Carl Arnold 7:55
Well, you know, that probably is I think one of the things that Being a good musician, you need to practice and you need to learn your trade. Once you get comfortable practicing, then you need to start playing with other musicians. And once you get comfortable doing that, then you build up a level of confidence in your own ability that you’ve learned as well as your ability to work with others. And that confidence really helps in business, I translate it to leadership, the more confident you are and comfortable and working through a situation, the more confident and comfortable you’ll make others. And it helps you I think one of the big things we do in Vistage and I don’t know if all your listeners know about this fish, but it’s a CEO leadership group that’s put together in groups of about 16 people to 18 CEOs who get together Once a month as the peer group. So one of the big things we talk about in our groups is leadership. I think that’s one of the most important things we can be talking about.
John Corcoran 9:11
Yeah, yeah, absolutely. So you grew up in San Francisco or around the Bay Area, which I say to people all the time, you know, it’s a world. It’s a world famous city, but it’s really a small town, especially people who grew up around here. It’s amazing to me, people who grew up in San Francisco, and they just seem to know everyone. So I imagine that was the case for a few but you were born essentially into the hotel restaurant industries. What did your father and grandfather do?
Carl Arnold 9:38
Yeah, oh, my grandfather had a restaurant many years ago and my dad started out and after the war after World War Two, he came out to San Francisco and started a boarding house. I actually worked in a boarding house, my mother would cook. My dad would serve and they would clean the rooms and they ended up working their way to manager and eventually bought their first boarding house like that. These are boarding houses back after the war, there just weren’t enough wasn’t enough suitable housing for people. And so you’d have families living or multiple families living in a house it was sort of converted into a, like a b&b, if you will. And so they ran that and eventually he bought his first hotel and he ended up having a small group of hotels in the senior citizen providing hotels on a con for senior citizens. And so did kind of grow up with it that way and then, you know, I ended up working in the hotel business at the St. Francis and Clift and Sun Valley, Idaho. In the room and the restaurant business and had an opportunity to join a company that provided contract hotels for you are talking about the railroads in the airlines. These are providing hotel rooms further their engine train crews as well as their pilots and flight attendants for the airlines.
John Corcoran 11:22
Right. So this is Milepost industries. I want to get to that but first before we do you know, you really started your first venture at a young age you’re 12 years old selling hotdogs and sodas and cokes at Cal stadium football games. What was that? What inspired that? was it? Was it your upbringing? Were you just even at a young age to go make money?
Carl Arnold 11:47
Yeah, I was driven. You know, I think one of the things my debt my mom and dad is and I think of it as really something they did for me that I’m thankful for now, but when all my friends Were getting a little allowance each week, as a kid, I would they say, look, we’re going to give you an allowance, but it’s going to be smaller than the other kids, probably a half or a third of two thirds of it. But if you want more money, just work, you can get some. So I would do, first of all, I would do some work around the house and they’d actually sort of pay me for it. And then eventually I worked and I got my first job, I think when I was 12, working selling soda and peanuts at football games. So I started out doing that and then eventually worked in a gas station and a sporting goods store and just in high school, I had jobs after school. And I know I didn’t know any different. I just thought that’s what everybody did in a way and I always had enough money to do the things I liked and so I found actually that was kind of a nice thing for my folks to premiere.
John Corcoran 13:06
Hmm, what? What was it like working for Mileposts? So you said you join Milepost and they served railroad employees, so they were setting up hotels around railroads, I imagine.
Carl Arnold 13:19
Yeah. Well, you know, it’s interesting because I left the St. Francis hotel to work at Milepost and at the time Milepost had I think, 11 motels, and I had a chance to, I started out working for them coming from this big hotel of 1000 rooms 1100. rooms to the small motels that had maybe 70 to 100 rooms. And they were but it was a good business model because the railroad would pay us for 100% occupancy on the long term. guaranteed a 10-year guarantee so
John Corcoran 14:02
there’s probably a lot of hotels that wish they had that right?
