in a family business, your salary may be less than what you might make on the outside. Might be the same, might be more, but all that time, you're building value because you own the business and you're building value for 

 

Michael Palumbos (39:23.586)

yourself and your families rather than building value for stockholders on a Fortune 500 company. So I think it is very important that people realize that when you have that opportunity, the value of building the value of that business and the real estate that you own and all the equipment that you own, yes, there's risks to it, but 

 

Michael Palumbos (39:49.994)

Is it more risk or less risk than working for a publicly traded company that you don't have any control over your future at some levels? 

 

Eric and Scott White (39:58.51)

Well, that's true. And I, you know, if I give an example of all of my buddies that I worked at Caterpillar with back in the eighties or early nineties, and, you know, they're all retired. They all got pushed out. They're all like, you know, I'm 57 and most of those guys might be 60 or 61, 62, but every one of them have been given a package and they had to leave. And so and so who's really got security? 

 

Eric and Scott White (40:24.896)

Is it somebody working for a large corporation or is it somebody who's working for themselves? You know, I mean, and you brought up real estate, real estate has been a huge part of our, wealth building through the businesses. And, know, I mean, my folks are able to retire because they own the real estate that the business occupied and the business is able to pay the rent. We'd be paying it to a landlord one way or another, but this way they get a retirement income. 

 

Eric and Scott White (40:53.928)

and we still have to pay the rent. And likewise, the two other properties that Eric and I have bought, we bought the real estate along with the business. And that's why one of the reasons we bought that business. And so that we can build real estate wealth as well as the equity in the business. And the hope is for us someday to be able to have multiple income streams when we retire. 

 

Michael Palumbos (41:23.214)

Love it. Talk to me. Eric, you mentioned the buy-sell agreement between the two of you. How often do you guys, and we're talking about wealth building. the buy-sell agreements, think, are that safety valve underneath the safety net underneath that wealth building. How often do you guys review your buy-sell agreement? 

 

Eric and Scott White (41:47.0)

Well, we've been really happy with our original by cell agreement. It was a basic Mexican showdown. I guess they call it where, you know, one of us can leave at any time that we want to. And then the other one has the opportunity to buy them out. If, that was ever going to be the case, we've recently revisited that just based on the value of our assets that we've acquired and then realizing. 

 

Eric and Scott White (42:16.194)

we we secured are our assets because our even our company is rather small we keep it that way and pay low taxes and it's a lifestyle business really but because of that you know we've never had a lot of value in the business itself but what what with the other assets growing we realize that if there unfortunately was a surviving spouse that we would want her 

 

Eric and Scott White (42:45.784)

to be able to be taken care of, there may not be enough life insurance money in order to do that. And so we're restructuring the BICELL right now to move up to a specific amount of insurance money and then an agreement of payments after that for the surviving family so that we can ensure the survival of the entity. 

 

Michael Palumbos (43:09.292)

love that. So it's music to my ears that you guys are doing that. Remember, I said I wear both hats as the wealth advisor and the business coach. So I could spend a whole show talking about growth strategy and where are we going, what are we doing with it. But at the same time, talking about things like the buy-sell agreement, just really pertinent and important to make sure that, God forbid, you know. 

 

Michael Palumbos (43:37.098)

We never know when our time is up. The buy-sell agreement is there and it's fine-tuned to take care of families. Good for you guys, appreciate that. When you start looking at the next 12 to 18 months, what would you say are your top three priorities over the next 12 to 18 months from the business perspective? 

 

Eric and Scott White (44:03.29)

The highest priority today continues to be to attract and retain good talent. Everyone is saying this, but particularly in skilled trades, we lost two generations of workers. And so now you have very old guys and you have very young guys. And the very young guys all think they're worth what the old guys are because they can look everything up on the internet and tell you the answer right now. And so it's been very difficult. 

 

Eric and Scott White (44:31.246)

for us and so over the next 12 to 18 months we're going to continue to figure out ways to to provide training to our current workforce to provide the best work environment possible and the highest salary that the company can afford and also to hire some good top talent and We've put a lot of effort into it already. We if you visit our website, you'll see an interview done with our current employees 

 

Eric and Scott White (44:59.21)

explaining why you might want to become a machinist. so that's our highest priority is our people. 

