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Episode 99: LETTING GO TO GROW YOUR FAMILY BUSINESS

In this episode of The Family Biz Show, Derrik Kassebaum* of CosmosCorp recaps his journey into the family business, the lessons he’s learned along the way and the importance, nay, duty) of each business owner to leave a lasting, positive impact on the world.

A Unique Journey into the Family Business 

Derrik's journey into the family business is a story that breaks the mold. Unlike many who follow a traditional path of higher education before entering the family business, Derrik chose a different route. After graduating high school, he was presented with a choice by his father: embark on a four-year college journey and accumulate debt, or join the nascent family business with a modest salary. Derrik chose the latter, marking the start of his unique journey into the world of family business. 

The Birth of Cosmos Corp 

The genesis of Cosmos Corp is a tale of resilience and innovation. Derrik's father, initially a barber, ventured into the beauty supply business, only to find himself in a financial quagmire due to misrepresented inventory. However, a serendipitous call from a dog groomer, inquiring about a product for dogs, sparked a new business idea. This led to the birth of Cosmos Corp, a company that started in the basement of their house and grew into a global entity selling in 72 different countries. 

The Power of Family 

One of the most striking aspects of Derrik's story is the role his family played in the growth of Cosmos Corp. Derrik and his three brothers, each with their unique skills and roles, worked together to build the company. This collaboration wasn't without its challenges, but their shared history and mutual respect allowed them to navigate these hurdles and build a successful business. 

Letting Go to Grow 

Derrik's journey also highlights the importance of letting go for growth. In his book, "Live and Let Go," he shares his experiences of letting go of various aspects of his life, including his role in the company, to pursue God's purpose. This process of letting go, while challenging, allowed him to grow personally and professionally. 

Lessons for Family Businesses 

Derrik's story offers valuable lessons for family businesses. It underscores the importance of resilience, innovation, and the power of family collaboration. It also highlights the value of letting go, whether it's of control, roles, or preconceived notions, to allow for growth and the pursuit of purpose. 

Our conversation with Derrik offers a unique perspective on the journey of a family business, from its humble beginnings to its global success. It's a testament to the power of family, resilience, and the courage to let go. Whether you're part of a family business or just interested in the dynamics of such entities, this episode is a must-listen!

Episode 99 Transcript

Michael Palumbos (00:02.958)
Welcome everybody to the Family Biz Show. I'm your host, Michael Palumbis with Family Wealth and Legacy in Rochester, New York. Today we have Derek Kesebaum from Cosmos Corp and very, very cool company. I think there's very few of you out there that look at the world the way that you do where it's both pets and people. That's pretty unique. So welcome to the show, Derek.

Derrik Kassebaum:
Thank you very much. I'm so glad to be here. So have a tradition of, tell us your unique story of how you entered the family business. And then after that, we'll dive into more of the history and of the business itself. Oh, sure. Well, that's, it's funny you asked that question. I wasn't going to say I wrote a book, but I wrote a book. And I think it's in my second chapter of the book was telling that story.

I graduated high school in 1989 and I went to a Catholic high school, it's all guys high school. And I went there, my parents sent me there because I didn't do too well in the public school. So my dad was just starting the company and I'll tell a little bit about the company in the future from here. But it was just my dad and my older brother in the company, starting the company at the time. And there were 237 guys that was in my graduating class.

And at our graduation, the priest said, you know, I'm so glad that there's 237 gentlemen that are graduating today and 236 have either applied or been accepted into the university. And I leaned over to my buddy and I said, I know who did it. And you know, I was that one. But my dad actually took me out to McDonald's. It was funny, he took me to McDonald's and he said, hey,

you could either go off and spend four years at college and you're going to end up with this much debt at the end and you're going to end up with this much money making this much money, or you can come work for me, which he had nothing to offer me. And I'll give you 600 bucks a month. You can still live at home, but you're going to pay 200 bucks a month and rent 200 bucks a month in insurance. And I said, I'll take it. So that's kind of how he started. I just didn't want to go to college. I wanted anything by college and I had no other opportunity except for.

Michael Palumbos (02:22.158)
a small company that my dad was starting at that time out of his basement. How cool is that? That's pretty funny. So tell me, you know, tell me about your journey in the company then, because obviously that was many, many years ago. Yeah. Let's talk about that. Let's talk about, you know, how your father started it. Where did this all come from? Yes. Let's just jump from the beginning. I'll just take two seconds here, two and two, like they used to say on a TV show. Um,

Derrik Kassebaum:
You know, my dad was a barber. He became a barber right out of the military in the 60s and 70s. Did very well at it. We weren't very wealthy, but he did well as a barber. In 1980, he was offered the opportunity to buy a distribution center that sold supplies to him. So he jumped on that bandwagon, spent a quarter of a million dollars and bought the company.

And a few weeks later, found out that the guy kind of fledged the numbers and there were $200 ,000 worth of inventory that had not been paid for. So now a company that was worth $250 ,000, he now owed 450 ,000 for. And he spent the next years just struggling. My mom and dad actually wanted to go in the mission field to just help the poor needy around the world. And they thought this was their ticket to do that because he could never do it as a barber. Well, now he's stuck.

