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Episode 64: Generating Innovation in Family Business

In this episode of the Family Business Show, host Michael Palumbos welcomes Larry and Michael Wetzel from Air Innovations, a second-generation family business based in Syracuse, New York. Air Innovations specializes in creating unique environmental control solutions, and the Wetzels share their journey from starting in mechanical contracting to pioneering clean room technology and evolving into various niches like wine cellar cooling and aerospace.

Larry Wetzel recounts the company's early days, its foray into clean room technology, and how a project for General Electric sparked their specialization in this area. Michael Wetzel discusses his return from France and the strategic decision to diversify the company's offerings, which now range from cooling systems for the world's largest Ferris wheel in Vegas to specialized environmental controls for aerospace launches.

The episode highlights the importance of a strong management team and board of directors in navigating business challenges, particularly during tough economic times and supply chain disruptions. The Wetzels emphasize the need for a clear distinction between family and business roles and the value of seeking external advice to foster business growth and innovation.

Listeners gain insight into the resilience, strategic thinking, and adaptability that have driven Air Innovations' success, offering valuable lessons for other family businesses looking to thrive across generations.

Episode 64 Transcript


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Michael Palumbos: Welcome everybody to the family business show I am your host Michael Columbus with family wealth and legacy in Rochester New York.

 

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Michael Palumbos: And we have an incredible show for you today with Larry and Michael Wetzel from air innovations in Syracuse New York.

 

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Michael Palumbos: Second Generation family business that does some pretty amazing things and rather than me even talking trying to talk about what they do, I just want to say, welcome to both of you and i'll let you guys introduce yourselves so welcome.

 

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Air Innovations: Well, thank you i'm very.

 

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Air Innovations: young man of the crowd and.

 

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Air Innovations: we're happy to be here.

 

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Michael Palumbos: Great and you're Michael Michael right.

 

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Air Innovations: that's correct.

 

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Michael Palumbos: Perfect so what Larry why don't you give me give us a little bit of a history of the company and how you started it and you know what was it like what were you working on, when you started at.

 

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Air Innovations: The time I was working as a mechanical contractor working for a company that did mechanical plumbing.

 

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Air Innovations: He he and process piping and.

 

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Air Innovations: We came across the project for General Electric here in Syracuse that was called that clean room and we negotiated the mechanical portion with a general contractor out of grand rapids Michigan.

 

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Air Innovations: and

 

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Air Innovations: It was it really involved just about every part of mechanical engineering and.

 

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Air Innovations: Technology clean room required extremely sensitive temperature humidity control has a lot of very high end process piping requirements ultrapure piping.

 

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Air Innovations: And, and so it kind of intrigued me and.

 

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Air Innovations: We went on, we did we built a number of rooms i'd say over three year period with this company, as well as doing our local hbc and plumbing work.

 

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Air Innovations: But I got more and more intrigued by it and it turns out that it was really a very new technology and most of the customers.

 

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Air Innovations: were looking for somebody to do it on a turnkey basis, in other words, guarantee a price and delivery and a performance.

 

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Air Innovations: And since it was so new there were we had very few competitors who who were willing to take that risk, but we are very confident about what we're doing.

 

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Air Innovations: And, and so I left and the company, I was with and started a new company called clean room technology, and we continue to work, primarily with the group out of grand rapids, although we became.

 

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Air Innovations: more significant part of the whole project than there are they did mostly just architectural work.

 

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Air Innovations: So we we were asked to do some projects by other companies, and so we started to branch out of it.

 

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Air Innovations: So.

 

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Air Innovations: that's where we really got started Mike graduated from clarkson and then he.

 

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Air Innovations: worked for a mechanical contractor to mechanical contractors in the Albany area doing the same kind of mechanical work hbc and plumbing.

 

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Air Innovations: And then, our company.

 

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Air Innovations: him successful enough that we merged finger and technology merge with a company in France and.

 

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Air Innovations: might get an opportunity to go to France as kind of our expert in each phase city because company in France did mostly just architectural walls and ceiling systems.

 

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Air Innovations: And so we're able to provide the customer, with a complete package out of our own factories, which was really innate so that's how we got started and that's how I got involved.

 

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Air Innovations: and

 

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Air Innovations: And then, after I guess four years or so Mike was sitting in France and I started become.

 

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Air Innovations: Not too happy with working under the French and so and I started to.

 

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Air Innovations: Ease away from the business and the French weren't doing that well with it, they put the wrong people in place, in my opinion and.

 

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Air Innovations: So we.

 

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Air Innovations: I decided I started actually left and started out start with another group of guys a venture capital company called exponential business development here in Syracuse and we worked at that for a couple of years.

 

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Air Innovations: And, but then, if I really wanted out of the US, they were strong in Europe, but they wanted out and Mike and his wife decided they wanted to come back so.

 

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Air Innovations: What we did is we bought a small local refrigeration business from a friend of mine that specialized in.

 

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Air Innovations: refrigerated flower coolers open coolers unique in that they were open to the atmosphere, but they maintain the temperature.

 

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Air Innovations: For the flowers to be preserved and and and so together, then we built that business up and but still wanted to get back into our love, which was.

 

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Air Innovations: The Clean room business and he he, and so we started with a product that we could introduce into that market, and can you the flower coolers but.

 

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Air Innovations: One big opportunity came when the French when they decided they want to get out they wanted to sell portion of the business, and so we were able to negotiate and acquire.

 

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Air Innovations: significant part of their business, which was making very large sophisticated.

 

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Air Innovations: air conditioning units for a particular customer in the clean room and semiconductor industry and that really gave us a shot in er by able to acquire that eventually we bought the building and and just been going forward so.

 

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Great.

 

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Michael Palumbos: So, Michael talked about you know from your perspective, you know Larry just gave a great you know background of the business.

 

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Michael Palumbos: Talk about bring us up to speed in terms of when you came in what when did you get involved.

 

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Michael Palumbos: What made you decide to you know, work together how was it How has it been working together father and son as you're doing this stuff.

 

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Michael Palumbos: And then maybe you know talk about some of the projects that you know that the two of you have tackled together, I think there's some pretty exciting things that you've done through the years and.

