As CEO of the newly formed master distributor Team Alloys, Bill Bootz has surrounded himself with a core group of extremely loyal employees, many of whom worked for him at other ventures in the past.
I’ve met Bootz numerous times over the years, and know his reputation as a tough businessman with a personality all his own. So leading up to my recent interview with him, I took great care in researching and preparing my proposed questions. I arrived at Team Alloys’ Houston headquarters, and set up my laptop in their conference room so I could start the interview. But in characteristic Bootz fashion, the interview didn’t follow the typical format. As we started the process, Bootz asked if I would mind if we could put the interview questions aside and just let him tell his story. He had seen my advance list of questions, and assured me we’d touch on all of them, but he thought this would lead to a better communication flow. And you know what, he was right.
So here is the Team Alloys story, in Bootz’s own words.
“In golf you’ve got to keep your eyes on the ball and don’t look where it’s going. It’s the same in business. It’s about building relationships, and those relationships will lead the business in the right direction. All the things you value in personal relationships apply to business relationships. We are all driven by a sense of purpose, and we strictly adhere to a core set of values and principles.
“The business is ever evolving. Twenty years ago, there were more privately held companies. Today, there is a lot of publicly traded companies and a significant role played by private equity. Distributors have gone from competing for regional and national contracts to global ones. The whole scope of business is changing. Companies now are being bought and sold like commodities. We’ll have to see how the consolidation and public offerings associated with some of the big PVF distributors impacts their desire to carry inventories. We are trying to use our breadth of product, as well as technology, to reduce transaction costs and capitalize on an ever-changing market environment.
“A lot of master distributors are slightly shifting away from being a master in the truest sense. The truest sense to us means absolutely no fabricators, contractors or end users. We think that creates differentiation for us since we sell strictly to distribution. We have a diversified product offering, which represents value for customers. Our product line includes carbon, stainless and nickel alloys primarily for downstream applications, with some high-yield products for mid-stream applications. Our service and responsiveness will also set us apart. Everyone here cares about their work and their customers.
“Team Alloys is a small start-up in a globally competitive market. There are a lot of pressures for return on investment. End users want scale and lower prices. Transaction economics and efficiency become very important. We’re going to be the first company in our market segment that offers all of our carbon and stainless products with one transaction, one invoice, one shipment. This is a value to our customers.
“Our SGA expenses are very low as a percentage of revenues. This allows us to be very competitive. In addition we deal directly with more than 40 manufacturers around the world. Given our start up status this is an overwhelming accomplishment. “So how do we do that? We don’t have a purchasing department. We don’t have outside salespeople. Instead, we have relationship managers. Everyone here does inside and outside sales. Our people will do whatever the customer wants to do in order to spend time and build relationships with them. We are focused on serving the customer. There are no minimum orders. We want to out-service everyone in the marketplace. We think that’s our real value.
“I handle all of the inventory purchasing. Our supply base includes domestic, Western European and Asian sources. Quantities are derived through target systems that are reviewed on a periodic basis. These systems are used to provide forecast to our core suppliers. In the future we will transmit sales data to the suppliers, which will reduce cycle times and increase asset utilization. We have frame pricing agreements which facilitate the purchasing process. In addition we are fairly transparent with suppliers. Currently they receive financial statements on a regular basis.
“We are managing brand relationships with manufacturers. As mentioned before, our supply base includes domestic, western European, Asian-approved and Asian-non-approved products. It’s a pretty broad range of market that allows us to buy from a large number of companies. We have 44 direct suppliers around the world. Think about that — a brand new company like ours already doing business with 44 suppliers! We offer carbon, high yield and low temp flanges and butt weld fittings, carbon pressure fittings and soon a full line of stainless and nickel products.
“Another major factor is the growing investment in the U.S. by flange manufacturers that are increasing capacity. The resurgence of manufacturing in America is going to change the face of master distribution. We’re not trying to be the biggest; we’re focused on transaction costs and providing everything a customer may want. Our goal is to make it easy and transparent to do business with us, and to provide the lowest-cost, best-service option.
“There is really a sense of teamwork, commitment and belonging here. Our 20 employees are very invested in the business and most have shares in the company. While we do employ some new faces, most of our team are veterans who have worked together and with me at other ventures. There is a sense of common purpose. They come in at 6 and stay until 8.
“Because our employees have such deep experience in this business, I look to them for their ideas. Our warehouse manager Robert Horton came up with the idea that rather than storing material outside, we could store it in containers that eliminates the issues of theft and rust. He designed the whole warehouse system with new racking and configurations.