And so this is where he learned his faith. He would wake up every morning, I'll never forget it, three o 'clock in the morning and pray. He's a screamer when he prays, just yelling and he's just like, God, please help us. Don't let us go bankrupt. And that went on for years until 1985, he gets a call from a dog groomer and the dog groomer said, hey, I was in a beauty shop getting my hair done the other day. The product that they used on it was pretty good. Can I get that for dogs?

My dad said, I don't know, let me check. So he called the guy who was making the product. He said, can you make this for dogs? And the guy goes, yeah, we'll just put a different label on it. So he stuck up at the beginning, they stuck a different label on it. Then through, through a couple of years later, we started manufacturing actually a product for dogs, a shampoo specifically for the pH and the balance for dogs. And got started that way. Like I said, in 1989, he closed down all the beauty supply stuff.

Michael Palumbos (04:38.508)
moved it to his basement of his house. We rented a 1500 square foot little warehouse, got a hundred gallon vat and started making shampoo for dogs. I didn't want to do anything except for, you know, make a buck here and there. So when I graduated high school, my dad offered me to go into sales and I took him up on it. And what that meant was he gave me, he gave me 350 bucks a week and I would get, put a bunch of shampoo in my car.

and I drive 3000 miles a week, knocking on dog roomy shop doors, sleeping in my car. I slept in my car for five years straight. I'd come home on the weekends, pick up some more product, go back out. Yeah, of course I had different weeks that I'd be in town, but yeah, I just, I learned the hard way of selling. But what that developed in me is the sales integrity and what it took to actually grow a company.

And there's three other brothers and my dad, we all built a company at the same time. And it allowed me to move into what my final role was before I turned it over in 2018 to a new executive team, which was the vice president of sales and marketing for our company. And we built it up to where, you know, we're selling now in 72 different countries. We sell to every major retail in the United States. We have the number one dental product for dogs around the world. You know, it's just God that kind of did that. So.

It's kind of mind you. That's very, very cool.

Michael Palumbos (06:13.102)
You and three brothers. Let's talk about that. I mean, was it you and three brothers from day one? Pretty much. We grew up in a small town with a, like I said, my dad was a barber. So I also have two sisters. My dad offered all of us to come into the company, basically tried to twist our arm and get us all in. My two sisters said, no, they both wanted to be teachers. My oldest brother came in.

with my dad when it was Beauty Supply Warehouse back in 1981. Another brother came in in 1988. He was an aerospace engineer, but there was no money to be made in that at the time. So he came in, he started manufacturing the shampoo. I came in in sales and then my younger brother came in as kind of like in St. Louis, Missouri, we have the St. Louis Cardinals. There's a guy named Jose Okendo who played all positions. My youngest brother played all positions. Then he moved into our IT department and kind of built our IT department for us.

But yeah, it was just three brothers and we learned how to play well and argue well when we were younger. And I would say we did business well and we argued a lot more. And that's what you do in family. That's great. You mentioned a book. Come on, you got to tell us the title of the book. Yeah. So I developed a book. I wrote a book in 2020.

spent two years writing it, it's called Live and Let Go, and it's called Releasing Your Hold to Pursue God's Purpose. It's things in my life that I had to let go of, and able to actually find the purpose that I was supposed to step to in my life, including in 2018, turning over my role in the company to a new executive team. Interesting. It's funny that you're doing this interview right now, or doing this show, because that is pretty much...

what I'm working on for me right this second. Like, I think I'm trying to control too much and trying to make it all happen and I'm not letting go. And that's a very, we may have to talk afterwards about that, but you know what? This could be helpful for a lot of other people. Yeah. Yeah. So I had no idea that this was gonna go, cause I had no idea about the book, but talking about some of the premises that led you to the,

Michael Palumbos (08:35.352)
you know, to the concept. Yeah. So in 2011 and 12, I had a stroke in 2011. Um, I'm, you know, I think I was 40, 39 years old, something like that. And I had my first stroke. Um, in 2012, I had a second stroke in September. And then, um, in 2013, I, they just fixed a little hole in my heart. A lot of people have it. They had basically the blood clot was going through the hole short in my brain.

Um, that's kind of what happens, you know, with a stroke. And so I had to sit around for a couple of months and do nothing while this thing that they put in my heart was healing. And, you know, I read a couple of different books and things like that, but from that time forward until 2019. So from 2012, 2019, I walked through a process in my life that I, I'm a, I'm a believer in God. I know that he's directing my life and that he's been good to me.

and challenged me all at the same time to be that person that he's called me to be, that he's created me to be. And during that time, there were many things in my life that I had, that I was growing up through, that I had to let go of. Things of attitudes, things that were hidden in my life, things that, you know, I had kids, you know, how do I take a child through teenage years to adult years, and then sit back and cross my arms and kind of, you know, hope to say nothing and they...

because they know a lot. And so there are things of letting go of your, you know, in family, there's things of letting go of, you know, in attitudes, there's things of letting go in business that you just know there's the right time. We knew in 2015, we needed to let go of some of the leadership issues that we had, but we couldn't do it. We just literally were holding on tight, myself and my brothers until 2017, where I believe in September.

