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36

Kuolt's Complex
 

Sooner or later, every successful entrepreneur has to face the possibility that his company has outgrown him. Milt Kuolt did it twice, and it wasn't any easier the second time around.
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Milt Kuolt had been through all this before -- that agitation of the spirit, that spasm of discountent. It had driven him out of Thousand Trails Inc., the first company he had founded, and now it was haunting him again, this time at Horizon Air Industries Inc., his second. It was a strange malady, a kind of occupational disease peculiar to entrepreneurs. Paradoxically, it always seemed to strike at a moment of triumph, when the dream that had given birth to the company was emerging as full-blown reality. In the glory of that moment, a troubling question presented itself: Had the company outgrown the person who had founded it?

Kuolt had been wrestling with this question for two yers when I first met him back in 1981. At the time, he was chairman and chief executive officer of Thousand Trails and -- to all outward appearances -- the picture of entrepreneurial success. That success dated back to 1969, when Milton G. Kuolt II (his last name is pronounced "Colt") had finally lost patience with the state parks and other verdant glades that he and his family frequented in their 16-foot Terry Travel Trailer. The campgrounds were too crowded; maintenance was deplorable; and they weren't safe, what with the boozing and pot smoking and all manner of raucous hooliganism.

Kuolt had pondered this sad predicament for a while and had struck on what was then a startling innovation. He would build his own campground, called a "preserve," replete with cozy travel-trailer pads in the woods, a pool, a clubhouse, and other amenities. He would then sell nature lovers a lifetime membership in the preserve, giving them the right to use it and any others he might build in the future. If his own preferences were any guide, he figured, there would be thousands of takers for his "modest man's country club."

As it turned out, he was absolutely right. Starting with a few sites that he cleared with his kids, he had built Thousand Trails into the largest membership campground system in the country. By 1981, the company had 27,600 members who had paid average membership prices of up to $5,795 for the right to enjoy a patch of sylvan splendor in any one of 19 preserves located in five states and British Columbia. From Milt and the kids whacking away at the underbrush, the company had grown to more than 900 employees, with annual sales of $40 million and profits of $3.3 million. Thousand Trails was as big a success as the great outdoors it sold.

"But," says William Peare, then president and chief operating officer, "Milt wasn't comfortable. He wasn't happy. How'd I know? Well, he said so. You know him, he always speaks his mind. At least once a week for two years he'd say, 'I don't like this. I can't get my hand around this anymore."

The company had become too big, an institution. "You had to take on a bureaucracy, whether you liked it or not," Kuolt says, "and I've never cozied up to bureaucracies. I get upset with them." There was, he finally decided, no way to relieve his discomfort short of leaving the company. "I felt that I was much better in the formative stages of a company, in the creative stages, in coming up with new concepts, as opposed to taking a proven product and making it 5 or 10 times its size. I felt that takes a whole new type of discipline, a new type of management thinking."

After a year of discussion, he brought in another chairman and CEO, sold most of his stock, and walked. Now a multimillionaire, Kuolt announced he would start Horizon Air Industries, a new regional airline based on Seattle, serving the Pacific Northwest. It seemed, in some ways, an odd selection, given the restless, impulsive nature of the man and the grinding technicalities of the airline business. But, the choice of industries aside, Kuolt had no doubt about his decision to leave Thousand Trails. "The worst mistake an entrepreneur can make," he told me back then, "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."

To be sure, the dilemma that Kuolt faced in 1981 is hardly unique. It is part of a pattern that every successful entrepreneur can recognize. You take an idea and a little money, find a handful of believers, and together set out to build a new enterprise against all odds. The quarters are cramped, the hours are long, the pay is thin, but it doesn't matter. There is a magic in the work, a special shine. You are a family, bonded together in common purpose and commitment. Exuberant, enthusiastic, and dedicated, you accomplish prodigies of endurance and self-sacrifice. The idea takes hold, and the company grows -- the first million dollars, 5 million, 10, and still rising.

