This article is part of our Beyond the Family Business series.
Hosted by Luke Hansen-MacDonald, a second-generation family business leader, “Beyond the Family Business” is one of the most thoughtful and engaging podcasts about family enterprise in Canada. Every two weeks on Canadian Family Offices, Luke goes beyond the headlines with other leaders in family businesses and family offices to explore lessons they have learned, their successes and their challenges.
In this episode of “Beyond the Family Business,” Luke sits down with Lee Bragg, executive vice chair and former CEO of Eastlink, a second-generation leader of the family business. With deep roots in Nova Scotia, Lee walks us through his father’s lightbulb moment of seeing blueberries on the family land and how he turned that into an empire—today, Bragg Group of Companies owns the largest fruit farm in the world.
Today, Lee has an incredibly diverse business portfolio. From Eastlink, which provides communications services across the country (internet, TV, mobile, and data) to Oxford Frozen Foods and Inland Technologies (aviation focused). The business interests are varied, but the successes are consistent.
In his conversation with Luke, Lee shares:
- Origins of the Bragg Group of Companies
- Meritocracy over nepotism in order for the family business to survive
- The benefits of reengineering a business, and what Lee learned from the experience
- People are the most challenging, but also the most rewarding when they want to embrace the culture and grow
Previous episodes of “Beyond the Family Business” on Canadian Family Offices feature K.C. Daya, Jeffrey McCain , Ian Wilson, Derrick Hunter , Pierre Somers and Ben Hertzman.
Disclaimer: This podcast is sponsored by BMO Private Wealth. The information provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. Always consult with a qualified financial advisor or professional before making any investment decisions.
Luke: Hi, I am Luke Hansen-MacDonald, and welcome to Beyond the Family Business, a podcast made in partnership with Canadian Family Offices where we dive into the challenges and opportunities that come from running a family enterprise. Today’s sponsor is BMO Private Wealth. As a client myself, I’ve seen firsthand how they can help families like mine plan for the future.
Today’s guest is Lee Bragg. He’s the vice-chair of Eastlink Telecommunications, one of the largest telecom businesses here in Canada, as well as a member of the prolific Bragg business family.
Today we discuss the origin of the Bragg group of companies, which started as a small business in rural Nova Scotia and has evolved into a multifaceted investment group, which includes Oxford Foods, the largest wild blueberry business in the world, Eastlink, as well as a number of other companies, including Inland, a very unknown business that has rolled up the value chain of de-icing in airports all across North America.
We also discuss the Bragg Group’s philosophy on risk, return and diversification. As well, he shares his view on why it’s so important to focus on meritocracy over nepotism if you want your family business to last generations.
Alright, this is Beyond the Family Business podcast. Let’s jump into it.
Luke: Who are you, where are you from and what do you do?
Lee: My name’s Lee Bragg. I’m from Cumberland County originally, but I live in Fall River now for the last 30 years. And what do I do? I generally say I make sure Eastlink doesn’t go off the rails, but my official title is executive vice-chair of Eastlink, but I still dabble in some of the other Bragg group of businesses’ activities from an oversight standpoint, not really a direct management standpoint.
Luke: Awesome. I’m excited to get into it. For those of my listeners that maybe aren’t as familiar with your family business, could you explain, first of all, what is Eastlink and then what is the Bragg group overall?
Lee: Okay. I’ll try to be reasonably concise. So, Eastlink is a telecommunication provider, primarily focused in Eastern Canada. I describe it to others as like we’re the Rogers of Eastern Canada, traditionally a cable television business, then we branched out. We were getting into high-speed internet. We were the first traditional cable company to launch a competitive telephone service over a cable TV network, first in Canada, second in North America. So that sort of put us on the map as being rather inventive of other opportunities.
We operate, as I said, primarily in … Oh, we also built and operate our own cellular network too, so it’s sort of a full-service telecom provider. We’re the fifth largest in Canada, one of the few remaining privately owned ones and really focused in Eastern Canada, but we also operate in a lot of rural towns and communities in Ontario, Alberta, BC. So really stretch across the country. And we do have a telecom operation in Bermuda as well.
Luke: Very cool. And that’s under Eastlink as well?
Lee: Bermuda is called Link Bermuda. I think the name Eastlink was taken by some other entity in Bermuda when we acquired that business. But everything operates under the Eastlink brand in Canada.
As for the Bragg group of companies, I’d say really what we’ve historically been known for is our blueberry business. We’re probably the world’s largest producer of wild blueberries. We grow half of them. We operate about 50,000 acres of blueberry land, half of which, so we grow our own blueberries, half of them, and we buy blueberries from other farmers, many of whom we help manage the land for them and do the farming.
We do frozen carrots, so we do a lot of battered products, particularly for McCain Foods. We make all their onion rings for Canada, for example.
Luke: Really? I didn’t know that.
Lee: So that’s our food business, and I mentioned our farming business. We also grow blueberries. We grow our own carrots. We buy the onions from Spain and Mexico and Idaho, and wherever you can grow onions.
Luke: And that’s the Oxford business?
Lee: That’s Oxford Frozen Foods, that’s right. And the farming business is called Bragg Lumber Company. A long time ago, we were in the forestry lumber business. We still own a significant amount of the land. One of my previous jobs was managing all our forestry land, but we just kept the Bragg Lumber name, and it sort of evolved into a blueberry farming company more so than a forestry company.
Luke: Cool.
Lee: We also have a wind farm development called South Canoe that we’re partners, we’re the majority owner, but we’re partners with Nova Scotia Power. It’s presently the largest wind farm in the province.
We are partners in the Rodd hotel chain. We have a significant amount of commercial real estate, primarily in and around Halifax. We have another company called Genstar Development, which is a residential property developer focused primarily in Alberta, so Calgary, Edmonton, some developments in Winnipeg, around the city of Atlanta in Georgia, San Diego and LA tend to be the targeted areas where Genstar operates.
