Welcome to this week's Intangible Balance Sheet conversation with Jim Nordhaus. See below and listen in for more of our conversation!
Please check out and subscribe to my Youtube Channel and Newsletter!
JOSH KLOOZ, CFP®, MBA
WEALTH ADVISOR
Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
jklooz@carsonwealth.com
1780 Hughes Landing | Suite 570
The Woodlands, TX 77380
Music by bensound.com
Welcome to this week's Intangible Balance Sheet conversation with Jim Nordhaus. See below and listen in for more of our conversation!
Please check out and subscribe to my Youtube Channel and Newsletter!
JOSH KLOOZ, CFP®, MBA
WEALTH ADVISOR
Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
jklooz@carsonwealth.com
1780 Hughes Landing | Suite 570
The Woodlands, TX 77380
Music by bensound.com
Hello and welcome in again to another episode of Wisdom and Wealth. This is another of our Intangible Balance Sheet series and today I have the distinct pleasure of introducing to you all Jim Nordhaus. Jim, thank you so much for joining us in the podcast and I'm really excited to learn more about your Intangible Balance Sheet.
Jim Nordhaus:Thank you for the opportunity to share.
Josh Klooz:Likewise, jim. So the question that I'll get sometimes from newer listeners is what is an Intangible Balance Sheet? And for my purposes, an Intangible Balance Sheet is everything that you give your time to, your treasure, to. It's kind of the summation of your first principles in life. I believe that we're all a little bit irrational about life's experiences because at the end of the day, given any amount of money, we probably wouldn't trade a lot of our life's experiences because they're what made us us On my Intangible Balance Sheet personally our first jobs, certain successes or failures and some humorous stories which will stay off the record, but it's all those things that make life meaningful and colorful, and encapsulated in that Intangible Balance Sheet are where we came from as well, like our grandparents stories and so on and so forth. But before we dive in, jim, could you give our listeners just a brief introduction to yourself and then we'll dive into the further conversation.
Jim Nordhaus:Well, I'm a product of San Antonio. My great grandparents, at least on my grandfather's side, arrived about 1858 and had the privilege I guess, call it what you want fighting in the Civil War, survived that and had a bunch of kids. My grandfather, jefferson Davis Nordhaus. So that's a prominent southern name if you're a confederate, If you're not a confederate it doesn't work so well. So sometimes I mention that, sometimes I don't, but why not? And he worked at the Centronics Press News and helped form a union there. And that gets into the story a little later because I am rather anti-union. But my dad started in the frozen food business back in the Clarence Birds Eye days, and Clarence Birds Eye was in the mid-1930s. So a gentleman by the name of Bob Glacier out of Houston, glacier Foods and you may have seen the building or the trucks if you're a long time was assessment at that time, and so he started a brokerage company. He started the food service distributor, which was slightly illegal, but he put his brother in law over one so that there was separation because you couldn't be a broker and a distributor. But anyway he came to San Antonio. My dad was a buyer at a company called Guggenheim Goldsmith which was very similar to Benny Keith as it is today beer, wine, ice produce. And Bob offered them selling frozen foods because they had a freezer for their ice and they declined but they liked my dad. Dad was interested and so they actually put him in business. They said we'll buy it, we'll store it, we'll go out and sell it and pass. And so he built his business and there's pictures delivering frozen foods on a bicycle. I mean not exactly what you would do today, but that's how it was back in, let's say, the late 1930s, early 40s. Anyway, he built his business and did well.
Jim Nordhaus:I went off to Texas. Probably should have studied harder, did fine. I wanted to be an electrical engineer. Had a drafting professor that didn't like the way I drew and he said you're going to be a horrible engineer. I'm plunking you. And I said I'm going through UT in three years. No, you're not. He said if you get out of engineering I'll give you a D. Today you know they'd bea little trouble for doing that, but that's back in the 1960s. Well, but they had a business route to engineering. So I could keep the science, I could keep the math, which I love, and took business courses in instead of engineering. Anyway finished. That got out in 1966.
Jim Nordhaus:I did it in three years and then my dad decided to have a stroke, very inopportune. So I was starting law school, he had a stroke, it was one of those things. And so, gee, I guess I'll be involved in the business. And so we started it, or I started getting involved, and I won't say I had a lot of training. There were great people, great sales people. My brother-in-law was there and I'm sure he wasn't happy that I was coming in as president. He was not going to be the president, but life is it Built the business.
