How Marc Bell Turns Distressed Businesses Into Gold

How Marc Bell Turns Distressed Businesses Into Gold

Kison: I'm joined by [00:01:00] Marc Bell, a self-described deal junkie whose career spans everything from newspapers and watches to satellites and data centers.

Kison: He's taken 17 companies public. Executed countless acquisitions and built businesses across the globe. Mark brings a mix of grit, strategy, and creativity to M&A. He's not afraid to get his hands dirty and a turnaround. Today we're gonna dive into what it really takes to fix broken companies, how to structure deals using leverage and seller financing, and [00:01:30] the principles that guide leadership and success.

Kison: Mark, how you doing?

Marc Bell: I'm doing great and thank you for having me today.

Kison: Hey, thanks for making a stop to our MA science studio hosted by VRC. We're not familiar with them. Valuation research company. I won't go anywhere else for valuation work. Can we kick things off a little bit about your background? Sure.

Marc Bell: How far background do you go on to go?

Kison: The entrepreneurial journey and like when m and

Marc Bell: A first got introduced to it. So my background is a little off the beaten path compared to others. Outta grad school, I started a company called [00:02:00] Globex, which stood for the global Internet Exchange. That was in December of 1989.

Marc Bell: Over the next decade, we grew it into the world's largest logical pier, meaning we had 28,000 miles of fiber around the world, and we connected to more networks than anybody else. We became the second largest owner of internet data centers in the world. We had people like Walmart, Microsoft, and many others as our initial hosting clients in the mid nineties, and we went from just providing internet access to eventually web hosting, to [00:02:30] eventually co-location and then application development.

Marc Bell: What do you do when you get on the internet? Everything from video streaming to e-commerce site to sell. In March of 2000, I was having kids and decided to sell right before my kids were born. After that, I moved to Florida, set a family home office. We started trading bonds. One of the positions we held was a position, a company called General Media, which, uh, most people have never heard of.

Marc Bell: This is back in 2004, 2003, 2004. General Media was a company that owned Penthouse Magazine. [00:03:00] And, uh oh. My guy named Bob cci, they were in bankruptcy, so we believed there was a lot of value there. We went through the process. Originally, we were just trading the bonds. We brought 'em at pennies on the dollar.

Marc Bell: Expect to get paid off. The confirmation cone tried, decide he was gonna try to cram down the dip loan. That means debt or in possession of financing. He can't really do that in a bankruptcy court. You found that out the hard way. We ended up foreclosing on the magazine. Next thing you know, we own a magazine with 30 million of revenue losing $5 million a year.

Marc Bell: We tried to flip it. [00:03:30] Nobody wanted to buy it, but we did learn a lot at 9:00 AM on day one. We had about 200 employees by 5:00 PM On day one, we had 50 employees. The business still hummed. We realized because we spent a year diving into the business while we owned the bonds, understand what they were doing right and what they were doing wrong.

Marc Bell: And this was a classic turnaround. Fast forward a decade later, we had done about 500 plus million dollars of acquisitions, but in Intuit renamed the company of Friend Finder Networks. We started a cable television network from scratch. We were in 30 330 million homes [00:04:00] worldwide. Our websites had 700 million active users worldwide, and we were the fifth largest owner of email addresses in the world.

Marc Bell: Besides Yahoo, Microsoft, Facebook, and Google. We the company to revenue with a million. And then we ended up selling it to a hedge fund. So it was a very exciting journey. And while we were doing that, my partner and I did a SPAC called Enterprise Acquisition. In 2007. We had market, it was a two $50 million spac.

Marc Bell: The market collapsed in 2009 where everybody wanted [00:04:30] their money back. 'cause that's how SPACs worked back then. So basically we had a shell with $25 million in it. We turned it into what I believe is the. World's first externally managed mortgage reit. And with that we set up a company, which is today called Armor Residential reit, which has over $15 billion of assets on the New York Stock Exchange.

