Veteran and long-time entrepreneur Patrick L. Hughes Sr. joined us to discuss his life, the various businesses he has started, and his thoughts about what it takes to be a successful entrepreneur. Throughout the conversation, Patrick shares his entrepreneurial roots growing up as the child of a sharecropper, his various companies and side hustles, all the way to his successful government consulting firm, Hughes Group LLC. Hughes is the winner of the National Minority Small Business of the Year Award for 2010.
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Read the transcript below.
Entrepreneurship Is Not a Destination, It Is a Journey with Patrick Hughes
Patrick, I want to start by saying thank you. I’ve been chasing you for a couple of years, trying to get you to do this. I know you’ve got an interesting story. I’m excited to dig into your story and share it with the world. There’s a lot of people out there that can learn a lot from your story and similar stories from people like you; what I like to call the underdog entrepreneurs?
I’ll accept that.
When people hear the word entrepreneur, and they think about the kids in Silicon Valley or Stanford, and they come up with these billion-dollar ideas. They overlook ordinary people like you who start with whatever they got, and they make it happen. Patrick, let’s jump right in. I know a little bit of your story because we met years ago when you went through the Ice House training. I got a little bit of the fragments there, and I’ve been dying to dig in since then. Where did it all start for you? Was there a person that influenced you? Where did the idea that you’re going to do your thing land in your brain?
I’m a firm believer. “Entrepreneur” is now a standard word. Back in the day, entrepreneurship was a special class of people that was actually called entrepreneurs. In my opinion, as I talked about a lot of times with people, there’s a lot of business owners, but entrepreneurship is something that’s in your blood. Everybody starts a business now, so what do you do? “I’m an entrepreneur.” Some people start businesses out of necessity. Some people start businesses because they got this great idea. This is Patrick’s opinion. This is not documented or no scientific knowledge to it, but it’s how my little vision of things took the long way to answer your question.
Many years ago, back in the late 1990s, early 2000s, entrepreneurship became a buzzword. There were many people that started businesses and owned businesses. Some out of necessity and some because they got this great idea that came up. Everybody said, “You need to sell that,” like Famous Amos cookies. I believe that entrepreneurship is ingrained or in your blood. When I was a little kid, we used to play cowboys and Indians. I wanted to be the storekeeper. I didn’t need to be the guy that was out rustling the bad guy. I was the guy who wants to sell you the goods.
Being from down South, we didn’t go to the store every day as we do now. We stopped by the store on our way home. What would happen is, we would work all week, and then on Saturday afternoon or Sunday after church, we would stop by the store. If we had to go to the wash house, we have to be at the wash with our mom. There’s always a little side store right next to it. We would buy stuff like Rock ‘n Roll Stage Planks or Now and Later. I don’t know if you know any of those are, but Now & Later’s come inch by inch and ten to a pack.
Is that a little candy?
Yes, taffy-like candy. They have banana, grape, strawberry. Rock ‘n Roll Stage Planks gingerbread cookie with a strawberry flavored glaze on top. It would be two to a pack. I would buy those, and they cost $0.05 or maybe $0.10 when inflation got high. I would take those back. My brothers, sisters, and the little friends that would come over to play on the weekends would eat all theirs. They would be coming back in the back of the truck or whatever, eating it and throwing paper out, flying everywhere. I would eat mine slow, and I’d eat right along with them. I’d keep the rest of them. Throughout the week, they’re playing cowboys and Indians. I’d sell them stuff. I’d sell them the Now & Later’s. I paid $0.05 for it, and I got ten. I’d sell them for $0.05 apiece. Make another $0.80 or $0.90 out of that. That is how I did things.
Let me dig into that for a second, Patrick. How old were you when you’re doing that?
I’m a small kid, 8, 9, 10 years old.
It’s interesting to me because you’re observing the behavior. You’re 9 or 10 years old, but you’re observing the behavior of others. You’re saying this is something that they desire? Are you cued into that right out of the gate?
It was a funny thing because I’m a son of a sharecropper. You understand how the sharecropping process works. Normally, people of color, Afro-Americans would be on the farm, and it would be owned by a Caucasian or a white person. He would provide you a place to live, animals, seed, and fertilizer. You would have to produce the labor to work that. Once you provided the labor and you finished the harvest season, you all would then gather the grain or whatever we would be sharecropping, cotton, peanuts, potatoes, corn, tomatoes, okra, peas, or whatever. You then would take it to the farmers market, and you would sell it. It would be a 70/30 split.
Most people will be like, “That’s no problem, 70/30,” but he’s providing everything. He’s going to take 30% of it, and you’re going to take 70% of it, but quite the contrary. He took 70%, and you took 30%. I could make an argument on each side, “He’s putting up all the risk,” but by the same token, you’re learning. If you have an entrepreneur spirit, you’re looking at how do I make this better? What can I do to make this process, that 30% that you get, what can you do to make it even better? How do you stretch that?
Patrick, that’s interesting to me. What you demonstrated is an interesting situational difference. If you’re the sharecropper, even though you got the wrong end of that stick, you still got one end of the stick. Your mind is focused on how can I make my end of the stick better? Somebody with the same intellectual ability, same smarts working in a job where someone else is telling them what to do, they’re not thinking like that. They’re thinking about what am I going to do on my day off? When I get home, how am I going to spend a little extra money I got or whatever? It’s interesting to me how that situation causes you to think differently in a way you don’t even know.
My father and my mother thought like that. The 70% of the big crops, the farmer would come over and look at it and all that. My mom would have another garden off to the side, of which we would tend that too. She would take those and sell that at church or wherever, and then you get 100% of that. That’s not figured into the equation, and that’s the difference between how an entrepreneur thinks, in my opinion, versus a store owner versus a work. Those are the three classes that I believe. Even though we’re all consumers, workers, and consumers, I put in the same category.
Business owners is the one that I put in the next one. They start a business out of necessity. “I got fired from my job. I can’t do anything else. I can sell these widgets here.” If somebody came in and gave them a little bit more, they would go. An entrepreneur is a guy who has that drive. Even if I stopped my business, you say, “I’m done. I’m retiring. I quit. I’m selling this business.” The whole while, you are thinking, “What do I do next?” You’ll find, if you search most true entrepreneurs, they got another business going within the first 3 to 5 years. They’re back in business again. It may not be in the same line of business, but they’re doing something in the entrepreneurial world.
I want to back up a minute. A couple of things I want to dig into right out of the gate here, right off the rip. They call that a side hustle. That’s what she was doing, but I want to point out something. I’ve been studying it for many years. I’m not a world-renowned expert or anything. You talk about natural-born entrepreneurs. I believe we’re all natural-born entrepreneurs. We learn not to be. We start going in school. They start telling us what to do, how to do it, and when to do it and we stop thinking for ourselves. That’s a part of it. To bolster my idea, you were exposed to parents. You came up in a family where your parents were always trying to figure how to make that thing a little bit better. As opposed to someone who came up with parents that went to a job, came home all beat down and turned on a TV or whatever. It’s hard to imagine this doesn’t land in your young brain at an early age and without you even knowing it. You’re not even aware of it. To you, that’s normal.
I agree, but I disagree that everybody is born an entrepreneur and this is my opinion. When a farmer does this, he doesn’t do this with one acre. Back then, it was common for a guy to have 100 acres, 50 acres down South. He didn’t have one sharecropper. He was an entrepreneur also. It’s the same thing we do as workers. We hire people to go out and do what we can’t do. We stretch our ability. He would have several other farmers that would do the same thing. Some of their kids knew that their life was going to be either as a sharecropper or as a worker in the factory or whatever. That’s always been a fascinating question. I’m a military guy. Is leadership born, bred, or trained? I believe we all have the seed of being an entrepreneur. I will totally agree with you there. That gene is in our DNA, but it’s got to be activated. I will steer off the course a little bit. I don’t watch a whole lot of TV, but when I do, I’m always on history or entrepreneurship. Something on business or something that’s truly fascinating me that’s going to help me grow what I’m doing already.
I was watching a show on PBS and they were talking about a scientist who’s in two areas. One was near South Africa. There was another one where there are these deserts that has plants and moss on the ground. They’re learning how to grow without water. They are taking the minuscule amount of water that is there and they are growing. It’s growing, living, and striving. She poured some water on this moss that’s standing there. It started to green up because it was that quick with the water. What she’s figured out is all of those plants, this one particular type of tree, and this moss all had a gene in it to make it grow. Over the years, that gene had become dormant that she is trying to figure out how to turn that gene on so that it gets on. Also, put it in plants that are green, so when farmers have droughts, that gene kicks in and then start to make the farm steel grow with a minuscule amount of water.
