Founder Milt Kuolt strangled himself with debt to build a network of 14 idyllic camping preserves.
Everyone knows that campgrounds are often pretty dismal affairs. So it was time for the reporter to kick a few tires, do a little fieldwork, and check things out for himself. There was a chill in the air, and a fine drizzle had begun to fall air, and a fine drizzle had begun to fall on this April morning in Chehalis, Wash., a small town about halfway between Seattle and Portland, Oreg. Jerry Andres, 38, vice-president of resort services for Seattle-based Thousand Trails Inc., was at the wheel.
Once past the guardhouse at the entrance to the campground, Andres set out on a gravel and dirt road that twisted slowly through acres of virgin timber. The periodic, rectangular notches cut into the forest sometimes held silver, bullet-shaped Airstream travel trailers. Sometimes, they held elaborate recreational vehicles with lawn chairs nestled under green-and-white striped awnings.
Good Lord, the reporter thought, this is all just too idyllic to believe. "Don't you think we should check out the bathrooms?" he asked Andres.
As an experienced camper himself and a trained observed of the human predicament, the reporter knew that the condition of the restrooms would indicate the true quality of this chain of campgrounds. Andres pulled the car in front of a freshly painted building by the side of the road and hopped out. Inside, the building was not only clean, but it also had, prominently displayed, a checklist indicating what maintenance had been done, when, and by whom. Andres tapped the list and smiled.
Behind the idyllic picture of Thousand Trails's Chehalis campground stretches a long road scarred by struggle, all leading back to one man: Milt Kuolt (pronounced Colt). In fact, Kuolt brought campers his vision of the good life in the great outdoors by selling his wife's jewelry, second-mortgaging his house, getting laughed out of bank loan offices, and generally strangling himself with debt.
In the 12 years since Kuolt quit his job at Boeing Co. in Seattle, Thousand Trails has acquired or opened 14 preserves, which now serve 25,000 members in Washington, Oregon, California, and Canada. In 1980, Thousand Trails reported sales of nearly $34 million with earnings of $4.5 million. Since sales had barely passed the $1-million mark only four years earlier, the company earned 19th place on the 1981 INC. 100 list of the fastest-growing smaller companies in the United States.
The company's success has also earned Kuolt the satisfying privilege of having the last laugh on a small army of doubters. Not only has his idea been proven in the marketplace, but Kuolt has also become a multimillionaire. In September, he resigned as chief executive officer and sold 400,000 shares of his stock to Jim Jensen, the new chairman, at $11 a share (see page 88).
"The worst mistake an entrepreneur can make," Kuolt explains, "is to think that the abilities he had to run a company of 20 employees are good enough to run a company of 850 employees. I've made my contribution. The company needs Jim now."
Although Kuolt will still serve on the executive committee of the board of directors and remain the single largest shareholder, it is without a doubt the end of his relentless, 12-year march. Along the way, Kuolt fought a series of skirmishes against a number of adversaries, in sharp contrast to the tranquility of the resorts he created.
"I built this company because I wanted to," he says. "The more I heard that I couldn't, the more I wanted to do it. It's been a long time coming."
Throughout the '60s, Kuolt worked in the business planning division of the Boeing Co. He filled his free time with two hobbies: buying and selling 10- to 20-acre tracts of rural land and camping in his 16-foot Terry Travel Trailer. By 1969, he was restless at Boeing, always thinking about a business of his own. His land dealings had been reasonably successful and he had gradually acquired larger patches of real estate, including one 640-acre site in the woods of Chehalis, Wash. And over the years his love for camping had been sorely tried by deteriorating conditions at local public campgrounds and state parks.
"My wife, the kids, and I tried to go someplace every weekend," he says, "but it got more and more disappointing. There were crowds, the facilities weren't clean, there was a lot of drinking and pot smoking, and there were no planned activities for the kids. Frankly, it was a boring experience."
At the same time, Kuolt had been following the growing popularity of tennis clubs and health clubs. Somehow this trend, combined with his experiences in real estate and camping, generated a novel idea. "What if," he reasoned, "I developed campgrounds and, instead of selling sites in fee simple, I sold lifetime memberships, kind of a modest man's country club." He envisioned a network of several campgrounds, each equipped with the amenities he had found lacking in his own trips to the backwoods. The lifetime membership would allow the camper to use any and all of the campgrounds at his or her convenience. Everyone would be happy, including Kuolt, because the plan had several built-in benefits.
First, the company that developed the system would end up owning the land. "I believe strongly in investing in real estate," Kuolt says. "My mind tends to think in perpetuity." As site improvements were made, the increased value of the land could support borrowings for other developments. Second, since many of the memberships would probably be sold on an installment basis, a receivables base would be created that could also support development loans and, in time, could turn the company into a veritable cash-flow machine.
Mel Kays, Thousand Trails's executive vice-president, treasurer, and chief financial officer, says that, in theory, the cash flow machine was to be built in three steps: Receivables would first cover operating expenses; then, as the receivables base grew it would begin to cover operating expenses and development costs; finally, the receivables base would get so large it would cover operating expenses and development costs, and still leave enough surplus to repay debt. Kays has all this down on a chart. The chart says Thousand Trails would hit step three in 1984. But things didn't work out exactly as planned.
