Partner Andrew Murphy considers the Fresnel partnership a force multiplier of its parts, with the expertise of the partners backstopped by a deep bench of all stars. And watch what happens when it works.
The Fresnel Companies portfolio may seem like a diverse set of businesses brought together with little in common. But if one were to look more deeply, the commonalities emerge, and the shared DNA of customer-facing technologies becomes apparent. But it doesn’t just happen: There’s a lot of thought and planning that set these companies on the path for stratospheric growth, and Fresnel partner Andrew Murphy has been preparing for that throughout his life.
What kind of background do you bring to The Fresnel Companies?
I lived in Great Bend, Kansas, for the majority of my life. Outside of college and graduate school, I had permanent residence there. I grew up in a family-owned commercial cattle-feeding operation that my father had founded in 1959, and they also farmed quite a bit over the years. We managed to do really well, and I always wanted to follow in his footsteps. I managed to do that with only one small hiatus: When I got out of graduate school, I went to work with Koch Industries in Wichita as an analyst at their market desk for part of my tenure. The last 25 percent of my two-year stint there was spent as an assistant manager at one of their commercial cattle-feeding operations, when they were still in the cattle-feeding business.
The opportunity to come back to Great Bend arrived in 1997 and I took over as manager of our family facility there and started looking for other opportunities to expand our scope and reach, chiefly because consolidation was and is the trend in the livestock business. We started making acquisitions with a partner feedyard of ours and then made four such acquisitions. At that point we determined that we needed to merge all of these businesses under one umbrella because we discovered inefficiencies in the system, meaning that the entities that shared common ownership didn’t necessarily share the common goal. Communication had become an issue. So we thought the most efficient way was to take it all and merge it into a company we founded in 2006 called Innovative Livestock Services (ILS), which is still in operation. We grew that company and merged many different things into it, so it was a consolidation of, at the time, five feedyards and, with a large land acquisition, we merged both companies’ farming operations into one company. There were several periphery companies—anything from fuel distribution to environmental services for the feedyards to pellet mills—and brought it all under one big management structure and streamlined the system. We built it into one of the most integrated and successful risk-management systems that exists in the industry and still is the best in the business as far as I’m concerned. Even though I’m no longer there I’m proud of what we built. We grew it to a certain extent and there was a timing opportunity that gave us—there were four of us who owned around 40 percent of that company—a liquidation event that allowed me to be creative and branch out and do other things in ag tech and some other ventures, and tech in general for that matter.
Is that when you learned about The Fresnel Companies?
My history with Fresnel actually goes all the way back to about 1972 or ’73. The reason I say that is because Tom Thies and I grew up together. His family was in the meatpacking business and my family was in the cattle-feeding business. He’s the youngest son of his family and I’m the youngest son of my family. In Great Bend everything is just down the street, but we lived literally about a block and a quarter from each other growing up. Our parents knew each other well and got us together quite a bit, and then we learned how to ride bikes and we didn’t need our parents anymore. So my journey with Tom started a long time ago.
After I had left ILS, my family relocated to a vacation home we had in Telluride, Colorado. From there, I started working on different ventures, re-investing in different things, diversifying what I was investing in, looking at different opportunities, and helping out with companies. What I’ve discovered is that I’m a really crummy passive investor—I prefer to be very involved or as involved as they’ll allow, and sometimes a little more involved than they’ll allow. I work with the Telluride Venture Accelerator, where they bring in groups and have a pitch day, and we work with startups and companies at various stages of their development.
My actual journey with Fresnel began in 2016, when Tom and I were both going to be in Kansas visiting parents. He was closer to Kansas City and I was closer to the middle of the state and he said, “Can you meet me in Abilene?” So we met up, and we sat and drank beer in a little pub in Abilene, boyhood home of Dwight D. Eisenhower, just as a frame of reference, and we got to talking about all the things we were involved in, going beyond the surface level of a phone call. Tom was talking about all the companies under the Fresnel umbrella and all the different opportunities they were looking at as well.
