My guest Ryan Callaghan and his partner Nick Parisi set out to finding an enduring business where the owner was in need of a transition and continue what they started. Through a friend of a friend they found a company named Oilstop and made it their first acquisition. Oilstop is a car service business on the west coast with 30 locations across 4 states and a strong customer focused culture. During this episode, Ryan and I dive into what makes Oilstop’s culture so unique and what he and Nick are looking to do next through their investment firm Cojourn.
Live Oak Bank – Live Oak Bank is a seasoned SBA lender focused on search funds, independent sponsors, private equity firms, and individuals looking to acquire small companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies – Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
My guest, Ryan Callaghan and his partner, Nick Parisi set out to find an enduring business where the owner was a need of a transition and continue what they started. Through a friend of a friend, they found a company named Oilstop and made it their first acquisition. Oilstop is a car service business on the West Coast with 30 locations across four states and a strong customer focused culture. During this episode, Ryan and I dive into what makes Oilstop’s culture so unique and what he and Nick are looking to do next through their investment firm, Cojourn.
Thanks, Ryan, for joining us. Excited to have you here. Looking forward to hearing about Oilstop and some of the other companies you’ve been involved with. But we’d love to first hear about your background and how you got to what you’re doing today.
Thanks Alex. It’s fun to be with you. Enjoy your podcast and all that you put out there. So great to try to contribute a little bit today. So my background, I think you have a pretty entrepreneurial audience, is not very entrepreneurial. I’ve kind of stumbled my way into more entrepreneurship the older I’ve gotten, but I studied finance and accounting in school and went into investment banking. Moved to Wall Street and did mergers and acquisitions advisory work for several years. And then took a kind of natural step from there into private equity, which I barely knew what it meant when I started but knew that’s what a lot of interesting people did. And I liked the combination of quantitative analysis, but people’s skills and trying to understand markets and companies and mixing all that together.
So I worked for a couple of large private equity firms doing really big deals for other people and really investing people’s money whom I’d never met, working hard long hours and learning a ton, but realizing pretty quickly that I wasn’t satisfied because I didn’t think what I was doing was very meaningful. And I remember probably five, six years into my career being in the airport about to catch a Red-eye from LA to New York at like 10 o’clock on a Sunday night. And I ran into a couple senior partners from my firm, guys who were 10, 15 years ahead of me who were kind of the heroes in our firm. And I saw them with kind of weary faces and tired eyes and fast forward and realized madness, how would I want to be doing in 10 or 15 years, there’s got to be a better way here.
So I started to kind of migrate down to smaller markets and moved to what I call boutique private equity firm, where I had a more meaningful role. And we were investing in what we call it middle market businesses, which were much smaller. And enjoyed that a lot too, but eventually wanted to get even more hands-on. And after several years with that firm as a partner doing lots of acquisitions, which I learned a ton, I moved into an operating role and kind of became the president of a technology-based business and had a great experience actually leading a team and being responsible for a budget and being faced with the real life challenges that come when you have real people that you’re working with day in and day out on the same stuff.
And I loved that, but I was a small owner of that company. And really that’s when I started to have the aspiration of saying, I should try to do this on my own. And several years ago, took the leap of faith and went out on my own with one partner and started our current investment firm called Cojourn with the mandate, hey, we want to find smaller velocity of transactions, but find businesses to buy that we can own and run really well. And hopefully have a team that runs them really well and do something that’s meaningful, focused, and trying to find a way to get great returns without the fast velocity of being an IRR based investor of other people’s money.
So is this something that’s just your own capital or is this something that you raised with investors to go start as well?
Good question. It’s a combination of both. At that time, we saved up a fair amount of capital that I was able to use so that I didn’t need to work for, I gave myself about a year and a half to go out and find our first transaction that would start to generate some cashflow and also had some capital of my own. My partner had about the same amount on his side, but we always knew that we’d probably have to augment our capital with group of investors, both on the debt and equity side.
We were pretty opportunistic saying, “Hey, if we find something where we can do it all ourselves, let’s do that.” But we also, and we can talk more about this. We’re looking for a company that was big in our size. We didn’t want to find a business that was just getting started. We were looking for a cashflow positive well-established business with at least a few million dollars of annual earnings. So that business was a 30 year old company, founder owned and led. And it was the kind of best in class solution. It was a drive-through oil change company founded by a wonderful guy named Larry Dahl, who like many entrepreneurs and business owners that I’ve worked with over the years, trying to buy their companies on behalf of other people had been inundated with private equity offers and competitive acquisition offers, just everyone in his industry wanted to buy his business, but he was extremely reticent to sell.