Marc Bell: And it's, I own basically Fannie, Freddie and Ginny mortgages. And that's what we did, is we realized it was a massive displacement in the mortgage marketplace when the market collapsed and loans that were, the principle was guaranteed by the [00:05:00] full faith and credit of the US government. Were trading way below par.

Marc Bell: Thought it was an upstream time to pick up yield and acquire some assets, and that company still exists today. Then a few years later, a friend of mine asked me if I wanted to go produce a Broadway show. I said No and asked if I really wanted to produce a Broadway show. I said, really? No. And they go, I'll do it on two conditions.

Marc Bell: One, I want a Tony Warren and two, I make money. And they, the joke on Broadway is, how do you make a small fortune on Broadway? You start with a big one. And our first show on Broadway was a show called Jersey Boys, and it was a [00:05:30] $12 million investment. We sold $1.6 billion of tickets worldwide. I won a Tony Award.

Marc Bell: The show won a Grammy award. We got a gold record, a platinum record, and then my partners asked me, I wanted to do a play, and I'm like, and I wasn't. I'll be honest, I'm a big fan of Broadway, but okay, so we did a play called August as county. It won Apul Surprise. I won my second Tony Award and then we made a movie with Jersey boys.

Marc Bell: Clint Eastwood directed it. We made a movie with August Asage County and Meryl Streep star in it, and then we just kept going. We did Rock of Ages, which was awesome. It Tom, [00:06:00] we made a movie with Tom Cruise and that was a lot of fun and I got a chance to be in the movie that was real, a lot of fun and no, nobody could recognize me.

Marc Bell: I had a long red hair and a arsenal, so I was a groupie, but it was fun. At the end of the day, we probably sold over $3 billion of tickets on Broadway, worldwide Broadway, the road shows, and some around the world. And then we started investing in hospitality. We invested in a restaurant in New York called Lavo, called Catch Nightclub called Avenue Pizza Chain called Auto TRO was so pizza.

Marc Bell: We did bongos in Miami, Philipp Chow Miami. I [00:06:30] had numerous other restaurants just because we didn't like waiting for tables, so it seemed like a good idea. We got very lucky. We had great partners, so we were very blessed. We were really good operators who helped worked with us. We bought a small company called Tyvek, which I invented the CubeSat.

Marc Bell: Turned that into Terran Orbital, and recently sold that to Lock and Martin. And now we're looking for what's next. Keep going.

Kison: Yeah. No end

Marc Bell: sight. No end in sight.

Kison: Are you? The definition of an opportunistic investor.

Marc Bell: I like to think of myself as a serial entrepreneur, but I also [00:07:00] try to be smart in how we operate our businesses.

Marc Bell: So a great example was I was building data centers in New York City. We built do in New York City and London and California. And I went and I decided you have to own your own real estate because you spend a lot of money putting a data center in. So we were acquiring a building on four 15 Granite Street in New York.

Marc Bell: I forgot the gentleman's name who sold it to me. Super nice guy. And we paid $25 million for the building and we're talking back 25 years ago, but it's a whole city block. And he tells me how super nice guy was. Probably my early [00:07:30] thirties, and he comes up to, he goes, he invites me up to his office after the closing and he goes, mark, I feel bad for you.

Marc Bell: You overpaid by a $5 million for the building and it was only worth like 20. So I want to take you under my arm and I want to teach you about real estate in New York and how I can help you do better. And I go, sir, I really appreciate your offer. It was very kind to you. I paid $25 million because there were $18 million of historical tax credits on the building, which I sold to Chevron the next day [00:08:00] after closing.

Marc Bell: So I really only paid $7 million for your building. And he goes, what historical tax credits? The ones that did back 50 years that were just nobody. You didn't force 'em. Whatever reason you didn't take 'em. He goes, huh. But if you like, I'll take you under my wing and teach you about real estate in New York City.

