'From €200m to €24bn - How I built a global glass empire'

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0:41Richard Harpin: We look forward to seeing you there.

0:47Windscreens, this is not a product that you wake up in the morning and say, I'm really excited, I'm going to go out and get my windscreen replaced. Can we sing it together?

0:59Richard Harpin: Autoglass repair, autoglass replace. That jingle is sung, I think, in 40 countries now around the world. A repair is about a third of the price of a replacement. And my thesis was, if we show that to insurance companies, they'll give us more volume. If you look after your customers, you look after your people, and you look after society, the results will look after themselves.

1:33Richard Harpin: I'm Richard Harpin, and this is the Business Leader Podcast, where we look at the stories and strategies behind modern businesses. Today, my guest is Gary Lubner, who was chief executive of global giant Belron for many years. His family business specializes in vehicle glass replacement and under his watch, repair too. He was in charge for 23 years, in which time the value of the business rose from around 200 million to 24 billion euros. So what secrets can he share about scaling a global business? starting at the beginning belron which is called auto glaston the uk is over 100 years old and you're the third generation did you always feel a pull to join the family business uh not at all actually so i mean growing up it was very much part of life and part of the family i mean you know the the roots of the family go back to my grandfather and um and he he ended up he was a salesman in the business at the turn of the century, last century.

2:38And he used to push this barrow around the streets of Johannesburg of glass. That's how we got into it. The truth is, it was never, well, up until after the mid 60s, it wasn't really a family business in the sense that the business had grown and it was listed in South Africa. The family was still an important shareholder, but it always felt like a family business, even when I was there. But the sad reality. I wish the family would have had even more, but it didn't. So it was always there. It was always present. But I went off to university. I studied finance and I'd never really thought about going into the business at all.

3:19But then as luck has it, you meet people. And I was always meeting interesting people who my dad had round to the house and stuff like that. And one of the guys was who I'm still very close to Etienne de Villiers he had just come back and from from the who's South African but had been at McKinsey and he'd come back to work in the business and he said to me why are you why are you doing Arthur I was at Arthur Anderson doing my CA work he said why are you doing that come and we're doing such exciting things I decided well I'd join it but But it was more just because I liked him and we got on well.

3:56And so, yeah, so I joined that. And sometime in between that you did an MBA, I think, as well, didn't you? So, no, that was afterwards. So, yeah, I joined the business in South Africa. I worked there for about seven or eight years and then decided to go and do an MBA. And that's when I came over to London. And that was really the big change. I mean, that was really where I realised, OK, this is going to be something.

4:16Richard Harpin: But you'd grown up in South Africa at a time of huge social and economic tension. How did that shape you? It shaped me enormously. My grandparents were all refugees. They landed up in South Africa with no money at all, had become very successful, my grandfather in particular, but never forgot where he came from and never forgot what I feel and what he felt and what my dad felt was an obligation to give back, an absolute responsibility that if you are successful, you should then give back. I grew up in a family that was very charitable, that was always doing things for other people. But alongside that, and that really only came when I was conscripted at the age of 17.

5:01If you were white and male in South Africa, I'm talking in the 70s, you got conscripted into the military. And I got conscripted into the South African police force, which was really the sharp end of the enforcement of the vicious apartheid. I bet. Yeah. And so that was hugely, hugely influential in my sort of shaping my life, to be honest, because what I saw there was not only the viciousness of a system that discriminated people on the basis of the color of their skin, but how a state could control effectively a country. Because I grew up, you know, you didn't go to a school where there were black kids, so you just grew up and you kind of thought that was normal.

5:45It was only when you got out of school and realized actually what was going on. So I did my military service, but then became very, after finishing that, I then became very involved in the anti-apartheid struggle, including starting a few organizations, trying to get business people speaking up against apartheid, which was not the easiest thing to do. The business community, I think like many business communities, was very conservative, wanted to keep their head below the parapet. There were always exceptions, but generally that was not the case. And I felt really strongly that we had to speak out.

6:22And we had to speak out, you know, not only from a human and a values point of view, but it was terrible for business to have a society and an economy that was based on discrimination.