Then it strikes -- let's call it "Kuolt's Complex." In the fullness of your accomplishment, you find it strangely hollow. The company is too big, too complex. What is that person's name? Where did that family feeling go, and where the magic? You find yourself stranded in the breach where impulse and improvication must give way to systems and planning, and the fires of creation are cooling on the routines of disciplined technique. You sense -- vaguely at first, but more certainly as your awareness deepens -- that your own talents by themselves, so productive at the start, are no longer of the kind and quality to carry the enterprise further. Others around you see that as well. But it's your enterprise, isn't it? You birthed it. You are its loving parent. How can you let go? What can you do?

To listen to business school professors, management consultants, and other such experts, there is an easy solution to this dilemma. "Recognize your limitations," they say. "Face up to the fact that the company has outgrown you, and bring in professional management before it's too late."

That is, indeed, what Kuolt had done at Thousand Trails, although it had been anything but easy. Now he was at the helm of another young company, Horizon Air -- one that appeared every bit as successful as Thousand Trails. In four years, the airline had grown from three planes shuttling commuters between Seattle, Yakima, and Pasco, Wash., to become the fourth largest of the nation's 200 regional airlines, with more than 30 planes and more than 20 destinations throughout the Northwest. Its prospectus of June 1985 -- for its second public offering -- reported that in fiscal 1984, the company had 847 employees serving some 660,000 passengers, with $48.7 million in revenues and $3.4 million in profits. Horizon was, in short, roughly the same size in revenues and employees as Thousand Trails had been when Kuolt left.

So how, I wondered, was he dealing with "Kuolt's Complex" the second time around? Did he find it easier to face up to his own limitations, having been through the experience once before? Was he already making plans to bring in professional management, without the agonizing soul-searching that had accompanied his decision to leave Thousand Trails? Or had he discovered new strengths in himself -- strengths that allowed him to remain at a company that had soared beyond the start-up phase?

With such questions in mind, I called Kuolt and asked him if I might come out for a visit. "OK," he said. "Can you meet me in Sun Valley?"

"Sure," I replied, "but isn't the airline in Seattle?"

"Yes, but I bought a ski resort here, Elk Horn. We're having a party, black tie. You'll love it."

"Sounds great," I said. "But what happened to the airline?"

"I've still got it," he said. "This is just something extra I got into.Listen, we'll talk about it when you get here."

Elk Horn Resort is located in the heart of Sun Valley, Idaho, within schussing distance of Dollar Mountain and Mount Baldy, two of the most famous ski slopes in the United States. In this case, "resort" is not a euphemism for a roadside motel with an aboveground swimming pool and a miniature golf course. Elk Horn offers 350 rooms and condominiums, 18 tennis courts, two Olympic-size pools, and a 7,100-yard championship golf course. Its roofs and chimney tops are sharply angled to conform to the surrounding mountains and, faced in white stucco, its buildings gleam. Kuolt estimates that he has sunk about $10 million into Elk Horn, which has yet to break even.Currently, it is a separate corporation owned by Kuolt himself, apart from Horizon Air, although the two advertise each other's existence.

The black-tie affair Kuolt had mentioned was billed as the Elk Horn Lodge Second Annual Birthday Party, an intimate affair for about 250 people, where he could thank various politicians and businesspeople for their kind words and support. After dinner, Ruth M. Lieder, the mayor of Sun Valley, stepped to a speaker's rostrum and read a passage from Charles Dickens's A Christmas Carol. The passage ended, "And God bless Christmas." Then Lieder, looking to Kuolt seated at the head table before her, said, "And God bless Milt Kuolt for all he's done for Sun Valley." The audience stood up and cheered. Kuolt, sitting there next to his wife, Kathy, was utterly abashed, working his face rapidly to accommodate various expressions of pride, properly toned with humility and heartfelt gratitude.

I think it was at this moment, amid the hurrahs and applause, that I first recognized the connection between Elk Horn, Horizon Air, and Thousand Trails, although I admit I had had some inkling of it before. During the two hours we had spent together before the party, it had become increasingly apparent that Kuolt was feeling the strain of his commitments. To be sure, he was still very much the man I had met five years ago, but the tone and focus of his considerable personality had shifted.

