Letter #203: Nick Howley and Mark Howley (2023)
Cofounder of Transdigm & Perimeter Solutions and Founder of Mark Howley Consulting | Nick Howley: NYSE Founder -- Today a $60 Billion Enterprise Value
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Today’s letter is the transcript of a conversation between Nick Howley and Mark Howley. This was a particularly interesting interview not only because Nick Howley seldom speaks publicly, but because he was interviewed by his brother, making for a more intimate conversation. In this conversation, Nick and Mark discuss everything from childhood stories to the founding stories of TransDigm and Perimeter. Nick shares what he looks for in businesses to acquire and why it’s like kissing frogs, his very first entrepreneurial endeavors (newspaper routes, painting houses), lessons learned from balancing sport and school, scaling TransDigm, setting culture, setting goals, managing employees, his father’s influence, the importance of hard work, running a public company, becoming more cynical, assuming good faith, and charity, before closing out with why he did what he did everything he did and sharing about the launching point of his career and his role model.
Nick Howley is the Cofounder of TransDigm and Perimeter Solutions. Nick has spent nearly his entire career in the manufacturing business across a number of different roles, starting with his father’s machine shop. He went on to join other machinery shops, including a farm machinery business in upstate New York, pursued several (mostly) failed entrepreneurial ventures, became an engineering manager at Raytheon, and ultimately joined IMO Industries. At IMO, he met his boss and future business partner Doug Peacock, who he teamed up, along with a private equity firm, to acquire and consolidate the four aerospace companies that became TransDigm. This past September, TransDigm celebrated its 30th anniversary. Since its founding, it has grown at a compound annual rate of ~35% over those 30 years.
Mark Howley is the Founder of Mark Howley Consulting and Speaking, and Nick’s youngest brother. Before starting his consulting business, Mark was the President, and then CEO and Owner of Pacific Bag, which he sold to Tricor Braun. Before joining Pacific Bag, Mark was a manager at Fresco System USA, where he started his career as an inside sales.
I hope you enjoy this conversation as much as I did!
[Transcript and any errors are mine.]
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Transcript
Mark Howley: Hey, good morning. This is the Mark Howley Show, and welcome back. I'm looking forward to today because I think we're interviewing a pretty cool guy. Happens to be my brother, but his name is Nick Howley, and he's one of my older brothers. And he's really accomplished in business. I think we're all proud of him. Got a master's from Harvard, which I don't know how he did that. I could have never done that. And he's also the Chairman and Founder of two companies, and they're both traded on the New York Stock Exchange. One is TransDigm, and the second one is Perimeter Solutions. And lastly, a whole slew of charitable organizations, which we'll get to after we talk a little bit about business. So Nick, where are you calling from?
Nick Howley: I'm calling from Key West. This is where I live. I live in the winter, which is a very cool, eclectic kind of place.
Mark Howley: Yeah, I know. I've been down there. So Cleveland is where you hang your hat on a--you call that home right now?
Nick Howley: Well, at least I call it home when the weather's good, which is mostly sort of May through about October now. But for many years, that's where I lived. And when I was working full time, getting up in the morning every day and going to work or going to the airport, that's where I lived.
Mark Howley: Okay. Okay, well listen. I'm sure anybody who's listening--something that's traded on the New York Stock Exchange is pretty, pretty hot stuff. And there's two businesses: TransDigm and Perimeter. In general, how did you pick out or get yourself involved in--just so everybody knows--the aviation industry? And just what got you there? What was it? Was it just you came up with a great idea, or was it sitting there and you went after it?
Nick Howley: Yeah, the far and away the bigger company and the older company's TransDigm. And TransDigm got started '93, which is now 30 years ago, with--me and my partner bought a small business, a couple of small businesses. But how do we get there? We got there sort of by dumb luck. I mean, we wanted to buy something, and this came up and we could buy it. And the way it came up, basically, is I worked for IMO Industries at the time, and the company was--and I knew these businesses--and the company went on a borrow--kind of borrow and buy and borrow and buy and borrow and buy kind of spree--and bought tons of industrial business. I mean like 100 or something. And I was somewhat involved in that. And then frankly, they got over extended, the economy turned down, and they had to start to unwind it. They had to start--
Mark Howley: All hell broke loose.
Nick Howley: All hell broke loose, as I like to say. The business strategy now was sell the furniture this month to pay the mortgage, and next month, sell the extra car, and maybe eventually we'll sell one of the kids. But along the way, they had to sell their aerospace businesses. I knew them pretty well. I volunteered to go out to Cleveland, to move to Cleveland to try and polish them up and sell them. As practical matter, my intention was to buy them. And I had a partner who was going to do it with me, a guy named Doug Peacock. And many times that kind of stuff doesn't work. And this one worked. And we were able to buy it.
Mark Howley: Good for you. Well, I mean, I know you worked your ass off. I've watched that from far and close up. But prior to that, you did have some some, I guess, pre education as a mechanical engineer. And then you worked in a metal turning shop for quite some time, which sort of--I'm presuming--got you a little keyed in on just making stuff like that.
Nick Howley: Yeah, I had a fair amount of background in manufacturing. So I felt pretty comfortable with that to begin with. But the aerospace industry, I can't say I--my knowledge of that was peripheral at the time. I mean, I knew they were good businesses. I knew the industry was a decent business. Though it was in a pretty ugly state at the time we bought it. But we felt pretty comfortable with them. But yeah, I felt good and comfortable with engineered kind of products. That's what I spent most of my life in. And though I never really worked much--actually I did some, a little bit, when I was younger, as an engineer. I was comfortable. I was comfortable with technology, I was comfortable with the jargon, I was comfortable with how they worked.
Mark Howley: And then I see in here also--well I know this but I see it--that this Perimeter Solutions, which--tell us a little bit about that. What is that?
Nick Howley: Yeah, that's a newer and smaller--let me maybe back up with TransDigm to put them in the--give you a sense. TransDigm--we bought it for about $50mn, with about $50mn of revenue in 1993. And we didn't have $50mn, so clearly we had to get investors in. If you roll the clock forward today, the enterprise value of that business, today, in the public market, is somewhere around $60bn.
Mark Howley: That's a good commission check. I sold for a living.
Nick Howley: And the reason I want to compare that is that the value--say the market enterprise value on the Perimeter business is more like $2bn. What the way--so it's substantially smaller. The way that started, which you might find interesting, is a younger fella I know that had been in the New York hedge fund business, wanted to try and, frankly, buy a business and get something started. And he came to talk to me. I knew him because they were investors and TransDigm and he was kind of the guy who owned the account through the years. So I got to know him. And he came and asked me--he sort of needed some support to get this done, somebody who had some credibility. Because the amount of money we're going to raise is more than I'm going to put in. Along with a guy by the name of Will Thorndike, who's closer to my age, who for many years had and ran his own private equity fund that he was kind of phasing out of.
Mark Howley: Let me pause you for a second. Let me pause you for a second here. So these guys come into your office--we'll say your office. And you know them, roughly. But so they're going to open up with a conversation: we need support. I presume you know that means Give me money. And what, roughly, what was the kind of the calculus or decision making, aside from the people, to say I think this is a good idea. Or I'm going to jump in.
Nick Howley: Yeah. Well, remember, we didn't have a business yet. That's what I should explain to you. In other words, we didn't start off with a business. And I'll say again--the amount of money that I was going to put into it was not going to be significant in the couple of billion that we were going to need here. So the--sort of the credibility and the reputation in that market was of more value at this point. So what we did is, we raised about $400mn in what is called a blind pool on the London Stock Exchange. In other words, you just get the money. It's just a slug of money sitting in a bank account that's traded on the London Exchange. Now, we then went and looked for an operating business.
Mark Howley: So they give you a pile of money and they say, Hey, you guys are smart. We want to get money out of this money. Just make us money on it.
Nick Howley: That's right.