Marc Bell: It was very funny. So that was an opportunity, and we continue to look for opportunities when we buy real estate. We look for real estate that has clauses and stuff that date back long before most people were born that work on the projects. We were very lucky to keep finding real [00:08:30] estate around the country.

Marc Bell: That is unique and that we can buy for a significant discount. It's still opportunistic, I guess. It's opportunistic. It's entrepreneurial. Well, so

Kison: I'm curious to, it sounded like earlier in your journey you built a business from scratch. Mm-hmm. Now, if you look at things, it sounds like you're more of a theme of finding things that you can be creative and reposition or something unique.

Marc Bell: Well, no. No. Now I'm looking for building more businesses from scratch. So we built a broker dealer for scratch at Armor Capital called Buckler. Which has done phenomenally well. We're looking now at other things that we [00:09:00] could build to scratch. We've been looking at trying to build A SMR small modular reactor business.

Marc Bell: All these data centers around the country are probably up, but they need power with AI and the mass amount of data processing that's needed, but there's just not enough electricity. I. And small modular reactors could be a very cost effective way to do it. We're looking at how we can produce these in mass production, not just producing these as one-offs, produce these as a match mass production.

Marc Bell: We're also looking at currently Boost, starting our first fund. We've never had a fund. We're 57 years old. It's not too late to do something new in life. [00:09:30] So we're starting a national security fund with an AI focus. Really focusing on acquiring, investing in companies that serve the national security of this country, using AI to achieve that mission.

Marc Bell: We'll be going on the road with that soon and we're pretty excited about it. This is not a solicitation offer, by the way. We are looking at other companies that we could acquire and do turnarounds as well. We keep finding interesting things and interesting businesses that could use help.

Kison: That's what I was curious about.

Kison: They're sort of like building from scratch. I think you were spot on in terms of there's a significant market [00:10:00] opportunity and there's nothing that exists. Versus the flip side of buy, like what sort of drives you to really get something that catches your eye, that makes it worth buying? It has to

Marc Bell: be something either I like and enjoy.

Marc Bell: I don't wanna do just the stake of making money, that be something. So I got my master's degree in real estate and development investment from NYU. So I love real estate, love building things, always love building things as a kid. So building stuff is fun, but it has to be a business that I feel like I could really get my arms around and really [00:10:30] not only understand, but something I'd be like, wow, that's fun.

Marc Bell: So, for example, I purchased a company called kibo. It was a Dutch watch manufacturer. They had two stores, one in the Hague, one in Central Pay. They made a great huge 55 millimeter watch in a lot of colors. They were going bust, and I loved it. So I decided to acquire the company, and over the next few years we went from two stores and we were in 6,000 retail stores worldwide, and we sold two and a half million watches.

Marc Bell: We were on the main runway at New York Fashion Week. We were having a blast, and then unfortunately, COVID happened. [00:11:00] And the watch company unfortunately did not survive, but we learned our lessons. Avoid plagues manufacture stuff locally in America. We learned a lot of lessons there, but it was a lot of fun while we were doing it.

Kison: Like what's the teach me that? Like how do you even spot these kind of turnaround opportunities? What's your approach to diligence again? And you're avoiding a trap of the catching a falling knife, just keep falling. A lot of

Marc Bell: stuff

Kison: just falls in our

Marc Bell: laps. General media fell in our laps because Bob Gucci, Andi was one of Globe's first customers, so he [00:11:30] called us asking for help in the bankruptcy.

Marc Bell: So we said we would help and we said yo. That way he would get his magazine back and in the end he turned against us and that's, we ended up owning it. We had never had any intentions of owning it. We were just trading bonds, and so that kind of fell in our laps with the watch company. It was more of, I don't want them going outta business.

Marc Bell: I loved wearing the watches. All my friends were like, wow, that's so cool. They had hundreds of different colors. It was just fun. It cost us very little money to buy it, and it cost us some money to turn it around. It was on a great trajectory. [00:12:00] Then other things we start from scratch. You. We just cutting in ideas and we build it and we just

Kison: fall into things.

