The Twenty One Clear Podcast

How does a family keep a company for more than 150 years?

In part two of my three-part conversation with Tony Simmons, former president and CEO of McIlhenny Company, the makers of Tabasco, his answer starts with a puzzle: feed the family and feed the business, and find the balance between them.

From there, Tony takes me inside how his family works in and owns the company together. We talk about a shareholder agreement with an independent call price, how a 129-year-old company with no written business plan built best practice governance, and why a cousin on the board liked to say, "Sunlight is an amazing disinfectant."

Tony also tells the story of a phone call about two sets of books, how he stepped away cleanly as CEO, why the family keeps its legacy assets outside the business, and why it chose to stay with pepper sauce.

Watch this episode on YouTube: https://youtu.be/bByRu0VzxkA

In case you missed it, listen to Part 1 of this conversation: Tony Simmons - Part 1: "Do Not Plan Your Life On It": https://podcasts.apple.com/us/podcast/tony-simmons-part-1-do-not-plan-your-life-on-it/id1811403547?i=1000792742072&utm_source=twenty-one-clear&utm_medium=podcast&utm_campaign=ep-16-sunlight-is-an-amazing-disinfectant&utm_content=show-notes

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Chapter Timestamps
(00:00) Cold Open: "Sunlight Is an Amazing Disinfectant"
(00:22) Welcome to Part Two With Tony Simmons
(03:20) Feed the Family, Feed the Business: Solving the Puzzle
(06:28) The Shareholder Agreement and the Call Price
(09:06) A 129-Year-Old Company With No Business Plan
(11:54) Educating the Board and Building Committees
(14:34) Why Governance Pays Off: Transparency and Trust
(16:52) Board Letters, Shareholder Meetings and a Shareholder Website
(17:56) "Two Sets of Books": Stopping a Rumor Early
(20:44) Naming the Timeline and Adding Outside Directors
(25:54) A Clean Change: Why a Former CEO Can't Be Chair
(27:59) Avery Island Inc. and Land Held Together
(31:36) Keeping Legacy Assets Separate From Business Assets
(32:58) Educating Young Shareholders and Meeting Your Cousins
(35:28) Is a Family Council Worth the Lift?
(36:25) Defining Greatness: One Product, Five Years
(39:39) Common Themes, Your Own Answers
(41:42) Coming Up in Part Three: The Tabasco Tasting

Creators and Guests

Host
Adam Hatcher
Family Business Consultant

What is The Twenty One Clear Podcast?

The benefits of working with family include mutual trust, a shared long-term outlook, and quick decision making. However, your inner family business relationships can also cause chaos for the company and family.

What can you do?

Join us as we explore chaos proofing your family business so you can build a great company with a strong family around it.

21clear.com

Tony Simmons: One of my cousins
who was on the board, had a

saying I used to like a lot.

He said, "Sunlight is an
amazing disinfectant."

And it's, it's very, very accurate,
especially in a family business.

A family has to trust the
information that's being

given is accurate and factual.

Adam Hatcher: Hey there.

Welcome to the 21Clear podcast.

I'm your host, Adam Hatcher,
the founder of 21Clear, a

family business consulting firm.

And with this and all of our other
podcasts and newsletters, we want to

provide resources to you that help you
think about your inner family business,

the unique way your family works in
and owns your family company together.

The voice you just heard is Tony Simmons,
and Tony is the former family CEO of

McIlhenny Company, the makers of Tabasco.

This is the second of three
episodes of a sit-down with Tony.

So if you missed the first episode,
go back and listen to that one first.

Tony both walks you through the company,
its formation, some of the high-level

details about McIlhenny Company and
their corporate structure, and then

he tells you about his own career.

And the theme you're gonna hear in
that is Tony never set out to run the

family company, but how did he end up
on the board, and then how did he end

up the CEO, and then how did he go about
stepping away and handing the role off?

So that's the first episode.

The second episode, we're actually going
to get an insight into the way the family

works in and owns the company together.

So if the company is McIlhenny Company,
and that's who we all buy Tabasco

products from, their inner family business
is the way the family owners, family

employees, and those around them work
in and own these businesses together.

Tony's gonna give us an insight into their
board, some of the evolution of their

governance structure, and even some of the
guiding principles that they use to make

decisions as a family and as an ownership
group and as a board about the company.

