We had the opportunity to sit down with Pete Van De Putte, President and CEO of Dixie Flag, about his family business and the transition process to the next generation.
Please forgive any typos in this hasty transcript.
Matt Register: Hey guys, welcome back to Texas Business Radio. We’re talking about family businesses. Family businesses are the backbone of The United States and we enjoy having these guys on here because it’s not easy to do. And family is one of those things that there’s a lot of people that do it very right. There’s people that do it very wrong. And the ones who do it right have multi-generational success and the ones who do it wrong, don’t stick around that long. So we’re going to continue to talk about that. I’m your host Matt Register. Jay Curry you had to step out. We’re here with my business partner George Walden. George talk to me.
George Walden: Well, I’m very excited about this episode because I came out of a family business. My father started a plastics plants many years ago. I took over the business. We eventually sold the business but I will tell you I miss the business. It’s interesting, it feels like a part of me was lost when, when I let it go. So I love the idea of succession planning were your passing it down to your family. I know Matt’s background. Matt was a machine shop guy, started, took over the family business. When the family business was doing about 8 million. When he sold it it was doing little over 35 million. That’s quite a story. And again it was a succession. It was a transition to him. So I’m excited about this topic, and excited talk to somebody who’s actually doing this successfully.
Matt Register: Well, and I tell you what we’re going to jump right into it. Dixie Flag. Guys if you ever bought any flags, you probably bought them from these guys. These, these guys make and manufactured so… flags of all shapes and sizes. So Pete Van De Putte is President and CEO of Dixie Flag. Pete welcome to the show sir.
Pete Van De Putte: Well, thank you for having me.
Matt Register: So tell me a little bit about Dixie Flag and how you got started.
Pete Van De Putte: Well, Dixie Flag and Banner Company, we started in 1958 as Dixie Decorator’s. And it was…my folks started the company. It was pipe and drape for trade shows like we’re in today. Decorating for county fairs and festivals and making flags. And my grandmother was the first seamstress, they started the business in my bedroom. And so I kind of grew up in the business. In 1974 they sold the decorating part of the business to the Freeman Decorating Company, big decorating company. And my dad found out that they were going to close down the sewing operation. The decorating people were all going to go with Freeman. So, he did not want the three ladies who were sewing for him to be on the street without a job. So he brought back Dixie Flag and the sewing machines. And so those three ladies would keep a job. Two years later with the bicentennial and all of a sudden people were going flag crazy and the business was growing. And at that point in my life, I had grown up with the business but I was teaching school. And in 1980 I came back and took over running the business and had been running ever since. And my wife and I have six children and they’ve all been through the business and two of them have stayed and decided to make it a career. And so they’re the fourth generation of Van De Putte’s in the business. And if everything goes according to plan, they’ll be taking over in about a year and we’ll see what I do about it. Maybe I’ll, maybe I’ll go on the radio.
Matt Register: Well I tell you what, it is incredibly rare for a second generation. Right? You know not very often… we run into this as investment bankers all the time. You know the son, the second generation is running the company, very rarely is he the guy you would hire to, to run that company. Right? Even rarer is to have a third generation, an almost impossible. In fact, I think we have talked to one other company that has made it to a fourth generation. That’s, that’s, that’s quite remarkable. Talk to me a little bit about the philosophy in your family about the transition, because it, you know, it… you just, you went through one in your younger years, a transition from your dad to to yourself. And you’re in the process of facing one now to transition to the next generation. Talk to me a little bit about how you feel, you know, how your family, you know, philosophy is about that.
Pete Van De Putte: Yeah. And it’s, it’s changed, because certainly the way I got the business, I was, I knew I was going to leave teaching. I didn’t know what I was going to do. One day my dad says “Why don’t you come take over Dixie? Run it any way you want to, some day it will be yours”. And the night before I… my first day there he called me up and said “Company can only have one leader, your it now”.
Matt Register: Well and that’s true and that’s where a lot of this, we’re a lot of these transitions go wrong. Right? They have too many chiefs and you end up causing problems.
Pete Van De Putte: He had had two older brothers that both had businesses and stayed too long. And their sons had lost more of the business but lost interest and went other places, so he didn’t want that to happen. And in retrospect I wish that I had a little more business knowledge and experience coming in. I had a, I finally hired a business consultant 10 years after I got there. And he told me “Well I’ll be here 10 days. Five days I’ll observe and five days I’ll, I’ll write up your recommendations”. And after about three hours he says “I’m going to have to change this, I’ll have to stay here 10 days”. I said “Why?”. He said “Cause you do everything wrong. It’s going to take me 10 days to figure out why it’s working.
