With Wayne Huizenga, Entrepreneur, Owner of Blockbuster Video, AutoNation, Waste Management, Inc., Miami Dolphins, Florida Panthers, & Florida Marlins
Remembering Wayne Huizenga
“I always like to stop what I’m doing and make an effort to remember the people who helped change our lives, even if they were only tangentially involved in our consciousness. One such person was Wayne Huizenga.” – Steve Pomeranz
On March 22, 2018, we saw the passing of one of the most preeminent business figures in our community and the country.
Steve interviewed Wayne in 2005 and came away extremely impressed with his honesty and down-to-earth demeanor.
So, Steve invites you to enjoy his discussion with Wayne Huizenga, master entrepreneur, philanthropist, dedicated family man, and employer.
Who Was Wayne Huizenga?
Wayne Huizenga was the only person in history to build three Fortune 1,000 companies from scratch:
- Waste Management
- Blockbuster Entertainment
He owned the Miami Dolphins, the Florida Marlins baseball team, and the Panthers hockey team, making him the only person to own three pro teams in a single market, two of which won National Championships.
In 1992, he received the Horatio Alger Award which honors Americans who overcome adversity to achieve great success.
He was also a five-time recipient of Financial World magazine CEO of the Year. He was named Ernst & Young’s US Entrepreneur of the Year and 2005 World Entrepreneur of the Year.
How Wayne Became An Entrepreneur
Wayne got his start in the waste business in 1962 by being in the right place at the right time. He got out of the army and landed a job in South Florida with his father’s friend who had three waste trucks and needed a new manager. Wayne wasn’t keen on the waste business but agreed to do the job for three weeks while they looked for a new manager.
Three weeks turned into three months, and Wayne decided to buy the business. While he did not have the $35,000 asking price, he got the owner to finance him.
Over the next ten years, Wayne expanded operations in South Florida. Then, through a relative in the same business in Chicago, he merged the two operations and renamed it Waste Management.
Six months later, he took the company public. While Waste Management (WM) shares traded at 30-times earnings, he bought companies out at 10-times earnings. These boosted earnings per share and WM’s stock price. Wayne continued expansion across the country and the world.
The Rise Of Blockbuster Video
Wayne took a break from Waste Management in November 1986. He got a call from John Melk, a former Waste Management employee in Chicago.
Melk told Wayne about his investment in Blockbuster video stock. At the time, Wayne didn’t even own a VCR and had no interest in the business. But Melk hounded Wayne and finally got him to visit a Blockbuster video store.
Wayne was “very, very impressed” with the store. He saw Blockbuster as something they could grow organically. He could build more stores in great locations before the competition did. There was nothing proprietary about the video rental business.
Wayne joined the company when it had a market cap of $32 million. Over the next six years, they grew the business quickly, opening a new Blockbuster store every 17 hours. Seven years later, they sold Blockbuster for $8.5 billion to Viacom. Under Wayne’s leadership, Blockbuster shares were up 4,100% over a seven-year span!
After selling Blockbuster in 1994, Wayne started looking for his next business, focusing on industry dynamics. In about 18 months, he honed in on the automobile sector. This was a trillion-dollar industry due to new and old car sales, parts, service, etc.
Wayne found that about 75% of car buyers weren’t returning to the dealer they bought from and saw an opportunity. If you treat the customer with respect, you could retain more customers. He used this concept to raise money and acquire 375 car franchises across 17 states, all under the AutoNation brand. Under Wayne’s leadership, AutoNation grew revenues to $20 billion a year through superior customer service and transparent pricing.
Dealing With Conflict At AutoNation
The path forward wasn’t all smooth. For instance, if an automaker decided to suddenly offer a $2,000 rebate, AutoNation would take a $2,000 hit on cars that it had already purchased for resale. This resulted in unpredictable profits. This led Huizenga to get into the new car business, and thus to the acquiring of new car dealerships.
AutoNation also suffered from inconsistent branding. Car dealers were unwilling to let the AutoNation brand overshadow their own.
Extended Stay Hotels
George Johnson, a good friend of his from the Blockbuster days, approached Wayne with a new concept. George was big on real estate and introduced Wayne to a new idea in Atlanta called extended stay hotels. An extended stay hotel is where the average traveler stays an average of three weeks.
They offered a small room with a full kitchen, so guests could have breakfast or dinner in their rooms if they preferred. Room costs were lower, sheets were changed every three days, and maintenance overhead was low.