We also have a company called Inland Technologies, which is an aircraft services business. We deice aircrafts and we also have contracts to collect the deicing fluid after it’s sprayed on a plane and drips onto the tarmac. We gather it all up, or we manage the waste runoff at the airport, and then separate out the deicing fluid, the glycol, and reconstitute it and turn it back into deicing fluid. And then we have some other associated sort of airline service type businesses that goes along with that. We do a little bit of fueling at some airports, do some baggage handling, freight handling, a lot of sort of miscellaneous, I’ll call it airport work, particularly for airlines that wouldn’t have a domestic presence.
So, if you’re, I don’t know, KLM or Lufthansa and you’re flying into Newark, you don’t want to have a lot of your own infrastructure there because it’s just a point of presence, but you still need to do stuff to your aircraft and move them around and deice them if it needs to be deiced. So, we tend to do the work for all those sorts of fringe airlines that operate out of bigger hub sites. But we have a few contracts with some of the major airlines, particularly actually Air Canada. And we operate in about, give or take, 60 to 65 airports in North America and a couple of locations in Europe.
So, kind of an interesting business that I think has nothing to do with blueberries and nothing to do with telecom. And interestingly enough, none of our businesses really have anything to do with each other, but it’s kind of the group of businesses that we’ve ended up with, and we have been in other businesses and out of them. So, we just like the look of a business, we’ll own it for a while and, if we learn we don’t know what we’re doing, we’ll sell it.
Luke: Smart. That is a truly diversified set of businesses. I have to say, I think Inland, partially because of how not well known it is, like, even in Nova Scotia, it’s this very quiet but unbelievably complex and large international business. I think that’s the coolest one.
Lee: I mean, it’s interesting. The head office is in Truro. We have, outside of Truro, sort of in Brookside, closer towards Debert or North River, we have a manufacturing business where we build our own, we call them glycol recovery vehicles, which are the, we buy a naked chassis of a truck, and then we build the equipment that goes on the back of it, the vacuum pumps and the plenums for sucking the stuff off the tarmac. And we build our own equipment, and all this happens in and around Truro, and most people have never heard of it.
Luke: That’s so cool. It’s such an interesting business, and I love the fact that you’ve managed to become part of the entire value chain, not just, you know, spraying or the recovering or the separating or whatever. Very, very cool. We won’t have time to get into every single one of those investments, but we’ll get to touch on some of it and certainly touch on your view of diversification, as that is a very diversified group of businesses.
But maybe to start off, could you talk a little bit about what is that origin story of your family business? Where did this incredible group of companies start?
Lee: Well, that’s a good question. I mean, I simplify it to some people. I say, you know, my grandfather was in the forestry business, and he cut all the trees down. And my father realized, oh, wow, there’s blueberries growing up on a lot of this cut-over woodland or abandoned farmland that might have come with a woodlot purchase, and just realized, you know, we should be exploiting that resource. You know, that’s obviously a simplified version, but, you know, a few generations before that, it was my, I’m got to go through the generations, grandfather, great-grandfather, great-great-grandfather who really started with a country store in the community of Collingwood in Cumberland County, where I grew up close to, close to the town of Oxford.
And, you know, in those days he was a relatively successful small businessman and owned some forestry land and was dabbling in the forestry business. And really, he was the, I’ll say, the first entrepreneur. And then his son, my grandfather’s father, died quite young, and my grandfather, my father’s father, was recalled from university to come help his grandfather run this business. And he did that and then really began to grow the forestry side of the business.
And that really flipped into where my father took over and really changed the business from a forestry business. You know, we had sawmills and sold lumber, like lots of people would, to really realizing, you know, maybe blueberries are a better future, and really grew it from there. And then, based on the, I’d say, the strength of our management teams and the strength of the blueberry business, allowed us to help acquire a lot of other businesses.
And particularly, like the telecom business. We were investors in the cable TV business. We didn’t really have any family involvement. I was one of the first family members who went to work in the, back then, the cable TV business. We had an opportunity to sell it all, and we thought there was a big change coming. Deregulation was coming. The telcos were going to be allowed to compete with cable companies. Back then, we were all monopolies, and you had a license and you had a license to deliver telephone, and you were the only one, or you had a license to deliver cable TV and you were the only one. But when the Canadian government wanted to deregulate the market, many saw that as a threat and wanted to sell. We, because we operated in the competitive food business and the lumber business, we saw deregulation as a potential opportunity, that maybe we would be able to compete with these giant telcos who’ve been a monopoly for a hundred years, and they wouldn’t get what competition is for quite a while. And we thought, well, we could take advantage of that. And so, we decided to go on a bit of a buying spree and bought up a lot of other small, you know, community, town-operated cable TV companies, and eventually knit them all together.
Luke: Did that start in Nova Scotia?
Lee: Started in Nova Scotia, yeah. And then we eventually branched out to some of the other areas that I talked about across the country, just through acquisitions that were available to us. And we were aggressive. And I think one of the advantages were that we weren’t stuck in the paradigm of “well, this is the way the business needs to be run, so it always has to be run that way,” sort of a monopolistic thinking, because we always had outside management and they were all good at running a cable TV business, but, you know, they were used to a monopoly situation. They were a bit risk adverse maybe, where we took more of an active approach to managing it when we decided we’re going to keep this business and try to grow it.
And I think one of the advantages, we didn’t know what to fear. Like, we didn’t fear the telcos because they were bigger than we are. We thought they were big and slow, and that we shouldn’t be afraid of that, that should be an opportunity. So, I think the fact that sometimes when you’re naive, it’s a benefit.
Luke: Yeah, no kidding. Well, there’s, you know, some people have that baggage of what can be done, quote unquote, that then holds them back because they can’t think of, you know, a new direction to go in. And as you guys proved with going from lumber into blueberries, which today makes sense, but I assume at the time, blueberries were not nearly as large of a business as it is today.