I’m going to interrupt you for a second, Patrick. That’s fascinating and there’s more and more research around epigenetics. I’m going to spit back to you what you mentioned with a little bit different language. Psychologists have known this for decades; every human being is like an acorn. It has within it the potential to become a mighty oak tree, but you got to have the conditions for all that to happen. That’s what happens. Most of us go to work for a corporation. That’s not the right conditions for you to become a mighty oak. You’re not going to activate those genes. I think about this all the time. When you become an entrepreneur, you’re stepping into this realm where it’s going to challenge you every single day. Here you are, several years into your business, you’re still being challenged every day, I’m sure.
For anybody who is in business, I don’t care if you are Warren Buffett and you’re 87 years old and still going to the office. Warren Buffett is still hit with challenges that he had never even thought about because people and situations change. It’s like what we’re in now, the Coronavirus. We’ve had colds and this and that in our lifetime, but who would have ever thought that we would be having the federal government giving people money to survive a cold-like virus is out that’s killing people and stopping the whole world.
It’s crazy. You were saying something about the moss. You were going to make a point about the moss.
What I’m saying is, and using your term there, every acorn has the ability to be a giant oak tree. I’m a faith-based guy. God created, even in our reproduction track, as many sperms that go out, but only one gets to do the egg. That’s the one who fights the hardest, who adores the most, who understands strategy. That’s what I believe makes a true entrepreneur. I’m hoping somebody comes up with the word because that’s the new buzzword, “Entrepreneur.” Before, when a person will own a business or a business owner and then someone said, “You’re an entrepreneur.” An entrepreneur is that moss where that gene has been turned on, but it’s been supersized or that mighty oak tree, that acorn has something in it that is supersized. Two tall people get together because they want to have a tall son or daughter. Some people fall in love for love. They don’t care if the woman is tallest or the man is the tallest or they are both midgets, but some people have that drive to say this is what I’m trying to do.
Once that gene is turned on in that moss, and by her pouring that water on it and it immediately started to green up, that drive is there to be green because it’s waiting for the right opportunity to kick in. I use the entrepreneur test, what I tell people. This is even since I was little, when I walk into a building, when I walk into a place of business, I don’t do it now as much as I did when I was younger, but I would immediately see what they were doing. I would come up with how I could make it better. Even though it’s not my shop, they’re not asking me anything, but my mind would say, “If I was in here, I would do this.” It’s like when Ray Kroc met the McDonald brothers and they were doing the special stuff with the dual burgers and making it the assembly line. Kroc did not initially go in there to say, “I’m going to steal the McDonald’s concept.” He went in to sell a milkshake. In his mind when he saw it, his initial thought was not how to make me some more money, was how can you improve on this? Look what they’re doing and how good it is? How can we improve on?
At ten years old, you’re observing these kids eating all their candy, it’s going to be gone in five minutes. They’re going to want more tomorrow or the middle of the week or whatever. You’ve been talking about your parents, Ray Kroc, or whatever, the way you walk into a business. It’s almost like calisthenics and mental exercise. I’d do the same thing. It drives my wife nuts. She thinks I’m always criticizing. You get the same route. I’m like, “Why are they doing this? Why are they doing that?” I’m always thinking they shouldn’t be doing this way. She’s like, “Stop criticizing all the time.” I’m not criticizing, I’m just trying to figure out how to do it better. What’s interesting to me is that stuff’s going on in our brains all the time and you’re not aware of it. I’m fascinated why some people think that way and others don’t.
In my opinion, it is a mixture of things. Everybody has the gene. The observation of other people and what they are doing feeds to that gene a little bit more, then the personal drive kicks in. A lot of people don’t have a personal drive. I went into businesses, and they could care less whether they make a sale, they could care less if the customer is happy. They could care less if the expiration date is already gone because they are an entrepreneur, but that’s not a true entrepreneur.
I feel that. There’s a difference between owning a business and being entrepreneurial.
Business owners and entrepreneurs are two different things.
To bring that point home, we got to get back to your story before we go down a philosophical rabbit hole.
You don’t have to own a business to be entrepreneurial. You can own a business and not be entrepreneurial. People need to think of that differently.
I tell my employees, “I want you to be a worker who thinks like an entrepreneur, not an entrepreneur who thinks like a worker.” That’s the difference. If you can convince your people to think like an entrepreneur, what if this was your business? If they can ever get that to kick in, and it’s the hardest thing to teach people. It is so much easier to complain and wish that I was up on top of the hill. I wish I had ice cream. You give them ice cream and then they say, “I wish I had the soda.” You give them soda. If you can teach that or if you can even spring that gene to come up a little bit, that’s another part of being a true entrepreneur. You’re constantly trying to figure out as you said with your wife and my wife and everybody else who is an entrepreneur. You see them and going, “Why don’t you do it like this?” Even if you don’t say it, you think it. “If you had done this, it would have been a whole lot better.”
What we’re thinking about is how can this work better? How can we make this better? How can we improve this? That’s what employers need to understand if you can get people inside the organization to think that way.
Most business owners think that the way to improve efficiency and the way to improve everything else is to throw money in. Somebody is complaining, give him a couple of dollars. Somebody is doing this, give him a couple more dollars. It’s like 21 days of doing this gets you conditioned to do that. It’s the same thing with giving a person a little bit more money. After they’ve done that for a while and they are comfortable at that salary range or that little bonus you gave them, in a little while, they need a little bit more.
It’s worse than that. What the psychological research shows is that undermines intrinsic motivation. It creates a momentary spike, but they become less motivated after the initial high or the boost from the reward is gone. That’s well established. What you’re saying has been validated with science. What I want to get back to is you’re ten years old. You’re in the backseat of the car, watching these kids throw the wrappers out the window, eating these things as fast as they can open them and eat them. You’re thinking, “I’m going to eat one and I’m going to save the rest. I’m going to sell them later in a week. I can make more money to come back and buy more candy.” How does that influence you? Walk me through the phases of your life, what did you do while you were in high school? Did you start a business right out of high school? Did you go to college? What did you do?
I went to college. I was a Southern boy. A funny story, I spoke when I was the National Minority Small Business of the Year. I was invited to speak at Duke’s MBA class. I gave the analogy of the sharecropper and the owner. It’s not the plantation but the farmer owner. I had to explain to them. I talked about a mule. A lot of these kids didn’t even know what a mule was. They knew what it was, but they had no idea what a mule was. I had to explain to them what a mule was, but in saying that, I took the opposite role. They all figured that the new world liberal society says that was wrong.
He was taking 70%. They were taking 30% and they were doing all the work. As the facilitator and the speaker, I took the side of the owner of the farm, the guy who owned the farm. I explained to them that I was taking all the risk. There are 100 things that could have happened. There could have been a drought. The season could have gone sideways because of the weather. The farmer could have died. The animals could have died or the seeds could have been faulty. There are 100 things that could have happened. That’s why I’m taking 70% versus 30%. Back to where that was, I was a Southern boy plying a mule because we didn’t have tractors back then. It was mule power, animal power, and manpower. I remember distinctly one day I was playing this mule and said, “I don’t know what I’m going to do in life, but it will not be on a farm behind this mule.” I think that’s the day that my true entrepreneurship kicked in. I knew then that I had to figure something out.
How old were you?
I’m probably 15 or 14. We didn’t have what they have in the schools now. The espresso stands that if you want to go to be the entrepreneur, you go work at the espresso stands or you set up the school store and all of that to teach entrepreneurship. We didn’t have that. Normally, you stayed in the community that you lived in. If you did go to college, if you were fortunate enough to go to college, you came back and stayed in the area or you jetted off to one of the Southern States or to a Western State to get the hell out of the South. Normally, you stayed in the fishbowl that you were raised in. It’s like salmon, you always come back to where you were bred, but you don’t realize this way you’re going to die too.
I decided that behind that mule, something got to be different. I went to college and that the end of the Vietnam War, I said, “There’s no way in hell that I was like every other teenager. I’m not going to fight the damn war for a country that doesn’t even respect me. I’m going to fight for somebody else’s freedom, but I don’t have freedom here.” I ended up going to college and joining ROTC. That’s what made me decide, and in my opinion, the fertilizer to fertilize that entrepreneurial gene that is turned off for some people but turned on for others. I joined the military. I loved the military structure. I loved what it all stood for. I didn’t finish college, came in and enlisted. That’s where the story started to kick in. I was in the army for 2 or 3 years.
Most entrepreneurs have Type A personalities also, that’s one of the other things that I’ve found. You may have an AB personality, but 90% that are true entrepreneurs. Business owners have that AB or B type. Most of them have a Type A. They want to be the leader of the pack. They want to make a difference. If they don’t make the change, they want to fix the damn change and do the change maker definitely. I had a couple of years of college under my belt, I was an NCO, Non-Commissioned Officer. Fast burner also again, came in the military and immediately went through the ranks fast.
