11. Ron Siegenthaler - Xeta Communications

Ron Siegenthaler:

A deal is so complex. It depends on not just the business motive behind it. It's got to do with the people and their ability to stick with it and their wisdom and all those other things. I've seen as many good ideas go bad as I think I have bad ideas come good. For me, you're always in a selling process of some kind. Everybody is selling something every day, even though, in many cases, they're not conscious of it.

Robert Wagner:

From Hogan Taylor CPAs and Advisors, I'm Robert Wagner, and this is How That Happened, a business and innovation success podcast. Each episode of the show, we sit down with the business and community leaders behind thriving organizations to learn how business and innovation success actually happens.

Our guest today on the podcast is Ron Siegenthaler. Ron is a lifelong entrepreneur who has started and sold several companies. He's been in a wide variety of industries, from specialty steel to hotels, to telecommunications, and now the cloud computing and cloud communications. Ron speaks frequently on the topics of entrepreneurship, sales and investing in startups, and other topics. In 2011, he was recognized by his Alma Mater, Oklahoma State University, as their distinguished entrepreneur of the year. So, Ron, welcome to our podcast.

Ron Siegenthaler:

Thank you, Robert.

Robert Wagner:

Appreciate it. So, Ron, we've known each other longer than we'd like to admit, I'm sure, at this point. But we reconnected a few months ago.

Ron Siegenthaler:

A few months ago. Yes.

Robert Wagner:

And had lunch, and had a great time, and got caught up on everything. And at the end of that lunch, I invited you to be a guest on our podcast.

Ron Siegenthaler:

That's correct.

Robert Wagner:

And you said something like, "You want to hear from a C student from Henryetta, Oklahoma, who majored in speech?" And I said, "Yes, that's exactly where I want to start." So, tell us how that happened.

Ron Siegenthaler:

Well, then I followed up with saying to you, "I'm not for sure you want people to know the real story and I can only tell a real story." And you said that would be okay.

Robert Wagner:

Yeah. Absolutely.

Ron Siegenthaler:

Yeah. Henryetta, 50 miles south of here, best known as the home of Troy Edman and Jim Shoulders. My mom was always disappointed that there wasn't a sign that said, "Home of Ron Siegenthaler."

Robert Wagner:

Just not yet.

Ron Siegenthaler:

Not yet. Well, yeah. Okay. Maybe possibly. So, a small town, small town understanding. Went to Oklahoma State. Had no idea of what I wanted to be. Just knew that scholars was supposed to be the next thing. So, I went to Oklahoma State. There were probably three times as many people at the university as there was the population of Henryetta. So, I was engulfed in that whole situation. Actually remember seeing people from Henryetta, like two blocks away, and taking off running, going, "Hey, Hen! Here's another Hen!" Kind of thing.

I wasn't really there with the right purpose. Education wasn't something that I found all that intriguing and got off to a slow start. Ended up pledging a fraternity and found out that I had to make a two point to become a member of the fraternity. So, I made a two point, not a 2.1, but a 2.0, and joined the fraternity, and promptly dropped my grades to a 1.1. Those were back in the days when the universities could actually contact your parents and tell them what you were doing. And it just so happened I got to the mailbox before my parents did. Saw a note from OSU, opened it, and they actually suggested that I might be better off going to college at a smaller university. That it didn't look like I was fitting at Oklahoma state.

Ron Siegenthaler:

I didn't want that to happen because I was in a fraternity and having a lot of fun. So, I actually went up and met with the Assistant Dean of Men, who was the head of the fraternities, and convinced him that I could do better than what I'd done. So, he pulled my transcripts, and I actually had an A in speech class. Why I had an a, I don't know. I've always liked to speak. So, he took me over to Dr. Krebs in the Liberal Arts College, and they made me a speech major. Wasn't because I wanted to major in speech. That was the only discipline that would allow me to have a second chance.

Robert Wagner:

Was that your first good sale?

Ron Siegenthaler:

That was probably the beginning of many good sales that somehow finally got me out of the university as a graduate, of which my parents actually didn't believe it and weren't going to come to graduation, because I graduated out of summer school. Had to make a 4.0 with nine hours to have a 2.0, which is a minimum requirement grade average to get out of college.

I had an incomplete in a class, went over to Dr. Krebs. He looked at the paper that I had prepared, which came straight pledge rise out of Reader's Digest. Smiled at me, called my professor in California, said it looks like an A paper to me. I got a four point grade point average 2.000. And I can document that. But I graduated.

Ron Siegenthaler:

Interesting story with that, though, is when they did the PhDs, they called out a Siegenthaler, and I've always considered myself pretty lucky, maybe a little fortunate, and I thought, "This is really cool. Not only going to graduate, I got a PhD." But it was in agriculture. And even though I'm from Henryetta, I told him too much agriculture. Guy actually stood up, went up on the stage. He was a distant relative that had been trying to do a family tree for about five years, and we were the missing link in the family tree. And here we'd been in college together for, at that point, he had been there two years.

Robert Wagner:

Wow. Okay. So, all of that's true.

Ron Siegenthaler:

All true. Here's the deal, Robert. I don't have to embellish anything. My life has been unique enough that all I got to do is tell the truth and it will set well.

Robert Wagner:

That's awesome. Well, we can already see, in college you had a gift for persuading folks. But what about life in Henryetta? What was that like? What was growing up like?

Ron Siegenthaler:

Oh, growing up Henryetta was happy days. I mean, they really were happy days. My children look back and say, "Dad, we wish we could have been you." Those were the days that you could run, ride your bike all day long, not even come home at lunchtime. Your parents never worried about you. Everybody knew everybody. There wasn't a tremendous amount to do. But the standards of excitement were so low that what we called "dragging main" was a really big thing. You went from one end of main street down to the other, because we didn't have much money and not much gas. You'd do it once, and then you go sit on the back of your car and watch somebody else do it. I can tell by looking at you that it sounds pretty exciting. We did have a teen town. Not only could you not drink, you couldn't even chew gum. So, that was the big Friday night thing, particularly after the football games, to go up and listen to the 60s music and dance with the little girls.

