Gary Pudles Lost His Job and Built a 1,200-Person Company

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0:35Founders Forum is a radio show and podcast where entrepreneurs share their journeys, reveal the stories behind their successes, and the lessons they've learned. Join Mark and his guests for a mix of inspiration, valuable insights, and a bit of fun. Now, let's dive in. Good morning, America. How are you? We are going to have a really good time today, I can tell you that. And I can also tell you the time's going to go too quickly and we're not going to have enough time. So my guest today, we have a lot of ground to cover and we're going to try to do it efficiently. So Gary is my guest today. I want to introduce him in a minute.

1:12He's an old friend and we'll make it into that a little bit later. But he is an innovator, an entrepreneur. Gary, I have a question for you I was thinking about on the way in this morning. You have, and you have had, without getting into it, a lot coming at you recently. And we all do. We have, you know, we have, first thing you think is social media, but we have news, we have politics, we have economics, we have businesses, we have personal issues, all this stuff coming at us. What do you do to center yourself? Because I know you're very focused in the things you do in your life. How do you accomplish that?

1:48Well, I do that. Good morning, Mark. And good morning, everybody. The way I do it is I have a very regimented day. I get up every morning at 7. I'm in bed by 11. I'm asleep by midnight. It's a very regimented day. And in the morning, early in the morning, I have what I call my CEO time. And during my CEO time, before the matter most and the messaging starts, before the phones start, I do my email. I do my birthdays on social media, as we talked about. I go on Facebook every morning and wish everybody who's given their birthday a happy birthday. So I'm very disciplined in my approach. I start my meetings generally between around 11 and I'm done by six.

2:31But it's very disciplined every day. And I do the same things almost every day. So that's kind of like your armor to deal with everything coming at you. It's the only way. Yeah, I love that. All right. So let me introduce Gary. He's a very interesting guy. Gary Puddles is president and CEO of AnswerNet. He founded the company in 1998 with a straightforward mission, helping businesses communicate in ways that directly drive client profitability. And I know that's what he does, which is a pretty cool thing to do. Over the last 25-plus years, he's scaled the company from a small startup into an agile organization that employs over 1 ,200 people across 42 states and five Canadian provinces.

3:14Under his leadership, AnswerNet's rapid growth earned the 21st spot on the Inc. 5000 list, which is amazing. And Gary was named Ernst & Young Entrepreneur of the Year, which is also an amazing accomplishment. Well, congratulations. He's a graduate of Syracuse University and American University College of Law. And Gary also spent years teaching entrepreneurship at Wharton, sharing real-world operational mechanics with the next generation of business leaders. So that's a lot, a lot of good stuff going on. And he's a leader of the Bucket Band, and I'll just mention I had the privilege of playing with them.

3:51Gary and I started playing together a long time ago, and it was a reunion of sorts. And we played at the Jersey Shore this past weekend, and it was a lot of fun. It was great. And you killed it, Mark. You did great, as always. I appreciate that. I don't know if it was always, but that was a good night. Worked hard. Kess noticed it. Yes, he did. So I did a lot of work between the last two sessions. A lot of new songs to learn from me, which was fun, challenge, good for the mind. So I love that. So where do we start? So let's start talking about you're an entrepreneur. And to me, you're a born entrepreneur.

4:24But I don't think you set out to be an entrepreneur when you came out. So how did that happen? What in your family and or your life influenced that, that you became an entrepreneur? So I started out as a lawyer at American. And I was in private practice. And I had a client made me an offer I couldn't refuse. A year and a half into practice, my client was Muzak, the Muzak franchisee in D.C. So here in Philadelphia, for example, people know Comcast was originally the Muzak franchisee. I believe when I first met you, you were still doing that? No, no, that was way, way behind me. Oh, I know what it was.

5:01So then we left there, and I won't go through my whole history, but I wound up coming up to Philadelphia for a job. And I really loved what I did, but I didn't fit in the company. So I often say, did I get fired or did I quit that last day? But I got a term sheet to buy a different business, not the one I ultimately landed on. And somebody turned the front page of the fax machine copy on. So I get a call that the CEO wants to see me. I walk by the fax machine, pick up a signed term sheet, and there was a copy of my fax of my term sheet on the CEO's desk, at which point I often say, did I get fired that day or did I quit?

5:42I did collect unemployment. So I'm pretty sure I got fired. Okay, good. Well, they treated you fairly, it sounds like. They did. And ultimately, I wrote down all the things that I liked in a business and all the things that I didn't. And I went on the internet to find a business to buy. And that's how I started my entrepreneurial journey. Out of curiosity, I see. What was the business you almost bought? It was a Muzak type business up in Northern Jersey. Interesting. Yeah. So it was a similar company to what I had been running years earlier. But what happened was the book that they put out, the SIM, confidential information, was not correct.

