George and Martha Todd of Kalsec join Family Business Alliance CEO, Diana Schad, to talk about their business, it’s origins, and what makes Kalsec a special and rewarding place to work. Listen to hear all about their in-house daycare service provided for their workers, along with their journey from car loads of peppers to a thriving, multi-national flavoring and extract company.
Diana: [00:01] Good afternoon, this is Diana Schad, CEO of Family Business Alliance. It is my pleasure today to meet with George and Martha Todd, family members at Kalsec in Kalamazoo, Michigan. George and Martha, thank you so much for joining us. Before we start, I have a few basic questions.
First, George, could you tell us what year the business was started?
George: [00:19] The business was actually started in 1958.
Diana: [00:22] And who started it?
George: [00:24] It was my father, it kind of emerged out of my grandfather’s business.
Diana: [00:28] Okay, and do you have a website for the business?
George: [00:31] We do! It’s Kalsec.com.
Diana: [00:34] You mentioned your father and grandfather, what number of generations are involved in the business today?
George: [00:39] Well, second and third are involved today, but our roots go back to the late 1800’s when my great-grandfather started the peppermint and spearmint oil business here in Southwest Michigan.
Diana: [00:53] Okay. Now, you mentioned that you have a non-family member in leadership today, is that correct?
George: [00:58] We do. It’s been about a year and a half, we have a gentleman who is extremely bright. He has been with the company about 20 years, we all adore him, including all of the family members. It is really working out quite well.
Diana: [01:12] Wonderful, good! Well, why don’t you take a minute to tell us a little bit about Kalsec and the products that you provide?
George: [01:19] Well, the basic business is we produce extracts, flavorings, and colorings for food and beer in particular. Part of the line is natural antioxidants derived from rosemary and other herbs for extending shelf life in food. We have a little bit in the nutritional area, but our primary business is extracts in the food ingredient and beverage industry, primarily beer and hop extracts.
Diana: [01:51] When the business was started was it similar products that you were manufacturing?
George: [01:55] Yes! It, again, emerged out of my grandfather’s business. The first product we produced here was an extract of hot chili pepper, it’s a good story. My grandfather liked to speculate in commodities a little bit, and he had a broker friend who told him that there were three car loads of hot chili’s down in New Orleans, and if somebody were to buy those, he could corner the market.
So, he bought them expecting to be able to flip them and make a quick buck, but nobody wanted to buy them. So, he was stuck with three carloads of hot chilis. He had a friend in Chicago at Armour Meats who he asked what he should do with these three carloads on chilis, the guy told him “the future is extracts”. That’s how he got into the spice business.
Diana: [02:45] Oh, how funny! What did he end up doing with the chili extract? Did he sell it to Armour, or what did he do with it?
George: [02:50] Armour, and many others. That started the whole process of figuring out how to extract spices, concentrate them, standardize them, and find applications for them in the food industry.
Diana: [03:03] When he started, do you know how many employees he had at that time?
George: [03:06] Oh, boy. That was when I was a kid here on the farm. Probably a dozen.
Diana: [03:11] And how many do you have today?
George: [03:12] About 400.
Diana: [03:14] You had mentioned that was worldwide?
George: [03:16] Yes. So, we have probably about 300 in the US and the rest are spread out over Europe, South America, and Southeast Asia.
Diana: [03:26] Can you tell us a little bit more about your other locations? I know you have different facilities around the world.
George: [03:31] One foreign country that we have a big presence in is Texas.
Diana: [03:35] [Laughs]
George: [03:37] We have some agricultural and processing operations in Texas as well as here in Kalamazoo. We have sales and marketing and laboratory applications support in Europe and Shanghai and in Malaysia. Then, we have sales offices in about 70 countries.
Diana: [04:01] Okay.
George: [04:02] Either sales offices or representatives that we work with in those countries.
Diana: [04:06] So, the next question is kind of a duel question for both you and Martha. So, I wanted to know, first George, did you always want to be a part of the family business, or how did you end up coming to work for the family business?
George: [04:17] I swore I would never go to work for my father.
Diana: [04:20] [Laughs]
George: [04:22] At the ripe old age of 35 I had a family; two kids, a new house, and no job. Dad said, “Why don’t you just come and try it for a while?”, and the rest is history. It’s been wonderful.
Diana: [04:37] Okay, and Martha, how about you?
Martha: [04:39] I joined the board about ten years ago when my grandpa was still alive. He passed away, and I was on the board, and I started spending more time at the business and getting to know people. I really love the family feel of the company and the culture here.