Wayne liked the concept and bought the hotel in Atlanta. He expanded to 475 hotels in a short span of time. He then took the company public and used proceeds from the IPO to build more hotels. He later sold them for $3.5 billion.
Selling A Business Vs Continuing Growth
Steve wondered why Wayne chose to sell didn’t hold onto them to watch them grow forever. According to Wayne, most of the growth occurs in the startup stage of taking something small and making it big.
Once it’s big, it’s hard to grow and is akin to running a business day-to-day. Wayne Huizenga did not like this as much. So, he opted to sell when he got an offer beyond his expectations. This was based on standard valuation multiples.
A Winning Management Style
Wayne attributed his success to hiring the right people and effectively communicating with them across distances. While he did not finish college, he thinks a college education is essential today because the business world is far more sophisticated.
While he’d prefer hiring someone who is both intelligent and street smart, if given a choice between extreme intelligence and a great personality, he would always pick the latter.
Thank you for taking a moment to remember Wayne Huizenga, one of our greatest contemporary entrepreneurs.
Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.
Steve Pomeranz: Last week we saw the passing of one of the most pre-eminent business figures in our community and the country. I always like to stop what I’m doing and make an effort to remember the people that helped change our lives, even if they were only tangentially involved in our consciousness.
One such person was Wayne Huizenga.
I interviewed Wayne in 2005 and came away extremely impressed both with his honesty and down-to-earth demeanor.
I also know a few individuals who worked with him over these many years and they have said exactly the same thing.
So, join me for a few minutes and I think you will enjoy my discussion with Wayne Huizenga, master entrepreneur, philanthropist, and dedicated family man and employer.
Announcer: Time now for Entrepreneur Spotlight, a weekly feature segment with advice, tools, and the insight. Listen now as Steve Pomeranz speaks to guests to help business owners and professionals start, run, and grow their businesses more successfully. Here is this week’s entrepreneur spotlight.
Steve Pomeranz: My guest is a person that needs little introduction. He is the only person in history to build three fortune 1,000 companies practically from scratch—Waste Management, Blockbuster Entertainment, and AutoNation.
He is the only person to have developed six New York stock exchange listed companies. He also owns the Miami Dolphins and is the previous owner of the Florida Marlins baseball team and the Panthers hockey team making him the only person ever to own three pro teams in a single market, two of which won National Championships.
In 1992, he received the Horatio Alger Award given to honor Americans who have overcome adversity to achieve great success. He’s also a five-time recipient of Financial World magazine CEO of the year, and he was named Ernst & Young’s US entrepreneur of the year and 2005 World Entrepreneur of the year.
The list goes on but instead let’s meet the man who has achieved all of this and get some insight into his world. Wayne Huizenga, welcome to On the Money.
Wayne Huizenga: Thanks, Steve, happy to be here.
Steve Pomeranz: Wayne, let’s start at the beginning. How did you end up in the waste business?
Wayne Huizenga: Man, you talk about being in the right place at the right time, that’s the way it was for me. When I got out of the army, my father took me to lunch the next day and at lunch bumped into an old high school friend of his who turned out to be in the waste collection business in Chicago.
He was down here because he had three trucks operating up in Pompano Beach, Florida. And, over lunch he said, he was looking for a new manager. He asked me, what I was doing and I said, “well, I just got out of the army yesterday and I don’t have a job yet.”
He said, “Good, you’re my new manager.”
Steve Pomeranz: [LAUGH]
Wayne Huizenga: Well, that is not what I wanted to hear, but he said, “Okay, fine, I understand you don’t want to be in a waste business, but do me a favor and take this job for three weeks to help me out until I can bring someone from Chicago down here to run the business.”
Well, three weeks turned into three months and four months and so forth. And, so finally one day, I flew to Chicago and I said to him, “I want to buy your business.”
Steve Pomeranz: I don’t understand that. How did you start from the very beginning and get to the point where you could turn around and buy his business?
Wayne Huizenga: Well, I didn’t like the business to begin with, but after I was there for three or four months, I thought this isn’t such a bad idea and at the same time there was a small business for sale in Fort Lauderdale. And it was when I say small it was really small, it was $500 a month worth of business.
So I thought about buying that business and I thought about Haman’s business, and so I flew to Chicago and I said, “Haman I want to buy your business. He said, “Great!” This was a long time ago now, this was in 1962. He said, “I want $35,000 for my business, and I don’t own any of the trucks, I lease the trucks.”
