Russ: Hi There, I’m Russ Capper and welcome to episode #562 of The BusinessMakers Show. Our featured guest today is the co-founder and former co-CEO of Mustang Engineering: Bill Higgs. This is a fascinating story about timing and culture. Check this out. So, tell us, here we were back in 1987. Oil and gas business then is very similar to how it is today. I mean, we were talking about (
Bill: Absolutely) a down market, and you and your buddies decide it’s a great time to leave the security of a salary with a big company and go start your own company.
Bill: It’s pretty ridiculous. It was a little bit crazy but, big industry downturn, it was, stay alive until ’85. Everybody was cutting jobs, and then it was, it will be heaven in ’87; it just kept going. In ’87 we decided, let’s go out and do it. But, I went to the bankers for some financing, and they sort of chuckled. They said, what are you trying to do.
Russ: Ok, wait, so I was in Houston, Texas in this period and I remember stay alive in ’85, but it kept getting worse.
Bill: Worse then worse.
Russ: I mean, two years later is when you guys jumped out there to do it. What made you think you could pull it off in such a down market?
Bill: Well, we really stripped out how to do offshore oil platforms and reduce the scope. And we didn’t like, the price was going between $35 a barrel and $5 a barrel, and it was going up and down. Every time it went up then down you’d lose people and teams, and so we couldn’t do a good project.
Russ: And by we, then you’re talking about the company you were working for.
Bill: The company we were with, yeah. And so we said, well if we go out on our own, we think that we can get enough work to keep 10 or 15 people working continuously, which would be just awesome, because the technology is fun, the jobs were fun, but the whipsaw was tough to take.
Russ: And so, how in the world did you do it? I mean, right from the get go do you still remember the first job you won?
Bill: Oh yeah. Very first job we won was Oxy Petroleum; Occidental, and it was just a small revamp job on a little platform, and so they could give it to us because they knew our people, who we had, and our rates were really good because we had no overhead. Well, that job turned into, it tied into six other platforms and it just kept growing. So, we wanted to be 35 people at the end of 2 years, and we were 35 people at the end of 6 weeks (
Russ: Oh my goodness), so that was a cash flow problem.
Russ: Yeah, well so, I mean, at one point, I guess right when you started, unless you guys had banked a lot of money before, you had to get cash flow positive pretty quickly, right?
Bill: Yes. And the problem, since the bankers wouldn’t help us we went to job shops. And these are people that would give you drafters and engineers, and you just used them as you needed them, and the job shops—
Russ: Kind of like outsourcing.
Bill: Like outsourcing, but they knew the oil companies. They said, oh, if you’re working for Oxy, you don’t have to pay us until they pay you (
Russ: Oh wow.). It was perfect, and so, like three job shops helped us. Seven years later, each one of those job shops we were doing a million dollars a month, and they were getting paid in 30 days, so it worked for both of us (
Russ: Well, that’s good). They got us through the startup and we took care of them.
Russ: Well, congratulations on that. I mean, were there jobs sometimes that you couldn’t do because you didn’t have the cash and the workforce to do it?
Bill: No. Cash ended up not being the problem. We could do the work but all of the work at that time that we were getting was what we called Sanford and Son projects.
Russ: Sanford and Son?
Bill: Yeah, it was like, take this junk and put it with that junk, and fix this platform. So, they were small jobs under the radar screen of most people until we were about a year old. And then we started hitting some real jobs.
Russ: Ok. Now I know you’ve told me already that you didn’t have a cash problem, but I also know that you were transitioning from hand drafting, like we used to do to CAD systems, and you guys insisted on going to CAD right from the beginning, right?
Bill: We did. We wanted to do CAD, and 4 weeks into Mustang we did our first CAD drive. The problem was we didn’t have the cash to buy computers. So, we went to the bank we were using and we got all of our drafters approved for a loan to go buy a computer, and then we leased it from our drafters and billed the clients. But what we told the drafters, now you have a computer, learn CAD. And so a year later, they took that computer home but their pay increased like 20% because they could do CADs, and so we trained them.
Russ: Ok. So they were taking a little bit of a risk, right?
Bill: Yeah. It was their money; they’re took the loan.
Russ: Did they know they were taking a risk?
Bill: Oh yeah (
Russ: Ok). But we were all in the soup together. It’s like this downturn we’re in right now. It’s like, you can grip hands and really work it.
Russ: Ok. So, I kind of feel there is more of a team effort than was normally existing at the time (
Bill: Definitely.). And then business as usual doesn’t always exist either, right?
Bill: No. Not in a downturn. These people were out on the streets and we were bringing them in. So, gold nugget people were available at the house if you could get the work.
Russ: Ok. Now also, in doing research for you, which was fun, I also kind of came across this project that was really outside of the normal offshore platform (
Bill: For Mustang?) that you guys did. Yeah, and it’s like a warehouse or something for METRO?
Bill: Oh, for METRO. METRO the bus company (
Russ: Yes.). That was ridiculous. We knew a guy down there and we’re an offshore oil company. There are no offshore oil platforms to do, so we went after this bus maintenance facility, and we got shortlisted. There were four companies; three of them had worked for them before, we hadn’t. So I knew we were going to go in there. We were the last presenter right before lunch and I was like, man, what can we do? They’re not going to listen to us. I took a bag of Snickers bars in with me, and I walked over into their space and I started putting Snickers bars in front of each one of them.
Russ: To kick off your presentation.
