Banking on KC – Scott Murray of LEVEL5 Tools
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Kelly Scanlon:
Welcome to Banking on KC. I'm your host, Kelly Scanlon. Thank you for joining us. With us on this episode is Scott Murray, a serial entrepreneur and the President of Level5 Tools, a company he founded in 2012, sold in 2022, and still leads today. Welcome, Scott.
Scott Murray:
Thank you, Kelly.
Kelly Scanlon:
You bought your first company in 1997, but this was after spending many years actually as an industrial engineer, working for PepsiCo, Frito-Lay, Quaker Oats, I mean, really big multinational companies. Yet you left and decided to venture out on your own. Tell us about how that entrepreneurial bug bit you.
Scott Murray:
Yeah, that's a great question. I was actually getting my master's degree via Quaker Oats at UMKC. The professor of international business, Dr. John Cleek took us on an international residency, so we were between Singapore and Kuala Lumpur. I can remember it was yesterday. We were actually sitting on a bus, coming into Johor Bahru, and I said, "This is really cool. This whole notion of international business and traveling around the world, and buying and selling products, would you ever consider selling your business?" And long story short, he had a deal going, it fell through, and went to my wife and said, "I think this could be an opportunity that we should pursue to do some things on my own." Because working in the manufacturing world, I was negotiating union contracts, I was leading big manufacturing facilities. And at a young ripe age of 37, I was already bored.
Kelly Scanlon:
So you really had this opportunity for an existing company to purchase it.
Scott Murray:
Right. And I guess I considered it from the outside looking in, it looked like a pretty simple business, and looked like something that I could do and something I could be successful at. I guess I feel like I'm more of an opportunist than an entrepreneur. I didn't take an idea from the seed and really grow it myself, but I took something that at least had a foundation and felt like I could take it to the next level. So having that, I think, made me feel maybe a little more secure. Had it not been for that, I probably likely would've stayed at Quaker Oats.
Kelly Scanlon:
Then you went on to own a number of other businesses, including an industrial coatings company, which you're still involved with, an animal, an agricultural probiotics company, and a construction hand tool company before starting Level5. And what I find so curious about those is at least at the surface level, they seem like they're such diverse businesses, and most business owners do tend to stay in one lane. Is there a commonality that we're just not seeing among those? And what is it, if there is? And if there's not, what attracted you to each one of those?
Scott Murray:
Yeah, I guess at the end of the day, I mean, my dad always had a saying, he has a picture of my older brother sitting there in a lemonade stand when he was about nine years old. And it's got a caption, say, "Nothing in business happens until a product gets sold." So the commonality was that I feel like I can sell anything as long as I understand the product, as long as I see there's a market opportunity, and then execute on the sale. So it's really about how do you sell that product to somebody in need somewhere. And then [inaudible 00:02:34] really, some of these resourced products, some of those direct manufacturer products. But that was really the commonality between those.
The other thing I would say is that early on, being an entrepreneur, and tell the story about my uncle saying, "Hey, when you buy a business, just don't change your routine. Stay there every day, no matter whether you have four hours worth of work or two hours, stay there eight hours a day." So I had a lot of idle time, so I was like a dog. I chased every bone coming down the street that I thought had some meat on it, and it got very, very broad, very, very quickly.
Kelly Scanlon:
Prior to actually founding Level5, that's a company you did found, were any of the others ones you purchased or did you take them from startup stage?
Scott Murray:
Well, the tool business obviously was one of the first businesses we had when we bought the trading company. So the guy that was running the trading company had been the past president of Goldblatt Tool Company, which was down on Osage, 125-year-old brand. So the tool business really born out of that. We created our own brand, Level5. And then other businesses like the probiotics business just came to us. There was another fellow here in Kansas City named Matt Wood, who's an entrepreneur, and he came to us and we talked about international expansion of his probiotic products. And so we had a partnership there. And really, that's really how we pursued those things, the partnerships. Jim Stuelke and I partnered up on the coatings business, so another local entrepreneur. So it seemed like once I get into that vein, whenever I saw an opportunity, I thought that we could make work, we chased it.
Kelly Scanlon:
And so the drywall tools company, Level5, that then is really the one that you started completely from scratch. Tell us about why you thought it was time to start a drywall tools company.