Robert Wagner:

Okay. Well, I'm old enough, and I was poor enough as a teenager, can remember buying a dollar's worth of gas because that's all I had. So, I do relate, to some extent, even though I didn't grow up in a small town. But was there anything in your childhood that forecasted a career as a business owner, salesperson, entrepreneur? Anything?

Ron Siegenthaler:

Well, there was always an internal desire to be at the front of the line. I was a Boy Scout. Actually, I ended up being an Eagle Scout over there at Arrow. Arrow sounds like Henryetta, right? Arrow sounds like somebody from Tulsa. But I always wanted to be front as a platoon leader. And when I became platoon leader, then I wanted to be the head guy up front. That was just something that was a part of my DNA.

I did, through my church affiliation, have a few opportunities to speak to small groups. I think at a very early age, I overcame fear of speaking and actually relished the opportunity to integrate my thoughts with other people. And I think that got me off to a good start.

I actually look at what happened that forced me into a speech degree as being very fortuitous in my career. Because it's turned out that the word is what I'm really all about. And I have a definition for selling that selling is convincing other people to think the way you want them to think, which in my case, would be buy everything you buy from me, pay my price for it, pay me quick, and don't complain if I mess it up. To me, that's a complete sales job.

So, when I look at, at life, I've been married 54 years and I'm still selling my wife on the fact that I'm the best man that she could have ever picked. So, to me, whether it's with your children, grandchildren, you're always in a selling process of some kind. Everybody is selling something every day, even though, in many cases, they're not conscious of it.

Robert Wagner:

Yeah. That's great. So, you graduated from Oklahoma State University. You're proudly wearing your 2.0 grade point average. So, what were you going to do?

Ron Siegenthaler:

I had no idea. Not only did I graduate, I was getting married in two weeks, and I didn't have a job. And that's not good. Makes your fiance a little uneasy. I came to Tulsa, actually lived with her uncle for two weeks, ran into a fraternity brother, and he said, "Have you signed up with an employment agency?" And I said, "I don't think so, because I don't know what an employment agency is. There are no employment agencies in Henryetta. I promise you.

Your older listeners will recognize this. I went to Bunt Carter Employment Agency, and they sent me out on a few interviews. Well, one of them was Lee C. Moore Company, which is still a Tulsa company. Well, my joke is, I wore suit and tie, and my joke is, they hired me in the parking lot, which seemed a little unusual because they were that anxious. And I didn't realize, I looked that good in a suit and tie. Actually, they hired eight of us in the same day, and so, I went to work the first day. Same suit and tie on, although I had cleaned the shirt. Pulled in and they started laughing.

And I said, "What's the deal?" "Well, not many of you will know what an [osloid 00:10:18] machine is, but that's the way we printed drawings in those days. And it was actually two round rollers, and you were over the two pieces of paper through those, and it somehow came off on the other side. That was my job. What they were laughing at was the fear that I would get my tie caught between the rollers and I would get hurt.

So, after about four days, six of the people had quit. What I heard all day was, "Hey boy," because the draft movers would hollered at me, "Hey, boy." That meant go out in the building where the rats are, and get some prints and copy them for me." They called me in and said, "Hey, we're going to give you a promotion." I like the sounds of that. And I'm thinking private office, maybe a couch, a few things like that. Well, they made me the relief receptionist, which meant that I had to come to work at six o'clock to take the phone calls to the guys that were going to get off.

Well, what I remember is, I'd only been married eight days. And when you only been married eight days, getting up at four o'clock in the morning and going to work is not an easy thing to do. And so, then I also answered the phone at noon hour, and then I got to go home at three o'clock. But it was humiliating because Mr. Woolslayer, who was president of the company, didn't approve of this move, making me relief receptionist. So, I had to crawl under his window at three o'clock, so he couldn't see me, so I could go home. Another true story.

Robert Wagner:

That's hard to believe, honestly.

Ron Siegenthaler:

But it's true. But it's true. But I was only there four weeks.

Robert Wagner:

Okay.

Ron Siegenthaler:

Then I went to a Righteous Brothers concert, and this was really how my steel career got started. Went to a Righteous Brothers concert, ran into a fraternity brother who was four years older than me, and he had come back for a party. And all I could remember was that he'd gotten a little drunk and had a fight upstairs, but I did recognize him. And he had a new car. Well, in my family, we'd never had a new car. So, I thought that was really a pretty cool deal.

And he asked me what I was doing. And I told him. And he said, "Well, do you like it?" And I said, "No, it's humiliating." And he said, "Let me see if we've got anything." So, I called in a couple of days, and why I can remember this, I have no idea. But his address was 801, Apartment B, Osage Drive. That's right over by Tulsa Country Club. I had this vision, when he came to the phone, that he had a smoking jacket on and he was coming down a spiral staircase over behind his bar area, talking to me on the phone. Well, if you want to go to 801 North Osage, Apartment B, it's not there anymore, but he didn't have any smoking jacket on.

Robert Wagner:

Got you. Got you. But he got a new car.

Ron Siegenthaler:

But he had a new car, and he got me. And he was from Bonita, so we kind of related, and he got me an interview at his company. And I actually took a $100 cut in pay, which was 25% of what I was making, for a better opportunity. I started off as a buyer in that company. I was also in the military. That was at the end of the Vietnam crisis. And I was got drafted and had to go off and do my six months active duty.

When I came back, they had lost the salesperson and they asked my buddy, "Do you think Ron can sell?" I don't know, at that time, that I thought I could, but here's what I did know. Salespeople made more money. Salespeople got to leave during the day, and salespeople had company cars. So, I'm like, "You bet. I can do it."

Robert Wagner:

Right. You're on.

Ron Siegenthaler:

I'm in.

Robert Wagner:

Any training?

Ron Siegenthaler:

Yeah. As a matter of fact, they about wore me out. They made me sit with the accounting people, which you've been around me. You know how well I relate to accountants. You may be the only accountant that I ever really felt close to. You sit in a lot of meetings with me and numbers, and numbers guys, all the way from the plant all the way through, for about six or eight months. I finally went to my boss and said, "Hey, I'm ready to go."

