Below is a transcription of Lifecycle Renewables’ CEO Rory Gaunt 10/18/11 appearance on Les McKeown’s Achieving Predictable Success podcast.
The Podcast is available here and the Achieving Predictable Success blog is here. Enjoy the below transcription!
Les: Hi everybody. It is Les McKeown here, President and CEO of Predictable
Success with the next in our Predictable Success interview series where we
talk to people who have achieved predictable success in their own careers
or have helped other people do so. Today I am absolutely delighted to be
talking to somebody who not only has done all of that, but also happens to
be a close personal friend and that is Rory Gaunt, who is CEO of Lifecycle
Renewable. Hello Rory.
Rory: Hi Les. Thanks for having me.
Les: You are more than welcome Rory. What I would like to do in a minute or
two, is talk a little bit about the business and what it has been like
running it, what your experience is as an entrepreneur, contrasted to your
expectations. Tell us what the business does because, I am going to admit
to everybody, I had about three or four coffee meetings with Rory when he
first started the business and in the first two or three of them I
pretended to understand what he was telling me, and it wasn’t until the
third or fourth that I really did. So tell everybody that is listening what
the company does first of all.
Rory: At our core we are a logistics outfit that converts organic waste to
renewable energy. So in practical terms, really what that means, is that we
run around the New England area currently in trucks and we pick up waste
vegetable oils and fats from hospitality businesses, food service and food
manufacturing companies and we process this material into a renewable fuel,
and we use that fuel in a few different ways. The first way and foremost we
use it in power systems, in combined heat and power systems. So we will
plunk down one of these power systems that some of our current customers
like Whole Foods Market or Iggy’s Bread of the World, and we will actually
in part power their entire operation with our waste derived fuel. Or we
will actually power and in some cases, heat the commercial operation. So
that is the first way we use it. Secondly, we are able to take our fuels
and use them in replacement, in terms of number two diesel and number six
fuel oil. So we will just straight out replace these fuels in a number of
various applications.
Les: So you have got more moving parts in your revenue model than most
businesses have who simply buy a thing and then sell it at a higher price.
You have got quite a few things that you have got to keep track of over the
course of time, right?
Rory: Absolutely, yeah. There are a lot of moving parts and some of the
fundamental pricing dynamics in the marketplace are changing as a result of
what we are doing, and a number of other companies are out there doing with
this waste material. So where traditionally restaurants and food services
would pay somebody to come and collect their material we are actually
paying them for it. So we are paying for it on the front end, we are buying
this stuff and we are producing some really good economics with it on the
back end and we are really shaking things up a bit, in terms of how the
market has traditionally behaved.
Les: I want to come back to that disruptive element that where you are sort
of shaping the market as you go along in a moment or two but before we get
there tell us a bit about the path that got you there Rory. I am going to
take a wild guess and say that when you were like 7 or 8 you weren’t
running around thinking I am going to run this renewables company when I
grow up. That probably wasn’t your goal. Or maybe it was, I’ve known you
long enough to realize that is maybe a dumb assessment for me. Tell us
about the path that got you to where you are now.
Rory: I think it was just a big accident really. I was traditionally in the
logistics business as a salesperson for a large corporations called R.R.
Donnelley, and always wanted to pursue something more entrepreneurial but
never really was quite in the financial position to actually do it for
myself. So after a quick turn of events, me joining a small software firm,
subsequently being laid off 4 months later. As a result of this small
company’s partnership that ran it sort of imploded. Then happened to meet a
fellow who had started a waste vegetable oil to power conversion business
over in the U.K. some years previous, had just sold that business, came
over and through a mutual acquaintance and a family member actually, of
this gentlemen, I was put in contact with this fellow from England. What he
really needed was somebody to take the bull by the horns and run things
here in the U.S. and build out the vision that he had created in England,
but do it here in the U.S. with was a much more robust larger market and
certainly more immature than the U.K. market was at the time. So, through
this weird chain of events where I didn’t really know what my next step
was, let alone when I was a young kid, but seriously just 4 or 5 years ago.
So it is kind of funny how things work out but I think in hindsight I just
got lucky really.
Les: Well I think that is the culmination that most entrepreneurs happen
upon is that what you call luck is a combination of opportunity with a long
held desire to do a thing, but with an important element that you didn’t
really discuss there, which is courage. It is one thing to see an
opportunity, and as you put it, to get lucky because the opportunity comes
up. But it is another thing to have the courage to take it. Given the
timing of when all of this occurred and appeared to you how tough a
decision was it for you to say okay I am going to throw all of my eggs in
this basket here as opposed to going back and finding another corporate
job?
