Leadership Lessons from Veterans Who Bought Businesses

I worked in Korea, Thailand, and Afghanistan, leading anywhere from two to 20 people in regular office jobs to downrange with bullets flying. A lot of learning experience there. I didn't go straight from military to owning a business. I went into the corporate world and tried the corporate climb, so I had that very drastic experience and change in career. Then through an MBA I got exposed to the opportunity to buy a business, a similar story for a lot of folks here. The business I bought ended up being a carve out. Lots of nuance and weird stuff that doesn't fit the normal search track. We closed in October of 2022 at roughly 2.5 in revenue. It's up to 3.5 in revenue this year, so two years of pretty good growth. About 20 employees, half are super technical PhDs who know what the word photonics actually means, and the other half actually put this stuff together. A super complex business and a very big change in how to lead both very smart people and very hands-on people.

I'm Evelin Montenegro. I own a lawn and landscape business called Mean Green with my wife Denise. Before we purchased our business, I was in the United States Navy and managed a small group of about four individuals. After the Navy, I went into the federal government. I worked for Immigration and Customs Enforcement, and I think that's where I got my biggest taste of leadership. I grew through the ranks and eventually became a GS-15, which in the federal government is pretty high up there before you get to the appointed positions. I managed about 60 folks. As far as the business goes, we have about 50 guys we currently manage with H-2B visas and about 20 to 22 permanent staff year round. You're definitely going to get some leadership experience real quick when you're managing 50 guys and you've got about seven different teams to roll out in the morning. We're heavily on the commercial side.

Before we get into leadership lessons, let's talk about the business side. You both highlighted different tracks in your educational and work experience: MBA into corporate versus military to government job. Talk about the differences in how you approached your search.

I think it'll actually be pretty consistent. Despite coming from very different educational backgrounds, and me being officer track versus Evelin being enlisted, we both have the same story. We were sitting in great jobs that paid well with a bright future and said, forget that, I want to do something hard. That comes from the military background. You get vets a lot in this space because the military forced us to do something very hard with a lot of responsibility, often at a young age, and you end up liking that. When you go to a regular corporate job, you're learning, well, what happened to owning millions of dollars of equipment and making sure guys don't die every day?

I certainly thought, like many, the only way to own a business is to do a startup or do the corporate climb for 25 years. I was fortunate the MBA taught me about entrepreneurship through acquisition. Thank goodness for the internet. Now you don't need an MBA to find out about this.

I'll take a moment to say what I worry about with the MBAs and entrepreneurship through acquisition. If you've been through formal training, you should already recognize those two shouldn't be in the same sentence. The beauty of what we're doing is how much it shouldn't have guardrails. It's fun. You get to be creative. Deal making is just as fun as you can make it, as much creativity as you can come up with with the seller. The MBA starts putting you into these boxes: well, you must find a business that has this much revenue, this much customer concentration, yada yada. I heard what the MBA had to say and then said, okay, but probably not. Which is why I ended up with a very weird deal. It's a carve out. I didn't use debt right away. I have the most customer concentration you could find in a business. And I still have a business that's going to probably be okay. The MBA is one track. I don't think it's necessary. I'll hand it to Evelin to show how much it's not necessary.

Completely different. I didn't go to college. I took a year or two but I don't have a college degree. I believe you don't necessarily need a college degree to be successful in life and I am a testament to that. I rose up the ranks in the federal government, and I think it's more heavily weighed on experience. I will always rely on my experience because nothing in school will ever teach you how to be a leader. That is solely experience. When I was a first time leader, it was difficult. The only way to learn is through experience, by grinding it out and doing it every single day. You don't need to go to college. I commend people that go to college, I'm not knocking that route, but it just wasn't the route for me. You can definitely be successful without that.

We're in a room full of operators, so let's talk nuts and bolts. What are some unique characteristics from a military background that translate to leadership in the business context, particularly for those who didn't come up through the military?

