Shore Bet: Hank Holland

Hank Holland is the first to admit that the company he leads, advanced materials manufacturer Amaero International, is a nuisance. In fact, he’s proud of it.

"I think that some bigger companies have taken note of what we’re doing and feel mildly threatened," the Chairman and CEO tells The CEO Magazine.

"My approach to business has always been to work really hard, do the right thing and hope you’re lucky."

"And that’s not bad. Competition is a good thing for our country, the ecosystem and the industry. The United States and its allies have created an untenable situation and it’s a strategic imperative that we take bold actions to improve the resiliency of domestic industrial capabilities, including defense production and supply chains."

Amaero’s wheelhouse – manufacturing specialty alloy powders that enable additive manufacturing and 3D printing of critical components for defense, space and aerospace sectors – demands this kind of no-nonsense approach and a fair portion of luck in order to bear fruit, something Holland found out early on.

"My approach to business has always been to work really hard, do the next right thing, communicate with candor, act with a sense of urgency, focus on building long-term value and hope you’re lucky," he says. "I’m keenly aware that we made mistakes along the way – and we got damn lucky."

From Research To Niche Products

Amaero began life as a research team at Monash University in Melbourne, Australia. The university’s strong material science focus coupled with the founding of the Monash Centre for Additive Manufacturing led to the spin-off of Amaero in 2013.

The company's initial focus was to commercialize its expertise and to advance the adoption of metal 3D printing for the aerospace and defense industries.

In 2019, the former Board and management team made an astute strategic decision to pivot from contract manufacturing of end parts to the manufacturing of metal powders that are the critical input – think of the ink cartridge in a desktop printer.

"I’ve always really appreciated people who take pride in their jobs."

Raised in Texas, Holland, a career investor and former Managing Director of AllianceBernstein and Merrill Lynch, was at that time flush with success from his private equity firm Pegasus Growth Capital. It seemed like the apex of an impressive career.

"I’ve always really appreciated people who take pride in their jobs. Whether you’re a CEO, an executive assistant or a doorman, you’ve got to love a person that loves their work and pours everything into it. And as a father, I really try to instill that in my kids."

Holland began university in 1984 on an engineering scholarship and worked long hours at a real estate development firm to support himself. At the time, the use of desktop computers was nascent.

"I’d stay up until three in the morning building financial models on spreadsheets, and I loved it," he says. "By the mere fact that I could build spreadsheets and analytical models, the partners thought I was a computer savant."

Connecting with Community

At 27, Holland moved to San Francisco.

"I didn’t know a single person. By the time I left, I was very rooted in that community because I’ve always had the ability to think long-term and approach relationships seeing how I could be helpful, rather than what was in it for me."

San Francisco was also where Holland met his mentor, then Sanford C Bernstein & Co and later AllianceBernstein CEO Lewis Sanders.

"He was one of the smartest people I’ve ever met. He had an absolute passion for what he did. I learned so much from him," Holland recalls.

The most important lesson, one that appealed to Holland’s own philosophy, was to simply fix problems as they arise.

"Lew had an unequivocal North Star. He didn’t focus on near-term metrics," Holland says. "He was relentlessly focused on delivering for our clients. Moreover, he was willing to lean against clients and insisted on well-reasoned investment strategies often at odds with popular opinion."

In the speculative period of 1999–2000 when unprofitable dot-com businesses such as AOL were the rage, Bernstein refused to invest in the sector and insisted clients who wished to do so would have to go elsewhere.

"I’ve always had the ability to think long-term and approach relationships seeing how I could be helpful, rather than what was in it for me."

 

Holland quickly gained a reputation in the investment world as a sober thinker and a trusted advisor, which helped him absorb a rich swathe of knowledge during his time at AllianceBernstein and Merrill Lynch.

While at the former, Holland built and managed one of the largest private wealth practices in the United States, with US$3.2 billion of assets under management. He also took on the role of National Director of Investment Planning where he contributed to product development and investment strategies.

"Eventually I left and started Pegasus with the idea to build a small fund," he says. "The challenge with venture capital and private equity is that they are fundamentally asset management businesses with a desire to grow assets and fee income. The problem is that as firms get larger, they must adjust their investment approach and employ investment strategies that are more scalable. At Pegasus, we wanted to take another approach."

By investing his own personal capital, Holland made Pegasus a place for high-conviction investments.

"By providing emerging high-growth businesses with both access to capital and active engagement, we could focus on opportunities that institutional capital would not invest in," he says.

"For example, we acquired a controlling interest in LogicSource, a procurement solutions firm, from Bain Capital Ventures just as the COVID-19 pandemic hit. Though uncertain on how the pandemic would impact the economy and capital markets, I felt that supply chains and procurement would matter a lot. After 23 months, we’d turned US$5 million into US$55 million."

Global Crises

It was in the wake of this win that Holland’s life was changed forever.

"As we were closing that transaction, I’m at home watching the horrible news unfold in Ukraine," he remembers.

