Ep 009 - Building on Values with Goran Haag

Transcript

Transcripts are generated by machine learning, so typos may be present.

Chris Hanslik: Hello, everyone. My name is Chris Hanslik, and I’m the chairman of BoyarMiller, a midsize law firm in Houston, Texas. I want to welcome you to Building Texas Business, a podcast about corporate innovation, entrepreneurship, and business leadership in the Lone Star State. The goal of this podcast is to learn from some of the best business leaders in Texas in hopes that their stories of growth, challenges and success will inspire our listeners in their own journey to building a successful business. Today’s guest is Yoron Hogg, president of Champion Fiberglass, headquartered in Spring, Texas. Champion Fiberglass is the leading supplier of fiberglass conduit, strut and bridge drain systems to the industrial, electrical and mechanical markets. In over 30 years, this sweetest chemical engineer turned Texas entrepreneur has grown champion fiberglass from one to four product lines and even survived and rebuilt after a devastating factory fire to become the eight figure business it is today. Currently, Joron serves on the executive committee of NEMRA manufacturers group and the Chemical Engineering Advisory Board of Rice University’s George R. Brown School of Engineering. Welcome to the podcast, Jordan. Thank you very much. So tell us what is your business known for?

Goran Haag: I would say that over the years, we’ve built up an enormous reputation of the customer service. We almost go to the extreme there, but I think long term, it always pays off. And because of that, we have become very dominant in our industry. We are only three manufacturers in our little niche market. When it comes to conduit, what everybody thinks about is PVC conduit and steel conduit. Fiberglass conduit is maybe three to four percent of the total conduit market, but it serves very important issues. We have three manufacturers and I would estimate we have about 70 to 75 percent market share in North America. When I say North America, it’s mostly Canada and U.S. Okay, so what inspired you to start Champion Five Glass? I always want to run my own company. I cannot explain why, but I always want to do it because I had a lot of good bosses over the years and a lot of inspiration. I always wanted to run, as you call it, my own race. Build it up. I want to build up something that you can be proud of. It was never about money. Money will always happen. It will come if you make things right. But that was not the driving force. It was just to build up a company that I can be very proud of.

Chris Hanslik: With that as the backdrop, how did it become that you were in this fiberglass manufacturing industry? That’s interesting.

Goran Haag: I have a wife who’s from the Philippines and she had some Filipino friends and one of those guys told her about a company that had gone bankrupt here in almost the spring actually. actually, and he kind of said, hey, your husband is a chemical engineer, he should be able to do something of it. So I looked at the equipment, it was horrible, it was awful. But I started thinking about it, you know, and then I said, yeah, we can probably do something. I didn’t have enough money. But luckily, through an accounting firm, we all know them, Grant Thornton, I was able to meet my business partner that time. He was an electrical engineer. He had an MBA also from Indiana University. And he and I started Champion 5 last 1988.

Chris Hanslik: That’s right. Now, my understanding is you now own the business 100%. So you went through some type of buyout of your partner? Yeah.

Goran Haag: That’s an interesting story. There are also 2008, two weeks after Lima Brothers went under a bottom out. And I remember going home to my wife that evening and saying, honey, this morning we were completely debt free. Right now, we’re in deep debt and the whole world is falling apart. But let’s say a prayer. Let’s hope we can make it, honey. And that was a great decision. We have on an average, we have grown 12 and a half percent every year since that organically. Wow. No acquisitions.

Chris Hanslik: That’s impressive. And your wife stayed with you. Yes, you did. So, in starting Champion and now owning it for as long as you have, what do you believe some of the key factors or elements are to building a successful business like Champion Fiberglass?

Goran Haag: Starting the right people, everything. You know, when you’re young, you know, I’m an engineer and you read about people and you hear that all the time, but you don’t understand it. But then when you get older, you realize everything is about people, finding the right people all the time, working with them, getting the best out of them. That is the whole key. The management group and the whole group I have today is just outstanding. I’m so proud of it. We have five outside salespeople. We have 35 manufacturer reps in every state of the union and every province of Canada. And we constantly check everything. I have just great people in my company.