The classic words you hear in formal training now are servant leadership or humble leadership. When you come into the military, especially the officer track, you come in as a 20-something suddenly responsible for people who have two to 20 years more experience than you. You look young and dumb, and you are young and dumb. When you buy your first business, you're young and dumb age aside, your experience level. Everyone looks at you like, who are you? You might feel that as well. The military gives you a good chance to know and to try being a bad leader first. You walk in knowing you're not going to be the expert, but at the end of the day you have to make the decision, you have to make the call. That can be very uncomfortable.

Whether you come up in the military or you're buying a business as the first time you've ever led before, there's no magic book, no magic talk that's going to answer the question of how to lead. It's getting your reps in, and the military is a great place for that. From day one, when you go to bootcamp or come up through OCS or ROTC, they put you in leadership positions over and over because they know they can't train that. You try the big tough person screaming at somebody and quickly realize, that doesn't work. Then you try the other extreme. Even longtime leaders still don't have it figured out because there's going to be a new person, a new team, a new culture that requires some leadership skill you haven't flexed in a while or never flexed before. Be it the military, a business, or your county sports team, just get the iterations in and you'll get better at it.

The military is the guardrails you were talking about in college. You can really screw up, but somebody's there to guide you, bring you to the side and tell you, hey, you should have communicated that better. The military sets that groundwork, teaching you how to communicate with guys who maybe don't respond to a woman in leadership, or who are much older and now see you as this kid. You have your team behind you guiding you.

Let's hone in on that. Coming in as a leader where you have employees with very different backgrounds, like a female coming into a male-dominated industry, or PhDs with technical expertise you'll never have. How did you navigate that?

For me, owning a landscape business that's heavily male-predominant, all of my guys are Mexican men. Mexican men tend to be very machismo. They don't really like taking direction from women. Now imagine me and my wife, who has very long nails, long hair, very girly woman, and they're looking at her like, you're going to run this landscape business? It's owning it head on. If you saw how she runs her crews in the morning, she's there with long nails and lashes scolding them, hey, you were five minutes late, let's go. You need to set the tone right away.

Even if you don't know what you're doing, let the guys know: what would you do in this situation? Help me out. They're really receptive to you being aware that you may not know, and they're more open to teaching you. As a leader you don't need to know everything. I will never know everything. Just being aware of that, talking to your guys, asking how they would do this, being receptive, and then saying, okay, I understand you did it that way, however you forgot about this whole other portion I need to take into account, so we're going to adjust. That is being a leader. You have to think of every situation because they're only going to see it from their perspective.

I'll talk about the highly technical side. When I bought North Star Photonics, I literally had to Google photonics when I bought the company because I didn't know what that meant. I was starting from zero, and I'm in charge of people who have 30, 40 years plus a PhD on me in this very niche part of the world of photonics. How do I establish credibility when I don't have the technical training? How do I run a company where I don't actually understand the technology?

You can't get away with not working. You've got to do some amount of effort. I leaned heavy on the fact that I know a few other smart people in the world who know the science side. I called them and did a lot of training sessions on what photonics is, what navigation is, what an inertial measurement unit is, so I could at least be intelligent about what the words meant and how they impact the market we're working in. Spend a lot of time on Google and YouTube University. Don't be afraid to educate yourself with whatever tools you have.

For the actual leadership, fortunately I had military experience standing in front of people who have done much harder things many more times than me. I encourage a lot of people, when you buy your business, go have a one-on-one conversation with each of those employees. A couple things happen. One, you build rapport. Two, you learn more about what they know, and they will teach you, which is wonderful if you just show a little humbleness and willingness to learn. People will extend more help to you. I'm also my sales team, so I have to understand the market and where our components are going to fit, and have at least a master's level discussion with people on what photonics is. Then admit when we've reached a point where I cannot be the expert and call in my PhD to have that more technical discussion. Recognize where your limitations end and lean on the smarter people in your business. That's why you employ them.

Let's pull on that thread and talk about leadership delegation. How do you take that step back and give people the opportunity to fail, to step up, to learn, to lead in their area?