Mark Howley: So you're sitting there saying, I got a big, huge credit card with whatever it is--a pile of money on it. We gotta go buy something.
Nick Howley: That's right. So we had roughly $400mn, and you had some odd rules about that. You have to invest it within three years or four years, I can't remember what, or you gotta give it back. We have--so why are we willing to do it? Because essentially, you do it like a private equity fund. In other words, you take a percent of the gain for putting it together. Basically about 20% on the gain.
Mark Howley: So let's clarify that. So if the business grows $100, you say, Hey, I get 20.
Nick Howley: Right. Well, it's little trickier than--well, maybe. If you start with $100, and it's worth $200, that's a gain of $100. You get roughly 20% of the gain. Now in this situation, you get it in stock, not money. And sometimes you have to hold stock for a little bit. So anyway, the way that--so we looked for a business, and we had some pretty specific criteria. What we wanted--we wanted very strong, niche market positions where it was pretty protected. We want to be what we call a small thing going into a big thing with a lot of values. So, more ability-- you're providing good value, nd frequently, you can price it better. And we had some other criteria. So we looked around, and we looked at a lot of businesses, and we ended up finding this Perimeter Solutions business. I would say we then had to go through another money raise, because this was about a $2bn transaction. And we gotta go back to our friends, we gotta go back to the well. We gotta go back to the well. The other thing we had to do is, the investors here wanted it to be a New York Stock Exchange company, which everybody wants because it's more liquid and tradable. So we had to raise the rest of the money and we had to move the listing to the New York Stock Exchange, which sounds easy, but it's a little bit of a complicated...
Mark Howley: Let me ask you a question there. I think I put in $6 to that thing, which I think was a big help for you.
Nick Howley: It was a big help. It was a big help. A big help.
Mark Howley: So, go ahead. Continue.
Nick Howley: Right, right. I spent most of it on the cab fare going--.
Mark Howley: That's okay. That's okay. I'm gonna get it back somewhere else.
Nick Howley: Never actually invested. So that, at the end of the day, we looked for about almost two years and what threw a monkey wrench in it is right after we raised the money, COVID hid and the whole world kind of shut down. So the first year or so it was mostly remote looking and video stuff and Zoom and all that, which is nowhere near--
Mark Howley: Were you getting your ass kicked by the pandemic--was that in itself part of the problem?
Nick Howley: Just everything shut down.
Mark Howley: Oh, that's a problem.
Nick Howley: Mostly just businesses shut down, investment bankers were kind of shut down, transactions weren't happening. So anyway--but some things were, but it was more hectic than you might like. So anyway, we found this. We found this company, which we feel pretty good about. It's not really in the aerospace business. The pictures you see are airplanes with stuff squirting out of it, but mostly what it makes is it makes the chemicals that suppress forest fires. It's the--
Mark Howley: Oh, yeah, you were talking about that. I remember that.
Nick Howley: It's the orange and red stuff that you see... And they're the only producer in the world of it--are the only approved producer in the big countries, at least, in the world. And they also run many of the fire stations. You can think of them almost like gas stations when there are forest fires.
Mark Howley: Yeah, yeah, yeah, yeah. Got it.
Nick Howley: They land and reload and land and reload--and they operate many of them around the United States, and some around the world. So that's what the business--and then they also sell another specialty chemical that goes into the automotive industry.
Mark Howley: Hold on, Nick. Let me pause you for a minute.
Nick Howley: Yeah.
Mark Howley: You do know--I think as of yesterday--I told you that I started lighting trees on fire out here in--
Nick Howley: Well, that's very helpful. Very helpful. And we're appreciative of that.
Mark Howley: I mean, a lot of trees out here. We got them going. We got them going.
Nick Howley: So that's the business. That's what the business is.
Mark Howley: Okay, okay. And then we'll circle back on this a little bit. I want to talk about your business a little bit, and then jump back on--you're hugely involved in charities. And maybe just give us a quick rundown on that. We'll circle back to give that a little more in depth discussion, but it's pretty cool, and quite a bit, which I believe, the biggest is, The Howley Foundation, I think.
Nick Howley: That's right, that's right. And it is--it probably takes 25% of my time now. We have three full time employees. So it's become a significant thing. What we do is we essentially provide money, we started off as mostly scholarships, to allow students that cannot afford it, mostly inner city students, to get out of the almost dysfunctional Inner City public school systems into some other option.
Mark Howley: You went to high school right in that area. And I guess that must have had some influence on your decision--walking through those neighborhoods, taking buses, all that kind of stuff. I know that--that was a long way from where we lived.
Nick Howley: Yep.
Mark Howley: So you're trucking a good distance back then.
Nick Howley: Yep. Yep. Yes, some. I think I got maybe some sense of what that neighborhood and life looked like. I went to--Mark's referring to is--St. Joe's Prep, which is in North Philadelphia. It is a fairly--the school is a fairly upscale Jesuit school, but it's right in the middle of a very tough area of Philadelphia, primarily because it's been there for 170 years, and the neighborhood kind of deteriorated around it. But they've still been able to get kids in there. I would say that was one. But I would say, probably the primary drivers were three things. First, my parents. My parents would always say that the only thing they could give anybody that had any lasting value was an education, and some type of value system, or a sense of right or wrong. And I--
Mark Howley: And we got a lot of assistance from our grandfather in that--
Nick Howley: That's right. That's right.
Mark Howley: And spoke to the the whole issue. And it was--what a--I didn't appreciate it at the time. You just thought, Ah, crap. I'm just hanging out at college. But as you get older, you're like, Man, that's a big gift for people. Huge.
Nick Howley: That's right. That's right. That's right. And Laurie--so that, I suspect there's some, impact of--I went to Jesuit school and they kind of always beat on, Do work in the inner city, for those that can't afford it. I didn't think any of that stuck, but probably some of it stuck. And I guess the third thing is, we got--we accumulated a fair amount of money. Frankly, more money than we could spend. And my wife and I started to say, It's time for us to figure out--we should give some of this back to the world. And when we talked about what do we believe in, we both came to the position that we thought the thing we could do that could help people is to help them get a quality education. And that's really the only way out of that inner city poverty rat trap you're stuck in.
Mark Howley: I also know that when you and I have spoken about it, just about generally giving money to things and trying to help people out that, that the buckshot is kind of frustrating. It seems like you shoot out and you hit 100 of them, but none of them are getting a good one. So you decided to focus. And that's not easy to do, when you've got a lot of people banging on your door trying to get help.
Nick Howley: Yeah, that's right. That's right. And we are--I would say we run this foundation--I kind of look at it like a business. We're very analytical, and we're very metrics driven. Which is unusual, by the way, in the nonprofit world. So I look at it the same way. And we invest. And what we invest in--scholarships and now other things. But we want to have substantial metrics that we can track it with. And and the ones that aren't working, we tone down, the ones that are, we tone up. And that will--that sometimes generates a lot of angst in the nonprofit world.
Mark Howley: Yeah, yeah. And when you say--I believe one of the metrics is to try and get them past high school and in some further education, where they can, obviously, try and make something of their life.
Nick Howley: That's right. We are always looking at putting students into schools that we think are college prep, in some way, shape, or form. Now, they won't all get through college, but we would expect them all to have a fair shot and probably get into a college. And particularly the ones that we support. And we track. And by the way, we track the kids. They have to keep a certain GPA, they have to write semi-annually reports. Now, we're not trying to drop them, but if they're not even trying, and their grades dropping off, and there's no effort, we'll drop them. And we'll tell the school--
Mark Howley: Like me. You would have dropped me.
Nick Howley: Probably.
Mark Howley: I didn't care.
Nick Howley: Probably. Probably. And by the way, we'll tell the school that. That's the kind of metrics we'll track. And we'll tell them, This isn't working. If you don't find a better way to to counsel these kids or help them along the way, we're gonna go somewhere else.