Over the years, Kuolt's trademark has been his contagious energy. "Milt has the ability to get people excited because of the pace he runs at," says his friend, Joseph Clark. "His leadership is by his tenacity and his strength in working so hard. He doesn't say, 'Show me.' He says, 'Watch me, watch me run.' "Standing still, Kuolt looks like what a quarterback sees when he peers over the line at a crouching line-backer. He has no neck to speak of, a bristling mustache, and broad, square shoulders, so that, at any given moment, particularly when he's excited, he seems poised to jump in your face. When his colleagues at Horizon describe his management style, they say it is personal and inspirational; tenacious in its goals, yet impulsive in its execution; open and bluntly honest. They also point out that, on occasion, it can be intrusive, overbearing, unpredictable, intimidating, and insulting.

And yet Kuolt was not as fearsome, or as feral, as I had remembered him. He is 58 years old now and knows that he looks tired. This bothers him. "You know," he says, "when I was at Thousand Trails, I used to go out and cut down trees and clear trails by myself. I loved that. I was in shape. Now what do I do? I go to my office and sit on my ass. I put on 25 pounds since I quit smoking, my hair's gone gray, and I look 10 years older."

I was even more struck by the change in his attitude. When he was leaving Trails, Koult had been all self-confidence and undaunted optimism: build a new company, take over the market, unlimited prospects, a "slam dunk." Now he is more humble, cautious, and questioning. He said he was pleased to be in the airline business, but then he talked about how the industry had surprised him, how he should have known more about it from the start, how difficult it was to serve customers. He mentioned heavy financial losses, dissension on his management team, and the need for a different kind of management. Above all, he shounded frustrated.

"What I really wanted to do," he said, "is to show people that I can build an airline different from all those other dipshit airlines out there. That's a tough son of a bitch. . . . We still lose bags, we still piss off passengers, we still don't answer the phones at reservations fast enough, we still have late flights, we still have mechanical breakdowns, we still have all those things like other airlines, and ours ain't no better than. I can't stand that. You know, sometimes I wish I could be happy being number five, but I can't. I can't stand mediocrity. I can't stand incompetence."

His frustration was enormous, and I did not have to look far to find its source. It could be traced directly to the ferocious and turbulent growth of Horizon Air itself.

By all accounts, the first two years of Horizon Air were one of those magical periods wherein dwells the stuff of legend. Everyone involved remembers it as a time of heroic deeds, selfless commitment, total immersion in a common goal, and complete personal fulfillment. "It was," says Thomas E. Cufley, 42, currently assistant director of flight operations and a member of the start-up team, "absolutely electrifying." To Kuolt, fresh from the trials of Thousand Trails, it was like being born again. "God, I love it," he says. "That's what I live for. Take something that everyone else is absolutely convinced will never succeed, and then make the son of a bitch work, make it come alive. I love it."

In the beginning, at least, nobody was thinking about building an empire. Indeed, neither Kuolt nor his two co-founders, Scott Kidwell and Joe Clark, had any experience running an airline. "It was only going to be two airplanes in three cities," says Kuolt. "Just a little thing. That's all I wanted to do. There was no plan to take over the whole goddamn Northwest."

But what had started out as casual conversation among friends quickly developed a momentum of its own. In the late spring of 1981, Clark began assembling a start-up team out of a small office on Boeing Field, and, by the end of the summer, most of the preparations were complete. To this day, no one is quite sure how it was all done. Says Donald P. Welsh, 29, vice-president of sales, "We didn't have a manual on how to start an airline so we just kinda stumbled across things."