Scott Murray:
Yeah, well, really, it came out of a massive failure in 2009 and '10. We lost pretty much everything that we were doing in the construction tool business, which was a broader line business, and sold off pretty much everything we had. We had to really redesign products from the ground up. And the drywall tool industry seemed to be the one that had the most potential. And about the time we were looking at that business, some of our competition, one particular competitor came out with a very high-priced, high-quality product. And typically, in the trial trade business, drywall, concrete, masonry tile tools, everybody's chasing low price, low quality. And when we saw that opportunity to be higher-price, higher-quality, it's like, you know what? If we just redesign everything and commit at the top end of the market, we certainly know how to make it. We probably can be successful. So that's really what we put our foundation in 2010, '11 was let's recreate this product line in the drywall tool business, and let's do it under the Level5 brand.
Kelly Scanlon:
With Level5, you launched a business from scratch. You had previously been buying businesses. For anyone who's listening that is thinking about becoming an entrepreneur or acting on their entrepreneurial aspirations, what advice do you have for either one of those? Does it take different set of skills to launch a business, versus buying an existing one? What would you say to them?
Scott Murray:
Yeah, I don't know that it requires a different set of skills. Certainly, buying an existing business comes with some hopefully level of revenue and profit that you can begin to build off of. The downside there is that it also comes with a history. It comes with behaviors from the previous owners and whatnot that you may feel obligated to maintain, and that might not necessarily be the best path for that business. So when you start over, as we did, and started something from scratch, we were really able to craft our own path, but we did it with no money. So we really had no foundation of performance. We had some knowledge in the category, but we really didn't have a foundation.
So certainly the risk profile was different, but I felt like the level of control was higher for us. And again, I go back to when we bought the existing business, I really didn't know what the heck I was doing. It looked like a safer bet, but it took a while to shake off some of the history and the people that they've been working with. And again, the products, processes and procedures. Because when we bought this small trading company in 1997, we were doing everything from Beanie Baby knockoffs to drywall, concrete masonry tile tools to cashew butts out of India. So I mean, we were doing anything we could make a buck on to buy and sell, and that really wasn't healthy.
Kelly Scanlon:
You've said, "My story's not one of rainbow's, butterflies, and roses." Tell us about some of the personal and professional choices and challenges that uniquely prepared you and Level5 to, as you say, seize the day and win.
Scott Murray:
When you face failure like we did, it really does humble you. And I heard a long time ago, if you think the price of success is too high with you, look at the price of regret. And when you've bet your life savings, when you've put your house on the line more than once, when you've had to sell vehicles and motor homes and motorcycles, and we didn't have a lot, but we had to sell everything. And then you had a 67,000-square-foot building that was wrapped around your neck by $3 million worth of inventory, all of a sudden, that burden comes down on you. And literally, the 67,000-square-foot-building that we couldn't sell, because it was 2010, and if anybody recalls then, the housing market was a disaster. The real estate market in general was a disaster.
I walked around that building many, many days, just thinking, "What in the world have I done? I put my family at risk, I put these employees at risk." And when you got to face 27 employees, we had 27 employees. At the moment we failed them, we had to go down to three, and that included me. And those people lost their benefits. Their families were then at risk. And that burden becomes very, very heavy. And you have to really sit back and reflect on "What have I done? And am I going to give up, or am I going to figure out what went wrong, why it went wrong, reformulate a plan and go after it?" And I think it's like holding a snake in my face. I mean, my number one fear is failure, and I don't want to let anybody down. And when you're in a position where you feel like you've let people down, I mean, at least for me, I mean, it was not double, triple, quadruple. It was X down, and recreate this line and learn.
Kelly Scanlon:
A lot of people would've done just the opposite. They would've said, "I gave this my all, and the writing's on the wall," but you chose to stick with it. Where do you find that kind of resilience? Where do you even start to turn something like that around?
