Gene Kettler | How to Grow Your Business Every Year

If you’ve been in a condo or commercial building in the Seattle area, you’ve no doubt run into the handiwork of Gene Kettler and his team at Frontier Door and Cabinet.

But you don’t have to be in manufacturing or construction to benefit from what 21 years in business has taught Gene about figuring out the right product mix to attract the most customers… how to become the go-to provider in your industry… and strategies for putting the right team in place to drive consistent growth.

Gene reveals all his secrets, including…

• How to identify ideal customers and projects
• The pitfalls of acquisition – and how to avoid them
• Why a culture of growth attracts the best employees
• The dangers of ERP systems
• And more

Listen now…

Mentioned in This Episode: www.frontierdoor.com

Episode Transcript:

Doug Hall: Welcome everybody. This is the Go for Growth podcast and I’m your host Doug Hall. And today I have an excellent guest to interview. I have Mr. Gene Kettler, the founder and CEO of Frontier Door and Cabinet, based here in Greater Seattle Tacoma. They have quite a nice headquarters down in Tacoma. And they are a very significant leader in commercial and multi-family residential doors, cabinets, and hardware.

And so I would love to welcome Gene today. I’ve known him for years and respected his business acumen. And in the Go for Growth podcast we’re really looking to learn from business leaders, owners and leaders, that have cracked the code on growing a business. And I can’t think of anybody better than Gene to share some insights with us today.

So, Gene, welcome to the podcast.

Gene Kettler: Yeah, thanks Doug, that’s really, really kind of you. It’s hard to live up to that intro.

Doug Hall: Oh no, I know you. You do.

So look, you’ve got the floor now. Tell me a little bit so that our audience can kind of catch up with me on Frontier Door and Cabinet. How you got started in it and a little bit about the size of the company and industry, and how you guys fit in the market here.

Gene Kettler: Sure. We’ve been in business for 21 years. When I founded the business I had parted ways with more of a straight distribution company. In Phoenix they had a way of going to market that was different than what most of the people here were doing. The installation companies would actually sell the door and hardware products and install it. So they would buy it from someone like myself at the time, the distributor. So when I parted ways with the company I was running I thought that’s going to be our value proposition in the Seattle market.

So we started based on being an installation company. We’ve since separated the companies for some, mostly insurance, reasons. The way that they assess the premiums it’s more advantageous to have two separate businesses. But we pretty much tie them together. But we went to market with that. We started with nothing, basically out of the garage. And at this point we’re somewhere north of 300 employees and revenues will be somewhere between 83 and 85 million this year, depending on what expedites. So it’s been a fun ride.

Doug Hall: That’s awesome. Would you characterize your business as sort of a David among Goliaths? How does it work in the marketplace?

Gene Kettler: You know I’ve never really looked at it that way. We’ve grown every year of our existence. I think that we are in a market that I don’t think that there are any real Goliaths out there. I think that there’s a handful of significant players and then a plethora of people that jump in certain aspects, certain skills. I think that’s true up and down the West Coast for the most part. That there’s really no dominant force in what we do.

Doug Hall: Right. Because you’re uniquely combining the wooden doors or metal doors together with jambs and hardware and all that stuff. And actually in a project, going in and installing it in a high rise condo or an apartment building or a commercial. Right? So you’re putting it all together.

Gene Kettler: Yes. And there are other people that do it to differing degrees. Of course we used to just sell cabinets. We’ve since become manufacturers of cabinets and casework. So that’s another thing that we tie into scope. Our theory, and I think it works most of the time, that we have a greater number of scope. That gives us a volume discount so to speak. Gives us an economy of scale, especially in terms of management on site. You can have stronger management and more consistent management on a construction project. Well, that’s usually kind of difficult because of scheduling, the delays, stops in work. The more scopes you have, the more able you are to keep a key core group on site. So I think that’s been one of the big advantages of actually managing multiple scopes of work.