Yet it was productive stumbling, leading to the arrival, one afternoon, of the most conspicuous sign of the team's progress: the first of three used Fairchild F-27s, purchased from Quebecair Inc., in Canada. From a long bay window in the Blue Max Restaurant & Lounge, the start-up team, Kuolt, and some 20 of his personal friends watched Cufley land the plane on Boeing Field, and then ran out to the runway cheering. Early the next morning, Kuolt, Cufley, and several pilots began scraping the aircraft's body, getting it ready for a new paint job and the Horizon Air logo -- a blazing sunrise in hot orange, burning red, and smoldering maroon. "Milt was involved in everything," Cufley says. "We'd be cleaning the plane on the outside, and there'd be Milt washing a window on the inside."

On September 1, 1981, about 25 people walked along a red carpet stretching from Gate C-2 at the Seattle-Tacoma International Airport to Horizon's first flight, to Yakima in eastern Washington, 120 miles away. On board the plane, they received champagne and an inaugural flight certificate. Watching from the runway were Welsh and Dianna Maul, vice-president of stations, who had stayed up all night fretting over some last-minute details. "It was like our baby," Welsh recalls. "There was a real feeling of pride. That sounds real corny, but it was like the baby walked for the first time." Maul cried. "It was a relief," she says. "'My God,' I thought, 'we did it."

Kuolt was aboard the flight as well, having left Trails that same day to become chairman, president, and CEO of Horizon. He had even greeted passengers at the gate. But he was already learning some hard lessons about the airline business. "I thought if we started an airline," he says, "we'd have to turn people away from the flights. Well, I think we had about half a dozen customers on that first flight. With the assistance of about 20 friends, we managed to put 26 passengers on a 40-passenger airplane, so when the press showed up, it looked pretty decent."

Out of the start-up experience came Horizon's extemporaneous, entrepreneurial style of management, which guided it for the next few years. It is perhaps best summarized by Kuolt himself, to wit, "When I see things working smooth, kinda good, I say: 'Shit, let's do some more." This approach offered the singular advantage of not cluttering intuitive flashes with market analysis. When a new market opportunity looked "kinda good," the folks from Horizon went after it -- family-style, everybody grab hold wherever you can.

When, for example, they wanted to begin service to a new city, they would list on a large easel pad what had to be done, and then divide up the tasks according to areas of expertise. "If one person finished first," says Cufley, "he'd help somebody else. We never asked if we were going to get any extra money for it. We just did it." At the same time, they would stage what Welsh calls a "city blitz," sending in a team of managers and sales representatives who would split into two groups and walk down the main street, introducing themselves to as many businesses as they could cover in a day's march. "We always brought along a pilot and a flight attendant in full uniform," Welsh says. "That's what really does it, the pilot and the flight attendant. You should see that work on a cold call."

It all happened very quickly. City by city, Kuolt's modest plans broadened in scope. He was like a wolf turned loose in a sheep fold, who -- once there -- finds his appetite suddenly growing.

There were, he discovered, other small airlines operating a few planes on limited routes throughout the Northwest. For the most part, they had been created by wealthy investors who bought the planes and then leased them back to the airline for the cash flow and investment tax credits. Horizon soon acquired two of these airlines of Utah Inc., adding more planes and cities to its system.

In part, the determination to grow reflected the heightened competition throughout the industry, brought on by deregulation. "We were hell-bent on generating revenues and developing market share," says William S. Ayer, 31, Horizon's vice-president of scheduling and planning. "That was the name of the game for the first three-plus years. I'm not saying that was wrong. You've got a certain window with deregulation, and you've got to jump, or somebody else is going to beat you to it. So you jump when you can and figure out what you're doing later on."

After nearly two years of heavy start-up expenses, Horizon finally became profitable in the quarter ending September 1983 and, for the next four consecutive quarters, reported rising net income. Then, suddenly, the profits not only stopped but turned into steep losses. Horizon, barely three years old, was fighting for its life.

The major obstacle to Horizon's continued progress was a company called Cascade Airways Inc., based in Spokane, which had been in the business since 1969. Cascade had been flying head-to-head with Horizon on certain routes almost from the beginning, and had shown no signs of tiring. "I began to realize," Kuolt says, "that the two of us cannot survive. One of us is going to have to go.I say to myself that we've got to make the moves that will eliminate one of us -- either suicide or murder. You've got to run yourself into bankruptcy or run the other guy into bankruptcy, one of the two."