Kison: Opportunities, multipliers are seized. Yeah. You sort of get this reputation. People are like, you should go call Mark. Maybe you can.

Marc Bell: Uh, you, you'd be surprised. People call me all the time and sometimes they're like, my God, that's so cool. I. I got a call once from a venture capital firm that was investing in a disappearing tattoo company in Canada.

Marc Bell: Their fund structure, they realized would prohibit them from doing a Canadian investment, so they called me up. I'm not a fan of tattoos, [00:12:30] I admit it. They asked me if I would be willing to take over their commitment to invest. And I go, hell yeah, because it solves a problem. Tattoos to disappear. I like that.

Marc Bell: Went and invested in this company and Neil tried to help them grow and we grew it and eventually I sold it, sold out, and it was just a great example. It was a young entrepreneur. I was able to work with him to give him ideas on how to grow and he grew. It was a, it's a great product. You mentioned you haven't done a structured fund.

Marc Bell: How do you think about capitalist structure? You always wanna be the senior secured lender at the end of the day and go from there. You wanna be the top of the cap table whenever [00:13:00] possible. But that said, you try to layer it. We always do equity. You always, then we do preferred, then we do debt. We always try to layer in all the different parts of a cap table.

Marc Bell: That makes sense. But it depends on the business.

Kison: Yeah, that's true. I'm just wondering like, what is your alternative structures? What are your levers that you're pulling on? And I'm trying to get your lessons over time of like, Hey, here's what I learned. If it's gonna be a new startup from scratch versus buying something that's a turnaround situation, I.

Kison: What are sort of the, the way you would architect the capital structure?

Marc Bell: One, we never wanna work for the lenders another, so you wanna make [00:13:30] sure you're only borrowing what you can afford. If you're not EBITDA positive, you don't have free cash flow, you better have a plan and how you're gonna get there.

Marc Bell: The lenders will own the business. Two, we never like to work for the landlord, so we always wanna own the real estate where we are. So we try very hard when we're growing businesses to own the real estate when possible. We believe owning the real estate is key because eventually you pay off your mortgage and, and your rent becomes cheap.

Marc Bell: But look, in New York City, your friends are still sky high, even though half the city seems to be vacant. But you know, San Francisco is getting, you see now a massive change where buildings are [00:14:00] selling for 30 cents on the dollar, 40 cents on the dollar because nobody wants to be in San Francisco and people are getting great buys, buying amazing buildings for very little money.

Marc Bell: We always joke, the second owner of a restaurant always makes money. The first owner spends too much building out the restaurant and the land, and then when the landlord relays it to the second owner, all the kitchen's already built out and everything's already there and it's turnkey.

Kison: You gotta rightsize the value of it and then optimize operations and it's a lot easier to fix something versus build something sometimes.

Kison: Depends what you're doing. You're right. You're right. [00:14:30] If a business is cash flow, that's always a good thing to leverage, but it's gotta be serviceable. How does an entrepreneur spell happiness?

Marc Bell: Positive cash flow.

Kison: I like that.

Marc Bell: I learned that from an undergraduate. I went to Babson College and they teach you that the first week in school.

Marc Bell: That's an orientation event. What about businesses that aren't cash flowing? What is your view on, how do you structure those deals? That's harder if they're not cash flowing and we try, as I get older, I get more risk averse. When I was younger, absolutely I would jump on in. We'll try to figure it out. Now at 57 years old, [00:15:00] yeah, I much, I like much more guaranteed, much more secure, much, much more conservative human.

Marc Bell: I try to take less risks.

Kison: I'm trying to wrap my head around this, like even, so I play in software and uh, one I got, I don't think I'm gonna do another thing from scratch again. I'm like done with that. But buying, fixing things. Sure. Like those are interesting. When I look at opportunities for us to acquire other businesses, they're adjacent or in the same field and software and they're not making money and they don't have growth, but they still have really high value expectations.

