Tag Archives: business

The Weekly Billionaire Case Study: John Schnatter

“All you’ve got to do in life is find something you love and are good at.”

John Schnatter is the founder of Papa John’s Pizza.  I was skimming my latest edition of Bloomberg Businessweek (edition June 11, 2017), and started reading my favorite section in the magazine: ‘How Did I Get Here?’  I was immediately interested to learn that Schnatter grew up in Jeffersonville, a small town in southern Indiana.  My family, on my Dad’s side, is from New Albany, IN, which is right next door to Jeffersonville (or ‘Jeff’ as my Grandmother used to call it) – both towns are immediately across the the Ohio River from Louisville, KY.

According to Forbes, Schnatter is the grandson of German immigrants who came to the U.S. in 1867.  His grandfather and father were entrepreneurs.  His grandfather owned three successful businesses, while his father started 20 business that all faltered.  Schnatter started working to earn money by cutting grass at 8 years old, and started painting gutters at 12 (starting to work for an income early is generally a sign of financial success later in  life).

Jeffersonville, IN is a pretty small town.  Not much appears to be happening there, at least the last time I was there, 5-6 years ago.  In fact, one of Schnatter’s Life Lessons is: “If your business can be successful in Columbus, Louisville, or Evansville, you’ve probably got something you can franchise.”  Presumably, he chooses these cities because of their relative size and the amount of business taking place in, and around, them.

So, Schnatter graduated from Ball State University in 1983 or 1984 with a degree in Business.  Nothing remarkable there.  But before he graduated from college, he may have discovered a secret to his future successes.  While working as a dishwasher and pizza cook at Rocky’s Sub Pub from 1977-78, he discovered that he hated washing dishes!  He also discovered that if he made the pizzas right, the plates would come back empty, but if he didn’t, they’d come back half-eaten.  The lesson being, make really good pizza and you have to do less work!

After graduating from college, Schnatter helped out at his Dad’s bar, called ‘Mick’s Lounge II’, in Jeffersonville.  His Dad’s bar had accumulated about $64k in debt so Schnatter sold his Camaro to cover the near-terms costs of the bar.  According to Forbes, he settled the Bar’s debts in about 4 months.

He started making pizzas out of a broom closet in the bar and immediately went from making $300 a week, to $1500, then $3000 and then on to grossing over $100,000 a year in 14 months!  The first Papa John’s was built next to his Dad’s Bar.

With the help of Schnatter’s brother, Chuck, a lawyer, they were able to sell 100 franchised restaurants between 1986 and 1991.  Schnatter says he put his brother, Chuck, through college and law school, and in return he received free legal services.  This ultimately resulted in Papa John’s having their franchise agreements created by the top law firm in Kentucky.  This was probably another key ingredient in the franchise success of Papa John’s, I would guess.

“In 1991 I didn’t have $2,000 to go on vacation. In 1994 the company was worth $200 million.”

Papa John’s filed for IPO and went public in 1993 with 232 franchised stores.  The company is listed on the NASDAQ as ‘PZZA’.  In 2016, they did $1.7 billion in sales worldwide.  So, roughly 10 years after graduating from Ball State with a degree in Business Administration, Schnatter finds himself at the helm of a publicly traded pizza company that would soon be doing almost $2 billion in top-line business each year!

“What gets measured gets done, and what gets rewarded gets repeated.”

According to a January 26, 2017 video posted on Business Insider:

  • Peyton Manning owns 30 Papa John’s franchises in Denver, CO.
  • Jerry Jones own 89 Papa John’s franchises in Dallas, Ft. Worth, Waco and Austin.
  • Jerome Bettis owns 4 Papa John’s franchises in the Pittsburgh area.
  • Jamal Mashburn owns 57 Papa John’s franchises across the U.S.

Forbes reports that Papa John’s currently has a market cap of $3.2 Billion, yet it has only captured about 1/10th of the Pizza Market currently dominated by Pizza Hut and Dominoes.

John Schnatter’s net worth is currently reported to be around $1 Billion.

Building a Business Vocabulary – I

I’m trying to build-up my business vocabulary and acumen.  Why?  Because I am pretty comfortable as part of the technical team of an organization.  When you’re comfortable, you’re not growing.  For over twenty years I’ve worked in back-office cubes building technology for organizations.  I now want to have a larger focus, a better grasp of a company’s big picture – and no, I don’t need another degree (MBA), and associated student debt, to get me there.  I want to be a successful entrepreneur one day.  To that end, here are some words I am committing to memory, because to walk the walk, you gotta talk the talk:

Entrepreneur:  ‘A person who organizes and manages a buiness undertaking, assuming the risk for the sake of the profit.’  — Webster’s NewWorld Dictionary

To be an entrepreneur, you have to take a risk if you want to realize a profit.  There’s no getting around the risk part, by definition.

Capitalist:  ‘1. A person who has capital; owner of wealth used in business; 2. an upholder of capitalism; 3. loosely, a wealthy person.’  — Webster’s NewWorld Dictionary

Grant Cardone introduced me to the term ‘Capitalist’.  I never thought of becoming a Capitalist until I heard him mention it as a desirable characteristic.  Sell or be sold.

White Space:  Hmm.  This one is kind of tough to define.  You won’t find this defined in your average home Dictionary (mine is Webster’s NewWorld Dictionary, which I’ve had since College).  Essentially, in the context of business, this term refers to potential opportunities in the market where there might not be as much competition; a place where new businesses might have room to operate.  Here’s a 2010 HBR article that helps further define the term.

I first heard this term from listening to a Gary Vaynerchuk talk.  I highly recommend positioning yourself to hear Gary V. talk shop at some point if you can.  It’s all about the hustle.