 

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Michael Palumbos: I think I last last we spoke, you know, there was something pretty cool that you're working on now so maybe bring us up to speed, a little bit from your perspective.

 

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Air Innovations: yeah I can do that, so I think it's I think it's a little bit interesting maybe a little different than than maybe typical family businesses in that.

 

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Air Innovations: What ended up happening, how we got into the others we actually both bought into a business, at the same time, so that's a little different unique there's a.

 

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Air Innovations: chain is broken a little bit, even though we sort of came back around again they're doing the same thing.

 

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Air Innovations: I got into the business moving back from France, looking for something to do and I was actually interviewing for jobs on the on the west coast and my father had this small manufacturing company inside their.

 

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Air Innovations: Their seed capital company and what they determine what really needed to happen is the the owner needed to sell that business, and so my father and I bought that business together, so we went in as partners, I mean that's.

 

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Air Innovations: That was really the start of me getting into it, prior to that I was working for the French over there, and so we got into it together by buying in, and then we decided to buy a piece of his old business back that got us into the clean room industry.

 

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Air Innovations: So that was so it's a little bit little bit unique in that regard that it's more partners than, then I think than your traditional transition.

 

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writer.

 

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Air Innovations: Then you know it sort of it was an interesting moment I remember after we bought into the cleaners, because here we were building.

 

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Air Innovations: keep in mind, we were building display cases for supermarkets that's what we were doing hundred percent of the business was display cases for supermarkets.

 

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Air Innovations: And then we started dabbling in this clean room product, and then we bought this air conditioning piece from a clean room company.

 

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Air Innovations: under the umbrella of a display case company, so it was it was a confusing moment as to well, what are we really and who are we really and what because most companies are.

 

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Air Innovations: An industry right you sell into a particular industry and that's what you do here, we had two vastly different industries, I mean they're the short, they shared nothing in common, you want it's very high tech in one is the supermarket consumer based it's very, very different industries.

 

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Michael Palumbos: Let me.

 

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Michael Palumbos: Let me ask you just a second for those people that are listening that don't know what a clean room is you mind just giving the.

 

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Michael Palumbos: overview.

 

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Air Innovations: yeah so clean rooms other people that have seen in movies, and such people wearing bunny suits all white.

 

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Air Innovations: White gowns and hair nets and even sometimes even more extreme than that but clean rooms are rooms that are very precisely control for temperature humidity and particle cleanliness.

 

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Air Innovations: So debris in the air they're very, very clean their hundred thousand times cleaner than than a typical office space or even more than that.

 

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Air Innovations: These are the rooms or their manufacturing semi structured devices, where their packaging your drugs they're making your drugs, so that these are contaminated with.

 

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Air Innovations: particles that would otherwise be floating around in the probably the closest that people might know would be in an operating room operating rooms are.

 

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Air Innovations: Clean rooms in that the air is filtered to a certain level with pepper filters, the same filters that are using gas mask.

 

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Air Innovations: But in the semiconductor and pharmaceutical aerospace the level of cleanliness is much, much cleaner and the requirements for temperature and humidity control pressurization is much higher than an operating room now.

 

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Air Innovations: I have so so.

 

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Air Innovations: yeah so we hit this kind of odd point in our time, where we have this floral businesses is cleaner business.

 

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Air Innovations: and also in the middle there somebody approached us about building cooling units for wine cellars so we have these three elements wine cellars.

 

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Air Innovations: semi conductor clean rooms and and floral display cases, all under the same umbrella of a company called Florida tech which didn't make a lot of sense either, and so.

 

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Air Innovations: We sort of sat back and we had a couple of board meetings and said okay well who are we, what are we, and there wasn't a lot of role models, I remember actually saying we're sort of like three Mr Lee.

 

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Air Innovations: which you know it just seems bizarre to think of a sign but three of them is in a lot of diversified businesses and.

 

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Air Innovations: We decided that, as long as the technology connection was there, so what we were doing and flora what we're doing something that what we're doing and why.

 

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Air Innovations: is fundamentally very similar work we're refrigeration air conditioning experts so we're just packaging it in different ways and leveraging those technologies in different industries.

 

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Air Innovations: we're not an expert of worlds like we're not an expert in cleaners we're not experts in the wild we're actually experts in the cooling systems that are being leveraged to to make those industry, successful and it as long as we kept that tie we said hey it might actually be quite.

 

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Air Innovations: Strategic to be diversified, because these are all niche industries semiconductor is a extremely cyclical industry is probably the most cyclical industry we've ever been exposed to.

 

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Air Innovations: They may run 300 miles an hour then might come to a gay stop for a couple years and then they do it again.

 

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Air Innovations: it's incredible the the rises and falls in semiconductor but all these industries their niches they're small industry, so they all have these cycles.

 

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Air Innovations: And we said boy, we had enough of them you'd be stale because somebody somebody down somebody up somebody down you put them all together.

 

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Air Innovations: And you become stable and so that became our mantra from the early 2000s forward we rebranded the company to air innovations which was a more generic name that didn't.

 

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Air Innovations: align us with floral it didn't align us with clean rooms it kept it more generic and.

 

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Air Innovations: Under the air innovations umbrella now, we were given the freedom to chase all kinds of niches provided the underlying technology, we were providing was similar because.

 

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Air Innovations: Our engineers are repeating the same tax each time we're sizing cooling systems compressors and coils and valves where we're getting good at lots of different types of packaging.

 

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Air Innovations: Of those components, but when you strip away the component of the application, the core technologies are similar and.

 

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Air Innovations: So we've been extremely successful over the years because of that diversity and we we keep pushing diversity we're we get little nervous when.

 

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Air Innovations: One business concentration gets too high and and we've had those cases, because when they do their deck.

 

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Air Innovations: It can be really tough on the business, and so you know we've really been working hard to expand diversity, and now you know we've done projects for aerospace all around the world for the.

 

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Air Innovations: South Koreans and every aerospace launch complex here in the US.

 

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Air Innovations: We do whitesides explosion proof systems for offshore oil refinery we do wine cellars we do a little tiny bit of display cases almost nothing anymore, it was originally the entire business.

 

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Air Innovations: When we bought it together in 96 it was the entire business, and now I think we build a half a dozen cases a year.