6:32Richard Harpin: How did it feel then to leave all that behind and make that big move to the UK? Yeah, it didn't feel like that at all because I had no intention of staying in the UK. So it was literally just, I'm going to go and do an MBA and then I'm going to come back and carry on. But, you know, life never works out like that. And while I was doing my MBA here in London, I did a project. We had to do lots of projects. And I did a project for what was then Balron. It wasn't called Balron, but for the business that became Balron. And I did a project, funnily enough, on whether we should be, whether they should look at doing repairing of windscreens rather than replacing.

7:11Got on really well with the then CEO, my predecessor. And he said, listen, you know, we're just starting to expand into Europe. Why don't you stay for another year? You can go back to South Africa after that.

7:23Richard Harpin: And that was 38 years ago. And then you never left for 20 years or more. And so what was your first job at Autoglass? So I joined, as I say, I joined because I've done an MBA. So then you think, well, you understand strategy and stuff. So my first job was setting up a little unit, which we call the Business Development Unit. And that really looked at where we should be expanding in Europe. So the UK business, Autoglass, was already very successful, was the sole generator of cash and of profit for the group. But we, and my predecessor, John, realized that there were huge opportunities in Europe.

8:06but exactly where we should go, how we should expand, whether it should be by acquisition, by, you know, just growing, by starting branches. So that was what I did in my first job. And what was your recommendation? So the recommendation was, I mean, we decided that we needed to go large and so I spent months and months in places like Germany, France, driving around finding businesses either to acquire or place or greenfield branch locations. So, yeah, we did a lot of work in Germany, in France, in Belgium. And then really that was the start of the European expansion. And so I did that for about three or four years.

8:52Richard Harpin: And those entries into those European countries, that was via mergers and acquisitions rather than organically. Exactly, yeah. What we typically did was we found the market leader at the time in those countries. Now, these were often tiny little business, but they were still the market leader. And then we used to buy that. And then on top of that, we then used to sort of do a proper greenfield approach to work out where should the branches be and often build our own. So that changed later on, particularly in places like the US. And so typically, how much would you spend on buying one of these businesses and what did they look like?

9:28I mean, they were typically a family business. You know, a big one would have been maybe seven or eight stores, branches, depots. I mean, we would have paid a small multiple of profit if they were making profit. But, you know, as you added to those, they became, you know, it became a very good model because you've got immediate synergies, particularly around things like buying and about back office and stuff like that. So the idea of, I mean, we did literally hundreds and hundreds of acquisitions, many of them very small, a few a bit larger, but that was the idea.

10:03Richard Harpin: And you're buying 100 % of the equity of these businesses? Yeah. So we did away with the idea of partnering or franchising. We felt that, and I think that was absolutely the right. And so this model is owned and operated where you're buying a good player in a country, then you're grabbing a hold of it and you're dictating how they operate. Exactly. In many cases, the founders or the owners of the business that we bought left soon afterwards because we had our model and we kind of knew what worked. And that was, you know, that was enhanced as we as we developed. And so how did you find great replacement leaders to put in at the top of those businesses that you'd acquired?

10:44Richard Harpin: What was the sort of, what did they look like? I mean, typically they were, it changed to be honest. So when we started, they needed to be really good operators. So they needed to really understand the business. And remember, we were coming here from the UK, often with no language skills or whatever. So you needed local people. You needed people who understood the business. And so to start with, that was very much the model. They were either people from the business or who had been in similar kind of businesses. As we grew and as the businesses developed, then that leadership model changed a bit because we wanted really professional leaders.

11:21Richard Harpin: In what way? So what would be somebody that you'd put in more recently than at the beginning? Yeah, so I think more recently, it's about size and scale. So, I mean, I remember our French business. I mean, I literally remember our French business doing 10 million euros of sales when I was involved with them. We had a call center of two people. It was a tiny little business. And this was a business that was called Carglass. Carglass, exactly. So all of our continental European businesses were called Carglass. And so the person who's running a 10 million euro business is very different to one now where it's, you know, hundreds, over 500 million of sales.

12:06So now we obviously we competing with and looking to find world class leaders. But that evolved over the time.

12:19Richard Harpin: So you, Gary, helped your boss, the group chief exec, to sort of figure out the model. say that you're going to do acquisitions to get into new countries help make that happen and then tell me about Succession and you taking over the group chief exec role Well, yeah, there was a bit in between so one of the projects that I did in my first job was to also look at the UK business which as I said was Autoglass and it had been very, very successful and it was the oldest business but it had reached a bit of a peak And so I went in with my team and we sort of came up with a whole lot of ideas about how we could improve even the UK business.