Chris Hanslik: Over the years, what have you done to refine and improve your hiring processes to make sure you have that strong team behind you?

Goran Haag: I always say, and my employees are tired of hearing it from me, but I always tell them, don’t worry about what they know. Worry about how they will fit into our company. Make sure they can work in Champion Fiberglass and they will fit there.

Chris Hanslik: Sounds like what you’re saying is culture is paramount. Absolutely. How would you define the culture that you built there?

Goran Haag: It’s a very tight. I have a lot of type eight personalities. very loyal people, I would say some of them would probably jump in front of a bullet, someone tried to shoot me actually, I’m joking, but very loyal and hardworking. And I will also say, when you’re successful, People want to work in a successful company. So you can feel that you attract good people there because nobody wants to work in a stale company. Nobody wants to work in a company that’s going to go out. But knowing that you’re with a winner, that means a lot to us. We can really recruit a lot of good people because of that. We have a great reputation in the industry. We have people constantly asking if you have an opening and all that. That’s a great feeling.

Chris Hanslik: That helps. You mentioned a lot of Type A personalities. tips or tricks that have been successful for you in managing a lot of type-A personalities because I imagine that they can prove to be pretty challenging from time to time.

Goran Haag: Well, one thing you learn is that don’t micromanage them. Never. Let them work because they will figure out they want to do their best. Always stay away from micromanaging. I mean, micromanaging is the death of a company, in my opinion.

Chris Hanslik: So in evolving yourself as the leader of the organization, any management consulting people that you’ve worked with or things that you’ve read that have helped you develop into the leader you are today?

Goran Haag: Well, it’s interesting to ask that because when I was young, you know, I read Peter Drucker, like everybody did and all that. I read all of his books, you know. It’s a lot of wisdom there. But then 1982, there came two books that really, really knocked me out. One was The One Minute Manager by Peter Blanchett and Waterman, you know, and I was just taken back, sorry, Spencer Johnson. And the other one that probably had more influence on me was In Search of Excellence. Tom Peters and Robert Waterman. And I had just, about 1994, I got a great job for a big Swedish corporation and I had just read In Search of Excellence. And we all know there was one phrase that we all remember, management by walking around. I don’t know if you remember that. Yes, I do. And I loved that, you know. And this company I was working for was a big multinational. We had manufacturing in 46 countries. and they put me for training in their headquarters for a while. So here, in order to get into the executive suites, you had to have a special key and to get in there. And everything was so quiet and all that. And I said to myself, that’s not management by walking around. I felt completely different from it. And from there on, it’s developed. And then in the early 2000s, there was this fantastic guy, and I still admire him, and I’m a big devotee of him, Jim Collins. Oh, sure. Yes. Love Jim Collins work. That’s fantastic. So you’re referring to good to great? Good to great, you know, and also if you want to find out really how the mighty fall, because that’s a very interesting book. I like that one, you know, where actually two of the 11 original companies, it brings it up and why they actually failed, even though they were originally great.

Chris Hanslik: Right. I’ve read that one as well. And to your point, they didn’t make it. Exactly. So You’ve seen a lot of success and what you’ve mentioned earlier since buying us your partner, tremendous growth in the company. But I have to believe along the way there’s been some setbacks. Are there any setbacks you could share with us? The first big one was that we were underfunded and after about a year in business we needed more capital.