 

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Air Innovations: And we built somewhere around 5000 systems a year, so I have a dozen cases on 5000 is not a very big concentration anymore.

 

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Air Innovations: In the floral industry, but you know we've been very successful at a driving diversification and that's actually what makes the business fun, because we are constantly being exposed to projects that.

 

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Air Innovations: You wouldn't ever even expect to defined people now come and look for us when when they come across the need for.

 

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Air Innovations: temperature control or humidity can join us all process level, you know we don't cool people were taking care of high valuable things or.

 

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Air Innovations: devices and so when they can't find something and they land on our website they immediately wow This company has done so much of this process work.

 

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Air Innovations: Even if it's not in their industry, they call us, I think that the main takeaway there is that we have this diverse.

 

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Air Innovations: Industry or application, but we stay close to our knitting I mean we we have a core competency that we utilize and everything that we do we don't we don't get out of that because that's where you get in trouble I.

 

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Michael Palumbos: love it you're hitting on some of the things that I definitely want to talk about so let me just dive in one of the things you mentioned, is that you had a board.

 

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Michael Palumbos: Not every company has a board how you know how does how how did it come about that you, you know that you had a board and howdy, how does the company and the two of you work with the board, do you still work with a board today i'm just if you can just kind of walk us through that.

 

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Michael Palumbos: But either one of you.

 

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Air Innovations: So again, remember sort of roll back to when we bought the business.

 

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Air Innovations: We bought the business together, knowing that this was something i'm going to run right, this was always something that.

 

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Air Innovations: I came back to the US to run a business and we partnered up on it and the main strength of that partnership was the fact that my father had already run businesses and so he understood.

 

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Air Innovations: All the non engineering elements that are needed to run a business, which I didn't understand I come from my background was engineering, I went to school for engineering, I was doing engineering and.

 

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Air Innovations: three different jobs prior to to buying into this company, and so this other structure around you as an entrepreneur was important, and it was his drive to say we need to put a board in place, because it will help give you advice and help you grow as the chief.

 

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Air Innovations: He helps with accounting and lawyers and all those things that engineer has absolutely no idea what to do there, and so we had a board since literally we were this little tiny for tech.

 

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Air Innovations: I think we were only five people when we bought the business total and we feel a board of directors right, and I think it was.

 

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Air Innovations: It was certainly instrumental for me early on, because the board of directors were also successful entrepreneurs, and so I had my father who had who had started in sold the business and.

 

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Air Innovations: to other people actually wants number Australia people on the board that all had successful business backgrounds and we're all willing to give advice.

 

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Air Innovations: Because when when you're 29 years old and you're only background is engineering, you need a lot of advice on the stuff that.

 

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Air Innovations: Is that it takes to run an entire business that is beyond the engineering and so that's that's sort of continued till today and it's actually something that you know we're continuing to look at because i've now since.

 

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Air Innovations: gotten involved in a lot of CEO growth groups vintage and strategic coach and now a third one, and so i've got a network now and so it's something that maybe isn't as.

 

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Air Innovations: as significant as it was in the past and so we've actually shrunk the board sites on the board sizes smaller but it's for the 2026 years now we've had a we've had a board in place as strategic advisors.

 

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Air Innovations: that's really always been the role.

 

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Air Innovations: And we're not a public company, so you don't need them for anything else it's really just strategic advice.

 

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Michael Palumbos: brilliant, in my opinion, I think you know understanding that it's just impossible for any one person to know it all.

 

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Michael Palumbos: there's just too many, too many aspects of the end, it takes some time, and you know, sometimes bringing somebody from the outside, just this.

 

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Michael Palumbos: crazy idea that somebody else thinks of it says, have you ever looked at it this way, because sometimes you know when you're in the forest it's hard you know it's tough to see so kudos to me and.

 

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Air Innovations: I also think that the the managers.

 

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Air Innovations: appreciate having somebody besides ourselves to bounce ideas off so people on our board were experts in manufacturing technology and and air air conditioning and so oftentimes an outside source decided to add to our credibility to to what they're saying and what they need.

 

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Air Innovations: A human issue.

 

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Michael Palumbos: So the two other things that I wanted to hit on that you said that I just think everybody needs to make sure that they caught what you said was sticking to your core competency.

 

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Michael Palumbos: I just think that that you know we talk to clients all the time about you know, do they know do they really understand what their core competency is, and you know, though you're diversified.

 

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Michael Palumbos: And you know I think everybody every company should be diversified I think it's fabulous but you stick to your core competency.

 

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Michael Palumbos: And that's.

 

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Michael Palumbos: it's pretty impressive I just not a lot of people miss that and sometimes they end up you know their their core competency is a you know A and B and they end up you know running a restaurant or you know some evidence.

 

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Air Innovations: Like.

 

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Michael Palumbos: You know you're just it's you're so far away from what your core competencies, are we use the silly thing called the rule of thumb for core competencies if if the thumb is your core competency you can't get more than two fingers away from your core competency you start going past that.

 

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Michael Palumbos: And you're out in the woods so.

 

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Air Innovations: interesting one, because it's a somewhat regular debate amongst the management team here is to because we're always seeing new paths new opportunities and.

 

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Air Innovations: So we pretty regularly have that discussion about okay wait a minute.

 

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Air Innovations: This makes sense that we actually because again we're pushing for diversity pushing diversity, and so it comes at you in many forms and and there's a lot of Gray, I mean your core competency isn't always perfectly chisel cut right and so.

 

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Air Innovations: it's a regular debate, it does this make sense, should we go down this path you know and we're doing one right now.

 

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Air Innovations: Where we're going to start bringing in a product that we're going to then brand and we're not a distribution company we're manufacturing company, and so it is.

 

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Air Innovations: It is sort of a deviation from even what you would classically call our core competency, but it rolls into our core industry and it leverage leverage is our core brand and so.

 

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Air Innovations: You know there's a lot of definitions of that and we are always looking for ways to expand it that makes setup but even even in this one, the.

 

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Air Innovations: The technology technology will air conditioning and writer, is to understand the technology it's just the distribution is different yeah.