Lee: Oh, no. I mean, I think the first year my father built the factory, I mean, I think one of the real sort of hurdles he got over, and whether it was a hurdle, but was convincing his father and his older brother, and his older brother was 10 years older than he was, really running the day-to-day operations of a forest business, forestry business. And my father is home from university and is the bookkeeper of the forestry, of the lumber business, and eventually realizes, I’m going to generalize, but we’re really just turning the trees, turning our inventory of trees into cash, that we’re cutting them faster than we’re growing them, and that this will end.
And I think, you know, as a kid, he would hire a lot of his friends, and he’d pick blueberries and sell them to a buyer who would bring a truck up from the state of Maine or New England and truck the blueberries back down there. So, he was aware that blueberries were a resource, and then I think saw that the lumber business was going to end. Well, maybe we need to do a shift, and managed to convince his older brother and his father, we should sell half of our forestry land to finance building a blueberry processing business, a factory in the town of Oxford. We don’t know how to do that, but we can see the end to this lumber business.
We did that, and that was 1968 was the first year, and we produced, I think it was 220,000 pounds in that first year. And now we would do, I’d say except for this year, because we had a huge drought and it was hard to grow blueberries without water, generally we do well over 120 million pounds of blueberries a year from that start in 1968. So, we’re basically half the world production now.
Luke: That’s incredible. Especially from a small town like Oxford. That’s amazing.
Lee: Well, and wild blueberries, you can’t plant them. So, they just grow where they want to grow. So we’ve encouraged, you know, you walk through the woods and if there’s blueberry plants growing, you say, well, this may be an area, and you cut the trees down and you spend 10 years sort of managing this land and keeping the competitive plants out. And eventually the blueberries take over enough that you say, all right, now I can harvest them and start to farm this land.
But it’s a long-term investment to try to grow your footprint, because you can’t just say, oh, what a great business, I’m going to go plant 10,000 acres. It just doesn’t work that way.
Luke: Yeah, absolutely. Almost similar to the seafood business that we used to be inward.
Lee: No, absolutely.
Luke: You just have to encourage mother nature to do its thing, really.
So, I guess maybe my next question would be, you know, you spent time in Eastlink, but before that, what is your early memories of the family business? When did you start spending time around the business?
Lee: Well, I mean, early memories, I can remember my father taking me to work as a little kid and parking me at the factory with a wooden box of blueberries that I’d just sit and eat while he really ran the factory in the first few years. And I, you know, I was the oldest and I had four kids, so I think, or four, three brothers and sisters. So, there were four kids in the family. And I think my mother probably liked the opportunity for my father to take one or two of us with him. Because he spent, like, he would sleep in the factory during blueberry seasons. He’d be gone in there 24 hours a day. So occasionally we’d tag along with him, my brother and I, and I can remember when we first started making onion rings around 1970-1971, maybe. I was quite young, but as a kid, I remember I really loved onion rings, but I didn’t like the onion. So, I’d sort of chew the side out of the batter and bite the onion and pull the onion out, and then just eat the battered rings.
Luke: That’s hilarious.
Lee: And spit the onion out on the floor. But my palate has changed now where I appreciate a good onion.
Luke: Sightly more refined.
Lee: But, you know, so that’s the early days. But at the age of 12, I, I had a few non-important jobs as a little kid, just, you know, here and there for a day doing little things just to familiarize myself with the business a bit. But when I was 12, I would live, I started working all summer. I’d live with my grandmother in the community of Collingwood. My parents and my younger siblings would go to the go to the cottage. And I used to joke, I wonder what I did wrong, that I never got to go to the beach. I had to work all summer. But I enjoyed it. And so, I’d live with my grandmother, and I’d work on the farm and spray weeds and blueberry fields or cut trees or do whatever needed to be done. And did that every summer. And, you know, I had worked in the maintenance department of the factory as I got into high school and university and just had a variety of sort of seasonal type jobs, but always, always in the food business. As I said before, I didn’t really get into the communication business until I was an adult.
Luke: And so, when did you guys buy into Eastlink?
Lee: The first cable television company or license we got is we applied for the license, and in, I think it was 1970, I don’t know when we applied, but I think we received the license for Amherst and Spring Hill in about 1970 or 1971, and we built those networks. And then just, we’d either apply for a license to an unserviced area or buy a neighbour. And that was just slowly gathering things up. And the government, when they were initially trying to develop the cable television business, their idea was that these would be small community owned businesses. Every little town would’ve their own little business. But, you know, that was, you know, a lovely concept. But, you know, regulatory change, technology change. Eventually there were economies of scale necessary to run these businesses. And it just caused, you know, we did the same thing as the Shaw family, the Rogers family. Everybody just started buying up their neighbours from those who weren’t excited about or weren’t willing to make an investment in new technology because it is a capital-intensive business. I mean we’re now in the internet business where our internet usage grows by 20 or 30% every year, the amount of bits that people consume. And we have to add capital to the network to add capacity to the network. Like people, I get people that complain, like, “oh my God, my high-speed internet bill has gone up 3% or 4% every year.” And it’s like, “yeah, but your usage has gone up 30% every year.” Like the, the network doesn’t grow on its own. I have to put capital into the network to add capacity, and I borrow the money and the bank wants it back someday. So, I have to charge more. It’s simple math.
Luke: Yeah. Interesting. And so, when did you transition from spending your time in the food business to actually working in the telecom business?
