Jesus Delgado-Jenkins, founder and president of JNI, LLC, knows something about hard work and commitment. As the son of Cuban immigrants who instilled a great deal of patriotism in their son, for his new country, Jesus attended West Point and served in the United States Army for five years. Entering the private sector, Jesus immediately began to excel in the world of business turnaround, where business are acquired and streamlined to reach their maximum potential. Jesus points to the mentors under which he was able to work as helping to shape him for his future, individual endeavors.
From 1999 through 2001, Jesus began to look carefully at his own opportunities, but never closed a single independent deal. This proved fortuitous when, after 9/11, Jesus felt obliged to serve his country. In two years at the United States Treasury, Jesus advanced to become the CFO of the Treasury, overseeing account volumes the likes of which most businessmen never see. He calls the numbers “humbling.” After two more years of public service, Jesus once again entered the private sector, this time with a better grasp of economics on a global scale.
Now, Jesus has taken JNI from a startup to a multi-million dollar company, completing his piece of the American dream: an immigrant family, whose son serves his country, then enters and dominates the business world. “If you work hard enough, and long enough,” Jesus says simply. “You will achieve your dream.”
So at 22, you were at West Point going into military service for five years?
So you mentioned on the walk over here, you’ve had a variety of experiences. You also said that it’s been a stepping stone to where you’re at today.
They end up being stepping stones. I think at least for me personally, a very important part of my success has been I’ve felt I’ve had an obligation to succeed. My parents came to this country with nothing. They had escaped communism. Because the United States had let me and my family stay here, I felt this sense of obligation to succeed and eventually give something back. That’s part of my passion. I feel like I have an obligation to succeed.
So as I was growing up I felt obligated to get good grades. I think that’s important.
If you’re already at a later stage in life, grades are irrelevant. You got to pick up from where you are, and start driving yourself from there. Find it within yourself to drive on. The past doesn’t matter as much. You just have to look forward and drive on and succeed according to whatever success means to you.
For me it means being excellent at what you do. It means being competitive. Being in the top 5 at something. If you’re a company in the XYZ industry you’re a top 5 company or you’re in the top 5%. Customers like your product. They like your employees. That, for me, is success.
Along with that, I feel that as an executive, you will be more successful in the long run if you share the wealth with the employees. If you create career opportunities for the employees that allows them to evolve and engage, and you listen to what they have to say, and if you reward them with part of the benefits that the company generates, the profits the company generates, you will build a winning, progressive culture.
If the executives are in it for building their own wealth, they aren’t going to share it, they’re going to scoop up most of the stock compensation programs, it’s pump and dump. The company stock will rocket fairly quickly because you’re going to cut costs and you won’t reward employees long term. And the stock will bounce back down again, but that’s when the executives will have left.
If you try to build something long term, in terms of a company, which is what I define as success, that’s why I’m talking about a company and not myself. That’s what I’m trying to do now. My partner and I are buying companies with a focus on the retail industry. What drives our passion is that we build a winning, long lasting organization that has a legacy. And we believe that by doing that, we ourselves will benefit in the long run. And we won’t have to worry about that.
So that’s what we’re doing now.
So you went to one of the best leadership programs in the world. How does that shape you today? Do you still take away those things that you learned?
West Point had a dramatic impact on me as an individual. Both in terms of my physical stamina and my mental stamina. My ability to organize and analyze problems. Whether I know something about the subject, or not.
You’re really taught there, regardless of the environment, to find yourself and cope, adapt and learn quickly. To think through your decisions and consider the consequences. Take a wholistic approach to yourself and the individuals that are there in that environment that you’re operating with. And then find a way to survive and thrive and dominate the environment. That’s what they teach you.
The honor code is an important part of that. Integrity is important. When you lead by example, and you follow the standards you set for other people first, that makes a big difference in the organization. West Point teaches you the importance of that. Our honor code is that a cadet will not lie, steal, or cheat. The motto of the institution is ‘Duty to our country.’ If you think about those two, they don’t have anything to do with the individual, they have to do with the individual serving. Having a service ethic for others. You build a passion for that at the academy. And you go on to build on that as a military officer. Not for yourself, but for others.
You’re serving something bigger than yourself. That then builds a foundation for having a passion to succeed by making others successful, the organization successful. And thereby you succeed by doing that.
I think that type of philosophy, religion is another way you would look at it. Not just a spiritual religion, but a religion of leadership. I think the Academy was very important in giving me those things. I’m very grateful for that. That has been an extremely important component to me being successful because that’s where I started from.
I graduated from there and had a successful career in the military. I transitioned from there into the private sector and had success there. I was basically using the skills and the tools that I first learned there and continuously applying them.