So, get my company car, get me all ready. I get up about five o'clock one Monday morning, shine my shoes twice, shaved twice. Put my best jacket on. Went into the office, drank about eight cups of coffee, shaking like a leaf, got in my car, went to see my first customer, which was WC Norris Company.

The road was blocked, so I went down an alley. My car dropped off in a ditch, pushed the pan up into the flywheel, which mechanically, I don't know what that means, but it made a lot of noise. So, I go back to the office. I'm 22 years old. I'm about to cry, because I think I've messed up my whole life. My boss's name was Charlie Ball, and he was the picture of the sales guy that you see that opens his jacket up, and he's got cigars stuck in there, and all kinds of things to hand out.

I looked at him and I said, "Mr. Ball, I've really messed. I've wrecked my car, and I'm so sorry. Please have some confidence to me." He started laughing, that typical salesman laugh. And I said, "Well, Mr. Ball, what's so funny?" He said, "Well," and he called me Ronnie, always. He said, "Well, Ronnie, I think you're going to do just fine." I said, "Well, Mr. Ball, why do you say that?" And he said, "Well, my first day here, I pulled out [inaudible 00:15:32] I was lighting up a cigarette, and I got broadsided and totaled my car." So, once again, I was fortunate.

Robert Wagner:

Right. Ran into the right guy.

Ron Siegenthaler:

Yeah.

Robert Wagner:

So, when is this in relation to... You started metals, I think, in 1974.

Ron Siegenthaler:

Right. Right.

Robert Wagner:

So, where are we in the timeline?

Ron Siegenthaler:

I stayed there about four years, and then there was a guy that came to town, and they were in what we call carbon steel, which you would call maybe red iron at rust. And the guy came to town and put in a specialty steel bar shop. And he went around some of the various machine shops and said, "Are there any young sales guys calling you that you think are really good?"

It just so happened, he hit the only three customers that thought I was good, because they all three said, "Man, you got to talk to this guy with the long last name." And so, he called me in, and he basically bought me. Because I really didn't want to leave. I was happy, and he just kept uping the number to a number that I'd actually said, when I left college, if somebody would pay me that for the rest of my life, I would never ask for a raise." So, that shows you how stupid I was.

I stayed with him for four years and decided that, due to some moral type conflict, that I wasn't able to work there anymore, and left him and went into a different product line, specialty steel, but mostly in flat road products. And I took another guy there with me, a guy named Bill [Emmer 00:16:57], who's still a dear, dear friend of mine. Bill had a skillset the opposite of mine, and yet we were very good friends.

So, what I've seen a lot of partnerships fail is when three or four people get together and they all have the same skill sets, but they don't have anybody to back them up in skillsets they don't have. So, Bill was the great inside, pay attention to details, very willing to talk to customers on the phone. Couldn't look them in the eye face to face. Had to have a phone between him and them. I was the quintessential outside guy. I love people. I've made so many great friends out there with customers.

So, I would come in the mornings and I would go out and see customers all day, and he would stay in the office and take care of the customers. Made a good team. We started metals at 4828 South Peoria, which was two red brick office buildings in. You would now know it as the Harley Davidson store. And what we did was we basically brokered. We sold somebody else's material, got a commission for it, did a lot of extremely creative things to make it work. Because at that time, in the city of Tulsa, in flat row stainless products, you had to go to Houston. You couldn't buy them here. Nobody had it.

So, I recognized after a period of time, "Hey, there's a need here." It takes a tremendous amount of capital. And we only had $2,800 paid in capital. Now I know you know all about those things, jumping way ahead, 23 years ahead. We built the company to close to $50 million in sales, and still only had $2,800 of paid in capital. And I know you accounting guys tell me you can't do that. So, we started another one in the pipe business, just like it. And in that one, we put $3000. So, we did it out of profits and leverage and all kinds of things. There's ways to get there. Not the easy way, but that's what we did.

Robert Wagner:

Okay. You covered a lot of ground there, and some of it, that's exactly where I wanted to talk about. But let's, just for the benefit of the listeners, and really myself. You use a term called "specialty steel." What does that mean?

Ron Siegenthaler:

Well, that means it's higher grade of alloy used for more special applications. Primarily, it's going to be used for something that is in a lot of heat or it's in a corrosive environment. So, if you look at Tulsa, because Tulsa's extremely unique, number one, we are the inland most port city in the United States. Maybe you didn't know that.

Robert Wagner:

I did know that.

Ron Siegenthaler:

You did know that. Well good. Most people don't. And we are highly industrialized. We have maybe 120 customers in Tulsa, in Oklahoma City, we have four. Tulsa was the heat exchange capital of the world. The first heat exchanger company, which has to do mostly with refining and processing. The first heat exchanger company in the United States was Coin Co., started by Joseph A Coy, which later UBA, which is now part of SPX.

So, because of that, these guys work there, they break off, they start another one. So, you got this lineage of people throughout the city that were in the exchanger business and then similar products. Demethanizers, anything that had to do with oil and gas, recovery, offshore, they have a tendency to congregate, break off, start more. So, Tulsa has become a very industrialized city that uses a lot of these materials. For example, John Zinc has been my largest customer for the last 48 years. That's a long time.

Robert Wagner:

Yeah. So, I can just tie into that. So, back, many years ago, when I was an auditor at Price Waterhouse, I had at least three, but I think maybe even four or five, of those heat exchanger companies as clients. So, I knew that world very well and knew about the tubes and the fins and all that. And I remember, long before I knew you, I remember all these invoices I would see from a company called Metals, Inc. And you evidently dominated that business.

Ron Siegenthaler:

Well, remember, there was nobody else here. So, our theory was simple. If we service you well enough, if we deliver you a good product at a competitive price, why would you want anybody else in here? And one of the things that I've become very proficient at is convincing people that you really don't need any more supplier than me, because I'm going to take care of all your needs, and I want us to partner up and I want us to learn how to look to the future together, so that where you go, I'm standing there and ready for you. And I think as we demonstrated that, the only reason we got any push from competition was competition seeing how successful we were, and wanted to come enter so that they could get some of it. But our relationships were so strong that everybody found it extremely difficult until we sold the company.