Cascade itself had signaled the onset of mortal combat in the fall of 1984, when it announced the introduction of five recently purchased BAC1-11 Jets, small planes capable of carrying 79 passengers. Kuolt and his managers, who had been considering a similar move, were both stunned and relieved. Granted, the jets represented a potentially significant competitive advantage, but they were also unusually expensive to maintain and operate. From what Kuolt knew of Cascade's financial condition, the company would be unable to support the combined weight of operating expense and debt service on the planes unless the jets were immediately successful.

Horizon rose to the challenge, mobilizing itself to keep Cascade from realizing its advantage. "It was exactly like a war between two opposing generals," Welsh says. "Kuolt was one and the president of Cascade was the other." Once again, Horizon's officers entered the fray with the family-style initiative that had characterized the company's entire brief history. Ayer, for one, became so obsessed with the jets that he drove out to Walla Walla, Wash., where they were being refurbished, and skulked about, surreptitiously writing down each plane's identification numbers. Then, for six months, he spent most of his lunch hours at Cascade's gates in the Seattle-Tacoma airprt, noting the competition's flight frequency and passenger count, and comparing them with Horizon's.

Meanwhile, Horizon was countering with an assortment of defensive strategies. It offered discounted fares. It held special promotions with travel agents. Above all, it increased its number of flights. When, for example, Cascade introduced 3 jet flights a day on the route from Seattle to Portland, Eugene, and Medford, Ore., Horizon responded by offering 12 flights a day along the same route.

The battle raged intensely for about six months, and then it was over. Cascade withdrew its jets. Soon afterward, Kuolt reached an agreement with Cascade's principals to acquire his major competitor. "I suppose we could've let it go under," he says, "but this way it's done once and for all. You know, dead airlines have a strange way of coming back to life." As it was, Cascade filed for Chapter 11 protection soon after agreeing to the acquisition.

The triumph over Cascade marked the end of a period of Herculean accomplishment for Horizon. In less than five years, it had grown exponentially by nearly every measure in the book -- number of passengers carried, number of stations opened, flights per day, cities served, number of employees, fleet size, revenues. In addition, the company had negotiated three acquisitions and made two public offerings. Along the way, it had clearly established itself as the dominant airline in the Northwest.

And yet most of Horizon's managers remember their victory as an unexpectedly anticlimactic event -- one, moreover, for which they had paid a steep price. "Chasing [Cascade] got very tiring," says Ayer. "You felt like it wasn't a productive way no spend time, but -- if you didn't do it -- they'd get an advantage. It was like we were playing a little game that was important, yet it wasn't."

The dimensions of Horizon's Pyrrhic victory soon became evident. For the first six months of fiscal 1985, the company had reported a loss of $3.2 million, the bulk of which was directly related to the struggle with Cascade. At the time, there were hopes that the second half of the year would show a return to profitability. But when the year ended on September 30, 1985, Horizon was forced to record a loss for the year of $4.9 million on a 35% increase in revenues to $65.9 million -- this despite an operating profit of $345,000 in the fourth quarter. As it turned out, the operational profit was more than offset by two extraordinary charges against earnings, one of them an unexpected inventory write-down.

Horizon clearly had its work cut out. That point was driven home in November 1985, when Edward Keaney, a securities analyst at Burns, Pauli & Co., in St. Louis, released a report that, among other items, presented selected operating statistics for the "top 10" commuter airlines in the country during comparable reporting periods. Even in fiscal 1984, its best year, Horizon placed only ninth in one vital measure of operating efficiency (the breakeven load factor) and eighth in another (yield per revenue passenger mile).