We're gonna pick this episode up.

McIlhenny Company has been around
for over 160 years, and I had asked

Tony, "How did you all do this?

Most family companies struggle to
make it past the third generation.

How did you all get to this point?"

And he gave a simple
but challenging answer.

So that's where we're gonna pick
up, and then get into some of

their governance and the way they
run their inner family business.

So let's start with Tony telling
you how they have kept the

McIlhenny Company both in the
family and alive for over 160 years.

Tony Simmons: So, if you feed the
business and starve the family, you

end up with poor little rich kids.

On paper, I'm worth a gazillion
dollars, but I can't pay my mortgage.

I need liquidity.

I need this business to produce for me.

A lot of family businesses, especially
capital-intensive family businesses,

can't afford to give that liquidity,
and if they are forced into it, they're

probably gonna have to sell the business.

Conversely, if you feed the family
and starve the business, the business

doesn't grow as it should, and the
family looks at what is probably

their single biggest asset and says,
"This asset really isn't doing well.

Why do I wanna own this?"

And that can lead to the
family saying, "I want out.

I wanna sell this.

I don't wanna own it anymore 'cause
I don't think it's a good investment.

I can do better than this."

The family businesses that make it are
the family businesses that can find that

balance between feed the family and feed
the business so that the family says,

"I wanna own it, and I'm happy with how
this business is giving me what I need."

And the business says, "I'm getting
what I need in order to produce a

better business for you and to continue
to grow at an acceptable level, and

make it something you wanna own."

But every family's different,
and every business is different.

So it isn't like you can hand someone
a formula and say, "Here's the formula.

Do this, and you get to
keep your family business."

It's a puzzle.

And you've gotta solve the puzzle,
and if you can solve it, you

can keep your family business.

If you can't solve the puzzle, you're
gonna lose your family business.

Adam Hatcher: And the solutions, you
can't copy and paste anyone else's.

I remember learning about the
Hermès family, and I think it

was 10 or 20% of the business
for that reason they took public.

They looked and said, "We're the owners.

We're the family that owns one of the
most valuable luxury brands in the world,

and we get nothing from this business."

So their solution was 20% public.

A lot of family companies probably
aren't gonna do that, aren't gonna

give up 20% of their control.

But it shows that there are
options for you as you find

whatever the balance is for you.

Tony Simmons: That's exactly right, Adam.

And the point is, can the family
find a balance that makes the

family wanna hold onto it?

Now, in a company like McIlhenny
Company, Tabasco, with its now

seventh generation of shareholders, no
shareholder owns enough of the company

to ever force us to do anything.

So if we had a shareholder who
needed liquidity or desired

liquidity, we can make that happen.

If a large group of shareholders
got together and said, "We want

liquidity," then we might have
to look at doing something.

But our stock is spread now so large over
so many people that no one owns enough of

the company to be able to force anything.

And, you know, we're an S corp.

When we became an S corp, everyone had
to sign a shareholder agreement, and that

shareholder agreement binds the successors
and assigns for those shares of stock.

And, it does several things.

One, you cannot move the
stock to a non-blood person.

To own stock in McIlhenny Company,
you either have to be a descendant of

Edmund McIlhenny or a spouse, because
we do allow spouses to own stock.

But if the spouse owns the stock, at their
natural death, the shares must move back

to a qualified shareholder, or the board
has the authority to buy the shares back.

Adam Hatcher: Into the business

Tony Simmons: Yeah.

And in addition to that, as part of
that shareholder agreement, we set up a

call price that is done each year by a
valuation company to set that call price.

If the board has to buy the shares
back or if someone tries to move

shares to a non-qualified individual,
the board has the right to purchase

the shares at the call price.

And that call price is reduced by a
lack of marketability and a minority

interest in a closely held corporation.

It is not the enterprise value
of the shares as if you were

gonna sell the whole company.

So there's no argument over how much
the board would pay for a share.

It's already in the shareholder
agreement at that call price.

Adam Hatcher: It's both in the shareholder
agreement and it's not Uncle Tony

who's coming up with the value of it.

You all have an independent company.

So I'm curious, 1997 was when
you got the call for the board?

All right.