He’d loved his team. He built a company that was like his third child, and really was stuck saying, “I don’t think anybody who wants to buy my business is going to treat it like I want them to treat it, so I’m just going to keep running it.” And so that was a great story. That’s when Nick and I, my partner kind of met him and realized this might be the perfect fit for our firm.
So why didn’t he want to sell to anyone else in his industry? I would think as a seller, somebody who already owns a business like mine would be a more credible buyer to interact with. So what made him hesitant to go with a competitor?
It’s the number one pain point in my experience that all sellers face and it was all about his team. So the problem was selling to a competitor is the reason that competitors want to buy you. And the reason they can pay more than anybody else is because they have that loaded word called synergies or redundancies, meaning they have a team and they have an infrastructure. And so they’re going to use their team and the best of what they’ve got and get rid of a lot of your people.
And what I found and kind of this was a big reason why we got passionate about starting Cojourn is that sellers care so much about their management team. They want those people to have another run, another 20 years of livelihood working for a great boss. And so often what happens is sellers have this guilt when it comes to knowing they need a succession plan, knowing they need to move on, knowing they want to get a full and fair value for their business. But realizing that they’re going to get this big paycheck and ride off into the sunset.
Their people are either at best going to get a new boss and the same job. A new boss who they don’t know as well, they don’t trust as well and keep their job. And at worst, they’re going to get a pink slip and have to find something else to do. So that was really Larry’s issue. He knew that if one of the big guys or a competitor came in, that his team would be out of business.
And the second reason was he had a mission for his company. They had a company culture and he wanted that to be preserved. He didn’t want one of the other company’s cultures to come in and kind of use up what he had created over the years.
So how did you communicate what you were looking to do with this company in those first, maybe one, two or three meetings with Larry? How did you describe what you were doing and what your goal was?
The first time I met with Larry, we didn’t even talk about buying his business. I sat down and I think curiosity is such an important posture. And sat down with him and said, “Hey, Larry I know your business. I’ve seen it.” The good news was I actually was a customer of his. So I had some real experience and real admiration firsthand with his company. But really sat down and said, “Hey, I think you’ve built something really special. And I just love to learn how, because I aspire to be the same. And so just tell me your story.” And listening and hearing kind of what was important to him was really meaningful. It both kind of, we started to build some rapport. I started to create some trust and I started to learn really about what was important to him.
And one of the things you hear about acquisitions a lot is seller psychology, and really trying to understand what’s most important to a seller and not from a manipulative standpoint, but more from a, is this a match? Am I going to be able to provide what this guy wants? And so that was my posture with Larry for our first four or five meetings. I think probably the third meeting, once it became clear that he didn’t have a really well-thought out exit plan. I started to say, “Hey, well, what would it look like for you to leave? And who is the ideal buyer for you?” And that’s when the conversation started to turn to, that’s something that I’m passionate about, and this could be a fit. Would you be willing to take the conversations in that direction?
Got you. So besides what would happen to his employees and the culture, what other, maybe smaller details that he cared about with whoever took over his business?
Well, his business which is so important, so great is, and Oilstop is that way to this day is what I call just a mission driven business, which you might hear a lot now in the business world. But our mission at Oilstop is to serve people humbly with excellence and with a servant’s heart. And that’s what got Larry out of bed every day. And so number one for him was to see that he wanted that to be preserved and he wanted to see that carried forward. So he wanted to see whoever owned the business would be committed to kind of adhering to that mission. We always say, we’re not an oil change business. We’re in the business of serving our guests in whatever way we can. We start by serving our staff and when our staff really believe that we’re there to serve them, they serve our guests.
And so that philosophy, I think along with the actual people who are executing that philosophy were the two things that he wanted to see preserved. And Alex, that’s what I think can be applied to a lot of different sectors. That’s what Cojourn is all about. We believe that what we say to business owners is we’re going to run your business as you would if you had another 25 years in you to lead it. If you felt like, hey, you were 30 years old or 40 years old or whatever age it is and really we’re just in the prime of your management life and wanting to continue on and take more ground. We’re going to try to step into your shoes. And we’re going to pretend like your legacy is being carried forward with you at the helm. Then we’re going to do our best to continue what you started.
