“Figure out what business we need to be in, and make it make money.”
With that piece of advice from company founder Tom Patterson, Dave Gray was given the reigns of Daxko — the company he led for over 15 years — in early 2003. Sure, the two had conducted several lengthy meeting-of-the-minds conversations before that, but those meetings all came after Patterson first offered Gray the position. A position he wasn’t even pursuing when they met.
“Several months earlier,” Gray remembers, “I’d joined a company that simply wasn’t a good fit for me. I’d decided to leave and start my own company, and asked my closest co-worker at the time — Barry Thomason — if he’d be interested in joining me. Barry had four kids and, in his own words, ‘no stomach for startups.’ But two days later, he suggested I meet this Patterson guy.
“So Tom, Barry and I met over breakfast at the Anchorage in Homewood. Once we got past the pleasantries, I told Tom about my idea for the new business — which took about 25 minutes. When I finished, he paused and said, ‘I have a better idea. I have a little company named Daxko. Why don’t you run it for me?’ Again, this is exactly 25 minutes after I’d met the man. Tom is an engineer by trade and highly analytical, but he’s very big on gut instinct.”
Gray spent his first several weeks with Daxko doing just what Patterson had advised: “I figured out the business we wanted to be in. Daxko had been chasing several different markets, and by February, it was clear we should pursue the YMCA market. We served YMCAs exclusively until 2012.”
A DIY culture, by necessity
Selecting a market was critical, to be sure, but arguably most the significant contributing force behind Daxko’s fortunes was its business model: “We were SaaS before there was SaaS. Well, at least there was nobody in Birmingham with the same model back then.” Which made business decisions particularly challenging from one distinct perspective: “There was no one locally we could emulate, or call-on for advice and mentoring. With virtually every challenge we faced, we had to create our own solutions — and early on, we were highly resource constrained. In other words, we didn’t have enough people. So we just invented solutions for things we didn’t know how to do. Customer service, go-to-market strategy, technology infrastructure — we didn’t know how to do any of those things. Thankfully,” he continues, “we had an incredible group of innovative team members,” ironically including Barry Thomason, who was with the company for 7 years.
The first-ever team member to join Daxko is still with the company. “I can’t say enough good things about Wei Jiang. He’s incredibly smart, but such a genuinely humble man. He never sought any kind of recognition or praise. And yet, he was instrumental in developing our first product — and is still a critical contributor today.
“We had a real team of all stars. Barry and April Benetollo were our dynamic duo of sales and marketing. They created a go to market strategy without any kind of outline for guidance. Britney Summerville, who’s now in a leadership position at Shipt, was our VP of Services. We tasked her with maintaining our customer-obsessed mentality, which she built from 2 team members to over 100.” (And yes, it should go without saying, the list of Daxko people Gray mentioned in equally glowing terms is significantly longer than the four noted here.)
Gray’s last day with Daxko was June 30th, 2018. In the year since, he’s learned one valuable lesson: “How important sleep is. You’d think that’s pretty obvious, but it just didn’t occur to me at the time that it was important. And honestly, I don’t know if we’d have accomplished everything we did if we’d worked and slept ‘normal’ hours.”
A new direction
So far, Gray’s current venture, Biso Collective (short for Birmingham Software, which he launched last November), has been significantly less sleep-depriving — and a big part of that is due to the business model, and his corporate partner.
“When I left Daxko, several people recommended I serve on advisory boards for SaaS businesses. When I mentioned that to my wife, she said, ‘That’s what old guys do. You like building teams and companies.’ Which led me to decide I wanted to acquire, and work with, relatively early stage SaaS businesses — where I could leverage my knowledge and bring new ideas. And if they are out of town businesses, we’ll move parts or all of the business to Birmingham when it makes sense.
“I’m looking for good teams who have the ability to successfully run their businesses. What I’ve learned over the years can be helpful for companies who want autonomy, but appreciate the help when they need it.”
An unlikely partnership? Surprisingly not.
All of which, more or less, leads to an obvious question — and a highly unlikely answer. The question: Who’s providing the investment capital? The answer: EBSCO Industries. As in the $2.8 billion-in-revenue, 75-year-old conglomerate known for everything from printing to turkey calls and deer feeders.
“The main reason I chose to partner with EBSCO,” he explains, “is the integrity I saw in CEO David Walker,” whom he’d met, purely by chance, shortly after leaving Daxko. Gray hadn’t considered partnering with EBSCO at the time, “but I met David one morning over coffee, and after hearing his description of EBSCO, I sent him a written overview of what I was planning — and we immediately began discussing a partnership.” In short order, Gray dug-into learning more about the company, and its leader. “What I learned very quickly was, David’s not just a smart man. He does what he says. Moreover, he’s willing to take risks, and he lets people do their jobs. That was very appealing to me.
“Then, when I looked at what EBSCO has done over the last 75 years, while maintaining their Birmingham base — well, it was a perfect fit. And yes, I’ve been very pleased with our partnership.”
Biso’s sweet spot is companies with $5 to $10 million in revenue and profitable — or, at least, on-track for profitability. “I’m not looking for explosive growth companies, but companies that are focused and disciplined. Companies we can help when they need us, and leave alone when they don’t.
“One of the most important parts of the Biso mission, if you will, is building businesses here in Birmingham. Long-term sustainable businesses that create jobs. EBSCO’s had a long history of doing just that, and I’d like to think I can as well.
“I’m 49,” Gray says, “and I can see myself working, relatively full-time, for at least another 20 years.” Here’s to two more decades of figuring-out what business to be in, and how to make it make money.
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