Building a Legacy Together: The Dynamic Connections Story

Michael Burcham: Welcome to Microcap Moments, a podcast from Shore Capital Partners that highlights the stories of founders, investors, and leaders who have taken on the challenge of transforming ideas in small companies into high growth organizations. The journey of building and scaling a business takes one down many unexpected paths. It’s a journey where we learn from our mistakes, fall down often, but have the entrepreneurial grit to pick ourselves up and persevere.

Within this series, we will share these stories of success and failure, of the challenges and the rewards faced by those who dare to dream big. And through their lessons learned, we hope to inspire others in their careers. who are on a similar journey of becoming, growing, and leading.

Anderson Williams: In this episode, I talk with Steve Frenkiel, Jonas Beallor, and Lynden Hennessy of Dynamic Connections.

Steve shares his entrepreneurial journey in third party logistics and some insights around his experience as the CEO of Dynamic Connections and his decision to bring on a financial partner. Jonas and Lynden, founders of Boomer Logistics and North American Logistics Services, respectively, offer two unique journeys and circumstances. That brought them to partner with Steve and Dynamic Connections.

From unlocking growth potential for the business to thinking through legacy and opportunities for your team, reasons for partnership can vary widely. As Steve makes clear, however, the keys to a great partner are their continued belief and drive to grow their business, their commitment to outstanding customer service, and the desire to build something special together that they couldn’t build alone.

I start the conversation with Steve.

Steve Frenkiel: Steve Frenkiel, I’m the CEO of Dynamic Connections. We’re an asset light, third party logistics company headquartered in Toronto, Canada.

Anderson Williams: And will you tell us a little bit about how you got to Dynamic and your entrepreneurial journey leading up to that point?

Steve Frenkiel: Sure, my journey, like every entrepreneur’s journey, is unique.

It started about 10 years ago. I was what I call a naive entrepreneur. I was looking to go and buy my way into entrepreneurship. I had worked in the professional world for a bunch of years, always knew in the back of my mind that I was going to be an entrepreneur. Saved up a bunch of money and got the okay from my wife to go spend all that money on buying a business and making that my um, career dream.

So I did that. I spent almost two years looking for a good business to buy and invest myself both financially and call it emotionally in. Specifically ended up looking for an asset light logistics company. I loved this concept of being a service business where I could overwhelm my customers with almost sheer hustle.

I loved the size of the industry. It was enormous, that big ocean I was fishing in, and I loved that it was technology enabled. I was really comfortable with technology. I was an engineer by training originally, and I loved finding a business that could help service companies with the help of technology.

So specifically looked for an asset light logistics business, went on the hunt, cold called every business I could find in this industry, found a good little business. It’s like 10 million of revenue, a good little business with an owner who was happy to sell me his business and give me his job. And lo and behold,

I became the owner and president of Dynamic Connections about 10 years ago.

Anderson Williams: And talk a little bit about what you built after that point and how you grew. And then as you built that successful business, what was it that made you start thinking about potentially taking on a financial partner?

Steve Frenkiel: Yeah. So listen, I dove in, I had no idea what I was doing. I was a sort of young, naive kid who just wanted to be an entrepreneur, run and own a business.

I’d never even been a manager, a real effective manager of other people. And I’d never been in freight. I’d never been in transportation, but I was a sort of a gritty, ostensibly smart kid. And I thought I could figure it out. In the end, that was true. It was just a little bit more painful than I thought it would be.

My war story, and I say this so many times, but it really framed who I am. In my first year out of sheer bad luck and really nothing else, I lost my biggest customer and I had no way out. I didn’t even have a good handle on the business yet, but like the expression goes, diamonds get built under pressure. And that’s what happened.

We had a ton of pressure. I had a ton of personal pressure, hardest year of my life, but it shaped who I am. It made me obsessed with customer retention. It actually helped frame the strategy of the business going forward. And we grew every year since. Really with no magic, it was no like one silver bullet.

It was a whole bunch of plays in the playbook to build a good company where customers love working with us. Where we treat people well, we empower them, where we use technology to make our customers lives better, our people’s lives better, and we try and have some fun doing it in a really big wide ocean.

And so I blocked and tackled my way from call it $10M of revenue to about a little over $30M of revenue in the ensuing years. And in the end, figured out how to both be an entrepreneur, a manager, and a logistics professional.

Anderson Williams: And at what point did you decide or start thinking about taking on a financial partner or looking for a financial partner? And what was it that triggered that from the business owner and entrepreneurial perspective?