So what does the Oilstop culture look like from a customer’s perspective? So somebody walks in, wants an oil change, what’s the process that happens when they enter the business?
I’ll tell you, you can tell the moment you walk in, whether it’s our corporate office or any one of our locations, you’re greeted with a smile. People make you feel like they’ve been anticipating your arrival. That they’re glad that you’ve come. They’ll call you by name as soon as they learn your name if they don’t already know it. You’re going to hear a language like please and thank you and how may I serve you? You’re going to see eye contact and you’re going to hear voice inflection that just emits kindness. And you’re going to see it, not only as a guest or a vendor that comes into our office, but you’re going to see the interplay between staff members as if they actually like each other and enjoy what they do and they serve one another.
So for us, it’s all about that service mentality. It’s saying, “Hey, can I get that for you?” It’s identifying what needs to be done. Little things like we do. We’ll offer a free beverage to every guest that comes in. So can I get you a cup of coffee, a water, a soda? Can I get you a juice box for your children, a biscuit for your dog? It’s those little things that we anticipate to try to make people feel like we’re truly here to serve them.
So how do you hire for that. So do you hire first for the culture side, which is what it sounds like, but how do you balance that out with meeting the technical side too?
I mean, I think this is true. I’ve invested in a lot of service businesses and you see this in almost any field. Most great companies will tell you they can teach you their trade and they don’t need you to come in with too much background knowledge, in some senses, it’s even an obstacle. So we certainly want to find people who like cars, but they don’t have to know a lot about them. Really we want to find people who like people. And one of my big principles of investing, which is so true in Oilstop is about momentum. And so we find people that we feel like seem to have that optimism, that positive attitude, the desire to be a part of something special and then momentum kind of takes care of itself. And there’s just this culture that they get immersed into. And the same can be true on the bad side, but you just don’t fit in if you don’t have that same attitude in our company.
So how does it look like if you’re going to interview somebody? So if someone comes into one of your locations, where do they go first? What questions do you ask them? Do you have the walk around to interact with a few team members? What does that process look like if you’re trying to describe that to someone who’s opening a new location?
It’s a great question. It varies. So now we have applicants that find us online and we’ll fill out an online application. Our first impression will just be, there’s some metal, and we still do often have people who come into the store. And so for the candidate that comes into the store, they’ve usually been there before and they’ve kind of seen, hey, this is a place that looks fun and interesting to work at. That is a selector device in itself. Certain people just see, I could see myself here. But our managers, our store managers and our system managers are people experts, and so they just try to make an assessment. Do I think this person looks like they can communicate. Communication is important for us and we teach the communication skills, but you have to have someone who you think is going to be interested in people.
So they do a little onsite interview, and then we have a head of, we call it human flourishing in our office, who does a phone interview still with every single employee after they kind of meet the first interview with our manager onsite. And we then, I mean, we do a bunch of little things, but we have a memorization requirement where we actually give a candidate several scripts that they have to take home and memorize. And they have to come back the next day and say them without notes, that weeds out a lot of people too. So we have guys come in and they took the time to do the memorization and they show up again on time. And we see yeah, these people really care and are interested in expanding some effort they might be a good team member.
So these scripts on how you greet a customer or how you describe an issue to somebody, what exactly are they saying in these scripts?
It’s how to present a portion of the oil change service. So usually it will be how we greet the customer and describing what they’re about to experience with us, checking, doing a 33 point service on their vehicle and then presenting to them their choices.
How steady is that word choice. I imagine Larry has refined that script over a long period of time?
There are a lot, there are a lot of little things that we’ve found over 30 years are extremely effective. Things like asking someone, are you here for a drive-through oil change today? As the first question so that the guest begins immediately to say, yes, we know why they’re here. When we present services we say, “Shall I go ahead and do that for you today, Ms. Jones?” And using language like that, we teach our team to be as satisfied and happy with a no, as they are with a yes. So that it’s really important that our guests know that our team’s not paid on commission and they’re not there just to get stuff out of them. They’re recommending services for their vehicle that they would do on their own vehicle.
So things like that are really important. We have a pretty detailed script, like I think all good service businesses, training is probably the most important component. And if you can have your team trained meticulously and have a great standardization of service, that’s the only way you can ensure kind of a consistent, excellent experience across multiple locations.
