Conference call: Will Schnier (Part 2)

CEO of BIG RED DOG Engineering & Consulting (Best Firm Multi-discipline #47 and Hot Firm #65 for 2017), a 105-person multi-discipline engineering firm based in Austin, Texas.

By Richard Massey
Managing Editor

“As individuals and as a firm, we’re either growing, or we’re dying,” Schnier says. “Stagnation is not an option.”

A CONVERSATION WITH WILL SCHNIER.

The Zweig Letter: In the event of failure, how does your firm react?

Will Schnier: Failure does happen. Nobody is perfect. When we don’t deliver on our value proposition or when we make a mistake or when our PMs fail to communicate up to the client’s expectations, we own it as fast as we can. When we fail, we admit it and we address it and we learn from it. It doesn’t happen often, or we wouldn’t be growing the way we are. When failure does happen, it’s an opportunity to prove to the client what kind of mettle we have and where our ethical compass is pointed. Handled appropriately, it is a chance to strengthen a client relationship because many firms fail to own up to their failures.

TZL: What has your firm done recently to upgrade its IT system?

WS: Last fall we put into place an IT infrastructure system that utilizes Panzura technology and Amazon Web Services in order to have a fully cloud-based infrastructure. We no longer have local
servers in each office. This allows each of our offices to work on projects across the entire firm seamlessly with zero downtime or waiting for files to download. We also have fully networked video conferencing between each office so that project teams can meet in person, virtually, and look at each other face to face. We used to have leadership meetings that required people to get in the car and travel. Now they can travel a few feet into a conference room and be face-to-face. It’s saved us money all around and increased efficiency.

TZL: What’s your preferred strategy for growth, M&A or organic? Give us a synopsis of how your firm effected growth in the recent past.

WS: We have grown organically and through acquisitions. We love both. It’s easy to grow organically in our existing businesses. Our brand and our BIG RED filter is so powerful in our local markets that organic growth is natural for us. For new service lines and geographic locations, we love the acquisition approach. As CEO, I charge our leaders with growing their existing businesses 15 to 25 percent each year. Any growth beyond that which our business plan calls for is my responsibility to spearhead, and that means buying other firms. I am a very outgoing person and it’s easy for me to make decisions. On top of that, I could negotiate all day long. It really charges my batteries. So acquisitions, both in execution and pursuit, are near and dear to my heart. Having said that, we’ve done two acquisitions in the past two years, and integration is much more challenging than making the financial deal work for both sides.

TZL: What’s the greatest challenge presented by growth?

WS: Easy answer – scaling our operational systems and procedures. No doubt about that. It’s come so fast for us in our first seven years that we’re playing catch up on a lot of our internal processes and training programs. We can sell all day long, and we can execute as experts, but we also have a lot of room for improvement in our behind-the-scenes processes. 2017 really is the year for us to catch up in that regard. This year, we’re putting the investments in place that will allow us to double in size in the next two years. That’s a painful process at times, but being able to show our team members, prospective team members, and potential acquisitions that we’ve got a fortress in place for our back-end infrastructure will make it all worthwhile.

TZL: What is the role of entrepreneurship in your firm?

WS: Our top leaders must have an entrepreneurial streak in them to be successful in the seller-doer model that we deploy. Our leadership features strong sellers, strong communicators, and inspiring leaders. Conceivably, our top 30 people could all be very successful as CEO of their own 10 to 20 person engineering firm. Our open-book management policy and leadership style ensures that the younger generation of engineering talent at our firm is exposed to the business side of engineering from their first day here. As individuals and as a firm, we’re either growing, or we’re dying. Stagnation is not an option.

TZL: Monthly happy hours and dog friendly offices. What do today’s CEOs need to know about today’s workforce?

WS: Today’s workforce is not yesterday’s workforce. And the scary part is that it’s also not tomorrow’s. The post-millennial generation coming up next is something that will change everything. I’m a millennial myself, so I don’t know what all the fuss is about today. I grew up with the internet and email and instant information, so this is all normal to me. We have monthly happy hours and dog friendly offices, but that’s not even 1 percent of it. It’s the entire culture of a company that matters. I’ve been at two other firms previous to BIG RED DOG and it was very clear that their systems were designed to reward tenure, rather than results. That doesn’t work today. What it amounts to is reverse age discrimination. Why the hell can’t a 30-year old engineer run a $5 million book of business? Failure to change leads to obsolescence. Information flows freely in this industry. If people know something better is out there, they won’t give leaving your firm a second thought in order to come to a place like BIG RED DOG.

TZL: As the co-founder of a firm, what was the biggest lesson you learned on the business side?

WS: We’re almost eight years old now as a firm. But about four years into running our firm, we realized that it really was possible to grow so fast that you run out of cash. That was a lesson that I was not expecting. Being a sales and marketing guy, I thought more sales cured all. Well, there is a lot more to it than that. With more sales comes more investment spending ahead of the cash wave coming in from those investments. Now take that lesson back to the first question about collections, and you’ll realize why we have to have such a strict collections policy. We’re not going to slow down our growth because we’re failing to collect. We’re not going to use our line of credit because we’re allowing our clients to slow pay. We’re going to grow, and we’re going to collect, and we’re going to have fun and be very unemotional about doing it. That’s just good business.

TZL: What’s your prediction for 2017 and for the next five years?

WS: Rising interest rates, inflation, even more dramatic labor shortages, and a mild recession are all very real in the next five years. But it’s not all doom and gloom. While we do work nationwide, all of our offices are currently in Texas. There are over 1,200 people moving to Texas every day which puts us in a very strong position. Four of the top 11 cities in the nation are in Texas. People in general are wary of the liberal anti-business positions that have been taken in places like New York and California. Texas has no state income taxes. Texas has no unions. Jacobs Engineering, my former employer, didn’t just move to Dallas from California because their employees are big Cowboys fans. There was a compelling business case to be made here. Eight out of 10 Texans live in the 60,000-square mile triangle formed by Dallas-Fort Worth, San Antonio, and Houston, that’s a triangle that features Austin at its center. By 2050, Texas will account for a sixth of the total U.S. Gross Domestic Product. My prediction for the next five years is that Texas will continue to be the miracle of the nation. Many of the larger national firms are in a “growth through acquisitions” mode, finding that they cannot grow their investors’ returns at a fast enough rate on organic growth alone, choosing instead to buy into the Texas markets and existing client bases. Texas is a very attractive and necessary market for any large engineering firm and many are actively seeking acquisitions in BRD’s markets. GTT, baby – get to Texas!

Posted in Archives | June 26th, 2017 by