6:20So I lose my job. The day I get my term sheet, I start due diligence. And I immediately realized that what they had sold me was not what was there. and so there I was January of 98 with a wife two kids and a mortgage in a new town that I didn't know and uh no job and no company uh just as a side I was thinking about you as a musician how you felt working at Muzak given the nature of the music there and funny I don't know if you know this line but John Lennon wrote a song to Paul McCartney when they were angry at each other called how do you sleep and he said the sound of the sound you make is Muzak to my ears which wasn't meant as a compliment.

7:01Well, Muzak had a bad rap, but Muzak was actually at a time, it was the only way to get music into licensed music into public spaces. And a lot of musicians complained about it. We all know that, you know, people wanted to buy it to put it out of business, but it was really, um, it was really programmed to help people and help businesses. So I was really proud of that time, but you're right. It had a very bad reputation and quite frankly, it got traded by the big time investors based on the name without ever really understanding the value of the business, which is a problem in business. Many times that PE firms or VCs come in, they don't really understand what the business does.

7:43And because of it, they use their models instead of their hearts and their brains to run businesses. It died on the vine, I assume. Ultimately, it wound up being sold to a company called Mood Media in Canada. And after it had gone through bankruptcy three times. Wow. Anyway, so we're moving on from there. So you bought, um, this company wasn't called answer net at the time. It was called tele-talk, uh, a telephone answering service out of Allentown, Pennsylvania. So I bought the company, I bought the building it was in, which was in the then red light district. And, and I, you know, I, I wound up.

8:21Yeah, it was doing$50 ,000 a month and it had 20 employees. And, and I was one call center with one call center and then a week later my then partner came in and said there's another call center for sale in Portland Oregon and he said if you can put the deal together it's yours and we closed that deal and three weeks later and we were off to the races and a lot of your growth has been through acquisition I know do you how many call centers today well so we have over 35 teams, we're now about 80 % remote. So while we call them call centers, they're really not because, and this is something that's really interesting.

9:00If all of your people work in different states, your equipment is in Amazon, you know, AWS, and your clients are also remote and their stuff is all over. Where is that a call center? No, it's a remote cloud-based team. And we have 35 premise-based and cloud-based teams. Today, we have about, I want to say, 13 physical locations left. So when you're in 42 states and five Canadian provinces, I assume that's where your customers are. No, that's actually where our employees are. Oh, your employees are. Yeah. We're an employee-based company. So you do still look at location from a data perspective, I guess.

9:44Right. And during COVID, I heard a saying that really resonated with me is, do you want the best employees in an area or do you want the best employees? Sure. And recently, I was able to save an employee who would have not had a job. But now that we're remote, I was able to give her a job instead of laying her off because I could hire her for something that would not have been in the physical location she would have worked from. Was the idea that you're mostly remote a product of COVID or you were doing that before then, I think? No, we were 98 % in facility. I fought that until two weeks into COVID when I just gave my – I raised my hands and I said, okay, we have to get everybody home.

10:33Because even though we were essential workers, a big part of my business is traditional telephone answering service. So we were known as a public safety access point or PSAP. And so we were essential workers, but I couldn't put all of those people at risk. And at that time, we had about 800 people. How many physical locations at that point? 50. 50. Wow. Yeah. You rented those, I assume, or did you own some? I owned 15 % to 20 % depending on the time because I always knew that if I was going to pay rent, you know this is a show at the core about wealth management sure and one of the things that i've always believed in is more millionaires are created by owning real estate no question but i didn't want to own real estate at that time where i was i had come from a real estate management company so i didn't want to run real estate but if i were using it and i'm paying myself rent that was a good way of increasing my personal network my own company went through that recently we were about to sign a big lease, this 10-year lease.

11:39And I looked at the amount of money over 10 years. I said, I really don't want to do this. We wanted to be in Conchahokken, you know where that is. And there wasn't anything available. And the day we were about to sign the lease, a property came up. And I said, let's go look at it. We went and looked at it, brought my partners out, we bought it. And we lost a bidding war, but we still got the property because of the terms and the connections with the people that were selling it and that kind of thing. But yeah, that's, you know, because rent is an expensive thing. Do you still own those properties that you had or?

12:12I own some. The hardest thing was selling recently. We sold the Allentown building that we had. And that was more emotional, but it also helped pay for my daughter's wedding. So nice. I assume it's not a red light district anymore. No, no. What happened was they built the hockey arena in Allentown. And so they paid us to move. So they bought the building in the red light district as part of the renewal of Allentown. And they moved us, you know, a little bit out of the core of the city. And we were there again and went until early last year. So your business, Gary, in my mind, is very successful today.