Lee: It was about 1994 or 95. I moved from, you’re going to have to forgive me because I don’t, people ask me these questions, and I’ve never, I don’t know rightly or wrongly, I’ve never had to build a resume. So, I never really paid attention to the past on what jobs I had went and for how long. Somewhere in that neighborhood, I moved from the food business to the, at the time, cable TV business. We had just purchased a system in Truro, and I was living outside of Oxford at the time. And, you know, it takes time. You do the deal, but the CRTC, our regulatory body has to, has to bless any transactions and that can take a period of time. So, we knew we were going to take over the operations. I spent the previous year, when we made the decision that I was going to move out of the food business to the cable business, I felt it was important I actually knew something about it. So, I really spent a year sort of traveling around with one of our key technical people to learn the technology. I worked in the little office in Amherst and did billing runs and answered the phones, and I climbed poles and did installs and really did a lot of the different operational roles, not for any great period of time, but enough that I kind of knew how it worked. And then the real job was I went in to manage the Truro location, and that sort of became the start to when we realized, at the time, we ran, I don’t know, like 15 separate little cable television businesses. We had Eastern Cable in Truro, the one I managed, we bought New Glasgow from Shaw’s, it ran separately. We had Prince County Cable in Summerside, Windsor Cable in Windsor, Cape Breton Cable in Sydney, Halifax Cable, Tri-Town Cable was Lunenberg, Chester, Mahone Bay. Mid-Valley was in the Annapolis Valley. They all had a separate manager, a separate office, and ran like a separate business. All fine, except that we knew deregulation was coming and we knew we were going to want to compete with, at the time, MT&T, a big brand across the province. And we felt we can’t compete with a company at that scale as 15 separate little businesses. We need to have one identity; we need one set of management practices. We need to take advantage of the economies of scale that we had, that we previously weren’t really. And that was one of my jobs working with a lot of other great people. And I was sort of focused more on the operation side. We had a good guy on the marketing side to try to knit all these separate companies together into one business so that we all bought the same equipment, we all showed up at the same time, we all answered the phone the same way, we all had similar pricing, and eventually had to come up with a name that represented all these businesses and turn ourselves into one business instead of 15 others. And it was, that was a tremendous experience because when you have to radically re-engineer a business like that, you really learn a lot about it. When you have to tear apart a lot of processes and pick the best of whoever’s doing what and knit it all together into one sort of set of management standards, you know, it’s a really great experience. You learn a lot.
Luke: Yeah. I could imagine that must be an incredibly complex experience with that many different locations trying to get a homogenous culture.
Lee: You know, and like anything, the people are the biggest challenge. They’re the most rewarding experience sometimes when you can find some of these folks who can really embrace what you’re trying to do and grow with you. And then sometimes they’re some of the most challenging situations. Or sometimes you had so much confidence in somebody you thought was great, but they were great in a limited scope, and when you try to grow, they couldn’t grow with you. And I’d say that’s one of the biggest challenges with business that I find are, it’s like the people challenges, the HR challenges. Like, you know, equipment doesn’t argue with you. Equipment doesn’t get sad, equipment doesn’t like … It’s, you know, you can fix those things. That’s a mechanical process, but people, it’s the biggest reward and the biggest challenge sometimes is how do you find and build the right team? And sometimes the business can grow faster than some of the individuals in the business’s ability to grow. Sometimes you have people who want to grow and are capable of growing faster than you are in a particular area, and they go off and find another challenge after you’ve invested some time and effort into them and your hopes for them to help you grow the business with you. So, you know, but that’s life. It’s a little bit like managing a sports team, a little bit. You have different players. They come in, they come out, somebody steals a player from you, and you have to replace them. And they don’t have the same skills as the last guy. And you have to rearrange your structure a little bit to fit the players that you have. So, it’s kind of a constant evolution. But I’ve always found that’s one of the biggest challenges with business. And either one of the biggest limiting factors, or one of the greatest opportunities to grow, is the quality of the people that you have around you.
Luke: For Sure. I can tell you’re passionate about it. I mean, it’s got to be in a business of that scale, it’s got to be a massive part of your focus, is finding the right people, especially where you’re in a bunch of rural communities. So, talent pools can vary a lot, et cetera. You know, to ask an unfairly complex question, what has been the underpinning, you know, philosophy of Eastlink or Bragg group, whatever you want to call it, you know, of your approach to developing talent? What, what has worked for you guys? Because obviously something is working.
Lee: We absolutely do work hard at developing talent. I mean, we say one of the biggest limiting factors we have is, I’ll call it management horsepower. Like, we know as a family that it would be lovely if we were the smartest people and knew how to run all these businesses, but that would be naive to think that. It’s in the family’s best interest to have the best management you can possibly hire. So, we go look for, you know, who we think is the best talent. Now we have a bit of a unique culture compared to, we’re a relatively large organization, as big as some publicly traded companies, but we operate like a smaller homegrown family business. We have a few key philosophies on, you know, I joke a little bit, I call it two steps forward, one step back. We are not so nervous about the one step back, about who’s going to wear the mistake, that we won’t take the opportunity to take two steps forward. Like, we encourage our people to, not make mistakes on purpose, but to be aggressive.
Luke: Take some risks.
Lee: I don’t, we say we are outcome oriented. We’re not process oriented. Like, if you are doing a job and you can come up with a better process to achieve the outcomes that we’ve agreed on, then you know better than I how to do your job. So, create a new process. And sometimes there has to be some guardrails or boundaries within that. But we try to give people lots of freedom. And we say, you know, we’d rather you ask for forgiveness than ask for permission, but don’t ask for forgiveness twice on the same thing, because then obviously you haven’t learned anything. And we’re very clear with a lot of our senior people that family members aren’t going to just show up and bump you out of your job. Because I mentioned before, it’s in the family’s and hence the shareholders’ best interest. And we are very clear with all family members that, you know, you don’t have a right to a management job. You just can’t show up out of university and say, “oh, I want to run the marketing department at Eastlink.” We all know that’s not going to happen. Well, I shouldn’t say it’s not going to happen, it’s not automatic. Every job, you have to earn. So, it forces us, and again, we share this sort of business philosophy with our staff, and it gives them some comfort to know that anybody in the organization could run one of the businesses. And as we talked about earlier, we have a variety of different businesses. So, I would not attempt to say I could run our aircraft services business better than the guy who’s running it. Doesn’t mean I don’t argue with him sometimes and ask lots of questions, but, you know, he’s been doing it for a long time, and he knows that business and it’s in our best interest to let him do that. You know, we provide oversight.
Luke: Yeah. It’s a meritocracy. It’s not nepotism.