If you came into the search world, it's because you're super ambitious, a high achiever, willing to work your tail off. The only reason you got to owning a business is because you did a ton of work. The change you'll have, as you grow from small business to medium to large, is you have to step back more and more and let go of those controlling tendencies, those if-I-don't-do-it-it-won't-happen tendencies.

I've been struggling with this all my life. I still recognize it every day when I speak up in a meeting and realize I should let my GM have that so he could own it and the employees can see he's the voice. I've been very conscious that this is a tendency of mine. I make sure I pause and listen before I speak. That extra pause gives that next-level employee a chance to jump in. Even if they're wrong, let it go. That's their chance to grow as a leader. Take them aside afterwards if there's coaching and mentoring to do.

The other thing I've done recently, I hired my first CFO, finally letting go of some accounting things. I intentionally went to hire a CFO who had way more experience than me. I had a strong conversation with him: I want you to be a bit of a mentor. It's an awkward role to ask you to be in, but you have that experience. I need you to guide me as CEO when I am overstepping my bounds or taking on work I should let you do. Lean on somebody in the company who is that trusted partner, an executive, or your investors, letting them know it's okay to quietly call you out when you aren't being a good leader or servant leader.

Delegation is one of my biggest struggles. I tend to take on more and more and realize I'm bursting at the seams. What I'm trying to do now is give the little tasks that really shouldn't be on my plate. I give those off and watch how they do them. Having a partner who can tell you, hey, you need to delegate that, helps. You need to give them the opportunity, just like someone gave you the opportunity to be a leader.

A tactical tool: Google the Eisenhower matrix. It's also like the 80-20 rule. It gives you an easy quadrant to say, is this something I really should be doing because it's important and my time is best spent here, or is this something on a lower level that, if somebody could do it at 80% level of quality, should be off my plate?

Evelin, you co-own and lead with Denise. How have you navigated being co-leaders?

We handle two different sides of the house. She handles the landscape construction with her long nails and lashes, and I handle the maintenance side, which is our recurring revenue. Our paths cross and we coordinate quite a bit. A lot of people have told us, I can't imagine owning a business with my spouse, that's insane. I could not imagine doing this business without her. She is the yin to my yang. She's the bubbly one, you can hear her in a crowd. I'm more reserved. That's why we work. She can tell me, hey, you need to approach it in this manner, or I can tell her, hey, that was way too much. We balance each other out.

When looking for a partner, do not look for a partner with the same strengths as you. That is absolutely not the route to go. I do not have her qualities and she does not have mine, and that is the best thing you could possibly do. If you have someone who is the exact same as you, you're lacking in another portion. You really need someone on your team who can help you on what you're lacking in, whether that's bringing in a partner or hiring strategically.

Something we did early on: Culture Index. Sam likened it to receiving a prostate exam, it's that invasive, but it's eye-opening in terms of getting to the meat of who you are. It really helped me and my partners early on understand where each other's strengths and weaknesses lie. Whether through hiring or bringing in partners, working with an organization like that to understand who you are, your strengths and weaknesses, and what you need to look for in people you bring in, lets you delegate in the right ways. I have a lot of strengths, and direct face-to-face conflict is not one of them. If I had to fire someone, that's not a good position for me to be in.

[Denise from the audience] I'll add: we did the CliftonStrengths assessments. Her strengths were leadership, ownership, initiative, all top 10, very assertive personality. I was on the opposite spectrum: influencer, woo, complete opposite. Woo was my number one and her number 30. Almost all of her strengths I didn't have were my initial strengths. Sometimes even on the maintenance side of the house she takes me to go close with her, because even though she can tee it up and sell it, she says, I just need you to go in better. We balance each other out. When you talk about hiring a partner or bringing in people who will help you succeed, it's so important you know where your limits are as a leader.

[Q&A] How do you delegate between the two of you, and how do you keep business out of the house?

I don't have a normal life right now, I'm living and breathing Mean Green. As far as how we divide things, when we initially took over the business, I was doing the landscaping and she was more in the office doing the office work, which is very important. I was trying to manage both sides. I realized there's a certain charisma that comes with selling, and I'm not that charismatic person. I'm very much the military person, very serious. I started noticing men were just drawn to her. I told her, you're taking over the landscape side. She said, what are you talking about? I said, you've got this. I told her the things I was doing, she took off with it. I just realized that wasn't my platform, it was really her platform.