Bill: Yeah. I want you to think about me and not be thinking about lunch, because we’re going to take care of you and we’re going to change how your jobs get done. Well, the last lady was like 3 months pregnant and not showing. I gave her a big Snickers bar and I pulled out a little one for her baby. So they crept up.
Russ: So you had some inside information.
Bill: Yeah, we had inside information. And it broke down and we just started talking about how to take care of each other. We won that job and put almost the whole company on METRO through the winter, until the oil patch came back. It was fantastic.
Russ: Well, that brings up another thing I discovered in the research on it. You’re an engineer, right?
Bill: Yes. Professional engineer.
Russ: When you read a lot of the background on the company it says what you were doing was sales and marketing and some engineering. Does that mean you guys didn’t have a sales guy? Or you were just a natural salesman? How did that happen?
Bill: We didn’t have a sales guy so I always learned how to do it. Our first drafter, the three months before we got him, he was the best salesman at a used car shop. So I said, how do you do it? What’s the key to sales?
Russ: He said, you go buy Snickers as you should right before lunch.
Bill: He said, make an impression. I said, how do you do it? He said, it doesn’t matter if it’s a good or bad impression, just make an impression. So, Snickers did it.
Russ: How long from the beginning were you still the main sales guy? I mean this—
Bill: Seven years.
Russ: Seven years, wow.
Bill: Seven years.
Russ: You must have started liking it or something, too.
Bill: It was fun because you’re in real time, solving problems for the client. But I also worked our vendors. All the vendors had salesmen out there working, and I’d share information with them. And so, vendors would call me and say, hey, this client has a project. So I’d be doing work. I’d do a rifle shot; just go in there, book the work, bring it back in, and do it again.
Russ: Fantastic. Ok, so we’re talking a lot about how in the world you got started in these tough times, but man, did you guys start stair stepping up, right? I mean, share the growth story with us.
Bill: Well, what we had seen with other companies, we watched a lot of companies start, and when you’d get to 120 people there was a glass ceiling, and people would bounce between 120 and 80. And I guess in like the 3rd year, in like the Spring, we were coming up on the glass ceiling. And so I told Paul and Felix, I said, here it comes, we’re going to hit that and then we’ll see what everybody experiences. And we blinked and we were at 250 people (
Russ: Wow.). And, what happened is we got really good people in and we formed a team that was tight. And then they brought in like-minded people, and that culture that we ended up developing with those people was just a game changer for us. So, we didn’t know it starting that we wanted this culture. Once we found it we got on it and rode it, and that culture…
Russ: How would you describe it?
Bill: It’s a real invigorating win-win culture where everybody is taking care of each other, and we call it silo busting. Because in that industry, structural people didn’t talk to piping people, didn’t talk to electrical, but it’s all on a platform. So we put them all together and we said, learn each other’s jobs. Figure out how to do this better with less man hours. And, we got that camaraderie and that team building sort of ethos within the company, and it just, it took off. It was crazy.
Russ: So, let me make sure. I mean, I understand silo busting and the value of it, but did you actually have electricians who did jobs that welders did, or something, because they cross trained?
Bill: Yes, they did. So, like the designers, like piping designer I was talking to today, he would do the electrical drawing and a structural guy would check it. And they learned how to do the electrical drawings, but that then when you go up and down on these downturns, in the downturn, we could use less people, because they were all cross trained.
Russ: Ok. Really impressive. So, you must be proud of the way that it grew.
Bill: Oh, it was fantastic. Unbelievable (
Russ: Ok.). It was tough all the time; it was fast.
Russ: All right. I’ve been doing these kind of interviews long enough to know that if it’s easy, you just lucked out. But you guys seemed to kind of set yourself off by starting at a tough time. That’s fantastic. So, eventually, you got to a size where you guys decided it would be great if you could find a good partner or choir to come in and really buy the company.
Bill: We had looked at it in ’95, decided not to do it, but we started an ESOT; Employee Stock Ownership plan. We put 30% of the company into 650 people, and we said, if these people stay, it’s a fun place to work. If somebody sucks them away, it will be tough. In 2000, we were looking at that ESOT, and the oil price went down, like at the end of 1999, from like $45 to $11, like overnight. And everybody shut things down. The spot market price was at 9, and we said, this is ridiculous, we’ve got to, and we called it our Adopt a Parent program. I said, we’ve got to adopt a parent that won’t mess with our culture, but will protect us some from what’s going on. So, we worked through Adopt a Parent in 2000.
Russ: Ok, and that company was…?
Bill: Wood Group, out of Aberdeen, Scotland (
Russ: Ok.) So, they were an engineering services company. So we started, we looked at 107 companies and got down to them, but culture was important to them, and so it worked real well for us.
Russ: Ok. That is such a cool story. Well, I really appreciate you sharing that. I think our audience would like to hear a success story that started at the bottom of the market… In fact, before I let you go, if you knew somebody that was right at the point where you are, that you were back then, what kind of advice would you give them?
Bill: Well, it can be done, but you’ve got to believe in people. And you’ve got to pull them together as a team, give them the tasks, challenge them, and then support them. And so we had a lot of what we call servant leadership; building people up and then letting them take care of the client.
Russ: Ok. It can’t be business as usual in these kind of times, right?
Bill: It can’t, no business as usual. It doesn’t work.
Russ: All right. Well, Bill, I really appreciate you sharing your story with us.
Bill: I enjoyed it. Thank you.
Russ: You bet.
brought to you by