Goran Haag: And boy, that was tough. I mean, I was smelling that one one, the chapter 11, you know, but through a friend of a friend, I was able to get an investor into our company. He and another person bought 25% of our shares and very patient investor. Some of them might know him. It was Mr. Ralph O’Connor. He was one of the son-in-laws of Mr. George R. Brown that everybody used to lose, of course. Good people to know. Yes. But it was his friend that introduced me to him. A fantastic guy, very patient, you know, and all that, and really helped us the whole way. He even guaranteed initially, personally, our line of credit with the bank because we couldn’t get that. And thanks to him, we were able to survive, we were able to come along. And then about 10 or 11 years later, we bought him out and we paid 10 times the price that we had bought. So he stayed very friendly with us the whole time. And then the most devastating thing, that was Sunday morning. beautiful morning it was march 13 2016 i got a phone call about 5 30 in the morning for my plant manager crying saying that the plant is on fire oh my gosh what were you talking about yeah the plant is on fire it’s pulling down So I jumped in it, a live fellow closed our plant, drove there. There were 12 fire trucks. It was an eight long fire. The whole road was blocked off and everything. They let me in because I was the owner, you know, and the president. And I saw my whole factory burning down right in front of my eyes. Very traumatic event. Yes. There was only the machine shop. in the office that survived. And thank Lord that that was the case, because that allowed us that we can come back. We were insured by Travelers, the biggest commercial insurance company. And I know everybody likes to talk negative about insurance companies. They were great. When I got a big fat check, this was on the Sunday, I got a big fat check on the following Friday to pay my employees. I only had to pay my employees myself for three days. Then they picked up 100%. We rebuilt in about less than half of the time of that estimated. We saved them over $5 million. So we turned that into a success story, actually.

Chris Hanslik: That’s amazing. What was the range of emotions you were going through when you saw those flames?

Goran Haag: Everything. I have to admit, I was probably more numb than anything else. I could not understand it. But on Monday morning, we started to take actions. Wednesday morning the justice from Travis came in and then like I said on Friday when I got to check I know that we are coming back I know it and I realized that you gotta have good insurance not only no liability and property and asset but you’re gonna have business interruption insurance because that’s what saved us without a good one we would not have been around.

Chris Hanslik: So in addition to having the right and good insurance, what were some of the other lessons you learned about yourself, about your team, things that you could share with our listeners?

Goran Haag: I mean, my team was fantastic. You know, I would almost have started talking about it, but, you know, to see how everybody pitched in, you know, we went out, we cleaned up right away and, you know, everybody was working to fix it. We are very unique because all of our equipment we have built ourselves, everything is custom built. And thank Lord that the maintenance shop was intact, that the fireman was able to stop the fire right before it was going to be in there. And that allowed us, we can do a lot of things. And then the main equipment was still okay. We just had to clean up everything. But everything else we had to take down the whole building while we still had machinery standing and all that. It was unbelievable. Wow. All right. Well, that’s enough about something negative. Let’s switch back. Nobody became a positive, very positive. Sounds like it, right? And a few years later, we build a third manufacturing line.

Chris Hanslik: If nothing else, maybe that’s the lesson is don’t let downtime discourage you because there’s opportunity.

Goran Haag: Exactly.

Chris Hanslik: Find the opportunity. But I’m most proud over how my employees reacted. They were great, really. So turning back to something maybe a little more positive, when you think about what you’re doing at Champion Fiberglass, or maybe it’s something you’ve done in the past, in the context of innovation, what have you done or are you doing that is innovative in your industry? Well, I mean, the rest of you have. Again, we’re limited on time.

Goran Haag: What we are very unique on is that we build all of our steel molds. We do compression molding. And like I said, we build the whole production equipment ourselves originally. Not anymore. We are too big for that. But still we do compression molding. We need very advanced molds. We build them all in-house. We don’t go to China. We can do it for half the cost versus China and half the time. And we had Congressman Kevin Brady came a few years ago and visited us. And when he saw that, he said, man, you’re doing home sourcing, you’re not doing outsourcing. And then he said, is it okay if I mention this in my speeches? And I said, sure, go ahead. So apparently, he talks about that in the company. That’s their own molds and all that. That’s very inspiring. That is good. This last year, we started a new line. We called it Bridge Drain. and it’s a very new thing and we needed special kind of fittings and they were very difficult to do but but with the company Owens Corning and another company we worked up a very novel process you know so we now have a fantastic process, low cost, the best quality in the industry and it’s really nice to see these these bridge stream fittings that we’re doing right now.

