2022 Annual Letter: The Stories That Inspire Us.
Comprised of 5 companies and 50 employees, Decada Group is united by a passion for craft and a sense of responsibility for building and cultivating small businesses in Utah.
In every case, this means staying true to the visions that founded our small businesses. We invest in people who are passionate about their work. We build value by helping our operators with tactics and their long-term strategies. We provide them tools to be lean, responsive, and adaptive. We help to scale and to automate. We advise on technology. We help build teams and culture.
And we believe the results speak for themselves. In 2022, our second full year in business, our holding company scaled by 3X, growing our revenue by 260%. We brought on 25 new employees. Compared to 2021, we made fewer acquisitions (Tatton Baird Hatters, in November) but we grew faster.
This time last year, I sat down with my good friend and partner in Decada, Adam Malmborg, and we wrote our first annual letter. It chronicled the entrepreneurial frenzy of a company having just completed our first year in business. We had just acquired three small companies that year with huge potential — Workshop SLC, Built By Design Construction, and Northern Electric Company — and it was a year of breakneck growth and setting the stage.
If 2021 was a year of growing through acquisition, 2022 was a year of growing through building and refining. Growth is hard, and hard times make you think about what really matters. And what matters is this: community and growth can go hand in hand. In fact, it might be the only way forward.
In this second annual letter, Adam and I explain the role local business plays in America, how its very existence is at risk, and our vision for Decada as a steward of remarkable small businesses in Utah. We believe the best way to share this is to talk about our team and to tell their stories.
At the center of it, Decada Group is a collection of stories. Stories about founders who fought and won their place at the table. Stories about talented professionals who, out of a passion for small business, put blood, sweat, and tears into helping build something great.
This year’s annual letter is a bit unconventional but it would be impossible to give the full picture of our organization without telling these stories…without talking about the people behind it all, and how they got here. Below is our 2022 Annual Letter – thanks for reading.
Small business, big impact – what it means to be a community asset
Nobel-prize winning American economist Milton Friedman once said, “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.” His theory of business ethics clearly outlined his stance: business is here to make money; everything else is incidental.
Over the past few years, I’ve had the privilege of sitting with hundreds of business owners and hearing their stories. Stories which indicate, strongly, that few if any small business owners would agree with Friedman. His philosophy doesn’t address the role small business plays in the local economy, if not the cultural milieu, and the raw gusto that ignites the founding of most of these businesses in the first place.
This gusto is the true engine of entrepreneurship, and our economy: small businesses are responsible for two-thirds of net new jobs in America and represent 44% of economic activity (Small Business Administration). Communities with strong small businesses see more dollars circulating locally, better wages, more tax dollars, and consumers benefit with better priced goods and services.
Friedman would approve of that much at least. But most small business owners would suggest that there’s much more to it all than increasing profits. Small business, after all, is challenging. And entrepreneurs take the hard road for a reason.
This has been evident in every company we’ve acquired and in every hire we have made.
In 2020, we started talking with the owners of Workshop SLC, our first acquisition. What we found was a small business that was incredibly beloved by its local community and the fine art scene in Utah. Workshop SLC offered something that, without them, simply wouldn't exist.
Their founder, Lucia Heffernan, had started Workshop SLC because, as a professional artist herself, she was constantly pushing herself to hone her craft, and to immerse herself in expert technique as instructed by some of the best artists in her field. This wasn’t available in Salt Lake City. It was a New York thing. A Florence thing.
So she hired a talented general manager, acquired studio space, and bought some easels, leaving a room open for a classroom. Then she brought New York and Florence to Salt Lake City. This wasn’t about money. This was purely a matter of artistic drive, and in the process Heffernan and Workshop SLC helped further establish Utah in the art scene.
This same story is echoed, each in its own way, by the other companies across our collection. Tatton Baird Hatters was formed to preserve an old-world craftsmanship that had all but faded in hatmaking. Built by Design’s founders wanted to buck Utah’s trend of homogenous home building and create something design-forward and intentional. Tim Komlos of Northern Electric wanted to offer a more friendly, more dependable neighborhood electrician. Emphasis on neighborhood. And Adam and I founded Tailor Cooperative out of a desire to build a destination custom clothier that simply made better suits.