In Horizon's defense, vice-president of finance Michael K. Lowry argues that such comparisons are inherently misleading. He notes, for example, that all regional airlines do not use the same aircraft, and thus their operating expense ratios will naturally differ. But even Lowry admits that Horizon "has substantial room for improvement." Commenting on the swing from a net profit of $3.4 million in fiscal 1984 to a net loss of $4.9 million in fiscal 1985, he says, with only half a smile, "We are a major regional carrier that's forgotten how to make money."

That was an exaggeration, but there is no doubt that the mad rush to squeeze through the precarious "window" of deregulation took a toll. The management team simply did not have much time to concentrate on issues beyond sheer revenue growth. "There were brush fires every hour," says Lowry, "and people's energies were sapped by fighting the fires." Now that Horizon has established its market dominance and operating base, Lowry and his colleagues say that the current year, a year of consolidation, will be devoted to making the company profitable again.

Exactly what this involves remains to be seen. Not that Horizon's managers are oblivious to the problems. They know that they must pay close attention to cost-control procedures, which have lagged far behind Horizon's expansion. They know that the company needs more sophisticated information systems. It also needs better coordination among departments, and a more realistic balance between what customers want and what the company can profitably provide.

Identifying the problems is one thing, however. Solving them is quite another. "Basically," says Ayer, "[the problems are] related to some emotional feelings about the way you know a bigger company should operate, and the fact that we haven't changed our style. We've been acting like we're a brand-new start-up company just sort of making decisions on emotion and not very much information."

And, to solve that problem, they need help from Milt Kuolt.

Kuolt admits that he was shocked to learn of the inventory write-down. "I went simple," he says, referring to an angry, frustrated stupefaction so great that it renders him momentarily speechless, an otherwise unthinkable condition. "Wouldn't you? I mean it makes us look like we don't know what we are doing."

The write-down put a strain on his relationship with Lowry, who bore the news, but there were other things on Kuolt's mind as well. He instantly recognized the significance of the event. Something had to be done. The company clearly needed stronger management. But if the name of the game was now systems and carefully orchestrated departmental maneuvers, maybe it was a game that he could no longer play.

If the truth be told, that unsettling thought had crossed his mind before. He had already tried, and failed, to bring into the company the type of experience that he thought would correct some of these problems. Had he not, in 1984, hired a man with long executive experience in a major airline to become Horizon's chief operating officer? That hadn't stuck. "For a while he was useful and helpful," Kuolt says, "but within a year, the pace was too fast, and he was used to large staffs."

And what about that other experienced fellow, brought in to run the maintenance program? He didn't last either. "He tried to manage through intimidation," Kuolt says, "the old boiler shop, management is 'we,' and you guys are 'they.' All that kinda shit was totally foreign to my style, but I didn't sense it when this person was brought in." Neither man had worked out, Kuolt concluded, because they were big-airline people with the wrong mind-set for a start-up. They weren't the "shirt-sleeve, hands-on, management-by-shoeleather-type guys."

So what was he to do now? Here he was, back where he had started, back where he had found himself five years earlier at Thousand Trails. And, Lord, wasn't he just as frustrated as he had been then? All these thoughts frayed the edges of his mind until he began to dwell excessively on the minor irritations he would see in his travels. The free coffee at the gate hadn't been brewed yet. Or, the station attendant was five minutes late, and now there were 10 people in line. "You see the same errors over and over and over," he says. "Your patience runs out. They're minuscule, but I'm absolutely baffled that they keep happening. I can't stand it. I lose my perspective."

Such, indeed, was his state of mind as he sat at the head table at the Sun Valley party, soaking up the applause. For all his composure and his aw-shucks-it-was-nuthin' grin, Kuolt was a man who had just been shot out of a cannon to land in the troubled margin between exultation and consternation. He was not happy.

"Horizon has reached a great transition, a critical turning point in its life," he said as we headed back to Seattle. "It's not a baby anymore. It's a teenager, and it's struggling, like all teenagers do." We were sitting in the tail end of a private plane. Kuolt was dressed in jeans, cowboy boots, and his long, cattle driver's raincoat, which reaches down to his ankles when he stands. Yosemite Sam.