This is Tony Simmons, publicly
traded executive, international

business experience, and you come
into the family company board.

How, at that time, because when I
hear you talk about call prices and

independently set, there's governance
there, and there's thought, and there's

formality, and this is something
family companies have to grow into.

How formal or informal when you joined the
board was it compared to what you expected

coming from a publicly traded business?

Tony Simmons: The governance
structure at McIlhenny Company

was not what it needed to be.

It definitely wasn't best in class.

Adam Hatcher: And how old was
the business at that point?

Tony Simmons: 168 to 97.

So, so what is that?

Another, 29 years, 129
years at that point.

Adam Hatcher: Yeah.

As you tell this story, I hope for
anyone who may think our, you know,

our company's 20 years old or 80 years
old, and how do we not have this in

place or that, here you're talking
about your family company over 120

years old that still had work to do.

Tony Simmons: And it had work to do that
most people would be kind of surprised at.

Like, they didn't have
a formal business plan.

They, you know, I said, "Well,
where's the business plan?"

"Well, we don't write a business plan.

We don't need that."

Okay.

Well, I disagree.

Adam Hatcher: Well, 'cause in your
world where you came from- you

couldn't, you couldn't do that.

In family business, you can, in a
successful, well-known brand, people

probably assume it's there or you've
just maybe even been successful.

I've heard the phrase, "We're
successful in spite of ourselves."

But you came in with that
experience and you found that gap.

Tony Simmons: And, the governance
was not where it needed to be.

And we started with we're gonna
write a formal business plan.

We're gonna have the management
team write a formal business

plan and present it to the board,
and the board has to approve it.

It was our first step for the year, 1998.

And we're a calendar year, so, it's
January of '98 and we got a formal

written business plan to start, and…

Adam Hatcher: Is it all family
board members at this point?

Tony Simmons: It was all
family board members.

Yeah.

And, then the board began to work on
trying to do best practices governance.

One of the first things we did was,
we had in groups of twos, we had two

board members at a time attend a Kellogg
School of Management, a week-long seminar

on governing family businesses to get
them familiar with how other family

businesses were doing things, what are
best class practices, you know, what

are they doing that we're not doing?

And we put the entire board through that,
two at a time, which was beneficial.

It was a great education and the first
actual board education we'd done.

And Northwestern did a good job
for us and it helped us along.

From that, we recognized that we
needed to change our board meetings

from regurgitating what happened in
the last quarter from the management

team to, "We're gonna get you all
of that information in advance.

We expect you to read it and to have,
you know, digested it before you ever

get to a board meeting, 'cause we don't
wanna spend the whole board meeting

talking about what happened last quarter.

We wanna talk about things that
are important and strategy and

where this company's going."

In addition to that, we began to create
a much more formalized committee system

and moving most of the board work into
committee, and then having the committee

report out what was going on with
that particular part of our business.

And created the audit committee, a
comp committee, and an investment

committee, and a corporate
governance and nominating committee.

And those four committees each have
written charters which are reviewed

on a every two years to be sure that
they're still what they're supposed

to be and should be, or if they need
to be modified, how they need to be

modified, and what needs to be in
them so that they don't go stale.

And, McIlhenny Company now
has best practice governance

and it's done very well.

But, it was a transition from almost
real no governance in 1997 to what

we morphed into as we moved along.

Adam Hatcher: Some families go to a
conference, they hear someone speak,

they hear about these committees,
and they think, "Oh, well, that's big

folks like big companies like Tabasco,
big complicated companies like the

McIlhenny Company and their well-known
brands," or we're here in the South, you

know, you and I are in the Southeast,
the Cathy family or the Cox family.

Like, it's for folks like them.

But I'm curious, when you all
started doing that, or someone might

say, "I have no interest in that
'cause I just wanna make money.

Like, what's that got
to do with the company?"

As you all started to do that, was there
a benefit back into McIlhenny Company

from the ownership board starting to have
these more formal rhythms and processes?

Tony Simmons: Yes, in that because the
board was more active in the governance,

the challenges that the management team
was being presented with were much more

transparent because, those committees
were asking questions and wanting to

understand what was going on in various
departments and parts of the company

where before it was pretty much just,
"You don't need to worry about that.

You, you know, it's, it's okay."