Doug Hall: Right. So you’ve expanded from just the doors, and really building the cabinets and doing as much as you can so you can be more important on the site then I guess.

Gene Kettler: Right. Right. And then the cabinet manufacturing is more … oh, what would the word be? … It’s much more complex manufacturing than the door part of the business. The door part of the business is a glorified assembly process, whereas manufacturing cabinets, especially the type of work that we do, it’s complicated manufacturing.

Doug Hall: You’re adding more value there basically.

Gene Kettler: A lot more. Yeah. I’d say it’s a whole different ballgame. But it’s a lot of fun as well and a great experience for me.

Doug Hall: Was that a big growth step for you to get into cabinet building? Real cabinet manufacturing?

Gene Kettler: Yeah. It was. I would say that in terms of our … Our revenue is only up about 10% from last year, but the cabinet revenue is a much larger of our total. So the cabinet revenue went from being only about 10% of our revenue in 2017 to being 30% of our revenue in 2018. And that was by design. The type of work that we focused on, we aggressively went after a smaller number of jobs but tried to make sure that we got the entire, all the scopes at work on a smaller number of projects.

Doug Hall: Awesome. So you changed your growth mix?

Gene Kettler: We changed the mix of our products, yeah. And that’s one of the other things that we studied pretty hard. What makes the most sense? What is the market most in need of? What products have significant barriers to entry? Whether that be human resources, financial resources, expertise. And try to find what our sweet spots are and really, really focus our sales efforts on those areas.

Doug Hall: So thinking about that. What is your ideal customer? What’s the ideal project you guys are looking for and bidding on now? How do you characterize it?

Gene Kettler: Well, the first thing we want is a customer that’s known to pay their bills. That’s always a …

Doug Hall: That certainly helps. That’s a good start.

Gene Kettler: That’s number one. You know I don’t know that I have an ideal. I would say our typical job that works really well is one where we are doing all of the scopes we’re capable of, which would be doors, hardware, millwork, cabinetry, miscellaneous, toilet partitions, common area casework. Where we do everything in the entire project and it’s with a customer that’s very organized and schedule driven. The scheduling is out of our control and when a customer is proactive and very good at making sure that they are hitting their schedules it makes it much easier for us to have a successful outcome.

Doug Hall: So who is your customer?

Gene Kettler: It’s a combination. We work at differing degrees for most of the large general contractors in Seattle, whether that be Lease Crutcher Lewis, Skanska Mortensen, Sellen. The local contractors Walsh, WG Clark, Raffin, Absher. I don’t want to forget anybody. But we’ve worked …

Doug Hall: All the names we see on the cranes around here. The cranes and the construction sites. We see all those names when we drive around town.

Gene Kettler: So we work with all of them. And some of the smaller footprint guys, a company like Shinn Construction, fabulous company. They’re not a large as some of these other general contractors, but they’re great to work with. They run a great job. Marpac is another one. They do a great … All of the, just in general the construction business, with the contractors that we’re working with these bigger projects. They’re all pretty darn good. It’s hard for me to find anything really negative to say about any of them.

Doug Hall: It’s good that they’re all good.

Gene Kettler: But a good job for us is one where we’re able to do all of those scopes, because it does give you an economy of scale. On a human resource side that is the most impactful. You get a little bit of help with trucking and so forth by having multiple things. But it’s the management resources that really can go a little bit further.

Doug Hall: So would you say that you have a unique combination of offerings?

Gene Kettler: I know that we have a unique combination of offerings. I think what needs to go with that is we’ve developed that. It’s not just that we have somebody that can go out and buy this stuff, but we vertically integrated the process. We’ve developed a very good system of communication. Not without flaws, of course. We’re constantly trying to improve it. But the idea, our goal is to provide a service to the customer that requires very little of their time. Once they give us the job, our goal is to provide a seamless service for them where the scopes that they choose to contract us to do are done without them having to really do very much. We’re very proactive at the front end so there shouldn’t be tremendous questions, and we do our best to have a great line of communication into the customer so that when they do have a need or a question we’re able to respond and react in a very effective and efficient way.

