#03: Chase Murdock (Decada Group)

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For the third issue, I interviewed Chase Murdock, co-founder and CEO of Decada Group, a Salt Lake City-focused, diversified holding company.

We talk about the trade offs of concentration vs. diversification, coming from a tech background, and operational success.

How'd you get your start, and why were you interested in the space?

Chase had been an entrepreneur since high school. He spent the first decade of his career in venture-backed tech startups.

In 2016, Chase and his friend (and now business partner), Adam Malmborg, went backpacking with no plans to start a business. But by the time they got home, they had a business plan for what became their first company, Tailor Cooperative, and started the company 30 days later.

Fast forward a few years, the company was profitable and throwing off enough cash where they “had a fork in the road:” “Do we reallocate every dollar back into this one business? — That didn't feel right because it felt like all of our eggs were in one small business basket — or do we start acquiring businesses? And that's what led to forming Decada Group.”

What are the pros and cons of being geographically-focused?

One of the great things about Decada is that because they’re hyper-focused on Salt Lake City, their values are strategically aligned with the local community — and it’s a good blueprint for others to follow because it comes with two powerful flywheels:

1. Getting a first look at organic deal flow. Although under the radar, Decada has developed relationships and are playing the long game. They’re “front and center” when local small business owners are ready to sell.

2. People and talent development. It’s easier to attract, cultivate, and retain talent when you’re geographically-focused and can offer development in roles across a multitude of small businesses and at the holding company level.

Importantly, they’re not geographically and industry focused. They’ve chosen to diversify, which has its own trade off. You could say there’s an inverse relationship, both in terms of deal flow and talent, between competition and quality supply.

But for Chase, the game Decada is playing is more personally fulfilling.

What do you think is maybe the most sound strategy and opportunity for building a holding company?

While there’s opportunity everywhere — and at the end of the day, Decada is a diversified holding company — the advantage of a roll up is being able to capitalize on acquiring businesses in an industry and business model that you know very well.

Decada is somewhat hampered by “the fact that every deal we're looking at, we're starting from the very beginning of that textbook of learning the industry and about that business.” You also have to consider the synergy, economies of scale, playbook, and people management benefits that can come along with a roll up.

However, you are making a deep, long term bet on a single industry. Whereas Decada, although betting on a single geography in Utah, is diversifying across relatively uncorrelated assets.

Some people Chase recommends following in the roll up or industry-focused holding company space: Reg Zeller, Amir Haboosheh, and Rich Jordan.

If you were trying to break into the space again today, maybe knowing what you know but not having access to the same resources or network, how would you do it? Where would you start?

The majority of searchers never even end up pulling the trigger. They spin their wheels looking for the perfect deal, hiding behind thorough analysis. And of course, you need to acknowledge the risks and proceed cautiously and diligently. But ultimately, you have to learn by doing.

The other important pieces of advice:

• Surround yourself with a great peer group and good mentors “so you don't go buy a bad business and so you don't go ruin yourself in the process.”

• “Anyone who is considering buying a business should take an honest inventory of your experience and skill set and tolerance for risk and … stretch to exactly the scope of business that you feel capable of buying and then owning and operating.”

What’s the most overlooked or under-appreciated challenge that acquisition entrepreneurs or hold co owners face?

Months are filled with dozens of wins and setbacks. A key team member quits, a customer leaves for a competitor or pays late and strains cash flow, or interest rates go up.

You need “emotional maturity and durability” for all the hard moments. But also, enduring the constant barrage of hard things develops perseverance, leadership, and the ability to navigate future situations. You get stronger and can do more as a result.

What do you and Decada understand that others don’t? What’s your advantage?

With that said, Chase acknowledged that a great small business holding a company requires both attributes: the investment, capital allocation, and industry evaluation abilities, and the ability to actually run and build the business.

What’s the #1 thing you wish somebody would’ve told you before you got into the space?

What’s the #1 thing you had to unlearn to succeed in the space?

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