Jim Nordhaus:And you know I didn't do much planning. Now I preach a little planning and risk adverse, a little different philosophy at my age versus when I'm 20s and early 30s. And things are going well. And you know we were making money, but not a lot. And I came to Houston and visited with this fellow by the name of Tom Glacier, who happened to be a very good friend, bob's son. He was then running Glacier Foods and I said, tom, here's my financials, what am I doing wrong? I don't know where to cut anymore. And his very good comment you can't see the forest for the trees. You need to raise your prices. You're too cheap. Raise 3%, don't pass along to your salesman. You keep that 3%. We started just well, we better open up profit share plan because we're making a lot of money and we grew and grew and anything goes. That point, whatever we did, worked.
Jim Nordhaus:And then came along the Carter Nixon years. Very few have ever been exposed to press controls but the government put on press controls and locked down everything. That meet was about the only thing that I remember that they allowed that to fluctuate carefully. We sold to the military the exchanges, so we had to be very careful what we did. But the interest rates and you're probably familiar, josh, with Paul Volcker. Paul put his foot down, stomped on the brakes and we were borrowing money and all of a sudden we were borrowing at 21%. You can't survive in a 4% 5% business paying interest at 21%. It just took us upside down. Fortunately I had good friends that had encouraged me because I was a bit shy to get involved in the Southwestern Prosperity Food Association. I became president of it and one of those fellows that was involved was this other gentleman out of Houston by the name of Johnny Ball. I don't know if you know of him, but he's the founder of Cisco, small little company here in Houston.
Jim Nordhaus:Now, anyway, johnny came to town, called and said I've got to come to San Antonio. Would you have tea with me? And it's a circle Be honored. And he said I'm coming for Valero. I'm on the board. You probably don't know that and in those days going back LaVaca gathering, the Wyatt family was LaVaca and became Valero. That was a spin-off that it is today located San Antonio.
Jim Nordhaus:So anyway, johnny came, we had tea and he looked at me and he said you know, we just built this new warehouse in San Antonio. And I said yeah, that's something familiar with it on FM 70. I looked at the property, johnny, I just couldn't afford it. And he said well, we built this warehouse and we're losing a lot of money. I need to buy your business Really. So, although we were upside down, we worked a deal and I sold the business to Cisco and stayed in San Antonio as VP of merchandising marketing. They made a spot, moved someone else out and then they asked me to come to Houston and had the grossing procurement for the corporation and meanwhile we were doing military exchanges. So that allowed me a whole other area because I got involved with multi-unit account on a national scale and worked with their national team. So all in all it worked out well for me.
Jim Nordhaus:Great that my report at that time was fell by the name of Chris Rotson. We still keep in touch, but as things change, your bosses change and I won't get into the part. But there's one fellow that he just said it's black or white and I said no, robert, there's always foray. That's how you look at things, your opinion of things. Numbers can be changed to be what you want, what your perspective is. But anyway, the short of it is I wanted a believing Cisco and then wound up it's good friends with some of the presidents and one of them here in Houston said we're going to franchise Cisco into Mexico. Would you consider going to Mexico? Well, the money's right, yes, and the money was right. So I commuted for every other week about for a year and a half.
Josh Klooz:Where to? In Mexico, mexico City. Okay.
Jim Nordhaus:Yeah, it was great. They gave me an apartment. It was wonderful. You know, on the off weekend I'd take a bus somewhere or subway. You felt very safe there at that time. And Polanco Zona Rosa.
Jim Nordhaus:The unwritten rule was we like gringos and we don't want trouble. You know, we might sell them drugs but our people better not use them and they better not bother any of the gringos. If you do, you might just disappear. I mean, it was a little startling to see the military walk around with commie guns, machine guns, in police, and that was the way they were. Very upfront. We have zero crime in this area, or let's say minimal crime.
Jim Nordhaus:So unfortunately my good friend Jeff was transferred out to New York and the ones that came in decided they weren't following his policies. Well, buys at a different price than domestic. So, for instance, if Heinz Ketchup is selling for $18 here in the States to a distributor, heinz may sell it at 14 internationally, so we would get the advantage of that. It had to ship to Houston and then transfer down from Houston and let's say the management of Houston decided to start keeping that money, which all of a sudden made the Mexicans not so competitive because they had other competitors from the United States, shipping in at international pricing, and about that time Mexico was going through a devaluation. So ultimately they just closed shop and said well, this didn't work.