Mark Howley: Sure, sure. And it's--I've always--having just chitter-chatting about this around the fire, as we're reading history books, pondering poetry as I recall, mostly--
Nick Howley: That's right. And setting my jeans on fire.
Mark Howley: That's always the fun part of the night. Anyway, so, it's not easy giving money away. And like I know, for you, who's going to come to the school, and how can you get certain demographics? Men, women, and the like. And on the other hand, just just giving money away, obviously, everybody wants it. Who gets it?
Nick Howley: That's right. Writing checks is easy. It's easy to write checks. I mean, there's a lot of people who want to check, you write them a check, and you can--but giving it away effectively, and monitoring the outcome, is hard work. Much more harder work than I thought, and probably harder than most people would realize. And that is--you have to go visit the places, you have to track the kids, you have to keep track have all kinds of metrics, you have to be willing to face up to issues when they come up. It is--I just--I'll repeat myself again, but it's a lot of hard work to give money away effectively. I also think you have to decide, which we did, which was basically inner city education, you have to decide on what you want to do. Otherwise, you're just...
Mark Howley: Throwing money away. Just throwing it out there.
Nick Howley: Yeah. You're putting a drop in a lot of little buckets and it isn't doing shit. Other than making you feel good. The goal is not to make me feel good, or to aggrandize me. The goal here is to educate these kids and give them a chance in life.
Mark Howley: Well, that's where you get your satisfaction. I mean, I've seen some of the little things you send out on your PR and all that. Some of the kids have succeeded, and it's pretty cool. Pretty cool seeing them. And that ain't easy.
Nick Howley: No.
Mark Howley: They're coming out of a tough environment, nasty environment.
Nick Howley: That's right.
Mark Howley: And that's just hard. Back to business. I always think--you know I had a bag empire, if you recall. We dominated all the packages in the world.
Nick Howley: Of course. Now you have a medium empire.
Mark Howley: That's right. Just taking my success somewhere else.
Nick Howley: Yeah. By the way, I'd also say, building your media empire on slave labor.
Mark Howley: Yeah, well absolutely. Well we--
Nick Howley: Like many of the old people do.
Mark Howley: Takers, takers, takers. Anyway, so you're running it on the New York Stock Exchange. It's not like you could just wake up one morning and say, Hey, I'm gonna send this thing in, and now I'm on it. How the hell does that happen?
Nick Howley: Yeah, it--I'll talk about the TransDigm one first. Perimeter's a little different. TransDigm was, if it's 30 years, it was probably 14 years private, with private equity investors. And we turned over a number of times. And ultimately, at least in this case, we got big enough that--and people start--they want their money back every so often--and you can't get them their money back, and you have to find a way to get some liquidity on their investment, and the only real way to do it is to go into the public market, because you've outgrown the private market. So you can't have Investor A buy out Investor B, B being the ones in before, because the number's getting too big. There aren't enough Investor As out there that want to write a private check into it. So that's how you end up on the on the public exchange. To get people liquidity.
Mark Howley: But you have to reach a certain size, is there some--
Nick Howley: Yes.
Mark Howley: Okay.
Nick Howley: You have to be you have to be big enough--as a practical matter, you got to be somewhere in the market value of $2-3bn. And even that's getting on the small side for it.
Mark Howley: Yeah, yeah, that's that's a tiny one. Because then you have things like the--for those of you don't know, you've got the Wall Street, you have the New York Stock Exchange, and you have the Russell 1000, the Russell 2000...
Nick Howley: Those are just indexes. They're not actually trading. The market trading are New York Stock Exchange and NASDAQ, basically.
Mark Howley: Oh, okay, okay.
Nick Howley: Those are the two trading. And then there's the London Exchange, and there's ones in other countries, but the US dominates the world market for public.
Mark Howley: Yeah. Yeah. And then when you say--I always think people may not know this, because you're not business folks--but liquidity, always a word of--what the hell is that?
Nick Howley: Money. Money. Cash. Money. So somebody puts a $50mn investment in your business, they want to get 100mn back. It's not just there to make me feel good. They put it in because they want more back. So you have to attract the money in, then you got to get them a vehicle to get the money out. In the public market, that vehicle exists every day. You could trade your stock in the private world-that does not exist every day. There's nowhere to sell your stock, unless I would find you another buyer, or we would go public now. We did, with TransDigm, we--three times we recapitalized it by finding new private equity investors to buy out the existing private equity investors. Obviously, at a higher price. And we did that three times. But the fourth time, it just--we were getting too big.
Mark Howley: Yeah. So basically, let me put that in really lay terms. Basically, you're, say, ticket's a piece of real estate, and you can get 70% on it. So you borrow that. Then eventually you get the opportunity to maybe borrow more, but even a larger percentage of that. But with that larger percent, say at 100, and you need 70--the 70 goes to pay it off. Now is the 30--am I making sense here? Maybe I'm not.
Nick Howley: I'm not sure I'm following. I'm not sure I'm following.
Mark Howley: Okay. The point of line is, you're saying, I borrowed and I bought, I borrowed and I bought. Well, what the hell--I mean, explain that a little more in just lay terms.
Nick Howley: Yeah. To start off, you buy the company in the beginning, you need a certain amount of money. And we did what we call a leveraged buyout, like buying a house. We put 40% down and borrowed 60%. So $100--$40 in $60 out. Now, as we went along, for the first four or five years, luckily, we generated enough profit that we could either service the debt--or actually we had more--or we could use the extra profit to buy other businesses. But eventually, let's say we got to the end of the five years, we had done all that, but the people that put the $40 in, the equity, wanted their money back. So you have to--so now, maybe, rather than worth $100, it's worth $300. So let's say you can borrow 60% of that, 180. You need 120 of equity. Because you got to buy the other people out at 3x. Now, you don't have to buy it all out, because the management, like me, has to leave their equity--usually leaves their equity in. But you have to buy a lot of it out. Then you do that again, and you 3-4x again, and now you don't need 120, now you need 480. You do it again, now you need $1.6bn or something like that.
Mark Howley: So you gotta--I mean, you don't get there by just--you have to find ways, obviously, to run something efficiently and make money on it.
Nick Howley: That's right. That's right. You have to be able to increase the value. Increase the value of what you have. And to keep growing, to get to this size, you have to find other things that you can buy, where you can increase the value also. And increase the value is a simple word for make more profit.
Mark Howley: Yeah. Now, and that's where I know I've talked to you quite a bit about this where, okay, you're going to buy somebody. There must be some criteria.
Nick Howley: Oh, yeah.
Mark Howley: I know it's aviation, but how do you--let's say--I want to buy Joe?
Nick Howley: Well, in the aerospace business, we are very, very focused on what we buy. We only buy aerospace businesses, one, they gotta be in the aerospace business, they have to be proprietary product--that means we own the intellectual property. In other words, we're not a contract manufacturer, we're not making somebody else's. We own we own the intellectual property. So it's a proprietary. And thirdly, we want businesses with significant aftermarket content. In other words, you put the equipment out in the field, it stays there in use, and you sell a lot of spare parts and repair services. So we buy proprietary aerospace, significant aftermarket. And that's not that easy to find. So we kiss a lot of frogs to find the prince.
Mark Howley: Okay, so if you were to find them--let me get my thoughts straight.
Nick Howley: A prince.
Mark Howley: Yes, you find a prince.
Nick Howley: You're kissing 100 frogs.
Mark Howley: Yes, you kiss 100 frogs. And that--now I know where I am. After looking at all these companies, and you say, geeze, there's a handful of companies out there. You need people to do that. That's not just--you need more than a few. Because you're gonna have to drag them through the paces to make sure that they do something well. And how many people--you once said--what did you say-- you're kissing, whatever, you get to 30 frogs, and you get one prince.