Steve Frenkiel: Anderson, that’s a really, really good question. And it’s a very personal one. The answer is very, very personal. It’s very unique to sort of my, to my history. So picture this kid who buys this business, invest everything I had, including my house. My wife was okay with it. She’s like, Steve, you’ll be fine. But I did that.

And in that first year, I felt like, whoa, did I just do that? Did I just bet everything and it may not work out. So I sort of had this like trauma of buying a business and potentially seeing it not go well. And that’s okay. That trauma sort of fueled the ensuing years and ensuing years. I just sort of sheer hustle, did what we had to do was very strategic and build a good business.

But it got to a point, call it five years later. Where I was in financially really good spot. I had all my loans paid back. When I bought the business, I’d take out a bunch of loans to make it happen. I put all my money in and it took out a bunch of loans.

I had all my loans paid back. I owned the business stream clear 100 percent of myself, which is, and these businesses are profitable business. I was doing really well. But I still had a little bit of that trauma of like, whoa, seeing how close it felt from losing it all. So I got to the point at this 5, 6 year mark where I was starting to listen and think about that more proactively.

Like. I didn’t know what it would look like. I still thought it was a good business. I knew what private equity was, but I didn’t think it really existed in our world. Like we were too small until I ended up meeting Shore at a conference. I actually met them haphazardly at a freight conference. I was there because I go to conferences just to mostly follow technology and network and meet people and get smart. And they were there poking around, getting smart about the industry, right? That’s what they do. Is there trying to learn about the industry?

So we, and I actually take credit for this. I ended up reaching out to them just by fluke. I was sitting at the bar on the app and I was just looking for people to connect with, and I see a finance guy. I’m like, Oh, finance guys are smart. Let’s see, like, let’s see what this guy has to say.

So I reached out to Matt. I actually, it’s a funny note cause I called him Mike by accident at the time, but his name was Matt. And I just started to get to know him and I really mostly was just picking his brain about the industry and then start to learn about their model about like, yeah, we invest in small companies and we invest a whole budget, time, resources, and energy to try and supercharge their growth to take them from X to Y.

And like, this is the starting point and this is the adventure. And I’m like, Oh, interesting. I’m like, Oh, that could work. So I’ll take some chips off the table, but I’ll. still be a partner in this adventure to supercharge this company that I still believe was a good company. And I got to know them a ton.

I did a bunch of research, met a bunch of their partners, their investors, really sort of understood their playbook, the depth. I got to make sure that the depth that they indicated was real and it certainly was. And it was a perfect partnership for me. It was an ability to both take some chips off, but continue on the adventure of trying to scale and scale my business in a way that I would have never been able to do by myself.

Anderson Williams: And given that partnership, describe for us a little bit about where Dynamic is going in terms of your strategy and your growth trajectory now with this partnership in place. What does that look like over the next, let’s just say three to five years? What are you looking out at?

Steve Frenkiel: Yeah, listen, like I said, so when I did my transaction with Shore, we were probably a $30-35M company this year, this is year two of the partnership, we will for sure break a $100M because we did two partnerships along the way and by the end of this adventure, we’ll be a probably a $300400M company that will be still incredibly responsive and accountable to our customers, provide a great service in different vertical, different areas and a certain level of scale that I think we’ll get to areas I would have never been able to on my own.

Anderson Williams: This belief in building something meaningful with others that he couldn’t build alone is fundamental to the way Steve and Dynamic Connections think about partnership. So I wanted to hear from one of those partners about their why, their decision, and see how things have played out so far. Here is Jonas Beallor.

Jonas Beallor: Jamie and I sat down and we sort of reflected on our partnership and we reflected on the business. And we were very happy with the growth we had made. But at the end of that fiscal year, we talked about what was doing well. And where we would like to go with the business. And we came to the conclusion that we wanted to pursue a partner in the space.

And so what were those sort of objectives that we set out? One is, did the two of us want to continue to work together? And the answer to that was yes. The second questions were, what were we good at and what were we not? And there were a couple things that we felt we weren’t good at. One of them was recruitment.

We found it very hard hiring the right people for the right roles. Um, the second was we wanted to invest in technology. Now, we had the capital among ourselves to invest, but what we weren’t willing to do was put in the capital without the expertise. And I think meeting the team here, meeting Steve, enabled us to see a vision for how we could grow the company the way we were thinking.

And then the last part I would share is the alignment and thought are a common North Star, which really is, you know, we’re not saving lives, but at the same time, we are a customer service company that happens to be in logistics. And that was really important to us. And we felt there was a common understanding of that North Star.

And that’s what brought us together.