Yeah. To the point about multiple locations, that seems like it would become a challenge when you have lots of different places that you’re trying to replicate this same culture, and they’re not necessarily within driving distance of each other. So you yourself couldn’t drive to every location in a day to check in on people. So how do you make sure that process replicates across your locations?
It’s great people. And we have people that have been in our company for multiple decades. We rarely, I don’t think we’ve ever hired a manager for a store from another store. They’ve all started their first day, day one as the new technician usually in the basement as the lube tech. So it’s just about inculcating that culture and then getting together a lot. We were doing Zoom, believe it or not before the pandemic. We have our Southern California and our Northern California, and our Oregon, and our Arizona and our New Mexico teams. We get together at least once a week face-to-face. We do something that’s really cool. It’s a Thursday morning leadership meeting, so where we invite every leader in our company, and really which is every staff member is welcome to be there.
And we’ll show kind of a 15 minute video, usually a speaker talking about leadership or management or self-improvement. And we all watch the video together on Zoom. And then we go around and actually call on people and say, “Hey, Alex, what’d you think of that?” And everyone who shows up knows they might be called on. So they have to be prepared to say, “Hey, this is what I liked about that. Thank you.” So things like that, just help solidify that culture, and it’s all about the right people.
So I’m curious what your procedures might be for customers who are a little more difficult or challenging. I’m sure you have a whole set of scripts for that too. Can you share a little bit of detail on that if things maybe don’t go as planned with somebody?
That’s a fun one. We have a couple of codes that we use. We try to use codes so that guests don’t know exactly what our team’s talking about, but we have a code seven, which is when a guest comes in and we can tell that they’re not a good mood, they’re hostile, or they’ve had a bad experience. And it’s one of our favorite things. It’s a challenge that we put on our team to say, “Hey, see if you can change the trajectory of this guest’s day. See if you can find a way to connect with them or to make them feel special or to see if you can send them off with a smile.” So that’s one way.
We have code 16s, which happens in our business where people come in with a complaint because they had their oil changed a few days before and now they see a leak or something’s not working right in their vehicle. And just like any business, the way you handle mistakes or the way you handle unsatisfied guests is probably the most important thing you can do. And one of the easiest way is to create a guest for life. If you do the right thing, when someone feels like they’ve not experienced the right thing, you instantly get loyalty and trust.
And so we talk a lot about that. Our managers are experts at listening, and many times we didn’t even make a mistake, but we still have the opportunity to say, “I’m sorry that you experienced that.” And when we can, we try to, for sure refund our service or make the guests understand that we feel their pain and that we’re going to do everything we can to make it right.
Can you dive in a little more depth into your code system. I’m curious how that process works.
It’s just a communication language. So code one, that’s our mission. That means serving with excellence and humbly with a servant’s heart. So we try to also do something called public praise. So one of our best things is to have our team members praise or affirm one another aloud so that the guests can hear. So John will say, “Excellent code one, Steve,” or “One, you’re doing a great job over there. Code one.” And so the guests won’t know exactly what code one means, but they’ll hear that.
Code five is a way to say, “Hey, I need to speak to you in private.” And so our managers will often say, “Hey, Louie code five, please.” And Louie will excuse himself from the guest and go talk with the manager separately. There are many, many others. It’s a way to have a communication that the team knows, but is not necessarily fully transparent to the guests.
So did Larry have some trial and error with that system over time. Like, did he start off saying just, I need to speak to you privately in front of guests. And then he decided, oh, let’s do codes instead, that’s a little better. Do you know some of the history behind that process?
Yeah. I know that Larry was deeply concerned with just guest perception. So store cleanliness, uniforms, all those things. And so the language that we use is probably the biggest part of that. We always say that store atmosphere is dictated more by the words that we use than the decor or the wall hangings or the cleanliness. And so I think that was probably how it came about. We also use the metaphor that we’re onstage. So it’s, hey, it’s just like when the curtain draws back and the band is on stage or the players in a play, you need to be aware that people are watching. As a manager, your team’s watching you and certainly the guests are watching you and you are going to be the representation of Oilstop that they see. And so you use certain words when you’re on stage that are different than the words you use backstage often. And that was part of the genesis of the code system.
The culture from Oilstop, of course, is a huge part of why you chose this business. Is there something you’ve learned about that culture or a few lessons that you only learn from Oilstop and you weren’t exposed to, or you weren’t able to learn from your private equity experience?