I looked at him and said, “How much more powerful could you be if you just built the structure above it and ran these companies effectively?” The idea is you have people who would be directly responsible for each individual company but take off the burden—and this is very similar to what we did at ILS—of the financing, the risk management, the fundraising efforts, the management efforts, and business development. Let the managers manage and get the most out of the companies themselves, while deflecting a lot of the noise that comes in while you’re trying to run a company like Tring, for example, and looking at different opportunities: which things fit and which things don’t. Create your goals and then let the senior team go out and bring you the tools that you need and focus those things down to where they belong. That was a very successful structure and I see very similar synergies within the five companies under the Fresnel umbrella as well.
I had seen what we talked about work firsthand at ILS. We let the managers manage. We saw the success of individual feedyards, or individual companies in this case, because they really ran as independent entities under one umbrella. Margins increased, performance was better, we didn’t have to worry about where more cattle were coming from. The ladies and gentlemen running those companies were able to focus on what was important and what made that company, that individual company, be successful, more so than having to worry about other things, such as, “We have to go through a financing component for this” or “We have to go out and be experts in the market and try to put risk management positions on,” and so on.
Was it something in the water in Great Bend?
There was a lot of excitement after that conversation, and then shortly thereafter I was introduced to Mr. Casson and we were a brotherhood. It’s interesting. Tom is the oldest of us and Andrew is the youngest our particular group of people and Tom’s only four months older than Mr. Casson. I don’t know if you could have designed it any better than that.
And likewise the Fresnel portfolio companies, there are five currently—you always have to throw that out there when you have Andrew Casson in a leadership position—you never know what that guy’s going to come up with, so you have to be prepared. There’s a unique value proposition in not only the diversification of these companies, even though they’re semi-interrelated, it’s harder to get from a Cipherium to a Clearly Ice & Water than it is to get from a Cipherium to an Emergent International Payment Systems. But all of them serve their direct purpose of being consumer front-loaded. They’re direct-to-consumer-type companies that enhance and enrich, and they all have this flavor to them—they’re all right there in front of everybody.
So it’s by design that each company makes the most of that high-profile position with consumers?
The best value proposition that exists is how active everybody actually is in the company, Tom and Patti and Andrew. But also how many people are willing to step in and be Experts-in-Residence, looking at those great opportunities. We have the best and the brightest basically in the on-deck circle. They could be called up to the plate at any minute. The broadening of the knowledge base is one of the most important things. These companies are not massive, so the talent pool has to be in a way, I don’t want to say artificial, but everyone is kind of a pseudo-full-time employee. As these companies grow, the components are there to seamlessly expand, which is great. And that really creates an opportunity for different biz-dev things, calling in different people for different meetings. Take Frank Murphy for example: He’s a prime-time player. And you look at the Experts-in- Residence right on down the line: We’re not talking about A players, we’re talking about All Stars, potential Hall-of-Famers. It’s amazing how it’s all come together over the last couple of years. I’m continuing to broaden horizons based on relationships that will ultimately come into play working on different projects and looking at where this enterprise can really go in the short, intermediate, and long term. I think everybody has to think like that.
One of the other things that’s unique about the Fresnel mentality, especially as you’re talking to partners and potential investors, is that one of the questions always is, “What’s your exit?” My experience in that realm is that if you’re thinking about an exit, you’ll never build anything. But everyone has to be honest with themselves. It’s always in play, and let’s be clear, even with entrepreneurs, everybody has their price, and everything is for sale, right? The exit strategy develops over time. My answer, and Tom asked me about this too, my answer always is, it depends. And it’s true, it depends on the circumstances, it depends on the timing, it depends on the buyer, or the seller, it depends on lots of things.
There are so many moving parts involved in this thing. And again, our primary focus is to build a successful company, one that outlasts the founders. It has to outlast all of us. And if you don’t build a successful company, you’re not going to have to worry about exit, except the only bad exit you can have, which is going under. And I think everybody realizes that.