Kison: To teach me how do you bridge the bid as [00:15:30] spread to help the seller rationalize the valuation expectations. And then the other part is even just structuring those deals. 'cause it's tough. You really don't wanna put debt on.

Marc Bell: It's funny, I meet lots of people, lots of entrepreneurs all the time. I used to do a lot of venture investing.

Marc Bell: I always hear the expression, I'm building a company to take a public. That's the one probably I've heard the most. Then I remind them that there's a one in 3.2 million chance of their company going public, and there's a one in 770,000 chance of 'em getting struck by lightning. So I say, go home. It's struck by lightning.

Marc Bell: Come [00:16:00] back, because that's not how you start a business. They're necessarily a business knowing what your exit's gonna be. N day one and what is it? 168 companies went public last year. That's it. 200. So many companies are gonna go public this year, maybe. But yes, there are millions and millions of companies all over the country.

Marc Bell: People have very unrealistic expectations. And it's unfortunate because I see a lot of businesses fail. 80% of all new businesses fail within the first year, and this two years, two to five, another 80% will fail, and once left, 50% will fail. So very few succeed. [00:16:30] And a lot of it unfortunately, is because of, I dunno if the word is hubris, I dunno the word is, of founders who just believe their thing is the best, it's the most awesome thing in the world, and they're worth the most amount of money.

Marc Bell: And they end up getting nothing at the end of the day. And that's unfortunate. 'cause they probably could have been good businesses if they were realistic in what they had, realistic in what they, what the value was and they could have raised capital. Being realistic with yourself

Kison: is key. We never kid ourselves.

Kison: I can see that. This is the cliche thing, that you raise too much money at a too high of a [00:17:00] valuation. You don't make up the metrics that get the return back on that valuation, and then you're underwater and then you're in trouble. Yeah.

Marc Bell: As you get older, you get more conservative and you're realistic about how things go, setting your expectations properly.

Marc Bell: So we go into a business now and we set very low expectations. It's like Scotty from Star Trek. We always want to set low expectations and exceed 'em. I totally agree. Feels better. Sleep better at night. Sleep much better at night. How

Kison: do you do that? I feel like we're in this environment where now we got all the AI trending and you look at the valuation on [00:17:30] those companies.

Kison: You thought we corrected ourselves after 21, but no, it's like swinging back the other way again.

Marc Bell: Being first doesn't mean you're the best. Doesn't mean you're the winner. If that were the case, MySpace would've been a winner. Lycos would've been a winner. There's a long list of people that had the right idea early, but didn't become a winner.

Marc Bell: Later, the people came later on were the winners. AI quantum computing, there are gonna be winners and there are gonna be a lot of losers. Nobody knows who's gonna

Kison: be who. Yeah, that's a fair point. In terms of like managing risk to keep out of that sort of realm of [00:18:00] overvaluation, keeping it like we talked about, just real achievable, how do you discipline yourself to do that?

Kison: Is it just all in numbers and saying, all right, we have a high level of confidence, we can hit this, and is that what it is or is there more to it? We look at the numbers.

Marc Bell: We also believe you bet on the jockey not on the horse. So we look at who the operators are. Some people are very smart and the smart doesn't necessarily mean you have your PhD.

Marc Bell: They can be street smart, they can be other kinds of smart out think. We look at their backgrounds, their track records. I had a young man the other day who I just hired who is [00:18:30] 30 years old and I believe he will do great things. He's gotta get comfortable with making decisions and getting comfortable with risk.

Marc Bell: But you know, you meet someone after you become a good judge of character, so you feel good, who's gonna be the jockeys of the future and he'll be a great jockey 10 years from now.

Kison: Tell me more. What makes a good jockey?

Marc Bell: People who are realistic, people who ask great questions. So I love when people ask questions because if they ask smart questions, that means they really thought about it.

