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Chapter 2

When Opportunity Knocks

I could spend the entirety of this book relating the stories of famous people like Jeff Bezos with huge companies and the lessons we can learn from them. I wanted to share a different kind of story—one that you won’t find in a magazine or read about online. This one is more representative of the millions of small businesses started across the world. This is the type of story that should be shared at every business school; a real-world story illustrating the risks, pitfalls, and success generated by acting on opportunity.

This story is mine.

This is a story about two normal people who were working great jobs in different, large companies near Seattle. We left our comfortable, successful careers to do what many simply think about, yet never actually act upon. These are two people who took a risk to start their own business with no guarantee for the future. These two risked everything, knowing they might fail and lose their homes, cars—everything. But they believed in what they could do and were willing to take the steps to do it. All the funding to start the business was borrowed from a bank at rates of 15% and up. This is a story about a simple, small company growing over $50 million in revenue, as well as commanding a 61% market share in a crowded, established market, then selling the company to a Fortune 500 firm. Today, that company employs thousands of people, has grown substantially, and is still growing.

My partner and I both shared a common vision of what could be done to better serve businesses and saw an opportunity others were not seeing. We felt we could profit from it. The story is far more than just a success story. It touches many points not covered in business school, including partnership relations, dealing with the challenges of meeting our families’ needs while starting and growing a business, and significantly reducing our wages by 75% to start. Then there were the banking relationship issues, intense struggles with a federal lawsuit, and other trying circumstances one might not anticipate when starting from nothing. There was also stiff competition already in place in the form of large, international firms. Anyone could have started this company, really. However, it just so happened to be the two of us starting a low-barrier-to-entry, almost commodity-type of business. We knew our business from working for others. Now, we had to prove we could do it better ourselves.

The marketplace we targeted consisted of trucking companies, construction companies, logging companies, core legacy-type industrial industries that operated trucks, large earthmoving equipment, industrial equipment and such—all running on the same thing: tires. The company today is owned and operated by a Fortune 500 firm and boasts the title of largest commercial tire operation in both Alaska and the Northwestern United States.

So, how did we start from nothing, against almost insurmountable odds of new business failures, and in such a competitive environment while leveraging the whole by financing at high-interest rates and exceed beyond our dreams? How did we gain 61% of the market share ahead of the remaining 15 companies, with the largest of them at less than a 20% share? How was this done, and can it be done again? I believe the answer is yes. With the same vision and tireless effort, this level of achievement is possible.

The threat of failure didn’t stop us from seeing this idea come to fruition. We saw something that our current employers could not change or adapt to and address. We did the only logical thing we could think of at the time: we acted on the opportunity we saw and believed it would lead to greater success.

I still laugh when I am asked how I ended up in the tire business. It was certainly nowhere on my radar when in school. In fact, I really thought the whole industry was low level, and of no interest to me. Tires were just something consumers had to have, a simple commodity. I worked my way through college at a service station, the same place I had worked throughout high school. My parents always taught us kids to work, make our own spending money, and pay for our own cars. I was also paying for my own education.

One of the regular service station customers managed a large tire store for a regional, long-standing company in town. I remember getting a phone call from him one day as clear as if it were yesterday. His name was Bill, and he asked if I would consider talking to him about working for the tire company. I had been interviewing with some Fortune 500 firms, and, as many in college do, I was always thinking about where I could end up in a career. Like Howard Schultz, I was always attuned to how I could make my first million—what I considered to be successful. I’m almost embarrassed to say my initial response was not very professional!

“Bill, you must be kidding me, who in the hell would want to work in a tire company?” I blurted out.

Bill said, “Kim, you should look into all opportunities. The company is very large and has a commercial department. That department has professional salespeople who drive company cars…”

I really do not remember anything he said after the “company car” comment. I think I was about 20 years old, and the thought of a company car was an extraordinary perk for a person my age, now living in an apartment, going to school, and working nights to support myself. I wound up doing an interview with them despite my initial negative language. I was hired on by Bill. However, I had to start at the bottom and work my way up. There was no company car just yet. There was the potential to get one within the next couple of years, but I would have to earn the position.

After just a few days, I was impressed by the opportunity at hand that I did not previously know existed. Who knew the depth of the commercial tire industry? More importantly, who knew that there was an industry that was virtually inflation-proof? Trucks are running every day, in every economy. The trucking industry has a saying, “If you got it, a truck brought it.” Now that is an industry that could last a long time. The company also operated truck tire retread manufacturing plants.2

It is not this industry the book is written about, but rather the visualization of opportunity and how we realized huge success. There are several other lessons within these pages, examples of how others turned an opportunity they saw into gold. It happens every day. Knowledge is power, and the more you study and understand how to look for the opportunities in front of you, the odds of seeing them improves.