Lee: Yeah. A hundred percent. And that’s how you get, and/or can keep, good solid people. And we make sure that our key senior people are aware of this philosophy so that they’re not, they don’t think they’re going into this, “oh, I’ll never get the job to run Inland,” or “I’ll never get the job to run Eastlink.” Anybody could, because we want the best person.
Luke: Very cool. No, that’s an excellent, excellent philosophy. And it makes a great deal of sense. I mean, the longevity you guys have had, you have to be meritocracy driven. That’s the only way you would do it, especially with this complex group of companies.
I want to get back to your career path. Just, you know, I love hearing about how you and Eastlink both evolved and it ties in with you rising up through meritocracy. I guess, can you sort of summarize, you know, from that nineties stage when you joined, what were sort of the key milestones of Eastlink and as well, how did you move up through the business?
Lee: I generally moved up through the operational side of the business. As I mentioned before, I went in to manage the Truro operation, which was really, it was a little business unto its own. But back then, it was primarily very operationally oriented. Like, when you’re a monopoly, you don’t need much of a marketing-centric approach or sales-centric approach, or even from an HR standpoint, we weren’t that strong because you were the only provider of that service. So, you could really be pretty terrible and still make a go of it, but you had to roll the vans, and you had to make sure the technology works. So, it was very operationally centric. So, I tend to like that. I gravitate toward things like that. So, as we worked through that, I managed that Truro location. We eventually realized, as I mentioned before, we had to knit a lot of these together. So, I took, I was a director of operations for the group. And part of the responsibility was to shut down some of the offices, create a call center, standardize some of these processes. And it wasn’t just me. We had quite a team of capable people to help. And then eventually I moved to Halifax and I was, we knitted all the rural systems together and left Halifax on its own for a while, because it had enough scale and good people. And then eventually we rolled it together and I moved to Halifax and helped with that. And again, I don’t remember all my job titles. Director of operations. And then I was, we had a separate president, I was assistant to the president for a while. Then I was co-CEO with a gentleman who was really good at the sales and marketing side. And I was the operations guy. And a lot of organizations might think a co-CEO situation might not work, but we were growing a lot and we were launching new products and services, and many of our decisions were myself and the other co-CEO and our senior director of operations, our CFO, our HR person. There was a lot of group discussions. because we didn’t have a game plan. We were figuring it out as we went. So, it was very collaborative on how we made decisions, so that structure worked. And, even then, we matured a little bit, and my co-CEO went off somewhere else. I became the sole CEO and then that changed, and I became executive vice chair. And we have a new CEO who looks after all the day-to-day activities. And it gives me a little more freedom now to spend some time being aware of what some of the other businesses are doing and doesn’t tie me down. I still spend a lot of time on bigger capital deployment, regulatory. I say it allows me to think what’s going to happen five years from now rather than what’s going to happen next month. But that’s a sort of an Eastlink career path from that standpoint. And a lot of other terrible jobs in some of our other businesses.
Luke: Very cool. I’m very fascinated with the co-CEO role because it is unique. But at the same time, as a family member of a family business, I can truly appreciate the value of having the ability to be complemented like that for a time period before eventually taking the CEO role on. It makes a great deal of sense. I guess, how did you find that fit? Was it an obvious fit from day one that you were the ops person, and they were the commercial one, so it was going to work like that, or was it a difficult transition to sort of make that happen?
Lee: I don’t think it was that difficult. At the time, I’m not sure either one of us were a hundred percent sure we would have been capable doing it on our own. My father has a great way of putting things sometimes. He said, “well, I’m not sure either one of them are mature enough or have enough experience to do it on their own, but between the two of them, they likely can’t screw it up.” But we had to, neither one of us would make a decision on our own without a discussion, even if it was in our core area of interest. We also both respected each other’s core area of interests and experience.
It actually would have been dangerous to have one CEO who would have been capable of choosing a path with this uncertain way forward of competing with a telco, this deregulation, launching new technology, new products. Some of these things nobody had done. When we launched a local telephone service over the cable network, technically it had been done in the US by another company, but a different economic environment, a different regulatory environment. This was all new.
To have the risk of just one person go down the wrong path, we still could have gone down the wrong path, but at least the structure forced good discussions. We would have a discussion and realize, well, neither one of us knows, so we’d gather some more people around and eventually we’d get some coordination on what the right approach would be. It might be wrong, but that’s all right. At least we were all in it together to a certain standpoint.
I think given certain situations; I think the structure can work. As I mentioned before about running a business like running a sports team, who you’re competing with, the situation you’re in, the talent that you have often can define the organizational structure. I think some businesses get too set on the structure and they try to make their business fit the structure and make the people fit the organization structure that they want. Like, “oh, I have to have a CEO, he can’t have any more than six direct reports. I need a sales guy. I need an HR.” And sometimes, maybe the talent’s not there. Maybe you need a different structure. You need to be evolutionary a little bit.
Luke: Absolutely. I think it makes a great deal of sense, as I said. Can you speak a little bit about, your dad has been an incredible entrepreneur. He had the vision to go in the blueberry business and then, you know, a bunch of other subsequent complex and incredible businesses as well. How has that mentorship role worked throughout your life as far as, you have this very competent entrepreneur as a father, but at the same time, to your point about meritocracy, you need
to prove yourself and so forth. How have you found that healthy balance with him being a supporter?
Lee: I mean, sometimes your father can be your biggest cheerleader and your biggest critic all at the same time. So, you know, it’s worked, but it’s hard for me to measure against anything, because it’s all I’ve known too. I’ve had some odd jobs, like through university working in other people’s businesses, but not meaningful jobs at all. And I’ve also been fortunate enough, most of my jobs I’ve had, I’ve always worked for somebody else in the business, not directly for my father. And most people knew, they’d give me hell if I needed to take some hell and force me to do my job. So, it is all I’ve known. I do recognize that the exposure I’ve had to how my father and others make decisions and the thought process they go through and how just sometimes there’s simple things. Like sometimes just take an extra day and think about a big decision. Some of those things I just take it for granted because I was exposed to it. But it’s a tremendous value. I mean, I say if everybody could spend a year just sort of sitting in my father’s office listening to how he makes decisions and the discussions he has in the areas of focus he has, would be a tremendous experience. Now not everybody can do that. And I was fortunate enough, and I think that’s one of the key things that has allowed me to achieve whatever I could achieve, is just having that exposure.