Jim Nordhaus:So back to the States, wound up going to Denver and became director procurement for Multifoods Again for my friend Jeff Boyce, who then became president. He left Cisco and took over what was then international Multifoods food service vending company. It's now PFG, so went to Denver and then he got in a tussle with the president of international Multifoods. He decided to tell Jeff Howard he's going to run his business and Jeff said nope, this isn't going to work, I'm out of here. So when he left I had another VP of marketing at Cisco who had gone to Ameriserve, which you probably have not heard of, but Ameriserve was the largest chain distributor in the United States serving all the multi-units and there was a perfect lesson in what you could do wrong. Their owner lived in Norway, flew over Great office building in Addison, texas, and their primary customer was Prycon, which was the PFG, the KFC group and Taco Bell Pizza Hut that whole family of companies, and they had also acquired some Denny's management and they had pulled together these various things.
Jim Nordhaus:But what I learned was you don't do well being in a granted elevator when you're a distributor. You're not making that kind of money. So I started asking questions and one of the things just when I got there, they had filed chapter 11, which isn't a good sign. So maybe I need to check some costing in my position. So I said I'd like to look at learning your screens and they were on a JD Edwards kind of like an SAP system. I need to see the F-O-B cost here. Where's the freight? Okay, here's our delivered warehouse. Now I will see the sales price. They didn't have it on one screen. You had to go to multiple screens on each item and follow the costing through the system, I said, but it needs to be on one screen. Then I learned because they brought me a repay I think it was to simple for like 50,000.
Jim Nordhaus:What am I repaying for? Well, this is the freight. Why are we repaying freight? Well, the freight product moved from the production plant to a forwarding distribution center and then went on to the distributors wherever they were. Jd Edwards had only allowed for one freight in their system and therefore Meriser never put the freight in From the plant to the forward warehouse. So immediately they were losing buck or more on every case they sold.
Jim Nordhaus:Well, we need to fix this Now. We can't change our price, we might lose the business. You're losing the business, you're bankrupt. But this is a big company and they didn't see that. I asked for the cost report and they said you don't want to see it. They said, well, who gets it? Well, the president, the VP, evp. Okay, why don't I want to see this? Because it's two of her pages of line that in detail it's losses on every item. So we got to fix it. It's way above you, Jim, and they're not going to fix it, so you might as well just leave it alone.
Jim Nordhaus:Well, it didn't take long before we liquidated the company. Now here's another thing you learn. My old background was when you do an inventory, you go in and physically count cases. That includes the buyers, because they know the product. So we had a warehouse in Dallas that was then liquidated and I said well, they brought in auditors to oversee it. Well, we'll go down and help. Oh, no, you don't need to do that, these auditors are trained, they'll catch it. So they finished up, they auctioned off the product. So whoever bought it was coming to pick it up. And there was one problem. There was all these other cases, all these other items. They had done Red Lobster, they had Bucu cases of shrimp and lobster. It was never on inventory but they had bought everything.
Jim Nordhaus:So this company wound up with lots of shrimp, lots of lobster, lots of crab the cheap stuff. And I said how does this happen? Well, we transferred it from one warehouse to the other, which has never set it up in the inventory. How do you not set it up in the inventory? Well, we didn't.
Jim Nordhaus:I'm thinking this could have been caught if you had people that knew the product looking at it, because it's not uncommon you find something that got misshipped during the council. But anyway, so all learning things, they should go through life and you just shake your head and say these are auditors, these are people that should know better, should be questioning why is this not on the inventory? And writing it down. But they didn't. Well, anyway, the company was dissolved out of business, sold to McLean Actual for pennies on the dollar. So they picked up a nice business and that was the end of my world with the big companies. Then, after that, I came to Glacier and became VP of Merchandising for my old friend and then owned later to Jake's and then retired from there. Meanwhile I played the entrepreneur. Do you know what? An?
Josh Klooz:entrepreneur is. I have a feeling you're about to tell me.