 

Michael Palumbos (45:09.44)

of it. And it's, I tell every business owner I meet, I ask the question, what business do you think you're in? And because it's, it's always, you know, it's machines, it's, it's aggregate, it's, it's construction. And I'm like, No, you are not. If you don't realize that you're in the people business first, that doesn't matter what you that's what you do. 

 

Michael Palumbos (45:36.768)

is construction, but we're all in the people business. Cause if we don't serve those people, whether they be customers or suppliers or the people that work for us, we're in trouble, right? what, when, if, if I'm Eric, I'll go to you. If three o'clock in the morning comes and you wake up and something about work is on your mind, what are you thinking about? 

 

Eric and Scott White (45:47.298)

Mm-hmm. 

 

Eric and Scott White (46:05.23)

Well, I've done so much soul searching. I usually don't dream about work. I dream about my trip to T. West. 

 

Michael Palumbos (46:23.15)

Love Key West. Love Key West. And matter of fact, I didn't give you guys, I wanted to let people know, my wife and I were just in Denver two weeks ago for a conference. And we ended up getting to go to El Dorado Canyon. And we went to the top of Mount Evans. We did a whitewater rafting trip and we went to the Red Rocks for a concert. And I can't say enough good things. What you said about Denver. 

 

Michael Palumbos (46:52.062)

It doesn't even do it justice. It's just an amazing place, like to the point where it is definitely on our hit list of places to visit more often, but maybe that it's a beautiful place to live. was blown away. I've been there many, many times, but I've never been able to take the time to be there. so I just wanted to give a nod to Denver and the Rocky Mountain region. 

 

Michael Palumbos (47:21.814)

It's gorgeous there. 

 

Eric and Scott White (47:23.945)

We're very lucky, very lucky. 

 

Michael Palumbos (47:27.064)

So Eric, good for you. If you're thinking about your trips and the personal stuff, I think that that's wonderful. What that means to me, what that says is that the two of you complement each other enough, and you've built a good enough team around yourselves that you're not constantly thinking about work. And it's not something that you wake up at 3 in the morning thinking about. Hands off to you. 

 

Eric and Scott White (47:50.296)

So have a harder time turning it off. Yeah. Just let me clarify just a little bit that, that we're Scott and I are personalities are, are totally different. we do compliment each other very well. I wear a lot of different hats and he wears other hats over the years. He's been very instrumental at working with the, the business, end of things. 

 

Eric and Scott White (48:20.466)

And particularly when it comes to HR, finance and legal stuff. And he actually has been worked the company books for many years. Only now have I gotten involved with that. I wore the hat of the marketing and then building our websites and working on customer relations more. I used to do a lot more of that. 

 

Eric and Scott White (48:48.782)

still get into some of the estimation just because I enjoy it. you know, if you were going to be a worry wart all the time, you wouldn't want to be in a business like ours because we just, you gotta have faith that we're going to just, know we've been through a lot and we'll get through anything. So I don't lose sleep and I think Scott might lose a little more than me. 

 

Michael Palumbos (49:14.798)

Michael Palumbos (49:15.462)

Scott, go ahead. You were gonna say, what were you gonna say? 

 

Eric and Scott White (49:18.796)

No, mean, you know, it's tough to own a business at times. And you just got to remind yourself that the stories you tell yourself in your head are not the stories that are real. And so if you wake up at three o'clock in the morning with your head spinning, the first question is, did I just invent that or is that, you know, or has this actually happened? And so that's how I control it. 

 

Michael Palumbos (49:45.998)

That's great. I just finished reading a book this year called Sapiens. And it's a brief history of Homo sapiens. And I'm like, can't believe I'm reading this. But as I kept reading it, I kept going through it. I'm like, this is just fascinating. I'm more interested to learn today than I definitely was when I was in high school. But the reason why I bring it up is it said that the difference between Homo sapiens and every other creature out there is our amazing ability. 

 

Michael Palumbos (50:16.152)

to create fiction and to our detriment sometimes to your point, Scott. We got to be careful. Don't always believe everything you think. 