Luke: Very, very cool. I love hearing about the decision-making process, especially, you know, you mentioned the two steps forward, one step back. Going from convincing his older brother and his father to go from lumber, which is a proven business into an unproven business. I guess, what is your family philosophy on risk taking? I mean, I appreciate the two steps forward, one step back at an employee level. But as far as an overall group of companies, as you look at new investments, et cetera, can you speak at all about what is that philosophy around making a risky investment versus a perfectly safe one in an existing business as an example?
Lee: Yeah. I think it’s, I mean, we’re not, we don’t take dangerous risks. We like to analyze them, and I think part of it is, what’s the potential return? Like, obviously we’ll take more risk if there’s more potential upside. So, they’re measured risks. And we also try not to bet the whole farm. I mean, it’s a little bit of the advantage of being as broad and diversified as we are that we can take a big risk relative to one of our businesses, but it’s only in one of our businesses. Now, I think that gives us a competitive advantage in the areas of who we’re competing with in these different areas. Like we might be able to look more risky than somebody we’re competing with in the aircraft services business, who might be equal to our size, but because we have so many other interests, we can bet more in that business because it’s not the only business we run, where somebody else might be harder for them. So sometimes that’s a competitive advantage. And we look, you know, we’re privately owned, which has a tremendous advantage to many other businesses we compete with. You know, I’ve heard it from the Bell guys and Telus and Rogers, how the risks we take. And I would argue, well, they’re not, we don’t see it the same way. We don’t have an army of shareholders and bank analysts who are scrutinizing every decision and who expect their dividend flows and expect a certain amount of growth. We can, we don’t think it’s risky to say, “well, we’re going to bet something that’s a five- or six-year payback.” Those guys might never do that. We don’t strip all the cash out of the business for dividends. You know, we like to grow the business. We don’t, we’d rather reinvest in ourselves. So, we don’t think of that as risky. So, it depends on your perspective sometimes, you know, what you think is risky. Now, all that being said, we’ve levered up some of these businesses as far as we can, but for the right opportunities. So, we have enough confidence in our management team, enough confidence in our growth plans, and arguably some back doors, because we have some support from our other businesses, that we can do these things, but I say we’re not taking frivolous risks. But we like to grow. So, we are always taking opportunity, but you know, there’s risks, but measured risks.
Luke: Yeah. No, that’s really well said. And very, very interesting to hear. I completely hear you on the private business thing after us, you know, we were in the seafood business in a public company that really was not a big enough public company and being scrutinized constantly. And our team did a great job of navigating it. But you can become, you can succumb to short termism because of quarterly reports and the focus of things that don’t matter as much as, you know.
Lee: Like, and you, so you’d experience, like the effort to do that, like the management effort. I talk about management horsepower, you only have so much, and to have whatever, a third of your management horsepower just dealing with external shareholder analyst issues provides no real economic value or no growth opportunity. We don’t have to do that. I say one of the strengths we have is, I call it consistency of shareholder expectations. It’s only five shareholders, and we’re all pretty consistent on what we expect out of these businesses. Like, it really makes it easy to manage the business when all the shareholders want the same thing out of it. If you’re a publicly traded company and you’ve got, management might have some shares and they want one thing, and a pension plan has some shares and they want something else, and some speculators, some private equity have some shares. They want some growth over five years. Somebody else just wants healthy dividend returns. Somebody else. Like it’s when you have an army of shareholders who all want something different out of a company, it makes it hard for management to run the company in the best way. Because sometimes the best way might be, well, we’re in a bit of a natural growth lull and we’re spinning off some cash. So yes, we will pay some healthy dividends. And then there’s a period of great opportunity and say, well now we want to stem the dividend flow and take advantage of some great capital deployment opportunities and grow. Well, suddenly your dividend motivated shareholders are not going to be happy. Your growth-oriented shareholders suddenly might be, and maybe you attract more, but it’s a whole thing to manage that, from our perspective, it’s something we don’t have to manage. So, it simplifies your life from a management standpoint where I sit, it’s really nice.
Luke: Yeah. Back to the employee retention thing too, not having that undue pressure. Clear vision of ownership is a huge way to retain people.
So, building on that same point, is it fair to say that, at a Bragg group level, you guys are really looking at all your businesses and whether you’re investing in further capital deployment within Eastlink, or you’re doing an acquisition in Inland, or you’re doing a new company investment, it’s largely all driven by just returns, and that’s your main goal. And I’m not saying that in a cold-hearted way. I mean, in a trying to determine between these different great companies where your money goes each year, you have to have some kind of clear philosophy.
Lee: No, I mean, and that’s right. And we do that from a head office standpoint. My father, you know, was wise enough to start an independent advisory board in the 80s. And, you know, he had the philosophy, “why wouldn’t I want to have as much advice as possible?” So, he created an advisory board of some good business people and people he knew, and some from diversified businesses too, because we talk about, I call it, blinded by familiarity. If you surround yourself with the same people working in the same business, dealing with the same challenges and have the same perspective on things, you get blinded by that familiarity. It’s nice to have somebody from an outside perspective, outside point of view, some fresh eyes. And our advisory board does that.