Matt Register: Well, but I tell you what, there’s nothing like a little pressure like that. Right?
Pete Van De Putte: Yeah.
Matt Register: To force you, wasn’t really optional for you not to learn it.
Pete Van De Putte: I just had to figure it out. So, in this one, what I did, my attitude going forth, I wanted to build a company where there would be an opportunity for any of my children to come, if they wanted to.
Matt Register: Sure.
Pete Van De Putte: Not to put any pressure that they felt like they had to. And as it worked out, my daughter Vanessa went got a degree in film production and was doing production on movies up in Chicago. She went to Columbia College up there and was up there for six years. And woke up one morning said “Darn, it’s cold up here, I’m going home”. And freelanced around San Antonio and Austin and then decided she was going to stay in San Antonio. We talked and I said “Why don’t you see if you can build something here.
Matt Register: Sure.
Pete Van De Putte: And so she kind of came in with a real push toward working with festival, festivals, fairs, special events cause that kind of fit in with her, her education. And out of that we started a division we called DFEST, Dixie Flag Event Services Team.
Matt Register: Okay.
Pete Van De Putte: That’s geared toward festivals, fairs, community celebrations.
Matt Register: Well because there’s a lot of flags, there’s a lot of banners, there’s a lot of all kinds of things, that you guys do associated with those. Right?
Pete Van De Putte: Exactly. And my daughter Isabella went to graduate from high school, was a rotary exchange student in Mexico but she wanted to get in international business. Went to A&M International in Laredo. One thing led to another, she came back up to A&M San Antonio and she says “I, I want to be in the business”. And she’s really the first one in the company that got any formal training in business.
Matt Register: Sure.
Pete Van De Putte: And so, the two of them work very well together. They complement each other. And so we’ve been operating under the philosophy, as I told them, I don’t want to leave before you’re ready and I don’t want to stay so long that you get impatient. And so it’s threading that needle. So now…
Matt Register: Having thread that needle though, we were talking during the break, you’ve given them a date. Right?
Pete Van De Putte: Well, last May or last year, I gave him two years notice.
Matt Register: Wow.
Pete Van De Putte: So, so yeah, I guess you could say I’m on my victory lap now, my farewell tour.
Matt Register: Well deserved.
Pete Van De Putte: The plan is for them to take over in a year. We’ll be celebrating our 60th anniversary as a business. And I figured that’s a good time to celebrate my retirement, whatever that means.
Matt Register: Well, as good a time as any. Right?
George Walden: Can you tell us a little bit more about your business? I mean you’ve talked about the humble beginnings. Tell us where you’re at today.
Pete Van De Putte: Well, we are a flag dealer, manufacturer. Is I guess in our industry what we call it. We, we, we hopefully sell everything we make but we don’t make everything we sell. Primarily things like what I would call like your industrial or the consumer flags, the smaller U.S. flags and countries like that. The big manufacturers up east churning those out and there’s really no way I can compete with them. But there’s no way they can compete with me on one of a kind custom. And that’s where we specialize in doing custom, we are a sewing shop. There’s fewer of those all the time because with the digital revolution almost everybody’s converted to doing digital printing. And we still sew, we still applique and churches, schools, the military, government they still want that look. And so we do that. We also are probably best known nationally for extremely large flags and banners. If you watch a football game where they unfurl a U.S. flag that fills the football field.
Matt Register: That’s you guys.
Pete Van De Putte: We make those. And our most famous flag was a 60 foot by 90 foot U.S. flag that hangs over the George Washington Bridge.
Matt Register: Oh, wow!
Pete Van De Putte: And it’s only attached at one end. So it made it into the Guinness Book as the largest free flying American flag in the world. We made that for the Port Authority of New York and New Jersey. Out of that, them being happy with that, they asked us to make the flag on the World Trade Center Memorial at Ground Zero. Another sixty foot by ninety foot. So that’s what we do.
Matt Register: Wow. Remarkable. So, Pete Van De Putte is the president and CEO of Dixie Flag. Dixieflag.com is the Web site. Guys, we gotta go to a break. We’ll be back right after this. Don’t go anywhere.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.