Nick Howley: And it's worse than that. On buying businesses. You look at more than 30:1. But you were asking about people. Yeah, when you buy one, you have to change the business. If you buy a good business that's making--I'll say $100--if it just keeps making $100, you have gotten nothing back on the investment you made. Five years later, it's making $100. All you did was give the money away for nothing. So you have to turn it into $200 profit. And that--you can get some of that, if you bet right, and you're in the right market, you can get some of that by market growth. But rarely are you going to double in 4-5 years by market growth over a period of time. So you have to improve the operation of the business. And typically that's--you have to try and find ways where the price does not reflect--I'll say the value you give to the customer. You have to you have to reduce the cost. And you have to find ways, typically, to come up with some kind of new business, either new customers or new products, that you can sell profitably. And that's basically what you do. So it's hard. It's hard. You have to change the culture of the existing business, which frequently means you have to change the manager.
Mark Howley: Which, jumping back real quickly to your early career--the Naval Shipyard, which I think you did some work in, when you were in college--
Nick Howley: That was my first real job.
Mark Howley: And that's a model you didn't choose as you moved on.
Nick Howley: No. No. I would say--a couple of things that I figured out. I don't want to work for the government. And I probably don't want to be an engineer.
Mark Howley: Yeah, I always like here to, just kind of for a moment, swing back to youth.
Nick Howley: Yep.
Mark Howley: Okay, your youth. And I remember--I'm presuming this was the start of your entrepreneurial business career, that you had a newspaper route in Ocean City, New Jersey, and you had had the assistance of your two brothers.
Nick Howley: Yeah.
Mark Howley: Tell us a little bit about that. What was your strategy there? I mean, you had a big one.
Nick Howley: Yeah, right. My strategy was, in order to get enough money selling newspapers, you had a cover a reasonable sized geography. But I didn't feel like doing that. So my goal was to just cover the little area around our house, but cover it intensely. And have my brothers cover the far out areas where you actually--
Mark Howley: There we go, there we go.
Nick Howley: And I think it worked pretty well--pretty... I didn't have to do so--I was in charge of strategy...
Mark Howley: Exactly.
Nick Howley: Strategy, which was, I won't do a lot of work and you'll do a fair amount of work.
Mark Howley: There we go. There we go.
Nick Howley: That was the strategy. It was a good strategy.
Mark Howley: Yeah, Andy was telling me that somehow, at the end of the week, you would have your money, and just say it'd be $10. And you would be like, Okay, three for Dan, three for Andy, four for me. And they would be sitting there like--
Nick Howley: Management fee. Strategy. You think that's free?
Mark Howley: They were bewildered. They're like, how the hell did that happen? Something happened. And what can you say? Without you, the whole damn thing fails.
Nick Howley: Exactly. Well, then we had another business. We had Dannick Painting Company.
Mark Howley: There we go. I remember that. I remember that.
Nick Howley: Painting houses at the seashore, and Dannick is Dan and Nick. This one, this was a little tougher business. Painting is a hard, hot work. The trick there is to get progress payments, so you can get paid a little bit ahead and buy the paint. That assumes that you are going to buy the paint, put the work in, and it's going to take anywhere near what you guess. The problem we have with that business is that we would run through the progress payments, and then we couldn't afford to finish the job.
Mark Howley: Or you stop. Then you just stop.
Nick Howley: Well, yeah, can we get the nerve up to ask for more progress payments, or should we just stop?
Mark Howley: Well, you got them by the short sticks, if you know what I'm saying.
Nick Howley: But it's hot. On the other hand, it's hot, sweaty work, even [inaudible] work.
Mark Howley: Oh, I remember that. I remember that. Oh, good lord. I hated doing that shit. And I generally--my attitude was this: the minute they gave me the job, screw it up. Just do it horrible.
Nick Howley: You would have been a good Dannick employee. No, we would have probably run out of money before we paid you. That would have been the downside, for you. Not for us, necessarily, but for you.
Mark Howley: Yeah, exactly. And back then, just kind of rotating back a little bit here, that you had, I know that--you went--we were raised in a town called Havertown in Delaware County. And you went to St. Lawrence, and then on to St. Joe Prep. And I think it's St. Lawrence, there was some sort of colorful experiences, maybe you'd say, were things that were just kind of a little strict at times.
Nick Howley: Oh, you gotta remind me some of that, Mark. But we did live in what is famously known now as Delco, which is kind of a euphemism for a low life. I mean, I would say now. At least in the Pennsylvania, if not the country, even. Let me just think--St. Lawrence. Give me a hint.
Mark Howley: Well--quite a few of the kids, if I remember, we're not pursuing a higher education.
Nick Howley: Yeah, I would say that's safe. We were in a very manageable classroom, sizes of typically 60 kids or more in the classroom, which required very strict discipline, I mean, literally strict discipline, like beating the crap out of them to keep them in line. And it was Catholic school, but you know what, it taught a lot of kids to read and write.
Mark Howley: And you had--I always liked--there's some good nicknames in those classes. What was it? What was the one--mouse? No.
Nick Howley: There were all kinds of foul nicknames. I'm not going to come up with a nickname now. Some of them probably are still alive--if I come up with one, it'll be very demeaning.
Mark Howley: Exactly. But now, when you went off to college, my--as I'm recalling it in my mind, and memory is a weird thing--you're playing football at Drexel. And then at some point--
Nick Howley: It took up--it was a big part of my life.
Mark Howley: Yeah, and at one time, at some point in there, you pivoted, or at least--I don't know if it was planned, but obviously, all of a sudden, you got quite serious, because you ended up going to Harvard. So was there something in your head that went like--
Nick Howley: Yeah. Yeah, that's interesting. And I was not a particularly good student in high school.
Mark Howley: I recall.
Nick Howley: I thought my world was playing football. And that was my world. I didn't--I hadn't looked around and noticed there weren't many five foot eight, five foot nine linebackers in the pros.
Mark Howley: Not a lot. Not a lot of them.
Nick Howley: But I think there was one, so... But I wasn't a very good student. I went to Drexel, and I was an engineering major, and I would test tell you, engineering majors playing football in college are like hen's teeth. There are very few and they usually--somehow, but actually, it was a good thing for me. And my dad scared me. An interesting story on that. He basically scared me. There was a--we were out to dinner once, when I was getting ready to head off to college. And we were--it was a kind of a bar place. We were having dinner, and I won't say the name, because maybe the guy's still alive. And there's a guy that was like a huge football stud--three or four years ahead of me--in one big football schools. And he was like, Oh my God. And so he's now 21 or something now, or... 22. He's a big, huge, fat slob. Sitting on the bar, just hammering down drinks with three or four other fat slobs.
Mark Howley: Consistent with the St. Lawrence audience, I mean...
Nick Howley: That's right. My dad goes up and says hello to woman. What are you doing? Oh... nothing. They gave me a job, but fuck them. I told them to go fuck themselves, mumbles on. And my dad comes back where we were eating dinner, and said, that's x, y, z. And I said, Woah, woah. And he said, You know what? You keep going the way you're doing, that's where the fuck you're gonna be in four or five years? Sitting on that stool, telling people how good you used to be in football four years ago and not doing shit. And it--for some reason, for me, it started to register. And I got into college, and I simply--I started right off as a freshman, and I had to go to summer camp in the summer. So I hit school, and the engineering stuff came at you like a tidal wave, and I simply could not have survived if I didn't change my lifestyle. I'd have been blown out in two months. So it forced me into a schedule where I had to get up in the morning, I had to study, then go to class, study at lunch, go to football practice, study again. And my dad gave me some rules that actually stuck with me. He said you have--you got to do at least an hour of homework for every hour of class, which actually worked pretty well for me. And he said, If you do that, and you stay at it like a job during the week, you can typically take the whole weekend off and party--
Mark Howley: Oooh, I like that. I like that.
Nick Howley: And you can live--and most things your parents say go in one ear and out the other--for some reason, at that point in my life, pointing out the past football bum who I respected and giving me kind of these rules on how you're going to have to do it if you want to get through this. And football helped because I had--I couldn't have lived if I wasn't organized. I could never have gotten through it.