And I said, “Okay, fine, I’ll buy it from you.’ He said, “How are you going to pay me?” I said, “You’re going to finance me.”
Steve Pomeranz: [LAUGH]
Wayne Huizenga: And he looked at me and he said, “Okay, I’ll take a chance on you, sir, but understand one thing. I’m not doing this for you.
I’m doing this because I’m a friend of your father’s.” And I said, “Great.” So I bought that business and then bought the little business in Fort Lauderdale.
So now we had three trucks running in Pompano Beach and one in Fort Lauderdale. And back in those days, they were separate cities.
They weren’t connected like they are today. And so, I got in business kind of by accident, something I really didn’t want to have and that’s kind of been a story for me, Steve. I’ve been lucky in being in the right place at the right time and sometimes I even said I didn’t want to be in that business and ended up going in it anyway and turned out to be the right thing to do.
Steve Pomeranz: So, Wayne, how did you manage to build this company— waste management as it turned out to be—into this giant public company that it has become?”
Wayne Huizenga: Well, I ran the company here in South Florida for about 10 years and by that time, we had expanded down into Miami and Hollywood, and we picked up the refuse for the city of Key West and had a small business in Tampa.
And then a fellow that was married to my cousin ran a family-owned business, a business that was owned by my three uncles. My three uncles all died under the age of 50, and so he was running the business in Chicago and I heard of his name because he was married to my cousin but I never met him.
So came down to Florida on vacation, and we chatted and talked, got to be good friends and a year or so later he came back to Florida and he said, I’ve been thinking. He said, “You’re really in a fast-growing market. How are you growing this business so fast? Where are you getting the money?”
I said, “Man, I owe every bank in Florida money, are you kidding?” And he said, “Well, we’re doing really well up there but we’re not growing so fast because it’s more of a stable market.” So to make a long story short, he suggested, not me, but he suggested that we merge the two companies together.
And mine was called Southern Sanitation, his was called Ace. So we merged the companies together and called them Waste Management.
Steve Pomeranz: Wow!
Wayne Huizenga: And, six months later took it public, and then we had a high multiple on our stock and so we went out. Our plan was to grow nationwide but, rather than start from scratch with one or two trucks in each market, we thought we’d buy the best guy out in each market we wanted to be in.
Most of that was in the sun belt, and so we went around the country trying to find the best operator in each market. And we acquired that person and let that person stay on and manage the business for us and grew the business internally very aggressively after that.
After we once made the acquisition, we wanted internal growth rather than acquisition growth, and so we acquired 100 companies in 9 months around the United States.
Steve Pomeranz: So, Wayne, you had this high multiple, in other words, the public stock was selling at high price to its earnings, and you were able to use that as a kind of currency?
Wayne Huizenga: Yeah, we were about 30-times earnings, and we were buying people out at 10-times earnings, and so we had to spread and not only help the stock grow up more.
Steve Pomeranz: Sure.
Wayne Huizenga: The more companies we bought the higher the stack went up and-
Steve Pomeranz: Because Wall Street is looking for growth, right?
Wayne Huizenga: That’s exactly right, and so it wasn’t long before gave them all a growth they wanted without doing so many acquisitions because we were in the great markets and we were growing internally.
Steve Pomeranz: So eventually, I guess, you got that business to a certain size and you decided to change direction?
Wayne Huizenga: Well, we grew all around the United States and then we went international. And we had businesses in Australia, in Argentina, in Venezuela, and all throughout Europe. We were in Hong Kong; we were in Saudi Arabia. It grew to be a very big company in a short period of time.
And I was commuting from Florida, for ten years I commuted to Florida every Sunday night, came home on Friday night or Saturday. And, I got tired of doing that and said, “Well, I’m going to retire for a while and so we did not sell the company and I did not sell my stock.
And decided I was going to take a year off and kind of goof around for a while. Well, that lasted three weeks and I was climbing the walls, and so I start going in other businesses.
Steve Pomeranz: When we come back, and I’m going to take a short break. When we come back, first of all, I’m speaking with Wayne Huizenga.
Probably one, if not the most, one of the most successful entrepreneurs in the country, perhaps the world. We’re going to find out about starting Blockbuster, I think it’s not as you think. We’ll be back with Wayne Huizenga in just a moment.
