Episode Transcript
[00:00:03] Speaker A: Welcome to INA Insights, where prominent leaders and influencers shaping the industrial and industrial technology sector discuss topics that are critical for executives, boards, and investors. InA Insights is brought to you by Ina AI, a firm focused on working with industrial companies to make them unrivaled. Segment of one leaders to learn more about ina AI, please visit our website at Ww Ina AI.
[00:00:40] Speaker B: Good morning. Welcome to another episode of our Titanium economy podcast series hosted by Ina AI. Our guest today is Mr. Mike Oloski. Mike is currently the CEO of Simpsons strongtie. Simpson Strongtie is one of the world's largest suppliers of structural building products and a leader in structural systems research and technology.
The company was founded in 1956 and is based in Pleasanton, California.
Prior to serving as CEO, Mr. Alaski served as the company's COO for two years.
Before that, Mike had more than a 20 year career at Henkel, a global manufacturer of adhesives and consumer chemical products.
His most recent position there was regional president of Henkel North America and head of the electronics and industrial division.
Mike, welcome to our podcast. We're super excited to have you and are looking forward to learning more about your journey to being CEO and how your journey's been there so far.
[00:01:43] Speaker C: Thanks, Sonad, and I appreciate giving the opportunity to join the podcast.
[00:01:48] Speaker B: Perfect. So first things first, could you give a brief overview of Simpson Strong tie for our listeners who just aren't as familiar with your space?
[00:01:58] Speaker C: Sure, Nanad. So the company started in the 50s when actually someone asked our founder, Bark Simpson, if they could make a product to connect the ends of two x fours for a roof. So that was the beginning of Simpson Strongtie, and now today, we're a leading provider of structural solutions for the building and construction industry. So what does that mean? Well, that means we help people design safer, stronger homes, and we do that with three main product lines. So first, wood connectors. That's how the company started. Those are engineered stamp steel products that connect wood. So it's a variety of brackets, hangers, straps and hold downs that are engineered. And they come in a variety of sizes and different designs. And then we also do fastening systems. So these are engineered and load graded screws and delivery systems, and then anchoring systems. So these are mechanical adhesive anchors that will connect things to walls, that will connect things like walls to concrete foundations. So you add up those three product lines, and Simpson strongtie does about 2 billion in revenue than that.
[00:03:03] Speaker B: Absolutely. I was reading about your company and the different product lines. It sounds like you guys set at the intersection of a lot of different players in the construction space, from distributors to builders to building code officials, also uniting different verticals, from commercial to residential to infrastructure. Could you share a little bit more about what you guys do to unite and engage with all of these different ecosystem players?
[00:03:30] Speaker C: So our business model really connects the ecosystem. And let me talk through our business model real quick. So we are a one stop shop for a broad and deep range of structural solutions. So what does that mean? Well, we take those structural solutions and we work with engineers and code officials to help them design safer, stronger structures. We provide training and continuing education credits to both engineers and code officials on a regular basis. We've known them for a long time. We've developed with them for decades the business and that work with those engineers and code officials results in specifications. So that creates the demand for our products. And then we work with builders to pull through that demand, and we work with the builders again to help them build safer, stronger structures. And we have agreements with 300 plus builders, representing roughly 50% of the housing starts. And so they're telling their supply chains that they want to use Simpson solutions, and that helps pull that demand through the system. And then for our channel partners in between. So lumberyards, pro dealers, contractor distributors, we work with them to help support the demand. So we're providing that broad range of solutions with very high service levels. So our lumberyard and pro dealer customers, if they place an order today, we typically ship it tonight and they typically get it the next morning. So that relationship across the engineers, code officials, channel partners, and builders, that creates a really sticky relationship. And part of what we do to support those relationships is we've got a big engineering team that's working hard to develop new solutions for our customers. We've got a field engineering team that's out there working with our engineers and architects, and then we have a highly technical sales team that's out there working with our channel partners and our builders. And all of that really helps us connect the industry. As you mentioned, Anad got it.