I think it really solidified for me a thesis that we had, which was, it’s not that novel, but that culture matters. And I mentioned earlier momentum that too. I think early on in my career, I was kind of what I’d call a value investor, where I was looking for things that were undervalued and trying to make a great buy. And the worst transaction I was ever a part of in my private equity career was a turnaround company. And it was a company in an incredible market. We knew the market was going to grow. We knew they actually had a pretty good product. They just needed to fix it and get it out there and it was going to take off like crazy. And we were able to buy it at a bottom floor. But it turned out not to work. We couldn’t turn it around and we were right.
Our thesis was correct about the market segment, and Oilstop is a flip of that. It’s a market that was slowly growing and eventually will plateau here in the oil change space. And it wasn’t the sexiest space to be involved in, yet the culture and the team was so healthy. And when we came in and were able to see that and just affirm that and kind of doubled down on that, the business just flourished. So I think that was the big lesson is saying, “Hey, even more important than market fit is team fit.” And if you have the right people and you have a good critical mass, you can win in almost any space.
So using Oilstop as an influence of yours going forward, what other things are you now going to look for with new investments in Cojourn? What questions are you going to ask and what things are you going to look for?
We’re out there looking for sellers who have a good, healthy business. And not necessarily sellers that are going to give their business away. We’re willing to pay a full and fair value for businesses that have a good critical mass. But what’s most important to us is finding that person, the owner or the seller, who deeply cares about what he’s built. And I think that oftentimes someone who cares about what they’ve built, what they’ve built is steady and stable. You can tell, it’s a win-win situation. Those guys who really don’t want to just turn their business over to anybody are the ones who’ve created something that’s special.
So I’d say that’s what we’re after. We’re less top-down thesis saying, “Hey, this particular industry sector is going to go gangbusters over the next decade for this reason or that reason from a macro economic standpoint.” And we’re more, let’s find what I call a big fish in a small pond or a business that is just really healthy in whatever little market segment it’s a part of.
Are there any overarching lessons or themes you’ve found through your private equity experience and experience with Cojourn that you think are applicable to other people trying to buy small companies today?
One interesting one I’d say is, I was listening to your podcast about trying to focus on small businesses and how smaller can sometimes be better. I appreciated what your guests said and thought there were some interesting points there, but it’s interesting. My experience is the opposite of that, where my partner really pushed me to stretch bigger and to try to find a business that was actually larger than what we had initially set out to do. And I’m a big believer that the companies that actually have critical mass have so much less risk.
And to find a business that’s a little bit bigger than you might’ve pictured yourself going after initially can bring a ton of opportunity and reward to you. You have less risk, you have less customer concentration typically. You have more developed institutions. You can handle a bump in the night better, and you have some organizational history that if you find the right business can really be a big benefit for your team. Teams with tenure, a larger talent pool to search through and find the gems from within whom you can raise up. So as we go forward looking for businesses, we’re definitely going up market and trying to find those private companies that have a little bit of scale, because I think that’s where the opportunity is.
So of course, part of the flip side of that argument that you presented with going for a larger company is you have to choose different sources of debt and have to raise a lot more equity. So can you talk a little bit about what that process was like for you?
That’s a great point. And I think you do need to establish credibility when you’re looking at larger companies, because you’re going to require maybe something larger than an SBA loan that’s more institutional quality debt from a regional or national bank. And for us, I’ll tell you having a partner was really critical to that. Both banks on the debt side and equity investors, if you need to raise equity, typically like having two people on the other side of the transaction, more than one. So that was big for me having the right partner and then just telling a good story. And so we actually are out there looking for, because in our business, the hardest thing to do is to find the company.
Once you find the company, I think raising the capital is pretty easy as long as you have that experience and credibility. So I just encourage people who are out there, if they find a good investment opportunity, they can find people. If they don’t have it themselves, a partner or a group like ours to hitch their wagon to in a lot of different ways that will then open doors on the institutional capital side.
So what kind of equity investors would support a deal like yours that’s on the more larger side of things?
I think from an equity standpoint, there is just so much opportunity out there. And finding equity is the easy part. So I would encourage people finding debt is the harder part, because if you really have a compelling investment opportunity, there are people all over, private equity firms, independent sponsors, family offices that are moving towards more direct investing, groups like ours, that if they have a compelling place to put their equity, there’re in, particularly once you get to cashflow, that’s 5 million or above, but even 2 million or above.