And one of my cousins who was on the
board, had a saying I used to like a lot.

He said, "Sunlight is an
amazing disinfectant."

And it's very, very accurate,
especially in a family business.

A family has to trust the
information that's being given

is accurate and factual, and that
especially, numbers are good.

You know, we do and have
since 1932, an audit with an

outside audit firm every year.

As a matter of fact, we're
still using the same one.

Peat Marwick Mitchell
was our auditor in 1932.

KPMG is still our auditor.

Adam Hatcher: Roots-

Tony Simmons: Audit partners, okay Right.

but

but we've, we've been, Yeah

Adam Hatcher: Wheel 'em out Yeah Yeah

Tony Simmons: Our family, we have
a quarterly board letter that

goes out from the chair, on what's
happening with the company, with some

financial statements to back it up.

And the letter talks about current
happenings with the company.

We have an annual shareholder
meeting that's very well attended,

every year at Avery Island.

And, the management team goes through
the year and, you know, what was good,

what was bad, where we are, what we're
looking at for the coming year, and, you

know, what growth opportunities and things
are happening that they can talk about.

Sometimes they can't talk about things.

And then we have a shareholder
website, that's, you know, got a

firewall on it, and we post quite a
bit of information to that shareholder

website so that our shareholders
can feel comfortable they have a

good understanding of their company.

When I ran the company, my assistant was
also in charge of shareholder relations

because she knew, because I had told her,

If you're on the phone with a
shareholder and something's not

right, I wanna know right now."

And she'd poke her head in the door and
say, "Tony, I just got off the phone

with so-and-so," blah, blah, blah.

No problem.

"Hey, it's Tony.

Tell me what's happening.

What's wrong?"

Adam Hatcher: Not every family company CEO

would take that approach.

Why did that matter to you?

Why would you stop what you were
doing and say, "Bring them to me.

I need to call them now or pretty soon"?

Tony Simmons: Especially in a family, you
can get rumors and you can get grudges

that you don't get in corporate world.

I mean a family will cut you.

I'll give you an example.

I had a call, "So-and-so thinks
we're keeping two sets of books."

" Hey, it's Tony.

I hear you think we're
keeping two sets of books."

"Yeah, that's right."

"You're right."

"I knew it.

I knew I was right."

I said, "We have a set of books that
are based on what is called GAAP.

And GAAP stands for Generally
Accepted Accounting Principles,

and you are required by law
to keep your books in GAAP.

It isn't optional.

It has to be done.

But the tax code is so crazy that you have
to keep a separate set of books about what

the tax laws allow you to do and not do
so you don't overpay on your taxes either.

So there is actually a separate set
of books that deal with all the tax

ramifications of everything you're doing.

So there are two sets of books.

Both of them are available to you.

Neither one of them is anything you
need to worry about, but yes, there are.

Oh, well, that's exactly the kind of rumor
that can run rampant through a family

and create enormous amounts of problems.

So you wanna, you want to attack that
as soon as you can to stop it from

getting out in the family with something
that's just not true, and now you're

trying to put out a wildfire instead of
putting out, you know, a kitchen fire.

Adam Hatcher: Your journey before the
company, how you came into the board,

how you came into the business, your
journey as, part of your journey as CEO.

But you've now done something
that a lot of family leaders fear

doing, which is stepping away.

You have stepped out, and you all are…

Is The McIlhenny Company
two CEOs past you now?

Tony Simmons: Yes

Adam Hatcher: Two.

How did you know it was time?

And then what was it like
handing the reins off?

Tony Simmons: The board, had asked me:
"What do you think see, you know, when?"

And I told them you know I think
probably 68 or so is a good time.

Adam Hatcher: And the board, the last
time we talked about it here, the

board is 1997 and 10 family members.

The board that you're working with
at that time, is it still all family

or has the composition changed.

Tony Simmons: It was still all family.

Now since then it has changed But at
that point it was still all family.

But having said that we were a little
different because in that boardroom

the only two people in that boardroom
that were board members that worked

for the company were myself and Paul.

I added two sixth-generation members.

One, had gotten a PhD in chemical
engineering from Berkeley and then

gone to work for Bain & Company.

I said, "Why do you get a PhD in chemical
engineering and go to work for Bain?"

And he said, "Money."