[00:05:30] Speaker B: So you're a big player in a big space.
It requires a lot of work to do what you do and be part of the ecosystem in that way. How do you also remain nimble in light of all sorts of changes in the system for different players?
That must be a lot of work as well. Yeah.
[00:05:51] Speaker C: So, first of all, relentless customer focus. We work really hard to stay connected with our customers to make sure we understand what they're trying to do and how we can help them. And then we run our business in the US with four branches, so, meaning businesses that are regionally aligned and they are very close to the customer. And when they're close to the customer, we can respond to local needs, changes in designs, changes in supply. That helps us keep the business nimble, as you said, because we're working very closely with the customers in the particular local markets.
[00:06:26] Speaker B: So, as part of my research, I was looking at your website.
Simpsons strongtie offers pretty robust library of CAD and software resources that accompany your core products. You don't see that often for industrial good manufacturers. Can you share a little bit more about the rationale there alongside the kind of resources you have to mobilize internally to deliver that?
[00:06:50] Speaker C: So we're committed to develop really complete solutions for our customers and all the markets we serve. So, quite often, to be able to provide that complete solution, we need to offer a comprehensive suite of software, web apps, drawings, plugins that they use as part of their tool. So in many cases, these plugins are integrated into their engineering and CAD programs. And what these software and digital tools help us do, and help our customers do, is help them identify, select, specify, and engineer the right Simpson solution. So we have over 15,000 skus. And for our customers to use those digital tools, it helps make sure that they get the right solution for the right job. And that means we have a big development team, and that big development team is working on developing all of these various types of digital tools to help our customers do their jobs better.
[00:07:45] Speaker B: Got it. I'm going to go back maybe five minutes where you mentioned the business model of being part of the ecosystem in a comprehensive way.
I'm sure this business model didn't come to be overnight. It probably evolved. Where do you see that going next?
Yeah.
[00:08:06] Speaker C: So providing complete solutions and more and more structural products will continue. At Simpson strongtie, I think the part that's going to evolve the most are these digital tools that I talk about. So the building and construction industry is becoming more digital, especially the residential part of it. There's some opportunity for the industry to improve using the digital tools, and we continue to move towards building information modeling. So that's basically creating a digital twin of a house. And that digital twin would contain all the relevant digital assets about the different components and the design of that house. And Simpson is going to continue to work to support the move towards the BIM, or building information modeling approach, and a couple of examples of how we can do that. So our software that does, it's called lotspec. It helps builders manage the various models they have of their houses. So if they want to come in and they want to quickly add a third car garage or they want to add a den, our plugins into big software tools like Revit, for example, will help automate and speed up that process. And then eventually that'll help them visualize what that house looks like to the end. Consumers. We're also developing tools that help take that building information model or the drawings of a particular house and create a bill of material for it. And that bill of material helps the builders understand the costs, and it helps the lumberyards and pro dealers quote that job to the builder. So I see a lot of development around those tools that will both help our industry going forward and also help us create even better relationships with our customers.
[00:09:50] Speaker B: Yeah, as part of that, I think it's an all out effort. Right. I'm sure culture has a big part to play with. Know, in an article you published last summer, you spoke about the vibrant culture you guys have. Know, part of it was the nine principles of the late founder Barclay Simpson. They include customer focus, leadership, having fun, being humble from your time there. If you could add a 10th principle, what exactly would it be?
[00:10:20] Speaker C: Yeah, that's a tough one, because those nine principles that bark developed, or he called it his ways of doing business, which have evolved into our company values. I mean, we're living these things every day, and it's a pretty comprehensive list of values. So I don't see there's anything on top because, again, it's a pretty comprehensive list. And I'm proud to say that we're using these values as our north star. I mean, when we start thinking about where do we want to go and how do we want to get there, these values are coming up every day, and I'm very happy to see us living them on a regular basis.
[00:10:53] Speaker B: Yeah, you mentioned North Star. I was going through some of your investor presentations.