Robert Wagner:

So, how did you turn that from just words to action? So just help, maybe the younger business owners out there. We all want to be that supplier that just stays with the company and the company that your client just continues to reach out to you. No matter what they're doing, they're looking to you to help solve problems. How did you turn that into actions? What kind of things did you have to do?

Ron Siegenthaler:

Well, there's probably three words that come to mind. I really believe in being extremely creative. I never set on the same thing for very long with the customer. I'm continually looking for more ways to service them uniquely. And then, I'm also very aggressive, in that a lot of times customers don't realize there are better things that we can do. So, I push the creativity very aggressively, and then you have to be consistent. It's extremely important to not surprise the customer with, "Well, you used to always do this and now, all of a sudden, you're not doing it anymore, and that's affected their business." So, that's not a good thing. So, if you stick with the being creative, being aggressive with your creativity and staying consistent, you're not giving the customer any reason to leave at all.

Robert Wagner:

Okay.

Ron Siegenthaler:

So, no surprises. Let's look at it that way.

Robert Wagner:

Okay. So, you mentioned Mr. [Emmer 00:23:18].

Ron Siegenthaler:

Mm-hmm (affirmative).

Robert Wagner:

And you talked about how you guys were different. So, I guess speak more to that contrast, and why it worked.

Ron Siegenthaler:

Well, let me turn that just a little bit. I think the first thing you got to look at is partner versus no partner, and you'll get some different views. Most people will say, "Man, I had a lot of problems with partners." Well, I've been involved in numerous deals, as you well know, and I've seen both kinds. But when you get with someone that has different skillset, that has integrity, that has consistency of output the same as you had, the same energy, the same dedication, same motivation. I have always compared it to standing in a hot tub of water together, and feeling the same shock when somebody throws a live radio in there, when we used to plug a radio in. So, if it hurts me, it hurts him equally. If it's good for me, it's good for him equally.

I can tell you, and I know this is unique, but to my memory, and he'll tell you the same thing, I remember us disagreeing, but I don't ever remember us having an argument because our common purpose was to continue to build the business. And so, by having different responsibilities, if it had to do with customers, banks, insurance, anything that was outside the building, I did it. If it had to do with operations, accounting, IT, then it was his responsibility. So, when we would get together, if we didn't agree, it was real simple. It's not my area. So, go do whatever you want to do, and I'll support you in it.

Robert Wagner:

Okay. That's great. You described Metals, Inc., at least in the beginning, as a broker. Is that what it always was or did it evolve into more?

Ron Siegenthaler:

Well, we did that for two years. Remember, we had no operating capital, and metal distribution, which is what I call it, requires a tremendous amount of operating capital. For one thing, you got to have a lot of inventory, especially steel inventory is very expensive. I'll give you a hardcore example. What you would call steel, maybe 30 cents a pound. What we call specialist steel's going to be $3 a pound.

So, one of the things that I recognized from a labor standpoint is, if you were selling material at 30 cents a pound, and you're shipping out 30,000 pounds of it, then you got $9,000. If you're selling at $3 a pound and you got 30,000 pounds of it, you got $90,000, but you got the same labor, and fixed overhead expense to it. So, it seemed like, to me, right out of the get go, even though it requires more operating capital, we'll get a quicker return on our investment.

So, the first two years, we didn't have any money. So, we saved all the money that we got, developed a couple lines of credit, got a little bank credit, increased our inventory. And then we built the warehouse over in west Tulsa and just continued to expand as we could.

Robert Wagner:

1. And you've talked a lot about selling and your relationship with the customer, but what you're describing is a two-tier distribution system. So, you've got a manufacturer of specialty steel, in your case.

Ron Siegenthaler:

Right. We have a producer.

Robert Wagner:

Yeah. And then on the other end, you've got someone who needs it. They're going to weld it, bend it, fabricate it, do something, and you're in the middle.

Ron Siegenthaler:

Right.

Robert Wagner:

Why were you needed? There's a lot of industries like that, but from someone who's been in the trenches, what did you add to that process and why do things evolve in that direction?

Ron Siegenthaler:

Well, it works really well, because it's about two things. It's about quantity, so I can buy it in middle quantity, because they have minimums, and I can sell it to 10 of you. Where, if just one of you are trying to buy it, you've got to buy ten times as much as you need. That's one of the problems.

The other thing is, by me having an inventory, I can push it quick to you. In the exchanger world, we have what they call turnarounds, which means something's down. It's costing them $250,000 an hour in lost production time. And so, if I have it in inventory, I can get it to you quickly. Now, there has been, as the industry has morphed, used to be that the fabricator did all of what we call the processing, the bending, all that kind of thing.

Things have changed in the last, oh, 10 to 15 years. In that we're more of, instead of just an inventory house, we're more of a processing house now. So, what we tell our clients, what I teach our salespeople to tell our clients is, we want to get as deep into your business as we possibly can, because our overhead is to design around inventory and processing. You're an engineering and a fabrication company. So, you're designed around that. Your labor rate's higher, your skillsets are higher. And you'll find that the other thing is, when we make a mistake on the material, we have to eat it. If I've sold it to you and then you do it and you make a mistake, you have to buy it from me again.

Robert Wagner:

So, in the evolution of metals, were there any big pivots you had to make, because markets changed for the businesses changed or customers changed?

Ron Siegenthaler:

Well, the biggest pivot that we had to make was 1982. We had been on a steady growth plane, all the money going back into inventory. I remember every tax season, going home, telling my wife, "It's a terrible day. I got all these taxes to pay." And she's looking around going, "Well, where's the money?" And I'm going, "Well, come down the plant, and I'll take you out in the plant. You'll see more inventory. You'll see more regular stock. You'll see more processing equipment."

But 1982, we had a bust, and it's the only time in the history of the company we actually had to cut salaries. We did that instead of letting anybody go. Fortunately, it turned around in about a year, and we went back and gave everybody what we had cut back to them. But outside of that, no, there really wasn't a time that the company had troubled times. There were times with rumors of competition and things like that, to go home and toss and turn. And what kept you awake last night, but not really.