 

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Air Innovations: So it is, but it is a stretch on what we would have otherwise defined as our core competency, and so I think it's okay to do that, but you have to recognize when you're doing that you can't just change everything so.

 

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Air Innovations: For example, we never do install and we get people asking us all the time, all the time can't you just do install can to take care of the Installers, and that is a very different.

 

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Air Innovations: Business and you start flying people across the country to do installations from Syracuse New York and we just won't do it, and so you know there's we're pretty good at keeping those borders, but I also say that we, we stress test those once in a while.

 

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Michael Palumbos: that's now I think that's a fabulous way to think about it, are there, you know, can you think of projects that were presented to you that you said no to and in hindsight, you sit there and say boy, are we so glad that we didn't do that.

 

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Air Innovations: Oh, I actually could think of some of the other way I wish we had done it.

 

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Air Innovations: I remember, I remember early on seeing at a trade show spot coolers these these machines on wheels that have air conditioning in them, and they would just reject the eat out the backward of water and I thought.

 

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Air Innovations: that's the silliest idea ever I mean who's going to want this thing which is horribly inefficient this a dumb idea and wow was a big.

 

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Air Innovations: Because that became those became very successful business at a.

 

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Air Innovations: low margin, they are, they are, we see it really fast and also an important feature is that if you have a really good car competency and an expertise, you need to charge for it, you can't.

 

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Air Innovations: diluted, to the point where you're getting so low margins you can't make any money, I mean.

 

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Air Innovations: I think it's critical that the pricing of your expertise is is not to keep going and invest in R amp D, I mean we put a lot of money into r&d every year to look for new applications, but if we didn't have the profitability, we couldn't do that.

 

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Michael Palumbos: Great point really appreciate that when you look back you know your time together working through things.

 

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Michael Palumbos: Talk to you what were some of the obstacles that were thrown at you guys through the years that you know you look back and said boy, are we glad we made it through that can you talk about you know one or two obstacles that were thrown at you.

 

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Air Innovations: I mean there's I think the the two most significant that come to mind to me, and you know this this shouldn't come as a surprise to any business has been around for for over 20 years.

 

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Air Innovations: Is twice we've almost gone out of business, and you know those those really throw you sideways and I remember the very first time was.

 

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Air Innovations: was probably six months after we bought the business, I mean that that soon within six months.

 

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Air Innovations: We were bleeding so much cash with that woke what did we get into, and I remember having a board meeting.

 

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Air Innovations: And might have only been the fifth or sixth board meeting and we had a discussion about how you take a company check to a question that that perfect.

 

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Air Innovations: Well, that was a really quick spend my money that I saved up over the last four years and.

 

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Air Innovations: And within two weeks we got a major contract from a company called food line and it saved the day it completely saved the day and.

 

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Air Innovations: We built off of that and then something similar happened again after we bought our send the business here the cleaner businesses in this building.

 

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Air Innovations: We had a major customer a two big concentration again and you get nervous when concentration gets heavy if I remember right at the time, their concentration was 65% of our business and.

 

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Air Innovations: And they got bought by an international company and the reason the international company bottom with the take them out, they didn't buy them to adopt the technology, the bottom, to take them out.

 

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Air Innovations: And, as a result, they took out all of their vendors and so we did they moved it to whatever they had moved to Europe and didn't bring anybody along and so you'll we took 65% of our business and shutting down to zero.

 

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Michael Palumbos: Over it's.

 

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Air Innovations: Literally over a phone call at lunchtime i'll never forget the phone call I mean i'm talking to the guy and he said.

 

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Air Innovations: I need you to stop what you're doing it's a you know we're going through an acquisition I said, what do you mean at the end of this pod goes no I mean at the end of this phone call, so you go out floor and just stop.

 

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Air Innovations: And I was 65% of our business and so those are those are tough days we were we were fortunate, they were very fair they paid or everything and that we had his line all the inventory all the stuff that we had on order.

 

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Air Innovations: yeah sure we deliver their honest, we didn't get home for any of ready costs, but we lost 65% of the go forward revenue and that's.

 

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Air Innovations: You know your whole year old think about your structure of your business and and the infrastructure everything else, and people.

 

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Air Innovations: So those are tough days there's, no doubt, those were tough days, and you know it took all of us to really put our heads together and that'll everybody down and.

 

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Air Innovations: And and plow forward and again, you know it just continually both those episodes continually reinforce this diversity this we've got to keep we can't rest until.

 

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Air Innovations: You know, we get concentration down to a point where you can lose any one of the base business segments or any one of the customers and not have a negative impact on the business and that takes a lot take so I mean you really have to be focused to do that.

 

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Air Innovations: And we've always been focused and now we push even for international diversity, because we feel that a diversity against.

 

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Air Innovations: territory, so you know it's not only the industry now we're starting to look at more and more international work to continue this push for diversity and so Those are the two that come to mind me know those were really, really challenging times for sure yeah and.

 

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Air Innovations: Interesting good news is that on that side about diversity or having too much business in one sector, the the we started the wind cooling business from episode 00.

 

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Air Innovations: And now it represents two thirds percent of our revenue, so now we're looking at the point where the wine, which has grown so wow and continues to grow.

 

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Air Innovations: We need to be careful that that it it doesn't overshoot or or diminish the other parts of the business which actually can be more profitable so.

 

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Air Innovations: We need to watch the balance that we have there what was interesting about the wine, so you might step back and holy cow now you're back again after 60% scare number.

 

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Air Innovations: But the diversity inside of why pretty amazing and we, we now have something like our customers are actually our distributors.

 

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Air Innovations: And I think there's around 140 distributors around the world and 55 countries that we sell wine to so you would have to have a collapse in the category on all 50 countries and honored 40 distributors.

 

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Air Innovations: So it's extremely well diversified within its own inside of wine it's it's not there's not any single customer that represents a significant element of wine, but as categories or something to drink.

 

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Air Innovations: Wine doesn't get a lot around the world for a little while.

 

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Air Innovations: Coming on strong.

 

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Michael Palumbos: If you look at the projects that you have tackled.

 

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Michael Palumbos: Talk about some of the toughest most demanding projects that you've put together through the years just to give people a kind of a taste, you know.