Rory: I sort of looked at it like I didn’t really have a whole lot to lose
at the time. There were those times in the beginning where it was extremely
difficult, personally, financially difficult for me and my family but I was
fortunate enough to have the funds or the income to take 6 months and
actually do some pretty serious research on what the opportunity really
was. And despite all of the other real day-to-day obstacles that came up in
the initial year or so, I knew the fundamentals were there and so I just
really wasn’t willing to give it up, I guess was sort of my mindset.
Les: Tell us a little bit about the period since then. How has this all
been when you look back on it now, how long has it been since you first
stepped in?
Rory: It has been about 4 years.
Les: So you are looking back on those 4 years, what has the actuality been
like compared to what you thought it might be like?
Rory: In the beginning I was a one man show. There was a long period of
time where I was heavily in sales mode, meaning getting oil supply, and I
was doing this all by myself. Of course if you want to make any money at
the business you have to go and actually pick it up as well. And seeing as
I was a one man show, I was doing both of those things. Where my fantasy
with entrepreneurism and starting something out was one thing, the reality
of it is putting on a suit and tie in the morning, selling a deal and then
showing up later in your mechanics jump suit, collecting the waste out of
the back of the restaurant that you just sold the deal to.
Les: I can picture you looking around trying to find a telephone booth, of
course of which there are none anymore, to get changed in.
Rory: Yeah. Well, almost to the point where you step back every so often
and just be like this is completely obnoxious. But, the reality is that at
the same time you are actually making money for yourself and you feel good
to be able to pay bills, and that type of thing. Even though it wasn’t the
grandiose vision that I had originally thought about what it might be like.
It felt as good as I thought it would, as opposed to having that little
taste of success.
Les: One of the things that I have always admired about you, is that right
from the very beginning when we first talked about this, even when it was
just a possibility, it hadn’t even become absolutely what you were going to
do. You always had a very clear understanding, it seemed to me that this
was going to be something that if you put the work in you would make a
substantial success of. You always talked about the business in
aspirational terms, all be it, but in terms of reaching the next stage, of
getting to the situation where you have got a real genuine business, it is
not just you doing everything. You had a good visionary sense of where you
wanted to go. So whenever you started to implement that, tell us a little
bit about at what point did you feel, “Ah, we’re actually getting somewhere
now. It is not just me being aspirational anymore. The business is
beginning to become what I always wanted it to be.” What were the marks
along the way?
Rory: We had built the actual business of going around and collecting this
waste and processing it into a fuel, around an agreement with Whole Foods
Market that we would be producing power for them. We, including myself, for
quite some time thought that we were really going to make it, when we turn
on our power installation here and get moving.
Les: Very quick, just to explain for our listeners. That would involve you
getting a substantial piece of (inaudible 00:11:30), right?
Rory: Yes, it is a substantial piece of equipment to want, fund and
finance, and to have installed. It is a first of its kind in the U.S. and
it is actually a pretty big deal. Because like I said early on, it
fundamentally changes the economics of this waste stream, and we think it
is probably going to be the default use for this waste stream going
forward. So back to your question. We thought that we would really be
making it and we could really call ourselves a success when that
installation was up and running. But the reality of it is you don’t really
have anything unless you actually have the feed stock or the oil necessary
to fuel the installation.
Les: Right.
Rory: So very early on I thought we have got to go out there and get the
oil, and that is what I spent that year and a half in the truck selling,
doing. Where things started to really click was when we got to a volume
level whereby we could pay all of our bills and I could pay myself a meager
salary and survive, on the volume. I think that was the first milestone.
And interestingly we are still in the final stages of getting the
permitting for this Whole Foods Installation 4 years later. We have got in
the meantime another power installation, quite a bit smaller but it is a
combined heat and power installation up and running, and that is really
exciting. We have got a number of commercial heating oil customers that we
service, as well as just a slew of by fuels and energy customers, as well.
The economics was really the milestone, the point in which you can actually
pay your bills and pay yourself, really was the turning point.
Les: Sorry for interrupting you there because that was the point I was
going to make to underline and I am glad you have done it too. One of the
things that we talk about a lot in the Predictable Success model is the
transition from early struggle to fund. And one of the things that I try to
make clear to people is that you haven’t transitioned to fund if you think
you have done it based on not paying yourself. Because there still is a big
economic bill out there waiting to be met, which is your own personal
monthly salary. I remember you and I talked about this many times, that you
had to get yourself to the point where you could get paid before you could
really say you were out of the early struggle stage. I just wanted to
underline that for the folks that are listening. That is really, really
important.