2017, God literally reached in, grabbed our hands and pulled the company off our hands through something we had to walk through. So, yeah, so letting go is very difficult in many aspects of life. But there's a story in the Bible that says that unless a seed falls to the ground, no fruit will be produced. That seed usually comes from a dying fruit.

Michael Palumbos (11:02.542)
And so unless a fruit, unless what was once healthy fruit can die and go to the ground, it can never produce again. So how do we produce more unless we die to ourselves? I love it. Love it. Love it. Love it. And you know, it's I have not, it's kind of, I just recorded another episode earlier today where we were talking with a family that they live, their family lived through the Holocaust, Jewish family.

And with everything that's going on in Israel right now, you know, it was, we had a nice conversation probably 20 minutes long before we started recording to dive into things. So now, now we flip over to the Catholic side, the Christian side of things today. For those of you listeners who don't believe in God in that manner, whether you want to call it life, the universe, there's a, there are, you know, just nature, there's a power that is bigger than all of us.

And I am a firm believer that it's letting go and paying attention to the voice, paying attention to the calling, paying attention to, you know, God's directions. However you want to look at it, I want to make sure that, you know, that you understand that you can take this from a Buddhist perspective or...

a Christian or a Jewish perspective and it all works, Muslim perspective, it all works in that. I love the fact that Derek, you are pronouncing and saying, this is how I view it and this is how I look at it. And I think that's powerful. I appreciate you. I've done a hundred shows almost now and not everybody has that conversation with me. So appreciate that you have the faith to do that.

No worries. Yeah, that's why I wrote the book. Sales aren't that great. I'm horrible at selling books, great at dog shampoo. But I gave it because I would ride on planes and I tell people my story, just two bits of this and that. And I just felt I want something to give to somebody just to say, hey, maybe this will help you out. And that's why I'm on here today is I just, I think there's things that we walk through in business that may help someone, may be that nugget to go.

Michael Palumbos (13:23.854)
That's what I needed. Yeah. So talk about, you know, it's really interesting though, dad was the founder at some levels, the five of you were the founders, you know, and working through this together and, you know, floundering and flourishing at different times as you're doing things. Do you mind sharing a, you know, a couple of the stories of, you know, the relationships as a family of where you might've gotten stuck and how you worked through those periods of stuckness?

And maybe, you know, another story where, you know, because we were family, because of the things that were going on, it allowed us to flourish. Yeah. You know, when we started, like I said, the way we started was this dog groomer called my dad and said, hey, can the product that they were actually looking for also at that time was this sprayer that you could, that they were using it for spraying hairspray and shampoo on ladies hairs at a beauty shop.

And she said, I think I could save a lot of money if I use this in my dog grooming shop. So my dad started renting them to dog groomers. And that really kind of like set him into the dog grooming industry. And then they were asking for shampoo and we created shampoo. Well, my dad and my brother built the shampoo system and at the company, that was our future. If we could get so many out, rent it out there and have this much money, we'd be doing well.

And then we came along and started making the shampoo even better on top of it. You know, a better shampoo. Now we have a brand of shampoo. We have the shampoo system. And it came down to my older brother and my dad in the early nineties saying, well, the shampoo system is the way of our future. And another brother and myself saying, well, hang on shampoo. We only have to make one gallon sell it to somebody. If they like it, they're going to keep buying it. We don't ever have to do that again, but we have to keep fixing these shampoo systems. If they break down, what are you know, we're renting them out there.

And that became a challenge over a two to three year period is which way do we grow? Who's right? And we let it play out. You know, one thing we always did as a family is a couple of things is we all have equal shares in the company. My dad was kind enough to actually give us shares years ago, but we also decided that we would all make the same amount of money. There would never be one person that made more than the other.

Michael Palumbos (15:39.126)
And we did that just because we valued each other. And you have to learn to value as a culture, each other's giftings that they bring in. I find too many times that people get to be 70, 75, 80 years old, and they're not willing to let go of that company to the next generation because they have yet to value that the next generation has something to say or something to give. And I think my dad and my brother kind of saw that value in us as...

we were able to bring something that they may not have seen. And now they're like, okay, we'll give it a try. So that was one. You know, when we were in 2014, we actually lost two of our family members and employees. They worked for our company. They were killed on motorcycles coming to work. One was my brother's brother -in -law who was my best friend since he was six years old.

And another one was a young man that was to marry my niece a month later. And they were both a bus pulled out in front of them. One hit the front, one hit the back. And in 2015, that was it happened in March 11, 2014. It was a tragedy. It was hard for the entire family. It was hard because we were a family company. But we had to start making a transition from family to corporate because we were growing at such a pace, such a fast pace at that time. And...

Like I said, between 2000 earlier, like I said, when we were between 2015 and 17, we just knew that we couldn't do it anymore. As the entrepreneur, as a family business, you had to bring in someone else who knew a little bit more than you. And we were great at taking risks. We were great at launching products with a lot of risk. We were horrible at managing staff. We're horrible at corporate culture. We're horrible at these things.

And we had to bring in the next generation to be able to do that. And that's like part of letting go again. That's valuing the next generation that they have something to say that you may not know. I don't know if that answers what you look for. Yeah, no. So today then, when you say bring in the next generation, are they family, non -family? What does that look like inside of your organization today?