Anderson Williams: And I have to consider, given your entrepreneurial, this is your business you’ve been building. Thinking about that opportunity for partnership and growth. How did you think about your own personal growth? Once you step out of the sort of lead entrepreneur role and into this larger company, how did you think about it just as an individual?

Jonas Beallor: Yeah, so I think my situation would be a little bit different than my partner situation. So my business partner situation is he’s been in logistics his whole life. This is what he does and this is what he knows. So, you know, when you go and you do these partnerships, you really need to make sure it’s a good fit.

And I think just quickly for him, it was making sure that he stayed still have the autonomy to make decisions that he was still going to be able to provide value and that they were willing to understand that they were acquiring a company that specialized in different niches and that we would have the capital and the leadership in place to help that continue to grow based on our discussions.

I think for me to answer your question is. This is my second exit. I am, again, as I said, an accountant by trade. I’m an entrepreneur. For me personally, I needed to know that there was an opportunity beyond what I had signed up to do with Jamie. And in this situation that worked out really well. So I’ve actually joined the corporate side of Dynamic and my new role is VP of strategic partnerships.

And so there I get to utilize my skills that I’ve had on my journey through my career. And so I think it’s really important, you know, it’s important that when you’re finding the right partner, that you also find your identity and your role moving forward.

Anderson Williams: This is incredible advice. Jonas shows it’s not just about knowing why you want to partner in the short term, but how you see yourself and your role and your contribution evolving over the next several years through the partnership.Jonas is still in the prime of his career, so his answer is a little different than Lynden Hennessey’s.

Anderson Williams: Lynden is in the latter part of his career and has been running his company since 1997. He’s thinking about legacy and fundamental to that, how he takes care of his team even as he plans his exit from the company.

Lynden Hennessy: At this stage of my life, I wanted to slow down, take a slowly exit from the company. I’ve created a great management team four or five years ago, allowing me to do that. I still have a lot to offer to the company and want to the company to grow, but I do want to step back from the day to day operations.

The legacy is very important to me. Company is 27 years old. I’ve been in the logistics business for 40 years now. I poured everything into the company and I wanted to preserve the culture and name that we created. We are an industry leader in this space and Dynamic was the perfect partner to maintain that legacy and to scale the business and allow me to reach my exit plans and goals.

Anderson Williams: And as you thought about this, given that legacy and given the team you’ve built and given the brand you’ve built, did you have concerns and did your employees have concerns about this kind of a partnership? And if so, what were they and how did you address those?

Lynden Hennessy: Yeah, my employees and management team are incredible.

They’re very loyal. I would have never got to where I am today without them. I have five employees that have been with me over 15 years. Four of them have been with me over 20 years. So I made the decision, and I remember sitting down with the team, my management team, and telling them that I was looking at selling the company.

They were very happy for me, but I wanted to ensure that the whole team would be kept in place. And to this day they are, and I’ve been insured they are. I wanted to see each employee have an opportunity to advance themselves in their career and play a major role in the growth of the bigger company now.

An important thing to me was the investment in training and technology for my staff. It’s very important and what Dynamic brings to the table on those two aspects is very important. It makes them more efficient and it makes their tasks easier., With a company like Dynamic, this will happen.

Every couple of months an interesting thing is, uh, you know, it’s just been a recent transaction, but they have a town hall at my office. They come in and meet with the staff, the very informative session for all. It’s an open forum for the employees, a Dynamic Shore team to share new ideas, keep staff informed and updated.

Overall it’s been a seamless transaction for my staff and a very positive experience.

Anderson Williams: Here again is Steve.

Steve Frenkiel: You know, we’ve done two partnerships to date, and you’ve spoken to Jonas and you’ve spoken to Lynden, and both are really, really different. Jonas and his partner Jamie were pretty young guys who had built a good little business, but got to a point where they didn’t really know how to scale it. They were not good at technology and they sort of hated it and even though they knew that was the way of the future and they were really not good at both sales management and HR.

By the way, almost every little company we meet is not good at sales and sales management. It’s actually one of the reasons we’ve invested so much in sales execution that we can help bring that to our partners. So these were young guys who still still had some hunger in the belly but had realized they were only gonna grow their business so much on their own so it was a perfect fit of like, Oh, hey, let’s join forces with someone who has some of that expertise.

Lynden, on the other hand, was totally different. Lynden is in his sixties, in his call it early to mid sixties, and he’s realized he has succession planning. You know, he can’t be doing this forever. He has to do the right thing for his estate and his family, and he has to do the right thing himself for his career.

As much as he actually still loves his business that he’s been running for 27 years, and he found it from nothing from with him and his partner who actually passed away five years ago from a heart attack. You know, that also gave him some pause. He was in a different situation. It’s like, I need to do something the right thing for the business.