So the challenge isn’t finding the equity, the challenge is how much debt can you get without actually giving up the equity in my view. And that’s where you need the credibility to get the lending institutions, which are a little bit more conservative and are a little bit more focused on your background and the experience of the team that’s sponsoring the deal. They’re the ones that you’re going to have to impress with some credibility.
So what kind of credibility is that look like?
It’s experience. It’s a story that says, hey, we’ve done this before, and it’s just showing that you’ve done your homework. So sometimes it can be an advisory board just saying, “Hey, these are the three or four guys that are a part of our group.” I’d really encourage people to use institutional name for themselves and their searchers instead of their individual name so that they can be a firm that’s being backed, not a person that’s being backed. So little things like that make a big difference for lenders.
What class would you teach in college if you could teach about any subject you wanted?
This is a hard one. I think what’s interesting to me is my background in finance is financial engineering is a term that has been a big part of deals that I’ve structured throughout my career. And it’s really a term that’s gotten a bad name. I think when people of financial engineering, they think of manipulating or doing things that are not right. But in my view, it’s such a critical component of any acquisition, is figuring out what’s the best way to capitalize it and being creative, and how you capitalize it can make all the difference.
So I was thinking I would teach a class called friendly financial engineering, or to borrow the phrase from Disney of Imagineering, like Financial Imagineering, because I think you can do great financial engineering and still be a good person who cares about people, but structures things wisely and creatively using the appropriate amount of leverage, understanding cost of capital and how that impacts returns. For me the first time I really understood a leveraged buyout, which is another loaded term, and saw how much opportunity there is as an equity investor.
If I’m a part of a leveraged buyout in a company, even that doesn’t grow, but where I just pay down the debt, it was staggering to me and the lights went on. And I think a lot of people just never understand that. So I would love to talk about cost of capital, optimal financial structures and how those things are not in congruent with being a good person and treating your team well.
I like it. What’s a belief you used to hold strongly that you’d change your mind on?
I hit on this earlier. I mean, I used to be all about finding the right market, and now I’m all about finding the right culture. So it’s that simple. I think almost any business segment is a people business. And so I believe that the right team can be successful in almost any market and could pivot if they need to in terms of what their product is. If they’ve got a group of people who are in it for each other who are collaborating, who care about kind of a common purpose. And so for me, I’ve become much less interested in finding the new solution in a really futuristic space and much more interested in finding the right people that I’m going to partner with.
What’s the best business you’ve ever seen?
I have a few favorites. There’s a local business. I was trying to say something that not everyone has thought of, but there’s a restaurant chain called Mama D’s here where I live, where it is an incredible environment because it’s just a team. And when you walk in, you can just tell, and they even state it explicitly, that everyone who works there is here to make your experience great, and anybody will do anything. So your server will clear your plate, will seat you. Might go back and help the chef if he shorthanded. It’s just this incredible dynamic team environment.
So I love businesses like that. I really admire In-N-Out Burger, because of their simplicity. That’s a burger chain in the West Coast for those of you don’t know. But they’ve got a menu with like five items on it. I know they’ve had request for decades to like go into chicken or do something different, and they’ve just stayed laser focused, which has allowed them to be incredibly efficient. So I love that. And then one of my final favorites was Zappos, some of you guys may be familiar.
Tony Hsieh, their founder just passed away recently. But his book Delivering Happiness, I’d recommend highly to anybody who would read it because they just went above the moon in terms of serving their guests in a way that would give them a wow experience. And there was basically nothing you could ask a Zappos sales representative that they wouldn’t go out and do, which I think is so cool. And we’ve tried to implement that in our businesses.
And the other things Apple is did that was really amazing is they were the ones that I first learned of after they had a really strong and long new hire orientation program. And then after their new hires in any position finished the orientation program, they offered them, I think it was two months pay in cash to quit. And the idea was anyone who would take that offer is probably not bought into who we are, and is not going to be a long-term team member anyway. And it’s going to be more cost-effective for us to pay them now and get them out than to keep them on and learn that down the road, and I love that.
So the offer to quit, how long was that offer good for?
I think it’s just like at the end of the orientation program. If I remember correctly, they did about a two week orientation program. And on the last day they said, “By the way, if what you heard you think is not a fit for you, or if you’re thinking about doing something different, you can come up right now and we’ll write you a check and today will be your last day.”