Doug Hall: And having more products, more scopes that you offer allows that contractor customer to deal with less suppliers, less subs.

Gene Kettler: Well sure. Less people. You know you have a good qualified person who’s there to track down multiple issues. That’s helpful. But, yeah, you know it’s the people business. Both the people on the customer side and the people on our side. The challenge and the key in my mind to success is bringing in the really great personalities in people and developing a culture where they understand we’re all servants and we’re there to serve the customer and make sure that they get what they need. The big win is getting their next job.

Doug Hall: So you’ve got a good system. Like you said, it’s intensely based on people, good people communications. Well organized. Taking troubles off the plate of your customer. You guys managing it. That sounds great. What was the biggest challenge getting to that system? Getting it to work, Gene?

Gene Kettler: Well saying that it works … There’s always room for …

Doug Hall: Oh I know it works. I know behind the scenes you guys are busy sometimes, but hey, you make it work for the customer.

Gene Kettler: You know I think that for me personally the biggest challenge is I expect things to be done. As soon as I envision it in my mind it should be done. And so probably the biggest challenge for me has been learning how to pull that back so that people aren’t frustrated and intimidated by my drive to have whatever vision it is that I’m shooting for be done immediately. I’ve held back on some of my old clichés and quotes about progress only happening because of unrealistic people. Things like that. It tends to intimidate or people don’t understand where I’m coming from sometimes. So I’m more cautious about what I say that I was earlier in my career. But that’s a challenge.

We live in an area where attracting intelligent, hard working young people into the construction industry as a career is challenging. Our competition is sexy startups. Amazon. Microsoft. It’s tough to get a bright young college graduate and convince them that coming to work for a door and cabinet company is a place to be. So we’ve … oh, gosh, we didn’t really start growing aggressively until about 10 years ago and at that point my oldest son who runs our business for the most part, we decided that the only way that we were going to attract bright aggressive people and retain them was to have a culture of growth, where we consider it our job to continue to grow a company so that we’re providing opportunity for the people that we’re recruiting to come in and work at our company.

We grow because we’ve made a commitment to them to provide opportunity. It tends to feed on itself when you do that. Sometimes the growth is a little more rapid than we’d like to see. You’re not ready for it and that creates some inefficiencies. But overall that is our philosophy. Our culture is one of growth. We feel a business that’s not growing that inertia is going to take you the other way. There’s lots of people out there wanting to be in business and if ours looks good they’re going to be trying to do it. They’re going to be trying to do it better than us. And so we need to keep moving and keep growing and keep recruiting. All of the things that we’ve done in the past we need to keep doing and doing it better.

Doug Hall: Mm-hmm (affirmative). So if culture and a culture growth is important, I’m pretty sure you had a challenge to that a few years ago when you did a major acquisition. Tell us about lessons learned there.

Gene Kettler: Yeah. So I think it was 2010 or ’11. We had actually fared pretty darn well through the early stages of the last recession. There was a relatively large door and millwork company that we acquired the assets of. We actually, we had been looking. We decided at that point that the market needed to consolidate. So we were going to buy, sell or roll up. And initially we thought this company would buy us, but when we dug in further we realized that we were the ones with all the real assets. And they were the company with the big sign, the fancier offices, and that sort of thing. We ended up acquiring them. A lot of things we missed.

Sometimes the product being the same isn’t the real synergy and isn’t the real purchase. They really focused on single family construction. And it was the same products essentially. And our instinct going in was that since it was the same product this would be an easy shift. But the real difference was in the logistics. The logistics of doing a large midrise building or even a suburban apartment or even more different would be a high rise. The logistics are so dramatically different than single family that we really missed the boat on that.

We tried for two years to be a force in that market. We had a lot of business. We felt the prices were okay. But were never able to do it. I believe that there are people that do it and do it well. But expediting or executing those two businesses, it was too different to not have two different companies. Whereas with the cabinets and doors we’re able to execute those relatively well out of the same facility as long as it’s on the same type of project. So that would be one big lesson.