The other thing too is I’ve had a bit of luck. I’ve been very fortunate in that for the most part, I’ve worked for very good leaders. I’ve learned from them. I’ve learned how to apply what I’ve learned at the academy by watching them do it. By watching them do those things in difficult situations. In situations where it’s a gray area, where it isn’t black and white, it’s confusing. And you’ve got to make tough decisions that have ramifications beyond just today.
Watching them use their judgment, taking all the facts at hand and making their decisions, I learned through that.
So you’ve had quite a few career changes.
If you go down the list you’ve had a lot of different industries. A lot of people, especially with our generation, we’re starting to not be so hesitant to do career changes. It’s no longer get a job and stay there for thirty years. It’s more bouncing around. I was wondering if you could talk a little bit about that. Because it seems like people aren’t as fearful any more to make career changes. I was wondering if there was any generational differences?
Generational differences. I think what you may find is that generations in part are known for what they’re known for based on the environment they grew up in and lived in. If you have an economy like the 50’s, 60’s, 70’s, where it’s a macro economy, you’ve got maybe two choices for Kraft macaroni and cheese. That’s it. There’s not a lot of change in that type of economy. You can only have so many colors for cars. There’s not that much of a change.
As we innovate and technology improved, and companies were able to give customers and address their needs more specifically, more uniquely, you’ve got all this change evolving. Now there’s five or ten different macoronis. You look at any brand, any family brand, you’ve got all these choices and varieties in that aisle.
Whereas in the past, you didn’t use to have that. Well that springs up a whole bunch of new industries and new needs and new companies that have to be in place to deliver on all those varieties and all those complexities. Information technology, marketing, advertising, distribution of advertising through a different medium. That spawns a whole new set of industries. Then what happens to the next generation is that they’re living in a very different environment than the previous generation.
Now you have all these different choices. Not only that, but look at all the resources you have to go get a job. Heck, you can just type a job description into Google. Whoof! Options and all this stuff pops up in front of you on a computer screen. You couldn’t do that in the sixties and seventies.
I think now there’s a lot more transparency in the market place. Individuals have a significantly different amount, or have a much higher set of resources that are cheap. What does it cost to type a job description and hit return on Google? What does it cost you? Nothing!
If you had to go find an executive recruiter in the 70’s or 80’s, you had to get in your car, take a half a day, put all your resumes together, drive somewhere for forty-minutes. You had to meet with the person for an hour. Drive back another forty-minutes. You had to pay for the gas. You had to do all that and spend half a day and then you really didn’t any information. All you did was deliver your resume. Now, it’s the complete reverse. You’re typing eight words, or five words into a computer, and you’re getting thousands of job listings.
So what’s happened with technology and information validity has dramactially opened up people’s options and the information people can review to generate and consider options. That obviously is going to create the opportunity for individuals, when they’re not happy in a company, or when they’re not happy in a career, they have choices to switch out.
In the past, it was much more static. It was a less flexible structure. You didn’t have choices. If you had a good job, and it was a good job that paid the mortgages, paid for the kid’s school, you were half stuck in that job. You had to wake up in the morning and find it within yourself to be passionate about that job. A lot of people can do that, a lot of people can’t.
Now there’s two sides to every coin. For all the benefits that you get by being able to switch when you can, there’s probably consequences to that. What those are I’m not as familiar with. But you know, maybe you don’t have companies now that take care of their employees as much. Because everyone is coming and going. It gets expensive when you do that, right?
Even though you have all these benefits, it’s never a free lunch. You know e=MC2. There’s always an answer in balance. You can’t get something for free. There’s going to be an offsetting balance. What you’re trying to do is make good choices based on what tradeoffs you’re willing to live with. For very few people it’s nirvana. For better or worse, maybe I’m wrong. So you have to decide for yourself, ‘What tradeoffs do I want to live with in order to find what I like to do? What are the costs I’m willing to incur in order to get those benefits?’ So those become individual choices.
What are some individual tradeoffs that you’ve taken in order to get to where you are today?
When I made my decisions, I try to make decisions that would give me flexibility in the future. Because I always felt that I wouldn’t always know what I’d want in the future. And as I changed as a person in the future. What I would want or what I would desire might change. So I try to pick careers and jobs that if I did them extremely well, I knew that in the future, I could opt into four or five or six different careers or job types within a career or within an industry.
You have different industries and different career paths. If I did early jobs in my career, I did them extremely well. And I had very good general skill sets that made me competitive and desirable as a person, an employee to an employer. I would have more choices and more freedom to have an impact on the outcome of my life. Have an outcome on what I ultimately wanted.
So when I chose to go to West Point, I knew it was a very good leadership school. It was a very academic, challenging environment. Both mentally and physically. I felt if I could survive that, that in most environments I’d probably be competitive.