So advisory board, head office, really to your point, I’m going to simplify it, I say they’re the balance sheet managers of all the businesses. The president or CEO, the operating teams, they manage the income statements, but the balance sheet managers is the head office. So if it’s, debt financing, capital deployment, mergers, acquisitions, we deal with that. Which is, it’s big heavy lifting stuff, but it also allows the management teams to focus on being just excellent day-to-day managers of those businesses. And so that’s generally where the decisions are made of, you know, we get a business plan, a forward-looking business plan from all the different operating companies, and we’ll have a bit of a discussion about where the cash is going to be deployed. Sometimes it might be, if Eastlink doesn’t have any great opportunities and we generate some cash, it could go to Inland because they’ve got a great opportunity to grow a footprint at LaGuardia, or somewhere. But the other hand is if I’ve got a great opportunity to invest in a cellular network that, you know, costs half a billion dollars to build, that’s more cash than I’m generating in one year, so I need some outside. Now, if the, and this goes back to how we take risks, if all those opportunities look great, well then, we’ll go to our banks and say, now we want to lever up some of these businesses to take advantage of it. So, I can’t really describe what the different criteria are, but that’s sort of where those discussions happen at that sort of head office advisory board level.
Luke: Yeah. Sort of treasury decisions around, you know, where if you need basically cash management, is it from equity, is it from operating income, is it from debt, more or less.
Lee: And the head office and the advisory board have that sort of oversight view and can help decide that. And, you know, it takes that hurdle off the management team. Right.
Luke: How about diversification? You guys have a grown a very diversified set of companies. I mean, it’s incredible that you’ve managed to manage them all, and I appreciate your point about the meritocracy and ensuring you have experts in those businesses to allow them to be run by subject matter experts. But from the point of view of diversification, how does that play into your decision making? I mean, was it a conscious decision to be like, we need to get into, you know x number of different businesses, and what would motivate you to get in a new vertical that is yet again, diversified from the existing ones?
Lee: I mean, we’re already motivated. We are always looking at new and different businesses. We don’t have a set number. We don’t think of ourselves as sort of limited in the number of businesses we could manage. And the reason I say that is because, and manage is the key, if we were looking at a completely different business, we would only look at it if it had competent management that we knew or had some inkling that was going to stay and continue with us. We don’t see there being as much of a limitation to manage balance sheets. That’s a sort of a narrower skillset. And our head office with the help of our advisory board can do a lot of that. And it’s not terribly complex. Balance sheets are balance sheets. They’re obviously not all the same for different businesses. But they’re, they’re more similar than the operations of different businesses. So, we’ll look at, I don’t want to say any business, but we would look at any business if it had the right metrics, and one of them is a certain scale, it has to be big enough. I always say business problems are the same. Doesn’t matter how many zeros are on the end of it. So, we know how much effort we have to manage businesses. We want to make it worth our while. So, it has to be a reasonably large enough business to attract our attention. It has to have, as I mentioned before, a competent management team that’s going to be with the business. Now, if it was another food business, another telecom, another aircraft services business, we might say, “well, it doesn’t really matter about management. We’re just going to roll it in anyway.” But if it’s completely new, we’d want competent management. We also look at a business that would have, we call it a long-term sustainable strategic advantage. Now, those are big words, and they might not mean much, but it’s like, what’s the edge? What’s the economic moat?
We’d say Inland, with our glycol recovery system, we have a patented process for how we recover, spent deicing fluid. And we’re the only ones that have that. And it gives us an economic advantage over somebody else who’s trying to do the same thing. So that’s our long-term sustainable strategic advantage. Arguably with Eastlink, it used to be our license. You know, it was hard to get. Now I’d almost argue it’s our network, because it’s very capital intensive and hard to duplicate building a network into everybody’s homes all over the Maritimes. Our food business, it’s really, as I mentioned before, you can’t plant wild blueberries. We own half the land in the world that wild blueberries grow on, so hard to duplicate. That’s our strategic advantage for the long term. So, we’ll want to look at businesses that have something like that, so we know it’s got a reasonable economic moat around it. So, scale, an economic moat, good management team, and ability to grow. We tend to like and look for businesses that may have been starved by lack of capital in hindering their growth. Well, we like a business we can put some capital in to help grow it. So, if a business can hit all of those preferably, or most of those boxes, we take a look at it, and it almost doesn’t matter what it is because we think we don’t have to manage it. We’re hiring a management team to manage it.
Luke: Yeah, and you’re the balance sheet experts.
Lee: Right. We can do the financing, we can provide the treasury, we can help with the capital allocation. And like, that’s the easy part.
Luke: That’s a very, very interesting and very logical philosophy of investment. So, I appreciate you sharing that. We’re running out of time, so I want to cover off a couple more questions.
Lee: I told you I was long-winded. I warned you ahead of time.
Luke: No, no. It’s very, very, very fascinating. I guess, you know, you’ve spent a bunch of time in Eastlink, but you’ve also been in these other businesses. You’ve now moved to the vice chair role where it’s giving you that capacity to look more into the future. Where do you think telecom’s going in the next five or 10 years? Because it seems to be a space that there is a lot of disruption going on globally. You know whether it’s the star links of the world or it’s the just insatiable desire for more data, you know, with data centers popping up. What do you think are some of those major changes we’re going to see in the next five years?
Lee: I’ll give you some thoughts on that, but I’ll also say, I don’t care. Which sounds a little flippant, but part of the reason I don’t care is because as long as it’s disruptive across the industry, I think because we’re privately owned, we’re a little more nimble and I think we have a superior management team. Disruption’s likely good for us. If the industry is a little bit lost and they don’t know what’s coming, that’s good for us. So I’ve been in this situation. Like, I can remember sitting around tables thinking this cable television business, how can it possibly grow? We’ve got 30 channels. What more could we do? Well, suddenly there were digital TV and there’s more channels. Then we sat around what more could we do? Then high-speed internet comes along and we kind of take over the internet business as well as the telco. It used to be a gazillion small independent ISPs. They all disappeared because we decided we should be in that business. And we were the obvious ones. That was tremendous growth. Then we figured out the technology to get into the local telephone business and then said, how are we going to grow that? Then the opportunity came to get in the cellular business. At no point back in the past did we see all these things. But we were able to take advantage of them.