Case by case, these are businesses that just cannot exist without planting a deeper taproot in the community they serve.
The formula doesn’t always pay off. But done with intention, the community takes notice. There’s often more demand than one expects for well-crafted hats, personally-tailored clothing, design-forward construction, and an electrician you can count on.
For Workshop SLC, the proof was immediate. Internationally-acclaimed artists like Duane Keiser, David Shevlino, and Sarah Sedwick, all flew to Utah for several-day masterclasses on oil painting, still life, and landscape. The workshops were a hit. Students filled the room – and even came from neighboring states to spend the day painting alongside some of today’s most renowned artists. Workshop SLC had struck a chord.
Some businesses have a deep connection with the real people who live on the same block, in the same neighborhood, in the same town … or even people worldwide who share the same passions and interests. At Decada we have a term for this: we call them community assets. Community asset businesses fundamentally change their communities for the better.
Few if any large corporations can establish the level of understanding and trust that can be achieved and cultivated by a small business. Community asset businesses play by a distinct point of view – the Friedmans vs. the local proprietors.
When we bought Workshop SLC, we knew something incredibly valuable was at play, beyond profitability. Our team injected cash, upgraded the building, implemented a brand refresh, and plugged in some technology–all critical functions and part of our core makeup–but the most important thing we did was work to support her general manager and help her step up to the plate to lead the organization forward and begin to write the next chapter.
Two years later, the business has grown 430%. The team is larger, we have multiple disciplines now being taught, and while there’s still so much work in front of us, Workshop SLC’s mission, and community impact, is just getting started.
Now more than ever, that community impact is crucial. Companies like Workshop SLC exist all over the world. They are patronized but also they are cherished. There can be no doubt that small business is beyond important. But there’s a problem – it’s on the decline.
Floating payroll and wearing too many hats – small business on the decline in America
Owning a small business has never been easy and it’s only getting harder. The number of new companies as a share of all US businesses has dropped 44% since the 1970’s (The Kauffman Index).
Large multinational corporations, by contrast, have seen their share of the economy increase by 15% over that same timeframe (Harvard Business Review). They have more capital to invest in technology, out-innovate, and out-earn small businesses. Last year, Amazon reported a staggering revenue figure of just over $502 billion. Apple reported having $90B of cash on hand. Meanwhile, half of small businesses only have enough cash in the bank to last 27 days.
Tim Komlos, who sold Northern Electric Company to Decada in late 2021, has recognized this gap all too well.
I first met Tim over a beer and he was a friend right away. His love of Northern Electric and his people permeated all of his battlefield stories. He started his company in 1995 from the back of his trusty Dodge Dart, and in the years since had turned Northern Electric into something great. But it was a hard-won victory.
Tim spoke about building his company one day at a time — how he’d grown his team, was able to offer benefits, and was an in-demand electrician. But his expertise and his passion couldn’t anticipate downturns in the market or the unpredictability of life. When The Great Recession came, it was not on his radar. Why would it have been? And as a small business he was less prepared for it than large corporations with full coffers. This meant floating payroll on a personal credit card. It meant betting the farm in a time where there was little to no certainty.
Small businesses being cash-starved is nothing new – it’s a classic knife-in-the-gut for local proprietors. But now things are getting more complicated. The modern era has many new ways to twist that blade. Proprietors have to respond to all threats more quickly and with greater complexity. They have to be more digital, more global, and more modern. All while balancing the daily responsibilities that have not gone away.
Tatton Baird saw the same troubles as Northern Electric but in a different Era. Tatton’s founder Chandler Scott, a talented milner, had been hand-making custom hats in Springville, Utah for over a decade when COVID-19 arrived. Demand for custom hats dropped sharply as the pandemic spread and the world was presented with an outlook far grimmer and far longer of term than it had seen in decades.
