2021 Annual Letter: Year One
Our First Annual Letter
It’s tradition for firms like ours to publish an Annual Letter. Typically these letters are written for current or prospective investors – of which Decada Group has none, nor do we plan to.
We are, though, surrounded by a number of people who have made a bet on Decada in some fashion. Whether it’s the soon-to-retire small business owners who have placed their legacy in our hands by selling to us, or the now 38 team members across our portfolio building their career inside a Decada company, or the leaders and employees of future Decada companies we hope to one day recruit, we feel a certain responsibility to share our vision for what we’re building and the work we’re putting in to get there.
Today’s economy brings an impossible labor climate for small businesses. Some have called 2020 and 2021 The Great Resignation, where millions of employees have quit their jobs, drastically changed their careers, or left the workplace entirely in search of more fulfilling pastures. Small Business has always struggled to recruit and retain great talent in competition with larger companies. Today, it’s even more difficult.
We believe this makes it all the more important to lay out a clear vision behind what we’re building at Decada Group, and why we think others might find purpose and fulfillment in joining us to help create the world we are working to shape.
Although much of what we do at Decada is behind-the-scenes and in support of the small businesses we own and operate, the vision for our small holding company will be increasingly present as we grow.
We believe Decada to be a practice in building great, resilient small businesses. And we believe being a Decada company makes our small businesses better, and if we execute our vision it will make our community better too.
2021 was Decada’s first full calendar year in operation. And it was a busy, decade-defining year for us. We grew our portfolio from one small business to four: Tailor Cooperative, Workshop SLC, Built By Design, and Northern Electric.
All companies but one can call 2021 their best year to date by any financial measure. (The one had a remarkable year too, among the best in its nearly 30 year history.) But more than our short-term financial performance, it’s the long-term work we forged this year that we’re proud of. Rightly so, as our firm name itself is a nod to our belief that the best companies think and act in decades, not fiscal quarters.
It’s our patient vision that if we hold to our values and stay long-sighted, Decada will have a collection of twenty masterpiece small businesses in Utah in twenty years.
A life project must start somewhere, and for Decada ours truly began in earnest in 2021. This Annual Letter journals our progress against our vision, how we make decisions, and where we are headed as we start our first decade.
So let’s begin. Thank you for reading.
Looking back on 2021
The COVID-19 pandemic had a hand in permanently shuttering thousands of small businesses across America. Of those left standing, many had to make painful layoffs and budget cuts, then hunker down to weather a storm whose duration is still uncertain.
Being on the front lines of small business during this time has cemented certain values and an outlook rooted into the core of what Decada Group stands for.
The importance of small business itself, for one. We prefer a world where there’s more locally-run businesses, and fewer monolithic, mega-corporations like Amazon, Wells Fargo, and Comcast. More Davids – fewer Goliaths.
The pandemic also forged within us a value of resilience, durability, and diversity. And the importance of having the right people and cool heads in times of crisis. And importantly too, the community stewardship all small businesses have to their people and to their neighbors.
Adam and I began 2021 with one small business: Tailor Cooperative, the luxury custom clothier we founded in 2016. It’s the epitome of a great small business in our eyes. It was founded with an initial investment of just $750 and its growth has been funded entirely by its own cash flow. Each year TC has grown predictably by making small, constant improvements to create a better product, evangelist clients, a passionate team, and strong and predictable financials.
As we grew TC, our passion for small business itself was the flame that burned brightest. We believed we had created a style of operating that worked for us. And as the pandemic spread, we watched it brutally hit industries disproportionately, creating an acute desire for Adam and I to diversify.
Said another way, we founded Decada Group because we’re damn passionate about small business, and want more of it. We see Decada as a “small business laboratory” where we can tinker, create, grow, and empower a collection of well-run companies.
So in late 2020, Adam and I formed Decada Group and made it Tailor Cooperative’s sole owner. We bought a whiteboard and leased a small office and began working to articulate our vision: to create long-sighted and intentional holding company focused on the practice of acquiring and building community-centric Utah small businesses.
Our plan is to hold each company forever, with no intention to sell. And to run each as a lifestyle business – invest in growth, but not for growth’s sake and to operate with a motive beyond profit. To center each business in long-sighted core values, and hire great leaders for each company who we genuinely enjoy working alongside.
Life’s too short not to enjoy the process, and building exceptional small businesses in our white whale.
To begin our journey, we recruited and relocated Michael Fairchild from California, who serves as Tailor Cooperative’s talented General Manager. To this day, Tailor Cooperative continues to produce free cash flow that we gainfully redeploy with appreciation into the best long-term opportunity we have, including funding the formation of Decada and the three acquisitions we would complete in the coming months.
It was during one of those whiteboard sessions in our new, under-air-conditioned office that my wife shared some exciting news that began the next chapter of our journey: the small business where she was General Manager was looking to sell.