Robert Wagner:

Okay. So, I would assume that's the closest near death experience that Metals had.

Ron Siegenthaler:

That would've been it. Yes.

Robert Wagner:

Yeah.

Ron Siegenthaler:

But remember, it's important, we were still, effectively, the only one in town. So, as long as we kept our ship steady and on course, there was really no reason to let anybody else in. Customer base stayed solid. They were satisfied with our service and our pricing. And so, we never had really big dips in our business model.

Robert Wagner:

Okay. So, I wanted to have you address something around, it was taking care of big customers, your biggest customers. And you mentioned John Zinc a few minutes ago. I was maybe going to relate it to a shared experience, what we had at Zeta Technologies, where you were the largest shareholder, you were a director. One of the original shareholders of the company, as well.

And that company, sold telecommunications equipment to, originally, just the hotel industry, and the company got on the map because there was a sale made to Marriott. And that was, I think, in 1982-ish. And Marriott stayed the largest customer of that company until it sold. Maybe it still is today. I don't know. But it was just a behemoth customer. And you, even as from a director standpoint, were part of taking care of that relationship. So, you can go anywhere you want to with this, but I'd just like you to address how you take care and nurture that really big customer.

Ron Siegenthaler:

About the same way you take care of your first baby. You got to give it that much attention. I encourage people that are entrepreneurial, that are trying to start something up, even though it's difficult, because you're reaching high, one of the things you have to do, you've got to find something you could point to that will shorten the sales process. So, as it related to Marriott, we were fortunate. We had the right machine, we went to the right place, and we had the right guy that listened to the right story. We had the right, if you'll remember, the products had remote diagnostics and nobody else did. So, we had a selling point.

If you look back, there's a lot of reasons they shouldn't have bought from us. One of them, we didn't have any money.

Robert Wagner:

Yeah. No balance sheet.

Ron Siegenthaler:

Yeah. No balance sheet at all, and they were spending all this money with us. If you'll remember, our profit margin was 78%, as I remember it.

Robert Wagner:

Right. Yeah.

Ron Siegenthaler:

We had a machine that looked big and it had lights on the front that blinked all the time, making you think that it was checking itself all the time. But if you opened up the back of the machine, it had a little processor and a whole bunch of paper in the back, and you paid 32,000 bucks for it.

Robert Wagner:

Yes. Right.

Ron Siegenthaler:

On the other hand, if you look at the revenue statement, heads and beds are number one in a hotel, food and beverage were number two. And at that point, telephones were number three, so it was a real profit center for the hotel. But to shorten the sales cycle, because sales cycles are expensive, and to shorten that, I got it from the old IBM-Unisys days, in that it was easy to sell IBM because you were protected. Your boss was never going to ask you, "Why did you buy an IBM?"

But if he wanted to step out and buy a Unisys, I think that's the name of the company, if I remember, it may have been something else, but anyway, you really had to have someone that really wanted to step out on limb, put their career on the line for what? So, what we did was, we took the name Marriott. I put together a really good story. We called it The War Room. I was quite shocked when I finally saw it because it really didn't look like a war room, but I'd seen a John Wayne movie on a battleship, and they had a big war room and all these maps and everything.

So, I would just go to the other hotel properties and you'd go in. They'd have one telecom manager. And I would say, "Hey, Marriott has spent thousands of dollars proofing that we're the right people with the right product. Save yourself a little trouble. Then, if your boss says something to you, say, "Well, Marriott's got the same products. You're pretty protected."

Really shortened the sales cycle. Same way with John Zinc. It goes something like this. "John Zinc's the largest stainless steel buyer, this part of the country. By the way, they buy everything they buy from us." End of sales pitch. It's over. What else you need to know?

Robert Wagner:

Yeah. Leverage, right?

Ron Siegenthaler:

All about leverage.

Robert Wagner:

Yeah. So, Ron, what's the hardest thing you've had to learn as the leader of an organization?

Ron Siegenthaler:

I'm going to have to think. Well, you remember Jack?

Robert Wagner:

Yeah.

Ron Siegenthaler:

Jack's the first person. Jack was president of Zeta. Jack was the first person at, as only Jack could do, to look me in the eye, even though he was six inches shorter than me, I never could figure out how he did that, and say, "You can fire them." And so, when I look back on my career and people say, "What would you change?" Well, I'm sure there's a lot of things I'd change. On the other hand, it turned out much more successful than I had planned with my 2.0 grade point average.

Hanging onto non-performing employees for the wrong reasons, too long, and the influence that they have on the rest of the company was a mistake. I was good about rewarding people that were dedicated, profitable employees, financially and every other way possible, to keep them long term, because the learning cycle's extremely expensive.

And it's still the same today. Trying to keep people, getting them through the learning curve, get them to the point that they perform better, more efficiently, more profitable, is extremely important. The biggest thing is treat them right. They're people. I really don't even like to look at them as employees. I much prefer to look at them just as people.

Robert Wagner:

I don't know of anyone who has learned the lesson you just talked about easily. You learn it the hard way. And I have this thing that happened to me around the same instance, where you've just held onto someone too long. And the sobering moment was when I finally made the decision, someone comes up to me, who was in the same department, says, "What took you so long?"

Ron Siegenthaler:

Right.

Robert Wagner:

And it's just like, you don't realize how it's, and you mentioned this, a cancer in the organization. It's killing the other workers. And so, it's a great point. So, Ron, you eventually sold Metals, Inc.

Ron Siegenthaler:

Right.

Robert Wagner:

And you sold it to Hughes Supply.

Ron Siegenthaler:

Right.

Robert Wagner:

Hughes was doing up big roll up. How did that conversation start? And tell us about that process.

Ron Siegenthaler:

Well, the first decision you got to make is, "Do I want to sell?" There's a lot of really good reasons to hang onto your company. Next generation, just a lot of really good reasons. And we didn't have much competition, up to that point. And we got worried that a major competitor was moving into town, much higher capitalizing than we were, could probably buy with a little more leverage than we had.

