Investing in People Critical to Success
YPO member Don Daseke barely knew a flatbed from a bobtail in 2008 when he bought his first trucking company, Smokey Point Distributing, in Arlington, Washington, USA. Just a few months earlier, an investment banker friend of Daseke’s asked if he would be interested in acquiring the trucking company. Not knowing a thing about the industry, Daseke went to check it out. “I really liked the people, especially the president, Dan Wirkkala. So, I bought the company.”
Since then, guided by his business philosophy of investing in people, the former real estate and telecom entrepreneur has gone on a mergers-and-acquisitions spree to create a convoy of companies with separate identities but common ownership under the Daseke Inc. brand.
In July, Daseke acquired his 12th trucking firm in less than 10 years. M&A coupled with organic growth has expanded the parent company into one of the largest owners of flatbed and specialty trucking capacity companies in North America, with 3,500 employees and more than 3,500 tractors and 7,500 trailers. “Not a typical Wall Street model I know,” confesses Daseke, “but we’ve gone from revenue of USD30 million in 2009, to USD740 million in 2016, and we expect to surpass a USD1 billion in 2017.”
In December 2016, Daseke agreed to a USD626 million reverse-merger deal with Houston-based Hennessy Capital Acquisition Corp. The arrangement gives private companies a shortcut to issuing shares in the public market while avoiding the long and expensive IPO process on its own. “Hennessy was a public company (special purpose acquisition company) that only had cash and was waiting for a business.” explains Daeske. “It was faster than doing the IPO ourselves.”
Despite Daseke’s portfolio, the Texas-based company’s share of the market remains under 1 percent, underscoring just how fragmented the U.S. specialized trucking sector remains. It also magnifies just how far Daseke has to go before he can realize his dream of becoming the premier open-deck, heavy-haul carrier in the United States.
The magic behind the growth
Daseke’s trucking company is part of an industry that specializes in moving cargo that is too long, too wide, too high or too heavy to move on an ordinary tractor-trailer or by intermodal rail, such as airplane wings and wind turbine blades. And it’s an incredibly fragmented industry. Big players like Boeing, GE, Caterpillar and Siemens — who Daseke counts among its customers — are relegated to rely on a network of small, local providers.
“Unlike the rails (railroads), this is a very fragmented niche, characterized by hundreds and hundreds of firms that are typically family-owned companies, usually in rural areas,” Daseke explains.
His consolidation model — merging high-performance companies under one umbrella without cutting leadership or employees — has helped the company develop a national network without reducing the localized customer service that made its individual parts successful in the first place. “We take a different approach, because we’re typically looking for not-for-sale companies that are already very profitable and very efficient,” Daseke says.
“I look for well-managed companies in a niche, in which the management doesn’t want to leave and that I can mentor and provide the capital. Some of these companies have been in business for more than 50 years … why change a culture and layoff off people?”
Although his acquisitions are successful, dealing with the trucking industry’s main conundrum —recruiting and then retaining drivers — has been at the top of Daseke’s mind. This is a more acute problem in long-haul, specialty trucking that is physically demanding for drivers.
In response, Daseke recently began offering stock incentives for his drivers to give them a feeling of ownership. “Employees are much more apt to resolve issues and bring ideas to the table when they feel they are a true part of the company and hopefully stay with us. We needed to do different things to be the winner in this industry.”
Trucking into the future
At age 69, he bought his first trucking company. Today at 78, Daseke is one of the oldest CEOs who has ever taken a company public. His company still has 22 remaining nondisclosure agreements with private, flatbed, specialized carriers, Daseke doesn’t plan to sit on them. “I’m having a ball building a company in a different kind of way and I plan to be doing this 10 years from now. Future merger and acquisition activity is a given,” he says.
Admittedly, Daseke says he’s never been bored. The key? “Passion and the need to be the best,” he says. “Never quit learning. Never stop having fun and investing in people. Helping others grow will always benefit you as well in the long run.”
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