12:49It's doing very well. But obviously we know the joke on the show is that, you know, you bought the business and you started acquiring business and it was a smooth ride all the way up, right? Oh, yeah. It's just never a hiccup. So given that, so you've already mentioned some challenges, like the challenge of being in-house during COVID was one. But along the way, that probably wasn't your first challenge. If you could think back to your biggest challenges early on, what would you think of? Well, the biggest challenge was a mindset of the employee. So to tell the whole story, after starting in July of 98 in January, sorry, March 1st of 2000, we went from a$4 million run rate to a$28 million run rate in one day.

13:35And we grew so quickly that that posed our first major challenge. But the bigger challenge was that at the time – That challenge was cash flow or was it – Just managing a much bigger thing. But the bigger challenge was only, no, the technology challenge. See, my history has been taking traditional businesses and dealing with new technological realities and then helping those businesses, not turn them upside down, but helping them shift. So with Muzak, we had two private, two radio stations. We went to five and then to unlimited. it in the call center business, only three of the, at the time, 25 centers I had even had internet connectivity.

14:24So moving all of those centers to the internet was huge. Right. So you had that. How did you, how did you adapt to that change? We have about 30 seconds. It was called welcome to the evolution. So I get up there at my first annual meeting with my general managers and I I told them about all the things that I wanted to do, and they wanted to knife me. So four years later, I came up with a concept called Welcome to the Evolution, where I said, we are an answering service, not a big-time call center like you said. We are now a big-time call center business as well. But I said, we're an answering service, and then I put up the websites of a bunch of answering service competitors, and I said, and these are the services that answering services provide, and we now provide these services.

15:10So what I did was I recognized the employees' fear. I recognized their uncertainty. And then I showed them how other companies had overcome those uncertainties. Gotcha. Excellent. We have to take a quick break, but we're going to continue this conversation real quickly right after the commercial. The Sattel Institute is the leading CEO member organization dedicated to corporate social responsibility. Under the vision and leadership of its founder, entrepreneur and philanthropist Ed Sattel, the Institute brings together CEOs in Philadelphia and other cities to support the nonprofit organizations that do heroic work in our communities.

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16:25To find out more about membership and why so many leading companies are now part of the Sattel Institute, visit the organization's website at sattelinstitute.org. Satell, S-A-T-E-L-L, institute.org. As Ed Satell says, think we, not just me. We're back on Founders Forum with my guest today, Gary Puddles. And Gary, right before the break, we were talking about technology challenges, which obviously you figured that out. But that's probably a long story as to how you did that. But I'm sure you also had people challenges along the way too. And I know you have a great culture today. So tell me about the challenges and how that culture evolved.

17:06Well, it's really interesting because the culture in any company is either going to be defined or it's going to be defined for you. So 2007, I brought a friend of mine in, somebody who got me into Wharton. And we took care. We were really analyzing things. And we came up with our mission statement. And then we built our core values around the mission to Mars by Vern Harnish in his Mastering the Rockefeller Habits. And we used that process to get our core values. But what really changed the game was what I call the fat guy blue shirt videos. And I was the fat guy in the blue shirt, of course. Although I'm not as fat as I used to be.

17:54Thank you. You're a thin man now. But we did these videos and everybody who joins the firm watches the videos, right? And the idea is to tell them a little bit about our history because culture is really important in a business where our cost of goods sold to our people. So we need to make sure that the people feel comfortable and safe. My goal was to be the nicest big company in the industry because call centers are known for being humorless. And I believe we've done that. I believe we are one of the nicest big companies in the industry. Are we perfect? No. But we really do try to be an employee-focused company.

18:39Well, in fact, you have a symbol for that. You have a mascot named Pat. So why don't you talk about that because I think that's a good example of some of your culture and the humor and the enthusiasm that the company has. So we have Pat the Fat Duck. And Pat the Fat Duck represents our core values of passion, attitude, teamwork, detail-oriented, good communication, and kind and likable. And we call him Pat the Fat Duck, P-H, because happiness and humor are our silent core values. And the idea came to me. We created through the Vern Harnish process the core values. And we had an off-color way of remembering those core values initially.

19:25And one day, believe it or not, I was in the shower and it came to me, Pat Duck. And I came into the office and my then head of sales, I said, Pat the Duck. And he said, no, everybody's going to know the off-color thing. And I said, no, they don't. The only people who know that are degenerates like you and me and a few others. So we introduced Pat the Duck by me putting on a duck costume at one of our annual meetings. I saw that picture. And, you know, we've gone from there. And again, one of the big things that we believe at AnswerNet, and more importantly, I believe generally, is, and I won't go through it if you want to look up Ben Zander, who is the former conductor of the Boston Philharmonic Orchestra.

20:10and it's rule number six but at the end of the day what rule number six is don't take yourself so seriously you know too often in business people who are in supporting roles think of themselves as as you know so seriously that they can't enjoy the the life they have and part of what I try to believe and try to give is happiness is a choice and, you know, and it's not underrated. It's very important for people in their work because you're spending more time in your work than anywhere else to find your happiness. Now that means, that means finding a job that helps you address your why, what, what drives and motivates you as a human being.