Steve Pomeranz: I’m talking with Wayne Huizenga and we’ve just discussed how he developed the business, Waste Management. Wayne, let me ask you this question about Blockbuster. Some have called you a visionary for starting Blockbuster, but you see it a little differently. How did that business begin for you?
Wayne Huizenga: Well, a good friend of mine by the name of John Melk lived in Chicago and he used to work for Waste Management. He retired a year after I did. And, he called me one day, it was in November of 1986, and he said, “Wayne, I’ve got a great business. I’ve invested in as a limited partner in a video store. And, the guy that owns this business, he said he’s going to grow rapidly and you should see this video business, Wayne, it’s really great.” And I thought to myself, there’s no way. I didn’t even own a VCR at that time, much less, I’d never been in a video store or rented a video.
And this fellow would call me once or twice a month. And finally, in late January, I was in Chicago doing some business and he called my office, and my assistant said, “No, he isn’t here, he is in Chicago.” He said, “Chicago?” So, he tried to run me down in Chicago and he couldn’t find me so, he went to the airport and waited for me to come back to get on the airplane.
And when I got there he said, “No, no, no, you’re not going home till you see my video store.” So, reluctantly, I went with him to see the video store. After that I was very, very impressed with his Blockbuster store. But that’s not the way the newspaper writes it or the magazines write it.
They talk about what a great Visionary Wayne is and he came up with this concept and this idea and that really wasn’t the way it happened.
Steve Pomeranz: You were no technology guru who saw the future?
Wayne Huizenga: No, it was just that my good friend saw an opportunity. I thought that renting videos was a dark, dirty, dingy, dimly lit stores that rented adult movies.
Steve Pomeranz: Yeah, sure.
Wayne Huizenga: And I was surprised after I saw a Blockbuster store.
Steve Pomeranz: So, I guess Blockbuster in your mind had the potential kind of similar to Waste Management of a serial business with a lot of cash flow coming in all the time?
Wayne Huizenga: Well, Waste Management we had to acquire a lot of businesses to get started, but in Blockbuster we did not and Blockbuster, it was the matter of building stores, before the competition did because we had nothing proprietary.
So, it was just a matter of getting to the best real estate before the competition. To make a long story short, we opened regions around the United States, each one was staffed on their own for real estate and construction. In over six years, we averaged opening a new Blockbuster store every 17 hours.
Steve Pomeranz: Wow!
Wayne Huizenga: So, we opened a lot of stores in a short period of time.
Steve Pomeranz: Now, when you got involved in Blockbuster, this small company, this one store that was already a public company?
Wayne Huizenga: Yeah, they went public to be in the oil services industry. And then that changed and they went into the video business kind of by mistake, but they went into the video business and then when we bought the company, it had 8 company-owned stores and 11 franchise store.
Steve Pomeranz: I see, so you developed that business for how many years?
Wayne Huizenga: We’re a total of seven years. And when we bought the company, it had a $32 million market cap. And seven years later, we sold it for $8.5 billion.
Steve Pomeranz: That’s unbelievable, you sold it to Viacom, right?
Wayne Huizenga: Sold it to Viacom, and the stock price over that seven years went up 4,100%.
Steve Pomeranz: Incredible, why do you think Bob Viacom wanted that business so badly?
Wayne Huizenga: Well, they were trying to buy Paramount Motion Pictures at that time and they needed to borrow a lot of money to do it.
And they didn’t have the cash flow to do it. We had a lot of cash flow at Blockbuster, so they paid us stock. And then ended up with a cash flow that they needed to finance the acquisition of Paramount.
Steve Pomeranz: Did Paramount’s anxiety or the need for their cash flow help get you the price that you were looking for?
Wayne Huizenga: Yeah, no question about it. You had a buyer on the other side that, in order to make the transaction that he wanted to make Paramount, he needed something to make it happen and we were that something.
Steve Pomeranz: When we come back I’m going to ask Wayne about the third business that he started which is now running revenue around $20 billion a year.
Stay tuned. I’ll be back with Wayne Huizenga.
Steve Pomeranz: I’m talking to Wayne Huizenga. We’ve been talking about Blockbuster, how he got started. Not really the visionary as everybody, as maybe the media, has played it up to be. How he got started in Waste Management. Now there’s another company, Wayne, that you were involved in that you started very much from scratch and I’m talking about AutoNation.