Then I went in the military and I specifically picked an overseas assignment because I felt that if I had an overseas experience, again, it would be something unique to my resume that would separate me against the people I’d be competing with for future jobs that they may not have on their resume.
I was billingual, which again is another skill because I know Spanish, German and English. By going to Germany I’d learn a third language. And getting exposed to all these cultures and different ways of doing business. Of course, in the military I was stuck with contractors. I just thought it would be another enhancement to my resume and my background and my skill sets.
When I left the military, I felt the military was my big corporate experience. Like a General Electric or a Kellogg or a Exxon Mobil. I felt that I needed in my background a small company with entrepreneurial experience. So I specifically tried to pick to work for companies with no more than 250 employees. I want to look for that. Some kind of criteria that would force me to look for a small growing company.
I was just fortunate in that I got work that introduced me to those opportunities. It was tough at first. But finally I found a real estate acquisition construction company. They had a turnaround situation which I thought again was a good opportunity because now I had a turnaround opportunity, and entrepreneurial. Worked both of them.
So I accepted that job. It was supposed to be a two to three year assignment. Six months into the job I realized that I could do parts of the job extremely well, but I didn’t have the business vocabulary that I thought I should have if I really wanted to be competitive in the business world and the private sector.
So I started talking to friends to see what I could do to develop this part of my resume or skill set. They said to go to a top 10 or a top 20 business school. It’s a pain in the butt to apply. You have to fill out all these forms, you have to write all these essays, it’s really tough. You have to take a test. I said okay, I’ll do it.
So I worked fifty hours a week, and at night, every night, I came home and wrote my essays. I applied to a bunch of schools. I was lucky enough to get into Kellogg Graduate School.
I realized very quickly within six months that I needed to do this. Then I was jammed up because I only had four months to apply (laughs). I had to cram all these all nighters, working my butt off, fill out all these applications, write out all these essays. And I got in, but I ended up leaving about a year and a few months after I started at this small company. I ended up going to Kellogg.
So 20/20 hindsight, maybe it would have been better for me to stay there another year. But it turned out to have worked out okay. I got my year’s worth of a small entrepreneurial experience. I did well there. At the end of the year they offered me to run the whole southeast region.
So I ended up going to Kellogg. I spent two years there. Again I wanted to maximize my flexibility, so I didn’t specialize at Kellogg. Instead of going deep in one area, like a master’s in finance, I took the minimum number of courses in marketing, finance, and strategy so I could get all three.
I left Kellogg in ’93 up in Evanston. And interviewed with a bunch of different companies. I interviewed with industry companies like Kraft and Whole Foods. And I interviewed with consulting firms. And I got job offers at both, and ultimately, again, not knowing yet, at this point in my life, I was 28, 29 years old. I wanted to keep my options open so I felt that going to work for a consulting firm it would keep my options open because I would work with several different companies and several different industries and for several different types of business projects.
I ended up going to work for PriceWaterHouse in their strategy consulting group. Most of my projects were in the food industry. But I did both retail and suppliers. So I did Frito, Coke, Nabisco, Pepsi, Kraft, General Foods, so I worked for them even though I didn’t take their job (laughs). As a consultant. I did Dow Chemical, some automotive companies, oil companies, and I did that for about three years. And then I felt that I needed an executive experience.
What I tried to do was target a job that was ahead of my time. Could I get a job where the average person was eight to ten years older than me? That’s what I was trying to target. I was trying to accelerate my career path. Those type of jobs were usually held by the #2 or #3 person in a large divison. So I started looking for that, and it just so happens that my boss at PriceWaterHouse was contacted by a headhunter. They were recruiting him for a job at Dominic’s. He decided he didn’t want to take it and thought I was the best candidate. He passed it on to me.
I interviewed. They went ahead and gave me the job.
I was the #2 person in the operations division for Dominic’s Finer Foods, which is a $2.6 billion dollar company. It’s 120 stores. Basically, I took everything I learned at PriceWaterhouse as a consultant, how to write presentations, how to do all the economic and financial analytics that I did for these Fortune 1000 companies at PriceWaterhouse.
These were real deep, intense projects that we did for these companies where you can sit for 10 or 12 hours uninterrupted and think about a problem. Really do deep analysis. That consulting in and of itself developed a lot of skill sets for me. It really honed in on a lot of different frameworks on how to attack the problem.
So if I take my West Point military experience, which is the leadership, organizational, motivational part, and I add to that the PriceWaterhouse experience which was the real deep intellectual development in terms of business analytics, when you put those two together, it’s a very strong set of skills that I could now take to Dominic’s, which was my first executive experience.
At the time I was 33 years old. My budget was a $350 million dollar budget. I had to run 120 stores and was the #2 guy in the division. My boss, late forties, really counted on me for a lot of the decisions they were making because of the analytical skill sets I had.