Our First Proving Ground: Workshop SLC
Workshop SLC is a beautiful business and, to its customers, a Salt Lake City community asset. As a fine art workshop it rents out private studio space much like a WeWork, and its front classroom hosts various classes and workshops to aspiring artists of all levels of experience.
Lucia had experience operating the business which helped us get past the initial fears that come with a first acquisition. We were propelled also by our belief that it was a business that was underinvested in and thirsty for a focused strategy. We saw areas where Decada could immediately support to breathe new energy into the building, the community, its brand, customer acquisition strategy, and daily operations.
So in February, we acquired the small business and its real estate from Ron and Lucia Heffernan and we got to work.
In our first 30 days, we invested more in sales and marketing than Workshop SLC had in its entire history. We overhauled the classroom, produced a proclamation video, re-launched the website, and fine-tuned the product. In the years prior to our ownership, Workshop SLC had hosted fewer than 25 workshops. In 2021, Lucia scaled up to over 200.
By the end of 2021 we had 4x’d the business: revenue was up 400%+ from 2019’s pre-pandemic levels. Hundreds of student artists showed up, and they inspired us to keep building despite the headwinds brought by the pandemic. This was a lesson learned from our first acquisition: taking the leap is the hardest part, and when you work hard against a focused plan, people show up from all corners to support. From the hundreds of students attending from 13 states, to the instructors who came to teach from all over the world, to our small and focused team, Workshop SLC saw new levels of energy take hold.
The momentum we have going into 2022 is palpable, and we can’t wait to watch Lucia thrive as we support her in more and better ways while we grow alongside her.
With Workshop SLC growing, we leased a bigger office for Decada and hired Josh Webber to lead our marketing efforts while Adam and I got to work searching for the next addition to Decada.
Entering the Trades with Built By Design
One of the first Built By Design tiny homes / ADUs in Salt Lake City, Utah
Adam and I are long on Utah. We love our state, and we’re excited by its growth, increasing diversity, and rising presence on the national stage as a great place to live and work.
We see Utah’s growth translating to strong multi-decade demand for the trades – an oft overlooked, but significant swath of the small business landscape. The construction companies, framers, electricians, plumbers, and architects that underpin our state’s growth. And when we think of a diverse portfolio that is recession resilient, we can’t think of a better industry.
We first met the founders of Built By Design over beers. In three short years, Jeremy Higginson and Jason Coulam had scaled up from nothing to what was now a multi-million dollar construction company, and like us, they had a dream of acquiring multiple trades businesses so they could drive consistency across their construction projects.
What began as “sharing notes” quickly became spirited whiteboard discussions. Then whiteboards became spreadsheets and financial models. And in October, we officially partnered via joint venture, thus welcoming Built By Design into Decada Group.
In our press release, we shared our vision for establishing Built By Design as the undisputed leader in micro-housing: crafting intentional, mindfully designed tiny homes and ADUs that alleviate the very challenges Utah’s growth is creating, like home affordability and housing shortages. Beyond micro-housing, we will continue to carve out our niche as a boutique, luxury home builder.
Our team at Decada had to prove agile. We had just learned the fundamentals of fine art instruction right as we were getting thrown into the world of construction and its supply chain problems, material shortages, and high demand for workers in an already shrinking labor pool.
But the operating rhythm from our first two small businesses snapped into place, and our team immediately got to work professionalizing Built By Design: we quickly implemented a new CRM and financial system, overhauled hiring practices to onboard two construction industry veterans, adopted a new project management rhythm, and began a brand refresh…efforts that we believe will help BBDC further differentiate itself and shift up market.
And our first trades acquisition opportunity arose earlier than expected.
Our First Trades Acquisition: Northern Electric
Jeremy Higginson, Tim Komlos, Chase Murdock, and Adam Malmborg at Northern Electric Company’s office.
Since July 1995, Northern Electric Company’s owner Tim Komlos has run a high-integrity electrical services small business in South Salt Lake. Across two crews and four electricians, they have completed major new construction electrical projects for some of Utah’s finest staples, like The State Room, KRCL Radio, Liberty Heights Fresh, Stoneground, Water Witch, Garage on Beck, and thousands more residential projects.
One of its largest clients happened to be Built By Design Construction, whose custom homes and ADU projects kept their electricians busy throughout the year.
When we learned Tim was planning to retire, we saw Northern Electric as a perfect fit for our vision. As a 27 year old business, it has proven durable. As a utility service provider, it was recession resilient. And as we got to know the team, we knew their culture was aligned to our founding principles.
Before meeting us, Tim had engaged other prospective buyers over the years. But none had seemed like the right home because they either lacked the vision he believed NEC still deserved, or because it was a competitor, likely to dissolve the brand and harvest the customer list.