John Corcoran 14:07
Yes we’re recording this in late April 2020 with the Coronavirus craziness unfolding all around us but you know, including the St. Francis hotel and many hotels are closed right now compared to their clothes
Carl Arnold 14:17
are running 1020 30% occupancy so guarantee of 100% was a really nice thing. Now, of course, we gave them a good discount, but we were able to make that work. So I left St Francis in and went to work there and had a lot of success, worked my way up from doing everything from cleaning rooms to manager and then and also we had restaurants associated with him so I worked as a cook short order cook which tell you that’s where you really learn what you’re made out of doing a short order cook especially in the middle of the night when People that are intoxicated come in about two in the morning and just order everything omelets and everything under the sun. But anyway, had a good did that and had an opportunity to buy out one of the owners worked my way up to eventually running operations for the whole company for these 12 units and bought out the owner, but the deal was I had to grow the company in order to really keep paying him out because I paid him out over a 10 year period. And so that was I tried a number of things growing and I tried consultants and oh, I was different. I put together an outside board of advisors, but the thing that really helped me the most was I joined a Vistage group which is what I’m doing now but at the time was a member and I did that for seven years and Over that period of time, that’s when the company grew dramatically. Not just for those, we had started out with 11 motels really for the railroad, and we ended up adding a shuttle division where we ended up. In the end, we had 1000 vehicles with 3500 employees. And we had 25. hotels or motels in the United States, and then about the same in Canada. And then, in my conversations with the railroads, they said, Well, we can do this, what else? What else do you need? And they said, Well, we need somebody to manage our office buildings. So we set up a Facilities Management Division. And in the end, we had 58. office buildings were managing for various railroads around the United States. And by the way, so you took it from 3.5 million in 1980 to over 100 million in 1998 over 18 years. That’s correct. Yeah. And it was interesting because the first getting that three and a half to 5 million seemed to take forever. And then getting 5 million to 10 million took a really long time. And then we kind of bounced to 20. And then 20. It didn’t take, you know, it was relatively quick moving up to about 35 and 50. And then from 50, we just started ESCO jumping up to 100. The biggest issue we had was capitalization, how do we capitalize the growth and that was where actually my Vistage group came in very handy because we were looking all over the place for capital and all the people who would give us money, wanted a controlling interest in the company, which I really didn’t want to give up. And my Vistage group gave me some great ideas where we were able to do it through debt. And they and I ended up retaining 100% ownership even up until the time I sold the company.
John Corcoran 18:14
You had 3500 employees at one point. What was it like managing that number of people? That’s just a really large number?
Carl Arnold 18:23
Well, you know, the key was for me to build a really good executive team and to learn that’s why I go back to the leadership. I think once you build an I tried everybody I tried to get someone who was overqualified and somebody that I respected as being an expert in their field in knowing more about that than I knew. And so I was not one of these people that wanted to know everything and wanted to run everything out. was willing to delegate. But it was a big learning experience on how to manage people that were experts that knew a lot more than me about these things and how to manage them without micromanaging them. But how to still be able to do that. So that was a real lesson. And I
John Corcoran 19:24
any mistakes you made along the way with that with putting the wrong people in place the wrong.
Carl Arnold 19:30
I don’t know if we have enough time to go into all that sticks I made but
Unknown Speaker 19:35
I think one or two pick one or two that we can learn from?
Carl Arnold 19:39
Well, you know, I think
the biggest one that I would say I probably made was along the way. Well, first, I’ll say that one of the big mistakes was I did try to do a lot of it myself as our fleet of vehicles. Vehicles, for instance, started growing to 100, 200 vehicles and eventually up to 1000. I needed to, I finally found I needed a fleet manager, and then a safety manager. And so I had to get over this thing of having to try to do it all myself. So that was that. And I see that with a lot of the Vistage members and the groups that I’m now leading, it’s hard to put somebody good in place and then get out of the way and let them do what they need to do.
And so I heard it explained.