21:00And a lot of the people in my company, they don't want to go up. They don't want to be managers, but they want a security and recognition and they want to help people. And I am in a business that does all of those things. And I believe you're a living example of that idea of happiness is a choice. You exude that. So tell me your why. My why is to help people enjoy their life more by running their business more, by running their business and their lives better. And what I mean by that is my goal in life is to help people find their happy place and to give them the tools. So education, for example, you mentioned that I used to teach at Wharton.

21:45When I would see the light bulb go on and I can tell that somebody's life was going to be just a little better because I taught them something that they could use somewhere else, not just in their business, not that it would benefit me, but it would benefit them. And therefore, if they could be a little happier, the world would be a little happier. Yes, I know that's a little utopian, but why not? Right? I mean, there's a lot of anger out there in the world right now. And I find that that if I focus people on being happy and being productive and being the best version of themselves, that's my why, because then they're happier and they spread that.

22:25You know, it's kind of like the folks on social media who go and, and give people money for helping somebody out in distress, you know, just be a nice human being. I can see that even in the band, when I experience you with the band, there's a lot of fun amongst the members. It's a fun atmosphere. In fact, I mentioned the bucket band, but you have another band that probably plays more often called fun size. Right. So, and I know that wasn't named after you necessarily, but, but, but it's, you know, it's, it's, it's, it's exemplary, you know? Well, it's, you know, Mark, and I appreciate, appreciate that.

22:57You know, a lot of musicians give their lives to music and I know you, you know, there's two passion for me. It's a passion for you, but a lot of people who didn't make it, you know, if you're lucky enough to have that friend who writes the hit song and get you out of your basement. But there are a lot more people who have ridden that bus, who have gone in the car, who's done those things. So you have the angry musician, the people who are really talented but really angry because they didn't make it, but they're still playing because they love the music. And then there are people like me who feel blessed to play with people like you, play with my chief of staff cast, play with Andy and Kayla and Rob and the other Mark who is in bucket and I get to play with people and they share their music with me.

23:47One of the things that you know about me, Marcus, I feel like I'm one of the luckiest human beings on the planet. I'm surrounded by people I love. I have a great family. My wife's my best friend. And I have people in my life who support me when things aren't rosy. And there are people in my life whose whole, their whole lives are also about being positive and that's pretty cool that is real well i believe i look i i do daily i am statements i did them this morning and one of the things is i attract people of like intent whose intentions are aligned with mine and if that's to be positive that's to be happy and and you've done a great job of attracting those people around you which is so it's it's it's you i know you don't want to take the credit if you're blessed but it's you attracting those people.

24:38But let me tell you the other side. I have an old friend who I was in New York with him and his family 10 years ago. And he said, Gary, you know what your problem is? You care what people think about you and people who you shouldn't care about. You still care about them. And I think that my, I got that from my father being in politics when my father was in local politics. And, you know, he would get up there and tell them the truth, according to Michael Puddles. And, and it would hurt him when people didn't, you know, didn't like him for his opinions. He, he would always tell me, it's okay to disagree with me, but don't be a jerk to me because you don't agree with me.

25:20Politicians are in the business of having people like them. So it's, it comes, comes with the nature. We don't have much time. Let me ask you real quick, If this were three years from now, so this is now September of 2029 and you and I are talking and we're looking back on the last three years, what would have to happen, Gary, for you to feel that was a successful three-year progression in your life? So I would turn around and say we have fully integrated the AI business, both delivering AI services, which we do, as well as using AI in our business. And we've integrated it in the same way that we integrated the self-help web stuff back in the day.

26:00So the call center and answering service business have been told, we were told we were going to be put out of business by pagers, by voicemail, by answering machines, by the internet. Everything was going to put us out of business. But the reality is humans and technology work hand in hand. And we are on our journey of making our people relevant in the flow of communications along with the AI, not instead of the AI. My job as the owner of AnswerNet is not to tell you how to run your business, but to give you the tools, both technological tools and human tools, to run your business your way. And that's how I will judge the success of AnswerNet three years from now.

26:47When you look at AnswerNet and you see we are the human in the loop, we're doing human QA for generative AI. And you and I talked about it. We could talk about it for a long time. But taking on these challenges of integration, that's the big piece for us. That's an amazing vision, very descriptive and very – and I know you'll do it. And we've talked about it and I know how you're getting there. Well, thank you for being here, Gary. It's been a great pleasure. Thank you all for listening and to Founders Forum, and we'll see you again next week.

27:47860 AM Philadelphia or on your favorite podcast streaming service. Securities offered through DFPG Investments, LLC, DFPG.