Marc Bell: Ask thoughtful questions. People just like to speak and pump up themselves. But you notice that when [00:19:00] you meet people and they ask lots of questions, you have to learn about them by the questions they're asking you. So whenever I interview somebody, I like when they ask a lot of questions, and the more sophisticated the questions, the more detailed the questions.

Marc Bell: I like that. And I'll push back and I'll see how they take it because I want them to feel self-confidence and I want for them to argue back what's their point. But it could be in any warrant range of even doesn't have to be issues related to the job. It could be about politics, it could be about, we had a great banter with people the other day over the Trump administration and Harvard, and [00:19:30] undoing them $8 billion for Harvard, the way they treated Jews during this, over the anti-Semitic things.

Marc Bell: And you know what? It's great that the administration is focusing on anti SEM as a Jew focusing on anti-Semitism. I think schools like Columbia should be punished, don't get me wrong. But I also think the research, especially the medical research like Harvard does. That shouldn't be punished. They should punish him in appropriate ways.

Marc Bell: But I do think punishing him makes a statement, but the cutting out medical research that helps the entire nation probably isn't what we'll wanna see. [00:20:00] 'cause that also creates innovation and that creates other things. There's a balance between it all, and it's a balance on how you do things.

Kison: I like this.

Kison: So vetting out the best jockey, it's like seeing how the questions are asking, asking some smart questions. The ego part, like making sure they're not too focused on themselves. They got a big ego and then the banter part, you turn around, you challenge it a little bit to see how they respond with some banter

Marc Bell: and how, how they react to it.

Marc Bell: I'm in pa. I don't belong to a political party. Never have, never will, and but the banter you get with people. I couldn't care less who's president. I [00:20:30] care that the president's doing the right thing, and I care that we have a budget that needs to get balanced. Clinton had a balanced budget. Everybody forgets he's the last president to balance the budget.

Marc Bell: No Democrat or Republican has done it. Since you need a balanced budget, you need to look at the deficit. We went from a $4 trillion deficit to a $30 trillion deficit. Our kids have to pay that off. Why leave our kids? It's off, what, $160,000 per person or something like that? Maybe the math wrong, but I believe it's a hundred hundred and I know it's over a hundred thousand dollars per person.

Marc Bell: So if you want to go write a check to the US government of a hundred grand and pay down your deficit, you can [00:21:00] have a reduction in your income taxes, and there'd be a great concept. You have people able to pay you off their share. People don't realize that they have all this debt accruing that they own a piece of That's a good view and a good thing to banter on.

Marc Bell: Yeah, but you think about it, we pay off the national debt. All of a sudden, taxes will go down, the economy will soar. Countries like China have no national debt. Russia, I don't think there's any national debt. The tis, the Saudis have no debt.

Kison: You said earlier that these deals tend to find you, and I'm a big proponent of a buyer led approach where [00:21:30] you got a profile, you got a strategy, and you're very proactive to find those opportunities as opposed to bankers and third parties just bringing you stuff and you're trying to rationalize your strategy around it.

Kison: What's your view on that of like being proactive and being proactive was great.

Marc Bell: I joke, you know, I do the cocktail party circuit all the time and for all the conferences, you meet people and you talk to people and you never know what's gonna fall into your lap. People tell you, I'm trying to raise money for this or that, and then you try to look into it and say, okay, does it make sense?

Marc Bell: How can we improve it? The trick is, how do you make one plus [00:22:00] one equal three? You give people money, that's great, but how do you give them more than money? How do you give them knowledge? How do you give 'em advice? How do you get them customers? How do you cut their costs? How do you do something that's gonna be transformative for their business?

Marc Bell: Not just write a check, but truly be transformative the business you're investing in.

Kison: How do you do that?

Marc Bell: That's just experience.