I really started working here when I was about 14 on the farm in the pepper field, so I’ve known a lot of these people my whole life. The more time I spent here, the more in love I became with the community here. So, that’s really what hooked me. Not so much the products, but our culture and the way we treat our employees, it’s a big extended family here. My girls are growing up on the farm, it’s just a really nice heritage to be a part of.
Diana: [05:29] And you mentioned that your 16-year-old is working with the company in the daycare?
Martha: [05:33] Yep, she is working up at the farmhouse. Her favorite thing in the world to do right now is to hold babies. So, she spends her days up there, holding babies all day.
Diana: [05:42] Oh, wonderful! Well, do you promote yourself as a family business in your marketing?
George: [05:50] Absolutely.
Martha: [05:51] Yeah.
Diana: [05:52] And how do you that, and why do you do that?
George: [05:55] If you go to our website, we have a nice little video clip there that talks a little bit about the history. Why do we do it? We believe that it means something to our customers, in terms of stability and longevity, we also think it’s a nice recruiting tool.
We have got a lot of really wonderful, talented people who have joined us from large, publicly held companies, who got tired of the rat race and wanted to be part of something with deeper values and a little bit longer term view.
Diana: [06:32] Terrific. Martha, question for you: what resources have helped you navigate your family and colleague relationships in Kalsec?
Martha: [06:40] Well I think one thing that we started over a decade ago was attending seminars for family businesses. Whether it be in Grand Rapids or in Chicago, there are a lot of resources in terms of educating shareholders and educating owners on responsible ownership and different ways that you can be involved in a family business, even if it’s not just as a president or a CEO like your grandpa or your dad did. I think that becoming educated on the different ways that it can look and work for your life and your lifestyle. It really opens up a lot of opportunities for family shareholders.
I think that it makes the company stronger when family members are involved in different ways in different levels, whether it be holding babies in the daycare, or serving on the board, or working for the family office. There’s just a lot of opportunities, and the more that family shareholders can educate themselves on that, I think it just makes the companies stronger.
Diana: [07:35] You had mentioned that you do an annual family meeting as well?
Martha: [07:37] We do. That started over 10 years ago also.
George: [07:41] Mhm.
Martha: [07:41] It’s a way to get the family together to educated everybody on what’s going on in the family business, and to just get alignment. We talk about what are our family values, and how we want those represented in our company.
What do want the future to look like for our family and for the business, and how can we get behind that? What can we each contribute to make that happen? It’s been really good for our family. I think it keeps us together, not just as a business, but it makes us a more healthy and cohesive family. We talk about charitable giving and our values. I think it’s been a really good tool for the business and for our family.
Diana: [08:17] Terrific. One word that you both have mentioned a few times is values and family values. On your website it says that Kalsec prides itself in “holding nature in awesome respect”. Do you think that this value has brought meaning to your life outside of the company?
George: [08:33] I would say absolutely. I think growing up on the farm, having the business still here, and the old family homestead here. Having Martha’s house here, having worked on the farm, for me personally, there’s just a lot of satisfaction in watching your product start in the ground, be grown, harvested, processed, and then see it used in the food that we eat every day. It’s pretty nice.
Martha: [09:05] I know one of our family values is environmental stewardship, so to have our products be responsibly sourced and to have vertical integration so we are controlling our product from start to finish. We know that it is clean product, we know that it’s not contaminated. We know that the food that our kids are going to eat is a healthy, natural alternative to a lot of the artificial things that go into foods these days.
It’s something that is really in line with our values of environmental stewardship and I think that also, my dad said that living on the farm, we have over 100 acres here that we have our manufacturing centralized here, but we also have woods, and prairies, and water. As a family, think that it’s important to protect and maintain that and be able to share that with the community around us. I think that having this centralized in Kalamazoo allows us to keep our family farm like that and share it with the people around us.
So, there’s a lot of ways that where we are and what we do can tie into our family values, and that also makes our business strong. It brings people in together under the shared values. Even though we have a very diverse population of people that work for us, people who come here stay because most of them will share those values and that makes it a really nice place to work for most of us.
Diana: [10:20] And the last number of years we have heard more and more about organic, and healthy, and processing, and caring for the environment. Do you think that your family’s passion for the environment has affected the success of the business?