I looked it up and AutoNation has an enterprise value now of $8 billion with revenues approaching 20 billion. How did you get that going? What was the concept there?
Wayne Huizenga: Well, after we sold Blockbuster in 1994, we looked around for a year, maybe a year and a half, trying to find the right business.
And we’d hear about a company, but before we would look at the company, we would always look at the industry. And after we looked at different industries, we would pass on them. And then finally, we came across the automobile industry, it was obviously right in front of our eyes and we never really focused on the automobile industry.
But if you think about it, it’s a trillion-dollar industry. There is about 350 billion in new cars sold every year, 350 billion in used cars. Then you do the warranty work, then you add in the parts and services, and you’re up to a trillion dollars. And so, the industry was so huge, we started figuring, boy, if we could get 5% of that industry, or if we could get 10% of the industry, we’d be $100 billion company.
Steve Pomeranz: Let me see if I understand this because, I mean the automobile industry is a very mature industry. But, you’re looking at something else besides the number of units being sold. You’re looking to consolidate within it?
Wayne Huizenga: We were looking at consolidation and actually when we were looking at the business, we found some disturbing trends that we didn’t like.
And because we didn’t like it, we thought there was an opportunity there. For example, most people don’t realize that the average car dealer, 75% of the people who bought the car there this year, will not go back to that same dealer. For a number of different reasons, maybe they thought they paid too much, maybe they didn’t like the service, maybe they decided to go a different way.
But if you are a businessman, and you lose 75% of your customers every year, that’s pretty doggone tough. And that’s why today, we see so much advertising in the automobile business because they lose a lot of customers and they have to keep trying to gain new customers.
And so we looked at that and said, wait a second, there has to be a better way. If you treat the customer with respect, if you listen to what the customer and your employees are saying. If you think about saying, hey, thank you for the order, it’s pretty easy in business and so, we kind of said, there’s an opportunity here.
We just treat the customer better, we ought to be able to retain more of the customers. And to make a long story short, we took this concept public, raised a lot of money, then once again, went out and acquired 375 different car franchises. And today AutoNation sells virtually every type of car.
And we’re in 17 states now and we have 375 different franchises all around the state. And so now, like you said, we do about $20 billion a year, and business is very good and we try to treat the customer different than most people do. In some markets, we have one-price sales where we quote one price and we don’t negotiate and it’s a good deal for everybody, and we do that wherever we can.
But in some markets, we can’t in some markets, we can’t but still we use the best practices concept. Where we take the best practice from every dealership around the country, we use that, and we treat the customer right.
Steve Pomeranz: Now, Wayne, the way AutoNation looks right now, is not really the way it looked when you started. You guys made some initial mistakes at the beginning, describe some of those.
Wayne Huizenga: We made some huge mistakes. See, you can’t just go out and start a Ford dealership or a Chevrolet dealership. So, we went out and we started building used car lots and they were big used car lots.
Steve Pomeranz: I remember that.
Wayne Huizenga: 20 acres at a crack and we did that but what would happen is we’d have a couple of thousand cars on the lot, and all of a sudden one morning you’d wake up and one of the manufacturers would say, okay, we are giving a $2,000 rebate on cars.
Well, all of a sudden, every car on our used car lot was worth a couple of thousand dollars less. And so then we’d have a great quarter, and we’d have a bad quarter, then we’d have two good quarters, then we’d have two bad quarters. And so we said, okay, this is okay, but what we really need to do is get into the new car business as well.
So, then we changed our concept slightly and then we went in to acquire new car dealerships along with used cars and that’s pretty much what we do now. Like I said, we have 375 dealerships.
Steve Pomeranz: Well, I know from the early days you were trying to brand the AutoNation name, but you weren’t really able to do that.
Why was that?
Wayne Huizenga: Well, we did want to brand, no question about it. We wanted AutoNation nationwide. But when we start selling new cars, the manufacturers said no, no, no, you’re not going to have the AutoNation name be bigger than the Ford name or the Chevrolet name or whatever the case may be.
So you can call it AutoNation in one market but in another market, you have to use a different name. So all around the country now, in Las Vegas, for example, we’re called Desert and here in Fort Lauderdale we’re called Maroone. And so in different markets we’re called different names even though the parent company is still called AutoNation.
Steve Pomeranz: Talking with Wayne Huizenga. Wayne, of course, has been in this area for many, many years, he started out in this area as he’s just described. And he, again, as I said earlier in the program, he’s the only person in history to build three Fortune 1,000 companies practically from scratch.