Michael Palumbos (18:01.134)
Yeah, so the answer is yes. My mom and dad had six children. Those six children had 27 children. So I have 27 nieces and nephews. I have one who's the director of our business development. And then we have a nephew -in -law who's actually our CEO. He married my niece and his name's Landon Hobson. Brilliant, brilliant, brilliant man. He's got three masters, you know, and just...

He's got talent beyond measure. And then we have four other family members that are anywhere from high level to mid level leaders in our company. So. No, so you saw my face and I just like, a couple of things just happened here for me. One, you did something in the beginning of the business.

that worked for you guys. It doesn't work for every family where everybody got paid the same. It was like, we all value each other. And so we're gonna just keep the pay the same so that there's not one person that's valued over another. And one of the things that, you know, I tell family -owned businesses all the time is you've got to figure out, are you paying for the job or are you paying because of the family? And so you started off with the family rules, you know? And so I'm very, very curious.

today, family members, are they treated, are they paid the same across the board, or did you have to do that corporate thing and be like, I have to pay people based on the job that they're applying for? Yeah, so it is a little different because we as owners, more are getting a, we sit on the board now, all five of us, and we get distributions. Yep. Plus the salary. So it's a small salary for being on the board.

and then it's a distribution because we're ownership. The people who, the family members who work for us work as the value of that job. So Lanny gets paid a CEO value, Bradley gets a director's role. Another one would get a manager's role for managing because...

Michael Palumbos (20:18.094)
just because you have a last name or your blood happens to have a DNA does not mean that you should be differently paid than a person walking in who has a skillset that probably is equal or better to you. So yeah, so we are very careful about what that looks like to those that are valued just as much as they are. They just don't have the same DNA. Right. And that goes back to your process of letting go and evolving over time.

Cause that wasn't the thought process in the beginning. And I have met many families where we're into the second or third generation and they're really still stuck in thinking about it in that direction. The fact that we can't bring in non -family members and pay them more than a family member. And it's really at some levels really holding them back. Yeah. And we do have a unwritten rule here that...

If you're a family member, you do get an opportunity, but the opportunity is equal to the next person applying for that same job. So I'll give you an example. In 2017, my oldest daughter was graduating high school and the lady who actually runs our HR department, our director of HR had just come on as HR. You we didn't even have an HR at that time. We're now developing an executive team for it and we had HR.

And she also used to be my daughter's high school dance coach. She knew her very well. And so she said, would your daughter like a internship this summer? And I said, well, here's the thing. I said, you can ask her, but you can't ask me. I said, because you need to value her and she needs to get that on her merits, not because of who she is. Because you also, I want you to know you have to be able to fire her on her merit as well. If she doesn't perform to what you want me to perform. So.

And I had to walk that through with another guy as well that Landon, our CEO came and said, what do you think about this family member? And just happened to be close to me as well. And I said, you need to hire them on their merit, but you need to fire them also if they need to be fired. So I think if anybody gets hired, they also need to understand I have the ability just like anybody else to be let go. Yeah, that's great. You did something else that not every family does is where you have an outlaw.

Michael Palumbos (22:43.254)
you know, an in -law that married into the family that is now, you know, leading as the CEO. And I wanna just congratulate you. I think that the families, you know, what is it? Oh, come on. I just had a moment and now it's gone. But, you know, it's when we look at evolution has to happen and it's the families that are open to change.

from where they were, willing to let go, as you say, and be thought -filled about what is best for the growth of this business. And you look to somebody that wasn't blood -related to say he or she is gonna be best. And I know it's a guy in your company, but I think other people need to look at that to say, what's best for the company, not just what's best for the family.

Yeah. And you know, I think you just have to focus on your why over your get when you're doing these things as you're growing, because you need to understand why did I start this company? What was the purpose? Why am I doing what I do? And you need to stay focused on that as opposed to what are we going to get out of it? You know, if you're true for us, we have a lot of.

employees that are 20 year employees that are 25 year employees that are 10 year employees to me, their family. I mean, you spend a lot more time with them sometimes than you do your own family. And I need to value them as much as I do the DNA family. And so with bringing in Landon, it's, I'm actually, I'm actually shocked at work because he can walk also.

He can, you know, at any one time, because there's a lot of dynamic to family. And there's a lot of things that will be said within a family structure that would not typically probably be said in a ownership to CEO structure. You know, we stick it out longer and unfortunately we stick it out longer. So yeah, it's, I think if you understand your why, our why is still, and it's in our mission statement, our why is,

Michael Palumbos (25:03.566)
still to enrich the lives of people in their past, support and invest in employees, provide for the poor and do it all to the glory of God. I mean, those four things are still to our core of what we do. And if we can remain understanding of that, it doesn't matter if you're family or not family, are you fulfilling the why of why you're here? Yeah. We call that, you call it the why, we call it a core purpose. And it's so important to have that because,

What's really cool is if the pet shampoo business evaporated, you could take that why and you could put it into education. You could take that why and find how does that why drive us inside of rocket science or whatever the case may be. It's not necessarily about the products or your company. It's about the people that are there and what is our joint why that gets us out of bed and motivates us.