You have a very complex business culture aside, even as a business metric, how do you determine what a North Star would be for you?
[00:11:12] Speaker C: So we spend a lot of time talking about where do we see the business in four or five kind of year strategic planning cycles. And we're now talking about how do we see our business developing towards 2030. And so we take a pretty comprehensive view of that Nanad. It's financially, what targets do we think we want to try to hit, but also what solutions do we want to try to bring to our customers to how do we want to develop our team and what kind of people do we need to add, and also how do we take those nine values, and how do we make that a stronger part of our culture? And I view that as a team sport. So we're certainly talking through that as a senior leadership team. But we're also getting input from a lot of our people, from all the various functions and departments and branches to make sure that when we develop that North Star, it's a collective opinion about where we want to take the company.
[00:12:04] Speaker B: Makes sense. So I think that was a very helpful intro into the company, what you guys believe in, what you guys do. But I'd love to dig a little bit deeper into your own personal experience.
Before Simpson, strong tie, you headed several north american departments for a german based company. You also mentioned that during your Henkel tenure, you were based in Shanghai for seven years, building new plants and R d centers. Could you share a little bit more about those experiences and what it was like to operate in a different market?
Yeah.
[00:12:40] Speaker C: So it was interesting being an american working for a german company, living in Asia. I had a lot of different experiences, a lot of different cultures. And if you look back at my time at Hank and the Knott, I worked overseas for 14 years. I spent about seven years in Europe and about seven years in Asia. And it was an incredible experience for me and a credible experience for my family as well. So when I was in Asia, it was from 2008 to 2015. So this was kind of right at the global financial crisis time. And right after the global financial crisis kind of ended, I mean, the economy in Asia just took off like crazy. And the business that I was leading in Asia, we had very strong profitable growth, especially the chinese part of the business. And the two of the parts within the chinese business that were growing really strong was the electronic business. So Henkel was supplying electronic materials to all the mobile phone manufacturers, semiconductor manufacturers, and then also the automotive business. And China was really starting to ramp up their production of cars as well. So it was interesting being there, because the chinese manufacturers and then also the international companies that were operating in China, they all wanted to use western products, both for the technology perspective and then also from a quality perspective. So that meant there was a lot of demand for Henkel products. And so we were significantly investing in R D and manufacturing. And I will say the government was incredibly supportive. They have a pro business mindset, and an example is they had set up a chemical industrial park that basically provided all the infrastructure and services you need to produce specialty chemicals. And so that helped us produce materials at a lower cost, at a higher quality, because a lot of that infrastructure was set up the government was also pretty good about setting up spaces for new headquarters and also innovation centers. They helped speed up approvals. They helped find the space. They provided tax credits. So it was an interesting time to work over there, and it's also interesting to work with the government in the development of some of these efforts.
[00:14:49] Speaker B: Yeah, definitely sounds like an exciting time to be there. Just curious, was this an opportunity that you sought out? Was this something that happened to you while you were at Henkel, being moved overseas? Would love to hear. I think that'll definitely provide some guidance to some of the younger listeners of our podcast.
[00:15:08] Speaker C: So originally, I was not so excited about the whole thing of moving overseas. It was actually my wife who, believe it or not, who wanted to move overseas.
So when we went over there, we thought, okay, we're going to try this for a couple of years. And when we were there for a couple of years, we had a ton of fun. The kids went to international schools. We got a chance to experience different people, different cultures, I mean, all kinds of different things. And so after two years, we thought, hey, let's keep doing this. And then we had the opportunity to move to Shanghai. And to be quite honest, not a lot of people want to move to Shanghai. So that helped us maybe get a couple of roles or help me get a couple of roles that I wouldn't have normally been able to get because I was one of the few people that was willing to raise my hand and say, hey, I'll give that a shot. And again, personally and professionally, learned a lot. Kids learned a ton while we were there. And then we ended up moving back to Germany for a while. So I was a little hesitant at first, but I think once you try the expat life, it's pretty exciting. There's a lot of really fun things you can do. And we really had a good time. We really look back on those 14 years as a great time for us as a family.