"I think I first noticed it around late 1984 and early 1985," he continued. "What happens is that your growth rate is so high that -- when you finally pause to take a look at what's going on around you -- you realize, 'Christ, I have not got the foundation I need underneath this thing.' You have to stabilize, get the systems and operations down better, the planning and control down better. You know, for a while you think you've got it made, and then you find out that things are kinda unraveling. You find that your management team is not pulling together as it should. And a lot of times we, as managers, have to take a look at ourselves to see if we're not part of the problem."

The symptoms were clear. Here, high above the newly formed dome of Mount St. Helen, Kuolt was describing the onset of the Complex. And as we talked, I could see him struggling with it.

He would say, for example, that, in the beginning, he intentionally avoided people with a lot of major airline experience because the "old traditional airline thinking is so screwed up." Then he immediately went back, adding, "but I probably should have brought in a little more than I had." He'd say he was happy at the airline, and then counter with, "but that's when things are good. When they're bad, there's nothing that can be much worse."

Or, "Overall, the first year or two I think we did everything kinda right." And then, "No, I would say we could have done a lot better job, had a lot more planning."

Or, "I drive my people. You've got to understand that. I work them hard, unmercifully." And then, "I'd probably change that today, because you strain the limitations of the people that are putting everything together, and I guess, if anything, I would have gone a little slower."

He said his management team held a planning meeting without him, "but I know what was going through their minds. They want to run an end play. . . . They're out there fishing for an opening. A palace revolt is all it is, a palace coup." Then, "When my senior people get together and want to have their own planning meeting without me being there, then I kinda know that maybe I'm not leading as well as I need to."

He'd say, "I'm quick to let go when I know the competence is there." And then, "But the competence has got to be so high that maybe I gotta lower my standards just a little to allow that person to take hold. I've got to work hard at letting go."

It was an altogether curious experience, listening to Kuolt think out loud. At no time, however, did I get the sense that he really expected anything to change. Rather, he seemed to be dealing in resolutions and possibilities that might happen at some point in the distant, unspecified future. It made me sad to watch him -- a kind of faltering hero figure, his usual blustering bravado now broken in places by moments of quiet self-doubt.

Nor did it seem to help much that he had been through the experience once before. Indeed, his plight was probably worse this time around, if only because the airline business is less forgiving than campgrounds of an entrepreneurial management style. Horizon, for example, depended heavily on makret share; Trails did not. Cost control was crucial at Horizon; at Trails, it was much less important. Horizon's business is technically complicated, involving route structures, flight schedules, and maintenance requirements; Trails's business was straightforward by comparison.

During Horizon's start-up, Kuolt and his team had been able to overwhelm these differences with sheer energy, largely because the business was, at that point, still drawn to human scale. But as the company grew, it began to demand more premeditation and greater control. Inevitably, the old ways -- the family-style initiatives -- were put to the test and found wanting. So, for that matter, was the impulsive, peripatetic style of the company's founder.

As usual, no one knew this better than the management team.

When a founder is in the throes of Kuolt's Complex, everyone within reach is affected. In the case of Horizon Air, many of the company's managers found that they shared their boss's symptoms. They remember, for example, the early days of the start-up with a keen sense of loss at their passing. "Have you ever talked to someone who grew up with a big family in a 2-room house?" says Dianna Maul. "You know how they say, 'As crowded as it was, it was great.' That's what it was like here. Now we've got a 10-room house, and everybody's spread out, and things are a little more distant, colder."

"There was magic here," says Donald Welsh. "It was a Camelot. I mean pilots would come in on their days off and wash airplanes. Everybody was there for the cause. There was no distinction between management and employees." Not only has growth "robbed" Horizon of its magic, Welsh says, but he has also come to question his relevance as a manager.

Welsh and Maul were not alone in such thoughts. According to most accounts, management's frustration reached a peak in early October 1985, when senior managers rented a suite at an airport motel for a three-hour meeting, to which Kuolt was not invited. "It was a lot of emotion and frustration coming to a head," William Ayer recalls. "People just felt they needed to get away from Milt and talk about what was going on. My contribution was [to point out] that Milt is the way he is, and he's always going to be that way, and we either ought to figure out how we're going to cope with it or go do something else for a living."