From day one in basic training, I was singled out as the guy to put in charge. You always put one guy in charge of the group when they first get there. There were ten of us. They were observing us, who was taking charge and who was saying let’s do this and that. They called me to the side and said, “You got to be the platoon guy.” I was in charge there. I still think it’s that entrepreneur gene that started from when I was a kid. It’s on everyone like you said, I still say I don’t think everybody’s an entrepreneur, but they got that entrepreneurial gene in them.
I got there and I was an E-5. Normally, if you’ve been in the army and if you’re a fast burner, you’re getting E-5 in two years. I was in about my third year in the military and I had been an E-5 a couple of years. I had a wife and a couple of kids. I had one and my wife was pregnant. Always restless, want to do something different, you come home, you finish work. In the summertime, you cut your yard and still got a lot of daylight left, you don’t want to sit around and drink a beer all day and watch a football game. You go and figure out what to do. You go cut somebody’s yards for a couple of extra dollars. You’re always looking for how do I get a little further ahead?
Were you doing that when you were in the army?
You got a wife and a child. You’re in the army for three years and you’re doing well in the military, but you still start to think about a side hustle as your mom did.
I’m not just going to knock off at 4:00 PM and come home, and I’m going to figure out something I can do to push my ball forward.
My next-door neighbor came to me one day and he said, “I see you always do this and you always do that, come go with me to do this dinner. That’s a free dinner for you and your wife in one of my friend’s house. Let’s go over and talk. I know you got a little side hustle going, but I think you’d like this.” I was like, “Okay.” As an enlisted guy, to have a side job or to work somewhere else, they had to sign a statement and let them know that you were working a side hustle. If you want to cut grass or do something like that, you don’t have to tell him that because that’s an as needed type of thing.
I was cutting grass in another people’s yard to keep going. He saw this. We get to this guy’s house that night. I never forget it, the wife and I and we sit down. We had dinner and everybody was laughing and talking. Everybody knew each other. It was 4 or 5 new couples there that didn’t know each other. Each one of them had brought a couple or an individual and we were all sitting there laughing and talking then all of a sudden, we got through. “Let’s go into the living room and let’s talk.” The guy was asking us, “What do you guys think about business? Have you ever been in business?” I’m oblivious to what the hell he’s talking about. I have no clue.
We get in the living room and we sit down. All of a sudden, he brings this whiteboard out on an easel and he gets his little marker. He starts talking and he makes a circle at the top and then he draws off of that. He draws a leg of each side and he make a circle here and he makes a circle there. The three circles are there and they’re connected by the one at the top. He started talking about PV and BV, Percentage Volume and Business Volume. The business volume was driven by how much stuff you sold and the percentage volume, the PV was by how many people you brought in. How many you guys have, at least two other friends. By the time, he got to that second level, Gary, I was a millionaire. I had already figured out twenty people that I’m bringing in. This is how I’m going to live my life. It clicked on me. That’s what I’m going to do.
Are you in the army?
How are you able to do that? I don’t even know what that is. I think I know what it is, but what is he talking about?
It was Amway. Amway sold soap powder. He did a little demonstration with this soap powder. He got ink all over this 3×3 cloth he had and held it up, let everybody feel it, try to wipe it off. Shows that it wouldn’t come off, it was a magic marker. He then put a glass of water there and he put this liquid detergent in it that would get rid of ink. He got a spoon and stuck it in. He spun it around like agitate in the washing machine. He brought it out and that thing was white. I was like, “This crap works.” It was the show back in the Western days when they were selling the snake oil.
They had about 50 products. It was started by two brothers. When he got to that second level and I had listed all my friends in my mind. I knew I could sell them that. I knew I had the ability to talk in sales. I was a natural salesman. I could sell the product. I still use a lot of Amway’s theories. Amway’s theory was you have two sides to every person. You have the person that you want to help grow your business or grow your group. You want to bring them in to your circle. You talk to them and you try to convince them and the answer is never no until you say it’s no. I’m talking to Gary about buying a car or do whatever service I want, or whatever I’m doing and you say, “No, I’m good at Patrick.”
I don’t hear no from you until I say no because as long as you’re willing to stand there and listen to me still, my answer is yes. Your no is a comma, exclamation point or whatever punctuation you want, but it’s not a dead stop until I realized that it’s a dead stop, “I can go no further here. He didn’t tell me to get the hell off my porch.” If you say, “Get the hell off of my porch,” and I realized this guy’s serious, then I’m got to go, but if he’s not, if I said, “Let me say one more thing,” and he said, “What do you need now?” I’m then like, “That was just a comma, now let me keep going.”
The second thing Amway taught us was if you cannot use him for PV, that’s for percentage volume, I’m going to bring you in to be a part of it, then you make a BV. Which means, since you’re not willing to do this, you don’t think you can see the opportunities, let me give you this product and you try. If it works for you then let’s talk again. Now, I’m going to sell you product versus have you sell it for yourself. I’m convincing a person in the business world, we would call that upselling. I want to do the job that you’ve hired me to do and I’m going to do a darn good job on that. I hope I do a good enough job that you tell me yourself, “I want you to do some more.” If you don’t, I’m going to talk to you about, “Do you have any other products? Do you have anybody else that would like this service?” I’m going to the other side, if I can’t get any more out of you, I’m going to try the other way. That’s what Amway told us.
It’s more like a selling strategy. Like you used to, you got the personality. You’re an extrovert. You’re a people person. You got the personality but they brought you the structure. They got the formula to it.
I went in hook, line and sinker. I turned one of my bedrooms into a store. I did everything wrong, you should not have done. I bought all of this product and put it on the shelf so that the few customers that I did have, when they asked for something, it was like going down to the dollar store. Going to Safeway near the grocery store. You don’t have to wait for it, I got it. You order it. It takes five days to deliver but I’m going to do you one better. Everything that we didn’t have, that overnight stuff. It would be everything is five days to deliver but I had it on my shelf. You order it, it’s going to take five days. You order it on Monday, I’m going to deliver it to you Saturday. Guess what I’m doing? I’m going to have it to you the next day because that’s super service. That is, “I need this by Saturday.” “Here you go.” “If you know anybody else?” “Yes,” then you have your party, you bring everybody in to do the circles.
The problem with it was Amway was the big thing and everybody knew Amway. People would see you coming and they’d go the other way because they know you’re going to be talking about Amway. You go invite them to your house to a barbecue and the music is playing and the beer is flying. About halfway through the barbecue, you stop and say, “Everybody got a minute, get around for a minute.” You throw up your easel and start drawing the circles. You might get 1 or 2 guys out there that you wouldn’t have got. Eventually, you’d call people to your house and they tell you they’re not coming because they know you’re not inviting them to have a good time. You’re trying to do a sales pitch.
You burn through all your friends and you still got a bedroom full of Amway.
That’s when I learned that this isn’t going to work. This is not how I’m going to spend my life.
That’s not going to be the path.
That is not the path.
How long did it take you to figure that out?
When I got moved to my next duty assignment, that’s the beauty of the military. Every three years, they got to move you some way but they want to take you the Amway with you to some way. It’s easy to get lost in the transition, especially if that’s not for you. Some people take it, can grow it, they have the different levels. They have the bronze and then they have the silver, the platinum, and then they have the diamond, ruby, and double diamond. Your double ruby. You get all the way up to a triple and that’s the guys with the $1 million homes and all this stuff. It was the Amazon of that time.
The guy with the triple ruby got no friends?
He’s making enough money to buy friends. They show the film of him and his limousine and all that. You got to remember just like Walmart took over Kmart. Kmart took over Ben Franklin, $0.05 and $0.10, and now Amazon has taken over Walmart. Some store will come along, if we keep living, to take over Amazon. Every time there’s business evolution.
You’re a few years into the military, they move you and you’re still a young guy. You got a family with you. You decide Amway is not the way. Do you keep going in the military?
I’m still in the military, I’m still moving on and I’m still working a side hustle. Wherever I would go, I would figure out something to do, whether it’s working, another job, or whatever. I would sell.
I want to dig into something for a second. The side hustle thing is an important part of your story. I want to drill into it. People don’t get how powerful that side hustle is. You’re taking the risk out of it, you don’t quit your day job. You take the risk out of it. You’re learning what people want and need. You learn how to function think on your feet. I lectured a lot in universities, I said, “Students, figure out how to get $10,000 in a separate bank account.” Don’t let it come into your lifestyle where you spend it on new clothes and whatever. Find out some kind of a side hustle that you can earn $10,000. When you have $10,000 in a different bank account that you did on your own by something you made, something you built, you’re going to be a changed human being.
I remember two times in my life that distinctively, I was broke. I didn’t have the money that I needed to do something. Each one of those builds on where I am to help me put me into position I am now. Because I swore that would never happen again and that’s how I live my life. I can’t say I can’t stop what already happened, but I make sure that something else may happen but that will never happen again.