As far as separating business and our marriage, we don't. That's something we're struggling with. We go home and talk about business, we go to the movies and get a text about something, it's constant. I hope at some point we'll be able to pull away from it more once we get people into the right leadership roles. Right now we're very much in the business 24/7.

Let's talk about the flip side of leadership: how you cope and find the strength to lead when you don't want to. Caroline, where do you find the strength when you'd rather just be in the office with your door closed?

I've had a few moments down in the dumps. The first time we ran out of cash, the first time we couldn't make payroll. That sucks. You ask people to work their tails off for you and then you have to go tell them you're not going to pay them. That first time I was scared to go near the employees because to me that meant I failed as a CEO. I turned to my two partners. I had pulled out all the stops I could come up with. This was the first time I ever defeated, head to the ground, said I can't do it anymore, this is it, we got to call it quits. That was the first time they ever saw me show that. They picked up the slack. They found a solution when I had given up hope. The first lesson: trust your partners, trust those people to your right and left. When it really gets hard, you may have to ask for help and that's okay.

The second time we ran out of money I had to do a layoff. I was a lot more thoughtful about it. We knew it was coming for a long time, so we put a lot of thought into how we were going to do the layoff and show respect to those people. We had worked hard to hire the ones we were about to lay off, and we didn't want to do it, but the business would fail if we didn't. Being aware of how we were going to have that conversation with those people, and then immediately, within minutes, having the conversation with the employees who were staying to make sure morale didn't get crushed.

I spent months leading up to it hoping a solution would come, but also facing the reality, talking to people outside the business about how to go through a layoff appropriately, talking to people who have been laid off about how not to be a punk to those people. Literally writing out my script: who's going to be where and when, so the timing was nailed. It wasn't nailed. I don't think you can ever nail a layoff. But it was a lot more graceful. Employees who were laid off came and thanked me for their time, which feels awful. Then some employees came in afterwards and said, I understand why you did this. Next time could you do X, Y, and Z, or talk to us about these few things? I'm still kind of torn about whether I should have talked to them about it. But how nice that employees have great ideas if you just trust them a little. Trust those right and left, trust those employees.

What Kevin alluded to in our situation: literally one month after we closed, the seller started competing against us. That is a wound. We found out through a customer who said, you guys did some work for me and now there's an issue with this retaining wall. We're looking through everything and can't find anything indicating we did the work. We asked for the address and invoice. He used our logo, sent it right off with Mean Green right on it. It was the seller's other entity that he had created. That hits you with a ton of bricks. We started losing a lot of revenue because he was competing with us. Those are some really dark times.

You're leaning on your partners. In my case I'm leaning against my wife. I don't think I processed it immediately. She was processing it very quickly and was down. I'm like, come on, we got to keep going. Then literally months later I shifted into being completely handicapped and she's saying, get out of this, we got to keep going, you have to figure it out. That is entrepreneurship: just figuring it out.

As for how you show yourself to your team, no one knew. The leadership staff knew but our field staff didn't, and they shouldn't. You really have to come in every single day and put on a smiley face and say the business is doing great, and you have to go out there and go get more business. That's it. In a leadership role, you are grinding. If there's a searcher out there thinking this is going to be easy, I'm going to increase revenue, increase the recurring, no, it is not that easy. You still have to portray confidence to your team even though you're dealing with a legal issue because your seller is competing with you. You have to rely on your partners, whether that's your spouse or partners within your business. You have to vent and get it out there.

[Q] From the military background, you learn how to identify leaders. How do you identify good leaders within your team?

You do get a keen eye for it. I wouldn't sweat not knowing those skills right away. What has served me well is putting somebody in a little leadership role to test them out, and letting them know you're doing that, so they understand: I'm going to let you have a chance in this meeting to show yourself, or you're going to run the standup meeting this morning. They're going to be nervous and that's okay. Let them know you'll give them coaching afterwards if they'd like it. Have that dialogue. Give them a chance, give them a few chances to fail, and have open dialogue.