Like some people think that they and also you need to still keep checking in on them. And I heard it explained, it’s like a marriage. You don’t want to just go out and find a great spouse and then never talk to them. Again, you know, once a year, say I love you, you need to be constantly staying in contact with them. And that’s the same thing with a great team. You don’t want to just hire them. And then once a year, give them a bonus, you need to be keeping that level of communication open to motivating
Unknown Speaker 21:20
and keep them excited about exposing you.
John Corcoran 21:25
That’s great advice. I wanted to ask, you mentioned about the vehicles he had over 1000 vehicles at one point, you know, with all the disruption that we’ve seen in recent years, you know, like super shuttle, which was a huge company for many years, I think declared bankruptcy six months ago or something like that, you know, Uber’s and lifts and things coming along. What advice would you have or put yourself in your shoes if you were in if you were still managing that company and you still had 1000 vehicles in your fleet and this kind of disruption is coming along? What’s your thought process? What do you do when that kind of change hits your industry? It’s gonna affect your business, your bottom line so dramatically.
Carl Arnold 22:03
You know, I think that’s it, that’s a good question I would, I would really try to embrace the change rather than fight it, you know you can be right and end up losing everything. But if you make a few mistakes along the way and try different things and embrace the change, you can go quite away. And that’s what I really think Uber and Lyft have done. They took an old industry like the taxi business, which has been around for years and years. And I remember in San Francisco you can never get a taxi when he wanted especially if it was raining out in wait and then somebody else would steal your taxi Now, over and Lyft came along with this technology that just totally disrupted it. Now you know you’re upset if you have to wait 10 minutes. For an Uber, it’s really been, you know, and I think that they just took a different approach, I think super shuttle, I think of my business. We had to do everything. Every time we moved the vehicle, we had, people had to assign something in triplicate. And then we had three pieces of paper that we had to deal with. And I had 30 or 40. Close to 40, actually at the peak, people in our accounting office just in the home office, processing pieces of paper. And every once in a while, then our client would want to audit us and then they take an exception and then we’d have to spend hours and hours going back. Reviewing things that happened in the past, with if you could embrace the technology and have something like the Uber program involving geospatial and billing and mapping, you know, then that that I, I think my business would have would be I wish I still had it if I had that technology, but we really didn’t have it and, and good opportunity to sell. So I did, but with that technology, that business would be a lot better. So I just say, you know, you really need to embrace change, and we’re going through that with the COVID-19 everything is changing. You know, we have our meetings today. You know, we talked about the Vistage meetings, and we’re gonna probably talk about that later. But typically, they’ve always been face to face and everybody says, Oh, it’s all about relationships and that sort of thing. We’re having these meetings or having cocktail parties having check ins on zoom right now, and it’s working out really well. In fact, people seem to get a lot of value, especially in these really uncertain times right now. They are great. That’s great coming on.
John Corcoran 25:02
Yeah, that’s great. Yeah. And I mean, certainly the role of a group like that is tremendous in these times, even more so than in, you know, you could argue that in the good times, because now it’s so urgent, it’s so critical. There are so many different moving parts. I want to ask you about, you know, 1998 or so, you sell Mileposts Industries. I don’t know what multiple you got for selling that, or what you sold it for. But it’s a big payday. It’s a big victory. How did you come about the decision to sell? Why did you decide to sell and even more interesting to me is you didn’t just go relax on a beach somewhere you started a new company. So I want to ask if I’ll pause on that and I’ll come back to that. But first, why sell and how did that come about?