Yeah, exactly. Let's talk about when you look at the next 12 months for your business, what would you say are the three, the drivers, the top priorities that, you know, the board is pushing, the advisory board, however you guys look at yourselves, and the CEO, you know, the leadership team in the business, what would you say are the top three priorities moving forward?

That's a good question. You know, the economy just went through one of the hardest times it's seen in a long time. Everybody's saying that there's a recession, some saying a depression coming, you know, in a few years from now that we haven't seen in the United States. We've always had a growth of 3 % to 20 plus over the last 20 years. I mean, God's just really blessed that we've had that.

In 2022, we did not see that. We saw actually a decrease for the first time in our company. However, all retail sales, you look at Amazon, you look at Walmart, you look at any of the leading retailers, they all had an incredibly hard Q1, Q2 of 2022. Well, when they're down, we're down because we sell retail product. When they're up, we're up. So what did...

Michael Palumbos (27:27.342)
what it allowed us to do is refocus because we're on a fast track growth at that time. We actually did well during COVID because we had a great hand sanitizer. And so that allowed us to, you know, make extra money and just shorts and loose ends. But coming into 2002, totally different story. So what we did is we looked and we said, what is the core of our company? And we said, what do we sell? What, you know, where do we win?

And we started looking at it again, and we realized that we were off track on some of the places we were investing money, some of the areas that we were in growth. For example, we were focusing a lot of energy into China and to the European and the Brazilian market because those were big white spaces for us. They were countries, their countries are continents that were on the growth.

And of course you have the Ukraine war, you have China shutting down because of COVID, you had China, US diplomatic relations that are not the best right now. So we had to relook at it and go, okay, within the 48 states, how do we win? Where do we focus? What's our core? So we reestablished that in 2022. Our executive team kind of put the plan together, Q1, Q2 of 2023, and began rolling it out to the rest of the team. And now our focus is,

kind of like when a batter gets a slump, you go back to the fundamentals, we're back to the fundamentals and who we who we were and how we got there. And that's next. That's our next 12 to 18 months is we know what got us through for the last 3540 years. If we if we remain at that both our our core values, plus our our driver in the company, our brain and the company, then we should be a successful

You never know what tomorrow brings, but you can at least do your best to do today well. And that's what we're trying to do. Okay. So who got nominated to be sleeping in the cars for the next five years? I'll take that one again. I loved it. That was, that was so fun. I, you know, it was the best, it was, it was the best, best growth time of my life. I called it my, uh, my education on wheels because I had a lot of time to read. I had a time to listen to different things. Like you put out a podcast.

Michael Palumbos (29:47.534)
We didn't have podcasts in the early nineties, but it would have been great to have them. Absolutely. We had cassette tapes and I remember I had the Brian Tracy psychology of sales and I listened to that over and over and over again, you know, about the same time you were on the road probably. That and Ziggy Ziegler. Yeah, that's right. That's right. That's good stuff. And it's still classic and still, still good stuff today. Yeah.

Looking at, let's talk about family and business again. What's it like, you said you're small town, right? There are family members that are not part of the business and there's a lot of them. And they share the same, a lot of them probably share the same last name, a lot of the heritage. How do you guys do at helping people that are not involved in the business?

understand and do you have a process for helping them to understand what's going on in the business so that they can be just as proud when they're out talking to ABC, John Smith on the corner when they're saying, hey, what's going on at the company? They have no idea. Yeah. So that goes back to the core of the company back in 1992. Again, my mom and dad wanted to go into the mission field. And so in 92, they actually went down to Hurricane Miami.

I just started went down to Miami, Florida during Hurricane Andrew and served down there. They just they picked up everything my mom and dad did and got a truck, a vehicle and went down there and just started serving for six months. They did really well along that same time. They met 30 Guatemalans that drove a school bus all the way up to Central America through Texas down back to pay an handle all the way down to Miami, Florida. And they got a connection. So what happened in 93 is my mom and dad went bought an old

89 or sorry 79 Ford Scout put nice big tires on it went to a junkyard got some good seats on it and began driving from st. Louis, Missouri where we're from all the way down to Guatemala and Serving people up in the hills of Guatemala that honestly some had never seen a white person before and then they drive back and then they go and they drive back and they they tell the gospel of Jesus Christ as they would go and

Michael Palumbos (32:05.838)
So they built this over the years, they've had the opportunity to travel the world and go into the Congo to help during the Albanian crisis in 97, go over there and serve with our military, serving food and bread and stuff like that to the Albanian refugees. And in 2003, my mom and dad bought a piece of property in Guatemala where they wanted to put a children's home. And in 2011, we opened this children's home for severely abused children. You know,

Children that honestly parents put out for prostitution, six -year -old girls, things like that. And then we just, we serve the needs of the people of that community. And it's just grown over the years. So why am I saying this? Because the family members not only see the value of the company as far as, oh, this is a resource to income, but it's a resource to helping do what is at the core of us is help the poor needy around the world and doing it to the glory of God and.

