A Conversation With Peter Davis – Chairman and CEO, Gaco Western
By Jen Kramer
Always mindful of his family’s legacy, Gaco Western’s Peter Davis relentlessly pursues innovation. He shares his enthusiasm about shaping business, the industry, and technology with Spray Foam Magazine.
Spray Foam Magazine: Yours is a true family-built company. How did your family come to be involved in the spray foam industry?
Peter Davis: My father, Aubrey Davis, bought the company in 1955 and built it up from scratch to a very successful company by the time he retired in 1977. Then we had two interim Presidents who took that very successful company and did their best to destroy it. When I came on in 1994, it was a mess. It went from a strategic, specification-based company to a price-driven company and that was just death for where we were. So, we’ve slowly rebuilt since 1994 – a little at a time – to where we are today. The family has always owned the company. But from 1977 to 1994 is almost 20 years. By that point, we didn’t have a whole lot of choices, and because of all the chemicals, the liabilities were greater than the assets. Someone needed to come in and fix things. I raised my hand and said, “I’ll do this.” And that was that. We all have equity, but currently I’m the only family member actively involved.
SFM: Your father actually went on to have quite the career after he retired, didn’t he serve on the Mercer Island City Council and the Washington Transportation Commission? Isn’t there even a park, Aubrey Davis Park, which he was instrumental in creating?
PD: Dad’s background was in political science. That was his dream, but in 1955 he had four young children and no job. He saw this weird stretchy stuff called “Gaco” in Life Magazine and called his friend and partner, Hugh, and said, “Let’s go talk to these people.” They did and they bought the company right there. He needed a job and he bought a company to get one. As soon as he got all of his kids through college, he retired and went back into the public service world. And he stayed there until 2013. He gave a speech on Wednesday and passed away on Sunday, so he was active in the community until almost just before he passed away.
SFM: It must be gratifying to be at the helm of a very successful family-run business and to meet with other family-run businesses in this industry.
PD: Family business – the backbone of America. I love meeting with our contractors, to us they are our partners, and I love meeting with them because they’re all typically mid-sized, smaller businesses, families, couples, brothers and sisters – it’s really fun to see how they’ve done what they’ve done and how creative they’ve been in building what they’ve built.
SFM: What makes Gaco Western the forward-thinking, innovative company that you are known to be? How did you rebuild after the interim presidents?
PD: It is due to our fabulous people – and the fact that I’m really impatient. If it’s not moving forward, I’m ready to move on, so let’s get going. We have a really simple strategy based on the best technology in the business, the best salespeople, and our partners in the business. We compete with Fortune 500 companies who could just crush us out of scale and out of volume, and if we don’t have better technology than they do, we’re in trouble. So we’re totally invested in being driven by new, fun, disruptive technologies.
The only way we win is by bringing out better products that make our customers richer than anybody else does. It’s not a complicated strategy – we just run hard to get there and I’m unbelievably impatient about us getting there. For example, we had a sales meeting in June and the regional sales guys said, “We need a silicone patch product.” I said OK and we talked it, went to the lab, made a decision, and 90 days later, it was in the marketplace. Designed. Done. Marketed. Priced. And we sold $110,000 the first day it was available. It took 90 days from start to finish for a brand new product. Now, because this is a patch product, we had to have it developed before we got too deep into the Fall and well before Winter hits – because that’s when everyone patches their roofs, right? At the last minute. So our timing has to match. We’ve got to be ready for that marketplace. We have to have it on our dealers’ shelves in September / October. And the team got it done. We don’t have any time to waste. Not with any product.
I always say: “You’ve got to wake up excited. If you’re not excited, why get up?” This is the culture of the company now. Everyone thinks this way. Move forward. Innovate. Let’s go!
SFM: That’s exciting. Does that institutional push for innovation figure in to your strategy for continued growth?
PD: Absolutely. We believe in disruptive technology. And we’ve got some unbelievably interesting things in the wind. We’ve carved our lab into three parts: One part is Quality Control (QC), one part is New Product Development, and one part is iGaco. iGaco is a pure think tank, pure Blue Sky, and they are not responsible for any specific new products – just fabulous new ideas and new molecules. We have six or eight people on this team, three or four hold PhDs. We believe that great products come from great people. Using the iGaco team, the New Product team, and the QC team, we make sure that what we make is extraordinary.