If I’m understanding you correctly, what you’re saying is you’re learning from your mistakes. You’re not blaming other people. You don’t say this happened to me. You’re saying, “Why did that happen? I’m going to take stock of that what I did, how I got there and I’m going to make sure in my power that this doesn’t happen again.” That’s a powerful nuance that I didn’t want to let slip by.
I was an E-5 in the military and then I got to Colorado and I’m E-6 now. A guy next door whose wife was Korean, he brought his father-in-law in. He then brought his mother-in-law and his sister in. All in all, it started off with just him and his wife. It was twelve of them living in this one house. He had a basement and a three-bedroom. He was like how I was when I was E-6. About 3, 4 years in doing this, they bought a shopping center because they save every dime. Papa Sam gave them ration money. $20 a week was what you had and you lived on that. Once it was over, $20 was gone, you actually got gas as your money. I got a roof over your head and all this.
He came to me and asked me for $5 to do something. If I gave him $5, it would be something. I can’t even remember what it was but I remember he wanted $5 and he would give me X back. It would be valuable, whatever he’s going to give me back. I didn’t have $5 in my pocket. I was married. I had a wife and two children. I was an E-6 in the military. I decided right then that I will never be in a position that I do not have money in my liquid cash. That day, I went up the next paycheck, and let’s say I was making $800 a month because you can get paid once a month or twice a month. I got paid once a month because I wanted to make sure that I kept every month I knew I had because you spend what you get.
It’s like the candies in the back of the car. It’s the same thing. The candies are coming back to you.
I took that and went and open up a savings account. That was the time that I started putting a little money away. After that $5 incident, I didn’t care if I didn’t put, but $50 in there. I don’t care how hard times got. It will have to be considered, in my opinion, an emergency for me to go mess that. That was my emergency farm, only if the world was going to end and I got to sell the farm that I went and got that because you always get tempted. If I go get $5 out of this and $10 out of this, it’d be good. Your $10 stuff enough in it, but that was the first time.
Now, I’m out. I moved on somewhere else. I’m no longer into the Amway world. I went to Germany. I was over there. Life was good. That’s probably the only time that I didn’t have a side job. My wife was working and I was working because I was big into sports teams, so I didn’t have a side job. Playing Semi-Pro this and Semi-Pro that, there weren’t paying us, but it was fine. I then came back to Washington and this was in 1987. I switched over and became an officer. Now I’m in a whole new world. In this world, you can’t go work a side hustle because if one of your enlisted workers works the same side hustle, I could be in charge of him when we are in the military and I get over to Kmart or to the grocery store and he’s been there longer than me, now he’s in charge of me. It’s a conflict of interest.
That’s another reason that you had to fill out paperwork if you go into a side hustle. As an officer, you should have a white-collar side hustle. You can do somebody’s accounting or you can do the books for them or you can have your own business. I had gotten restless by now, I know that I need to do something, I need to come up with some kind of side hustle or something. Type A personality, I believe I’m an entrepreneur from birth where that gene kicked in and I understood it and liked it and wanted to continue with it. I went to a high school reunion with my wife. The two of us were there. She was out with a friend shopping and I’m sitting at home with her mom and grandma and I’m watching all my children and days of my life. Let’s make a deal and all that kind of stuff. You can only do so much of that. If you’ve never done what you want to do, it gets old quickly. I basically said, “I got to do something. I don’t know what I’m going to do but I need to do something, this isn’t going to work.”
One of her friends, my wife’s friend’s husband owned a carpet cleaning company. He had a business partner. Jerell said, “Why don’t you come go with us? We got to go do a carpet cleaning out in Carmel.” That’s where Clint Eastwood and all those guys live in California. I was like, “Cool.” They said, “We’ll pick you up at 8:00 AM.” I was excited and it was the two of them, a worker that they had and then me, the four of us. We rolled out there in the van, he had a Von Schrader foaming carpet machine and upholstery machine. We left at 8:00 AM, we got out there and got set up about 9:00 AM, between 10:00 AM or 11:00 AM. By 12:00 PM, we were on our way back. 12:30 PM, we were back at the house and that made close to $600. I’m like, “Hold on.” It doesn’t take rocket science to figure out here. We were gone less than four hours in a round trip, we made $600, that’s about $150 an hour. When you take the labor out of that, I wasn’t doing a thing but standing there.
The three of them and I take the labor out of that. They were still around $100 an hour profit. Three people $50, back then the minimum wage was about $7 or $8. You put taxes 35% on top of that. You’re at probably $10 or $11. That’s $33. Chemicals are probably 5% or 10% percent of that. $50 but you made $150. That means they get to split $100 to the two owners, they’ve made $50 an hour profit and they got paid and they got a salary. I knew that this is what I needed to do. I was kind of picking them for advice, for more information. How did you guys get started? What did you do? Write it down. I didn’t have the cell phone to take a picture of it, I wrote down everything it was. I came back home, I went straight to my local hardware store.
Were they worried that you’re asking too many questions?
No. A funny story, they later got upset with me because that’s the difference between to me, a business owner and an entrepreneur. I took what they had and improved on it.
You were like Ray Kroc.
That’s right and I realized that but I didn’t take that burger but I surpassed where they were. Later on, 4, 5 or 6 years later, when I went and met with them again, they were upset with me. They thought that, they assisted me in getting this done and, “How dare you take my idea and go.” I’m like, “Wait a minute, I didn’t take your idea.” I saw what you were doing like Quickway, 7-Eleven sets up and the owner of 7-Eleven gets mad because Quickway puts a darn store right across the street. Some people are going to go to Safeway and they’re going to 7-Eleven, some go to Quickway.
What I did was I went back. I got to my local janitorial supply store and the guy’s name was Rich. We were friends for a long time. I met with Rich and told him, “I want to buy this Von Schrader.” He looked it up. He said, “I can get you that. It’s going to be X amount of dollars.” I had a $4,000 credit card limit and I had a few dollars in the bank. Back then credit cards had a limit on them as they do now but $4,000 was a lot of money to have a limit on a credit card. Most personal credit cards did not go over $5,000, especially to the average working guy. Most of them were $2,000. If you had a pretty good paying record, it was $4,000.
You’re still in the military. You’re an officer, you got a family, you got a military career that’s still going forward. You’re still going forward in the army. You’ve got this $4,000 credit card you’re thinking about buying the cleaning machine, Von Schrader. Pick me up there. You’ve got the credit card, the guy’s telling you he can get you the machine.
He said, “I can get you this machine. It’s going to take about 2 to 3 weeks to get in.” I said, “Not a problem. That’ll work.”
You got this idea in your head. You’re going to open your own carpet cleaning company. You saw how the sausage gets made. You said, “This isn’t rocket science.” You see that this is a potentially profitable business, I got a little bit of hustle in me. I’m going to get my machine and do my own thing. I can do it better than these guys are doing it. The question I want to ask you is the million-dollar questions. Do you write a business plan?
No, it’s all in here. That’s the difference between an entrepreneur and a business owner. Entrepreneur, in my opinion. Walking into your business and I see what you’re doing. My mind is already clicking, “If it was my business, this is what I’d be doing.” I am not put it on paper. The formal, the SBA, and all of that is what generates the business plan. I tell people, “I can write out a business plan and go give it to ten people.” One of them is going to be super successful on what I gave him. The other nine, some of them are going to be moderately successful.
Some are going to be kind of successful. Some of them are going to use it to start a fire because they’re cold. That one thought is going to take what I gave him. That’s the seed that I was telling you about. He’s going to add his water and fertilizer to it. He’s going to grow that thing even bigger than I expected it to be. I gave ten people the same thing I gave you $1,000 and a business plan. That drive is built into entrepreneurs, not business owners, but entrepreneurs. How often do startups fail? Do you know the number for that?
It’s way more than half in the first five years.
The reason for that is when the entrepreneur hits a bump, he figures out how to go over it, under it, rounded up to the whole. The business owner hits a bump, the first thing that comes to his mind is quitting altogether. The second is, “How do I file bankruptcy?” The third one is, “Can I sell this to somebody? Can I pawn this off onto somebody and let it be their problem?” The entrepreneur is thinking, “What do I have to do now?” He may have to use one of those tactics of selling it or bankruptcy, but he’s only doing that long enough to get his wind back. The guy that gets knocked down and he’s letting the referee count. Most people let it go to ten. The entrepreneur may get to 8, 7, or to 9, but he’s going to pop up on his feet and he’s going to take the two steps forward to the referee. He’s going to run around to read and duck and dodge to keep them getting hit into the bell rings. They’ll get some rest and then hopefully fight again. Those are the kinds of analogies that I use between business owners and entrepreneurs.
That gives us an indication of what’s going on in your brain. That’s the story you’re telling yourself. It’s important. Tell me what happened. You’re going to buy this machine. You’re going to put it on a credit card I presume is what you’re saying.