But don’t entrepreneurs always look to sell?
I’ve been in the business world, but I have never really considered myself an entrepreneur although that’s what other people have labeled me. I look at people like Andrew Casson and how he developed the company that he built in the telecom world and did it in a completely different fashion to what was being done at that time, that’s entrepreneurial. Tom, getting out of college as a wet-behind-the-ears 23-year-old kid and being thrown into a business that hadn’t been created yet. Water kiosks were a thing, and water filtration was a thing, but creating a business out of it? I remember talking to him right after he had moved down to Arizona. I said, “Tom you can get water out of the tap. I think you’re nuts.” But he and his dad saw something that nobody else was seeing, and it obviously turned out to be extraordinarily successful.
I consider myself more of an operations guy, more of a strategist, than an entrepreneur. I’ve learned a lot in my career and I continue to learn, and I don’t ever want to stop doing that because that means something bad has happened. My goal is to be better every single day, even if it’s percentage points, even low percentage points.
I’ve learned that the way you structure a company, you build it like it’s been running for ten years and that philosophy flows equally throughout all of the Fresnel Companies. And that’s what drew me into the mentorships with groups like Venture Accelerator and other groups that I’ve consulted with over the years. It’s that you can make a product and start with a great idea or a solution to a problem. They really both have to be there, you have to be solving a problem. There are lots of mistakes you can make along the way. If you have your eyes on the prize and it’s like ten years out and you’ve got a staff of a hundred or 200 or whatever you’re going to have at your maximum size, you can avoid 75 percent of mistakes that you might make.
So building the structure of a company allows it to reach that critical mass sooner?
All this is circling back to the point: This group of people, Tom Patti, Andrew and I, we’re pretty damn battle-tested, and also backed up by the Experts-in-Residence. Who in this group is not going to, first, see a mistake or bad decision coming, second, stop it from happening, and, third, eliminate that mistake from being part of the process? I think that like-mindedness is equally enhanced by the fact that all of us—Tom, Patti, Andrew, and me—we all may get to the same point in a discussion, but we don’t all get to the same point the same way, and that’s the value of keeping your eye on the prize. People come to understand it, how we each get there is one of those things. There are differences in personality, and how I approach things may not be successful in certain settings in how I would convey them, but in other settings they are. And it’s the same with all of us. How we get to the end is different, but we all have the same end.
And the Experts-in-Residence think the same way, so there’s a certain amount of validation. We review decisions: This is our go-to-market, or this is our technology play, or this is what we see in the Emergent sector, and we come up with it and we get validation and/or enhancement of what we’ve just got done working on, which is really what makes it that much better.
How is that different from what an advisory board does?
That word Advisory Board is a term that is way overused. I’ve sat on “advisory boards” and all they really turn into a reason to have a boondoggle once or twice a year. That’s all they do because the advisory board is rarely informed about what’s going on day to day in most cases. In my opinion, they’re useless.
We spent a lot of time discussing this group of men and women that we’ve got, and what to really call them: Experts-in-Residence. And Lisa Meade, she liked what she saw and jumped in, not even waiting for the invitation. We hope there’s a waiting list to be an Expert-in-Residence. We hope that’s what we’re really developing: People throwing their talent at us on purpose. And what a terrible problem to have, that we have more talent to draw on. That’s really the essence, because we draw on the talent, rather than holding meetings to get a rubber-stamp approval.
These five companies are in position that any or all of them can go stratospheric at any time. The first one is always hardest. We’re seeing massive amounts of traction inside Emergent right now, and this is what we said it was going to be people. And that’s the easiest way to say it. This is happening just the way we said it was going to happen.
And that’s really what’s going on with the portfolio companies, and players to be named later. We’re getting these companies to where they really could be, within their own markets. And that’s a really cool thing to witness.