After about 18 months at that job, I got a company car. I was still going to school in the evenings. As it turned out, I was excelling in the business, and I was promoted to management. Ironically, after I started our business five years later, Bill, who had hired me, ended up managing one of the locations we operated. I guess that’s just proof that you often “meet the same people on the way up that you meet on the way down!” The business specialized in commercial applications, not retail—a vast market requiring greater knowledge of the customers and their businesses.

I was scared to death when I got that first company car and was given a territory in the industrial areas of Seattle. As I would drive through Pioneer Square and see the homeless people on benches, I was so afraid I would end up like that. I had to call on big companies like Boeing and UPS, as well as garbage companies. Garbage trucks are a tire salesperson’s dream. They grind off tires! I also called on dump truck operators, construction companies, and huge shipping companies around the waterfront. I was just this 22-year-old kid, engaged to be married, still doing night school, and here I was in this big world of industry.

It is what I learned along the way that made more sense after we succeeded in our own business. Time has a way of teaching us if we pay attention. At that time in my life, it was not so clear. What was I seeing, and what was I doing that was so different than others? What did the others fail to see?

I resigned after five years, and that is when my partner and I started our first company. There were some obvious obstacles we encountered while looking to start that first business, one of which was our partnership. We both quickly realized the truth that while most new businesses failed, the rate of partnerships failing was even higher. We had only worked collaboratively between our two previous employers, but we really did not know each other well at all. Our respective families and spouses had never even met the other! All we knew for sure is that we shared a common vision, saw an opportunity, and trusted each other in a working relationship. We both felt comfortable with the way the other conducted business and had similar ethical standards, always following through on what we said we would do. We agreed to each own 50% of the stock issued. I was very fortunate to have a great partner as a shareholder. We are still partners today in several ventures, even after 40 years.

Together, we had completed several large, successful collaborations for both our respective companies in the years leading up to us starting our own company. John had run the manufacturing operations as company president. He had many skills I did not have. He had also started from the bottom and worked his way to the top in a relatively short time. My background was in marketing, operations, and sales. I was promoted several times up through management positions, becoming a young Vice President by the time we both left our jobs. While I appreciated the promotions, one thing nagged at me. It was simply not clear to me why I had been promoted ahead of so many others who had held similar positions for 20, 35, or even 40 years at the company. Why me? It became very clear as time went on.

As we grew, it was apparent the opportunity we saw proved to be the correct path. Perhaps our greatest partnership asset as we started the new business is that we had such diverse corporate experiences in the same industry. One might also say that our young ages would indicate we did not know yet that failure was a real possibility. I was 26 when we started the new venture, and John was 29. Ignorance was bliss.

Another reason we started our own venture was fear the company we both worked for might fail. The owner had turned the company over to a son after 65 years. The father held the large capital assets, while the son only had the operating company. As can often be the case when family takes over a business, the son did not share the same passion, business acumen, or decision-making abilities as his father, who had worked hard to build the large group of companies. A few years after the son took control, we saw signs of financial concerns that could affect the future of all the family companies, including the ones John and I ran. I was getting more and more concerned, pouring my time and effort—my life, really—into this business, realizing a little at a time that the son might be running it into the ground with poor decisions and management. The companies we both left to start our business did fail just a few years after we resigned. Hundreds were out of work, and a 65-year-old company was history.

Prior to that company failure, John called me out of the blue saying we needed to get together to talk. John told me he had given notice and resigned. We discussed starting our own enterprise, and that short meeting led to an all-night session developing pro-forma income statements and balance sheets. By 4:30 AM, we shook hands and agreed that, “Unless we ran into an insurmountable brick wall,” we would start this new company. There was simply no other company in our market I felt could do what our vision was telling us we could do.

At the time, I thought I was already near the top of Maslow’s hierarchy pyramid. I was at the top level of management. I had a company car, recent salary increases, a new home we had just built, and kids in a private school. My life was about to take a huge change!

John felt assured that he could run an efficient retread plant operation, building it from scratch. He had planned to buy used equipment as cheaply as he could, possibly at an auction, and have it shipped to Seattle. I, on the other hand, felt strongly that there was still a market for a commercial tire company working with the customers and educating them on how to reduce their operating costs and significantly reduce expenses.