Scott Murray:
Yeah, I mean, there's multiple fronts. Number one, I've got a great spouse. I mean, my wife for 38 years, she was a rock during this whole thing. She didn't like it any more than I did, but she was very, very supportive during this whole thing. Even my few employees were very supportive. My family was incredibly supportive. So you had a lot of people around you cheering for you to be successful. Certainly, I couldn't have done this without a deep faith, of all the credit to higher power that I could not have done this. I'm not that smart. I couldn't have done this on my own, but I am tenacious, and I refused to give up and refused to lose. And there's many times, quite frankly, that I should have just given up. I had a mentor one time, he says, "You're way bankrupt, and you probably ought take advantage of the bankruptcy laws." And I just could not live with myself if I did that.
So the other thing I did, I mean, I got up and went to the gym every day. I got up at 5:15 every morning and went to the gym. And somebody asked me a great question one time, they said, "Did you ever wake up and think, 'I cannot do this one more day'?" And I said, "You know what? That's a really good question, because I went to bed feeling like that every day for five years. And I would lay there, and toss and turn and think, "What have I done? What have I done?" And I would fall asleep at some point, but when I woke up, it's like, "Okay, new day. Left foot on the ground, right foot on the down, get to the gym, clear your head and figure it out." And some days it was two steps forwards, and some days it was five steps backwards.
Kelly Scanlon:
You're also involved in the entrepreneurial community here in the Kansas City area. Tell us about some of the resources that you've tapped into that have really made a difference in success versus failure for you.
Scott Murray:
The Entrepreneurial Exchange, the group that sponsored a recent event here at the Country Club Bank, was an important part of that. You always knew you had an ear to call on Neal Patterson, got to spend time with him early on in those meetings, and he always challenged everybody around the circle to say, "Hey, what are you going to do to make yourself better? No excuses. No excuses. No excuses." I was a member of the Helzberg Entrepreneurial Mentoring Program for quite a while. I had a great mentor there, Ralph Wrobley, who he was with me during the dark times. We didn't spend any time trying to learn how to talk about growing the business. We were spending a lot of time saying, "How do we stay out of bankruptcy?"
So it was just a different environment. I spoke about this earlier. The biggest challenge is when you are failing, sometimes it is really hard to reach out for help. Because you don't want people to think you're a failure, and you don't want your story being told in a bad way. And again, now looking back on it, after we've had success, I would've done that differently. I would've probably reached out to others sooner. And the people that were close to me were incredibly supportive and always in my corner.
Kelly Scanlon:
What's the most surprising thing, given all the different kinds of companies that you've owned, giving the adversity that you faced and overcame, what's the most surprising thing you've learned about yourself as a business person, Scott?
Scott Murray:
Yeah, I'm actually pretty good at it. I never really thought I would be, and certainly there were days and months and years where I thought, "I'm really not very good at this, and I should go back to Quaker Oats or Frito-Lay, or go back to a quote, 'real job,'" as my wife and I would joke once in a while, but I'm relentless. I mean, I am relentless. And anybody that knows me from my history, even back in my Quaker Oats days know that I am very, very determined and sometimes to a fault. I will plow through to the goal line if I see an opportunity. And so really, I think the biggest thing I've learned about myself is that if I see a goal, I will go after it. The downside that is that sometimes there's collateral damage in rearview mirror. So I think one of the things I'm trying to learn, even in my advanced stage of 60 now, is patience.
Because patience is something that was an enemy to me for a long time. And as an entrepreneur, you think you can do things fast, and change things and change people. And even negotiating with lows, for example. You give them a proposal. You don't hear back for a week or two and you think, "Oh my gosh, my price is too high, my price is too high." So you send them a better offer. And you don't hear from them for two or three weeks and you think, "Oh my gosh, I'm going to lose this." So you send them a better offer. Well, they're just sitting there, collecting lower prices while you're negotiating with yourself. So being patient is something that, quite frankly, in the sale of the business, we stayed focused, we stuck to our knitting, and being patient, the opportunity came to us. We didn't go get it.
Kelly Scanlon:
Scott, among all the different things you've done, you've also served as a lecturer and an adjunct professor at the University of Missouri Bloch School of Management. So if you had to write a lesson plan for running a business, what point would you stress the most?