I put it on a credit card. It cost about $2,500 to buy both machines and supplies. It takes about three weeks to get in. We didn’t have Google. I couldn’t look it up. We had computers, but they didn’t have websites and training videos on how to do this stuff. Everything was on a DVD. It came in the packet instructions hidden in the materials. I had to remember what I had learned that one day for four hours watching my friends work and what’s on my DVD. In these three weeks that it’s going to take for me to order the item and then for it to get in. Three weeks is unheard of. You order something from somebody they tend to be three weeks because of what we got with this Coronavirus, it’s out of stock. It’s all sold out. Back then that was a natural occurrence. Three weeks was probably fast even. These three weeks, I didn’t say, “I’m going to wait until this gets here and then stop doing this.” My business plan in my head is already gone. I’m a faith-based guy. God’s got to help me through things.
I was driving to my mother’s house to one of our friends’ houses and I saw this little brown Toyota pickup truck sitting on the side of the road. I saw that it looked like a camper on the back. In my mind, I instantly figured out, “I need to buy that.” It was $800. I went and said, “You could get a cash advance. I’ll payout of the credit card.” I already spent $2,500. I went and I got an $800 cash advance and bought the little truck. I’m in the military, so I took it to the auto craft shop. I talked to the guy and I said, “I want to get this painted.” He said, “We can help you do it. We’re not going to do it for you.” I was like, “No problem.” I would go to work in the morning and the afternoon, I would come back and sand and paint and do all that. I had never done auto bodywork in my life. The first week, it took me five days to get it.
You bought this truck for $800 bucks. You fixed it up on the cheap. These guys are helping you do so. You made yourself look respectable. That’s what you’re trying to do?
I got it all painted to buckskin brown. I took it to another friend of mine. He did signs and neon lights. I came up with the name of Dymo Clean. I had him put that on, logo it up with all this stuff, carpet cleaning. I still didn’t know how to do it. I knew that I thought I was going to put in carpet cleaning, janitorial, window cleaning, all the stuff like janitors does. I was reading books on how to do this stuff. We’re in week two and I got another week before I get my stuff. I went to Kmart and bought myself some Dickey black pants and a Dickey black shirt. I had a friend who did embroidery who made me a deal that says Dymo Clean in red and white and my name. I’m going to look like a carpet cleaner. I’m all dressed like a carpet cleaner. I’ll have a vehicle that will look like I’m a carpet cleaner. I’m making this work.
I’ve heard this story before from different entrepreneurs. It’s an important point. You’re presenting yourself as a professional. You’re putting it out there. You’re not showing up in whatever you happen to be wearing. You’re not rolling up with an old beat-up truck. You’re putting your best foot forward. You’re saying without even saying it, “I’m a professional. I’ve taken this seriously.” I’ll tell you who else I heard that from Patrick. I interviewed a guy. He’s up in your neck of the woods too. He’s up there in Vancouver, Brian Scudamore. That guy started 1-800-GOT-JUNK?. He said the same thing. He’s doing $250 million a year revenue last time I talked to him. He said the same things like doing trash hauling. He said, “I wanted to have a nice-looking truck and, I bought myself a nice shirt.” The same thing like, “I want to communicate with people. You can trust me.” It’s an important point. A lot of people miss that.
The difference between an entrepreneur and a business owner. A business owner wants to get the doors open and start selling. The entrepreneur wants things to grow. He wants to own them.
The entrepreneurs’ the builder. He doesn’t want to open the door and sell stuff. He wants to grow something. He wants to build it. It’s about growth.
I got a week left. I got the truck. I got the equipment water. I got the outfit squared away. I got to have good customers because I know that was coming. I got to have customers. Since I got my business license and all that as I ordered the equipment, I had started a post office box.
You still got your day job?
We had to go to the field and didn’t get called out on the alerts. I have also been a watchdog. I’m 24 hours available for the military. If they call you at 3:00 AM, You got to roll out of bed and go and you might not come back for a week. It’s a peaceful world. I’m putting this all together. I’ve worked until 5:00 PM. We get off at 5:00 PM. If I didn’t have CQ or anything, I’m over to the craft shop getting my vehicle straight, or I’m out doing this or doing that getting ready for this business. I got to find a customer.
Who better to find a customer than the guy that has written a post office box from? He had a pawn shop in the back. Back then everybody was starting to own their own business more so than then. Everybody wants to own their own business. They are working for you trying to figure out how to get a business started. That used to be the case. I went in and I told him, “Here’s the deal. I started a carpet cleaning company.” He and I always had a pretty good personality. I could always laugh and talk with this guy. It was probably a 12 x 15-foot space that you walk in the door.
It’s a medium-sized bedroom.
It’s got a bank-like door where you turn the knot to A and G then M, alphabetical dial lockers. You open it up, you have the small boxes and the medium and the large box not like the post office. He had a bank of those in front in this 12 x 15. You go through the door to the pawnshop. I said, “Why don’t you be my first customer. Let me clean your carpet.” He said, “You have a clean carpet?” I was like, “Nah.” I told him the story about my friend, “I’m going to open up the doors next Saturday and you’ll be my first customer.” He was like, “Who’s getting them fried?” I booked a job for that Saturday. He said, “How much do you charge me to do that?” I said, “$35.” He said, “My Patrick. I’m going to do that for you.” That same 12 x 15 would be $150. It was $35 and he snarled at $35. I told you the difference in that time, which was in 1994. I said, “Good.” I got everything except equipment. I got the look, got the truck, equipment is coming. I got the uniform, got the desire in my head to do it. I got my first job.
Friday, I go to pick up the equipment. When I got there, he said, “The guy says that it will be in tomorrow about noon.” I was, “That’s going to kill me because tomorrow by noon. I got a job.” The pawnshop closes at 6:00 PM. He said, “I locked the pawnshop at 6:00 PM. I need you to be here because people have keys to come in to check their box anytime that they want to.” The outer door. He said, “I locked this door and I set the alarm. You don’t have a key to get into this door. Once I close it, the only people who can get in here are people who have the code to get into this deal. I’m not going to give you a key to get in. You got to be inside by 6:00 PM. The door will lock because if you go out of it, it’s going to lock automatically and when it locks, the alarm triggers.” He had a system that if somebody comes in use the key that you’re authorized to use to be in there. If it opens in clocks, it triggers the alarm for the whole building for those seconds. This was back in the day.
Once I got in there, if I went out and that door closed, I couldn’t go back in until I was done. I figured 6:00 PM, I’d be through by 8:00 PM I’m going to be out of here. This is our job and match. I give myself another hour for incidentals. I told the wife I said, “I got everything in place.” I went up to pick up the equipment at noon and the guy hadn’t got there. He finally pulls up at 2:00 PM. I get the equipment. I loaded it into my truck. It was three boxes. It was the bottom, the top, and the poster machine and all the holes and stuff. He said, “Want me to show you how to hook it up.” I said, “I’ll hook it up myself. I’ve seen it before.” It’s sitting on top. Do this, do that. I said, “I got a DVD. I’m going to watch it.” I went home.
My first mistake was I booked a job the day before I thought it was going to be the day after I got this stuff, ended up in a day I got. That’s number one. Number two, I got home. It was 2:00 PM and I’m exhausted. I don’t know why but I’m exhausted. It’s 2:33 PM. I told my wife, “Give me one hour. Wake me up at 4:00 PM.” That gives me an hour to watch this video and practice. It’s twenty minutes or ten minutes max to the place. I had my timing all down. I laid down. I should have watched the video and then laid down but my thought was if I watched the video and laid down and then laid out, I’m never going to lay down because I’m going to be tired. I’m going to be watching it while I’m tired. If I take a quick nap. That’s a 30-minute nap to an hour max, then I’m good. I laid down at 3:00 PM. She’s going to wake me up at 4:00 PM. I get a 10 to 20 minutes video. I can watch it a couple of times. I can test it out in the house and let it work a little bit. I’m good to go. I laid down.
“Patrick, get up.” I feel like I slept forever. She’s like, “It’s 5:30 PM.” I said, “I told you to wake me up at 4:00 PM.” She said, “I came in to wake you up at 4:00 PM and you were snoring. I’m like, ‘I’m not going to wake him up. He must be tired.’” I was like, “You didn’t.” I jumped up. I haven’t even put the equipment together. I open all the boxes. I put the equipment together. I say, “I’ll figure it out. When I get here.” I turned it on. It came on. I put the water on top. I’m not doing any upholstery. I’m not going to worry about that. I got the mixture I read on the bottle. Put a half-cup for every gallon.
