2019 Top 50 Distributors: How Smart Source LLC CEO Thomas D’Agostino Jr. Built a $125M Company
In business, the thinking has long been, “If you build it, they will come.” But mindsets are shifting as executives learn the proverbial “they” don’t come automatically. For those lucky enough to spark consumer interest with a new product release or technology investment, the work doesn’t stop there. The truth is, if you constantly innovate, remain authentic and hire the right team, “they” will stay.
Just ask the firms that comprise Print+Promo’s Top 50 Distributors list. They’ve made this a part of their process, and it shows. Collectively, the class of 2019 generated $3.83 billion in revenue, a 7.1 percent increase over the 2018 tally. We reached out to five of our highest earners to learn more about their strategies. Here is what Thomas D’Agostino Jr., CEO of Smart Source LLC, had to say about his recent accomplishments, greatest obstacles and plans to remove them.
Last year, you mentioned that a top priority for 2019 was expanding Smart Source’s resources with potential acquisitions. Did you achieve that goal, and when you’re considering such a substantial purchase, what factors are deal-breakers for you?
Thomas D’Agostino Jr.: We are pleased to say that we completed two acquisitions, and passed on six companies during the last 12 months. Both companies acquired complemented our current footprint, and one expanded our product offering. Prior to creating Smart Source, I was part of a team to build the largest successfully publicly traded M&A roll-ups company in North America, responsible for acquiring over 80 print and promotional companies. When looking at possible additions to the Smart Source family, we consider not only the financial aspect of the deal, but of equal importance are the aspirations of the owners beyond money. In some cases, the owners serve an important role within Smart Source. Lastly, but most importantly, is making sure both organizations are a cultural fit for one another.
How is your company positioning itself to continue to stand out in 2020? How do you maintain a long-term vision and focus for the company in the face of constant change?
TDJ: I accept the fact that the only constant is, indeed, change. Change in our industry is being driven by technology and innovation. In turn, much of the innovation is being driven by national economic conditions, forcing cost reduction for the sake of preserving the bottom line. Our future success is based on each of our sales reps embracing the change that is occurring in the marketplace, especially industry-specific changes that are impacting specific customers. My vision for the next two to three years includes the expansion of two new major areas of our business, which will be announced in Q1 2020. We will always have a transactional business presence. However, as we grow our BPO offering, we will cross-pollinate best practices of both segments.
What is the biggest professional risk you’ve ever taken?
TDJ: I turned down the position of CEO of a $700 million company on the grounds of philosophical differences. I then started Smart Source LLC from scratch in 2003. In 16 years, we have grown to $125 million in sales with offices from Maine to Hawaii. I began the business with the promise of three key accounts joining me in the new venture. After [I had started] the company, two of the three accounts decided to go in another direction. Today, our future is bright and the possibilities are limitless. Proof positive of high risk, high reward!
Which issues do you think keep distributors up at night, and how can they work toward a solution?
TDJ: Most distributors are facing the same fundamental challenge: where to find, cultivate and reward the next generation of salespeople. During the early years of our industry, the “big directs” were the primary source of trained and hungry talent. Today, those sources, for the most part, no longer exist. It is critical that we reinvent ourselves in the eyes of younger salespeople. I am convinced that great salespeople are born with a specific skill set. They will succeed in almost any environment, given the right resources. We need to identify the segments of our business that can once again become attractive to these young entrepreneurs.
Knowing what you do today about leading in this industry, what advice would you give to your past self?
TDJ: In my early years, as a workaholic, my dad would always “coach” me, saying that I should delegate more. I have been extremely fortunate to now finally be surrounded by the best individuals—measured by skill and ethics—that I have ever worked with. When a team operates as one, there is no [limit] to what we can accomplish, and our company’s morale reflects it.
What is something that people may be surprised to learn about your company?
TDJ: We have managed to keep our core values and culture intact as we have enjoyed tremendous growth over the last 16 years. As a $125 million company, we remain financially strong, employee-focused and customer-driven. Our extremely low turn[over] rate for both employees and customers substantiates that we are on the right track.
Of all your travels, what’s the most beautiful place you’ve ever been? Why?
TDJ: I was fortunate to be invited to a black-tie dinner event just outside of Paris this summer at [Palace of] Versailles. A friend cooked dinner for 500 people in honor of the 100th anniversary of the signing of the Treaty of Versailles. The Hall of Mirrors is a beautiful work of art; however, I would suggest not going during a sunny heat wave of 104 degrees Fahrenheit!
Is there anything you’d like to add that we haven’t already discussed?
TDJ: I see a trend among many distributors who do not currently have a succession plan. With the concern for the value of your company, I am seeing many individuals hoping for better sales results for next year than they are experiencing this year. Each year, they are wrong in the hopes of next year; the value of the company is continuing to erode. Making the difficult decision of selling your company sooner than later will typically yield significantly greater dollars, based on our experience in acquisitions. Complacency is our largest enemy.
View the full 2019 Top 50 Distributors list here, or click here for stats, trends and analysis from the list.
Elise Hacking Carr is editor-in-chief/content director for Print+Promo magazine.