Large corporations responded to COVID immediately – new budgets were created, supply chains shifted overnight, and marketing efforts immediately re-positioned. Small businesses couldn’t move that fast. Chandler had always juggled his multiple roles, but suddenly he had to juggle much more, much faster. This meant less time making hats, and more time trying to figure out inventory, update clients on wait times, find new suppliers, and navigate a frenetic digital landscape.
It hadn’t always been this way. Hatters of the 19th century certainly had their problems but they never had to set aside the mercury or stop pouncing fur to build a website. Entrepreneurs today face a very different world. Everything simply moves faster. The same old challenges are magnified. And they’re already spread thin.
It would be a mistake to say that the entrepreneurial spirit is waning – it’s not. Small businesses simply have less cushion to absorb shocks to the market and competitive assaults from multinational corporations.
In both Northern Electric and Tatton Baird’s cases, things worked out. But not everyone can do that. Sometimes the funds run dry and the cards are already maxed. Having both access to that capital, and ample bandwidth, are important, and there are times when small businesses can’t even coast into town on fumes.
All of this strikes at why Decada exists in the first place: to solve these problems disproportionately impacting small businesses. To help absorb change and systemize what we can. But at the same time, we have to do that while preserving the business as a community asset. That’s where stewardship comes in. And stewardship requires the right people.
What stewardship means to us – building a team to carry the torch
The nuts and bolts of how Decada operates are simple. We provide operational support and shared services so that it's easier for a business to focus on its core offering. We handle the rest: HR, marketing, financials, and other back-end functions.
While all of this is critical, it isn’t where we make our biggest impact. That, rather, comes from bringing in the right people to carry the torch.
Businesses sell to new owners all the time. This is almost always a highly disruptive process, and one that can be painful. It can change the business itself, drastically. When this happens, the new owner either hasn’t recognized the drive and direction that was established by the founding owner, or simply has something else in mind. While it can certainly be a positive change, it often isn’t. And it’s about to happen at an unprecedented level.
In 2023, and fairly consistently for the next 15+ years, about 10,000 baby boomers will retire daily in the United States. This generation was perhaps America’s most entrepreneurial generation: 7 million small businesses are owned by baby boomers – and many will be transitioned to new owners over the coming years.
What that means for the next generation is that we have hard work to do, to ensure that the torches get passed without the original, founding vision being snuffed in the process.
This means finding the right set of hands to carry that torch. It means taking care to steward the business properly. Doing so is one of Decada’s chief values. Thankfully, we’re not alone.
As the previous generation retires, a new one steps up to the plate. Running a small business is an incredibly fulfilling proving ground for the next generation of entrepreneurs. For many, a career in small business is empowering and fulfilling in ways that the corporate mechanism simply can’t offer.
It’s no coincidence that in the past five years, the amount of university-level courses on Entrepreneurship Through Acquisition, as it’s called, has increased as quickly as it has. More and more MBA students are turning to small business over, say, Wall Street or consulting, than ever before. (It’s no surprise the book Buy Then Build, the HBR Guide to Buying a Small Business, and Stanford’s Primer to Search Funds were all published after 2016).
This movement, if it can be called that, has inspired thousands of entrepreneurs to start taking small business seriously again. And it’s what has allowed us to recruit and develop a phenomenal team.
Before joining Decada, Michael Fairchild, our President of Tailor Cooperative, had an incredibly successful (and fast-paced) career as a director of operations for Live Nation. He oversaw the massive corporation’s venues in Las Vegas, San Diego, Anaheim, and Hollywood. It was an impressive responsibility but the playbook he’d been given left no room to innovate. His team was a cog in a 10-spoked wheel that turned the same everyday.
When Michael found a Decada job posting, he wondered what a small company could offer someone as driven as he was. He reached out to us, and Adam and I set up a meeting and laid out our vision. Michael got it right away. As he puts it, not only did he see a great team and a good product, he saw something big in this small company, something inspiring, and he wanted to help it grow.