The other thing is that openness to understand that what seems like the
most important milestone at the outset often isn’t. If you had waited and
waited and waited to get that Whole Foods generator deal sorted out you
would still be in early struggle, right? You would still be focused on that
and that would not have been the same?
Rory: Yes. Absolutely and that really is not the lynchpin of the business.
The lynchpin of the business is having a business and having not to be able
to financially support itself and the people who are operating it and that
is critical bit.
Les: So tell us a little bit about your own journey in the last 4 years.
What have you learned about yourself as a manager and as a leader?
Rory: Fortunately I had some help to frame my own thoughts about the
organization as we were building it, through your help obviously. So I
think what it really comes down to from a leadership perspective for me is
I can be either very controlling or very laissez faire and hands off
completely, and I think it is finding that balance with our employees and
our partners. If I can stay balanced in that way and actually have some
sense of self diagnosis on that level I think that is really what I have
learned to do well in this process.
Les: I want to touch back on that in a second or two because I think you
have also got a unique dynamic going on in the business because of one
other person that is working closely with you. We will talk about that in a
second or two, but before we go there, as you say, you and I have talked
long and hard since the business started and somewhat before then and you
have been a great fan of the Predictable Success model. Tell me and share
with the listeners a little bit about what was it about that which was
helpful to you?
Rory: Essentially this is a process and this is the first time I have been
through the process of starting and running my own business. So I had
nothing to compare my current experience to, in terms of making decisions
about the organization and about the way forward. So what I found helpful
is that it is almost like having a system or a process in your corner that
you can refer to say, “Okay, I’ve given the symptoms and what I am seeing
in the organization and the business, where am I at on the life cycle?”
Les: Right.
Rory: Giving that meta data or meta information about the process and the
life cycle, you can look at things in a more informational way. You look at
your own situation and you are able to self-diagnose about what is going on
and answer that question which always is; what do I do next? That really is
how it has been extremely valuable.
Les: It is good to have a road map when you are going somewhere that you
haven’t been before. It is always helpful.
Rory: Absolutely. Absolutely. Yes.
Les: A little bit earlier, one of the things that happened on the way,
maybe you would like to share to the degree that you are comfortable, how
it did happen is that you ended up working closely with one of your
siblings in the business. Do you want to share a little bit about how that
happened and I know there was a lot of the folks that are listening are in
a similar position that are working with family members and that brings its
own dynamic. Watching you and Rob together, it is clear that you have
worked real hard at trying to make that work. Do you want to share a little
bit about first of all, how Rob got involved in it? What have you two done
to make it work well?
Rory: I had always thought, probably because my parents told me this. Is
that don’t get family involved, family and friends involved in your
business dealings, because business is a different environment that is
governed by economics and sometimes those economics don’t include feelings,
emotions or sentiments that personal relationships do. I took that advice,
and I think that is really good advice. At the time in which we were
starting to experience some significant growth and we were supporting
ourselves, it became very clear to me in my process of self-diagnosis that
I am not the guy you want managing the books. I just seem to not have any
interest or time for it. I do realize that it is critical to being
successful in this world. So what I started to do was to look for a
candidate, somebody that could come in and not only be an equal to me, in
terms of our ability to go out and sell, create business and create
opportunities and do all of the things that we need to do, to keep the
business moving forward. But also somebody that had a financial mind, who
had been there before that could give good advice, who could manage the
books and make sure simple things like regulatory things are taken care of
etc. My brother Rob, happens to be such a person who is extremely dynamic.
He is well versed in the financial world. He has worked on Wall Street for
a number of years. He has done a ton of transactions in the multi hundred
million dollar range in the real estate world. He is just a fantastic guy
overall and he was exactly who I needed. Fortunately he was well positioned
enough that he would come and work for free for 6 months until we could
afford to pay him something. So all of those things together, it wasn’t as
if I was looking for a job for my brother. But I have a job that I needed
somebody to fill and he happened to be the best candidate, someone who I
love and trust. So that is how that came together. Along with the financial
thing, I am not worried about doing him wrong, if something in the business
were to not work out because obviously he is a big boy and he can support
himself. So those things I think, made the situation unique, and he was an
investor early on in the company. He knew enough about what he was getting
into. The fact that he joined the company, I think has been the best credit
to our name because he is a pretty serious guy, in terms of his
professional life.