The other big lesson was to be extremely cautious with the ARP systems. We took on their ARP system which if I had looked at it differently, I would have seen that their implementing that particular system, or trying to, was one of the things that led to their hard times. It wasn’t the right time. They didn’t allocate enough resources to getting it done. And they went live before it really worked. And then we took it over and it created some really serious issues in our accounting and inventory control and stuff.

So I would say for anybody that wants to listen, be very, very cautious and careful when taking on or switching ARP systems. Because in my experience and from what I’ve seen from the … not just this acquisition but one other acquisition, not doing it correctly can really apply a fatal blow to your business if you’re not careful. It tends to take longer and cost a lot more than what the software people say. Maybe double or more is probably a pretty good guess.

Doug Hall: That’s a painful lesson to learn and good advice for folks that are listening in. Very, very good.

Now when you acquired the factory in Tacoma that you have expanded into, was there any particular growth challenge to that?

Gene Kettler: Oh, gosh, yeah. Yeah, wow.

Doug Hall: Big, right? Well, it’s a big facility first of all.

Gene Kettler: It’s a big facility, yeah. It’s a big facility. It really, it was on antiquated software. A lot of the machinery … I guess the heart and things of a manufacturing, a wood manufacturing business, is your dust collection system. That’s really … Right now that’s very expensive to put in. You have to find the right buildings to put it into. It’s the real challenge.

Doug Hall: A lot of regulations you have to deal with too.

Gene Kettler: Well, that and paint of course.

Doug Hall: Oh yeah paint. Your fumes from paint and varnish and all that, right?

Gene Kettler: Right. So that part of the business was all in place and was working very well. But the saws and the sand machines, for the most part they were antiquated. The software they were using was ineffective. They didn’t have a culture of fixing problems at the root of the problem. Guys just got in the habit. Stuff would come to them wrong. From one part of the line to the next they would just fix it. So the people that we retained after the acquisition, that was a big shift culturally make. If it comes to you wrong we find out why it came to you wrong and we fix it at the point of the issue or the mistake. That was one big challenge.

Just being in a new business, we had anticipated a lot of expense and we didn’t know what it was. So we paid a certain amount for the assets. We calculated that just our set up costs, just soft costs associated with learning curve would be probably two times what we paid for those assets. In reality it’s probably been more like three or three and a half times. And so I think if I were to look at it again I would be … I’m sure there’s people that could do it better, but I think you don’t know … Another one of the old clichés … You don’t know what you don’t know.

And so you go in and you have a great business plan. You have maybe 80% of the facts, but sometimes that other 20% can be very expensive. Those are things that you just learn by doing it. We did recruit in some fantastic help though. We got some really great people from companies. But not all at the same time. So that would be one of, probably the biggest lesson is it’s going to cost more than what you think it’s going to cost.

You know there’s many things that I would probably do differently. There’s a balance when you know you’re going into growth and you’re in a new business and your profitability is important. It always is. But a meltdown of any type can be catastrophic. And so we consciously over hired. We brought in more resources than we knew were justified for the revenue that we were creating. But we did that to make sure that we didn’t have just a terrible, terrible mistake. And we haven’t. We’ve got the systems working very smoothly now. There is little fear of a huge breakdown. We feel like we’ve got all the right processes in place, or most of them.

I think where we could have done much better is in quantifying what people ultimately need to do and reacting to those shifts of personnel faster. I think we ended up carrying too many people for a long time, which I think creates more … It’s not just the cost at the extra employee in my opinion. I think when you have too many employees it actually denigrates the entire staff. It slows everybody down. People work to the amount of work that’s there. And then when you do get an increase, even though you probably have the right number of people, in their minds they’re … They’ve already acclimated to doing what they do. So it keeps you from making improvements that you need to.