Mark Howley: So it forced you. It forced you.
Nick Howley: It forced you into a schedule that I would never have gotten to otherwise, which is--
Mark Howley: I mean, I don't know if it happened, but the jet fuel fired up--I guess your junior year--
Nick Howley: Somewhere around there. I started to say I'm not going to be an engineer. And I want to go to a fancy business school. My father told me, Great backgrounds, good engineering, and get a fancy business school. It used to be just for graduate degree, it used to be just get an engineering degree. But the world's changing. And an engineering degree, if you want to be a management, you ought to go to a fancy business school. And again, I said, What's a fancy business school? And he gave me the, Well, Harvard's real fancy, Penn's real fancy, Dartmouth's real--
Mark Howley: Shit.
Nick Howley: And I think, Oh, shit. Well, okay, I'm not doing that. But then, I started to say, to do that, I'm going to need a 3.7, 3.8, 3.9 kind of GPA to have this happen. And that became my goal. And I just--it became a real goal, almost from the end of my sophomore year, where I just grinded at it.
Mark Howley: Yeah, I remember that.
Nick Howley: I got the idea. And it wasn't--once you got the idea of how to study and how to listen to class and what the tests were going to be like, and, frankly, for things that were electives, load up on things that there was nothing to do and you could get an A, which there are many in the colleges, we all know. It worked for me. It worked for me.
Mark Howley: Well, good, good. You talked about Dad, and he had such a strong influence on all of us. I was a mess in college, and even after college. Well, I was moaning. It was just too hard, and I don't know if I could keep up with it. And basically, trying to make up excuses. To which I remember he was down in Jersey Shore once, and he sat with me. And he said, You know what right now, Mark? I think if I opened your mind, it would be filled with beer bottles and girls. And that's it. And he said, So have that fun. But that is 40 miles of bad road. And somehow, at that point, Mom got real sick. And I decided to get--I just, I got sober. I didn't know any other way to do it. And, at which--I just didn't know. I didn't how to play the game. So I thought, Well, I know I'm doing this way too much. And I gotta get that under control somehow. And living in a big Irish Catholic family, that was not exactly easy. So I had to draw the line there and say, Okay, I'm gonna step on the other side of this and see if I can wing there, and kind of much like you, when I got into sales, I was at the bottom of the rung. There's no fast way.
Nick Howley: That's right.
Mark Howley: You just have to sit there and say, Okay, I show up every day, and I'm gonna bang on that damn phone, and I'm just going to be good at it.
Nick Howley: Yup.
Mark Howley: And really, that, for me, that was a huge launching point. Because I learned it. This shit's hard. This shit's hard.
Nick Howley: Yeah, there's no magic bullet. There's no magic bullet to any of this.
Mark Howley: No.
Nick Howley: It's--academics, to do decent, and work, it's hard. You got to work hard. I hit a home run and hear these stories, I didn't do much and everything happened to me--that's 99% of the time, that's just pure bullshit.
Mark Howley: Yeah, I agree. I agree. It's endlessly--whenever I've spoken to people who have some success, whether it's with money or career, it always fascinates me that they spent a lot of time in it. You meet a guy or gal who's 45 or 50, and they've been hanging out playing--you love to listen to--some some bar or something like that down in Key West. But they're they have a good life. And they're doing it.
Nick Howley: Yep.
Mark Howley: That's a lot of work.
Nick Howley: Yep. It's a lot of work to get there.
Mark Howley: That's a shitload of work.
Nick Howley: Yep.
Mark Howley: Yeah, yeah. And that's not even the big screen.
Nick Howley: Yup.
Mark Howley: And so I've just become more and more fascinated with that as I moved around the world, that all these people that I met were really curious and enjoyable individuals, but they were not wildly successful. And it really opened my eyes to like, Wow, so something made them tick. That wasn't me. That wasn't me. But it's almost equally as impressive that they threw their time in there. And without a doubt. Okay, so we talked about the New York Stock Exchange, we started all that. And then at some point in this little story, little story, big story, you start to think, Hey, I'm doing something that's making money. I got something that's got the goods going on. And was there a time where--I mean, in your career, where you said, Wow, this is a--little bit of I found, I struck gold. Was there some time where you said--and I have the knowledge, I have the skill set, and I can do this?
Nick Howley: Yes. I would say if you asked me, and I'm gonna get back to TransDigm, because by the time I get into this Perimeter, I was older and wealthier, and all this. But TransDigm--if you would have asked me what's going to happen here, I would have said, We're going to buy these businesses, I'm going to--with a private equity buyer investing with us--put whatever money I have, which wasn't a lot, in the deal, but it was everything for me, and then some. I'm gonna run them for five years, I'm gonna sell them, I'm gonna take my cut of it, and I'm going to maybe put some in the bank, maybe get enough for the kids to go to college, maybe if I'm really lucky, buy a house at the beach, and then I'll go figure out my fame and fortune. Where do I go from here? Because I'd have been maybe 45. And as I went through it, I became more and more convinced that I really know this. This is something we can really run with. So it turned over--I turned out all the investors three times before we went public, and each time is somewhat of an opportunity to punch out and leave with them. But I was increasingly convinced that I think we uniquely knew how to do this, and we were getting better and better at it. And I liked it. And frankly, I liked what I was doing, I liked the people, and I was too young to retire. I was gonna have to something.
Mark Howley: Sure. Yeah. I know that for a lot of us, there's that period, and I'm--for me, it happened to be in sales around late 30s, early 40s, where all of a sudden, I said to myself, Holy shit. I can play, and play well in this game. And it wasn't like it turned on. It just evolved to as you start to go into places, you start going--questions are coming in from right and the left, and you're just comfortable.
Nick Howley: Exactly.
Mark Howley: You're comfortable in your skin, you're not a nervous wreck. You're just able to answer questions and ride. That's not--that takes a lot of training. A lot of training.
Nick Howley: That's right. The other--on that point, you get a baptism of fire by that when you go into the public market. When you go into the public market, you have to continually do presentations to shareholder groups, you have to do public earnings calls every quarter, and you just have to get--you get a number of the people are very, very aggressive. They're aggressive questioners, they turn antagonistic pretty fast, you get all sorts of questions all over the place. But it doesn't--after a while, if you know your stuff, you get comfortable with it.
Mark Howley: Can you just tell them from the outset, Go to hell? Does that work? Like you just so cool--
Nick Howley: No. What you can say, as you get more established, a little more established, not at the beginning, but what you can say, if they press you too much on the business model or what you do are, is, I like to joke, there's a lot of seats at the bar here. If you don't like me, move down the bar and sit next to somebody else. My job is to tell you honestly what I intend to do. I can't guarantee you an outcome, and I can't guarantee you'll like it. But you know what? You don't have to like it. You can sell it and leave.
Mark Howley: Yeah, yeah. Well, it's like anything. It's a little bit of a roll of dice. They've done all their due diligence, but the roll of dice, really, is you. It's talking to you.
Nick kHowley: You never know what the future will bring, and you never know until you see it. You never know whether I'm full of shit.
Mark Howley: No, no. And I would say, I know, probably 82% of the time, you're full of shit.
Nick Howley: Yeah, right, of course.
Mark Howley: I mean, why not?
Nick Howley: But the 18% that's in the aerospace industry, I'm not.
Mark Howley: There we go, there we go. It's a clean divide, clean divide. Now, as you have gone along in your career, again, I've watched it, obviously, you and I've talked constantly about it, that your job changed, everything changed. And a lot of people who I talk to, in smaller businesses, there's this time where you move from I'm running a business to--they always say, I'm in the business, and now, whatever the hell you call it, out of the business, whatever the hell they say, But at some point, your job becomes a lot more the diligence of doing the work, hiring people, giving promotions, setting up pay scales, organizational stuff. Was that something you found a little difficult to do at first, or just kind of like, Oh my gosh, how do I do this?