He said, "The same math skills
you use for chemical engineering

are the same high-end math skills
you use for financial modeling."

And he said, "Bain wants that
technical math expertise, and then

they train you of what they want."

So anyway, he was in his early 40s,
he was a full partner at Bain, and we

brought him onto the board as our first
sixth-generation family board member.

The other family member we brought
on the board graduated from Harvard,

worked for McKinsey & Company,
went back to Harvard Law, graduated

second in her class in Harvard Law,
and was working in the legal world.

Very, very smart lady.

And, brought her in.

And our feeling was, with family
shareholders that are that qualified

to be board members, do we really
need outside directors because they're

essentially an outside director.

What they are is a shareholder that
has become an outside, you know,

a director, but they are family.

What the board finally said was,
"The only two people in this room

who know or, and are in the food
business are the family members who

are actually working in the business.

We would like to add food professional
experience to this board to give the rest

of the board the assurance that people who
know the food business are evaluating this

management team and giving the board an
honest opinion of how well this management

team is doing, because they know."

So that was the impetus to start it.

I think from that, McIlhenny Company
has continued to do a board evaluation.

What skill sets do we have and what
skill sets do we need and we don't

have, and how are we gonna get them?

And they just added another outside
director with a skill set based in

being a CFO, 'cause they felt like
they wanted to have some more high-end

financial experience on the board.

Adam Hatcher: It's dynamic.

What the board needed in 1997
or in 2018 is not gonna be what

it, they need in 2030 either.

So the board asked you, so I'm
winding back in time a little bit now.

So the board asked you,
"Tony, what is your timeline?"

It sounded like.

Which is, by the way, a question that
a lot of families are scared to answer.

Like, I've sat down with families
and we've just said, "Well, what's

the latest you would be gone?"

And the moment you write that on the
board, if they say it's 70 years old

and they're 63, seven years, or if you
turn that into months, it's so hard

for families to answer that question.

So they ask you, and
you gave them an answer.

Tony Simmons: Mm-hmm.

Adam Hatcher: So how did that play out?

Tony Simmons: It was fine.

It was an orderly transition and one of
our other corporate governance is that a

CEO cannot be the chair for a minimum of
three years after they retire to stop a

former CEO from lording over the new CEO.

And, that may be a little
tough in some families, but

it's a good business practice.

I mean, it's hard for me to think that you
could have a hard time arguing against it

because it's normally hard for a family
member to turn over a family business.

You see it a lot.

I've seen it a lot where, "Okay, I'm gonna
turn it over to you," and then he's in the

office every day telling him what to do.

Well, he hadn't turned over anything
at that point, you know, if that's

how he's approaching it, and it can
be very destructive to a family.

Adam Hatcher: And "We miss you" to
the person who's left if they're still

around, "We miss you," or, "You were
so fun to work with," can very quickly

become, "'Cause your cousin drives us
crazy, and he's not as good as you were."

It just, there's such a slippery slope.

Tony Simmons: Absolutely.

You gotta make a clean change.

And, that's what it was.

And I stayed on the
board, but not as chair.

And, McIlhenny Company's age
limit for board members is 73.

So, I rotated off the board at age
73 because I aged out, you know.

Now I still run Averill & Inc for
my family, and I run another little

family land business for my family.

But, I aged out of McIlhenny
Company's board at 73.

Adam Hatcher: So Tabasco's
the name of a product.

Avery Island is the name of a place.

McIlhenny Company is the company that
produces Tabasco at Avery Island.

Okay.

Tony Simmons: Yeah.

And Avery Island is actually
McIlhenny Company's landlord because

Avery Island owns all of the land.

God bless my ancestors.

Over 100 years ago, they got together
and agreed to give up their fee simple

interest in Avery Island and put the
land into a corporation and take back

shares of stock in the corporation.

So no one can sell off a piece
of Avery Island because Avery

Island Incorporated owns the land.

No shareholder owns the land.

They're able, like I am, to have a
home site lease on Avery Island, and

I own my improvements on my lease, but
I do not own the land underneath me.

Avery Island Inc.

owns the land underneath me and leases
me that land to have my residence on.

But my lease restricts ownership of
that home to a blood descendant of

Daniel Avery and Sarah Craig Marsh.