Carl Arnold 25:51
You know, I started out, but towards the end, we have 1000 vehicles and a transportation consultant saw when I’m in vehicles. And he was representing another company and said he’d like to inquire if we’d be for sale. And as I’d mentioned before, we were growing and needed capital. And I, I was really not happy bringing in a partner who was going to take controlling interest if I was going to still be there. But I was willing to talk to this person, and he introduced me to his client. And the client said, We’d just like to buy you out, lock, stock and barrel. And that brought on a whole new, you know, outlook for me that I hadn’t really thought about. Much before. I’d been thinking about raising money and I hadn’t really thought about just selling and which is interesting because we have now in our groups, we have experts come in and talk to us And we recently had somebody that talks about how do you prepare yourself for selling? And how do you get your company to maximize its value? And how do you know, when do you decide when to sell? And most people do, I guess kind of what I did is it’s just by happenstance, someone comes along and makes him an offer and they sell people who are and in my case, it just happened to be at the top of the market. So I was lucky. But it was in 1990 eight.com bubble of 1998 actually, but many people get the offer, you know, and they sell and it could be at the bottom of the market or their company, they may not have done certain things to maximize the value of it. Prior simple things like maybe even having audited financial statements. Having policy employee handbooks and things like that. So if you have certain just nuts and bolts, things like that in place, it will add value to your company. So luckily we had a lot of those things that we’ve been learning about through Vistage through these speakers and so when these guys came along and offered, we took the offer and even actually, somebody in my Vistage group suggested that I have somebody else help us to negotiate. And they offered a person who came from Ernst and Young, we pay them by the hour so I didn’t have to give them a percentage of the deal. And that actually worked out really well too. So that’s, that’s kind of how it all came about. Somebody just saw one of the vans and called me up with the phone number on the side of the van
John Corcoran 29:00
And so I’ve heard many business owners say this that oftentimes after they sell, they fall into a depression, but what was it like for you? Were you excited?
Carl Arnold 29:10
I was really excited and did a lot of traveling and things I wanted to do for the first few months after the sale, but yeah, when when the honeymoon sort of period is over, when the dust settles, then you got to decide what well what do I want to do with the rest of my life? And I was fairly young at that time and I so I started doing some nonprofit work and then then I decided I basically wanted to kind of recreate and try something different.
Unknown Speaker 29:53
And so was that a temporary foray before you started the Arnold Hotel Group?
Carl Arnold 30:00
Well, I’d started the Arnold Hotel Group right before I actually sold the Milepost Industries so that was about two years before, while we were running Milepost Industries, the airlines said we’d like to have hotels for our flight crews, pilots and flight attendants. And so I set up, we ended up building and operating three commercial hotels that we operated strictly for one of the major airlines. And so that those two sort of overlapped,
Unknown Speaker 30:43
okay, and it was the career change, then,
Carl Arnold 30:47
well, the career change was, I eventually sold the Hotel Group and the sun decided I want to love finance. I wanted to be in the finance world, and so on. I had an opportunity to work at Morgan Stanley with a high powered Investment Group and went to work with them. And did that and ended up doing that for a number of years until I eventually came over to Vistage.
John Corcoran 31:18
It’s such a funny thing for you to go to, you know, at the level of achievement of selling a company that has gone from three and a half million to 100 million dollars to then some might argue take a step backwards or sideways to then work in financial services. What was that? Like? I mean, were people like well, wait a second, what are you doing here? What was that like? Well,
Carl Arnold 31:38
it worked out well because Morgan Stanley at the time had a special program for what they called seasoned executives, okay. And they would bring them in at a pretty good salary and teach them the ropes and hope that they could help build their book of business. With Morgan Stanley and I, I actually did read a book about how you find your next job doing something that you really want to do. And so I drew a line on a paper on the one side, I put the things I didn’t want to do. And on the other side, all the things I did want to do, and you know, some are basic, like I didn’t want to travel anymore. When I had my own post industry’s journal Hotel Group, there were 70 different profit centers with three major offices most of those were on the east coast by the end. And so I was in a plane all the time. So one of the things I didn’t want to do is I didn’t want to travel. And another thing as I wanted to work as something that really mentally stimulated me, and I was I’ve always been really interested in investments. And so this gave me a great opportunity to learn in fact, and went back and got my series seven and all my various licenses that you need to be in financial services. So yeah, it was kind of like going back to two college days again and by this time I was I guess in my 50s. So
John Corcoran 33:16
seems to be a theme with you. Well, we’re running short on time. So in a couple of minutes, you know, talk a little bit about why Vistage why you decided to get involved in Vistage after having been a member for many years.