Scott Murray:
That's interesting. I did that because I thought it'd be a really fun thing to do when I retired. From the outside looking in, being a college professor looked like a pretty good gig. Come and go as you please. It is far more difficult than it looks from the outside looking in, dealing with all the students and whatnot. But building a lesson plan, I think if you look at the foundation of understanding of financial statement, those kind of things are important. But boy, it's really, really hard, because how do you teach somebody that you're going to have to work harder than you've ever worked? How are you going to teach somebody that you are going to be wrapped up emotionally in something more than you can even imagine?
So it is really hard for me to say that I could teach somebody. I'd have to look at what their history and their background was, and how hard have you had to work? Are you willing to make sacrifices that you can't even dream of today? I made 16 trips to Taiwan in 18 months when my kids were four and five years old, because the partner that controlled 95% of my business died nine months into me owning the business. And I had no idea where any of our stuff was made. Those are sacrifices in times that you just don't get back. So it's really hard. And what schooling taught me is that, and I look at some of the higher level of education, it shows me you can complete something and it likely shows you're a good problem solver. And believe me, you have better be a good problem solver, and you better be quick and nimble on your feet when you have a business.
Kelly Scanlon:
What's the next part of your journey, Scott? I know you're still the president of Level5 Tools, which you sold recently, and you're still involved with at least one of your other businesses. Where do you go from here?
Scott Murray:
Yeah, I mean, we'll see where things go. I mean, I'll never probably stop doing some type of business. I've already have ideas cooking, which my wife rolls her eyes at. But we'll work on the coatings business. I have some other ideas. We've built a really, really powerful direct-to-consumer model. I think there's opportunities there. There's certainly opportunities with our new owners to do some things well beyond what our current agreement is, because I think they're building a consumer products business. And we built a consumer products business, and we did it in a different way than most did because we went direct-to-consumer first. So I'll always have my finger in the pie. And quite honestly, this will sound a little maybe corny to some, but this is a true story. I woke up the Sunday after we sold the business. And if you've been through that, as you have, it can be a highly emotional and a highly draining experience.
And I never thought something like that would take me to my knees. But it did. And the Sunday after I sold the business, I woke up to a voice that said, "Now go do some good." And it was audible to me, and I looked over at my wife, and she wasn't moving. So it was really almost like somebody saying now and pausing, "You're off the hook, but now go do some good." So that's the other thing. So we've created a donor-advised fund. We're trying to go out there and find opportunities in Kansas City to help other people, because a lot of other people helped me along the way. And I could name a laundry list of them here in Kansas City. There was always someone that showed up. There was always a person that recommended I talked to someone else, a specific person that helped me sell the building in 2010, '11, and I'll mention his name, David Zimmer.
When no one was buying any buildings out there, and we had to work through an AT&T easement that went through the middle of the building, and the supposed abandoned septic system outside of the building. And he traipsed around that property with me in August in 110-degree heat, looking for all these things. And he figured it out for me. So there was people that always showed up at the right time. So again, I mean, be open to the opportunities that are there. Be open to the people that are willing to help, and just be patient with what's coming your way and you'll be okay. I mean, really, the next chapter is obviously, I hope Level5 lives well beyond me. I'm confident it will now. That'll be a brand that'll be around for, I'm hoping, a hundred years plus. And you hope you get to be remembered by doing some good in the community as well.
Kelly Scanlon:
Scott, thank you so much for coming on today and sharing your story, and best of luck to you.
Scott Murray:
Thank you very much. It's a pleasure.
Joe Close:
This is Joe Close, President of Country Club Bank. Thank you to Scott Murray for being our guest on this episode of Banking on KC. As a serial entrepreneur, Scott has learned the intricacies of various industries and found the key to success in each of them. He points out, however, that his story is not all butterflies and roses. He survived many personal and professional challenges by considering the adage, "If you think the price of success is too high, look at the price of regret." Think about that for a minute. How often are we confronted with situations in our personal lives or in our businesses or in our community where achieving success means taking big risks? Rather than giving up when the risks seem too great, like many entrepreneurs, Scott went to work, formulating a plan to go after the challenges, and he and his companies emerged stronger. As individuals and as a community, we too emerged stronger when we sidestep our fears, embrace the risk, and seize the opportunity. Thanks for tuning in this week. We're banking on you, Kansas City. Country Club Bank, member FDIC.