“I have a very egalitarian approach to managing a business. There are exceptional situations all the time that you have to adjust to. I started out in 1989 at a company called Semet — later renamed Southern Stainless Supply — selling welded stainless steel pipe from a Mexican mill. My Dad ran the office for the family that owned it. He didn’t want to sell a new product, so he asked me if I would be interested in giving it a try. Later, I started a company called Stainless Piping Products, representing Ta Chen in the Gulf Coast and working out of my house.
“After that, I went to Van Leeuwen, then worked with Sam Brown at Wholesale Alloy, and later moved to KG Specialty Steel, which is now owned by Sumitomo. My approach to management is a little different. Instead of holding people back, I push them. I want them to learn as much as they possibly can about every aspect of what they do — and to make mistakes. My leadership style is much more about education and training and establishing a clear path. We don’t have task masters here; we have people who are looking for better ways to do things every day. It’s really about working with people instead of having people work for you.
“There are several people who have been instrumental in my life. First, my Dad, who taught me not to lie. He believed that our integrity is really all we have. Robert Sheih, who is the president of Ta Chen, is the one who actually showed me the world. He allowed me to make mistakes and learn from them. He was also very humble and giving. Another person would have to be Makoto (George Horie) from Sumitomo Corp., who taught to navigate the turbulent waters of risk management. He forced me to see business through the eyes of people not intimately familiar with the pipe and fittings marketplace. Because of his patience and tutelage, I am able to express concepts in terms most analysts understand. He told me I achieved good results but was a terrible businessperson. He substantiated his point of view by saying he believed in me but did not understand my business. The following year he did understand the business.
“When it comes to products, KG Specialty Steel really taught me the most about products. I was there at a time when they had bought KenRac and became a full line master distributor. It gave me an opportunity to learn about seamless pipe. While there, I developed an inventory management program that was based on long-term averages instead of the shorter-term ups and downs. Most companies in the 90s purchased at three- to six-month intervals. The approach developed at KG and utilized by Ta Chen created a steady stream of incoming material.
“My first Team Alloys was in 1996. After leaving KG, I wanted to focus on cooperative as opposed to adversarial relations with customers and suppliers. The name came from my old partner Stephen Feinstein. In June 1997, Ta Chen acquired the assets of the old Team Alloys LLC. My time at Ta Chen ended in July of 2001. GSS or Global Stainless Supply began operations in July of 2002. FFF was acquired by GSS in September of 2006. GPS, the pipe division, began in 2010.
“The new Team Alloys was incorporated September 27, 2011. We moved into the warehouse on January 3, 2012. We have a good customer base and great support from both customers and suppliers. It’s kind of overwhelming. We started receiving material in late January and currently we have $6.9 million in inventory. I had to take a lot of risk and doubled up some purchases because deliveries are long right now and demand is good. In March, we had our first operating month in the black, which was a huge weight off our shoulders. Overall, my objective is profitability for Team Alloys. Everything you do in business has to create a profit or you won’t be around long.
“We’re based in this 70,000-square-foot building, with a 5000-square-foot office. There are 24 loading docks available. We also have 61/2 acres outside, with 11 acres next door that we can purchase down the road. You never know when you are starting out how much you will grow.
“You don’t build an organization by yourself. The exciting thing about starting a company is that you’re like an All-Star coach — you get to pick the best people for each position. I’m surrounded by a team of very skilled people who all bring their own expertise. They are also very loyal to our purpose. Many left good jobs earning more money to come here and be a part of this company because they believed in our mission. I’ve learned over the years that people don’t work for the money — that’s short term — they work for respect — which stays with them forever. It’s being listened to and feeling like your efforts make a difference. My job is to give them an opportunity to fully use their skills and reach their potential.”
At the end of the interview, I asked Bootz what his overall objective for Team Alloys was, and he responded by saying that he wanted the company to be the best at what they do — but emphasized that being the best was a journey and not a destination.
After I concluded my interview with Bootz, he asked if I would mind talking with some of his employees, and one by one, a dozen of them came in and sat down with me. Many had worked for him at other ventures, and some were very emotional in describing what Bootz has meant to their lives. It was refreshing to hear about this other, more unguarded, side of Bootz that he tends to keep fairly close to the vest. It’s very evident how close knit this group is, and the trust, gratitude and admiration that they hold for Bootz and each other is palpable. They are a truly a band of brothers — and sisters — on a shared mission.