13:01And John, the CEO, in his typical fashion said, well, if you think you know all the answers, why don't you go and do that? Which actually turned out to be brilliant. So I ended up running the UK business for about five years from the mid-90s.

13:16Richard Harpin: What were the top three things that you did when you took over as UK chief exec of Autoglass? I looked at the team and changed quite a lot of the team. People number one then? People number one, always people number one. How many direct reports can you remember that you had and how many of those do you need to change? I mean, I inherited, yeah, I took over probably a team of about seven or eight and I changed in the year or so afterwards, probably five. So people was always number one. Having the right people around you is, for me, always going to be the number one. But also, you know, what was the customer service?

13:53Back then, we used to ask people to fill out a, it was a hangout on the mirror, you know, how good was the service? Well, no, we didn't even ask how good was the service, right? The service from 0 to 10. And so we had these very high customer service scores, but there just was something didn't feel quite right. And so we did a much, much more detailed customer service. And we discovered that actually the service was not what it should have been. People were feeling forced into answering a thing and saying. Well, the technician was filling in the form himself. Yes, and the technician, obviously, they're the heroes of our business.

14:30And so they were brilliant. But what about the process getting you to the branch or getting you to the store or getting your insurance details? Because that's all part of that customer experience. and we weren't really checking up on that. And that's where there were huge issues around technology, around promising and not delivering. Once you got the technician to do the work, he was great, but that isn't actually how people felt about the whole experience.

14:56Richard Harpin: How did you fix the operations process? Well, you do that slowly but deliberately. And, you know, I mean, that continues today. I mean, it's 30-something years, and we are continually trying to make the process even smoother because you remember, I mean, windscreens, this is not a product that you wake up in the morning and say, I'm really excited. I'm going to go out and get my windscreen replaced. You know, it's a distress purchase. It happens, I mean, I've had in my life two windscreens replaced. I mean, it happens on average every seven or eight years. And for many people, it doesn't happen at all.

15:32The whole way you design your customer experience has to take into account all of those things. And people don't know what to do. It's completely foreign to them. And so you've got to enable them to do that. And so that means making all of those processes from the minute you call us or go online, what are the different steps that you've got to take to make sure that that experience is the best possible? So that was number two.

15:55Richard Harpin: You've improved the customer service. What was the third one? Well, the third one, which had begun, and again, we improved significantly even after I left, was the whole marketing angle. So, again, in our business, you've got two customers. You've got the insurance company who pays the bill, but you've got the motorist who experiences the service. And you've got to get both of those right. And your marketing strategy has to reflect both what we would call the push and the pull. So we've got to make sure that people know about the service, which is the big branding. And a lot of people in the UK certainly know the name Autoglass and Autoglass Repair, Autoglass Replace.

16:34Can we sing it together?

16:37Richard Harpin: Autoglass repair, autoglass replace. And, you know, that jingle is sung, I think, in 40 countries now around the world, which is another whole story. So, yes, so the whole marketing side, which is making sure that insurance companies trust you. You know, it's a very, very important part of what they, you know, they need to be able to give their policyholders peace of mind. but at the same time, if you piss off the motorist, you give them a poor service, they're not going to use you and worse, they might not use the insurance company. And presumably some motorists come to you direct because they know the Autoglass brand and then they get the reimbursement later from their insurer and others would call their insurer and say, who do I use?

17:27Richard Harpin: What do I do? Exactly, yeah. And you win on both counts. Win on both counts. But you've got to keep doing both things really, really well. So, yeah. So that would have been probably the third thing that we did. Europe was then growing really well. So I took over the European business for a while, for about two years, I think. And then in 1999, the controlling shareholder, which was SAB Miller, the brewing company. From South Africa. From South Africa. They came here to London to list and they were correctly advised to get rid of all of their non-core brewing assets, of which Belron, it was called the PG Group, was one of those.

18:10Belron was within that. It was a big South African group. And so we got new shareholders at the end, well, sort of mid-1999, which was this Belgian family listed company called Tieterin.