I’m doing three gallons of water. That’s 1.5 cups. How hot can it be? I got to get there. I get there five minutes to 6:00 PM. He’s like, “You cut it close, don’t you?” I was like, “No, just putting everything together.” I gave him the old military turn that in transportation, if you are too early, you clog up everything. If you’re too late, you miss everything. If you’re in transportation, if the rendezvous is at 8:00 AM and everybody else is moving, if you get there 5:00 to 8:00, you’re going to clog up everybody else. You want to get there right on time. I gave him that story. He laughed. He believed it. We moved on.
I got all the water and got everything together. He stood there until I got everything. They gave me about five minutes to get everything together and he rolled out. I turned my switch on and it fired up. It started leaking straight water. No foam. I sit there. At 6:30 PM is when I started. At 11:00 PM that night, I still hadn’t cleaned the carpet. I called my friend at 11:00 PM who had a truck mounting unit. I said, “Stan, can you come over here to take care of this for me quick?” He said, “What do you have?” I told him my equipment. He’s like, “12×15? That isn’t even worth setting my equipment up.” I was like, “Come on, man. I have to get this done.”
He came over and it took him about fifteen minutes to get here. He got there about 11:15 PM. His water and everything were already on the truck. He came in. At 11:30 PM and at 11:45 PM, we were out of there. It took him fifteen minutes. When I’ve been there since 6:00 PM, five hours trying to get that machine to foam and work and all that, the guy came in the next day. He gave me my first dollar. He gave me $35 and a $10 tip. That’s how good of a job I did. I had no clue back then but by now, I have figured out how to do these things. I got it dialed down. I was able to kill it from then on. I’m in the military. I’m cleaning carpets after 5:00 when I get off work.
What are your friends telling you? Do you have friends who think you’re crazy? What are other people saying about this lifestyle you got going because not everybody’s doing that in the military?
Someone thinks I’m crazy. Others already got a second job. They’re doing about a second side hustle. Others are like, “If you ever get going let me know I can help you, whatever.” Everybody was looking for a few more laps. It’s out of necessity, but back then it was to have a better lifestyle. I’m doing this at night after 5:00.
How did you find clients? You did that first job. Where do you get the second job from?
I would give out flyers. I put flyers at churches. Word of mouth, which was the best way of getting it done. I did stripping and waxing hard floors.
Did you find that need after you were out there hustling that you started to recognize what people are asking for what their needs?
I would do their carpet at their house or whatever it is. They’d asked me, “Do you do stripping and waxing too?” I learned how to strip and wax in the military. I said, “Sure.” I would do their carpets. I do the stripping and waxing, clean their windows, stuff like that. Anything in the janitorial arena. I would go ahead and do. In Washington State, affirmative action was big. We no longer have affirmative action but back then it did every contract, patent affirmative action going on. You had to make that goal. They gave you a percentage off. You could be 5% or 10%. You could be 10% higher than everybody else if you got a minority. If you met the minority goals. You still want to contract. People would call me once they see that another minority would be in business. They call us, “You want to do this one? Want to get on this contract with me?”
I was doing the first weeknights, then I was doing weekends. I was doing holiday, so I’d have to take a day off. I would have to take a day’s leave if it was a big job. I got called about a job in a tiny hotel. They needed a minority business to do it. I got the contract. I had a manager and four workers. There were a total of five people working for me full time. An entrepreneur sacrifices more than a business owner. I was going to do this for the rest of my life. I was going to be a carpet cleaner and run a big janitorial company and be the ABMs of the world and that’s how they all started. ABM, ISS and Krauth, and all these Fortune 500, that’s how they started. Most big constructions have a truck and a shovel.
You started with a credit card, you bought a $2,500 machine, an $800 car, you bought some supplies. Did you have a vision in your mind like Fortune 500? When you began, what was the end goal? What was the vision in your head at the time?
I didn’t have one. I wanted to own the business and make money.
Didn’t you have any big grand vision of what not to write down?
I had no idea, no desire. I thought I was going to do this. Finished out the military at first. Get a government job. Keep doing my side hustle. Live well, retire and die going to Heaven hopefully. I didn’t realize that this is what I’m going to do for a living until I was in the military at the time. You got to have twenty years to retire. Being an officer and an enlisted, they send you orders. You go on where they tell you to go. One Sunday afternoon, my assignment branch manager contacted me and said, “I have this assignment? Which one do you want to go to?” I told him, “I don’t want to go to either one. I am going to retire from the military. I am going to become a carpet cleaner. Full janitorial service.”
That’s when I decided that’s what I was going to do for the rest of my life. He informed me that, “Let’s do some quick math here. You have to have twenty years to retire. You only got nineteen. If you turn down an assignment, you got to be out in six months.” I was like, “Yes.” He said, “The way I do the math, that’ll give you about six months shorter retirement. You have to go somewhere.” I’m like, “I guess you’re right.” He’s like, “I guess you’re going somewhere.” Long story short, I ended up going to Japan. The best thing that could have ever happened. Again, I’m a faith-based guy.
Every entrepreneur, every business owner, or whatever, you got to be faith-based. Your core values, faith have got to be in it somewhere. It doesn’t have to be religious faith. You just got to have faith. Mine is religious faith. I think there’s a higher being, I think there’s a God, I think Jesus Christ died for me. If you’re Muslim, you believe in Allah. If you are an atheist, your fate may be an oak tree somewhere where you have to go for solitude. You can think and get some internal guidance. I’m telling you, if you are any business owner, you are going to run into things and nobody can talk you out of it. You’ve got to sit down and figure it out on your own and that’s where your faith comes in. That faith gets you through it. It gets you to the other side. I prayed about it.
They sent me to Japan. You get a different stipend for going overseas. It was $1,500 a month extra I would get. I saved all of that money. I closed the business down and when I came back, I decided that I did not want to be a carpet cleaner and a janitorial guy. I wanted to sell the products. I opened up a janitorial supply store called Top Choice Janitorial Supply. I started selling supplies and selling equipment. I had a training center. I rented a space and did the whole thing. I was entrepreneuring in my mind.
The entrepreneur genes were rolling. I was figuring out what I was going to do. I got a showroom for all of the equipment that I was selling. This is the difference between a business owner and an entrepreneur. A company here was called Coastwide who’s out of business. Staples purchased them and before they came out of Oregon, they had twelve stores in Washington. I was killing it. I was selling to the casinos. I was selling them to everybody. I was selling to the military base. Advantage products were the big product that everybody liked to sell or whatever.
It is like your Amway roots are coming back.
In 1987, I left and went overseas. I was an enlisted man. I’m a little bit retrogressive. I’m an officer. I was on a staff call. A lieutenant colonel is three grades from being a general, that is the Lieutenant Colonel, then Colonel and then General. There’s Lieutenant Colonel who’s as high up there as well. He said, “Chief, I need to talk to you.” I was like, “What’s going on?” “I can’t talk to you right now. I need to talk to you later.” I called him on the phone. I say, “Sorry. I can’t talk right now. Let’s talk next week.” but it’s really important. This is the Amway sale kit that gets the curiosity up. By the time he talked to me I was excited, “What do you need? What’s going on? Am I getting in trouble? What did I do?” He said, “You told me you sold Amway before.” “I don’t think I like what you think, and I don’t go door to door salesmen.” “We started a new thing called TriStar.”
This is online selling. That was when it first started, online selling. I retrogress a little bit. This is 1992. I’m getting ready to go to Korea. He said, “They opened up Korea. They are bad. They sell everything in Korea. If you go over there and already understand how Amway works, I will put you with my connections over there. I want you to extend my line over there.” It’s calling your line. You’re extending your line. You sell to this person who sells to another person and that BV and PV, I get a percentage of whatever you sell and I get all of whatever I sell. PV, I get a business value, BV, I get all that I sell. In the PV, I get to percentage of whatever anybody in my downline sells.
It’s like your parents. You get 30% of the sharecrop and you get 100% of what you grow.
We had Amway back then. We didn’t know it.
It’s almost like you got the story here. You can see these things, experiences, and how they feed into each other.
I accepted it. I went over to Korea. I had been to Korea once before and didn’t speak Korean. They had no concept of the capitalistic society here in America and selling Amway. They could do it because they knew the culture. They knew the people. I said, “To hell with this.” I tell everybody, when I speak, “What made you an entrepreneur?” I say, “A couple of things. First, it was ingrained in me as a youth. I said the second thing was my drive. I had a type-A personality and the drive to succeed at all costs. Third, I failed at selling Amway twice.” I am never selling Amway anymore. Whatever I got to do in business, it won’t be to sell Amway.
Did you get back to Amway in Korea?
I don’t think I sold a box of soap powder in Korea. Nobody, everybody I talked to spoke Korean. I talked to a translator.
Was lieutenant colonel selling you a bit on a bill of goods or something?
He was hoping that I went over there and got his line going overseas. I know because most military guys marry people that they’re stationed with. Most guys who were in Korea when they were young and married Korean. His thought was I would find someone who had a Korean wife and get them to sell it and the Korean wife would draw the circles for me. I wouldn’t know for that drive anymore.