So I would respond quicker. We have and we are responding to that. You starve areas where the numbers don’t make sense and it usually works out. So I think those are two of the big things.

Doug Hall: So in that area of staffing, sort of that over-hiring and then trimming back at a certain rate. What have you found, between you and Gabe and the rest of the managers, what’s been the most effective leadership tools or management tools and processes that have worked for you guys? You’ve gone through substantial growth in these 10, 12, 15 years. So what worked well? Have you tried some management techniques that just didn’t work very well?

Gene Kettler: Yeah. We don’t have long enough to hit all of those.

Doug Hall: That’ll be another podcast episode.

Gene Kettler: Yeah. You know I think what seems to work best for me is make sure that you can develop a quantifiable expectation for employees. I try to really avoid having any type of negative jiu-jiu out there but one of the things that I find to be, not entirely true but true a lot of the time, is that a lot of employees … and in some companies and in some situations most of the employees … They’re not working really hard to be the best. They’re working really hard to not be the worst. So the bar … In a company with a number of people it’s very difficult to get everybody to be shooting for that high bar. We work on it all the time. I think what happens is your lowest common denominator is going to be your bar, you’re going to be better than that.

So I think having something that’s quantifiable, to say, this is the expectation. And then setting the top producers by themselves, say, here you go. I think one of the mistakes … Everybody hears the cliché, you want to ruin a great salesman, make him a sales manager. Well, it’s true with a lot of functions. You have somebody that really produces well, and so their reward is to manage other people. What we’ve seen happen numerous times is their productivity goes down and you’re not getting that multiplication. The helpers don’t ever get as good because they’re helpers. They’re there to assist or do what the manager tells them.

So making sure that we have independent measures of what people do is something that we strive for. I forgot the other part of the question.

Doug Hall: I’ll come back to that but you got me going on something here. So when you’ve gone through that failure mode of taking a great producer, whether it’s a production line worker becoming a lead or supervisor, or whatever it is, have you found success in backing off of that and just enabling them to be a leader on the floor? To support them better? Is that the reaction you’ve found that works? Rather than try to stick them into management?

Gene Kettler: Well, yes, we’ve done that, and that’s a much better model. I think what we’ve been trying to do now for several years is, hey, the term manager, it doesn’t necessarily mean boss. We want to make sure that our culture is one where the manager is the servant to the producer, not vice versa. The manager is there to eliminate obstacles so that the person that’s actually producing the product is able to work smoothly and efficiently.

And I think building that attitude, it takes some of the glamor out of getting the title manager. And I think the other thing is in terms of reward, our managers aren’t necessarily rewarded any greater than the top producers. They may be, depending on what their responsibilities entail, but manager means that you’re responsible to manager that group of people. And that means making sure they’re effective. The most effective managers are the ones that truly support their staff.

Doug Hall: I think that’s a huge revelation for you guys. And the fact that you’re living it out is awesome because I’m 100% in agreement with you. The servant manager just seems to work just so much better than them trying to be the boss. Right?

Gene Kettler: Yeah, being the boss isn’t all that great sometimes.

Doug Hall: No, it’s really not. It’s really different horses for different courses, right? You want people that are gifted at supporting as managers, and people that are gifted producers.

Gene Kettler: Yes.

Doug Hall: And let them help each other.

Gene Kettler: That’s a great point. It’s a great point.

Doug Hall: Awesome. So the other thing was do you have any stories, kind of like words to the wise of management techniques that you tried that failed? I don’t want to put you on the spot. We all try different shiny objects right?

Gene Kettler: Yeah. I would say probably the most impactful have been bonus programs or commission programs for salespeople that are tied into everybody else’s success. I know a lot of businesses function differently. But salespeople ultimately aren’t really successful unless the product that they are selling is done properly and effectively, and the support of the sale is there. We have made the mistake a few times where we’ll bring in a salesperson and offer tremendous incentive for them to go out and get a whole bunch of business. But it’s short lived because either they’re selling under market. You don’t find out until the job is done. Or they’re out selling their support and so the reward needs to be on not getting the job, but on completing the job.