Adam Hatcher: And the company
that owns it, I assume, has a

board, has people who run it.

Tony Simmons: Yes.

So I still run Avery Island Inc.

for my family, even though I'm
retired as former president

and CEO of McIlhenny Company.

I still run Avery Island Inc.

I tell people it's almost like
I'm the mayor of Avery Island.

That's sort of what it's like, you know.

It's not really a
full-time job by any means.

And I have a full-time manager who
is there handling day-to-day stuff.

And we have a crew that
maintains the island.

It's a gated community
and Avery Island Inc.

controls the gate onto Avery Island.

So those are our employees
that are on the gate 24/7.

And all of the grounds maintenance,
is done by Avery Island Inc.,

our family company.

And then McIlhenny Company leases land
on Avery Island for its facilities.

They own their improvements,
but they lease the land from us

to have those improvements on.

100 years ago, the closest town,
New Iberia, is seven miles away.

Well, it's too far to go to work and back.

So we built housing on Avery Island
so that our employees could live on

Avery Island and be next to where we
needed them to be to make Tabasco.

We have about 60 houses on Avery
Island that we lease to our employees.

So the population of Avery Island,
including family members, is a

little over 200 people probably.

Adam Hatcher: I'm trying to think of
how many headaches the company and

the family have avoided because they
put the ownership into a business

versus, as you were saying, having
individual shareholders, any of whom

could have at some point elected
to sell their part of the island.

It's all pulled together versus
any one person really being able to

have leverage over another person
or another branch of the family.

Tony Simmons: Yes, Adam and actually
there's another added benefit that I

interact with a lot of family businesses.

One of the benefits that we've received
from the way we're structured is

that what I would call our legacy
assets, which is Avery Island itself.

And, we have the family home
on Avery Island that, you

know, is communally owned.

It's owned by the corporation and is
available to family members to use.

We have various amenities on
Avery Island that our family

can choose to take advantage of.

Those legacy assets are
not part of our business.

They're not part of McIlhenny Company.

So, it's much easier to separate legacy
assets and business assets, which is as

you know, where a lot of families get
into quarrels and squabbles if it's a

successful family business and they have
villas or they have yachts or they have

airplanes or they have facilities, how
those get used by various family members

can cause significant issues in a family.

So, the fact that our legacy assets
are separate from our business assets

makes life a lot simpler for us.

Adam Hatcher: Are there still
distinct branches of the family?

I find that interesting how families,
sometimes it starts to get so

big that you start to lose those.

Do you still have distinctive
veins in the family?

Tony Simmons: Yes, you do.

One of the things that we instituted
for McIlhenny Company especially,

was a shareholder education program
where we invited 25 stockholders.

Originally, it was just
stockholders' family.

We ended up allowing spouses to attend
later, but we tried to keep the age

group as close as we could to each
other because even though some of

my cousins knew who their cousins
were, they didn't really know them.

And by coming into a three-day education
session with cousins that were mostly

in the same age bracket as them, it
really, in addition to them learning

a lot about their family business and
having a much better understanding of

what happened and how it happened at
Avery Island, and what the governance

was because they met with the board,
they met with the officers that run the

company, they toured the facilities.

But they also, in lunches and dinners
with their cousins, became much better

acquainted with an awful lot of their
cousins, which was an extra benefit,

that we got from trying to educate
our younger shareholders especially,

on what McIlhenny Company was.

We finally did it enough to get down
to about 25 years old and just stop

there, and now we're waiting until
this next group gets sufficiently

large at 30 to, you know, around 30
years old or so to bring in another

group and do it all over again.

Adam Hatcher: We'll wind back to that and
the shareholder meetings and the creation

of those and then how you use them.

But it's neat to hear that there was
a benefit, not just to the company or

to ownership, but just to the family.

People that may not have had a
reason to see each other have a

reason to get together and connect.

Tony Simmons: Right.

They've been investigating
and are just trying to start a

family council, and we'll see.

One of the things I question
about the family council,

I'm not questioning the family
council, I'm questioning versus a lot

of families, what I mentioned to you
earlier, we've separated our legacy

assets from our business assets.

Family councils, to a large extent,
tend to deal with non-business family

issues, not the business issues.

That's the board's purview.