Jim Nordhaus:You're an entrepreneur but things go south and it becomes a manure. I know you think you're smart and I related the conversation about the accountants and maybe I should have used more lawyers, maybe I should have used more engineers, because I got involved in distillation program that we can distill anything out of water. Well, that's true, except it doesn't work well with hydrocarbons. So went through that venture. Should have had other people look at that because it was too good to be true. Oh well, another venture, and it was a tank terminal out at the port. Put some money into that salesperson and marketing. Should have had third-party handle all the accounting because all of a sudden he went from a very small house to being able to afford a nice one in Santa Fe, new Mexico, and said goodbye, hmm, I'm sitting there with the tank terminal. What the heck am I going to do with this stuff? So forks only got out of that other than losing the money I put into it and I say I was fortunate because it turned out you had tank bottoms, stuff that has hazardous, that has to go for disposal. Sent it off for disposal. Five or six years later I get something from LionDell. I'm thinking I can don't recall buying stock in LionDell. Good company, finally open it.
Jim Nordhaus:Dear Mr Nordhaus, you're part of an EPA issue. That recall facility or that hazardous waste disposal was broken in and there was a major spill. So here's your bill, for I think it was 50,000, 70,000 dollars. Whatever it was, it was a big number. I'm thinking how many barrels, wasn't that many? And on there was Exxon for Mega Millions, and Valero for Mega Millions I mean all the big oil companies, for almost call LionDell. And I said this company's been out of business for seven years. There is no money to pay for this. Well, the EPA is not going to let you off, so you're going to have to settle that one out. Unfortunately, they allowed me to settle it and I figured it was cheaper to settle it than to hire an attorney at that point, because I figured the EPA attorney type attorneys who bill $800 an hour even then, or more, and it wouldn't take long. So for $5,000, checker bye. So the point being, with all this you tend to get a little risk adverse. Be careful with your money.
Jim Nordhaus:I volunteer for a group, the SCORE group, which is subset of the SBA, and we coach entrepreneurs and I try to caution them as they see where it's colored glasses, how this is going to be a wonderful green, and I want to borrow half a million dollars. I said it's going to cost you 12%. Can you pay $60,000 a year in interest? Huh, well, that's what it is. Divide that by 12, that's $5,000 a month. That'd be as much as your lease payment or more. Can you afford this? And usually the answer is no, and it's just sprinkling a little reality that going to business today is very expensive. There's no free money. Get calls. Well, who will give me free money? Government, because they've been known to sprinkle money around. I just try to keep people out of truck. So it's been an interesting time.
Josh Klooz:Incredible story and, man, I wish we had more time to go through the different vignettes within that, because I have a feeling that there's been some more details to add some color to some of them. But, jim, I want you to think. Four generations from now, you're great, great grandchildren's generation, and maybe their community what do you feel would be the most instructive pieces that you would have that you would hope that they would be able to take with them from your life's experience?
Jim Nordhaus:Don't be afraid to work, don't be afraid to study, learn a trade. I've got a granddaughter that I'm concerned. My daughter went off to school boys and I have to admit I screwed up with my one of my sons. He went to Texas A&M great school major in animal science, wanted to be a veterinarian, but his grades weren't there and I wasn't paying attention. So he wanted to put the animal science degree in equestrian management. No business courses. So I'm encouraging every one of them Now you will should take a business course. I've got a granddaughter who's into anthropology and that's a wonderful field. You're not going to make any money at it but it's a wonderful field, unless you get a doctorate. And that same son was a herpetologist. Do you know what a herpetologist is? Love snakes. So one time we probably had, I'm going to guess, 20 snakes at the house, anything from python, boas, corn snakes. Only one venomous snake, a little tree snake that he met.
Josh Klooz:You put that one in double, double cage, I'm assuming Caged within the cage the story of that one.
Jim Nordhaus:he's off at A&M and about midnight we hear a thump.
Josh Klooz:Oh no.
Jim Nordhaus:And looking around, you know what is it, and I will turn on the lights in the house. Nothing, I can't get inside and nothing. And then I hear another thump that's coming from upstairs. So I go upstairs and I don't see anything and then I hear another thump. There's a family room up there that had a bar and glass shelves. Aboa had gotten up and was going up the shelves knocking the glasses out. Apparently he didn't get a brick or rock secured on top of that aquarium properly when he was home, so Mr Aboa, who was about five or six feet long, was just having fun climbing around.
Josh Klooz:So I got to ask what does one do at midnight by themselves with a bulk of the structure loosened in their house?