If we need to go close a deal we can leave that to the few people that we already have. What we’re really looking for are people that can make sure that it’s done properly. We don’t need to have any super, great line to convince people of what we do. We’ve got a long resume of successful projects and happy customers. So we don’t really need that. What we need are people that know how to make sure that what they say is followed up on.

You know I think the other thing for me is just the management technique that doesn’t work very often is the top down management. The best success that I’ve had is when I’ve made sure the person that I’m working with is bought in, or better yet, that whatever we do is their idea. Being a great listener is usually a much better, or effective way I feel, of managing and getting the most out of people than being a great talker.

Doug Hall: Those are excellent insights. I agree. I’ve seen that in other businesses too, even more transactional businesses. When your salesperson has a comp plan that’s out of phase with the whole company bad things happen. And when they’re aligned with your final result good things happen.

Gene Kettler: Yeah I think that’s true.

Doug Hall: You’ve lived it out.

Gene Kettler: But yeah, I mean I still, I’m sure I still make a mistake or two or three a day. Circumstances change and so the reaction to those circumstances needs to change too.

Doug Hall: Yeah, and you’re active in doing your thing so you’re going to make mistakes. So that’s a good thing.

Gene Kettler: Yeah.

Doug Hall: So in kind of summing all that up. In the context of what we talked about today, what’s sort of the number one or two things, the top things that come to your mind. If you’re talking to somebody that’s younger in the construction industry or building a business in a more general sense, what are the top one or two or three things that just your advice, your best advice to them.

Gene Kettler: Oh, boy, I’m not a big advice guy because I’d hate somebody to take my advice.

Doug Hall: And come back and blame you.

Gene Kettler: And say, hey, man your advice really sucked.

I can say that for what I feel, the reason that we’d had some success is I always goal set through the goal. I think that with me, and I believe with most people, there’s a tendency of kicking back a little bit once you’ve achieved a goal. And I think when you do that you lose tremendous amounts of energy. It just slows your momentum down. And so as soon as we start getting close, I move the goalposts back.

Doug Hall: Good for you.

Gene Kettler: I think that’s critical to growing a business, to getting better. It’s a never being satisfied. I think just snapping back quick from failures, things that go wrong. It’s probably going to happen. I would guess that it’s pretty unique to have any type of an enterprise where you don’t have some serious setbacks. And just knowing that you’re okay and you’re going to come back from it and being relentless in pursuit of that vision is, I think it’s necessary. I just think it would be very hard to be an entrepreneur and not have thick enough skin to put setbacks or failures behind you very, very quickly. I think that’s probably as important, if not the most important trait that’s needed in building a business.

Doug Hall: Sounds like sound advice. Thank you.

Gene Kettler: Oh, you bet.

Doug Hall: So if people want to know more about Frontier Door and Cabinet, what’s the best way for them to check in on you guys?

Gene Kettler: Well, we do have a website although it’s probably where we have been remiss. We just set it up. It’s not great yet, but we’re going to make it great over the next year or so. We’ve brought in a web designer to help with that. But you could certainly go to the website or anybody that wants me, I love to talk and share about our business. I’m more than happy to. They can contact me personally at the business and I’d be happy to talk with them.

Doug Hall: Great. Folks that’s frontierdoor.com as you would imagine. And I think Gene’s a little modest. I’ve got the website up and it actually looks pretty sharp. There’s some pretty little images there of projects you guys have done. So I think you’re being a little too modest, Gene.

Gene Kettler: I appreciate that. I appreciate that. I’ll take that as a compliment and say thank you.

Doug Hall: You’re welcome. And I thank you for being on my podcast today. I appreciate your insights, the time you spent with us. And I believe you’ve shared some wisdom which people can take advantage of. So thank you, Gene.

Gene Kettler: You bet, Doug, and I’ll look forward to seeing you soon.