Nick Howley: Yes, and as you get bigger, it also becomes dealing with the outside world, because you're continually in a fundraising mode. You're continually--and you're continually then trying to deal with them. But yes, I would say, it is less satisfying running businesses directly. Being the Head of Sales and Marketing, being the Head of Manufacturing, or being the President of a an independent, smaller business, is a more satisfying job. You do something and you can see the results relatively quickly. The bigger the company gets, and the more you get removed from the line of fire, the less direct satisfaction you get. And the much slower it is to see any results you did. But that's just the price of getting bigger.
Mark Howley: I mean, you know I had a small businesses, 70-80 employees at the time, and we unloaded it, but that was the thing for me. I liked it. The audience out there, it wasn't anonymous. And I felt like, Oh, I know those people. Now the backside of that is, you tend to be too charitable.
Nick Howley: That is true.
Mark Howley: Oh, I know Joe, I know his husband, or wife, whatever it may be. And oh, I don't want to get rid of him. If anything, I was guilty of probably dragging that along more than a year or so. And by the time I did it, I used to say, now what you've done is, in a way, the person who's working for you, you're kind of--you're sapping their dignity, because it starts to become known that that person--people know. They smell it. They're not workers, they're not doing what they want--and really the right thing to do in many times is to have let them go earlier. So with you, a few questions that circle back to younger guys and gals. Now, it may be anonymous to you, but it wasn't at one time--one time you're more--
Nick Howley: For many years, it's not. When we had smaller businesses, I was very involved. At some points, I knew everyone in the company, at different times. By the--I would say--at one point we were up to 24,000 employees, clearly I didn't know everybody.
Mark Howley: That's a little hard. That's a little hard. So now--but I mean, one of the questions I frequently field from younger people is two things. One is: Oh, my god, what am I going to do? I'm searching for what I want to do. I'm going to wait, and eventually it's going to come to me, rather than I go to it. Just share your comments on that for anybody in--young folk.
Nick Howley: Yeah, I would say, first, you got to do something. You can't just sit and bring your hands and do nothing. I would say it is good to have a goal, what I'm after. Now, it's--I want to, I don't know, be head of an engineering department, I want to be president of a company, I want to--that's good. But you're not going to get there right away, and it's not going to find you. You're going to have to find it. I would say one, you got to work hard. That's a fact. Try and get into something you have some interest in. Hopefully you're lucky enough and you can say what that might mean. And it may not be perfect, but at least it's close. And be a hard worker. Be a hard, responsible worker. The other thing I'd say is be honest.
Mark Howley: Yep, that's a big one.
Nick Howley: A very big one. Be honest with your employer. Don't try and be cute or bullshit--that'll catch all the time. I would say you should try and be educated enough for the job you're going into. That doesn't have to be a PhD, but whatever the requirements are, you don't want to feel like you're a secondhand rose, so you should be educated enough for whatever that job is.
Mark Howley: Well the peer group starts to crank up.
Nick Howley: Yeah, that's right. That's right.
Mark Howley: Each layer you get up, you get to another 10 people, whatever it is, and now they're all running a little harder.
Nick Howley: That's right. That's right.
Mark Howley: Motivates you.
Nick Howley: That's right. And the other thing I'd say is, be flexible. You may be wrong the first time. You may be wrong the first two or three times. You may whiff the first few times. I mean, it--I didn't come out of college or come out of a fancy graduate school and jump right into this. It took a while to work my way through it, to find an opportunity, be working at the right place at the right time, and manage to get myself to the right level that I could do it. But it looked pretty frustrating to me for a while. And it looked like, geeze, I'm on a treadmill going nowhere, and I'm never gonna get to my goals. But--
Mark Howley: Absolutely. Absolutely. And I think we circle back to dad making some comments--who had such a strong influence on us. Good guy. A good guy. And as was our mother. I mean--we're very lucky in that you got great, great role models who--they worked in a unit, and they tried to figure it out with eight kids, and they did a great job.
Nick Howley: Yep.
Mark Howley: Early in my career, I got a job in the bag business, okay. Now I can promise you, at 18, I wasn't dreaming of saying, God, I want to sell bags. I mean, what better thing could there be? The reality is, I got a frickin job. And to me, there we--you're in the game. Now you got to figure yourself out getting a job. And I think a lot of younger people don't realize that--Get in the game.
Nick Howley: Yeah.
Mark Howley: If you're in the game, things happen.
Nick Howley: Yep.
Mark Howley: Things happen if you're working hard, and you're ethical, and you're not a big fat jerk. I always say there's no shortage of assholes in business.
Nick Howley: That's right.
Mark Howley: No shortage. Pompous assholes that are trying to knock you down all the time. And they can be very frustrating when you're young, because you don't--you're shocked by it. But in the end, I think that you have to have a goal, what you're what you're pursuing. And dad once said to me, I was talking to him about my job at Fresco at the time. I was a manager, I was driving hard, and I was all pissed off, because the company was run by these Italians, and I felt like I wasn't going to get anywhere. I was busting my balls, and all that. And he once said to me, You know, Mark, one of your problems is you don't have the right spots on your tire. And I didn't know what the hell he was talking about--basically he's saying, You're not from Milan, Italy. And unfortunately, that's what that is. You can jump up and down all you want, but that's what that is. At which time, then he said, So what do you want to be? Like, what is it you want to be? And I was young, and I didn't have the confidence to say something. And I remember him saying, Is it safe to say you would like to be the boss? And I, at that age, I was too young to say it. And I finally just went, Yeah, that's what I want to do. I want to be the boss. And he was like, Well, there's nothing wrong with that. You can do it. You just can't do it yet. And that was a huge influence on me. Because the fact is, I did think I could do it. After another 10 years or so, I thought, Now I know how to do this shit.
Nick Howley: Yep.
Mark Howley: I know how. And let me let me circle back to--
Nick Howley: Do you know the sled dog--do you know the sled dog analogy?
Mark Howley: Oh, I love that one. Go ahead, tell them.
Nick Howley: That Dad used to us on that. If you say, Do you want to be the boss? He used to say, Well, it's like the dogs on the dog sled. There's only one dog sniffing fresh air. The other 10 got their nose up somebody's ass. That's the lead dog.
Mark Howley: I always loved that. And he left that when the dog is--the other ones are sniffing somebody--he left that out for me. So I left, and I'm like, what the hell does he mean by that? I was reflecting on it, and then I thought, Okay, wait, oh, my God, they're all sniffing the guy ahead of them's ass. I said, He's--what the--that guy's a freakin genius.
Nick Howley: Only one's breathing fresh air.
Mark Howley: I think he--I think as a role model, he instilled that in a lot of us, that the goal here is to work really hard, and--I remember he said to me, you work really hard, you work really hard, and maybe something good will happen. Maybe.
Nick Howley: That's right.
Mark Howley: If you don't work hard, it won't happen.
Nick Howley: Guarantee it won't happen. I agree with that. I agree with that. The other one I use on that, which is somewhat related--I have actually used this when people have asked me Why did you buy the aerospace businesses at the beginning? And we were looking for engineer product businesses to buy as they became available, but we used the--the saying I've used some number of times is: I did it for the same reason the bulldog licks his balls. Because I could. Because I could.
Mark Howley: Well, now we're wandering astray. We need to rein this in, because that could go a lot of directions, and ones that I happen to enjoy, probably more than business or anything else. Now, I keep circling back to these kids, because I keep forgetting to bring something up. But now I've had it in my mind all along. Do you have any experience--I'm sure you do--with at what point when they're young--a guy once said to me in the South, I just loved it. I sent a sales guy down, and he said, Mark, you know what the problem with that boy is? That dog don't hunt. Do you have any experience with what you think with younger people who have maybe--they've set their expectations too high? They want things to happen too quick, they got happy feet, and ultimately--maybe you don't, but I mean, when do you discover that, and just say, Hey, this young man or young woman doesn't accept they have to have some patience?