Chris Hanslik: So it sounds like to be the innovation and is some of that come because of your background? I think so yes. You’ve you’ve made that a

Goran Haag: serious competitive advantage. And then a very interesting thing. A regular conduit does burn at high temperature, but you can use a phenol-based type of resin. And that thing doesn’t burn. We can go up to 2,000 Fahrenheit for two hours. It doesn’t burn. And we cooperate with a big electrical, a big cable company called RSSC. They’re owned by a guy up in Omaha, Nebraska called Warren Buffett. Somebody may have heard of him. Someone listening may have heard of him. And we developed a very novel type again to make this kind of conduit to avoid, you know, environmental problems, environmental inside the manufacturing, all that. And that has been very well accepted. So a lot of tunnel applications today in railroad tunnels, in road tunnels, et cetera, to use this type of conduit. And it’s been very, very successful.

Chris Hanslik: We’ve talked a lot about your people. Does Champion Fiberglass have a set stated values that they expect people to operate by?

Goran Haag: Absolutely.

Chris Hanslik: Tell us about that and how those were developed, what they are and how you use those in your day to day.

Goran Haag: Well, we sat down and we kind of hashed it around or whatever you want to call it, you know, with the whole management group and all that. And, of course, integrity is one of them. Another one is customer service. You want to be excellent at customer service. Another one is that because of my Christian background, I want us to be a faith-based company.

Chris Hanslik: That’s great. You don’t, unfortunately, you don’t see companies put that out to the public very often, even though they may believe it.

Goran Haag: Kudos to you for that. And every time when we go out and we eat or something, we always say a big blessing as a company. I tell everybody it’s voluntary, you know, and if you have another belief, that’s fine, but it’s voluntary.

Chris Hanslik: With the pandemic that we’ve all been experiencing over the last now almost 18 months. What are some of the challenges that your companies faced and what’s helped you navigate through them?

Goran Haag: The biggest challenge was to avoid panic. In the beginning, if you remember, March, April and May 2020, it was panicky and you were afraid of touching everything and all that. So, you know, I saw my role was to kind of keep people, you know, trying to make people not panic, making sure that they were comfortable with everything. I was very surprised. I offered the whole office so that you can work from home. Only one person worked half time from home. And then I asked the other ones, how come you don’t work from home? And they said, no, I don’t want this. It’s so depressing, you know, they want to have that daily interaction, actually.

Chris Hanslik: That’s very unique to hear. Well, there’s certainly, I think there are a lot of essential services as those were defined in the orders that kept going in. But to hear that your employees are that dedicated to the company to be there in person is a testament to the culture you’ve built.

Goran Haag: I hope so, yeah. And then it’s interesting, you know, a few weeks ago, I actually gathered all of my employees when the Delta virus was starting to come. And I went over, you know, the facts that we know about, and I said, okay, here are the facts. And we went over it. Almost everyone is vaccinated and everybody after them is, okay, it was good you had that because everybody felt much better after we had had a little talk.

Chris Hanslik: So you’ve given us some examples of, I guess, the way you relate to your employees. How would you describe your leadership style, your philosophy on leadership for that matter?

Goran Haag: Well, I have to go back to Jim Collins. Get the best people, get them on the bus, find the right seat for them, and then don’t micromanage them. That’s okay. Yeah. That’s what’s worked for you. Yes. And because of that, I can take time off, you know, my wife and I would like to go on a two weeks vacation in Europe or Asia, whatever, you know, no problem. I can trust everybody, you know, it’s great.

Chris Hanslik: That’s good. From a, we talked about the fire and your funding. personal setbacks or failures maybe that you’ve experienced, that you’ve learned from, that our listeners might be able to learn from, they need to go into the same thing.

Goran Haag: Yeah, one thing comes to mind, you know, early on we needed to have a special type of fittings made of fiberglass and I thought we could avoid that by using some other type of solution. failed big time and I realized if you can’t do it, do it right. There are no shortcuts very often.

Chris Hanslik: Yeah. How long did it take you to kind of pivot away from that? Probably about a year, I would say.

