How to Make it Big in Texas
Dallas has become quite a diverse and opportunistic place to do business. Not anchored by any one industry, the city is ripe for business owners of all kinds to succeed. In fact, looking at this year's Inc. 500 list, the top five companies from the Dallas metro area are in five different industries, which include financial services, insurance, and human resources. And, one Inc. 500 CEO has proven that it's possible to be successful in businesses as varied as energy and sports management, to nightclubs and hair salons.
Meet Chad Willis, the 31-year-old co-founder and president of Texas Energy Holdings, an independent oil and gas company based in Dallas that manages $225 million in energy assets, and is a three-time Inc. 500 honoree. In addition to Texas Energy Holdings, Willis has ownership in 14 other companies, which have been started up in the past seven years alone, the majority of which are also based in the Dallas area. Over the years, Willis has developed a business model for starting and growing companies that has allowed him to pursue opportunities in industries he never would have dreamed of dabbling in. We talked to him about his Texas-sized business portfolio.
How did you go about starting companies outside of your area of expertise in the oil and gas industry?
I don't claim to be an expert in every industry that I own a company. Typically my role is my vision and strategic thinking. I think I'm good at identifying ways that a company can grow, ways to cut costs, and having a good team to carry it all out. At Texas Energy Holdings, which is the face of my enterprise, we have about 90 employees and they are my core group in the areas of marketing, PR, accounting, and legal that have been instrumental to our success. What I've learned is that no matter what industry you're in, every company has the same objectives. They are to make the most amount of money, minimize your expenses, and mitigate your risks. Whenever I get involved in a new venture, we hone in on those objectives. I'm the visionary and strategic thinker and then I'll team up with an industry level expert for that business. We have an in-house team at every level – marketing, PR, accounting, and legal – and because of that, we can get a company up and running with no overhead. I'm the one behind the controls making the decisions, and then you have the expert on the ground.
So, can you give an example of how you have implemented this strategy with one of your companies?
One of my most recent ventures is Lure Salon, a hair salon in downtown Dallas. One of my childhood friends came to me and told me he wanted to start his own salon, but he didn't have the money. I've learned the hard way not to loan money to people, but instead to try to help people sustain themselves. My friend had been named a top stylist in Dallas and was working at one of the best salons in Dallas for seven years, but he wanted to branch out on his own with some of his colleagues. I had to familiarize myself with the economics of the business, because of everyone who knows me, they would never connect Chad with a hair salon. I found out that the economics of the salon business are actually impressive and it can be profitable pretty easily. It all comes down to if the stylists have the proven clientele. I structured the deal so that I controlled 100 percent of the company and there are buy and sell agreements set up based on how long it takes my friend and the other owners to buy me out. I committed several hundred thousand dollars to the salon that they started in an uppity area in Dallas called the West Village. It's a very high-end retail area. We opened up in July of this year and they've had a profit every month since.
With all these companies, how do you keep up with all of them and actually maintain an active role?
The first three to six months of starting a company is very intense, and I'd say that I spend about 60 percent of my time in that company, putting people in place. The idea is that we nurture the start-up, by putting for example, a marketing person that is employed by my parent company. That way, we have resources at these companies so I don't really need to be brought into everything. Eventually, the company will have another marketing person in place that they hire, but my ultimate goal is to get the company out of start-up mode as fast as possible. My role beyond the first three months to a year of starting a company becomes more of a consultant advisory role. We set a one-year objective and then we kind of phase ourselves out.
How do you decide which ventures to get into and which ones are too risky?
Well, just because you are a friend of mine and say you have an opportunity, 90 percent of them I say no to because I see a risk. But, I'm very much an opportunist, and if I see something that could work, I will pursue it. I would hate to walk away from something and turns out you are the next Facebook and I've turned you down. A lot of times I'm presented with good ideas, but it takes some restructuring to make it successful. For example, I am friendly with the football player Remi Ayodele [ a defensive tackle for the New Orleans Saints]. He brought an investment opportunity to me for a nightclub in Dallas, but the deal was done all wrong and eventually, his investment group left Dallas.
A few months later, I went to check out the space where they wanted to put the nightclub. It was in a residential building and initially I didn't think that a nightclub would work because of the economy, but I thought that the space could be successful as a restaurant. The reason I decided to invest in a restaurant, which is not something I would normally invest in, is because there were 440 residential units above the space and I knew it would have a good in-house clientele. It's also surrounded by some of the biggest buildings in downtown Dallas, so that would bring a good lunch crowd.
What is the most challenging part of running so many different types of businesses?
It's my time. With my energy level and abilities, I feel that if I could devote more time to each of my companies, they could grow faster and easier. The challenging part is not becoming frustrated that I can't be everywhere at once and I'm going to have to miss important meetings for example, because I have to be at Texas Energy Holdings that day. It's about managing my emotional constraint and the psychological aspect of having to pick and choose your priorities. My oil company has blessed me with the success to even buy these other companies, and you can't be an absentee landlord when it comes to your parent company. Fortunately, I've got very talented and capable partners in all of my other companies.
What is the most valuable lesson you've learned as a serial entrepreneur?
To always be a student. I wasn't the book smart student in school, but I'm a sponge when it comes to what others do in business. My success is really due to mentorship. I have had a lot of mentors that were more successful than me at the time, and when they give me advice, I don't forget it. A good business goal is to surround yourself with people more successful than you. I've also learned the value of being a well-rounded individual. Two months ago, I waited tables at my restaurant and learned the POS system. My main parent company grew 40 million last year, but I still wanted to wait tables. I've mitigated adversity that way because I can feel the numbers struggling before it happens.
I've also had a philosophy of low debt, low burn. I've paid myself small percentages over the years, and when I've had the opportunity, I haven't taken more money for myself. I invest it back into my companies. If there's anything to invest fully on, it's yourself. By continually investing in our own business model, hopefully I've increased the value of my portfolio 30 times more.