But even more so, we were one of those cycles that it seems like we see about every 10 years, where people decide that big is better, in all industries. So, they run around buying up a bunch of smaller people, only to find out that they probably didn't buy what they thought they bought. And they don't have the culture to assimilate that. And it hardly ever works out if you'll look at it.

And there was a feeding frenzy of buying companies our size. It just so happened, we'd come off of three really good years. Our trailing earnings were high. Our margins were high, our return on investment was high. They were a public company. So, they had Chinese money, and they came in and made an offer. So, anyway, I packaged the company, just put it on the street in a limited way, and see what we could have happen. And they came out of nowhere, came in on an October day, as a matter of fact. Looked at the company, two weeks later, they flew their president in here. He put his arm around me, walked out the back door and he said, "I want to buy you." And I said, "Well, you just bought me." And he said, "What do you mean?"

And I said, "Because there's no trip wires in this company. As clean as it can be. So, you're not going to have any problem as a public company assimilating us into your company." And we were $1 million apart. I was going to the lake that weekend, and he said, "If you can figure out why I'd pay you another million on what I'm already offered to pay you, we'll see if we can do a deal." I came up with something creative. I don't think it made a lot of sense. I don't think he really cared. And so, he came up a million and we closed in 90 days.

Robert Wagner:

Wow. That's awesome. I did look at their filings from back in those days, and you guys were a $50 million company at the time.

Ron Siegenthaler:

That's correct.

Robert Wagner:

So it had really grown.

Ron Siegenthaler:

Right. With that $2800 in operating capital.

Robert Wagner:

Yeah. So, Hughes's eventually sold to Home Depot.

Ron Siegenthaler:

Home Depot. My mom was still alive then. Remember, she was a Henryetta mom, and she never thought her son would go very far. Not that I particularly did, but anyway, she goes, "Son, your company's now owned by Home Depot." And I go, "Yeah, mom. It's actually Home Depot Supply." Which, it's another division of Home Depot. It's got more to do with their industrial supply.

Robert Wagner:

Yeah. So, that was what I was going to ask. I mean, maybe I'm just ignorant of this. How did a company like Metals fit into Home Depot?

Ron Siegenthaler:

Well, it didn't. It fit into Home Depot Supply. Didn't anything to do with, when you go to the Home Depot store. Didn't have anything to do with that. Although, all companies are always looking for the same thing, more margin. And it's like the grass is always greener on those side of the fence. We happened to have had three years of good margin. They didn't ask for five, so they didn't catch on. Amazed me, being a public company, that they didn't check the two years before that because they weren't that high. They're looking at their margins. Our margins were better. So, they say, "This should be a good thing."

Robert Wagner:

Yeah. So, what has happened? Is there remnants of Metals still around today? Or what happened?

Ron Siegenthaler:

Metals has been sold five times. Actually, Mitt Romney's company, at one point, was a part of the group that had them.

Robert Wagner:

So, Bang? You mean Bang Capital.

Ron Siegenthaler:

Yeah. Mm-hmm (affirmative).

Robert Wagner:

Okay.

Ron Siegenthaler:

But they came with a larger group. Metals ended up being a very small part of a big group of steel companies. It's lost its vision. It's split the flat road side from the pipe side. They got two different owners. Actually, they have a fence down between them. They're competing with each other, and we're just sitting on the sidelines. The company I consult for now has the major market share in this market. We're the dominant supplier.

Robert Wagner:

Wow. We're going to get to what you're doing now. So, I can go back, really, to when we met because we were a public company at Zeta. We had bios and all of our filings. So, there was a bio on you, obviously. And it talked about a lot of different things you were doing, even then. So, in hotels. I think there was KFC restaurants. And, obviously, you were in telecom with your Zeta investment. Why the varied interest, I guess? You did a lot of different things, and maybe you still are doing a lot of different things.

Ron Siegenthaler:

Well, I wish I could look at you and tell you I had a grandiose plan and I was smarter than all the rest of you. And I was intelligent enough to spread out my investments. And I only put my investments in things that eventually made money, but that's not the case. It's Tulsa. Tulsa's very entrepreneurial. Certainly was in those days. We were so dependent of oil and gas. So, to go to [inaudible 00:41:04] Club, people were trading drilling rigs at lunch hour with each other. Money, we lost our understanding of money because there were feelings, particularly when we had the 22% interest, which was the highest that I ever borrowed money from the bank, that didn't make any difference what interest was, because we were going to make so much money on it. Because the price of oil was going up faster than the interest rate. As long as it stayed ahead of it, everything was fine.

There was a deal minute, no matter where you turned. God [inaudible 00:41:34] people that were deal oriented, and I did think it was good to diversify, but it was mostly the fact that it's been said that I've never met a deal I didn't like. And I look back and I go, "You know what? I think that's true." There were some of them I met that I shouldn't have liked, but it's really a hard going in with a deal. A deal is so complex. It depends on, not just the business motive behind it, but it's got to do with the people and their ability to stick with it, and their wisdom, and all those other things. I've seen as many good ideas go bad as I think I have bad ideas come good.

Robert Wagner:

Yeah. So, you've said this a couple times. You're back in the steel business. So, what are you doing now, and how are you doing it?

Ron Siegenthaler:

Well, I had a very good friend that wasn't a partner of mine, but he was in the same position I was, with his company. And so, if you look at what we sold specialty steels, what he sold was special, special steel. All of his steels were patented. So, he ran a different kind of organization. So, his steel people were very intelligent. He's a PhD metallurgist. They would go in and sell to the engineers. And so, then, when it got to the buyer's desk, the buyer had no attitude. If it said RA type 330, he had to buy it from this company, which is named Rod Alloys. So, they didn't understand much about competitive selling relationship, those kinds of things. Service wasn't a major issue. Margins, they made a lot of money. You can't buy any place else.

Just a different model. Very intelligent model. Had a lot of value to it, but it didn't fit well in the specialty steel business because the specialty steel business were selling a commodity. Well, buy it from the same mills. It's all bought to the same specifications. And so, when their patents begin to come off, and they're a very large company, their patents became begin to come off. They were having a problem selling. So, they decided to get into the specialty steel world, and they didn't know how to sell at all.

