Frank and Prentiss Baker on Humility, Bankruptcy, and Building Baker Roofing

[00:00:00] Frank Baker: I think that is a very strong point in how our company evolved
to become what it is today; we learned humility. Prentiss had to go down to the
bankruptcy judge every Friday morning and ask if it was permissible for us to pay our
employees. I mean, none of this was a given.
[00:00:22] Todd Kavanaugh: Hey there, and welcome to Under the Roof, the official
podcast of Baker Roofing Company. I’m Todd Kavanaugh.
[00:00:29] Matt Elban: And I’m Matt Elban. We’re here to connect the dots between
the field and the office, leadership and the crew, and values and action.
[00:00:36] Todd Kavanaugh: In each episode, we dive into the stories, lessons, and
updates that matter to our team.
[00:00:43] Matt Elban: From safety and career growth to company milestones and
good old-fashioned storytelling, it’s all about living out what makes Baker, Baker. Let’s
get into it. Welcome back to Under the Roof. If you’re joining us for the first time,
please do yourself a favor and go back and listen to part one first. You will want the full
picture. For everyone returning, thanks for coming back. We are picking up right where
we left off with Prentiss and Frank. If part one gave you a sense of the history and the
heart behind this company, part two is going to take that even further.
[00:01:22] Todd Kavanaugh: It must be one of those things to take a step back for a
moment and remember those humble beginnings. Your grandfather came here so
young, I didn’t know he was only twelve or thirteen. I always pictured that he was
nineteen or twenty, old enough to be an adult. To see where the company is today from
those humble beginnings is incredible. It’s hard to fathom all of those years, especially
since I’ve only been here for twenty-three years.
[00:01:57] Prentiss Baker: I will tell you one thing I’d like to add, and it’s not too late for
you all to start this.
[00:02:04] Frank Baker: I wish I had kept a diary.
[00:02:05] Prentiss Baker: I would have loved to write down a page every single day
detailing the people, activities, projects, and failures. I think it’s fascinating to look back
on your life. I bet we’ve had ten or fifteen thousand people come through our office at

some point for employment. I will go out, and if I have a Baker jacket on, somebody will
stop by and say, “How are you doing, Prentiss?”. They might have worked for us for six
months or just a summer. I wish I had written a book. I would love to include other
people’s stories because they deserve a spot.
[00:03:01] Frank Baker: It is informative to note that this didn’t really happen
spontaneously. We had to sit there and ask, “How are we going to grow the business?”.
[00:03:15] Prentiss Baker: I don’t remember ever having a conversation about that in
the early days, by the way. We grew because it was organic. We had people wanting us
to do roofs, and we liked people and putting roofs on. I still like to do business that way.
[00:03:34] Frank Baker: I remember, though, at one point we decided we had to show
people that we could do a big job. We were pricing a job in Louisburg at the Russell
Furniture Company.
[00:03:47] Prentiss Baker: Yeah, and we got it.
[00:03:48] Frank Baker: We were the low bid. I remember going back after the fact
and looking at our estimate to figure out exactly what our margin was. This was an
expansion to an existing plant with a lot of expansion joints. The line item for the
material for the expansion joints had been left completely blank.
[00:04:30] Prentiss Baker: No, not on purpose.
[00:04:32] Frank Baker: We just looked at it and said, “Uh-oh”. That was a $12,000
mistake back in the early ’70s, which was a tremendous amount of money.
[00:04:41] Todd Kavanaugh: That’s a $100,000 mistake nowadays.
[00:04:43] Frank Baker: Apparently, that was how we got the job!. That was the first
big job we ever did.
[00:04:48] Todd Kavanaugh: Did you make money on it?.
[00:04:50] Frank Baker: No, but we did the job.
[00:04:53] Prentiss Baker: We learned something from it. Back then, estimates were
done on a yellow pad. You would write everything down; you essentially build a roof on
that pad, including the labor. We worked like that for probably thirty years. For new
construction, you would take off the blueprints with your scale ruler and look at the
specs. It was a pretty neat way of doing things.