Nick Howley: Ah, yeah, yeah. I mean, in my business experience, when that has come up, I've just told them. This isn't gonna work for you. Maybe it doesn't make sense. Maybe the speed of progression isn't what you want. But usually, I would say for us, the company grew, at least at TransDigm, it grew so fast for so many years that we were needing people all the time. And I don't mean just people. And we were needing what's hard to get. As I like to say, smart, energetic and honest.
Mark Howley: That's a small pocket. That's a small pocket.
Nick Howley: And that's a small population. And that was probably my biggest sort. And I thought somebody was smart enough, energetic, by which I mean hard working, not just fidgeting around, and honest, or at least close to honest, you could coach them on honest, if they're afraid to talk to you. I would work hard, and I would try and move them at a rate that was at least good enough to keep them somewhat occupied. And by the way, I would tell them that, We think you can make good progress here. Now, there's no guarantee. You have the attributes, you're gonna go in these jobs, you have to perform in the jobs, but we think you have the attributes.
Mark Howley: You got game, you got game.
Nick Howley: You got the game! And if they don't--and that was always my test: smart, energetic and honest. I can't fix dumb... I can't fix dumb.
Mark Howley: Oh, that may be politically incorrect today, but we're gonna leave it in here.
Nick Howley: I can't. Maybe other people can. I can't. I can't fix lazy.
Mark Howley: No, that's never coming back.
Nick Howley: I can't fix lazy and I can't fix honest. As I like to say, on lazy and honest, If your mom didn't fix you by the time you were five or six, sure as hell, I can't fix you.
Mark Howley: It's the old--you've talked about a lot of people are bowls versus brains.
Nick Howley: That's right. You need a little of both.
Mark Howley: Yeah. But I mean, the first one is, at least in my experience with most salespeople is, you cannot--there's a certain way you want people to hunt, and he can't fake that.
Nick Howley: Nope.
Mark Howley: You just can't. And some people got it, some great people don't. It's just not there. And I'll tell them that. I'll say, Hey man, we cross paths three years from now, I would not be surprised if we bumped into each other and you're doing a lot better in some other field.
Nick Howley: Yeah. Yup. Yup.
Mark Howley: It just so happens that here, at this one, you're going to be--
Nick Howley: And you do no one a favor to encourage them in something they're not going to work in, or culture they're not going to work in. Particularly someone who's in the stage of building their career. If it isn't going to work, it isn't going to work here, and they're better off moving to another place where it might work for them.
Mark Howley: You've also talked about, with me in general, that as you get along further up the ladder, significantly further up the ladder, all the legal crap that comes in. I mean, you're running a public company--I never--well, I sort of know it, but I get a bird's eye view from your position, and that is, Oh my god, they're out there picking away--
Nick Howley: The regulatory burden is very high. To be a public company, there's--you have a significant staff and expenses on lawyers and people complying with all those public company regulations. You also get all sorts of attention for other regulatory requirements, and it just, it becomes--you get litigated all the time. When you're a public company, you get sued all the time. Which horrifies you at the beginning, but you just got to get your mind set on that. Many times--sometimes there's reason, we think, usually we're on the right side, or we wouldn't go down the road. Many times, it's just shakedowns. Shakedown. Shakedown suits. Somebody's looking for some money to go away. But it takes up a significant part of your time.
Mark Howley: Yeah. I think that it's so interesting listening to some of the--for lack of a better term, a lot of dirtballs out there, trying to find ways to shake a buck out of a tree, and all they're doing is shaking. They're not doing anything, they're just trying to cause disruption.
Nick Howley: You got to learn to deal with that, unfortunately.
Mark Howley: Yeah, that's just what it is. And how has that changed you--in a way, kind of--kind of a heavier question, I don't know whether I can find the way to express it. But it changes you as a person. It changes you as--the way you're running a business, you say things get anonymous. Well, now all of a sudden, you've shifted from like, dude running a company, dude going onto the New York Stock Exchange, and now, guy getting shot out a lot. And people are lobbing bombs at you, too.
Nick Howley: Yeah.
Mark Howley: So, I mean, that has to alter--just the way you move through life.
Nick Howley: You get more guarded. You get more guarded on who you talk to them what you say to them. For sure you get more guarded. I would say, for better or for worse, probably more for worse than better, you end up cynical. More cynical than you would be otherwise. But you got to find a way to balance that that. Because mostly, people don't want to deal with people that are just cynical and negative about everything. So you got to tuck that in a side corner. You still have to try and be an enthusiastic, upward kind of person.
Mark Howley: Once, you and I were talking, and I had some bad experiences when I was out in Seattle with people trying to screw me, and all of a sudden, my view, everybody looked at me like, What the hell are you coming at me for? What the fuck are you doing? I don't trust you. What's going on? And I think I was talking with you once, you said, Hey, man, you gotta go into everything assuming they aren't going to do that.
Nick Howley: That's right.
Mark Howley: Because if your if your reality gets so distorted, which will happen--I mean, I think to all of us--where just everybody talking to it's up to no frickin good. What's their game? And you just can't live that way in business. You can't--you just--you don't get anywhere.
Nick Howley: My comment on that is: you have to assume that somebody you're going forward with in a business transaction or business relationship is going to act in good faith. Or else--if you can't start off assuming that, don't do it. Go somewhere else. There's--as the old saying, you say, you can't do business with a crook. There's no amount of paperwork or contracts that's going to cover you if you think somebody's a crook. And to some degree, bad faith is the same as that. On the other hand, you got to have in the back of your head, What if I guessed wrong? I can't be stupidly naive. And assume there's some probability this goes wrong. And I think, maybe the older you get, the bigger the company gets, and the more transactions probably if it's--you assumed it's 95% upbeat and 5% downbeat, and you got to cover your ass on 5% of them. Maybe the bigger you get, and the longer it goes on, maybe you're up to 70:30 or something like that. But you can't--if you get to the fact that you think it's all bad, you either leave, or retire, or stop doing it or--it just, it isn't gonna work. Life is too unpleasant.
Mark Howley: Let's pivot for a moment to the charity. So we talked about you do the Howley Foundation--
Nick Howley: Let me back up on that. Let me back up on your point. I would say, by and large, I enjoyed what I did. For the vast majority of my career. I still enjoy what I did. Not to say there weren't--but I liked it. I was enthused. I liked the people, I liked the place, I liked the business relationships. And I genuinely felt good about it.
Mark Howley: That's a huge thing. That's a huge thing. In the bag Empire--let me fill you in on a couple of things. We have an argument in the bag empire--argue price, argue price, argue price, and then drop down like a madman to get the business. Is that good--
Nick Howley: Well, that's interesting. What you try and do, in the world I've lived in, is engineered product. And engineered product is also kind of nichey kind of markets. It's typically very heavily engineered, thus the name. And usually fairly specific to the application. And, I would say, reliability, consistency, things like that are vitally important, because it's typically a small, highly engineered thing going into a very big system, where the cost of failure is immense.
Mark Howley: An airplane.
Nick Howley: An airplane is perfect example. The other example I'll give you is the firefighting stuff. You have these huge airplanes ready, the thing's burning down--if you can't get the product there, deliver it, and it works, the cost is horrendous.
Mark Howley: What's your experience with the toilets on planes? I've always found that--
Nick Howley: Yeah, we make almost all the sinks in airplanes.
Mark Howley: Oh, boy. Oh, boy.
Nick Howley: Or an awful lot of them. I mean, the issue there is that people can't fly an airplane if the bathrooms don't work. They have to have so many bathrooms per person, and they can't fly an airplane. So you'd say, what's a leaky faucet matter? Well that's why it matters. You have to start canceling flights. It's hugely expensive. People can't be pissing in their seat. It's just bad--it's bad business. It's just bad business.
Mark Howley: Exactly, exactly.