[00:16:20] Speaker B: Yeah, I think we have a similar culture in Ina that if you put your hands up to do something, you really get that opportunity to do that.
Curious, is there anything else in your career, like a moment that stands out, that you put your hand up for something and it made a world of a difference in where you are today?
[00:16:39] Speaker C: So when I was at Henkel, I was running several businesses. I'd had a lot of sales, marketing, general management type experience. And then Hankel was reorganizing the management team, and I took on an innovation role. So now I'm an American with a mechanical engineering degree, leading innovation for a specialty chemical company based in Germany. And so there were a lot of different experiences there. And I learned a lot about new product development. I learned a lot about innovation. I learned a lot about partnering with customers and co creating and co developing new solutions that I probably wouldn't have picked up if I had just been continuing to be in a general management sales track. So that was also a pretty good.
[00:17:24] Speaker B: Experience that I had. Yeah. Would love to tie it back with where you are today. You lived abroad for several years.
Several, many different tie is Springtai is obviously a US based company based in know how. Does your experience building plants in China or helping with innovation in Germany help you in your role today?
[00:17:53] Speaker C: So when you work in an emerging country or an emerging region, it's all about trying to build scale. So it's, how do you build teams? How do you build infrastructure to support the growth? So lots of investment in people, lot of investment in training programs, additional manufacturing capacity, innovation capabilities, all really linked to having this big growth mindset. I mean, that's all you're thinking about all the time. And then when you go into more developed countries, sometimes you see more companies in more developed countries, they get a little more conservative, they invest less. So that slowdown of investment usually means a little bit slower growth, which then leads to a little bit less investment. And so that kind of starts a little bit of a slower cycle. And I tell you, one of the things that I absolutely love about Simpson is we very much have that growth mindset in a fully developed country. I mean, we're investing in our people like crazy. We're continuing to add lots and lots of training programs. We're adding engineers to help us develop new products. We're adding salespeople to help us take even better care of our customers and develop new business. We're adding capacity and manufacturing capacity and also warehouses so that we're closer to our customers, and we continue to provide great service and support. And so taking that growth mindset from an emerging region and applying that in a developed country, in the building and construction space, I think has really helped us accelerate growth. And if you look back at the growth of Simpson strongtie the last couple of years, the market has not been great, but we've grown 800 basis points faster than the market with a 20% operating income. And I don't think there are many companies that have been able to do that the last couple of years. And I really attribute that to the growth mindset that the Simpson strongtie team has.
[00:19:45] Speaker B: That makes sense. I was going to ask about how opportunities and government interactions and things like that might be different as well. But you're right. I think once an organization really embraces that growth mindset, you can really take pick and choose the best of not both worlds, but all worlds, and see how you really outperform the market.
[00:20:07] Speaker C: Yeah. And that growth mindset, once you get excited about that and you start to see it deliver, I mean, it just fuels itself and drives more investment, which drives more growth. And having that in a fully developed country like the US, I think, is different than a lot of the ways other companies think about it.
[00:20:27] Speaker B: Are there any specific ways that you try to inculcate the growth mindset within your company with all of its thousands of employees?
[00:20:38] Speaker C: Yeah, I think what we talk a lot about is how growth enables us to do a lot of different things. It's not just growth for the company top line. We talk about how growth enables us to develop better solutions for our customers. We talk about how growth gives us professional opportunities for our teams to develop, move into new roles, move into bigger roles. We talk about how growth helps us give back and how we can make a stronger impact in the communities we operate in, because we are growing and we do have the financial capabilities to give back. And I think part of that is finding the why for everybody. And the why am I doing this is different for a lot of people. Sometimes it is all about giving back. Sometimes it's all about taking great care of the customer. Sometimes it's all about the numbers. And so making sure that we're clear on that why and getting everybody excited about it, it's a big part of what we talk about every day.