 

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Michael Palumbos: We talked about the clean room we've talked about you know the the wine guardian and, but I think that there's some you know some other ones out there that you're really proud of what your team has put together.

 

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Air Innovations: And there's there's a bunch one of the ones that everybody loves to point to and it's sort of it definitely creates a lot of buzz is the world's largest Ferris wheel that was built in Vegas.

 

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Air Innovations: that's probably half a dozen years ago now called the link wheel at caesar's Palace it's 550 feet high and if you've ever been there you can't miss it it's the highest thing in all of Vegas.

 

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Air Innovations: Essentially, the the people right in pods those spheres class spheres.

 

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Air Innovations: or 28 of those pods on the wheel and each one of those pods holds 40 people 40 so it's a lot.

 

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Air Innovations: And that were asked for it to dissipate giant glass ball in the sky 550 feet high with 50 people 40 people in it and the design temperature out and buy your honor 10 degrees and solar.

 

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Air Innovations: And so we were approached, which is really interesting because it is still to this day, the only time that we really were cooling people.

 

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Air Innovations: But the only reason that there was a project that we would take on is because it wasn't the comfort of the people, but it was the LIFE safety of the people, that was a paramount concern.

 

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Air Innovations: Because of those extreme conditions there could there is no option to fail on the on the air conditioning and so they came to somebody who does something much more.

 

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Air Innovations: critical and tight tolerance like that we do for all these other clients, because they felt comfortable that we could come up with solutions.

 

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Air Innovations: That would ensure the integrity of that climate in every situation every circumstance, and so we had to it was really interesting because we get to work with their fire departments and their.

 

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Air Innovations: Their security personnel and you know, we had to run through all the scenarios, or what If this fails, one of that fail and go to the custom designed to fit in the box and move the.

 

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Air Innovations: ball so it's just a really interesting project from the dynamics and everything around it, as well as.

 

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Air Innovations: The technology, we had to deploy we have five levels of redundancy in that system, none of them communicate with each other so that the probability you start to knock down probability of taking all of them out.

 

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Air Innovations: And you know just a really cool project it's very visible lots of people know it is written in it.

 

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Air Innovations: And that you know we're critical component to that to the link wheel and so that was, I mean it was it.

 

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Air Innovations: You know projects like that are really fun for the team as well it's not only technically challenging but it's just it's really interesting and the entire company gets excited and jazzed for for doing these things, and they can physically see it in the end.

 

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Air Innovations: You know the other ones that are similar to that are these rockets were probably the world leader in.

 

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Air Innovations: Protecting payloads satellites that are loaded into rockets prior to launch and we do this now on.

 

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Air Innovations: You know we're doing it in South Korea, we do it at every launch face just about every lunch based here in the United States.

 

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Air Innovations: Where we have our systems that are there on the ground that are connected to the rocket that are cooling the satellites and they might be commercial satellites to Syria so whatever but they're more likely.

 

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Air Innovations: Military we do a lot of military launches so we're you know that's those are really critical projects again not much option for these machines.

 

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Air Innovations: Because you could lose a very expensive satellite that if you're not to go in orbit and so those are really it's just really interesting and people love to be a part of that.

 

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Air Innovations: The the Koreans actually just had their very first launch ever.

 

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Air Innovations: and have my engineers knew about it, because they're just keep tabs on it it's just fun for them to keep tabs on I wonder when they're going to do the launch and the last one off it was successful we got big thank you's from.

 

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Air Innovations: The Korean aerospace group and yeah to be parts of that as a small company here in central New York is is really quite amazing.

 

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Michael Palumbos: love it love it all right let's, this is the family business show so let's talk about the two of you are.

 

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Michael Palumbos: Like you said you, you went into business together, so you probably had a really good idea that you know your personalities were complimentary but.

 

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Michael Palumbos: You know, when you know being family members there's always that Father son dynamic is a little different in within you know most families.

 

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Michael Palumbos: When you guys don't agree, how do you work through you know those how those conversations work just talking at it from the father son perspective and the business perspective How does that mesh for the two of you.

 

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Air Innovations: yeah that's a good one, and I think.

 

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Air Innovations: Generally speaking, we do agree.

 

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Air Innovations: When we don't agree since Mike is going to own the business, I mean he owns his now mostly and.

 

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Air Innovations: Thinking over I ought to him, because he he kind of live with that decision, more than I do so that's I think that's one.

 

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Air Innovations: rule of thumb that we've gotten to now originally earlier when when we were both more equal partners everything yeah that was probably more discussions but.

 

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Air Innovations: But we think a lot, I like we we knew he We grew up together both of us hands on people, I mean might you know tell you stories about helping build the horse barn that we had, and I mean we both and very involved in hands on projects and so.

 

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Air Innovations: I think that that together, this allows us to.

 

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Air Innovations: not take that challenge each other on decisions, but I think ultimately it's because he's gonna own IT and he should make this decision.

 

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Michael Palumbos: there.

 

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Michael Palumbos: From your perspective Mike anything dad.

 

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Air Innovations: Oh yeah I would say that that's true, I mean, certainly in the last you know.

 

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Air Innovations: number of years.

 

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Air Innovations: i've really run the business now and it's sort of an evolution, we came in together as partners is almost equal in percentage, and now we just keep shifting and i've learned and then run the business.

 

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Air Innovations: So I don't think there's there's not as there's it's very different when somebody I never considered myself working for my father, I think that's maybe one of the big distinctions companies that.

 

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Air Innovations: Have a transition, where the father actually ran the business, then the son or daughter comes in and tries to learn how to run it.

 

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Air Innovations: I think that's a very different dynamic and i'm actually in I mean CEO groups where is that is the case when I look back and see that's a really different dynamic than we ever had.

 

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Air Innovations: Because we didn't wasn't set up that way this as the business sits was not something that he owned and ran and i'm coming in and trying to ride his coattails it was always.

 

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Air Innovations: This collaboration of together, of how we're going to run this how to run this business and and I think he did a good job, always making sure that it.

 

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Air Innovations: was always being steered towards me running the business and it becomes more and more so that transition just you know continues to plow on and.

 

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Air Innovations: So I think it was a different, I think, with a different role, I think that we made a commitment, a long time ago that he would ultimately own the business so every year we give him stock.