Martha: [10:32] Absolutely. I think that’s one of the things that has really gotten us together as a family to support and promote what we do as a company, is knowing that our family is invested in something that we really believe in. We have that longevity, that long outlook. We want to be invested in this for the long term because it is something that we believe in.
Our family would not be passionate about this business if we were making chemical ingredients for children’s snacks and snack foods. I remember, I always joke, because when I was 16 my grandpa invited me to my first board meeting and he really put me on the spot in front of everybody. He said, “If there’s one thing you think we should do, what would it be”, and I’m thinking, “oh, thanks so much for this” [Laughs]. I did say, “I think you should be doing more organics”. 24 years later, and we are finally doing organics.
Diana: [11:26] In 2017 you opened the farmhouse early learning center. Can you tell us a little bit about that, and how do you think that this has impacted the lives of your employees?
Martha: [11:35] It kind of started from an idea that my grandma had before I was born. She ran a camp back out of their house, back on the south side of the farm here, for employees. To me, we have this whole farmhouse that all of us have lived in. My grandpa was a baby there, my dad was a baby there, I was a baby there, my girls were babies there. It has been sort of sitting three over the years, people move in and out, and it’s a nice home base for when family members would come into town, they could stay there. I just kept thinking “Wouldn’t it be great if there were kids here all the time, and if that house that has such a great history for our family was being utilized on a regular basis”.
I’m a single working mother, it can be very difficult to balance those parts of your life. It had been on my mind for a while, and then I read this amazing book called “Family Business” by the founder of Patagonia, and they started an onsite childcare center in the ’80’s, and the effect that that has had is that they have an equal number of men and women in managerial and executive positions. Working mothers don’t have to make that choice between do I stay home with my kid, or do I take a break from my work, or if I take six months off what does that mean for my career path?
Finally, I came to Dad and said, “We really need to do this.” He said “Okay, you’ve got to get everybody on board”. So, the first step was convincing the family to give up our beautiful home and get it renovated so that is could meet all of the codes. Getting everybody else on board at the company was so much easier than I thought. It was incredible how everybody instantly, from all parts of the organization volunteered to help make this happen, let’s get a business plan together, let’s find the funding, let’s do resourcing, let’s find people who want to work there.
We are at capacity after only being open for about nine months, so now we are in the process of starting our second building that is going to host our preschool program, and then our farmhouse will be only for the infants and toddlers. For the employees, you hear it every day. We have a gentleman coming to visit from Virginia, he wants to visit four places on our campus, and one of them is the daycare center.
It’s been a big recruiting tool for us. Which is great, but in terms of work/life balance, I know for me, my daughter is up there right now. To get into my car in the morning, to go to minutes, drop her off, and then be in my office, instead of people who must get up and drive 15 minutes in that direction, 15 minutes in that direction, and then they don’t see their kids for 8-10 hours. So, we have centers open for employee’s children and grandchildren. My favorite is, we have a guy named Lorenzo, who works in our facilities, and he finds something to fix up there about four times a day because his granddaughter is there.
[14:21] [All laugh]
Martha: [14:22] We have a room for nursing mothers, and people can just go up and have lunch with their kids, which is really great. Even the people who don’t have kids say they just love seeing kids around the farm. it’s really been great.
Diana: [14:35] It really is incredibly progressive. I would love to see more companies around our nation do that. I think that other countries around the world are doing a little bit of a better job with that.
Martha: [14:43] Absolutely.
Diana: [14:43] It’s great that your company is doing that. How many employees participate n that?
Martha: [14:47] We have 27 kids right now, and that’s as much as we can have for code. Then, I think we have 8 or 9 on a waitlist already for the fall, but we are expecting that to go up. When we did a survey of families that would have kids within the range, it was about 45-50. So, we have already got most of them on board.
Diana: [15:07] Fantastic, that is great. George, the final question is for you. So, thinking of all that your family has accomplished, and all your family has done, what do you think the founders would feel about what the family has achieved today?
George: [15:19] Oh, I think they would love seeing it. I think they would really be proud. I know my father would be really upset by the fact that we finally paved the driveway.
[15:30] [All laugh]
George: [15:32] But, I think, that all is all, I wish they could see it today. I wish they could see it, they would love it. They would just absolutely love it.
Diana: [15:39] Wonderful, well thank you very much, we really appreciate it. Are there any other final thoughts?
George: [15:44] No, this has been fun. Thank you for giving us the opportunity.
Martha: [15:47] Yeah, thank you.
Diana: [15:47] Thank you very much for joining us.