[00:21:35] Speaker B: Got it.
Thinking about this growth mindset, I want to pick your brain a little bit more about where you see your industry going. You'd spoken previously about the digitization of the space and how you guys are at the forefront of it driving the ecosystem. But as you look three to five years out, how do you see the rest of the structural solutions industry changing as well? Are there technologies players changing, industry structures changing that you feel like you would need to get ahead of, that you feel you could influence?
Yeah.
[00:22:12] Speaker C: So I think that the digital part is going to be the biggest driver.
Moving more and more towards that building information model is going to be, I think, a big productivity driver and help us drive more efficiency. But I do think that there are other ways that we can continue to develop the industry. So offsite construction will continue to gain speed. New technologies like Mass timber, where it's basically big wood cassettes that are craned in a place that improves sustainability. They're great looking buildings. There's some advantages of using mass timber construction. We think that's going to make a difference. We also think there's opportunities to develop new solutions using equipment. So, for example, we made a small acquisition at a company where you can develop cut packages for job sites. So, meaning it cuts the lumber in a more of a production setting. It also prints directions onto the lumber, which speeds up framing of a house. So the technology piece is going to be the biggest driver. But there are other things I do believe that will help us progress the industry going forward. And I think Simpson is going to play a really big role in that.
[00:23:26] Speaker B: Makes sense. I wanted to check, or I wanted to ask, when you talk about a technological breakthrough, technological progress, almost everyone in the industry kind of needs to move forward at the same pace. Or there's a big difference between leaders, laggards, how do you help the entire ecosystem embrace the change? We've spoken about the CAD solution software and libraries that you have up there, but it's the small mom and pop shops that also need to be embracing this change. And how do you help them do that?
[00:24:07] Speaker C: Yeah, I don't think there's a silver bullet for that. I think it just takes a lot of people spending a lot of time trying to make sure people understand the why behind the change and make sure people understand the benefits behind the change. So we have a very extensive library of training programs. Those training programs are all about making our structural solutions easier to use. It's all about making the digital tools easier to understand and clarifying the benefit of it. So it's really being clear on where do we think we can help the industry go forward and how they can benefit from some of the changes that we're trying to drive.
[00:24:51] Speaker B: Got it. Yeah. I think, obviously, the bigger players will always be more technologically driven or have an open eye, but it's especially in the construction industry, the mom and pop shops, the average Joe general contractor, moving them along as well is pretty key to, I guess, progress your growth and the like.
[00:25:19] Speaker C: Yes. And as the next generation of workers come into that field or that industry, and they've had more exposure to doing everything on their phone and more of the digital tools, we think that will also help us progress the digital efforts in the building and construction industry.
[00:25:40] Speaker B: So in this larger quest, do you draw inspiration from any other companies, either for where they are today or what they've been able to do in the past?
[00:25:51] Speaker C: So I was a supplier to Apple for many years, and they are just an amazing company. And some things that Apple does that I think are incredible is they try to raise the bar and put it at the highest level for everything they do from a design perspective, from a people perspective, from a technology perspective, I mean, the way Apple sets the bar is, I think it's fantastic. And there's a lot of learning from that. I also really like how Apple partners with their supply chain. So they do that in a way that encourages their suppliers to put their best and brightest people on it and put the most effort towards them and creating that ecosystem of how they do that with their supply base. I think there's a lot of learnings there as well.
[00:26:43] Speaker B: Yeah, I think Apple definitely is a company that we all can learn from just for their technological work, but also how they've thought through the rest of their business.
[00:26:54] Speaker C: An amazing company.
[00:26:56] Speaker B: Yeah. So I want to bring it back to you for one last time. So, reflecting on your 20 year career, were there any pivotal moments that significantly shaped your approach to leading companies to work in general?