18:23Richard Harpin: What sort of value was that, that the whole Belron business was worth? Yeah, it's hard to say because the whole, I think they paid for the whole group, including South Africa, around about 275. I'm talking euros. About 270 to 300 million. So it's hard to say what Belron was part of that, but it would have been quite a lot smaller percentage of that. So I would say somewhere around 200, 220 million is what they would have paid, what you could have attributed to Belron in 99. My boss, John, decided that he didn't want to continue working for various reasons, which I totally respected. And so there's a period where Dietrin came in and there was no CEO.

19:08I was looking after Europe. We were in America. We were in Canada, Australia. And so there was a year which was quite tough, actually, at the beginning of end of 99 into 2000. No CEO. But for whatever reason, they approached me midway and said, would I like to take over?

19:25Richard Harpin: A very smart decision it turned out to be, Gary. It was brilliant. How are you feeling then that you knew the business and you're up for becoming that group chief executive? The challenge was huge. I mean, I was very excited about you. I was looking after Europe, so I was very confident about that. I was very nervous about North America, Canada and US, and that turned out to be the correct caution. And I didn't know much about Australia and New Zealand. So it was a big step up, but I took that. And yeah, it was a tough, tough, tough introduction. What were the first things that you did when you grabbed the reins of the whole group?

20:03We had a minority stake in the biggest US automotive glass business, which had been struggling for many, many years. This was SafeLite? This was SafeLite, yeah. This was in 2000. And my very first decision was the SafeLite business needed an injection from us of$100 million. And I just could not. So the majority of shareholders was a private equity group who, yeah, I wasn't mad about. and yeah so they we needed 100 million dollars and i could not justify that i said to the board i'd rather have that if you've got 100 million dollars spare give it to me to invest into europe and that was the decision we took and uh as a result of that safe light went into chapter 11 because they had they had no money um and we'll come back to that because then back in 2007 i went back in but then was able but that was a pretty courageous decision at the time wasn't

21:00Richard Harpin: Because most people have said, oh, well, we've got a minority ownership. We'd better stick with it. And you said, no, we're not going to. Look, by this stage, I knew the business really, really well. The US business and the US management at the time were not really interested in learning anything from Belron or they kind of knew their own way. The performance of the business was incredibly poor. It was losing money. and I just couldn't see how particularly as a minority owner that we'd be able to influence that and to invest 100 million. It actually wasn't that difficult a decision. I mean, it didn't go down that well as you can imagine amongst certain people certainly in the US.

21:37Richard Harpin: Talk about the bit about technology and how that's played a part and I think you acquired a business called Glassmedic. So Glassmedic was something that I'd done earlier in my time and that again turned out to be something pretty good. So we came across this organization called GlassMedic, which had come up with a technology that repaired windscreen. So when you have a little crack on your windscreen, a little ding, if you like, you normally had to replace it. And this company had come up with something which said, well, actually, you don't have to replace it. You can repair it by injecting a resin under a vacuum, which would all but make the little crack disappear.

22:19Now, most people in the industry obviously saw this as a massive threat. I saw it completely differently, though, because I thought if we could go to insurance companies, because we knew only about 25 % at maximum of windshields or windscreens could be repaired, because once the crack became too long, you can't repair it. But if you get it as it happens, you can repair it. And we did these calculations which said, well, if we can repair even 20 % of these for an insurance company, that would be a massive saving because a repair is about a third of the price of a replacement. And my thesis was if we show that to insurance companies and they trust us that we're actually on their side, we're trying to save them costs, they'll give us more volume.

23:08So it is a tradeoff between, in effect, price and volume. So, and that's exactly how it played out. And that was pretty brave though, wasn't it? It was brave.

23:19Richard Harpin: Many other people wouldn't have done that. No, no, no. And even within our own company, people were saying, are you mad? Don't go near this repair thing because you're literally going to see, and in fairness, in some places we did. We saw sales drop because we were doing so much repair. I remember countries like the Netherlands were doing huge amounts of repairs. But I said, look, I think if we just keep going with this and we keep telling the insurance companies about it, we show them how we're saving their money, we show them how their average price per claim is actually going down, even though their spend with us is going up, that would be something.