"All these women and children at train stations trying to get out of harm’s way. Now, I’m not a trained warrior. I’ve always felt guilty for not having served in the armed forces while benefiting from the free world I’ve lived in, so I got on a plane to Warsaw."

Once he arrived, Holland bought out an entire store of homemade teddy bears.

"I came back to the United States looking very intentionally for a company I could scale into an advanced manufacturing and/or advanced materials platform business."

"I filled my backpack with stuffed animals, went to the station and started handing them out to all the kids as they arrived," he says.

"It was one of the most impactful things I’ve ever done. It was unbelievable."

Holland then used his networking skills to assemble a group of former British SAS commandos and started Project Apollo in Ukraine to extract vulnerable women and children, many of whom were behind enemy lines in the war zone. COVID-19 and the Ukraine conflict exposed a geopolitical chasm that set Holland on a new course.

"I was in Lviv when the first Russian cruise missile hit a fuel depot near our location," he says. The experience was a reminder that the United States and its allies were in a vulnerable situation, not unlike the early days of World War II, and that he would have to mobilize support to reshore critical industrial base capabilities, particularly advanced manufacturing and defense production capabilities.

"I came back to the United States looking very intentionally for a company I could scale into an advanced manufacturing and/or advanced materials platform business."

The Perfect Investment

He found it in 2022, when Amaero was brought to his attention.

"One of the primary bottlenecks in the defense sector is domestic production of speciality alloy powders that are essential to additive manufacturing, which is essentially what Amaero is doing," he says. "It was the perfect investment theme for us – big, strategic opportunity with strong secular tailwinds."

But all was not what it seemed.

"I thought it’d be a growth opportunity. The prior Board and management team had announced that the Melbourne manufacturing facility would be finished within three months and that they’d be profitable the following year," he says.

"I invested on this premise, but by the time I got on the Board, I quickly concluded it was misguided at best."

"Unfortunately, I’m not very good at quitting."

Holland had two choices: walk away and admit he’d made a mistake, or stay and fix it.

"Unfortunately, I’m not very good at quitting."

Fortunately, the Amaero opportunity proved much bigger than it seemed.

"It turned out to be a significant restructure. I had to go in and purge the Board and the management team, assume the responsibility of Chairman and CEO and lead two further rounds of investment," he says.

"And that really culminated when we announced that we were relocating to Tennessee."

An International Move

In keeping with Holland’s ambition to reshore, Amaero wound up its Australian operations and scuttled plans that had been considered in the United Arab Emirates. Instead, Amaero has made its home in Chattanooga, Tennessee.

"The pro-business, pro-growth environment of the Volunteer State has made all the difference for Amaero," he says. "The Governor’s economic development team moved in haste to coordinate support and identified a 9,300-square-meter manufacturing facility that was nearing completion."

Within five weeks of the first meeting, Amaero signed binding contracts and a 15-year lease on the facility.

With Holland making the decision to move to the US and with a completed facility as its new home, Amaero’s go-to-market strategy was accelerated by 18–24 months and the company reduced its working capital need by approximately US$19.8 million.

"Again, we got lucky," he says. "It just so happened that there was a 300-acre [121-hectare] industrial park with a 140-megawatt dedicated substation newly built in Chattanooga and the manufacturing facility was ideal for Amaero’s needs."

Holland’s stake in Amaero is more than just business. "I believe in Amaero and that what we’re doing is vital to the national and economic security of our country," he says. "Pegasus led three capital raises and invested A$22 million [US$14.5 million] in Amaero when other capital was not available.

"We took bold and decisive action to position Amaero at the nexus of the reshoring theme and to address the deficiencies in the United States domestic supply chain. Further, we have attracted a strong technical and operating team with decades of experience in powder metallurgy, atomization and additive manufacturing."

On a fully diluted basis, Pegasus owns approximately 40 percent of Amaero and Holland owns approximately 20 percent.

"I personally led the capital raises, I’ve set aside all other pursuits and I’ve aligned my interest with other shareholders," he says. "It’s indicative of my optimism for the opportunity and it creates a different consequence of failure than I think a lot of CEOs have."

"I believe that what we’re doing matters against an ever-uncertain geopolitical backdrop at this critical time in history."

While Holland admits Amaero is the hardest professional challenge of his career, it’s also the most consequential.

"I bought a business and essentially had to destroy it. No-one believed in what we were doing, no investors would support us," he says.

"But we’ve emerged with a capital raise led by the bluest chip investors. We’re having high-level meetings with stakeholders throughout the ecosystem, including political leaders, Department of Defense labs, prime contractors and top suppliers. We took a big risk, we took decisive actions and we’ve made important progress, but much work lies ahead."

Where others may have walked away, Holland says he didn’t have it in him. His reward is a company that can place the ‘Made in the USA’ stamp on a product of profound importance.

"I believe that what we’re doing matters against an ever-uncertain geopolitical backdrop at this critical time in history. I think we will make a difference," he says.

"In our own small way, I believe that we will make a durable contribution to the national security and economic freedom of our country."