Because so much of our legacy assets
and non-business issues aren't in

McIlhenny Company, we'll need to see
how effective a family council is.

Adam Hatcher: Do you mean is there enough
meaningful things to do that it's worth…

'Cause that's a lift.

Tony Simmons: Yes

Adam Hatcher: Creating a council's a lift.

Tony Simmons: Yes.

Yeah.

You know, how effective can they be.

Adam Hatcher: And one thing that's
interested me with McIlhenny

Company is you're still, it appears,
still a single product company.

Now, there are different product lines,
but there are other families whose

companies were started in a similar era.

Heinz is an example of this.

Campbell's an example of this.

They start as a single product
family, and then they go out into

lots of stuff, and they go well
beyond that, and they go public.

But you all have been able to make the
decision to stay with a core product

and make it as great as you can.

Do you think that is uniquely
you or the family or…

It feels like at some point a different
company, a different family could have

felt tempted to chase, to be considered
great, to chase Heinz, to chase Campbell,

to chase these other companies and
try to outgrow them or outdo them.

But y'all didn't make that choice.

You defined greatness your own
way and have become what you are.

Is there something about having a
family business you feel like lets you

do that, define it on your own terms,
versus having to chase what other people

would or what a corporate board would've
tried to force you to add products

along the way or diversify lines?

Tony Simmons: Actually, Adam,
the way I think about it is

what we talked about earlier.

It's the way we solve the puzzle.

The family likes owning the
business, and the business is

getting what it needs to grow.

But we did make a conscious decision
to do what we know how to do.

We're gonna stay with the
pepper sauce business.

In the early '90s, we bought
another pepper sauce company.

Which we sold a few years later.

The only thing we did worse
than buy it was sell it.

Demonstrating a complete lack of ability
to recognize how to do M&A effectively.

And, we made a conscious decision at
that point, you know, to not refuse

to do M&A, but to put a low priority
on it and concentrate on trying to

do organic growth of our products and
expand our product offerings with line

extensions because we make a premium
product that we sell at a premium

price, and we're not really good at just
how to market and sell me-too stuff.

Mm-hmm.

So, you know, there is no one, no one
that takes five years to make a bottle of

hot sauce other than McIlhenny Company.

'Cause seed to table takes us five
years to make that little bottle of

Tabasco that you see on your table.

Adam Hatcher: At 21Clear, when we
work with family companies, one of the

things we talk about is that when you
choose to work with your family, the

great family companies have two goals.

The first is to build a great company,
and the second is to keep the family

together as you own and operate it.

And what I love in family companies
about that first point, building

a great company, is the family
gets to decide what greatness is.

You need to make a decision about
what it is, but you get to decide,

and you heard Tony right there
at the end talking about that.

They didn't have to become a large
publicly traded company that got

into lots of other ancillary business
lines and consumer packaged goods.

They decided they were really
good at making pepper hot sauce.

And there was something about, Tony
says it right there at the end,

there's something that resonates
with that extended family about

a product that takes five years.

It's not something that you can
just quickly do and produce.

And that's what I love about the
stories that Tony has told us so far,

is you hear some common themes and
principles, family meetings, governance

structure, intentionality, the courage
to answer big questions or to pick

up the phone when someone accuses
you of having two sets of books.

But the way they do it
is specific to them.

So the point is that they lean
in on how they work in and

own the business together.

But how they do that is theirs,
and it may or may not be applicable

to you, any given answer.

So this is episode two.

Episode three, I'm gonna encourage
you, if you're an audio listener,

to go find the YouTube, because Tony
has been our guide through company

history and inner family business work.

But the third episode, we actually turn
the camera on, and Tony takes me through

a five-bottle Tabasco tasting, and you
get to see him go from historian and

inner family business expert to a man
who absolutely loves hot pepper sauce

and making your food taste better.

It's fun.

It gives you a bit more insight
into him, and it's a great way

to end this series together.

So look for that in the next episode,
and I encourage you to pull up

the YouTube video and watch it,
particularly my face when we get to

habanero and the scorpion bottles.

There are links in the show notes if you
want to follow our newsletter as well.

You'll always hear about new
episodes there and get content

in between to help you think
about your inner family business.

I look forward to you joining us
next time for the third episode.

And as my grandfather would
have said, "Thank you so very,

very much for listening."