Jim Nordhaus:You nicely grab it by its head and its tail and coffee with a wife to come upstairs. And I got it back in the aquarium and put the you know, said, get the lid on it and hand me this, you know, pick up the rock and put it on as fast as I could and then call your son in the morning and say please be a little bit more careful. When you you know he had whittled down the snakes because he had two pythons I'm going to guess they were 12 feet long in his room, which we didn't even know, but anyway, short of it was. I had taken him to San Antonio Zoo and uh, is there taking him on a tour behind the scenes, said with the bachelors you can help clean the cages. With the masters you can be the supervisors, like us, you get a doctorate. You hope that kind dies. That was Louis DeSapto or Moves On. So we have a chance at his job.
Jim Nordhaus:It's a very limited career, unless you're in science or whatever, but anyway, same thing with a lot of the humanities. You know, what do you do to make a decent living out of it today? And with my daughter who was a math major and then decided she wanted to change the communications and it was uh uh. Math can go for communications, we'll see, because she's small. But it turned out she wanted to be an attorney. So she went to Wake Forest and they did a wonderful job. They let her do a radio program and then TV production, um, as part of communications, and then she took a business program during the summer. That helped her greatly. So now she's off into entertainment law Good profession.
Josh Klooz:A lot, a lot of overlaps between the law and the communication major, I would imagine.
Jim Nordhaus:Yes.
Josh Klooz:Now, the next piece that we typically go through, jim, is what some people would call your ethical will, but, uh, you know it could be your eulogy as well what, what are some of the things that you want, uh, to be a part of people as they remember your ethical will and your eulogy? Um, as you look back on life, To be a friend to everybody.
Jim Nordhaus:This started with my dad and I would go with him into the restaurants and he said always be say hello to the dishwasher because he could become the manager. And many times they work themselves up in San Antonio and that happened. We have a friend there, everybody. If somebody you know dishonest, you deal with it and then you know you don't have to go out of your way for them, though you'll be hurt. But there's lots of people like that, so you're going to have to be careful. Ethics is important. Family is extremely important. Stand by your family. Now I'm not saying if someone goes out and that's capital murder, they've got to love your son and say that's all right, son, it's okay. Probably not, you know, but you, they're your family and you help them as much as possible. That doesn't mean you don't teach them how to work and responsibility, one of the things that helped me early on. I had an aunt and she would give me presents for birthday at Christmas and I was probably 10 years old and she says I am no longer giving you gifts, but what I am going to do is open an account in a mutual fund called Dividend Shares and it's in the newspaper and you can price the value of it. And that was my first interest into your world of stocks. So I watched it and she kept putting money in and I put a little money in. It just went.
Jim Nordhaus:My mother was fortunate. I guess her mother had had some stocks. So my mother had stocks and I started investing her stocks. My dad never got into that, he was always working in the business. So in those days when you paid a broker, a trade could be $100, $150. It was not unusual and brokers made a lot of money. But in those days there weren't really computers. They had clotheslines that they'd send order tickets on. I remember seeing those in some of the brokerages in my era.
Jim Nordhaus:But I've always been interested in companies, the technologies, the markets and technologies changing so fast today You've got to be aware of it. The kids today grew up with cell phones, ipads or equivalents. In my day we had a crystal radio and what was called Cat's Hair and that's. We made a, built a radio. It was part of the Cub Scout program strong a wire outside the house for any antenna and wire through to make it work. But that was the era then. Versus black and white TV, the color to wireless everything Amazing technology. So be aware of technology. Keep your ethics plan on working hard. Watch where you spend your money. Look at inflation it's a killer. I won't rain on the Preston, but when he just peddled to the metal, we spent 17%, 18%, three years. So we'll never get back. When prices go up, they seldom go down.
Josh Klooz:Jim, this has been such a great conversation. I really appreciate your insight and your willingness to share from your life's experience. Are there any topics or anything else that we didn't get to that you'd still like to share with us today? Let's say you know, love your family, take care of them.
Jim Nordhaus:Think about what your ancestors had to do to get where you are today and when I think back of my great grandparents in the 18th century, parents in the 1850s, they were on the boat. When they traveled it was covered wagon, mule or horse. That was not easy. There was no electricity and we take it off for granted today. But reflect on what they went through.
Josh Klooz:Jim, thank you so much for your time today. Please know, as always, that we wish you and your family nothing but truth, beauty and goodness on the road ahead, and I look forward to us connecting again sometime down the road. Okay.
Jim Nordhaus:Look forward to it. Thank you, josh, take care. Thank you, happy Thanksgiving.