 

Michael Palumbos (50:29.838)

All right, so we've got your priorities as people in attracting and retaining and developing good people. What are some of the ways that you interact with other business owners? my gut says, if I'm not mistaken, are you guys, are you Vistage members? 

 

Eric and Scott White (50:55.19)

Yes. 

 

Michael Palumbos (50:56.076)

Yeah, I think that's how we got connected. I mean, what is Vistage like for you as business owners? What does that bring to your table? 

 

Eric and Scott White (51:05.612)

Vistage, I joined Vistage first and you know, it really, it really causes you to mature as a business owner and to realize that everybody's business is really the same. There's so many issues that become very similar no matter if you're in a manufacturing business or a service sector business or construction company, you know, you all have the same issues with. 

 

Eric and Scott White (51:33.996)

you know, finding and attracting people and selling the work and performing the work and then getting paid for the work. and you got a whole group of peers to, to really, to really drive that home and to help when those really tough decisions come. I've been a member of this age for 15 years. And I feel that, that it's been extremely important. 

 

Michael Palumbos (51:55.054)

Okay. 

 

Eric and Scott White (52:01.216)

not just to my personal growth, but to the growth of our organization and to the overall leadership of the organization. Eric joined Vistage a couple of two or three years after I did, but a visible change in Eric once he joined Vistage and he joined a different group than mine. And we're a small company, but we invest in two of us. Actually, there's four of us that are in Vistage now in our organization. 

 

Eric and Scott White (52:30.562)

because we have two guys in the key man groups because we believe so much in it. But there was a visible change in Eric after joining that group where he stopped thinking like an employee and he started thinking like a business owner. And that's a crazy way to say it for the business owner. But at some point, does your mind turn to strategic decisions and how do you make that happen? so groups like Vistage are extremely important and have been very valuable for us. 

 

Michael Palumbos (52:59.15)

And it doesn't necessarily have to be Vistage, it's just that's how we met. But I know that there's the Entrepreneurs' Organization and YPO and there's plenty of other CEO roundtables, I'll call them groups. what you said, two things that really I think are important is you grow as a CEO, you grow as a business owner because... 

 

Michael Palumbos (53:26.178)

You're surrounded by all these other people. And I'll tell you, in my group, there's people that are making a million dollars a year. And then there's a guy that's making up, in 10 years, immigrated from Europe, from the Ukraine, came over from the Ukraine 10 years ago. He's running a $100 million business within 10 years. And he says, I'm not growing fast enough. And so by putting yourself and surrounding yourself with some different people, with some different attitudes, I've always found to be helpful. 

 

Eric and Scott White (53:54.978)

Mm-hmm, I agree. 

 

Michael Palumbos (53:56.448)

Eric, what has been your favorite part of being a part of the CEO Roundtable Group? 

 

Eric and Scott White (54:04.302)

Well, there's just so many lessons to learn and I think you say that they're not all positive. I've been in there, I guess, what, 13 years now and I have watched so many new members come and go and we've had a guy 

 

Eric and Scott White (54:28.664)

We've had, so I'll give you for instances, a guy that was in charge of $190 million drilling company, and he was a division president in the United States. And of a Canadian company drilling oil wells. And, you know, we watched this guy whose morals were with his people, but then the company turned on him. 

 

Eric and Scott White (54:57.922)

They got somebody killed and he wanted to treat it one way or another. And at the end of the day, the end is his employment. So he goes out on his own and, and, he stays with us and he tries to start his own oil rig company for a while. You watch guys like that. You watch guys. had a guy that came in and he was in the logging business in Colorado and he cut areas of land for the forest service, but it 

 

Eric and Scott White (55:25.09)

He never, he failed as a younger man, he failed to calculate the price of what it was going to cost for whatever situation or whatever gas. And he was in these huge contracts, a $10 million worth of contracts from the government business. And he couldn't fulfill the contracts as he literally could not afford to do what he had committed to doing. So he watched him go bankrupt. And, and that's not. 