23:55Richard Harpin: That will help in the long term and build partnerships and you can expand those globally with the same insurers. Precisely, yeah. And you ended up buying GlassMedic, I think, did you? The technology. We bought the technology and that's now patented. Was that a big price tag? No, it was tiny. It was a few hundred thousand pounds. You know, once I was able to unleash it onto the whole of Belrond, it became a very successful thing and we still use the technology today. We touched on the branding and the TV advertising. Was that something that only worked in the UK? So when I took over as CEO, I think we were in about 12 countries, But each of the countries was their own, you know, very autonomous, made all of the decisions themselves, including things like buying glass.

24:44So there was a bit of a centralized function, but not very big. Logistics, warehousing, marketing was completely separate the way, you know, IT systems are separate. So it was an obvious thing for me that, you know, once I took over that we started centralizing some of the stuff. And the first things we did was around supply chain, around purchasing, because there were immediate benefits to that. But then very quickly, we had a brilliant Belgian business and a fantastic individual, Gerard, who you know. Gerard Damsky, who was at Procter & Gamble. He was, yes. And he had come up with a jingle, which is the one we just sang a little bit earlier.

25:27And it was working incredibly in Belgium. I said, if it's working so well, why don't we use it everywhere else? And I got a huge negative. No, no, you don't understand. Oh, it won't work in my country. We're different. Exactly. You know, jingles don't work in this country. Anyway, I said, well, I'm going to try that. And listen, the rest is history. I mean, that on its own, I think. And the fact that we and it wasn't just the jingle. It was the fact that we used our own people in the ads. So even today, you'll see every one of our ads is our technician talking to the customer. He or she is a hero of the advertising.

26:02Yeah, and we've made it absolutely scientific, and Gérard really led that way. And we built an incredible marketing machine, which didn't use agencies much from a creative point of view. I mean, we used media, obviously, because we knew exactly what worked, and we tested and tested and tested. I mean, these days it's much easier to test with A-B testing. But even back then, we used to test, does this work? If you use this word in this place, if you put the jingle at the beginning and at the end, what are all the different things? And we became very, very scientific at working that out. So that was a huge part of marketing.

26:38Richard Harpin: But interestingly, you kept the local brands that you acquired rather than coming up with a global brand. Exactly. Why was that? So that was very simple. And I mean, every person who came to me said, well, I don't understand why you've got all these different brands. Well, the simple reason is people in Australia, where our brand is called O 'Brien Glass, do not travel to Sweden in their car. And so it actually doesn't matter what the brand is. And so, you know, because what we talked about earlier, we acquired many of the businesses. So many of them had their own brands and had a brand awareness.

27:09So where a company didn't have brand awareness, we changed the name. In Europe, very important, because people do cross borders all the time. So in Europe, and it's true today, our brand is Carglass. And so, you know, if you're in France, but you're going on holiday to Italy, you'll see Carglass. It'll be very familiar. But in Australia, O 'Brien's is the brand. In New Zealand, Smith & Smith is the brand. In the United States, you know, Safe Flight, Canada.

27:37Richard Harpin: Yeah, so why would you throw away that brand recognition? Make no sense. If you did that, it would smack of sort of ego from the top, wouldn't it? Completely, completely. And that's something, you know, I had to fight throughout my career. You know, don't get too centralised, but, you know, do the things from the centre that make a difference rather than, you know, exactly. What else did you need to fight? What was the resistance from the other countries about, oh, no, we're not going to adopt your model? Yeah, so technical training. So what do I mean by that? We realized and we call it now the Belron way of fitting.

28:13There is one way to fit a Mercedes C-Class windscreen. We're doing this thousands, hundreds of thousands of times. We know the exact steps to take to fit every single piece of glass. And so one of the things, and it took years, we did was we codified that. And we came up, as I say, with a Belrond way of fitting. And that if you've got this piece of glass, this is the way you fit it. Now, we got a lot of resistance to that in the countries. Because one country, the United States, I remember early on, they used to use a long knife, a very technical knife to cut the windshield out. Well, we'd worked out there was a much better way, a much safer way, a much quicker way to do that.

28:58And then you tell them, well, you're going to change the way you do that. No, no, no, you don't understand. This is a different country. Anyway, so we did that. But, I mean, that, again, has been a huge, huge source of competitive advantage. We can use the learning from around the world to work out what is the best way to do everything. And so that was – so we now have something called Belron Technical, which is a separate – it's not a business unit, but it's a separate team of people. who are just constantly refining the operational side of how do you fit a windscreen in the most practical way.