And so, they actually came to John Zinc and got blown away. And he called me at one point. I was actually playing golf that day, which I do a lot of days. And he said, "Hey, how do you sell something everybody else has?" I said, "Well, it's a little different from what you do." And it just happened to be a period of time in my life. I was mostly spending time on Zeta. Other things were going well. And I like to say that I retired too young, because all my friends were still working. I had nobody to go out and play with. So, he said, "Would be any chance that we could get you to come in as a consultant for three years, and teach, and coach our people, and develop them and their ability to sell what we call common alloys?" For this discussion, we'll just call it special steel versus special special.

I said, "Okay." Didn't really think that'd be very difficult, but changing the mindset of people that done something one way for up to 30 years, and getting them to try to do it another way was a little more challenging than what I thought it would be.

It just so happens that three year contract is now on its 13th year. They are such awesome people, and we do awesome things like fly around the country and play golf at nice places like I'm going next week. And they're easy to be with. We've become extremely successful in transferring their knowledge base from where it was, incorporating that knowledge into the special steel business, and yet teaching them how to get customers to think the way we want them to think. They're a well capitalized company, so we have a lot of advantages from capital equipment to inventory and some of those kind of things.

So, I just have fun. I don't have to work. Actually, I don't really work. I teach, mostly. I do have a few major accounts just to keep my knife sharp, so that I have to stay current with where the competition is, what other people are doing in the market. And it's just best that I have some customers that I've seen on a frequent basis. So, it's relationship selling. But once you get the relationship, you got to back it up with your complete delivery, your complete product with your inventory, with your pricing, with your processing, your accountability.

Robert Wagner:

Yeah. That is awesome. I mean, you hit on something. I'd just like you to go a little bit deeper, because this whole thing about, as industries are being disrupted across all industries, including the accounting industry, there's lots of us that are having to change and bend our minds around new ways to doing things. So, you've had some success at that in this consulting contract. What's been the secret to that, or secrets? What do you make people do, or have people do, that really makes them change their behavior?

Ron Siegenthaler:

Okay. Well, in the first place, they're going to look at me and, just due to time and grade, I have credibility just due to the fact I've been there, and I've been there a lot. I've been successful at it. They're looking for some help. My most operative words, I gave them to you, were aggressive, creative and consistency. And so, to challenge them to get out of the foxhole they're so comfortable in and get out here where we start facing live bullets. Because if you're not trained in that, I'm looking for reasons to get out of foxhole every day. I don't like getting in a fox hole.

But people that have been comfortable at work, this is always a workforce. Well, guess what? It doesn't work anymore. Competition's changed. Competition's always on the move. Don't ever think you've locked in on your competition because your competition's figuring out how to get business away from you every day. And so, that's perpetual. That's always going to be. It's always going on.

And any company that is, today, like they were three years ago, I would tell them, you're getting ready to get challenged. If you like you were five years ago, you're probably in trouble. You better bring somebody in that can get you out of your comfort zone. Comfort zones are just the worst thing. The definition of ridiculous stupidity and everything else is doing the same thing you've always done, expecting a different result.

Robert Wagner:

Right. Okay, Ron, we're almost to the end of our time here. I want to ask you one more question, and you already hit on this bit, about the fact that you're working. So, you're in your seventies.

Ron Siegenthaler:

Mm-hmm (affirmative).

Robert Wagner:

You're a wealthy man.

Ron Siegenthaler:

Mm-hmm (affirmative).

Robert Wagner:

You've been very successful. Why do you get up, at least most days, and go to work?

Ron Siegenthaler:

Well, I get up almost every day and go to work and go somewhere, number one. It's what I enjoy. The thought of just getting up and having nothing to do, I don't get anything out of nothing to do. I've seen too many retired people that don't like retirement. They don't have a lot of hobbies. I don't have a lot of hobbies. I don't like to kill things. I don't fish anymore, unless you're a customer. Then I'll fish. And I play golf. 90% of the time I play golf, I'm playing golf with a customer. It's that sense of accomplishment, fulfillment that, when I sold the businesses, and while we had Zeta, I was getting it from Zeta. I would look forward to the days that I would go over to Zeta.

But having had that all of my life, I was only 32 when I was starting Metals. So, having that all of my life, and I think the other thing is candidly being needed. A lot of people, when they get in their 70s, nobody needs them anymore. And to me, that's an empty feeling. And I guess the third thing is to have all of this experience, good and bad, and not do something with it, why? I'll tell you, by the way, retirement is not in the Bible. I'll challenge you with that one.

Robert Wagner:

Right. No, I've looked, too.

Ron Siegenthaler:

Nobody retired. I don't see a reason to retire. My wife has her own business. She's up and going. Now, I don't work 16 hours a day anymore, but I have busy weeks. So, this week would be typical. We took eight people to [inaudible 00:50:00] played golf for two days. Is that a job? Doesn't feel like it.

Robert Wagner:

Right. Right. Well, I asked the question often, successful people in this podcast, it's about success. So, that's who we have on the show. And I ask it somewhat selfishly because there's a philosophy pervasive in our culture now, about successful people, and they're being marginalized or they're being disliked, I guess. I can't think of the great word. And I just want to draw out that, is successful people keep going, and most of them keep going, keep creating jobs. You're teaching a workforce how to do things in the current environment. And you're the guys have been doing it for 40 years, and you still can figure out how to survive and be successful in the current selling environment. It's so encouraging to me that guys like you get up every morning and still help move this economy forward. It just excites me.

Ron Siegenthaler:

Well, let's understand this. We may be older, but our ideas are not older. All I do with the old ideas, I'll look back at them for reference points. If we looked at the way that we did things at Metals many years ago, even up to the day that we sold it, and we look at what I've got Rhode Alloys doing now, they are totally dissimilar. Totally dissimilar. Except for the facts I tell people, "I can teach you everything you need to know about stainless steel in about three seconds here. If you cut a piece of it off and you drop in a bucket of water, it'll sink. If you cut a piece off, you drop it on your toe, it's going to hurt. Outside of that, everything else has changed."