[00:05:32] Matt Elban: When I first got into this business, I did estimating for new
home building the exact same way. I remember learning how to estimate repair work on
a pad of paper at Baker. It has changed a little bit since then.
[00:05:45] Prentiss Baker: Absolutely, but today it’s the exact same job principle.
[00:05:56] Matt Elban: Speaking of estimating, your dad was known for his ability to
estimate on that yellow pad. What did you guys learn from him?.
[00:06:08] Prentiss Baker: He was a very good, cautious estimator. We had what they
called a “plan room” for the AGC, the Associated General Contractors. They had plan
rooms in each major city where you could find boxes of all the construction projects
coming up across the state. Our bid schedule came from bulletins we received every
week. We basically bid on everything in our area to grow the business. Dad would be
located down in the plan room at the Sir Walter Hotel and was responsible for the
majority of the jobs that were taken off. We helped price them, and we probably just
learned by osmosis. I don’t remember ever having an official instructional session.
[00:07:50] Frank Baker: Like you said, he was not a teacher.
[00:07:53] Todd Kavanaugh: Frank, I feel like we can’t tell this full story without
mentioning Rebecca Baker, who was our CFO when I started in 2003. I heard early on
that she was the “heart of the board”. Can you talk about her influence on the company
and leadership?.
[00:08:34] Prentiss Baker: She was very smart and cared about people. I loved
Rebecca. She didn’t always agree with our business ideas, so she would counter that
with debate. We always had a good outcome; we would agree to disagree and move
forward.
[00:09:03] Frank Baker: She was famous for saying during board meetings when we
had an outlandish proposal: “I’m going to remember that. You can’t do that”. If she said
that once, she said it two hundred and fifty times. The great thing was that she was
almost always right. Out of those two hundred and fifty times, she was probably wrong
only twice. She loved people and thought everyone should be treated well. She
believed if you were doing your job properly, you should be rewarded for that effort,
not necessarily just for your position. We all learned that was a very good way to treat
employees.
[00:10:22] Matt Elban: In my fourteen years, I have seen that play out over and over
again.

[00:10:33] Frank Baker: It’s an inside culture.
[00:10:38] Todd Kavanaugh: One of the stories I learned early on is about the financial
hardships the company faced around 1991 with the bankruptcy. I know that stemmed
from getting loose on collections and other factors. What did that teach you?.
[00:11:14] Prentiss Baker: We became much better business people. We knew roofing,
but we hadn’t kept our eye on other things essential for success. We learned that
strong accounting and leadership are essential. We ended up filing for Chapter 11
bankruptcy because the bank said it was the best way to get back to being healthy. We
turned it around and were profitable from the first month after filing. However, we had
experienced bad years leading up to that with bad debts and a major problem in
Charlotte where we lost a lot of money. We essentially outgrew our resources,
specifically our people. That can still happen today; you have to get the right people in
each location.
[00:13:39] Frank Baker: You never forget these lessons. We were actually trying to
remember the name of our forensic accountant just a week ago.
[00:14:04] Prentiss Baker: That old country boy from Nashville, North Carolina, his
name was David Bradley.
[00:14:09] Frank Baker: David told us one day that his job was simply to convince the
judge that “this dog can hunt”. Somehow, he did that. He looked at the way we
estimated jobs and how we accounted for costs. It took us seventy-five years to learn
how to estimate properly. We finally learned that lesson, and it has carried forward. At
the time, it was not funny; it was incredibly humbling.
[00:15:44] Todd Kavanaugh: Prentiss, I remember you telling me ten or twelve years
ago, when someone was trying to woo me away by bringing up the bankruptcy: “I’m
not going to apologize for that story. That has made me, and us as a company, who we
are today”. I really appreciated your embrace of that failure.
[00:16:41] Frank Baker: We learned humility. Prentiss had to go to the bankruptcy
judge every Friday morning to ask if we could pay our employees. None of this was a
given. Because we handled a bad situation well, UNC Law taught our case for a couple
of years as an example of how bankruptcies should be handled. We were a shining
example of how it was supposed to work.
[00:17:52] Matt Elban: What advice would you give to younger people just starting out
here at Baker?.

[00:18:08] Prentiss Baker: Keep at it. They have unlimited opportunities, particularly
now that we are an ESOP. It’s incredible to think of the opportunity every single one of
our employees has. I smile just thinking about it.
[00:18:56] Todd Kavanaugh: Dylan Baker said he knew exactly how his mom, Becky,
would respond to the ESOP, which let him know it was the right thing to do. How do
you think Mr. Baker the First would respond to knowing where the company is today?.
[00:19:22] Frank / Prentiss: He’d love every moment of it.
[00:19:25] Todd Kavanaugh: I have a lot of gratitude for the years you all have put into
this company. It’s left a legacy for both of us and our listeners.
[00:20:02] Prentiss Baker: We hope we’re not through.
[00:20:10] Todd Kavanaugh: I typically like to close with one question: What are you
listening to right now?. Frank, what is on heavy rotation?.
[00:21:10] Frank Baker: My last fifty years have been circumscribed by Bruce
Springsteen. I’ve been listening to Streets of Minneapolis a lot recently. In fact, I’m
waiting to buy tickets this weekend for his sixteen-day tour.
[00:21:34] Prentiss Baker: I’m a gospel music guy. I’ve never heard a gospel song I
didn’t like.
[00:21:57] Todd Kavanaugh: That wraps up this episode of Under the Roof. Thanks for
being part of the Baker Roofing family.
[00:22:04] Matt Elban: If you liked what you heard, share it with your crew.
[00:22:11] Todd Kavanaugh: We’re here to keep you informed, inspired, and included.
[00:22:19] Matt Elban: And, as always, we’ll leave you with this: We shall do good work,
at a profit if we can, at a loss if we must, but always good work. See you next time.