We were uniquely insistent on keeping his people, his brand, and his way of operating. We wanted to buy Northern Electric because it was a good business already, and it didn’t need layoffs, reorganizing, or a pivot in strategy. Instead, our plan was to promote its 10-year Master Electrician Scott Bonin to General Manager and empower him to lead NEC into its next decade, with us supporting him in the back-end functions of the business.
As we met with the team, we heard that they were open to change in areas that made them more productive, like abandoning paper forms for digital. And possibly, they said, a refreshed brand, with better branded trucks, company shirts, and a more modern website. Bingo, our forte.
We closed on Northern Electric in December, and already 2022 is looking to be a fine beginning to NEC’s second chapter.
Looking Ahead to our First Decade
Decada Group’s new office, in May 2021
2021 was a remarkable start to our first decade. At this time last year, Adam and I were still struggling to articulate our vision for Decada Group. So while we have come a long way, I think back on many discouraging moments. Times when it felt like an acquisition was about to fall through, or when a key employee chose to leave for another opportunity, or moments when we wondered if we were going about our plan all wrong.
In many of these moments, I’d look to Utah’s cherished community asset, the Larry H. Miller Group. For over forty years and across 80 companies including the Utah Jazz, Salt Lake Bees, Megaplex Theaters, among so many others, LHM proved that a long-sighted holding company can be a vehicle for much economic and community good.
Over the past few years, the Larry H. Miller Group has begun sunsetting and selling off many of their business ventures. As Gail Miller begins a bold, new philanthropic chapter for their family, we sometimes wonder if this means the clouds are parting to leave room for another community-centric holding company in Utah.
Last year, Utah was named the second-fastest growing state in the country. The economic climate is burning hot too, with low interest rates, high inflation, and lots of cash roaring through the economy. For Decada, each of our four businesses are profitably generating both growth and cash, so accelerating our growth is an alluring temptation as the world emerges from the pandemic.
But we’re in the early days of Decada Group. And our vision is patient.
Holding to this long-sighted value is our strategic-edge: we aren’t beholden to the sirens of the market or the short-sighted mindset of investor-owned businesses.
So in 2022, we plan to focus on our core. 2021 was about setting the stage and selecting four great businesses to invest our capital and time into. 2022 will be about seeing through those capital and time investments to build remarkable, durable organizations.
Our patient vision is to have a collection of twenty masterpiece small businesses in Utah in twenty years. And we only get there through patient, disciplined progress.
As we begin a new year, our sights are set on our people, our community efforts, and operational core. This year will be a year where we can strengthen the interconnective tissue between our businesses.
For example, in early 2022 we launch Decada’s mentorship program, where an employee from one portfolio company will be paired with another in a different business, creating a mentorship pair to support career development inside Decada Group. One day, I hope a senior leader at Decada can say they got their start in an entry-level role in one business, then joined another Decada company to enter mid-level management, before taking on a GM role at a newly acquired company.
This year we will also further our Give Back & Community efforts. Last year, we politely asked that each operating partner set an annual budget, even if small, for philanthropic work and engaging more in the community. Tailor Cooperative made, then donated, over $30,000 in custom suits for individuals rebuilding their lives after incarceration, and Workshop SLC taught art to LGBTQ youth and troubled teens. In 2022 we will host our first portfolio-wide volunteer day, and expand our give back efforts further.
For the first time, we’re beginning a year with strategic plans in place for each business, the capital we need to invest in our long-term outlook and weather new storms, and strong leaders in place for each small business – all of whom have an ever-present chip on their shoulders to prove Decada’s long-term mission out.
For as long as I can recall, I haven’t been this excited about the beginning of a new year. And I’m grateful to so many who helped shape the early days of Decada.
In closing, I want to thank my partner Adam for his tireless positivity and hard work. Working alongside a best friend is a life privilege I’ll be forever grateful for. Parlaying that into now working with my wife in her dream role at Workshop SLC is an even greater privilege. For her constant patience and passion, I’ll also be forever grateful.
Adam and I would also like to thank: Dustin Cederholm, Josh Webber, Bronson Smith, Anna Wilder, Brinnley Ashton, Lucia Murdock, Hannah Blomgren, Lorie Santos, Grant Miller, Joe Wise, John Wilson, Rick Lindquist, Kaustubh Deo, Britt Colcolough, Erika Larsen, Dave and Jon Willson, Brennan Roney, Graham Thompson, Nick Fidele, Chris Tanner, Tim Komlos, and our operating partners in crime: Michael Fairchild, Lucia Murdock, Jason Coulam, Jeremy Higginson, and Scott Bonin.
And to all of the team members across the Decada portfolio, including the ever-patient team at Tailor Cooperative who partook in much change: thank you for your trust building your career with us, and for your undeserving patience during a time of so much growth.
Onward.
Chase Murdock
CEO, Decada Group