 

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Air Innovations: So, so that it doesn't hit the tax consequences and then he ends up will will end up 100% or so right but, but you have to do that, over a period of time because you're only allowed to give so much tax free in any one year yeah.

 

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Michael Palumbos: So it's really important to have good advisors that help you through those things, so you don't make a big text mistake by you know.

 

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Michael Palumbos: erroneously.

 

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Michael Palumbos: Have you ever through the years.

 

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Michael Palumbos: Either either i'm trying to think of how to word this either not agreed or thought of a project where.

 

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Michael Palumbos: You when you brought it to the board the board advised against you know your gut was telling you to go one direction the board said, you know opened your eyes to some different thinking is that ever happened.

 

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Air Innovations: really comes to mind.

 

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Air Innovations: Something significant that really jumps out there's always there's always little things you know there's a.

 

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Air Innovations: there's always a need, I think that.

 

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Air Innovations: you're smart enough to step back and say okay don't know everything let's keep talking to people and let's let's I same with my management team, I mean I sit with them.

 

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Air Innovations: Several times a month, and you know we're always discussing strategic paths forward and and having an open line of communication, without challenged me.

 

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Air Innovations: yeah so you know what why don't we should we do that let's go this way and then and I think that that.

 

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Air Innovations: You know I love, or I learned early on that you're never going to run this thing successfully by yourself, and so I don't.

 

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Air Innovations: So, as a result, I can't think of any one thing, where I was hell bent on going one direction, and then went to the board and they shut it down I it, I think, is.

 

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Air Innovations: All of this is evolution process where everything is discussed, ultimately, you have to make a decision and i'm never i'm an only child so only children are really good at making decisions.

 

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Air Innovations: And then every other every other only child ever met can make a decision pretty damn quick because think about it, when you grow up you play for yourself it's pretty easy.

 

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Air Innovations: So i've always had to be careful that i'm first.

 

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Air Innovations: Exploring advice of others and then then making that decision and i'm never afraid to make that decision, but.

 

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Air Innovations: As opposed to making a decision and taking it to a board and saying what do you think and and then shooting it down, I think we put that over on a Ted fairly well I I don't I can't think of anything where I can.

 

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Michael Palumbos: yeah it sounds it sounds like your management team is very strong and you rely upon them so you've vetted things before you're going to the board, you know here's where we're going here's a direction you know how many people around.

 

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Michael Palumbos: Good.

 

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Michael Palumbos: Sorry go ahead, you.

 

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Air Innovations: can imagine.

 

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Air Innovations: yeah so I 36 direct reports to me, and you know I.

 

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Air Innovations: You know i've always been of the mindset I ultimately want them really running the business and as much as I can get them to run the business and each segment.

 

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Air Innovations: Of that they are responsible, of the business is important to me because it all rolls back to me, we will just.

 

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Air Innovations: We will limit what this business can accomplish and so you know it's a long time in the making, you know, a management team is not something you put into place in.

 

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Air Innovations: Within two years and off you go, I mean it is every single position with save one has been rotated you know we're not the same person in that seat.

 

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Air Innovations: Since for the for more than 12 years something like that right so as the business grows there's been some rotation there to keep getting somebody better and better.

 

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Air Innovations: And, and I think the team now is you know the team, now is the best the team has ever been by far, by far, and they just they really do have the ability to run day to day of this business without much input for me, or they know where there's input needed from me.

 

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Air Innovations: And they run it, I mean I can I can disappear for two weeks and I come back and places still standing products still going up the back door and bills are getting sent, and you know, things are getting received and.

 

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Air Innovations: You know it's it's it's it's really comes back now so long term strategic direction is is the driver that that i'll play in that role, but they're.

 

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Air Innovations: The management team is critical and I really defer to them always on at any time writing decisions they're they're absolutely a part of that, because if they weren't.

 

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Air Innovations: They wouldn't do any good for me to make a decision without them being a part of that process, because it would be really hard to get them motivated to go down those paths.

 

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Michael Palumbos: yeah in from some of the groups you've been in you probably can see the so those two differences having a strong management leadership team having a board of directors that's not that's not.

 

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Michael Palumbos: In every single family business or entrepreneurs business because they have really strong feelings about how things should be done, they just were good at doing it and and sometimes it's you know it's just easier for me to do it than the teacher.

 

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kind of thinking yeah.

 

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Air Innovations: I do, I feel like you're actually corrected and I don't know.

 

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Air Innovations: I don't know in the family business, a typical problem in the dynamic, is that the father had put in place people, and now the child is coming in and inheriting those people.

 

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Air Innovations: I think that I see some situations where that's a problem particular problem or it's just the two of them, trying to do everything themselves and that's also a problem, and so I think again, I think it is a bit of a unique situation for how we got to where we are today but.

 

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Air Innovations: I certainly rely heavily on a management team and want the management team.

 

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Air Innovations: Maybe that's more important, I actually want them to be running the business yeah well when one of the a lot of family businesses are not just.

 

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Air Innovations: father and son there's also two or three sons or daughters, and so they all want a piece of the business are they you know so they set up a board the Board is nothing but family members, and so they don't get any real you know creative outside.

 

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Air Innovations: input into decision making it's just too narrow now, so I think that a lot of family businesses make a mistake in trying to me, I have a good friend of mine Texas, who.

 

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Air Innovations: got stuck in the family business and he was the only one that could run it but everybody else wanted a piece of it.

 

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Air Innovations: And he did just struggle NUTS absolutely NUTS tore him apart because he was trying to run a business and trying to satisfy their needs to was two months, so I think that people, you know that make a mistake in not saying that.

 

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Air Innovations: You need to have a leader and the right leadership and the rest of you should take a pay half or something.

 

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Air Innovations: family business can be very sticky that's for sure, especially when there's a man yeah i'm an only child so there's really facilitate stuff right.

 

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Michael Palumbos: there's a question, do you have any children that have any interest in what you're doing today.

 

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Air Innovations: I have two boys, so now we complicate life.

 

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Air Innovations: And ones in more in agent real estate finance living in Boston he loves his life and the other one is.