Carl Arnold 33:27
Yeah, I was a member for many years and I had been in contact with the chair now the chair is really the leader of the person that puts the groups together and then helps facilitate the groups. And so I’ve been in contact with my business chair for all throughout the years in fact, and built a great bond with my group that I stayed in contact with a lot of them still to this day, from back in the 90s but Anyway, he suggested that I come to be a vicious chair myself, and then I’d really get a lot of benefit and enjoyment out of it. And so I went ahead and on a leap of faith decided this would be a great, great thing to do. And I was ready for, I figured I had maybe one more change in me. So I did that about seven years ago, and really, really have enjoyed it because I love connecting with people, which is kind of part of the reason I think I like financial services, but I like connecting with people. I like helping people. And I like learning and I’m constantly learning at this job and constantly having an opportunity to help people, especially with the COVID-19. Right now, we’re really hunkering down and having a lot of different, you know, more casual meetings, so that people can help each other.
John Corcoran 34:57
Yeah, well, you’re really in your element, having seen You do it, facilitating the group having come in and spoken. It really feels like everything you’ve done up until this point has really led you to that. And so I think it’s kudos to you that you found something you really enjoy doing. But let me wrap everything up because I know we have to go. But the question I always enjoy asking, let’s pretend we’re at an awards banquet, much like the Oscars or the Emmys, and Carl, you’re receiving an award for lifetime achievement for everything you’ve done up until this point. Who do you think were the mentors? Who are the friends in addition to a family? Of course, in addition to friends, of course, who are the people you acknowledge?
Carl Arnold 35:35
Well, you know, of course, I would have to thank my father, I think I did get to learn a lot from him. I had a great business sense. He was also a great rock on tour and musician himself. And he also had a great sense of humor, and I think those are all really important things that I tried to incorporate into my practice. I also brought on a person who was very influential to me when I was building my team. And he had actually already built a large company and retired and was bored with retirement. And so I brought him out of retirement and he and I are still great friends to this day and he was a huge help. I do you know, I have, I have, I do love to read biographies and I would say, you know, Richard Branson as somebody that I would really look up to, and as well as a number of other great business leaders for all you know, Jim Collins
John Corcoran 36:43
good choice. Yeah,
Carl Arnold 36:45
He’s doing a lot of work with Vistage right now and I just heard him speak at one of our get-togethers and actually had a chance to meet him. So yeah, those are probably some of the maybe three Top people for me.
John Corcoran 37:01
That’s great before. All right, Carl, where can people learn more about you?
Carl Arnold 37:06
Great. Well, yes, I have a website called Arnoldleaders.com. And that’s probably the best way you can also look me up on LinkedIn, it’s Carl Arnold AI F, or the initials after my LinkedIn profile. I love to chat with people, especially if they’re in the Bay Area and CEOs or business leaders that would be interested in learning more about peer groups and how they can help them to grow their businesses. One last thing I’ll say is that, interestingly, Vistage groups have grown at twice the rate. Their companies have Vistage left and companies have grown at twice the rate of non Vistage led companies. And in the last downturn, it was 15 Dean times the rate if you can imagine that, wow, this is a time where even if you’re not in my group or in Vistage, this is where you really need to get with peers and talk and brainstorm, because this is where it’s time to, to really pivot and think about how you can maybe do something a little differently to take advantage of
Unknown Speaker 38:20
a situation,
Carl Arnold 38:23
this unfortunate situation that we’re in right now.
John Corcoran 38:25
Yes. Yes, that’s great advice. Carl, thank you so much.
Carl Arnold 38:30
My pleasure. Thank you.
Outro 38:32
Thank you for listening to the Smart Business Revolution podcast with John Corcoran. Find out more at smartbusinessrevolution.com. And while you’re there, sign up for our email list and join the Revolution Revolution, Revolution Revolution. And be listening for the next episode of the Smart Business Revolution podcast.