Can I get involved in that? Yeah, you're a part of that. Our team of employees are part of that every day when they're putting a cap on. You're helping someone somewhere. And even today, it's Monday, November 6th, and we had Mission Monday. And I brought in a lady that does a feeding program here in the St. Louis area. And I was telling our employees, I said, you may never be able to go to Guatemala or Haiti.

but you have the opportunity to go serve locally and change people locally, lives locally. And that's what we offer also at our company is we offer five mission days a year that our employees can take a mission day, do what some do it with Missouri conservation, some do it with other things, and they go serve and they get paid five days a year to go serve in the community. Because we believe in just taking what's been given to you and giving it back to the community.

So our family members that are not involved know the good that's coming from the company. Love it. Love it. Love it. Love it. Um.

Michael Palumbos (34:14.35)
What's next? I just, yeah. You know, I just had a, you know, sometimes there's pains, obstacles, you know, things that companies go through and families go through, you know, how do you make it through those? As you were asking that question, you asked a question earlier and I started thinking about that. And one thing that we've always tried to do, we weren't great at it, but we tried to do is when you walk out the door of the company, it remains the company.

You keep family and business separate because family's always going to be around. The business could go bankrupt tomorrow. And I learned this from when my daughters used to have friends over and I have two daughters and they were probably the four years apart. They were probably 12 and eight, let's say, and they're arguing one day with, you know, and they had three friends over there arguing. Well, this friend, that friend, and I took them both aside. I said, listen, your friends will be gone, but you will remain sisters.

forever. I said, you need to not argue with each other like you do with your friends. You need to care for each other. And that's the same in business. You need to leave business as business and keep family separate. And, you know, on your best day, you can control yourself. You can't control anybody else. And they're going to do stuff you don't like. They're going to do stupid things. They're, you know, they're going to say something to you, something to you in a way you you're taking offensive. The best thing you can do is just remain humble.

and go talk it through with them and just say, what did you mean by that? You've got to help me understand because I don't understand. And we're family, we've got to get through this. There's many, many books out there, how to have critical conversations. Bunches of them. I think that's one of the tools that especially if you're going to be working in a family business, we need to get better at our communication with each other. A lot of times,

You know, they'll say that in a corporate world, we would have never treated somebody or talked to them the way that we might inside of a family business. Yeah. And in like you just said with your daughters, you know, at the end of the day, it's family is the ones that deserve the best from us on a regular basis. And so, you know, you have to do that work and figure out that balance to say, how can I?

Michael Palumbos (36:42.99)
better understand what Uncle Jim or Aunt Teresa was talking about and how do I understand their perspective rather than jumping to conclusions about where they were going and what they were doing. That's right. That's right. And one thing that we've done in the company, I guess it was three years ago, it was probably about three years ago, we had a gentleman come to us who does videos. And we actually asked him, we said, we know why we built the company.

And we now have passed it on, well, we would say passing on to the third generation. Landon runs it. We have a few other members of the family in it. But we are also 100 % family ownership owned. And we figured out how to do that. It took about a three year process. And I can talk about that. But we had him in. And we said, what we want to make sure is that the next generation, whoever they are, understands why we originally started this and some of the things we went through.

So we spent a two year period, literally, I think he did maybe 60 hours of video of myself, my brothers, my mom and dad, just asking questions. Why we did things, what we went through, what did we learn along the way? What mistakes did we make? And he comprised it to an hour and 20 minute video that now is able to be passed on to the next generation. That's powerful. There's power. I tell people this all the time, power and stories.

you know, and having those conversations and understanding where we came from and why is you can write up a, you know, here's what you should do, you know, going forward. But if you tell me how to do something, it's nowhere near as powerful as telling me why. Yeah, that's right. That's right. Talk about family ownership. You hit on that for a second. Talk about that for a little bit. Sure. We were all...

Like I said, equal partner. So if you take a hundred shares and you divide them out, we're all 20 % owners. About three years ago, we're trying to figure out how we could legacy the family into these shares. My mom and dad gave us shares. It's a little bit different as the company grew from a little bit to now a bigger bit. And we're trying to figure it out. So we hired, we brought in our CPA firm who's just brilliant.

Michael Palumbos (39:11.022)
It's a large CPA firm in St. Louis, Missouri, brought in some trust attorneys. And we started walking this through of asking questions. What does each family member want? What do you see? How does that look? And across the board, our heart was to pass on what we built. I own 20 % of the company. I would really like, and for 28 years, I traveled a lot. I really liked my kids somehow some way to get.

some value of what their dad gave up for them, you know, in future years without ruining them in the third generation of giving them a lot of stock. And so how do you do that? And I had another brother that wanted to give it to him immediately. He's in a different area of life, an older brother, different area of life. And his kids were kind of ready for that next step. So walking it through, we actually built a thing called a night digit.

And we - Defective grantor trust. There you go. And it allowed us to, because we still need to get our distribution, allowed us to sell it into there through the distributions and then still it pay us through the money that was going in through the distribution, allowed us to build a family legacy that we could pass this on into our own entity families. And then outside of that, if we wanted to give shares to a

another family member, let's just say one of them came on after Landon was our CEO. We just want, I have two kids, another, another has five. And so my kids are going to get more. I can share it out to them. I, you know, with it, within both, but we had to talk this through. It was not easy. It was a two year, two year walkthrough. What I praise God about is there was no yelling. No one ever walked through the table. We were able to just, each of us tell what was on our heart to make it happen. Give it to the professionals.