[00:27:15] Speaker C: So when I was working in Asia, we had had a couple of really good years, and I was doing a business review with my team, and I said, at the end of the business review, I want to hear what you're going to do with the bonus. I mean, we were having good years and we were paying really good bonuses. And Nanad, I heard some amazing stories. I heard about people buying a home when they never thought they'd be able to do it. I heard lots of examples about private education for their kids and giving them experiences to do college overseas, about taking trips with their parents who had never been out of the country. I mean, all kinds of really cool stories. And it was incredibly motivating for me. And I think it's at that point in time, I realized that it's all about the people. If you enable people to grow and develop professionally, they can help the company do some cool things. And then by making those things happen, they're able to take great care of their families. And when they're able to take great care of their families, they get more excited about doing things for the company they work at so they can keep taking great care of their families. And I think that's the part that I realized, that if you get the people and the culture right, and by the way, at Simpson, I think very much we got the people and the culture right. Companies can do some really good.
[00:28:34] Speaker B: And I think, you know, it's hard to build that into the culture. So it's great that it was an important part of your life early on, so that as a leader, you can really roll that out in all of the organizations you're part of. But I was just curious, from your perspective, you're in a cyclical market. There are good times and there are tough times. I was very impressed to read about how you've been able to outperform the market so much, even when there's been a little bit of a housing slowdown. Do you feel like having the culture where people are more bought in really helps you in that outperformance and in a way, innovate your way out of being in that cyclical space?
[00:29:29] Speaker C: The culture and the people, again, make all the difference, and I think it's having the right benchmark. So that's why when we talk about what do we want to try to do as a company, we are always talking about overproportional market growth. We want to grow faster than us housing starts. And I think what that does is that gives us a good view on what winning looks like. So, like in the last couple of years, when the housing starts have not been great, we have still grown significantly above housing starts. And that gives us a feeling of, hey, we're making progress, even though we don't have a lot of economic tailwinds. And that creates a winning culture, and people get excited about that. And at the same time, we're also saying we're in it for the long haul. So long range view is one of our values. And so even when the market has not been great, we continue to invest in the business because we think that's going to help us take even better care of our customers. And so just doing those kind of things, I think, gets everybody excited about driving future growth of the business, taking good care of the customers and what it looks like to win. And that's really driving above market growth at a very high profitability level.
[00:30:44] Speaker B: Got it. Yeah, I completely agree. I think building a long term view, building a view that you matter, building a view that a culture where you're not just reacting to the cyclicality of the space really gives people the confidence to come up with their best ideas, which in turn makes the company stronger. So, Mike, I think that was all very interesting to hear about.
I just wanted to ask you, if there was one thing you were looking forward to most in the next year, or know, on a personal note as part of work, what would that be?
[00:31:27] Speaker C: Yeah, for me, one of the things that I think is a lot of fun is getting customer awards. So over the last couple of years, Simpson has done a great job of servicing our customers. We've picked up a lot of various awards from our different customers, and I'm hoping that we continue to do that going forward, and I hope that we continue to get even more awards because we're doing everything we can to take really good care of our customers, provide them the best service and provide them the best solutions. And that's kind of getting recognition from your customers like that. I think that kind of puts a cherry on the top.
[00:32:06] Speaker B: I love hearing that only because sometimes hearing about customer awards, that's important parcel. It's different from top line growth, which industry and Wall street is always pushing you towards. So just being that customer focused company also stands out. Mike, I think this was a very enlightening conversation. It's not every day that you get to talk to someone who's behind such a critical infrastructure and industry in the country and how, despite being supplier, supplier, supplier to a consumer, you're so customer focused. Right.
I think everyone has something to take away from this conversation. I definitely do. I think what you spoke about being open to international experiences, different cultures, definitely resonates with me and definitely will be something I think about following our conversation. Good.
[00:33:05] Speaker C: Thank you, Nana. I appreciate the opportunity to talk with you guys.
[00:33:13] Speaker A: Thanks for listening to Ina Insights. Please visit Ina AI for more podcasts, publications, and events on developments shaping the industrial and industrial technology sector.