29:32Richard Harpin: And what did that look like in terms of the head office, head count, and how many people you had centrally versus the individual countries? Yeah, so we've stuck with a model where each country has its own head office, but they are only doing things that matter in the country. And then we have experts in the centre. So the centre is small, relatively small. I mean, the business now employs about over 30, nearly 35 ,000 people. The head office would be hundreds or even less. It's not big. And so other than the local brands, this is the same model everywhere. Exactly. 97 % the same or what would you...

30:15Well, I would hope almost 100 % the same. So, you know, if you went into a store today and you were watching a VW Golf side glass being installed, you shouldn't, you know, other than knowing where you were, you would not, if there were, you know, if you were in New Zealand or if you were in Ohio, it would look exactly the same. The steps that the technician takes, what he does exactly the same. So that was one big one. And then the other huge one for me was leadership. So in the end, we talked about that earlier. For me, leadership is what makes a difference. And I used to do a speech to all of our new joiners or to people who are coming in.

31:00And I used to say, look, our business is not that complicated. You know, if you've got a bunch of high school students or certainly business school students in a room for an afternoon, they could come up and describe how you would run a business like ours. And so I said, and so the interesting conundrum for me always is how come Balron is 20 times bigger or 30 times bigger than the next biggest competitor? And the only thing you can come up with is the people we have, the leadership that we have and the importance that we put on that.

31:34Richard Harpin: And who delivered that fantastic operating model. Exactly. Yeah. How many times did you get it wrong on the chief execs that you hired in the country? And what could we learn from that? I mean, we got it wrong many times. But I mean, our selection process, the way we select senior people, well, the way we select all people, but in particular senior people, I mean, that was something that I was very passionate about. I started developing when I was in Autogloss in the 90s with not using interviews. I mean, interviews are the worst predictor of performance. We moved to assessment centers. We moved to psychometric testing.

32:17I mean, we did a whole range of things. And so our selection process has just got better and better and better over the years. And not surprisingly, we've made less and less mistakes. So, yes, in my early years, I made quite a lot of mistakes with senior appointments. And your question was, you know, what did I learn from that? What I learned from that is I always took too long to fix it. Because you kind of know quite soon and you have this, and I mean, I didn't learn, and you keep thinking, well, something's, you know, it's that.

32:46Richard Harpin: So the advice is if you know it's wrong and we all know, you've got to tackle it now. I always did the same. Took far too long to get rid of the wrong people. Exactly. And, you know, so the way I try to avoid that horrible feeling, because we know how horrible that is, of waiting too long, and then when you do it, you think, oh, my God, but why didn't I do it earlier? So the way to prevent that is to just make that select, when you're selecting the person, make that the really hard stuff to do. Because once you've selected, it's sort of, you know, it's another whole thing. So a key part of this model was also about going and buying those businesses, the M &A.

33:26Richard Harpin: Yep. How many did you have to, how many businesses did you review and look at over your 23 years, Gary, as group chief exec? how many acquisitions do you think you made in total? It's in the high hundreds, six, seven hundred. So this wasn't just buying one business in a new country, this was going and buying several? Several, yeah. In order to create that sort of national coverage? Exactly, yeah. So the US was a good example. In 2007, we went in and bought SafeLite. By the way, we bought SafeLite after we had failed. I thought I could beat SafeLite, and we started an American strategy in sort of 2004-5, going and trying to buy a whole lot of regional chains and we bought four or five and very quickly I realized, you know, why are you doing this?

34:17You know the model only works if you buy the market leader. So we bought the market leader but then we very much enhanced it. We then went and bought the number two and then we must have bought, I mean in the US alone, I don't know how many acquisitions we've done over the last 20 years, or not 20, 18 years, but it will be in the hundreds. And that means, you know, because the US is so huge, you know, there's always great local operators, and so there's always opportunities to buy businesses, even today.

34:47Richard Harpin: But what I admire is that you, having got out of Safe Flight, that you then went back and did the deal and bought the whole of it later. Yes, exactly, yeah. And I have to say, looking back at the history of Balron and the growth that we've had, I mean, the U.S. was an absolute pivotal moment. And again, I met a huge amount of skepticism, even from the board. I remember having very, very difficult conversations when I put forward the idea to buy SafeLight because I got the thing that many people in Europe have heard. You know, U.S. is a graveyard for European companies. You're never going to be able to get that.