Les: The dynamic is in what you just said, you get bored with the detail of
numbers and all that sort of stuff and he is really excellent at that but
that broadens out into different views of risk, different views of how to
do thing, different views of what you should do, how you should respond to
opportunities and the two of you come at that from different perspectives.
Has that been difficult to reconcile? Is there a lot of blood on the walls
or have you found ways to manage that?
Rory: There is, I wouldn’t say argument, but it certainly is good strong
almost ferocious debate on a number of critical issues. And I really like
that. I love the debate, and he is really good because he brings the
numbers. My thing with Rob is you better have your act together, before you
start the argument or debate or the argument with him, because he is going
to bring it. My feeling is that it is really healthy and it does happen a
lot and in the end I think what we do is make better decisions.
Les: Right.
Rory: That is the end result so I am excited to fire it up.
Les: I have watched the two of your do it, and I have got to say it is
pretty much text book stuff right out of the Synergist, which I know you
have had a chance to have a glance at, that kind of publication, because
Rob is a great processor. You are a visionary from your toes up, but the
two of you have learned to go out at those visionaries and processors. But
when the bit comes to business it is time to make the right decision I do
see you both move into that synergist mindset that says “What is best as
the business as a whole here? Okay, I have had my say. I have scratched my
itch as a processor and data dumped everybody and you have scratched your
itch as a visionary, and had your swing for the fences big idea, but in the
end we will make up our minds based on what is right for the business as
whole.” And it was fun while I was actually writing the book, just watching
you two have at it. It just confirmed so much of what I had already decided
over the years.
Rory: Absolutely.
Les: Share with us a little bit about where you would like to see the
business in another 4 years? You have your first 4 years under your belt.
Where would you like it to be? And do make sure in giving us the answer, to
disclose all of your competitive advantages so that your competitors can
listen to this and beat you to a pulp.
Rory: I will not disclose. I have tried to manage this business in the last
3 or 4 years as a ninja, just coming up and poaching off huge customers and
so forth. But now we are very conspicuous in the marketplace and we
actually have to compete toe-to-toe with everybody else out there. The
great thing is that we are, right now, today, competing with the best of
our industry in our geography, that is, and we are winning. We have not yet
brought out the big guns, which is exciting. So the big guns really are
taking our ability, our unique ability to create the best value with this
material, and just doing more of it. We are in a mode right now where we
should see double or triple growth year-on-year for the next 3 to 4 years,
and really have a substantial business and substantial presence here in the
Boston and New England marketplace. We think that once there has been a
saturation in a given geography that at the same time because we have good
processes and systems that we can take our blueprint and go to other
geographies and certainly even overseas. I think the next 2 years will be
extremely telling as to what our next moves are in terms of geographic
leaps, but right now, this instant we are just focused on capitalizing on
all of our unfair advantages here in the Boston area.
Les: What do you think when you look at achieving all of that to bring it
back to you personally, what is the biggest challenge for you as the leader
of the business and as a manager in getting the business to that point?
What do you see as your biggest personal challenge?
Rory: I think my biggest personal challenge is waking up every morning and
deciding what the most important thing that I should be doing is. What I
should be paying other people to do for the business. I think that is the
constant question that is always coming up in my head. That is what I have
got to continue wrestling with is where I should be spending my time. I
think so long as I’m honest about the value of time spent, I think
hopefully I will be able to stay on the right side of that question going
forward.
Les: It would certainly be a [inaudible 00:2:51] to you to have good people
around you who challenge you from time to time when they think you are not
doing that.
Rory: Absolutely.
Les: That has been brave thing you have done and I know from watching you
that it reaps rewards. I am really looking forward to having you come back
here in 4 years time at least and sharing with everybody how you achieved
the growth goals that you have got set out for yourself. But in the
meantime I will wish you all the very best. Rory, it has been one of the
great pleasures of my life getting to know not only you, but you and your
family over the last number of years and it has been like a platinum thread
add on to watch you also build a magnificent business and see it so firmly
founded on the Predictable Success principles and is rewarding for me to
see that you have been able to utilize those to accelerate goals that you
would have achieved anyway but it is nice to have been alongside while that
has been happening. Thank you for this and I will enjoy watching what is
happening over the next number of years.
Rory: Yes, well thank you and certainly your friendship in this regard for
tremendous help, in enabling me to see what is possible and getting my head
around what I should be doing next, so far throughout this thing. So I look
forward to continuing that.
