2 Haslams share a stage, offer lessons on business
James Haslam II knew Warren Buffett, founder of Berkshire Hathaway, to be among history’s most highly regarded investors, but he initially resisted the idea of making a business deal with him.
Berkshire Hathaway was seeking to purchase Knoxville-based Pilot Flying J, the largest travel center company in North America. It wasn’t until Haslam and his son, Pilot CEO Jimmy Haslam III, went to Omaha, Nebraska, to meet Buffett last July that he began to come around to the idea.
“What we did was establish continuity,” James Haslam said. “Berkshire Hathaway doesn’t want to run anything themselves ... They get management and they keep with it. I was able to look everybody in the eye, and Jimmy was too, and say, ‘Look, this company is forever, it’s going to stay the same way.’”
Haslam shared his story with an audience of business leaders and entrepreneurs at 36|86 Entrepreneurship Festival in Nashville on Wednesday. His son, Gov. Bill Haslam, sat next to him on the stage of the Wildhorse Saloon, interviewing him and telling Pilot stories along with him.
The fireside chat elicited several enthusiastic laughs from the older Haslam, 87. The two Haslams kept up a casual, playful rapport throughout, with the governor teasing his father for his poor driving skills and for starting a company in the same month he was born in 1958.
Building a company
James Haslam founded Pilot Flying J after graduating from the University of Tennessee in Knoxville, a school he attended on a football scholarship, and after serving in Korea.
Skeptical of television’s future, he turned down a TV advertising job and instead took a real estate position at a company that owned 20 gas stations. Three years later, he started Pilot Flying J. The company has since grown to 750 sites in 43 states and 30,000 employees. It sells 7 billion gallons of fuel annually.
In 2017, Warren Buffett’s Berkshire Hathaway announced it would eventually acquire control of Pilot Flying J while preserving its Tennessee headquarters and leadership. By 2023, Berkshire will become Pilot Flying J’s majority shareholder, while the Haslam family will retain 20 percent and will remain involved in its leadership.
James Haslam said after the initial meeting with Berkshire executives, he “really wasn’t sold on it at all.” He described seeing the Oracle of Omaha’s one-story office building in Nebraska and Buffett’s preference for a cheeseburger at a casual lunch. Given their ages, both 86 then, Buffett asked him where he had been on Pearl Harbor Day.
The decision to sell Pilot was difficult to make, James Haslam said. Another oil company might move the headquarters and a private equity company would have certainly changed its operations model — options that may not benefit employees, he said.
“I was telling Jimmy, I never want to drive up this hill and tell all these people who work here at our center and our stores that we sold them out,” James Haslam said. “I want to be able to talk to them and say, ‘This is a great deal for you.’”
Of all of his business partnerships, which include Marathon Oil, Louis Dreyfus Company and CVC Capital Partners, Berkshire was the easiest to work with, he said.
Lessons learned leading a company
As Haslam reflected on his lessons learned in the business world, he encouraged other business owners to focus on hiring good people.
“The mistake I made, quite frankly, I emphasized too much trying to raise money and to find more locations and not enough finding good
people,” he said. “You can get all the money you want, but if you don’t have good people working for you ...”
Haslam also emphasized the challenges that come from leading a business.
In the past three years, Pilot Flying J executives have been embroiled in a legal dispute involving scheme in which Pilot Flying J shortchanged some customers on diesel rebates.
A former company president, Mark Hazelwood, and 16 of his subordinates have either been convicted at trial or pleaded guilty.
Pilot Flying J’s board of directors has admitted in a criminal enforcement agreement that its direct sales division cheated customers of at least $56.5 million. Jimmy Haslam has denied knowing about the scheme and hasn’t been charged.
“If you think in business you aren’t going to have bad times, you are just kidding yourself,” James Haslam said, when asked by his son about facing difficult times in general. “The team that makes the fewest mistakes wins.”
‘We have to pay the rent’
Gov. Bill Haslam, the youngest of three children, commended his father for his family and community involvement and asked him how he managed a company at the same time.
“Your family comes first,” James Haslam said. “It won’t do you any good to make all the money in the world if it ruins your family.”
Business owners also have a responsibility to contribute the communities they live in, he said.
“As business people, we have to pay the rent,” he said. “One of the strengths of the free enterprise system is giving back to the communities we operate in.”
Haslam encouraged business leaders to get involved politically and to support good candidates. Without doing so, it is difficult to complain about government not understanding business, he said.
“Business people who abstain from getting involved in politics are making a mistake,” he said.
Running a family business means, at some point, transitioning the control to the next generation. The two Haslams shared stories of the comical parts of the training process, such as when the elder Haslam failed to negotiate a materially better deal after shaming his son.
“You have to trust the next generation,” James Haslam said. “You can’t run it forever. You don’t want to run it forever and you shouldn’t run it forever. Train the next generation.”
Haslam offered practical advice to young, aspiring entrepreneurs: Get an education and learn the business you want to enter.
“When we have gotten out of the area that we knew anything about, we haven’t done it well,” he said. “Make sure when you start a business that you know something about it.” Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.