SFM: And the people who use those extraordinary products, your partners, how do you team with them?
PD: Our central goal with our partners is to make them rich. If we make them rich, they’ll keep buying from us. So we make them rich by giving them products that save them time and by training them so that they can save time. Our 14-person tech team performs the training, and two of our staff created the in-class curriculum, one is a PhD and one is an ex-contractor. So we know exactly what they will face in real world situations and we train them with the knowledge to handle those situations.
We also help our partners plan jobs, find leads, get jobs, hire people, whatever they need to be more successful. We want them to be successful, because if they are successful, then ultimately we will be too. So we work really hard and we have 77 “feet on the street” all across the nation. We go to the same church, our kids go to the same schools, play on the same teams, go to the same grocery stores, we fish on Sunday, and we work with you on Monday to make you more successful. Our partners are our neighbors. At sales meetings, I give a keynote speech and as part, I say, “OK. Pull out a piece of paper and write down how many of your partners you would invite over for Thanksgiving dinner.” And they write down a number and I say, “OK. I want you to put that piece of paper in your wallet because in a year from now I’m going to ask you the same question and I want you to have two or three more.” We’re selling to our friends and the people we want to have Thanksgiving dinner with. That’s how we differentiate ourselves.
SFM: What specific markets does Gaco Western target?
PD: We have two core markets. The first is the silicone retrofit market. In round numbers, retrofit roofing is around $1 billion a year and Gaco has 15 percent. This means that we have 85 percent to go, so we are absolutely focused on silicone retrofitting. The second market is spray polyurethane foam. I think spray foam is the insulation of the future. No question. Batt, fiberglass, cardboard, all that other stuff is history and foam is the future, so we are 100 percent focused on commercial, residential, and institutional insulation. We have an automated SPF plant and can make a huge amount of foam – there’s almost no limit. And there’s no limit to the foam industry.
SFM: Speaking of no limits, what does the future hold for Gaco Western?
PD: Only more and better. There is so much work domestically – we are working hard to add more sales and better technology. We are only domestic today, but with the right outside investing, this platform could easily be transferred to any place in the world. Europe does not have silicone roofing, they do have spray foam, but it is not very advanced. We could go to Southeast Asia, South America, Africa, Australia – and if we grow, we can only further fund our research. The only hurdles for international growth are the different codes and regulations. What is necessary is a local partner, someone who understands how to get through hoops. If we grow internationally, we can’t do it by ourselves. We have to have really strong local partners on every continent.
SFM: Unlimited domestic growth and international expansion are intriguing predictions. What is your outlook for the spray foam industry in the coming years?
PD: I was involved with starting the Spray Foam Coalition five or six years ago and I am still pretty active, I was the Chair for several years. We’ve taken huge strides now that all the systems houses have gotten together and unified our resources in terms of developing the marketplace for all. That was a massive step forward in terms of the industry accelerating our growth and the Coalition has done a great job. The Chemistry Council has been unbelievably helpful in getting us so very optimistic about the industry as a whole. In terms of taking on additional marketing, dealing with the regulatory agencies, the EPA, OSHA, California – we’re getting to be quite an adult industry now and that’s a massive step forward from where we were six or eight years ago.
Just working at the table with the people we compete with every day, we have really smart competitors, and I just sit there and go “Wow, these guys are good.” If all of us get our heads together, and we all collectively push the industry in the same direction, there’s no doubt spray foam’s going to continue growing. We’re all developing new products continuously. And new and better products such as – zero ODP products and new blowing agents. We’re getting healthier in terms of what we produce and smarter in terms of worker safety. So all the right pieces are in place. And it is the only insulation that makes sense at the end of the day.
Ten years ago it was a little bit of a cowboy industry and now it’s gotten to be very mature and very smart and just a thrill to be a part of. We’re all in – 100 percent – now and for the future. •
Photos courtesy of Gaco Western