Now, I do think ultimately, we will be just a cellular and a high-speed internet company. Now, I think traditional cable TV, doesn’t mean we’re not delivering video, but I think people are going to, I’ll get crucified for this by somebody because I grew up in the cable television business, but there’s too many middlemen in the video business. Like, you’ve got somebody who creates the content, I don’t care who you are. And then, you know, Sony Pictures picks up the distribution rights, who then get it to some channel Discovery in the US who then resells it to Discovery Canada, who then resells it to Bell becomes the owner of Discovery Canada. And then they sell it to us. Like there’s a lot of middlemen. When the technology allows somebody to just go direct, buy a direct. Now, you got to have, you need search engines, you’ve got to be able to navigate and find the stuff. But I think getting a lot of middlemen out of it, us included, would be healthy and just selling high speed internet. I’m not saying we won’t try to have some mechanism, whether it’s a fancy box that has a guide that has search functionality across Netflix and Apple TV and Hulu Plus so that you can help the consumer navigate through and find stuff. You know, there’s a bit of a role for us there, but it just doesn’t seem to make sense to me that we’ll remain in that business. Landline telephone doesn’t make sense to me why anybody has one. Now, I sure likely have 150,000 customers still on landlines. I’m not suggesting they all go disconnect them, but I think that’s ultimately the evolution is you’re just going to have a cell phone, you’re going to have an internet connection. Which is all fine. It actually simplifies my business model tremendously. But what I have realized is there’s a longer tail on these things than most of the time you think. So, when I say ultimately be out of that business, I might wish it was three years, it’ll likely be 23 years. But that, I think, is where it’s going to end up. And as long as we have that high-capacity pipe into a house, and yes, Bell might, and maybe somebody else might, but those high-capacity pipes are very difficult to duplicate. They’ll always be a role for us to deliver, whatever it is. I’m a bit of a toll highway. I don’t really care if I sell cars. I don’t care what color your truck is. I don’t care. You still have to use the road. So as long as I own the road, there should be an economic future for us.
Luke: That’s very well summed up. And I will say that my parents had a landline in their house until a couple years ago, and I think it literally only gets spam calls now. And so, they stopped answering it and I was like, “why is this even here?” And they’re like, “well, you know, we’ve had it forever.”
Lee: I’m the same way and I should know better, but I mean, we’ve got our house in Fall River – it has a landline because it always did. And it’s still there. But we recently bought a place in Chester where we spend the summer and it never dawned on me to put a landline in. And I don’t miss it.
Luke: No, exactly. Especially with a cell phone.
Last question. What do you hope you, and I mean Lee specifically not your family overall, because your family’s had a tremendous impact philanthropically and as far as business goes. What do you hope your impact will be in your lifetime on your business and on your community?
Lee: Well, I mean, I think my father’s demonstrated the value of being very community minded as well as economically minded. I mean, I think what I’d like to leave is companies and solid management that can continue. I think we have a responsibility [as my generation] to make sure we pass on the stories and the philosophies that would’ve come from my father down to the next generation, so that they understand the why. The ‘why’ we do things the way we do. Like we say we’re good stewards of the land. We own a lot of forestry land, but we treat it with great respect, like a big park because we think it’s not just there for us. It’s there for many other people. There’s snowmobile trails. People hunt on it and fish. So, we want to treat the land with respect. Therefore, we do the same thing with our businesses. We want to treat our businesses with respect because we’re not, we’re all as individuals not going to be here forever. But as long as there’s a longevity there, that this can continue and continue the idea of growth that some people think it’s terrible to say the business comes first, but we want the next generation [to be successful]. And I think that way to think of the liquidity that’s generated by these businesses is the businesses’ to decide what to do with it first. Yes, shareholders should get something out of it. I mean, they’re always, you need to have a reason to own it. I say, a mistake you can make is if you push the shareholders down too low, where there’s suddenly no value in owning a business, they won’t want to own it very long. But they should understand what the intentions of these businesses are. And if we can continue to give back to the communities, particularly the rural communities. You know, my father jokes a little bit. We have a pretty strong approach to funding lots of things. But he said, there’s enough rich people in the city. Those folks can deal with all the city issues. Who’s going to look after rural Nova Scotia. And he puts that on his shoulders. There’s many others that do as well.
Luke: I love that. That’s a great expression.
Lee: We kind of focus a lot of our giving kind of in the rural areas. And I think it’s important to do that. And whether it’s directly funding, you know, we’ve got a project with the United Way to build low-cost homes so people can get over the hurdle of owning their own homes in Amherst. And we’re trying to roll that out in other areas to simple things. You know, we’re building a golf course, that sounds altruistic, in Collingwood where I grew up, but really, it’s about we saw what Cabot did for Inverness in improving the economics of that whole community. Why can’t we help facilitate that in the community we grow up in? Yeah. I mean, we’re building a golf course and people are going to have to pay to play, but there’s going to be jobs, there’s housing developments, there’s hopefully other ancillary businesses that will spin off because of that economic anchor. So, there’s lots of things you can do, other than just write checks and give them to people to help support your community, support employees. And I think those are kind of the philosophies that we want to pass down. And I say, if I’ve done my job right, it’s to have a good solid management team who want to stick around and continue what we’ve been doing in these businesses, and have the next generation understand those philosophies so they’re capable of allowing it to continue. So, it’s pretty simple.
Luke: Yeah. No, it’s a wonderful way to look at it. And, you know, to paraphrase, you really have that stewardship of your wealth approach. You know, the money or the wealth is not for any given generation. The generation is really a steward of the family business. And it needs to be constantly passed forward and continue to progress like that.
Lee: Stewardship is the key word. And educating people on what that means. You know, you can’t just write it on a piece of paper and hand it to the next generation. They need to experience it.
Luke: Yeah. Very well said. Thank you so much for your time, Lee.
Lee: Oh my God, My pleasure. This was a lot of fun.
Luke: Thank you so much for watching. This is Beyond the Family Business podcast. Please like and subscribe, take care.