So he had to sell his business as both succession and estate planning was the right thing for him. But he was looking for a good home for his business. And so he keeps saying to me, Steve, I wish I was 20 years younger. I’d be like on this ride with you guys. You guys are like unstoppable. You’re going to take over the world.

But we were a good home from his business. And to his credit, he had a legitimate second layer of management that is now taking over the business from him. And he remains a really active shareholder. And it’s still really hadn’t stopped working yet, even though that was the point, because he’s still trying to help us grow this business.

So like. We can fit for different profiles. You know, we can fit with different seller profiles and partner profiles. As long as they still believe in their business, they want to be a partner in this, whether an operating partner or at least a

shareholder partner in this invention, they still believe in the potential for their business.

Anderson Williams: So when you think about your approach at Dynamic to growth and the opportunities that have come with being private equity backed, what do you think are some of the misconceptions about private equity, maybe specific to your industry, maybe not, but. What do you see as misperceptions, misconceptions about what it means to join a partnership like this?

Steve Frenkiel: Yeah, there are definitely some very, very common ones. And probably the most common one is the concept of cutting. And cutting people, cutting jobs, and cutting stuff. in pursuit of profits. And so a lot of times when we meet entrepreneurs or even management teams, and they hear the word private equity, they all start talking about jobs and cutting.

And it’s so incredibly not how we think about it, and how Shore thinks about it, and how even remotely relevant for this industry. Like in my industry, it’s all people business. Like it’s all about people. We’ve hyper focused on making sure no one leave, not about cutting. We never talk about who we’re So I think the common misconception is that private equity is going to cut their way to success.

Anderson Williams: Yeah, it’s it really is. The misperception is completely the opposite of the microcap and Shore’s approach to investing in small companies. I mean, it is the polar opposite.

Steve Frenkiel: It’s the polar opposite. There’s nothing to cut in microcap. Like it’s such small, leanly run organizations. There is no way to cut your way to success. And we haven’t. Every partnership we’ve done, we’ve added people we haven’t cut. So, it’s all part of the playbook.

Anderson Williams: Since we had talked so much about growth, both in terms of new partners and new team members, I wanted Steve to share his vision for the future of Dynamic Connections.

Steve Frenkiel: I think if we’ve done our job, we’ve combined a number of organizations that share an obsession over customer experience and customer service.

I’m really an obsession, which means that they have organizationally will do whatever it takes for their customers. We do our secret sauce. Uh, currently is we operate in areas of logistics world that we call high cost of failure, where our customers are doing something important. The freight they’re moving is important.

There’s something really valuable. It’s really timely. It’s really delicate. Something hard, which means someone needs to be really good at their job to do it well. We work really hard and have great tools to do that well, and in turn, retain our customers for life. And that’s a great playbook in an industry that is huge and an industry where it’s so easy to switch from one to the other where you find areas where they value the service and therefore they stay with you.

So that’s the ML of the organization since day one and it continues to be as we find partners who share that obsession with customer experience and customer service in areas that are hard. If they’re too easy, then customers don’t value it. So you can bang your head against the wall still, you know, it doesn’t matter.

But in areas that are hard and they do a really great job and you actually it’s amazing because then you have these cultures that like share these Similar philosophies. Like the last partnership we did, we presented our mission, a vision, and values, and I said, Hey, these are our, this is Dynamic, but like, we’re going to grow and evolve, and we went through each one and I said, how does this feel?

They’re like, sounds like real, something really familiar. So once you share some of that DNA or over service and customer experience, You can put some really good players together and build ultimately what we look to be is like an all star team. We were, you know, one team tried to build an all star team, which would still be a small player in the industry but getting to $300-400M in freight is still a tiny player, but I think we can build a very strategically significant, relevant, entrepreneurial and service focused organization.

Anderson Williams: If you enjoyed this Microcap Moments episode, be sure and check out our interview with Rob Goldberg of FirmaPak about their founding story, early partnerships, and vision for growth. You can find this and all of our episodes at www.shorecp.university/podcasts, or anywhere you get your podcasts.

There you will also find our Everyday Heroes and Bigger. Stronger. Faster. series, each highlighting the people and processes that make the microcap space unique. This podcast was produced by Shore Capital Partners with story and narration by Anderson Williams. Recording by Austin Johnson, editing by Reel Audiobooks, sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.

Special thanks to Steve Frenkiel, Jonas Beallor, and Lynden Hennessey.

This podcast is the property of Shore Capital Partners, LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the terms of use page on the Shore Capital website for other important information.