Let me get this straight. When you came back from Korea the second time after you retired, you opened up?
I retrogressed to tell you that I had sold Amway twice. I did my year in Korea. He called me and said, “You didn’t do anything over there.” I said, “No, I’m done. I’m out. You can cancel.” Luckily, he was gone from Fort Lewis when I came back.
When you went to Japan, you did your last assignment.
I retrogressed to tell you that I sold Amway twice that gave me the drive to know that I wasn’t a salesman and whatever I do it’s not to be selling Amway. I learned some very important lessons from Amway that I still employ in my business. In 1996, they called on that Sunday. I went there, I saved money in 1999. I came back to Washington State. I opened up my top choice janitorial supplies. To sell supplies versus working at night doing all this. In the morning, I would go to PT and do the physical training. At 9:00 AM, you had to be back at the base between 6:00 and 9:00. I would have to go to the formal PT. I will go to the store at 7:30 AM. My worker opened it up, I would get her pumped up for the day, give her a check and cash and everything. I go back to the base at 9:00 AM. I got off at 5:00 PM and at 5:30 PM, I’m at the store closing it out. We close at 6:00 PM. I did this that came in from Oregon. They went to my suppliers and said, “He has one store, we have twelve stores. Who are you going to sell to?”
They said one or the other. You can’t sell it to both.
We’re not going to buy from you if you keep selling to him because I was cutting into their business. When I would order something, the first tactic they use, they would say, “I know we’ve been giving you net 30. We got to have net ten.” I turned in ten days to turn inventory. Turn to pay ten days. Normally it is 30 days. That was the first thing that came to me with my major suppliers. The second that came to me was, “Because of this, and that, we need to have a minimum order.” Each time I ordered, I had a minimum order, and it was a high minimum order than I normally would be able to sell. I got a minimum order. I have ten days to sell.
I said, “This is not going to work.” I would want to give them number three because number three is always in this track factor is cash only. You got to start paying cash. I tell you what I’m going to do. I’m going to keep selling supply but I’m going to go back to doing carpets and janitorial because that’s what I’m doing. I started doing that again. I got approval from the military to run my business while I was in the military. I understood that if I had to go to war, they’re not going to give me a chance to sell or shut down.
In 2003, February, I decided that I’m retiring. It’s the reason that I started my business, the reason that I got it going again. I was going to get out at twenty years. They sent me overseas, I did three years and I came back with 23. I said, “Why would I get out here in ‘99? Why don’t I wait these other four years out?” Almost 24 years after I came from Japan, I’ll get my business started. I got to be in business for two years to be able to apply for the 8(a) program. I did that. The next thing I know, four years went by and I’ve qualified for the 8(a) program but you can’t do that while you’re in the military.
The 8(a) program is a government set aside. There are seven set-asides in the military for small businesses when they let contracts out, they either let them be full and open. Anybody can be an owner. There are seven set-asides for minority companies, normal. If you want me, I can give you those seven qualifications but 8(a) is one of the most sought-after ones because 8(a) is one of the ones where they can sole source you a contract for up to $4 million without any sole competition source. No one can protest that sole source.
All the others have the ability to sole source but it’s a whole lot of hoops you have to go through. Everybody wants to be the 8(a). You only own it for nine years. You can do nine years in this program. I had wanted to be able to be on the 8(a) program. When President Obama came in, he said competition, so no one likes the sole source anymore. Everybody wants you to put in a proposal and then they judge it against somebody else’s. I got my second contract with my first contract as a sole source to perform a service. I’m ready to get out in 2003, getting ready to get out of the military. I’ve run my business from 1999 to doing that side job. I have workers and stuff again. I went to the military base to turn in my equipment for retirement. The Holy Spirit, allowed me to run into someone who said, “You did this while you’re in the military.” I was like, “This is what I did.” He said, “They got a contract coming up. You should go look into it and put in a proposal.” I went and got the RFQ.
I have ten days left in the military. I got the RFQ. The retirement date came in. I sat at my kitchen table and drew this route up which is the proposal. I turned the proposal in. I had Dymo Clean. I called a friend of mine named Tom Nazmi, who was a consultant for the military. He was a military DoD consultant. I told him what was going on and what I needed to do. He said, “I’ve been doing this for about twenty years and I charge $300 an hour minimum.” This was in early 2003. $300 an hour is unheard of. “If you’re just beginning, I would charge around $100 an hour.” I said, “Cool. That works.”
I hung up the phone and went back to putting this proposal together. I said, “I’m not at $300 an hour because haven’t been doing it for twenty years. I have been doing work the government wanted me to do for over twenty years. I’m not going to give them $100.” I put down $200 an hour as my base number, and how many hours they wanted, how long it would take and I put it down and put it on the paper. If they wanted 1,000 hours, I put 200 times 1,000. They gave me $200,000 and I gave him the thing and signed it and put it together.
My company was called Dymo Clean. I can’t turn in $200 an hour with Dymo Cleaning services. I changed my company name to Hughes Group. My logo was Atlas with the guy that was naked with the globe on his head. That was my first logo. Dymo Clean was a diamond with a DMC on it. Would you be willing to pay a company that does janitorial and carpet cleaning for $200 an hour to be a consultant? I have to repackage the box. You got the best candy in the world but if all you got is a plain blue box, not too many people are going to buy but if you got a picture of the candy and caramel is dripping out, everybody is going to be like, “I need that.” I came up with the logo of Mr. Atlas and changed the company name to Hughes Group, turned it in, and got to the final two. We scheduled a face-to-face for the logo but AT&T is the company that I was going against because they have logistics. They don’t just sell phones.
They had to be intimidating.
It was, but it’s here at Fort Lewis and they had hired one of the people who had gotten out of the military to be their guy here on the base to run the operation. I knew who I was going against. The fact that it was AT&T didn’t matter to me because I’m getting out of the military and I’m thrilled to be doing this.
Was that the biggest contract you’d ever done?
I used that as an example. It was a $50,000 contract. You have to put your hourly rate, the number of hours you want to do. Your fully burdened rate is what they want. I got the interview. I went up against a guy named Mark Borland, whom we had served together. We both were warrant officers. He represented AT&T and I represented Hughes Group. He went first. I came in and I didn’t mind. We both were waiting outside and they were talking. They call both of us back into the office. They said, “We’ve made our decision. We appreciate both of you coming in. You both did an excellent job and you both should be commended on the job you’ve done. We have decided that we’re going to go with Hughes Group.”
I smiled inside. I said thank you. They say, “Either one of you has any questions?” Boylan said, “Nope. Don’t have any questions. I appreciate the opportunity.” It was a straightforward contract. They asked me, “Do you have any questions?” I said, “No, I’m fine. Thank you.” They said, “You guys are excused. Mr. Hughes, you’ll be getting some information from us. We will get it out to you tomorrow. We’d like for you to start on Monday.” This is Wednesday. I said, “Not a problem. Thank you.” We both walked out. I didn’t want to ask this question with both of us sitting here. I walked out. I came back into the room. I said, “I have one question.” I said, “I didn’t have any questions about the process or anything like that.” I have one question. They said, “What is that?” I said, “Can you tell me what I did that set me apart from them?”
They said, “Quite simple. Your price was a little better. We looked at your price and their price. We’ve figured that we looked and determined that your overhead was lower than theirs therefore, we gave you the contract.” I said, “Thank you.” I turned around and walked out. We had cell phones right here, and I called Tom. I said, “Tom, I got the contract.” He said, “That’s great.” I said, “I went at $200 an hour.” I said, “I’ve got a question for you.” He said, “What’s that?” I said, “What is overhead?” He said, “You don’t know what overhead is and you won the contract?” Tom, “They said they want it because my overhead was lower. I don’t even know what that is.” He said, “Patrick, overhead is what it takes to run the damn contract.” I was like, “I didn’t know I’ve been in the military for 28 years.” No one had ever used that phrase with me. Even though I was running my carpet cleaning company, I’ve been doing it before, no one mentioned overhead.
I said, “Tom, they said I want it because my overhead was lower but I don’t even know what that is.” He said, “Patrick, overhead is what it takes to run the contract.” I was like, “I didn’t know. I’ve been in the military for 28 years. I don’t know what overhead is.” No one had ever used that phrase with me. Even though I was running my carpet cleaning company and I’ve been doing it before, no one mentioned the overhead. As most new business owners, if you make $1, you’ve got $1 to spend. They don’t realize all of the things that go into that dollar.
I interviewed an entrepreneur some years ago named Keith Kochel and he said he got his first customer and the guy said, “Send me an invoice.” He said, “What’s an invoice?” He didn’t know what an invoice was. You’re backing into it. You said something before Patrick. You’ve got to drive to figure everything else out. You keep marching forward. I want to be respectful of your time. I need you to bring us up to speed. That was Hughes Group. That’s what started as Amway. It started with you observing the kids eating the candy in a car when you’re a little kid. Hughes Group was born and that was it. You got that contract. You came up with the name on the fly to make it look like something more than it was. Tell me where you are now.