Revenue Per User (RPU):  According to Investopedia, RPU is ‘[a]ratio used to express the profitability of a company on a per-user basis. RPUs are calculated by taking overall revenue and dividing by total number of users.’

I first heard of this term listening to Nathan Latka’s ‘The Top’ Podcast.  This cat is a business genius and I highly recommend his podcast.

Real Rate of Return (RRR): According to Investopedia, RRR is ‘[the] annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time.’  For example, if you make 5% return on an investment, and inflation is said to be at 3%, then your RRR is really 2%.

Again, I picked-up this term from listening to Nathan Latka’s Podcast mentioned above.

Affluenza: According to Merriam-Webster Dictionary online, this is defined as ‘extreme materialism and consumerism associated with the pursuit of wealth and success and resulting in a life of chronic dissatisfaction, debt, overwork, stress, and impaired relationships <Affluenza is particularly rampant in the United States, where we place a high priority on financial success and material possessions. — David Hawkins, Breaking Everyday Addictions, 2008>.  

I heard this word today while standing in line at my Bank listening to a News Story on the TV.  This is one of those ridiculous words, like ‘twerk’, which has no place in a proper dictionary.  From my perspective, Money should be used to buy Financial Freedom and experiences, not more stuff.

Ohana
Ohana

“It’s not about money or connections. It’s the willingness to outwork and outlearn everyone when it comes to your business.” – Mark Cuban

Freedom Fast Lane Live, Austin, TX : Day 1

Go Big, Or Go Home

I love the title of Ryan Moran’s Podcast, ‘Freedom Fast Lane’.  He’s putting on a live conference this weekend in Austin, Texas called ‘Freedom Fast Lane Live’, and I’m here in Austin attending the conference.  I really wanted to attend a conference this year.  I feel like conferences give working professionals the ability to get out of their environments, mingle with people they don’t know and learn something new.   If you’re not growing you’re dying.  The same holds true for business.  Growth and development is THE name of the game.

I debated on what kind of conference I was going to invest in this year.  I have not attended a professional conference in years, so this year I was determined to make it happen.  I am going to grow professionally, not die!  In fact, I now want, and expect, myself to grow exponentially.  No more half-assed expectations or settling for mediocrity!  My life is going to change significantly in 2016, for the better.

I thought I might want to attend some tech conference like BlackHat or OWASP – all Computer Security Conferences.  But these conferences seemed too focused and narrow for me at the moment.  I need to think big and be around other people who think big.  I need to blow the roof off of my current status quo.  I therefore settled on attending a conference centered around Internet Marketing and Entrepreneurship.  In my mind, this is the most important thing I can focus on in my career at this time.  Dream big, go big, or go home.  I believe that investing in one’s self is imperative for personal growth and development.  I also believe that Ryan Moran’s Conference has the potential to help me take huge steps forward in my personal and professional growth.

One of Austin's monthly Internet Marketing Parties,
One of Austin’s monthly Internet Marketing Parties,
Austin City (Without) Limits
Austin, City (Without) Limits

 

 

 

 

 

 

 

 

 

I decided to blog about my experience each of three main days at the conference…Here are some of my takeaways from Day 1:

Day 1 of Freedom Fast Lane Live

Jesse Elder

  • Goal Setting and Practice are the keys to achieving all that you want.  Practice is imperative in the realm of entrepreneurship.
  • Appreciate Everything, need Nothing, Have it All.
  • There is no Risk when you are clear about what you are doing and are fully committed to your objective.
  • Measure personal growth and progress by looking at where you were in the past relative to current state.
  • Exclude ‘Yeah, but’ from vocabulary – dream-killer talk.  Words matter.
  • Human beings are Energy.
  • In order to achieve entrepreneurial success, we must overcome our fear of disapproval; remove the need for approval in the first place.

Jeff Hoffman (Priceline.com founder)

  • Starting a business is a way to achieve a better future for yourself and others.
  • Write down dreams and goals and put them where you can see them daily (e.g. index cards on bath room mirror).
  • Design your own future, don’t let others dictate it.
  • Dream Big, Work Hard, Create Value
  • Solve Real Problems
  • Chase Excellence
  • Info-Sponge (form meta ideas from themes in disparate places).
  • Focus on Operational Excellence
  • Deliver the right message to the right customer.  No one wants to buy your shit!  Get to the root of why a customer is giving you money!
  • Clearly define success and failure and time-box (Define and Sign).
  • Book: ‘Straight-Line Leadership’
  • Treat employees like your company depends on them; how can you help employees achieve THEIR dreams?

Mark Jenney (RVShare)

  • Money does not create happiness.  (I’d like to find that out on my own, thank you)
  • Ask yourself these questions to determine if you should continue in current professional path:
    • 1) Are there any happy, old Rich guys who do what I’m doing?
    • 2) Does what I am doing now matter?
    • 3) If I stop what I am doing now, would the world be better off?
    • 4) On a scale of 1-10, how important to humanity is what you are currently doing with your life?
    • 5) Would I be totally happy and fulfilled 10 years from now doing what I am currently doing?
  • Authors Note: It sucks to have high expectations of life sometimes…
  • Silicon Valley, as opposed to Internet Marketing Companies, creates more Billion Dollar Companies because they focus more on contribution – helping others get what they want, rather than simply extracting wealth from others.

Gary Vaynerchuk (Vaynermedia)

  • Re-emphasizes that one key ingredient to success is practice…and hard work.
  • Attention is an asset.
  • Actually look at 50, $50-$100 million dollar companies and learn how they got to that level.
  • Look at White Space in economy right now and look to fill a gap.
  • Focus on personal strengths and outsource the rest.
  • Get people to give honest feedback on your skills and abilities.
  • ‘Work your [f$#@&*$] face off.’
  • People skills are the most important skill right now.

Reward for a long day