I’ve never heard anything like that before. I was curious if that was something that in your first few months on the job, if you went through the training and you went through some of the actual hands-on work, if you still didn’t like it, you could have that same offer and quit. But has anyone taken up that offer before?
In the Zappos story? Yeah, people did. And I’m sure there’s reasons where some may have been in like a dire financial emergency, but it probably makes sense. Those people who take that offer, I bet they lost very few people who are going to be future long-term leaders in the company. And so I love it. I think it was a really wise thing that created a great culture.
That’s interesting. One thing you noted in the first business in Mama D’s is the ability of each employee to do multiple tasks. And I’m a huge fan of Southwest Airlines, and they have a big focus on that as well. I’m curious if you’ve incorporated some of that into Oilstop or if it was already there?
Me too. Southwest was my other one that I didn’t say. I love Southwest. They’re another business that they’re just famous in an industry that’s infamous. And they foster creativity, and they’ve got this cross training functionality that you hit on, they’re just special. It’s so great to be the dim light in a dark industry to some people. Some people think the airline industry service wise is not the best. But yeah, we’re big believers in cross functionality. And you need to do that especially in times like this with COVID, we have people calling out all the time who just can’t show up for work.
And so you have to have a cross functional team who can pitch in for one another. And it just creates this brotherhood and commonality, I think behind the team. And by the way, we have great men and women serving together and they do such a great job. And when they can fill in for each other, it creates a special place.
How do you go about implementing that cross training? Do you give each employee a day, a month, or a day, a week to train on some other job or what’s the process for actually training them on other things?
We have a certification program. So another huge principle in our business is, you’ve got to show people that you’re investing in them and give them a path to grow. And so we created our own certification where you actually get certified in the different functions of our process. And you can apply that to I think any business and people want to, it’s like continuing education, but they’re getting paid for it. And when we give our team members their first certification or their second certification, they’re so proud and we celebrate it. They come home and tell their wife or their kids or their significant other, “Hey, I just got certified.” And we do try to give them some increases in pay, but sometimes it’s just like they get a new fancy flashlight or a new belt for getting their cert. But that creates that motivation to become cross-trained, which also helps us in the event of staffing and when there’s a big surge in volume or anything like that.
I know Rich Jordan, he talked a little bit about that and how he uses a rubric of pay. So depending on your skills, they’ll give you a certain pay bump for having them. And as you acquire them, you’ll get your pay increased and it’s very transparent. It’s obvious what your pay is going to be if you have these certain skills. Have you taken it to that extreme where it’s more of a public facing poster or some information on what those incentives look like?
Yeah, absolutely. We have what we call kind of the Oilstop growth path that shows kind of, here’s where you start. They won, and here’s what your earnings potential is. Here’s where you can be in three months. Here’s where you can be in 12 months. Here’s where you can be in 36 months and trying to celebrate each step along the way. Visually, we do it with a nice graphical presentation that’s posted on the wall in every store. And then when guys get their certifications, we post those too and we celebrate them. We have a monthly meeting with our managers where actually each manager gets to present a picture of the team members at his store or her store who were certified. And we all kind of clap and celebrate.
And we try to have somebody from our corporate office call them and congratulate them. But I think, things like that do so much, not only for people’s just pay and income that they have a path to more prosperity and more financial freedom, but just for personal esteem. I mean, we all want to be growing and improving and it’s so powerful to feel like, yeah, man, I accomplished something great today, and this is something I can tell mom about when I call her, when you’re running out of things to talk about. So I love that.
That’s awesome. So if people want to learn more about Oilstop’s culture, what’s the best way to learn more?
They can go to our website and get in touch. If they send a little email inquiry, someone from our team, I’d be happy to talk to people or Mark who is our VP of Mission is a great evangelist for the Oilstop mission. So people can reach out, shoot an email if they’re interested to talk to us and we’d love to share more. Stop by a store for even you’re on the Western US and talk to any one of our managers, those are good ways.
Thanks Ryan. Really appreciate you sharing your time with us on this. And I’m excited that we got to chat a little bit more about the culture and you’ve talked about it before. And so it’s been fun to crystallize that into an episode.
Well, thanks, Alex. Great questions. I appreciate your interest and I’m grateful for the chance to talk and share a little bit of our journey with you today.