Let them feed us back some stuff. Again, shake it up, give it back to the professionals. Again, shake it up without saying, well, you always want this or you that, you know, I think that, I think you leave the use out of it and you let the professionals work it out to the, there's no, I was listening to one of your other podcasts. There's no set way for doing any one company. It just isn't possible. Every person is different and every company is different. And that's what, that will work for us.

Michael Palumbos (41:36.718)
Yeah, I'll throw to you my, how do I say this? My family business coach radar is going off. And I mean this with all the respect and I'm hoping to add value in our conversation to you. The preparing the business for...

the heirs is one side of it, and that's the edgit and the technical and the attorneys and whatnot. I would throw to you that there's also the other side of preparing the heirs for the assets. And so there's a yin and yang inside of there. Jay and Lisa Daniels from Lodge Cast Iron, they did an episode with me way back.

I would highly recommend grabbing that episode because they've got, and we talk about it in the episode about 50 family members, more than 50 family members that own the company. And I believe there's only two family members that work in the company. And that was what I was relating to you. And it's a little different right now, but it's like the family members that aren't in the business.

And eventually you're gonna have family members that aren't in the business that are owners of the business, or you're starting to do that now. And there's this balance between that, that there's what I would say issues that come from that, that you have no idea, because you guys are here to communicate, but in 50 years from now, you won't be here to communicate it, likely. Yeah, so our response to that was, y 'all deal with that. Not uncommon.

No, and I appreciate that and I will listen to it. Legacy is not just the financial end of it. Legacy is just so much more what you just spoke about. And for us, what we developed was a plan of you have to be this level to actually be a voting share. Otherwise you get a value of the financial, a financial, but you get no value of the say. And I have two daughters, one.

Michael Palumbos (43:54.126)
She's on a fast track to be a NICU doc. And she's never going to want to be some doctor too. I have another one too. She's brilliant in IT and she's a developer in IT and project manager in that. She worked for us for a point and then she's just like, yeah, I don't know if I want family business. And because she wanted to create her value for herself. And I appreciate that. I will listen to that one. And...

That's the part that I would say you haven't just arrived when you figured it out to this degree. You've got to, until the day you lay your head. Until the day, if you own a company until the day you lay your head in the grave, there's gonna be those challenges that you've got to keep asking, you've got to keep learning, you've got to keep seeking advice. Yeah. And you guys have done a great job of learning and letting go and changing and evolving over time.

There's probably not too many episodes, just Jay and Lisa's is the one that came to mind. Anything with, you know, Jay Hughes, the ones with, you know, some of the consultants, I think you'd get a lot out of them as well. Obviously it's fun to listen to other families and how they handled those things, but I've been studying family businesses for years.

and part of an organization called the Purposeful Planning Institute and people that have listened to this before, they've heard me talk about it, but what planning, the Purposeful Planning Institute, the whole idea behind it is exactly what I was talking about in Roy Williams from the Williams Group talks about this. It's, you know, the issues are never with the technical. That's the, the issues.

you know, it's the attorneys and accountants will do a great job of helping you avoid taxes and do all the right things from a standpoint of estate planning and tax planning, investment planning, and you'll be fine. But then you start throwing in communication between people and trust and just the differences in personalities. And it's the people side of it that ends up making the quagmire. And there's an old,

Michael Palumbos (46:13.644)
you know, saying it's in every heritage that's out there. Shirtsleeves are shirtsleeves in three generations. It's nor but a clog, nor but a clog, and would be, yeah, nor but a clog and a clog between three generations, race patty to race patty, from stalls to stars to stalls, you know, so it continues out there. And a lot of times,

advisors will push on it as a negative, not for nothing, but, you know, S &P 500 companies typically don't last more than 15 years nowadays. And so you guys have already beat that. You're into the second generation. You're moving to the third in a successful manner. And it's this next step of figuring out how does the family, both the ones that are owners, both the ones that are, you know,

making the decisions and those that are working. You might have family members that work in the business, don't own anything. And so how do we put that stuff together and open up the communication at a different level and continue to do those things? And like I said, it's never the technical side. It's always the people side. So you will love, dig into some of the other episodes and I think there's a lot for you there.

Love it. Love it. All right. So you're sitting in front of an audience of multi -generation family businesses and you're on a panel and they ask you a couple of questions. So I'm just going to, you know, let's go through the questions together. What are your top two or three pieces of advice for family, for, you know, people in a family business today? What would you be telling them or, you know, don't miss these things?

Don't do it. You know, the first thing is, so we have five cores at our five core values in our company. And the first is be honest and humble. And, you know, I think that would be one of the first things is just be honest and humble that you ain't all that. You know, you have a lot of to bring to the table.

Michael Palumbos (48:34.222)
but another family member does as well. Because as you were saying earlier, we're all different. And I do not think a lot like one of my older brothers. I would just think differently. Yet he brings so much value to the table in his thought process, and I do as well. But I have to understand sometimes I need to yield and just know I am not right in this and it's okay to let someone else be right.