So he packed up his family and moved to Utah to lead Tailor Cooperative through its next chapter. It wasn’t easy — he had to learn a whole new industry, he had to earn the trust of his of employees, and manage a business that was increasing daily. In those early days he leaned heavily on the Decada team. But now, after two promotions, he’s growing Tailor Cooperative and was tasked to take the lead over our acquisition of Tatton Baird Hatters – a first in his career.
Michael is smart and dedicated but he had seen first hand how easy it is to get lost inside a large corporation. No matter how driven or talented you are, corporate barriers keep you limited. And if you believe like I do that career fulfillment comes from applying your full skill set to overcome challenges and produce real change and growth for a company, the corporate world leaves something to be desired.
For Decada, stewardship means hiring people like Michael. People of talent, skill, and passion who want to dedicate their professional time to growing and strengthening a piece of the community. The businesses we buy will always be small outfits in a way. But they have more resources. Our people believe in what we’re doing, believe in balance, believe in working hard and enjoying the work they do every day.
Michael’s story represents the stories of so many of our incredible leaders across our collection of companies: Caitlin, Tony, Logan, Lucia, Kaori, Lindsey, Jeremy, Jared, Chelsea, Kevin, Katie, Chandler, Tommy, Josh, Marcela, among others. We invest in the people who lead our great companies, and we aim to challenge them, develop them, and help them succeed – personally and professionally as they grow with us into our first decade.
It’s a reminder that small business is anything but small: it impacts many lives, gives purpose, and provides a living in the best possible way. That’s our North Star. Decada, after all, is a small business too.
What comes next - compounding gratitude and grit
There is one more story that I can’t leave out. Decada’s own founding stretches back to a hike Adam I took years ago in Capitol Reef National Park. We had taken the trip without an idea to go into business together, but knowing full well that the desert air and the clear stars have a way of inspiring. After two long days on the trail and dreaming big, Tailor Cooperative was born.
Years later, in March of 2020, a 5.7 magnitude earthquake struck Salt Lake City. That morning, Adam and I rushed to meet at Tailor Cooperative to pick up the broken glass from our mirrors and display cases. It was hard not to feel vulnerable. It was hard not to despair.
What’s worse, COVID was in full swing. Even as we literally picked up the pieces of our own business, we watched as long-term staples of our community went under. 30% of “main street” business shuttered. Many never returned.
Tailor Cooperative survived, and the experience shaped how Adam and I look at small business. What we know now is that, through small business, we want to build a better, richer, and more vibrant version of Utah.
The process of company building is challenging. There are tremendous highs and countless lows. But Adam and I are so grateful to our team, who remain hard at work in a long-term game contributing to Decada’s mission. 2023 will be a year of continued investment in the multi-decade horizon ahead.
In our industry, this kind of day-in, day-out effort is often referred to as compounding. Daily, regular improvements without a lot of fanfare or exciting milestones can seem small. And after an era in which venture capital and the technology sector has taken our economy by a storm, it’s profoundly underappreciated. As physicist Albert Bartlett put it: “The greatest shortcoming of the human race is our inability to understand the exponential function”
Or as Charlie Munger, the reigning sage of all holding company wisdom, put it: “Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things.”
Said simply, we keep our heads down and our feet moving. And these things, compounded as they are, further a set of stories that we’re proud to tell.
To our operators and their management teams: thank you. You’ve seen the challenges that come from working with such a fast-paced, young holding company. We’re far from perfect and we’re all learning on the job. Yet you push through. We're inspired by your passion and the size of your goals.
To our sellers who put their trust in us, thank you. We are hard at work creating a better holding company every day.
At some point our team will look up from the daily compounding and realize we’ve accomplished something remarkable. We’ve done what we set out to do and have helped create the kind of city we hope to call home. We’ve carried the torch, and we’ve developed our eclectic and charming businesses with sound principles and steady hearts. We’ve gone into it all with the long game in mind and we’ve seen it through over decades. Hence - Decada Group.