NCtrend: Hamner time
What was your most costly mistake?
I’ve had a lot of those. The most costly mistake was when we sold The Pantry in 1994. [Actor] Wayne Rogers and I took a third of what we made and bought Tenneco Oil Company’s retail convenience-store chain, then called E-Z Serve. We changed the name to Swifty Serve. Almost all of the convenience stores except The Pantry had gone bankrupt in the early 80s. That was due to oil prices changing. Gasoline was starting to be sold by Wal-Mart and Kroger and they were discounting gasoline to get you in their stores. We bought 100 bad stores to get 200 good stores. The company, Swifty Serve, declared bankruptcy in 2002. I probably lost a million and a half to two million dollars.
Are MBA schools today worth it?
Not all of them. You judge how good an MBA program is by the jobs people get coming out of the program. Maybe 30 schools are worth it in terms of increase in market value of the graduate.
Most people who go for an MBA have taken a job and had it for two or three years but are not on the trajectory in their company or in a job that they see as their career. An MBA is very expensive, $120,000. You lose income for two years, but the idea is to make it back by moving from $75,000 a year to $130,000 and a faster upward mobile career path.
If you are a person who invents things or are in social media, such as Facebook, then it’s probably not worth it. Many of those people don’t ever finish college. Going for an MBA depends upon the following: Are you unhappy in your job and want to change, or do you want to get better skills? For instance, do you want to move from marketing to finance? A higher percentage of MBAs succeed from those 30 schools in the United States. Worldwide, I would add 10 more schools, so I think it is well worth it. But it depends upon the individual.
If you have an undergrad degree in business, then you don’t need an MBA because you already have 90% of the knowledge you will get in MBA school. A lot of schools which are starting MBA programs have no business starting them. They don’t have the teachers. The worst are the fly-by-night, online-only schools.
You left Duke at age 42 to work for Iowa investor Roy Carver. Do you regret leaving academics?
Yes, my life would have been easier in some ways. I would be retired now with a good pension. I had a safety net and I wasn’t taking any risk. But every year when my best students left, I would be depressed because they were going on to something bigger and better and I was starting the whole thing all over. Eventually it was the pull of my friends like Roy Carver, [Wendy’s founder] Dave Thomas, [Chicago industrialists] Lester Crown and Alan Schwartz, J.B Fuqua and Frank Kenan who wanted me in their game. They really enjoyed it.
I went into academia because I got my Ph.D. (at Indiana University). I did that because I could get out of the Army four months early and they paid my salary for the four months. Then I wrote down what I wanted to do with the rest of my life and I couldn’t think of anything.But one thing I knew was that I didn’t want to work for somebody else. Academia fit because I didn’t want to take any risk since I grew up poor. I knew I wanted to avoid poverty. One thing I found I could do well was teach.
I had tenure and a full professorship at Duke. But the reason I left was because of Roy Carver. I took a two- year leave of absence from Duke and went to work with him. (Carver owned Bandag, a Muscatine, Iowa-based tire retreading company. He died in 1981 at age 71.)
Why did Roy Carver take such a liking to you?
He was at the stage when he was enjoying his money and not doing deals and getting bored. He was in his mid-60s. He said he saw a fire in me that he didn’t think I could fulfill in academia.
I met him on an airplane and invited him to come to my class. He came to speak to my classes at Northwestern and Duke. At the time nobody was asking entrepreneurs to their classes. The faculty didn’t know them. The faculties then focused on heads of big corporations and their CEOs (as opposed to successful entrepreneurs). Half of my speakers didn’t have college degrees. These were role models.
Who was your strongest mentor?
I had so many, but Frank Kenan was my most consistent mentor overall. We did fifty deals together.
What interested you in Southern Season?
It’s a chance for us to build a brand and take it public. It’s fresh because it’s unique. And it needs to be taken to other markets. It’s unique because you would not start a business like this. There are 80,000 items in a Southern Season store, where most stores have 20,000. We probably have 600 hot sauces, for instance. Southern Season has to be located in a well-educated population where people want to entertain at home. It was started by Michael Barefoot in Chapel Hill in 1975. We bought it with a five- or six-year commitment and after that, we will take it public. We’ve got excellent professional management. I’m doing it because I am a deal junkie. I get to pick who I invest with.
How did you get involved there?
For a long time I had been talking to Michael Barefoot about expanding. I was just trying to invest. You get an idea by looking at something and seeing how it could work elsewhere. It was big enough to roll out. It wasn’t a small business, and I didn’t want a small business. It takes a certain capital structure and a certain willingness to take a risk. It takes three years to build a store to profitability. It’s not for the faint of heart.
Are these new tricks for an old dog?
There is a current impression among some that believe that older entrepreneurs are out of date. They aren’t in the tech or medical side of the business world, so it must be old school and out of date. But Ned Johnson, who runs Fidelity Investments, is 85 years old. Roger Milliken was 95 and running the Milliken textile company before he died. Warren Buffett is fairly relevant at age 85, don’t you think? I can tell you all my mentors were in their 60s to 80s and were never old dogs when it came to business.
The key is: Does age relate to relevance and knowledge? I know a lot of 35-year-old entrepreneurs who have had only one idea and are now burned out. I don’t think anybody believes that I am not adding value or doing work here. Everything is new. We are bringing new products, new features, new locations, new looks. Everything is new. We’re just taking a single concept that we think has a wide market appeal and expanding it and growing.