You just have to be honest and humble within that. And you said it earlier, it's actually funny. It's our second, one of our second core values of our company is being clear in your communication of what you're trying to say and how you're trying to say it because we're two different people. We don't hear the same thing when something comes out of our mouth. Agreed. Yeah, you know, I would duck dynasty.

uh, duck commander came out with the duck dynasty show years ago. And I probably watched one of the first shows I actually got, I, we had the privilege of making them product during their six months run before they kind of tank real quick. And we, but I got to meet them and spend time with them. But in that show at the very first, one of his first, very first airings, he says the greatest thing about being in family business is you get to be in family business with you, with your family.

The worst thing is you're in business with your family and you must understand that you grew up with this person. If you're in family, they knew you before business. You didn't probably just end up in business and their family. They know your ins and outs. They know what makes you tick and they know what ticks you off. And sometimes they're okay with ticking you off. So just understand, I guess the other one, the second part of that would be what I said earlier.

Leave it at the door. You've got to learn that, you know, business is business and family is family. Love it. What is your favorite family tradition? So we grew up, my dad was a barber. He loved to trout fish. For some reason we went camping one time and a guy taught him how to trout fish and we love trout fishing. So honestly, to get away and trout fish as a family is just,

Michael Palumbos (50:55.31)
Brilliant. The second part of that, my sisters probably wouldn't say that. So as a family, we love get togethers. And unfortunately, my mom and dad are older and it's harder to bring a get together together with 70 different people, but we love our family get togethers. Great. Last question for you is for a new family business member or just...

new to the business, what are some of the top learning things that you've learned through the years in terms of like organizations or books or trainings that you've been a part of? What were some of the things that were critical to your growth through the years? Yeah, it's really funny you asked that. In 2013, I was reading a book, I think it was 2013, 2012 or 13. Yeah, 13. I got stuck in Hong Kong.

and a company that I was supposed to meet with said they couldn't meet with me. So I'm on a 30 floor tower overlooking a construction area, reading a book called Good to Great by Jim Collins. It was awesome. I'm reading about it. And then they came out with the next book, How the Great Fell. And it's really interesting to me because I think that's family business to a core, those two books, because...

The good to great tells how they went from just being a good company to a great company. We went from being a good company to a great company. You mentioned it a couple of times and I only say it because it's by the grace of God that we're able to do this. But how the hard fell, how the great fell is they were not willing to change. They were stuck in the way that they always did it. And I think those two businesses, those two books are great reads for someone starting a family company because.

You understand how you go from good to great. You understand if you get to great, how to be careful that you don't become the one to fail. And you have to be, just be willing to listen. You know, well, if you want to be good at family, at a family company, become good at listening and shut your mouth.

Michael Palumbos (53:09.646)
and just trying to hear what someone else has to say. So I don't know if that's what you're looking for, but. No, that's awesome. It's one of my favorite books. And I, you know what? The companion book to that is not one that I've talked about on the show before, but I think it's really important to understand this is good to great. And this is how the great fell. I love that. Jim Collins just did a live event in Chicago, not far from you last month. And a bunch of my buddies took their.

their clients to the event and they just said, he's still amazing. And just, you know, he took one item and spent the whole day talking about that one item and it was mind blowing. So pretty powerful guy. Yeah. And I'll say the last one and I'm going to put a plug in for my father who's 81 years old. So a few years back, it was about 10.

12 years back, we always meet on Monday mornings and pray as a family before we start as a company. So it's myself, my brother's my dad. And then my dad would tell us about his mission work, you know, and he tells stories after he came back. And one day I said, dad, you need to write these down in a book. You need to tell your story. So he actually wrote a book called, He Will Make A Way. And it's those stories, it's called Miracles Are The Normal Way God Lives In His People. Yes, it's...

It talks about the Christianity, if you want to call it the religious background that my dad got to. But there's so much value that I've heard from people over the years that had just read the book because he tells the story of the company, tells the story of how he went into the mission field, how he grew both of these at the same time and the struggles they went through. So it may be someone, it's an easy read. You could probably dial in the book in four to six hours. It's just, it's a great book on.

And it's not for selling it, it's just, if you wanna know why we do and how we do it and how we made it, that's probably in the book. Love it. Derek, this has been a real pleasure. I got a lot out of our conversation today. I'm positive that many, many people will get something out of this at different stages. I'm always touched when I get an email from people that listen to it that said, I've had two over the last couple of months. Can I be on your show?

Michael Palumbos (55:27.342)
that story that you shared, that you did that interview with so -and -so, and I wanna share our story. And so, you know, it just really appreciate you being willing to share your story. You don't know, you know, who that's going to touch and how it's gonna impact somebody's life, whether it be tomorrow or 20 years from now, because this will be out there. It's in the world forever now. Right. Awesome. Thank you for having me. I so appreciate it. And I so love just being able to tell the story. And if anybody would ever like...

does listen to it and wanna contact me, please feel free. I would love to help anybody out in any way I could. Appreciate that. Derek from Cosmos Corp. I really appreciate everything that you've done for us. Ladies and gentlemen, my name is Michael Palumbis. I'm with Family Wealth and Legacy in Rochester, New York, and you've been listening to the Family Biz Show. Have a great day and we can't wait to entertain you and share some more stories on the next episode of the Family Biz Show. Take care everybody.

 

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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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