 

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Air Innovations: Just graduating college getting his MBA buddies in the second one is an engineer, I mean he really i'd say of the two boys he thinks the most like my father and I for sure.

 

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Air Innovations: And, and I think there'd be some interest there, but again they're young, so I don't.

 

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Air Innovations: I don't and I didn't I worked for three other companies, I was International and then we bought a business together.

 

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Air Innovations: Again, it was very different We made this decision to consciously by this business together, as opposed to me saying okay i'll come and join a business that's.

 

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Air Innovations: It so I don't want to put that burden on either the boys either and they're pretty young, and so I want them to sort of explore and do their own thing and make a decision of themselves where they want to go.

 

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Air Innovations: And if they want to come here that's that that's interesting and we can take a look at how that might play out.

 

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Air Innovations: But it's there's no way I have given them no expectation that Oh, I need someone here to run this business that absolutely is not been put on their shoulders I don't want them to face that they have to do that.

 

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Air Innovations: If the business is not was not set up that way is not set up that way, and so it doesn't have to be its path it can be a path, but it doesn't have to be.

 

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Michael Palumbos: Agreed, I would throw to you one of the things that i've often said, and try to teach is that the building a strong management slash leadership team is the route to a successful transition.

 

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Michael Palumbos: Whether that's within the family or management buyout or even sold to an outsider because you know, an outsider doesn't want to buy a business if they have to come in and run everything.

 

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Michael Palumbos: Valuable all the right things there.

 

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Air Innovations: yeah right, I mean again, without a doubt, I completely agree the management team needs to be running the business I used to be that clear and so that you're absolutely right now.

 

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Air Innovations: The opportunities of where the business goes announced so young, I imagine 5060 X i'm 55 years old i'm pretty young.

 

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Air Innovations: But the pathways are wide open because of the strength of the management team and so sure, a young son could come in eventually and and grow into that role, I mean you know it's a pretty successful in large business now compared to the foreperson business I bought when I was 29.

 

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Air Innovations: So it'd be much harder to step in in your 20s and run this business but, again, if the management teams in place then they're still we continue to run really run the business great.

 

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Michael Palumbos: um as you're sitting here today with you and your team and the two of you discussing you know what's going on, what would you say, are the things that are.

 

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Michael Palumbos: What are the, what are the main like the pains the frustrations right now that you're dealing with today.

 

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Michael Palumbos: yeah.

 

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Air Innovations: it's never I mean inflation was, of course, very interesting.

 

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Air Innovations: For the last two years, this inflationary situation is something that i've never seen in the 26 years that i've been doing this we've never had.

 

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Air Innovations: runaway cost like like we did here, still have so.

 

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Air Innovations: It got to the point where even customers were numb to it, I mean we were late to the game thinking okay well, maybe we don't have to raise our prices so much and we're definitely late to the game.

 

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Air Innovations: But even got to the point where some customers were calling me saying hey you guys raise your prices, I just want to make sure that i've got a built in right for this year.

 

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Air Innovations: And then we're in the history of Allah and his company has a customer ever called me and asked me if i'm raising my friends.

 

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Air Innovations: Right i'm just it's just crazy times and the supply chain issues are real.

 

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Air Innovations: You know, sitting here right today we've got hundreds of units and backlog that won't move for another five weeks because of our partners are.

 

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Air Innovations: A lot of industry analysis i've got i've got units that customers would do anything for pay anything for to get out this calendar year that I can't get to 2023 i've got parts that are.

 

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Air Innovations: Now vendors are quoting me 60 week lead times, can you imagine somebody quoting you a 16 week lead time on apartment the middle of next summer late next summer.

 

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Air Innovations: I said, and you know, nobody knows where that's going to unwind.

 

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Air Innovations: And so customers are starting to do odd things customers are starting to put in bigger orders than I know they need and they're asking them for delivery sooner than I know they need because they're afraid of not getting at when they need to ship their product and so.

 

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Air Innovations: that's setting us up a little bit for a longer term problem, because if everything gets front loaded and those can be a gap in the need.

 

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Air Innovations: For some of these customers and so it's dominant in non wine and in sort of our semiconductor our oem some of these others that are really afraid of their own tools.

 

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Air Innovations: I don't see That being said, same situation why people are buying forward a wine cellar.

 

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Air Innovations: But there's a certain segment of our business that I think in maybe a year and a half, time is probably going to go a little bit soft because of this everything getting pulled forward right now, when supply chain normalizes there's going to be a gap in their in their need but.

 

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Air Innovations: you're right now that supply chain, without a doubt it's.

 

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Air Innovations: it's a daily daily task I it's funny I describe it to people outside of the industry is playing whack a mole every day, our procurement team.

 

328

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Air Innovations: Every single day they saw when they whack a mole about it pops up over here and they.

 

329

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Air Innovations: They saw that one, and then it pops up again and it does, I mean we we manage 4000 parts in this building.

 

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Air Innovations: So the likelihood of one of them, not showing up when it's supposed to or all of a sudden lead time changing is pretty high and we face it every day there is.

 

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Air Innovations: There is another area where we get kind of frustrated and that is in the medical field we've developed our own units for certain.

 

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Air Innovations: Medical mostly hospital applications we're working with another company that's doing a similar type thing we build a part that goes into their unit.

 

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Air Innovations: And, but the regulatory and the I should say that the inertia of P, of the medical community to do something new, better it's just.

 

334

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Air Innovations: it's just amazing it's frustrating for us, because we know we have a solution that will cost them less reduce their time to do a much better job than their traditional methods and.

 

335

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Air Innovations: They we can't get them to buy it because it doesn't fit their mold or they're not used to it or their insurance companies not paying for it right, I mean.

 

336

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Air Innovations: We came out with a product that was claimed by the researchers, but the insurance companies said, well, we can't pay for that we're not going to pay for that So these are people.

 

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Air Innovations: Products for residential application for people kids with asthma, especially kids with asthma, where we have to the wall or window unit that would tremendous improvement in the kids ability to learn and to to function and the insurance companies will pay for.

 

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Air Innovations: that's been a real frustration for us.

 

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Air Innovations: Ms Community stuff.

 

340

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Air Innovations: But again, if you so we know that right we're diversified, it would be great if they were easier to work with, but.