35:28I mean, SafeLight had a market share then of about 5 % or 6%. It was making less, yeah, I mean, it was making a small loss.

35:39Richard Harpin: But this was your biggest ever acquisition, was it? Sort of, how much did you pay? We paid around 200-odd million at the time. Today, you know, that business has got a, you know, I mean, a significant market share. I wish I could tell you the profitability of it. And it's just extraordinary what they've done. You did bring in external capital, got some investors. Just talk about why you needed to do that. Well, the interesting thing is we didn't need any capital. So it was a very different reason why I pushed very hard, and again with quite a lot of difficulty, because the shareholding in 2017 was effectively, the business was owned by Dieter Instill.

36:24the people who we talked about back then, and they owned 95 % of the business. I owned five, and that was it. But I was feeling that the business really needed some external input, not necessarily external capital, but just some different views and some different things. I mean, the business was going really, really well, but there was just something in me which felt I'd been doing this quite a lot on my own. And so it was more that that pushed that.

36:57Richard Harpin: So an active investor that is not just bringing, not really bringing the money, but bringing the help and advice. Correct. Which is quite unusual again, you know. And, you know, that, yeah, it wasn't straightforward at all. Firstly, to persuade Dieter in that this is the right thing to do. And then to bring in some outsiders. and remember this, I mean, I hadn't had any outside other than, you know, the Dieter and Partners. I had no outside, but I knew that that was the right thing and that turned out to be absolutely spot on because what, and it was Clayton to Billy and Rice. I mean, we had a huge process, huge process.

37:42How long did they, talk a little bit about it.

37:45Richard Harpin: You had advisors, presumably. We had advisors, we had the whole thing, yeah. Yeah, so spending too many days of my life in big boardrooms in Goldman Sachs or JP Morgan's offices, talking to private equity groups. How many potential buyers are they narrowing it down? Yeah, we had a huge list and then we narrowed it down to three in the end. And then CD &R won. They came in with the best offer and they were my preferred group. And the thesis really was, which I positioned with them, was that we were world class in customer service, literally world class, NPS scores over 80. We were world class in our people engagement.

38:34So, you know, I talk a lot about people. We measured that. You know, so people say, well, we actually measure that. So we do staff surveys. We are doing pulse surveys. We measure the effectiveness of our leadership, a critical thing. And we felt we were world class in that. We felt we were world class in our giving back, in our role in society, which is something we might talk about in a while. But when, and particularly when the financial guys, the private equity guys, looked at our financial performance whilst very strong and growing, it wasn't world class. And that really pissed me off.

39:12Richard Harpin: In what way was it not world class? It wasn't world class in terms of our margins. so we were growing you know every year we were growing double digit usually i mean throughout my time as c double digit in revenue but not a yeah and yeah not profit profitable growth was you know profitable growth was a big thing for me which is you know i mean it's any anyone can grow sales but i mean if you're not growing your your profit at a higher rate then you kind of i feel like you're then just on a treadmill. So, and we just weren't doing that. And so, and that was really where I wanted some input. And where these private equity, where CD &R were brilliant is they came to me and said, look, we've done some benchmarking.

39:52You know, they've got very smart people. We've looked at a whole lot of service companies. They probably looked at HomeServe at the time. You know, very good companies like Rent-A-Kill, some of the, you know, some of the brilliant service companies around the world. and they were saying, it's really interesting this because your financial performance is just not on a par with these organizations. And so your initial reaction is very defensive. But I think if I would have carried on being defensive, I probably wouldn't be sitting here talking to you. But there was just something in what they were saying which made a lot of sense.

40:28And so we decided, well, actually, we're going to become world class from a financial point of view as well. And that was 2017. and you know the numbers, but CD &R invested in the business. The equity value then was$1.7 billion in 2017. They exited a portion of their stake. Four years later, the equity value was$17 billion, 10 times their money. And that was all on the back of improved financial performance whilst keeping world-class service, world-class people engagement, world-class giving back and societal things.