I have one of my top gals on the assembly staff. She's the best at her job. Everyone treats her as a leader because she has the skill set and knows how to bark people into place. I said, hey, I'll promote you to operations supervisor. She said, nope, you're already doing it, but I don't want it, I'll listen to you, but hire somebody else. Okay, very clear. She's got the leadership skills but she said no. Now I'm training new people into those positions. Put them just far enough out there that if they stumble we can fix it. Have a dialogue, see if they want it, give them the chance to try, give them another chance before you give up hope. They might come back to it in two or three years. Like deal making, it might fall apart and that's just not the time for that person. At least they got a taste for it.

We had something very similar. We knew this one guy, he's our labor, but we wanted to promote him to a foreman. He's got all the makings of it. Denise spoke to him, and we both identified him as our next foreman. He said, no, I don't want that, I'm not ready for that. Listen to them. Don't force them, but also ask them why. Because if you see something in them, they may not see it in themselves, or they may be timid. Talk to them. If they say they need more training in this, get them more training. That was the reasoning for our guy. He didn't have enough training on a specific piece of equipment we use often. We're going to continue giving him training until he feels comfortable. One day he's going to make an excellent foreman.

One more on this, because the question often comes up: how do you hire for it? You have people in your business you can try and test. If it doesn't work out, they stay in their job. But how do you hire for it? I have been surprised at how hard it is. I thought I had a good read on people. Anyone who's gone through the hiring process learns: you think you do, and then that person gets started and it's like, this is Dr. Jekyll and Mr. Hyde from who I hired. One thing I've been learning: don't be afraid to go ahead and hire. Do a little diligence. Background checks help a lot. If you can call a reference, you can learn quite a bit and perhaps keep yourself from making a bad hire. I recently hired an operations manager I'd like to turn into a COO, but now that I've watched him work for three months, this guy doesn't have the it. I don't know how I would have hired for the it, that core desire to lead at a high level. But now that I've hired him, I learned about myself and how I want to interact with that person. When I go for that next hire I'll be that much wiser. Do your diligence, but don't be afraid to make the hire and learn.

[Q] Going back to qualifying people, in the context of the seller, his plan was not to go off and compete. What did you learn about how to qualify the seller?

I'm probably not the best person to speak on that considering how the situation turned out. I clearly did not qualify him enough. If I were to purchase another business, I would definitely be much more hands on. I want to talk to the staff. I had not talked to the staff before we closed, and that was a huge mistake. I would have gone to talk to them as we got near the end, gotten to know everybody, almost conducted an interview, seen if they were in the right positions. You can start formulating that in the back of your head: oh, this guy's a salesman but he's so dry, I don't know if this is a real salesman.

If I were to go through this again, I would definitely be looking for someone looking to retire. Our seller was younger, he's my age. That was something I overlooked and really should have considered. There are a lot of red flags. If you show up to a meeting dressed in a three-piece suit to meet the landscape owner, he's going to look at you like, what the heck. There's so much you really need to consider when talking to a seller. Even the QoE didn't identify any of this stuff. There's nothing to prepare you for what we went through.

Were there any personality red flags during diligence that you might have missed?

Looking back, certainly. He had a whole story of breaking up a business partnership with his brother that ended up in litigation, with a whole story about why his brother was awful and their relationship was over. They're back together now, by the way. That's an important red flag. Hearing that story and seeing what happened, yeah, huge red flag. But at the time, when you've got the story and you've got good rapport, it's difficult to catch.

In leadership it's the exact same thing, especially if you're promoting from within and you have those interpersonal relationships. It can be easy to overlook things that maybe make this person not the best fit because you have that great relationship. A great takeaway, search and purchase process aside, as you're thinking about who you're promoting or hiring into leadership roles.

Final one-sentence takeaway on leadership?

Be humble, but make the decision.

Always be in that learner mentality. Don't ever lose that. As a leader you always need to be in that role. You always learn more.