Ayer says that, as a result of the meeting, managers have begun to communicate with one another more effectively. Its primary accomplishment, however, lay in the affirmation of solidarity, an understanding that "we're all in the same boat." Meanwhile, the managers are hoping that Kuolt will change enough to bring in a strong chief operating officer, who would relieve him of the day-to-day details with which he is obviously uncomfortable. Failing that, they are prepared for the possibility that Horizon might get a new COO another way -- through acquisition by a larger airline.

Not that they question Kuolt's value to the company. "The whole irony of the thing is that we wouldn't be where we are now if it weren't for Milt and his style," says Ayer. "I mean the growth and the good things that have happened to this company. His style was completely appropriate for the first two or three years, but now [we need a] a different style, a more traditional organizational style of managing a going concern. We're no longer this entrepreneurial deal, flailing around and growing and trying to find itself. We're a major company that needs to be managed."

It's such a goddamn challenge," Kuolt is saying as we drive to a late dinner in Seattle. "We're a teenager trying to be an adult, that's what we are." But help is on the way, he says. Yes, even as we speak, he says, he has plans to add experienced people to his management team. Granted, it didn't work out the last time, but now the company's "personality is stronger," Kuolt says. "They won't be so tempted to come in and say, 'Well, this is the way we did it at TWA.' I never gave a shit how they did it at TWA anyway." then, too, he says, he is "more willing to accept help."

(That's true, says William Peare, the former Thousand Trails COO who recently joined Horizon with a broadly defined marketing assignment. "I'd guess that Horizon today is basically where Trails was in 1981. But here, Milt is confronting issues, which he wouldn't do at Trails. At Trails he'd say, 'I just want out.' He couldn't see light at the end of the tunnel. Here he's willing to try ways to make himself more comfortable.")

Yes, says Kuolt, he's been thinking a lot recently about the similarities between his situation at Horizon and the situation at Thousand Trails before he left. But there is one major difference, he explains. "When I left Trails, I felt that we had built an excellent company, the best in the country, primed beautifully to move to its next level of accomplishment. It's very different with this airline. Here we are about the same size as Trails was, but I do not feel the same way about it as I did about Trails.This company is not anywhere near the best airline of its size. I think we've got all the ingredients, but I have not been able to bring the whole thing together yet. I'm going to bring in outside talent to address these things. When I let go at Trails, I brought in somebody who I thought was better than myself to run the company. I don't feel I've got that person yet, here at Horizon."

"What will happen when you find that person?" I ask.

"When I find that person," Kuolt says, "I guarantee you, he'll run the company."

"And what will you do then?" I ask.

The answer to that question has to wait for a plateful of enchiladas. We are having dinner at the Azteca restaurant. Jose "Pepe" Ramos, the owner and a friend of Kuolt's, is sitting with us. Kuolt has been complaining that he doesn't take enough time away from business. He says that the further away he gets geographically, the more relaxed he feels. Ramos laughs. He says that, this summer, he took Kuolt to Cuautla, the village where he was born in Mexico, which is pretty far away from just about everything. But it hadn't helped Kuolt relax. Kuolt, he says, had tied up the only two phones in the village, trying to reach Horizon.

"Well," says Kuolt, "don't you worry, Pepe. Maybe in a year or so, there will be a chance for me to relax."

"Oh, really," Ramos says, "and where are you going to do that?"

"At Elk Horn," Kuolt says. "Maybe I'll be spending a lot more time at Elk Horn."

And it occurred to me then that maybe Koult had discovered a cure for the Complex after all. In his own roundabout way, he seemed to be saying that there are some people in this world meant to start things and then move on to start something else, and that the most they can do in between is to find their own replacement.

At least, I think that's what he was saying. The ways of Milt Kuolt and his Complex are sometimes hard to figure.

Last updated: Apr 1, 1986




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