Kison: It's so easy to screw that up. It's so easy to bet on the wrong jockey. My partner once said to me,

Marc Bell: I have a 500 batting average and I'm not a baseball fan. I go, what does that mean?

Marc Bell: He goes, mark, it means one of your two things you touch turns to shit. [00:22:30] I'm like, that's great. That say pretty good. And I'm like, but he goes, but at 500 batting average still puts you in the Cooperstown Hall of Fame. And I'm like, where's Cooperstown? He started laughing and I'm a sports guy. As you get older, I try to improve my batting average.

Marc Bell: My batting average is much better today than it was 30 years ago.

Kison: I continue to improve my average. Any other things besides the jockey part? You got a good vibe. This person's the right person that's gonna follow through. Any other elements that you look for in a good deal? We look at the total adjustable

Marc Bell: market.

Marc Bell: We look at the tam. Yep. We look at the tam, we look at who are the customers, [00:23:00] what's the value of that customer? What are the chances that customer's gonna buy again, if it's a recurring revenue item or if it's a a hard good item. But there are things that kinda should be done to really

Kison: analyze the business.

Kison: On the strategy part, it sounds like once you find a direction with this business that you got the jockey lined and then you are looking at some of the elements, the TAM and things like that. From there, that's when you could be very pragmatic about. What are the other businesses that may align or you wanna acquire with it?

Kison: Does that like sound? [00:23:30] Right? I'm trying to think of when do you get to that point, when you're like really proactive on, we have a strategy, this is what we need to do, we need to go acquire these other assets?

Marc Bell: When you look at a company, a lot of times we believe if you control your supply chain, you control your destiny.

Marc Bell: So with any company we acquire, we try to make sure that they have, uh, deep control of their supply chain. Whatever that means for that company, we wanna be able to control the supply chain.

Kison: That's a good lead in, it's okay, you look at this company and then when you think about how do you make that sort of vision or the strategy from it, that's one good philosophy is like you control the supply chain [00:24:00] and then that gives you a view of does it M&A sort of fit in to be able to achieve that or there are other means to do that.

Marc Bell: Controlling supply chain is key because then if you own your supply chain, you have better, you can have better control the quality of your product, better control the cost of your product. Pretty much all good things come from that they tell you in business school about just in time. But the reality is it doesn't work.

Marc Bell: Companies keep having supply chain problems and just in time inventory isn't working. But if people own their supply chains back like Ford in the 1920s, they own their [00:24:30] supply chain, own everything, and it worked. And I believe that's what's gonna happen. Now. Everybody is building stuff in China today is going to go ahead and be like, wow, we're screwed.

Marc Bell: We have all these tariffs. If we would've built it here in the US and owned the factory, it would've been a lot better.

Kison: Yeah, those will be be the manufacturers. Get ahead the niche domestic manufacturers. 'cause they own their supply chain. Hey, what's a good another mark? Philosophy from bending the right jockey here.

Kison: Own your supply chain. Buy low, sell high. Buy low. Sell high. Uh, yeah, that's a good one. Try to teach that to my kids [00:25:00] guys. It's not that complicated. Buy low, sell high. Everything else. I don't know.

Marc Bell: I thought about too much. It's just things that come to mind. You're always so employee. Don't be afraid of making mistakes.

Marc Bell: Not making a decision is worse than making a bad decision. And that paralysis by analysis. And people are just afraid to make decisions. And I see this at big companies all the time. People are afraid. They wanna make a group decision so nobody can take personal liability for the decision. Everyone's afraid of making a bad decision.

Marc Bell: I'm like, you know what? Make a bad decision. It's okay. It's not the end of the world.

Kison: Hopefully everybody learns from their mistakes. [00:25:30] Cliche corporate thing is like you're encouraging an entrepreneurial culture. When you hear what you're describing is like, go take some bets, go make, go do something. But people but

Marc Bell: big companies I've seen over and over again, big companies don't want their employees.