Nick Howley: You're not allowed to fly! You have to have so many seats or you can't take off. But to your point on the pricing, so No, no, no, then dive. I mean, what you try hard to do in the engineer product, and particularly if it's a proprietary, that meets your design, you have to keep trying to convince people what matters to you is that this damn thing works. And if it doesn't work, we fix it fast. And we deliver it on time. Because the huge expense to you--I'll say flying an airline is--the goddamn thing breaks. And either God forbid there's a safety issue, the plane crashes, but the more common one is, you can't fly. So you lose the revenue from the flight. So either it doesn't work, or same issue, we don't deliver it on time--
Mark Howley: And fix it.
Nick Howley: Yeah, it's not everything will foul up sometime, but you fix it fast. That's the huge price. What they pay for the thing is a de minimis part of their exposure.
Mark Howley: Yeah. I would argue that--let's just say, assuming you have a good product, and I know a lot of my competitors had a good product, that service and response time is--it's fascinating how lousy people are at it.
Nick Howley: Exactly, and don't even get it.
Mark Howley: Like they don't get back. You call into these companies to--I'll bitch at them, and--not in my business, but just individually--and there's no--they don't call me back.
Nick Howley: Yup.
Mark Howley: Nothing.
Nick Howley: Yep, yep, yep.
Mark Howley: Well, we had a lot of different ones in the bag business, a very sophisticated group. And we decided, in our business, we would never hire an engineer for fear that they make us do shit we didn't want to do.
Nick Howley: Oh, you don't want them.
Mark Howley: Actually, no, over the years, like in any industry, I got wildly familiar with all the equipment-making stuff and going all over Asia, and traveling around to the point where I got to a point where I walk into a plant, I knew what the equipment was, I knew what it could do. And that--huge. Huge for me to be able to comfortably make something and service it to know how the hell it's made.
Nick Howley: Yup.
Mark Howley: Because you don't want to let that stuff get out of hand.
Nick Howley: Yup.
Mark Howley: You can't keep customers happy. I just wanted to bounce back to your your charitable things. How many charitable organizations do you contribute to and participate in?
Nick Howley: I would say an awful lot of what I do now is related to the giving of the Howley Foundation. And we give scholarships for many places. And that's probably the--was the biggest. But we also have increasingly started to support people that are starting new schools that we think can meet the clientele that we're looking to help, that are expanding networks of schools. They get two that work, and they're trying to turn it into three or four or five. We've also picked up more and more post secondary education--what do I mean? College scholarships, and even which I think is also very interesting, sort of more occupational kind of training, which in many cases is way better for people. Way better. For occupational training. Now I'm--I have some other ones I'm on. I'm on the Cleveland Clinic board.
Mark Howley: I knew that. That's one I wanted to--that's one I was thinking at, and I forgot.
Nick Howley: Probably one of the biggest hospitals in the world. One because I think it's a great thing in Cleveland. And the other is, it is, as part of our foundation, we run a very substantial nurses and medical tech program with the Cleveland Clinic. Almost all to give inner city kids a career option. Nursing, for instance, is the highest paid major coming out of most colleges now. And medical tech jobs, typically x-ray tech, things like that, pay a 20 or 21, with a couple year degree, they pay significantly better than many college majors. And they really bring you into a world of a big hospital that'll pay almost any education from there on in the org.
Mark Howley: Yeah, yeah, there's a lot of angles to go.
Nick Howley: A lot of angles to go. And it's a damn stable market, and it's growing, and it's not gonna get moved to China, and you're not gonna close the place down. We do that. The other one I'm on this just fun. I'm on the Rock and Roll Hall of Fame board.
Mark Howley: I know. I love that one.
Nick Howley: That's just fun. It's just fun stuff. They have fun events. They do things like that. The induction ceremonies are cool. My wife and I are our big music fans. So we like that.
Mark Howley: I love it. There's two things I know. One thing is, you mentioned that you met Alice Cooper once--
Nick Howley: Oh, yeah, yeah, yep. Yep, we met--
Mark Howley: He had some candid comments about his career.
Nick Howley: Yeah.
Mark Howley: Yeah, I know, I get a kick out of that. And I also get a kick out of some of the--I just--maybe I'm running over here a little, we can edit it out if need be. But you mentioned, I think, a couple of these bands, I guess like kind of rap-type bands, that you were so impressed with the people and like their intelligence, their their awareness, their--what they put out publicly is significantly different than the true--the nature of who they are.
Nick Howley: Yeah, and I don't want to go through all the specifics of that, because it was somewhat small and confidential. But the one I was mostly impressed with was, if you remember Public Enemy, Chucky D was the Public Enemy guy. We went to a small group of 20, 25 people with him where he was kind of the speaker, and he was just a very smart, practical, head screwed on right kind of guy. Not at all the image that you have.
Mark Howley: Yeah, yeah. Well, I think longevity in that thing is--I don't think he can--a guy like that--yeah. Most of them--
Nick Howley: He had just dropped his kids off at Emory University in Atlanta. And for some reason he was coming back through Cleveland, he agreed to come in and do this free thing with the Rock Hall and talk to people that wanted to come. So it was just not the image you thought. And he was making a joke that he tried to turn on like the Public Enemy, which was kind of the lead in rap stuff for people, and his--it was either his daughter or son kept telling him, Oh, that's not--turn that stuff off. That's old man stuff.
Mark Howley: It's like, for those who remember--I remember, Robert Redford kissed a girl on the film when he was older, and my daughters are like, Gross. Gross. For those who don't know it, he was considered the equivalent of Brad Pitt for most people...
Nick Howley: Right, right, right.
Mark Howley: Okay, so I'm going to start to wrap up here. And one of the things we always ask, and to some extent you've said it, but why not make it a little more succinct, in a way? So why did you do all this shit? What made you do it?
Nick Howley: All what shit? All what shit?
Mark Howley: Just, what you did. I mean, you went into this business, you started a public business, you--I mean, there's something, some impetus for that, or some launch point. Maybe that's not clear. But do you see one?
Nick Howley: I guess the launch point is--my dad ran a business. And that was sort of the role model. I sort of went to work and I always said, I want to run a business. I want a business, I want to run a business. And then I think as I got into working, I would always look and I'd look at the next person above me, and I'd say, I could do that. I can do that. And it just kept driving me. And one of my goals--my wife and I used to sit down and write down what our five year goals were every five years. And they were never perfect, but we sort of got there. And always one of mine was to own and operate the business. And it was just almost from the time--I could have articulated that probably at 23. Now, it took a while to get there. And it didn't look like I was ever going to get there for a while, but I could have articulated that. The foundation thing, I just--I think I said, I made enough money, and my wife and I both thought it's time to give back to other people. We've made more than we need, we've made more than we're going to spend, and how can we do some good for the world? And we came down on educating people that didn't have the opportunity.
Mark Howley: Well, I think that's that's a huge one.
Nick Howley: Right. Because I don't think... Right. I think, I really do believe, the way out of the rat trap, and the way to move yourself to get economic and social mobility is education. I don't think it's government just throwing money randomly at things. I mean, they've been doing it for 100 years, and it didn't move the needle.
Mark Howley: What I heard somebody say me--once again, maybe my dad, It comes slowly, and when it gets there, it's not enough.
Nick Howley: Yeah, yeah.
Mark Howley: And I do believe that... Well, listen, I want to wrap up and I just want to say, boy, I could go on forever, because there's so much just about us personally, but I tried to keep it a little bit more on an objective line. So anyway, well, I just want to thank, again, this is my brother, in case you didn't realize that. Maybe you never said that. But Nick Howley. And has, obviously, he's got--he's a business guy with a lot of success. Chairman and Founder of two companies that are traded on New York Stock Exchange, and also spent a whole lot of time with charitable organizations. So hey Nick, I just want to thank you, and next time I see you, I hope it's in South Carolina doing nothing but stupid stuff.
Nick Howley: Okay. Thanks.
Mark Howley: Thanks for tuning in to the Mark Howley show. I hope you'll join us again. Adios.
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Great post!