 

341

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Air Innovations: When I tried to make a whole business out of the medical community.

 

342

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Air Innovations: you're gonna you're gonna spend an awful lot of money, and maybe not that make that much headway and it's unfortunate but.

 

343

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Air Innovations: So we bounced in a different direction that it's all we can do.

 

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Air Innovations: We have to keep growing as a business and evolving, it would be really great medical community was more open the new technology we're facing in the dental industry, we did a big study in the dental industry last year.

 

345

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Air Innovations: And came upon some just startling data on haircut poor quality in the dental Community high very high VOC.

 

346

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Air Innovations: Like off the charts VOC and op with to, to the point, I mean just anecdotally it killed our sensors and it was so high, the VOC is that we actually destroyed sensors.

 

347

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Air Innovations: do some.

 

348

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Air Innovations: Sorry, volatile organic volatile organic compounds so they're gases that are given off by anything synthetic.

 

349

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Air Innovations: So it could be materials of construction, but in the dental Community it's more likely processes that are doing the mouth of the canoes and oh yeah all of its chemical in nature and it's giving off the gas and you're.

 

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Air Innovations: In the dental industry, there are no indoor air quality regulations you could literally open a dental clinic in your basement or in your spare bedroom or in a shopping mall strip mall I mean think about where dentists, are located many emerged strip malls.

 

351

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Air Innovations: And there is zero air quality regulations and and you've got tight buildings and they're generating all of these gases.

 

352

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Air Innovations: Between the cleaning agents and their process chemicals that are never getting out of that space very, very unhealthy and we went and we did a study we developed a solution.

 

353

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Air Innovations: But again it's an industry that's very resistant to change there's no money for them to make that change, these are all little entrepreneurs themselves.

 

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Air Innovations: So there's no Roi necessarily in improving indoor air quality, and so you can come to you come to a wall and it's very frustrating, because you can you can you can be improving people's health, health and lives and yet you run up against sort of the bureaucracy of an industry.

 

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Michael Palumbos: As we're wrapping up here it's getting that getting to that time you both have been in business, for many, many years and have lots of incredible knowledge.

 

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Michael Palumbos: If you're just imparting your one or two pieces of wisdom to some you know, a family business that's listening to this right now, what would be the what would be.

 

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Michael Palumbos: From your perspective, one or two of the most important things that an owner or a family should be looking at and doing for their long term success.

 

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Air Innovations: Well, I think we touched on what I would say is is the most important thing and and I think it's you know to, I guess, to put it simply, constantly seek the advice of others, you know i've been involved in CEO groups for.

 

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Air Innovations: it's got to be getting close to 20 years now, certainly 15 years i've been involved in several different CEO groups roundtables where you're just constantly challenging each other and sharing ideas and learning from each other and.

 

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Air Innovations: Whether it's a board or whether it's groups like that you have to you know they everybody says Oh, you only know what you know and that's true, and if you if if the CEO is not.

 

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Air Innovations: expanding their vision and looking for ideas from others, then they're going to constrain the possibilities of the corporation, and you said, one person won't know everything.

 

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Air Innovations: And so to me that's, the most important thing for the CEO is to constantly figure out how to be exposed to ideas that are coming from the outside, because everything else inside the building has some pyramid effect from you right so so all these ideas that people that i've hired.

 

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Air Innovations: You know you want them to be strong in db diversify but they're still fundamentally reporting back up to me and so there's always a little bit of a constraint on those ideas, whereby when I bring an outside group of CEOs and tour through our facility.

 

364

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Air Innovations: there's they don't have any previous predetermined notions they don't have any constraints of telling me women, this is this doesn't look right this you know you guys did a way better job than this and.

 

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Air Innovations: You know, I think that you, you have to put yourself in that situation i'd actually think that very few do unfortunately I think people just don't realize how important it is to to get that advice great.

 

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Michael Palumbos: Thank you, from your perspective Larry.

 

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Air Innovations: and

 

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Air Innovations: I I would think that.

 

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Air Innovations: The business is a business a family is a family, and then they don't necessarily have to be the same so.

 

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Air Innovations: If you if you are have a business and you're bringing up a family.

 

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Air Innovations: I think you need to have the mentality and.

 

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Air Innovations: focus that the business needs to run as a business and our family will run our family as our family when you try to integrate.

 

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Air Innovations: Family priorities into the business priorities you you face a huge conflict you think you face a huge conflict with your employees, because.

 

374

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Air Innovations: They see their have limited opportunities themselves you you limit your expertise or your diversity, I mean because of family grows up they generally grow up listening to the same.

 

375

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Air Innovations: political structure and music and and many times they're grown up maybe with a silver spoon, so to speak, you using that cliche.

 

376

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Air Innovations: And that doesn't bode well for managing a business you you you don't relate to the employees employees don't relate to you, so I think that.

 

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Air Innovations: That would be one that I would say that you gotta be tough, I mean it's hard you know your families your heart, but your businesses your brain and you got to keep them that way.

 

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Michael Palumbos: I couldn't have said it any better myself better.

 

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Michael Palumbos: You have said it better than the ways i've said it in the past, thank you i'm gonna i'm going to go back and listen to this recording to be able to pull that out for people I might even make that a.

 

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Michael Palumbos: Quote and as we're putting these out to your episode, I think that said it perfectly.

 

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Michael Palumbos: Larry and Michael air innovations in Syracuse New York you guys have been a joy and a pleasure to.

 

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Michael Palumbos: talk with today, and you really shared some important nuggets I hope those of you listening really brass bond of the nuggets that were shared with you today.

 

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Michael Palumbos: My name is Michael Columbus and with family wealth and legacy in Rochester New York, and you have been listening to the family business show.

 

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Michael Palumbos: really appreciate all of you guys, you know, taking the time to listen to our podcast We look forward to having to having you as guests again in the future, and you have a great day, everybody.

 

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Air Innovations: Thank you.

If you’re a family business or a family business consultant and want to be on the show, share your story and help other family businesses, send us an email to producer@thefamilybizshow.com or fill out a contact form here!

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Michael Palumbos is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Family Wealth & Legacy, LLC is not an affiliate of Lincoln Financial Advisors Corp. Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.

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