Marc Bell: Or if they don't want, they don't want to take chances. They know they got a job to keep their head down. They notices who they are. They get their 35 years and they get their pension and they move on. But there's no efficiency there. There's no moving the ball

Kison: down the field there The strategy part can come up pretty easily.

Kison: You can sit there in a room, hack out some ideas, find the right [00:26:00] jockeys to bet on, that takes some work. You gotta go meet people and hit the conference circuits and so forth. Some of this ways to create value, the actual execution, like once you get the deal done, and this is something you've done really well, is that you've make things happen.

Kison: I get it. The right people always matter, but is there anything else that you're doing to either align incentives. Or just certain structures that you found have really helped push some tailwinds to make sure that things get really good, executed, and there's some success that [00:26:30] happens. Well, we

Marc Bell: try to tie people's compensation to performance metrics, which will lead us to success.

Marc Bell: So we want people to have skin in the game. Whenever I meet an employee who says, I wanna get paid less money. Everybody wants to make more money. Fine, let's give 'em a way to make more money. But they have to be successful, so let's incentivize them. Make more money.

Kison: Gimme some examples.

Marc Bell: We have a manufacturing business and we had to meet a deadline.

Marc Bell: When we had to meet, it was a tight deadline. We had people who had to work double shifts and we said, look, we have a pool of money, we're gonna pay out a million dollars to everybody working on it. It was like [00:27:00] 150 people and we're gonna divide it up and as long as you keep working, do your double shifts seven days a week.

Marc Bell: So we make the delivery, you get the share in it. Some people dropped out, others stayed int, but every day that it goes by the pool decreases by $10,000. Pools whittled down. So at the end of the day, if you missed all the deadlines, you get nothing. Real incentive. To go ahead and help each other. 'cause it had to be a team effort.

Marc Bell: It was all or nothing as everybody had to help each other to create a lot of teamwork and people want their bonus. That's like a key factor [00:27:30] is there's a financial

Kison: incentive

Marc Bell: that you, but a financial incentive to both encourage everybody to work together because if the person next to you is getting it wrong, that means you wouldn't be able to deliver the product and everybody suffers.

Marc Bell: So everybody was forced to help everybody else. I was very pleased with how it really worked out. It created a lot of bonding and that was really good. How important is that to just making sure you got the right person in? Is it not Gen Xers, millennials? What are they called today? Gen Zs. Gen Zs. Gen Zs have a real problem because Gen Zs, they're stuck with their phone in their hands and they don't know how to [00:28:00] communicate.

Marc Bell: They don't know how to work in teams. They very much want to just work from home. They tell 'em all to go work, go back to whatever barista they came from, grow up and come back when you want a job.

Kison: They don't, they're not incentivized my money. They're trying to get their SNAP score up and collect some robuck.

Kison: Yeah. So I think social media has not helped us. That's why I wanted to overcome it, but maybe we will get to that point. You gotta have some real bills to pay. I don't know. I wish that was the case. I haven't seen it yet. We talked before and you had this term you used about taking people outta the process.

Kison: Can you tell me more about [00:28:30] that? It was related to automation. I think we're talking about scaling.

Marc Bell: Computers don't make mistakes. People make mistakes. The more we can automate things and use AI to help make sure that our, to teach robots to be better at their jobs, but we're creating new jobs in terms of programmers for ai, people who build the robots physically.

Marc Bell: Until robots build robots, and then I guess you have Skynet. At the end of the day, we are very much all about robotics is a huge way to save money and do things fast and quick and

Kison: get it right. Any trade-offs between, over [00:29:00] automating, trying to focus on innovation, but still maintaining the human touch.

Marc Bell: No, I think you always have these humans, 'cause humans are the ones programming the robots. So humans are the ones designing everything, so it has the human touch. But you're right, once again, you try to solder something. Your hand can't stay steady over and over again a thousand times for solder, a computer gets solder, thinks a billion times over, we're never slowing down.

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