 

Eric and Scott White (55:54.926)

Um, that's not fun to watch, but you, you see these people in the past that you take, see another guy who took a little tiny $3 million electric electrical contracting company and turn it into $150 million company who does all the solar, um, yeah, all the solar installation for the government all the way across the country. It's just, it's just nuts. 

 

Eric and Scott White (56:23.884)

What you see in that place and then be able to ask anybody any question. I can't say enough good about about. Vistage even when I don't have questions, you see somebody who might appear to have a really. You know, not a very interesting question, but then all of a sudden the discussion brings out such a lesson. It's it's great. One more story. A person in my group. Now we have a couple. Who in? 

 

Eric and Scott White (56:53.946)

They got into the hemp industry, they're producing this CBD oil, which I guess is wildly popular. They have the only recipe process that gives a zero THC value in this stuff. And they're right now right in the middle of writing the new laws for Congress with the congressmen. And I mean, they're running this business here in Colorado and they're in the middle of politics. Anyway. 

 

Eric and Scott White (57:22.412)

I guess we shouldn't spend so much more time on that. do want to put in my two cents about there are other industries, particularly the associations, for the listeners that are out there. Whatever their industry association is, Scott and I have been involved with the National Tooling and Machining Organization through our local chapter and sat on committees. I know Scott, I think, is still on a committee for workforce development. 

 

Eric and Scott White (57:52.226)

with those guys and then their national conferences and stuff that they hold to be able to talk to other people in our same industry. Understanding that, yeah, we might compete over one or two things here or there, but we have a lot better opportunity to learn and to complement each other. 

 

Michael Palumbos (58:15.234)

No, I really appreciate you mentioning that, It's so important that you're involved in your associations in your industry. I want to wrap up here and be cognizant of your time. parting wisdom, if you're standing in front of an audience of 50 family businesses, what are your parting words to the family businesses in front of you? 

 

Eric and Scott White (58:44.814)

Mine would be, don't put all your eggs in one basket. lot of business owners tie everything up that they've got in their business. And I personally think it's important to be looking at other investment opportunities all the time. Real estate's a good one. Don't forget your 401ks, especially when you're young. And realize that you're in this not just to survive today, but for the rest of your life. 

 

Eric and Scott White (59:14.946)

You know, be constantly, you know, talk to Michael. Michael is your wealth advisor and ask him for some advice because business owners often get tied up in doing only the business. And I think that that's a mistake. 

 

Michael Palumbos (59:31.576)

love it. Eric. 

 

Eric and Scott White (59:34.606)

Well, I think the most important thing with it is to realize that you have a unique opportunity that others before you may not have to cherish it, embellish it, and plan on enjoying it for a very long time. If your ideas are going to be to try to grow something and then milk the cows, 

 

Eric and Scott White (01:00:04.248)

say so that your books look good, so you can sell the business and whether you're cheating yourself and also your employees and their futures and their sons and daughters futures. We have multi-generation of family employees that have followed us. I think that survival of a family business should be taken extremely seriously and not 

 

Eric and Scott White (01:00:35.51)

not be thought of as a vehicle that was passed down so that it can be sold. 

 

Michael Palumbos (01:00:43.628)

Yeah, no, I love what you just said. I think about that as it's our term time to be good stewards of what was done before us. And I'm a second generation. Many of our clients have been with the family for 30 or 40 years longer than I've been in business. And that's a testament to what my father taught me. I've just, like the two of you, I've diversified. 

 

Michael Palumbos (01:01:13.206)

and I've added some different things. I'm not a big fan of all the government regulations that we might have. So I like to work in some other areas that are just a little different, like coaching. But I can't say thank you enough to the two of you. We've got a great history of Denver Machine. We have a great history of how proud the both of you are of what your family did. You're both obviously great stewards. 

 

Michael Palumbos (01:01:41.486)

of the work that was done before you and so many other really thoughtful nuggets that I hope that people take away from this episode. I really appreciate both of you. Thank you for joining us, everybody. My name is Michael Palumbos with Family Wealth and Legacy in Rochester, New York. And you've been listening to the Family Biz Show. We are excited to have you. Tune in to our next episode. Have a great day, everybody.