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Episode Summary
If your business is the result of a 20 or 30-year build, you’ve collected scar tissue you can’t really explain to anyone who hasn’t lived through it. Dave Darmoni has 28 years of it. He took over Epoxical from his dad in 1992, watched the bank pull his note three months after 9/11, signed personal guarantees that pulled his wife in too, and stood at a neighbor’s window in 2006 watching his 30,000-square-foot plant burn on the local news while a helicopter tracked the smoke plume out over Woodbury. He learned the hard way that paper profit doesn’t pay your tax bill. Twelve months before we recorded this, he was wondering if his business would survive. He closed the sale to private equity on December 31, 2020. I wanted Part 1 of this conversation to live inside the growth story specifically: the bank, the fire, the 2008 collapse, the generational shift in his customer base, and the leadership team that quietly saved everything. Part 2 covers the EOS install that made the business sellable and the transaction itself. This one is about how it actually gets built.
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## Top 10 Takeaways- The relationships you build before the crisis are the only ones that show up during the crisis.
- Your bank is a partner, not a vendor. A quarter point matters less than who picks up the phone when 9/11 hits.
- Personal guarantees pull your spouse in too. Know what you’re signing before the bank slides it across the table.
- Paper profit doesn’t pay your tax bill. If you borrow to pay taxes, the cash isn’t really yours.
- Read your insurance policy front to back. The exclusion you skipped becomes the cleanup bill nobody covers.
- Your competitors will make product for you after a fire only if you treated them like humans beforehand.
- Each survival chapter hardens you. Use the scar tissue intentionally, or it runs the next decision for you.
- When your young employees stop having fun at trade shows, your customer base is quietly aging out.
- Listening to a 24-year-old about where customers actually buy isn’t a soft skill. It’s how the product line stays alive.
- Running every decision through your office makes you the constraint. Growth doesn’t survive that for long.
Sound Bites
“12 months ago I was wondering if my business would survive.” (@00:00:20) — Dave Darmoni
“I said to my dad, what are we going to do with the money? And he said, we get to do nothing with it. So we’ll borrow money to pay our taxes.” (@00:21:45) — Dave Darmoni
“If anybody’s ever owned a business, really really money doesn’t matter. It’s easy to say because of what’s happened to me, but money doesn’t matter.” (@00:25:14) — Dave Darmoni
“I was literally watching, when we do these trade shows, I was watching my customers potentially dying in front of me.” (@00:49:46) — Dave Darmoni
“If you said, Ryan, I’ll buy your business and you were going to give it to me for free, but I could never run Traction, I wouldn’t do it.” (@00:59:13) — Dave Darmoni
About This Episode
Dave Darmoni is a Twin Cities-based owner-operator who spent 28 years building Epoxical, an industrial epoxy manufacturer serving composite, marine, automotive, and consumer markets, before selling to private equity at the end of 2020. He took over the business from his father in 1992, survived a post-9/11 bank pull, a 2006 plant fire that made local news, the 2008 collapse, and a slow generational shift in his customer base. This is Part 1 of a two-part conversation focused on the growth story: the build, the survival, and the moments that hardened him. Part 2 covers the EOS implementation that made the business sellable and the actual transaction with private equity.
Resources Mentioned
- Lake Elmo Bank — The relationship bank that left Dave’s notes in place after the fire and worked with him through 9/11.
- Traction / EOS (Entrepreneurial Operating System) — Gino Wickman’s operating system Dave implemented in 2015 (covered in Part 2).
- Chris Naylor — The EOS implementer who started Dave on Traction in summer 2015.
- Chris Yonker — Coach Dave referenced on processing traumatic business experiences.
- MAS Epoxies — The competitor business Dave acquired in 2012 to replace lost revenue from a departing customer.
- Conscious Capitalism by John Mackey & Raj Sisodia — Referenced for the Whole Foods stakeholder story.
Connections
Phase + Module:
- Module 1 — Ownership Goals — The 28-year arc of ownership decisions and the personal cost behind them
- Module 4 — Sustainable Financials — The hard lesson that paper profit isn’t cash, and the bank as a real partner
- Module 7 — Leadership Team — The key employees who picked up the business while it was still smoldering
Milestones inside the build:
- Milestone 18 — Business Operating System — EOS as the 2015 inflection point that made the business sellable (Part 2 sets this up)
- Milestone 19 — Functional Leaders — The leadership team Dave built after the fire that ran the business without him as the hub
- Milestone 20 — Leadership Roadmap — Cross-generational listening as a leadership system, not a personality trait
Concepts referenced:
- The Owner-Operator Trap™ — Dave as the hub of the wheel pre-2015, running every decision through his office
- Normalized EBITDA — The cash-vs-profit confusion Dave didn’t have language for at the time
- Three-Statement Model — The financial literacy gap that made every growth decision feel like a guess
- Free Cash Flow — Why earnings on paper produced no distributable cash year after year
- Business Operating System — The 2015 install that becomes the spine of Part 2