We’ve been talking about Waste Management, Blockbuster, AutoNation and this is for our entrepreneurial spotlights segment. I know there is another business you got involved in with a chain of business hotels called Extended Stay, how did that start?
Wayne Huizenga: George Johnson is a very good friend of mine from Spartanburg and he used to be a big Blockbuster franchisee.
And he and I were friends and after we sold Blockbuster, we were looking for something else to do, and one day George called me. And George was real big in real estate, mini-warehouses, and so forth. And so called me one day and he said,” “Listen, I was just talking to a friend of mine and he told me about a new concept in Atlanta and are called extended stay hotels.”
That wasn’t the name of the company but it’s like Waste Management, it’s picking up waste management. So, we said okay, fine. And he said, “I’m going to go take a look at this hotel, Wayne, would you like to meet me? So he flew from Spartanburg, and I flew from Fort Lauderdale, we met in Atlanta.
I looked at this hotel, it was the extended stay concept, where the average traveler would stay about three weeks. It was a small room with a full kitchen, and so the people that stayed there could have breakfast or dinner there in their room, if they wanted. They could cook if they wanted, or they could pop something in the microwave or whatever they wanted to do.
But there was a full kitchen there and we liked that concept and so we bought that hotel.
Steve Pomeranz: Why did you like that concept?
Wayne Huizenga: We liked the concept because it was different than anything else was out there. They operated it pretty much as you would at home.
They changed the sheets about every third day. And the room cost was down, there was no lobby, there was no restaurant, there was no ballroom, it was very simple. It was more like an apartment building than anything else with a bunch of one bedroom apartments and a kitchen.
And we looked at the projections and we liked that a lot, they actually turn out to be better than we thought they would be and in a very, very short period of time, we ended up with 475 hotels.
Steve Pomeranz: Did you take that public again?
Wayne Huizenga: We did take it public.
Steve Pomeranz: And had a high multiple and you used that to build.
Wayne Huizenga: We did have a high multiple but there was nothing to acquire. So, we used a high multiple to acquire cheap money on Wall Street and we used that cash to build hotels.
Steve Pomeranz: I see.
Wayne Huizenga: And we did extremely well with that and we sold that about a year and a half ago for $3.5 billion.
Steve Pomeranz: Wayne, you seem to take your businesses to a certain level and then you sell them. Why do you do that? Why don’t you hold onto them and watch them grow forever?
Wayne Huizenga: Well, the growth is in startups.
Steve Pomeranz: Yeah.
Wayne Huizenga: The real growth is taking something small and making something big.
But, once it’s big, you don’t have much growth because the base is so large. Now, and it’s more like running a business day to day where we’re more in the growth mode all the time, and that’s the reason.
Steve Pomeranz: Well, I mean also when the stock price gets so high, I mean literally speaking you have to grow like crazy at almost impossible amount in order to get that stock price higher.
Wayne Huizenga: Yeah, and at the hotel company, we average building a new hotel every week. When you think about building a new house every week, well, we were building a new hotel every week. And there was a period of time for two years where we averaged opening a new hotel every three days.
Well, when you’re doing that there’s a lot of moving parts. And so, finally, you get it to where you got a good stock price and business is good and you can’t keep growing at that rate anymore. So, we then sell, take our money, and start a new business.
Steve Pomeranz: How do you determine what the right price is?
Wayne Huizenga: Well, when get an offer that’s beyond your expectation.
Steve Pomeranz: Well, that’s number one, sure.
Wayne Huizenga: [LAUGH]
Steve Pomeranz: [LAUGH] That’s the easy one.
Wayne Huizenga: Obviously, there is the rule of thumb in a business you get the blank times cash flow, blank times EBITA, that type of thing.
Steve Pomeranz: Sure.
Wayne Huizenga: And when you get higher than the rule of thumb, then it’s time to sell.
Steve Pomeranz: It’s time to sell. Let me ask about your management style. You make it sound like kind of just very casual how you managed to do this. You must have an aggressive management style.
How do you get your companies to perform so well? I imagine it’s in who you hire. How do you hire people and make sure that that’s a success?
Wayne Huizenga: Well, in the early days when we started waste management and we were operating all around the United States, and then we were operating around the world, I learned because I had to learn.