41:05Richard Harpin: And so what did you specifically do on improving the financial performance, Gary? A lot didn't have to do with me or didn't have to do with Belrond. But because in this period, we had spotted a trend in 2015, which was that the technology of windshields was changing. And by that, I mean, they were putting more and more technology into the windscreen to deal with all of this new things like automatic braking, lane deviation systems, all of these systems that are now in every new car. Well, how did the car work out what to do? All this stuff was in the windscreens. And so the first Tesla, I had a Tesla back then, and I saw there's this huge camera planted in the windscreen.

41:51And so we started realising that actually, if you broke your windscreen, what would happen? You know, you had to replace the windscreen. But we then realised not only did you have to replace the windscreen, you had to recalibrate the whole vehicle. And that was another service. It was another service on top of just replacing the windscreen.

42:10Richard Harpin: So that was a breakthrough moment then for improving the financials. Yeah, well, it was because suddenly, and yeah, it continues today. But in 2015, 2016, less than 1 % of cars would have their windscreen broken and have to be recalibrated. Today, that's about 40 % worldwide. And that has been a huge thing. So that was a big part of the growth, which was just revenue growth. It was very profitable. And so the value when you stood down in 2023 was roughly what? Roughly about 20, equity value, probably about 24, 25, somewhere around there, 24 probably. From 150 million euros or so when you became Group Chief Exec in the year 2000.

42:56Richard Harpin: Absolutely incredible. Let's call it 200 because then it's easy to do the arithmetic, 100 times. Wow, fantastic. You're still a youngster. Why did you in 2023 decide that it was time to step down? Well, I'm not a youngster. And there were a lot of reasons. So I'm not a youngster, number one. In 2021, we talked a little bit, and I don't think I've ever told you this, but in 2021, we sold, CD &R sold a stake to a combination of Hellman and Friedman, BlackRock and GIC. As part of that, we management had a very, very attractive incentive scheme, and we had done very well. And so a number of us got, well, all the senior management got a lot of money.

43:45As a senior management team, we also decided that as a result of our huge win, we would like to thank all of our staff. Now, this was something that I dreamt about, to be honest, the first day I started work. And we came up with a scheme which we called the Belron Thank You, which we were able to implement. And that meant that we gave 26 ,000 people 10 ,000 euros each. Wow. A combination of cash, 1 ,500 euros of cash and 8 ,500 euros of shares. So the cost to us, the management team, we gave up about nearly 300 million euros. But we thanked every person in Bellrod. It was called the thank you, which meant it was unconditional.

44:36There was no conditions attached. You could get rid of them the next day if you wanted to. Most people haven't. And that was a seminal moment for me because it felt like I've kind of done my life's work. I've grown this business. I've empowered people to make a little bit of money. I mean, not a huge amount, but for some people it was a significant amount. And it was really then that I decided, actually, I was then 63 or 62, that maybe it was time for me to start thinking. And so I went to the board and the board were amazing. And I said, look, at the beginning of 2023, I'd like to be exiting.

45:16Richard Harpin: And finally, what three bits of advice would you give to UK founders today that are trying to scale the businesses to become large companies? Number one is surround yourself with the best people. I mean, and I genuinely say this, I mean, every member of my team was much better than I was. Be very self-aware. Understand where your strengths are, but much more importantly, where your weaknesses are. And instead of trying to make those weaknesses strengths, because usually that doesn't happen, play to your strengths and surround yourself with people who fill in the weaknesses. Honestly, it's about people.

45:54There's nothing really more I can say because, you know, each business has its own thing. The only thing common is, you know, are you choosing the right leaders? Are you leading yourself properly? And it does come to you. And I guess the other thing I would say to someone who is starting out or wanting to scale, be very self-critical. The self-awareness thing is so important. You know, you don't have to do everything yourself. You don't need to do everything yourself. there are going to be times where you need to step aside and let people get on with it.

46:26Richard Harpin: Thanks Gary, I've really enjoyed this conversation. Me too, thank you. You've been listening to me, Richard Harpin speaking to Gary Lubner of Belron for the Business Leader podcast. Please do rate and subscribe to us wherever you get your podcasts and if you visit our Business Leader website you can sign up to our weekly newsletter to get more content like this and find out opportunities for your business.

47:21Richard Harpin: leaders who are shaping the future of business.