It’s important to note that this had nothing to do with selling tires cheaper than the competition. That was already being done. There were several areas we had learned that would save customers a lot more money than simply buying cheaper, but the customers did not understand that yet. Again, this was thinking outside the box, doing something others did not understand. This involved really learning the customer’s business, not just our business. The examples later in the book are there so you can think through what we did. There are also examples of what many others did and are doing that might apply to your own business, or any business. We showed Fortune 500 firms how to operate their own businesses better with our knowledge, as well as helping them see what industry trends could benefit them. That is the story worth reading. Who cares that two people started a little company that grew very big? What matters is looking at what your company does and asking yourself how it could be done better.

Our vision was not complicated. It seemed like everyone else in the marketplace was simply selling tires and services. There was no one educating the customers on their options and what could happen if they changed the way they did their business. It was a vision that could change the paradigm of the companies we targeted and lead our business to success.

One such area was outsourcing—showing the customer that with changes, they could reduce labor costs and the associated expenses and liability. In the past, the customers were hiring their own staff for the tire programs. We could show them why they did not need to do that. We could be an outsource entity that could significantly reduce their operating costs, and we could prove it. Companies could experience huge savings by looking at operations in a different way. Our new venture would be a company that specialized in outsourcing and educating the customer.

Of course, selling new tires and retreaded tires went along with this, but no other company was in this space doing what we believed the customer really wanted but did not know how to do. Anybody could sell a tire or lower a price, but that was not what the customer really needed. All companies strive to find ways to do business more efficiently. Any business running trucks needed to buy tires, and if somebody could show them a better way to do that, it would result in a win-win situation. To fulfill this vision, we were hiring staff with no experience in our industry and training them how to do it our way. We wanted people with no baggage or bad habits.

The opportunity was right in front of thousands in the industry, but nobody, especially the global companies, could visualize it. Those big companies just wanted to sell more tires, but the customer could realize huge cost savings by changing the way they operated and used tires. Why would a customer hold $100,000 of inventory when we already had a warehouse? This will all make more sense as you read further.

Our largest success story was with Boeing. They operated several thousand trucks and equipment over several cities that all ran on tires. They spent about $500,000 a year buying tires. We saved Boeing over $600,000 in direct costs by changing how they bought the tires, managed the tire program, and warehoused the tires. Really, they still spent $500,000 on tires after changing to our company as a supplier, but they also saved $600,000 a year in cash as we assumed the management of the tire assets, warehousing, and maintenance. We won a huge award for this, covered a little later in this book. Trust me, it was not rocket science, and anyone could/should have been able to do this. However, nobody did until we came along with our vision and new company.

After that all-night planning session that led to the founding of our first company, John agreed to research the availability of the plant equipment to fit within our budget, while I would discuss our ideas and plan with the major tire companies we would want to use. We both agreed that the likelihood Michelin would even consider us was low, but we had to shoot for the moon anyway. Even if the chances were small, we both knew that in order to fit this new model, we had to become a Michelin tire dealer. The Michelin products fit our model of business. The Michelin truck tires lasted longer and could be retreaded more successfully than any other tires, and we made more money (and the customer saved more money) using retreads.

From the time the Michelin brothers started the Michelin Tire Company in the late 1800s, almost every advancement in tires, even today, has been first introduced by Michelin. The company saw an opportunity to make a simple bicycle tire that was filled with air in 1889. Up until then, all tires were solid rubber. Ouch. Michelin was (and still is) a global, innovative, industry-leading company. Every car, truck, or vehicle that has tires is benefiting from something invented first by Michelin. Michelin invented the pneumatic tire (tires with air inside), the tubeless tire (and wheel), the radial tire, and so many more products we all use today. But more of that story and the parallel reasons for our success later. Michelin had vision, and for over 130 years, they focused on what the industry needed and invented it. They had a similar focus to our own.

After John and I settled on our marching orders, off we went on our separate ways, planning to stay in touch with any and all updates until we found the manufacturing plant. After we secured the building, I would need to resign from my job.

Just like that, we had decided to start a new business together, leaving the security of our old jobs behind. Would we succeed? Could we make it into the five percent of new businesses that make it longer than five years without failing? We didn’t know for sure, but what we did know is that even the best plans have no guarantee of future success. You will never know unless you try, and our company started from nothing just a few months after that meeting.

2 By the way, failed retreaded tires are not the cause of the rubber pieces we all see on freeways, but something about that later.