Here’s what launched Hughes Group and this is what I’m saying. I took what the overhead was, won that contract because that seed is planted from birth. If you got that gene, the seed kicks in, you’ve got to drive, fate, then all the things hit on perfectly. Success is when opportunity meets preparation, as a lot of people say. That’s when success happens. Sprinkle a little luck dust on top of the two of those. I’ve got that $50,000 contract. I did such a good job as I was a subject matter expert for a logistics company that was changing for the government who was changing the way they ministered contracts from task-based to performance-based. Task base tells you, “You need to do this at this time at this place.”
Performance-based is, “You need to perform this. This is what it looks like now. This is what my expectation is for the end. You figured out how to get there. I’m not going to tell you what to do. You get it done.” I was a subject matter expert on how to do that from the military in a vertical that he was working. I did such a good job at that. When it was all over, the contracting officer called me up and said, “I see you’re an 8(a).” I say, “Yes, I am.” He said, “I would like to award this contract to you,” and it was $3.4 million for five years. That’s how I launched. I’m an advocate. I did a great job in a small business.
That was years in the making, though. You walk out the door with your steam cleaner and get a $3 million contract.
I wouldn’t have been in that position even to get that. Even if I had been 8(a) and had not gotten that $50,000 job, even if I got that $50,000 job and did a half tail job on it didn’t it didn’t do a great job in putting it together, I still would not have been given that contract. What I’m saying is, opportunity, preparation, sprinkle with some dust of faith and hard work. They see how hard I work. They’ve seen how efficient the documents that I turned in. When they got ready to award that contract, his first thought was, “I’ll give that to Hughes Group.” I’ve got fourteen guys working for me. For $3.4 million, I brought in a subcontractor called Eagle Group, who I had worked with when I was in the military when they stopped doing contract work for the government. I brought them in as my sub. They did a great job on that contract, then I got another one and that’s when the cycle started.
I’ve taken that from that day to 2010 when I was nominated for Minority Small Business of the Year for the state of Washington. When I won that, I won against the region from the winners of the state of Oregon, Idaho, Montana, Washington and California. I became the regional guy. I went through ten regions in the SBA. I went against the other nine regions and won the National Award. I went back to DC when all the ten regions went back to DC. We had a week there to the Washington Department of Commerce and the President. I won and got three big trophies with the White House and all this on it. I have two crystal trophies and a big plaque from the regional. I went through a lot of people and now we’re at the point we are now. We’re in twelve states performing contracts. I leave with you and every entrepreneur three things.
First of all, as in everything entrepreneurship is not a destination. It is a journey true because you’re going to go places, meet people and do things. Some people go and be like Bill Gates and Basil. Some people are going to be Jimmy Smith, who you never heard of. They’re going to be as excited about their small company as Basil and Gates are about their launch company as I am. I am super excited about Hughes Group. I have all kinds of issues that everybody else but that’s the first thing. It’s a journey. Don’t look at the destination of, “When I get to be a millionaire, I will do this.” Millionaires come and go every day.
I remembered something you told me when we met in Seattle a few years ago. I was asking some questions and I’m going to ask you again, “What’s driving you?” You said when you started out you had in your mind you wanted to be a millionaire. If I recall what you said, you said, “I knew what the house was going to be the cars and the clothes and all that.” You were thinking all about the material things and I’ll never forget this. You said, “One day I looked up and I was past being a millionaire but that cease to be the driving force.” Can you say a little bit about that?
When I first started, a millionaire to me was the destination and that’s why I gave you that reply. Life is not a destination. It’s the journey that you go through. I thought when I became a millionaire, I was going to have a big party and everybody in the world was going to know I was a millionaire. All my troubles were going to be over and I could do whatever whenever. I surpassed being a millionaire and I still had the same troubles. I still have the same problems. I feel like it’s the same destination out because it didn’t say, “You have made it.” I’ve been successful. I have a big house. I have the 15,000 square foot building as nicer than anybody that’s on the block. I’ve got 150 employees and I don’t go to bed at night worrying about whether I am going to be able to make my mortgage or whatever.
I’m more about, “Is somebody going to take this crap from me.” When you get in these positions, it’s always somebody that wants what you got. Some from your employees, some from other entrepreneurs or business owners, and some from family members. You’re going to get it all the way. My new drive is when I and most rich entrepreneurs or business owners finally get there and want to be a philanthropist. I want to give back to something that’s going to make this world better, whereas before, I was doing this for me. I want to now leave a legacy not only for my family but for others to look back and say, “If he can do it in his journey, I can do that.”
Quick money is easy to make. There’s a criminal born every day that can go out and rob a bank, sell drugs or do whatever. Some created and some born, but to have someone who can say, “He gave back. The electric light, the telephone, the blood plasma, the hot comb, Madam CJ.” It’s small things. If you can do that then that’s my drive. One of the things I’ll tell you is we’re going to have a motorcycle riding. I have a little small coffee and wine bar that’s in my building. That little small coffee and wine bar if this Corona leaves by Labor Day, we’re going to have a for-profit even though I’m going to give money away from that, but it will be an annual event. We are looking to have about 1,000 motorcycles come and may grow and go somewhere else but that’s the new drive.
Have something to leave behind that someone will remember you by. I’ll end it subject to your questions. As I stated, I came from a sharecropper, Levi Hughes, who had a third-grade education, and Mabel Hughes with us who had an eighth-grade education. They were all one-room schoolhouse. The eighth-grade person in today’s time might be a first-grader. The third-grader, my father may be in kindergarten. Because it was a one-room with one teacher who probably wasn’t much smarter than anybody in there but she could read, write and communicate.
She’s training twelfth graders, as well as first grade is all in the same room. It’s up to you to figure out physics from a guy who’s trying to learn to write his name on the other side of the room. It did. In 2010, I had surpassed the millionaire stage. I had purchased a building. I bought a 15,000 square foot building, which is Hughes Group’s headquarters now. To have my mother, who’s now over 100 years old now. In 2010 for her to be in the audience and cut her ribbon for a building with her name on it is called MB Hughes Logistics Building.
The governor had a representative there, the mayor of the city, all of the city councilmen. I had a parking lot with chairs. We had a big program. The mayor, her, and all of us cut the ribbon. To have that feeling, if I don’t do anything else in life, I have done that. I had my mother who had to sell stuff up to get the 100% was able to see her son put a building up in a state 3,000 miles away from where she was born in rural Mississippi. As long as I’m alive and able to provide a building with her name, there’s no feeling like that in the world, Gary.
That’s a beautiful entrepreneurial story. I’m grateful for you sharing that with me. I appreciate that you ended on that note because it puts the human factor on the whole thing. What drives you as a human being? I want to give back. It’s not about me. It’s not about taking. It’s about making a better place. That’s part of entrepreneurship.
I’m excited. I’m meeting new and better people than with the Millennials out there. It’s a whole new world. You have to learn a different way of leadership.
You’ve got to learn to adapt.
Number one, as an entrepreneur, don’t look for problems, they come. Number two, don’t look for solutions from within as well as without because sometimes when solving the problems, you get advice from others, but in the end, it comes from inside. Last but not least, don’t let the attitudes of others dictate where you take your company. I was told not to start construction. I do a lot of construction now. I started a few years ago. I had a vice president who resigned because he said, “We need to stay in the government contract. It’s what we’re good for and now you want to get into this construction stuff and I’m not doing it.” It’s now 25% of my income and well on its way to being 50% of my income.
As the leader and as the entrepreneur, you’ve got to be the one that has the 30,000-foot look and make the decisions that everybody else may be against it but you’ve got to convince them that the direction that I’m taking is where I need us to go. Not tell them that, “This is where we’re going.” Convince them. That’s part of being an entrepreneur. I was telling someone, “As an entrepreneur, you’ve got to be part lawyer, part doctor, part psychologist for the psyche, part gangster, and 3 to 4 more things.” You’ve got to be all of that at a time.
You’ve got to wear a lot of hats. Thank you so much for doing this. I’ve been chasing you down to try to get a story for a long time. I’m so delighted that we had this time together. Thank you.
I hope it was worth it. I hope I didn’t bore you too much.
Patrick, I can sit here and talk to you all day long. Thank you.
Thank you. Have a great rest of the day.
About Patrick Hughes
Patrick L. Hughes Sr. is the President and Chief Executive Officer of Hughes Group. Mr. Hughes retired after 28 years served in the US Army, where he services as a logistic officer.
He performed progressive responsibilities in multi-functional logistics support operations and operations training and program management in the defense/military sector. Hughes Group has now added construction to its operation.