Robert Wagner:

Okay. That's a good place to stop. And we'll go into our five questions, and I really appreciate the time we've had together, but we have five questions that we ask every guest. So, you ready?

Ron Siegenthaler:

Okay.

Robert Wagner:

All right. So, Ron, what was the first way you made money?

Ron Siegenthaler:

Mowing yards? No. Got to back up. Yes, mowing yards in Henryetta. And then I had a paper route. And then at 14, I went away to Camp [Garden 00:52:25] for the summer, and worked at the Boy Scout camp. And then I was the youngest lifeguard in the history of Henryetta, and I was a lifeguard at the lake. By the way, we worked 9.5 to 10 hours a day and I made five bucks a day. That was good money, by the way. And two candy bars and two pops.

Robert Wagner:

Had the snack allowance, right? Okay. So, Ron, if you had not headed down the path of selling things and starting businesses, what do you think you would've done?

Ron Siegenthaler:

Oh, my gosh. What would I have done?

Robert Wagner:

Of course, leveraging that 2.0 grade point.

Ron Siegenthaler:

Well, my history should have been, that I went to work. Here's the way my life should have been, and I can only be thankful it didn't end there. I would get a job with somebody, because number one, I'm a hard worker. The 2.0 was lack of attention to detail. Wasn't anything to do with my intelligence. And I would assume that I've gone to work for somebody. I would've made, reference today, $75,000 a year. I would've already been retired. I would be living on social security, and I don't know. I'm a pretty content guy. I suppose I could have been content, but I'm thinking I'm a little more content now, but we'll see.

Robert Wagner:

Yeah. That's excellent. So, what would you tell your 20 year old self?

Ron Siegenthaler:

Tell my 20 year old self. I would tell him do it again. Do it again. One, I don't have the regret, when I look over my shoulder, of saying, "You should have, you could have, you would have." I still feel like I'm at this stage in life that I'm way ahead of any place I thought I would ever be, and I'm not just talking about financially. I'm talking about spiritually, happiness. Like I said, I've been married 54 years to an awesome woman, still deeply in love with her. I've got great family. All my children live within three miles of me. My grandchildren are all the same part of town. And I just have to say do it again. You got on the right path. And if you get on the right path, stay on it. Now, sometimes people have a little bit of a problem staying on the right path to make a little money. That's a big tempter. But we haven't had that problem. So, I'd just say, must do it again.

Robert Wagner:

Okay. Excellent. So, Ron, what would the name of your book be? The title of your book?

Ron Siegenthaler:

Title of my book. All right, give me about five seconds here. Let me think. Because first thing I want to come up with is Creative, Aggressive, Consistent, but that doesn't sound like a very snappy title that anybody would pick up. Probably Mr. 2.0.

Robert Wagner:

Okay. Excellent.

Ron Siegenthaler:

Yeah. Mr. 2.0. I think that's what we'll call it.

Robert Wagner:

Okay. Very good. I hope you write it.

Ron Siegenthaler:

Yeah.

Robert Wagner:

So, Ron, what's the best piece of advice you've ever been given?

Ron Siegenthaler:

Stay true to yourself. I'm a pretty spiritual guy, too, so, the spiritual guidance that I've had, which encompasses thousands of pieces of advice, has been extremely important. I try to live each day as I think God wants me to live that day. That's very important to me. My proximity to the Lord is extremely important, keeps me in balance, and that's important. That's probably the best.

Robert Wagner:

Yeah. So, I'll share a piece of advice that I got from you. It was pretty specific, but I have carried it, and this, of course, goes back to Zeta world. So, one of the things that I oversaw, besides accounting, was the sales order processing piece. And we struggled the entire time we were there, but we struggled with all the things that happened to an order during its life. And my natural tendency was just to keep clamping down and clamping down and clamping down. And one day, you said, "Robert, you're making it hard for our customers to do business with us." And that has stuck with me. That was good advice, and it really made me peel back and say, "Hey, what's important here? We got to remember the customer." Which is the theme of everything we've talked about today, from a business standpoint.

Ron Siegenthaler:

Well, if you viewed this, beat the customer for a minute and you've got three options between three companies. The one you're going to pick is the one that you find is the easiest and most profitable to do business with. And I think there is a management problem at times.

The other thing that I've always taught is, in my businesses, we look from the customer back. Now, I remember telling you at Zeta that Jack looked from Zeta to the customer. I can remember telling him, at one point, we put some new feature on our product, and the customers didn't like it. And Jack's answer, God bless him, was, "We got a bunch of dumb customers." You remember that?

Robert Wagner:

Yeah.

Ron Siegenthaler:

And so, it was like, "No, Jack. If you'll go to the customers and find out what they want. Where's your pain? Tell me where your pain is," and then you go back and solve it? They're going to buy from you. But then, if you make it really difficult and hard for them to do business with you, they may change their mind.

Ron Siegenthaler:

So, I think any company that's dealing with customers, and I'm not sure what company isn't dealing with customers somewhere, has got to be what meets their customers' needs. Sometimes you got to help them understand what their needs are. I usually do that by pointing out other customers that I have, and the success that they've had in making some changes. One of the things that we do with a lot of our customers is, because of the metallurgical resources that we have, when customers get slow in their standard business, we help them get outside of their footprint and level the learning curve by using the resources that we have. So, staying ahead of the competition. Slow down and you'll go down.

Robert Wagner:

Yeah. Well, Ron, thanks so much for your time today. Thanks for what you mean to me and what you've meant to my career. So, I appreciate that very much. And again, thanks for being with us today.

Ron Siegenthaler:

You bet. This has been a lot of fun, and you're really good at this, Robert.

Robert Wagner:

All right. Thanks.

That's all for this episode of How That Happened. Thank you for listening. Be sure to visit howthathappened.com for show notes and additional episodes. You can also subscribe to our show on iTunes, Google Play or Stitcher. Thanks for listening. This content is for informational purposes only and does not constitute professional advice. Copyright 2019 Hogan Taylor, LLP. All rights reserved. To view the Hogan Taylor general terms and conditions, visit www.hogantaylor.com.