Goran Haag: Yeah. I struggled and struggled because I was so convinced I could do it. But no, in the end, you know, customer told us, Jordan, it doesn’t work. Don’t just say it takes too much space. It’s not what we want, you know, all that and left. Well, OK, OK.

Chris Hanslik: You still believe you do better, right?

Goran Haag: Yes.

Chris Hanslik: I guess looking back you’d say waiting a year to make that change was too long. Absolutely, absolutely. You mentioned some of the authors that you’ve read. Any other mentors that you have had over the course of your career that have kind of helped shape you into who you are?

Goran Haag: Well, they’re often, you know, your bosses and all that. I had a guy who recruited me to work for the big Swedish company I told you about. But the guy who recruited me was actually the reader manager for Southeast Asia. So I worked for him in the Philippines for two years. I lived in the Philippines. And he’s the best guy I’ve ever had. Okay. Share his name? Well, it’s a Swedish guy. His name was Finn Johnson. And what I liked about him is that he was very demanding. He set very high goals. It was always fun to work with him because, you know, he mixed in fun with hard work and all that.

Chris Hanslik: So based on what you learned from him, have you incorporated that somehow in like with your senior team that were you mentored them in ways?

Goran Haag: Absolutely, and set high goals. Never be afraid of it because people like to have high goals, you know, that they want to take on something. I got to mention a funny thing about him. So a few years later on, he became the CEO of a beer company that we all know about. Guinness. Oh, really? Yes. So I spoke to him because we are still talking to each other. He said, so how did it go? He said, can you believe this? I walked in there. There were 91 Rolls Royces with 91 private drivers and all that. So I asked him, how long did it take before you fired them? One week. They had 91 VPs and they all had their own Rolls Royce in Guinness. It was no wonder that they were not making any money. He cleaned up the whole operation and sold it to Diago later on. And we all know the rest of the story. Yeah, that was pretty quick action to turn. Yes, well that’s him. And that’s another thing with him. Don’t wait, do it right away.

Chris Hanslik: Yeah.

Goran Haag: And I think Collins talks about that, right? Yes. My employers, they know very well if they agree with the proposal, they know what I’m going to say. Okay, do it is what I always say.

Chris Hanslik: So you mentioned the belief in setting high goals. Anything else kind of from a mentoring or encouragement standpoint you do with your senior team?

Goran Haag: I think not only the senior team, but the only part, care about them. You get out of care, but you have to like people. I don’t think you can be successful unless you like people and you care about them. To give you one example, I had a guy that had a little problem with immigration. And I was able to bail him out, you know. I had to drive up to Conroe to one of the ice centers one night and get him out on the Friday night, you know, and all that. And you can imagine the loyalty from that guy after that, you know.

Chris Hanslik: Yeah. Well, I think it’s… The theme, which I think is great, is that you care about your people, and it shows. I can see it here, but it also shows you the success that you’ve had at Champion Fiberglass. I think that’s a great lesson for business owners out there and inspiring entrepreneurs. give me a lot also you know so it makes me happy and I feel good about it you know it’s not the one way that I give them but they give me a lot also sure right in any great relations two ways yeah absolutely but I think that’s you know as people start to think about a business I think sometimes they get caught up on the technical of whatever that products going to be or the idea is going to be and lose sight of the people And what you’re saying is it’s got to be the opposite.

Goran Haag: It’s funny a bunch of that because I had a consultant in many years ago. And then when he gave his summary, he said, the biggest surprise that the employees have said about you is that the thing they like most is that you go into their offices and sit down in their office and talk to them, instead of them coming to me. And I said, yeah, why not? And he said, no, no. He said, that’s very unusual.

Chris Hanslik: And I said, OK. In fact, it is unusual when he tells you to keep doing it.

Goran Haag: Exactly.

Chris Hanslik: You’ve shared a lot, and for those that are listening, if there are a couple of key takeaways where you would say, this is the advice, if you’re out there trying to start a business, want to or have recently, here are some of the keys to success and advice I would give in part to you. What would those be?