I learned how to deal through people over the telephone many miles apart and so forth and you’re just forced to learn. And I made a lot of mistakes along the way, but I’ve finally learned how to hire the right people to make things happen. Where you could communicate with that person over the telephone and not have to have them in the same office as you. And I got comfortable with that. And that’s how we were able to build so many Blockbuster stores. Through regions and through the right people in the regions. And the same with Extended Stay America and my friend George Johnson. And so, I just somehow got lucky in learning how to work with the right people. We made some mistakes along the way and had to change management from time to time. But basically, it’s all through people. You know, you hear it said here so often, people are the name of the game. And we hear it said so often it goes in one ear and out the other ear. But that is the most important in growing a business quickly. You have to have confidence in the people that are making it happen.
Steve Pomeranz: I guess you’re also using that as a form of leverage because you’re only one person and the more qualified people and confident people you can have working for you, I guess the greater growth you can get.
Wayne Huizenga: That’s exactly right. So instead of just growing one business, you’re growing several businesses at one time.
We don’t have any public companies anymore, but we’re investors in lots of companies. In some cases, we own a minority piece, but in most cases, we either own 100% or we own a majority. Even if we have partners, we usually own a majority. And right now, companies that we have, we operate now in 42 states in the United States and 15 foreign countries. And we operate some businesses that I’ve never been to. All operated through good people in those markets.
Steve Pomeranz: Also, what are some of the ideas that are percolating now?
Wayne Huizenga: You know; we’re looking every day for something. It’s not as important to us now because a lot of years have passed and I’m getting older.
Steve Pomeranz: How much time are you spending in the office these days?
Wayne Huizenga: Oh, I spend 12 hours a day in the office except I try to take 2 months off in the summertime.
Steve Pomeranz: And are you successful at taking 2 months?
Wayne Huizenga: No, it hasn’t worked for me, yet but I’m still working on it.
Steve Pomeranz: So, you’re still looking at other businesses but not with the same hunger or interest?
Wayne Huizenga: Yeah, we’re still looking and we’ve come up with things. Right now, we have, like I said, we have quite a few businesses now. Several of them are in real estate, which we have never done before, so we’re learning that.
Steve Pomeranz: Is that different for you because it’s harder to figure out the right price or the right multiple and so on?
Wayne Huizenga: Yeah, it is. And we don’t have any desire to be a home builder or condo builder or anything like that. We buy the land and get the land entitled and maybe put the streets in and then let somebody else come along and build the buildings on it.
Steve Pomeranz: So, you’re buying the raw land kind of in the outer sections of…
Wayne Huizenga: Yeah, in the path of progress and then, like I said, we take it to a certain level and then we sell the rest of it all.
Steve Pomeranz: Now, I know when we were talking before, you think that people of today absolutely need an education and I know that you didn’t finish college. But what’s more important to you? Street smarts? Academic smarts? Or what?
Wayne Huizenga: Well, you know when I didn’t finish college, it was a little different. That was some time ago, that was 50 years ago. And I think you could get away with it back in my day, but I don’t think you can get away with it today, I think you need a college education and maybe more. You know, it’s very, very sophisticated today. A lot more sophisticated than when what it was when I was starting out. And so, I think people really do need to have an education. There’s no question about it. But you know there’s a lot of difference between someone who’s intelligent and someone who is smart. And obviously, I’d like to have someone who’s intelligent AND street smart.
Steve Pomeranz: They seem to be the same to me. Tell me what the difference is in your mind.
Wayne Huizenga: Well, someone who’s really intelligent, but they can’t see an opportunity or they’re so intelligent they can’t really relate to people that aren’t intelligent, they can’t work with the average person. You know it’s tough, and so if I could only pick one person who had a great personality and was smart, I would pick that person over the extremely intelligent person.
Steve Pomeranz: That’s very interesting. Especially, I don’t know the exact name of the award, but you received Yale’s highest award I think for non-academic achievement. So here you are saying that perhaps academic smarts are a little less valuable than street smarts.
Wayne Huizenga: Depends on which business you’re in. You know, but I think someone with a great personality, someone who gets it, is someone more important than someone who’s extremely intelligent.
Steve Pomeranz: So that concludes my interview with Wayne Huizenga. I hope you enjoyed listening to it as much as I enjoyed doing it.
If you have any comments or questions don’t hesitate to contact us. Go to StevePomeranz.com—that’s StevePomeranz.com.