Goran Haag: I would say number one, customer service, customer service, customer service. Number two, find the right people, hire if you barely can afford them, but hire the very best you can. Absolutely. And then work with people all the time, trust them and don’t micromanage. Don’t micromanage.

Chris Hanslik: Okay, very good. So you mentioned several books. I’m curious if there’s something currently that you’re reading that you would suggest to me and those listening out there.

Goran Haag: Well, we spoke about Jim Collins. And, you know, his mentor, Bill Lazier, I don’t know how you pronounce it, Lazier, Lazier, he unfortunately has passed away. But Bill, Jim Collins tells him about the brand new book here a few months ago, it’s called Beyond Entrepreneurship 2.0, or BE 2.0, you can get on Amazon, outstanding book. Okay, very good. And he says one thing that really hit me big time, and that is that Just because you’re an entrepreneur, you know, in the old time, it was always said, entrepreneurs cannot operate an ongoing corporation. After three to five years, they should always kind of leave and all that. And we all know what happened with Stephen Jobs when he left Apple and all that, and the disaster that, you know, and Jim Conlon said, don’t listen to that. Okay, he’s very out of it. When I read it, it’s like, dang, you really mean it, Jim. And then for me, having now started a company and now being a business for 33 years, that hit home very much because I don’t see any reason that I should step out just because it’s no longer a startup company.

Chris Hanslik: Right, because it’s still yours and you still care about it. Yes, yes. I think those are the qualities that matter most. I think so too, yeah. Okay, so now it’s Talked about a lot of fun, interesting, serious stuff when we turned to the light side. Tell us what your first job was. Very first job.

Goran Haag: Boy, I was 13 years old because in my old company, Sweden, I’m from Stockholm, Sweden. You’re allowed to work when you’re 13 years old. You get a little yellow book. and the employer has to fill it in and then when the semester starts you show it to your teacher and then make sure you have not been working in a bad place. I was a receptionist in a private photo studio. Oh really? And then I’ve been stalking mail and I’ve been working in hospitals and I’ve been a security guard to finance my college thing. I’ve done everything.

Chris Hanslik: It sounds like it. A lot of, I’m sure, things you learn along the way. Oh, definitely. So, you’re born in Sweden, but adopted Texan. We consider you a Texan now.

Goran Haag: Absolutely.

Chris Hanslik: I love it here. You prefer Tex-Mex or barbecue?

Goran Haag: We have a place in the Old Town Spring called Corkscrew Barbecue. If you go there, you will know why you want to have barbecue.

Chris Hanslik: Okay.

Goran Haag: However, a good fajita at Luper Tortilla is pretty good also, but I think I take barbecue first.

Chris Hanslik: Very good. Very good. So if you could take a month sabbatical, where would you go? What would you do?

Goran Haag: I would go to Maui with my wife. We have gone there many thanksgivings. We love it there. And I would probably just read. I would be on the beach and take it easy. Hopefully our daughter can come with her boyfriend, spend some time with us and just relax, have a good time.

Chris Hanslik: Good for you. Anything else you do like in your free time? Do you have hobbies or projects you’d like to do?

Goran Haag: Well, I had a big hobby, but you know when you get older you have medical problems. I played something called squash. I played scorch on the fairly decent level for 46 years. But unfortunately I have had to replace both of my hips and one knee because of the scorch. So six years ago I had to stop playing. I still miss it.

Chris Hanslik: Yeah, I guess now you just have to watch it and probably don’t get too many opportunities to do that. Well, Jorn, I want to thank you again for taking the time to come on the podcast with me. Your story is inspirational for sure and I really appreciate all the things you’ve shared with us today. Chris, I really thank you for inviting me. I really do. It wasn’t that nice talking to you. Very good. Well, enjoy the rest of your day and thanks again. Same to you. Thank you, Chris. And there we have it, another great episode. Don’t forget to check out the show notes at boyarmiller.com forward slash podcast. and you can find out more about all the ways our firm can help you at boyarmiller.com. That’s it for this episode. Have a great week and we’ll talk to you next time.