One thing I want to remind you is, these jobs were tough. These were sixty, seventy hours a week. When I was at Dominic’s, six months after being there, some people would say, ‘It’s just not worth it to go through that. It’s just not worth it.’
When I was at Dominic’s, the stress was so much I had purple spots on my forearms from the stress. I had a condition called Linkin Plantis. It doesn’t hurt you. It’s not painful. It’s just related to stress. Because I was drinking a lot of coffee. I was working Saturdays and Sundays. But, I loved my job. I loved what I was doing. I knew I was having a big impact on this company. That was a real turn on for me. I really liked doing it, so I didn’t mind going into work. I didn’t mind working sixty or seventy hours.
After about two and a half years, the company did extremely well. We more than doubled our value. We went public. We had a value of $3 a share, book value, before we went public. We went public at $18 a share. I got a stock plan at $3 when I first got there. We went public at $18 a share. In less than two years, we sold at $49 a share.
So I did extremely well with my stock plan. At that point and time in my life I decided to take a year off.
Some of the things companies do in order to pay for these mergers is they get rid of the overhead of the company they just purchased. So everyone knew that when we sold, half the executives were going to go. For me, that was a good thing because they buy out your option package on the spot. Instead of having to wait. Because if you would have waited, you wouldn’t have been able to cash in your options. You would have had this unrealized value sitting out there at risk because the stock can always go down. Which is actually what ended up happening at Dominic’s.
They really changed the company’s strategy and it didn’t work for them. So what I decided to do is to take a year off. I relaxed. I didn’t work. I traveled around the world. I went to South Beach for two months during Spring Break. I read novels on the beach. I read all my high school novels all over again. Catcher in the Rye, Farenheight 451. I read all those books. It was just a great experience to do that. I went to Southeast Asia and spent four months backpacking with no itenierary. No prebooked hotels, nothing. I went to India, Cambodia, Vietnam. Thailand, Hong Kong, Malysia. It was a great experience. Really got to take a year off, relax, and not worry about work.
When I came back, I formed a partnership with a friend of mine and we started doing consulting. We felt that’s what we were best equipped to do, and at the time, I didn’t want to go back into a Fortune 500 company. I wanted to be more out on my own and have more flexibility to do the things I wanted to do.
To make enough money I’d have to work 60 hours a week. I felt like after having done that for 10 years, I needed a little more of a break so I could spend more time with my family and friends, etc. Go to the Cubs games, that kind of stuff.
So we did consulting. We did well with that. We had a thirty-forty hour work week. I did a project for Exxon Mobil. I did mostly IT related or profit improvement type of projects.
After about a year of doing that, we said, ‘Why do this for someone else? Why don’t we look to acquire companies that we can build and grow? We know how to fix companies and know how to fix problems and know how to work with people extremely well.
So we started asking ourselves what industry we would have the best fit for. That also has the most opportunities for upside. Because we didn’t have a lot of equity. So we had to find a way where we could aquire companies without a lot of equity and have a big impact. That’s what we were tryting to find. It turns out that convienance stores, because they have a real estate component, because it’s real estate and the operation both, and you can buy them both, because it’s real estate you can borrow a lot of money from the bank. You don’t have to put up a lot of money relative to the size of the value. Alright?
So if you think in terms of doubling the value of something, if you just take a million dollars and you’re going to double it to $2 million in three to four years. If you only have to put down $100,000. If you’re buying a million dollar asset and you only have to put down $100,000, and you double it’s value in three years, you now own something that’s worth $2 million, but you only owe $900,000. So you put in $100,000 and you now have $1.1 of net value that you own. You’ve eleven times your money.
That’s how business works.
That’s how business works. You leverage the equity. We thought convienance stores were a great opportunity. It’s a very fragmented industry. So all the things I learned at PriceWaterhouse, at business school, at West Point, putting it together. What turns out as I look back at my career, even though it wasn’t planned this way, each of these opportunities ended up being stepping stones or building blocks to the career or opportunity that I have now.
West Point with the leadership and organization.
The military with training on how to run people and how to run an organization.
Kellogg, my real estate experience, Kellogg, PriceWaterhouse, developing the intellectual. How to talk business, how to service the consumer.
The executive experience at Dominic’s.
Applying all of those things in an executive role from other executieves. I learned difrectly from the CEO and the COO, now getting to take all those experiences and using them for a company I know own and work.
So it was slow to build. And you don’t have to take that risk! There’s a lot of 25 year old who’re saying that they’re going to learn that on the job. I’m going to buy my company now and motor through it. I just choose a different way of doing that. There’s no right or wrong. You can do it both ways, where you’ll be just as happy and successful both ways. I’m just giving you my personal experience about how it evolved. How each one of these ending up being a building block to where I’m at right now.
We looked at about twenty deals. I got to tell you I was very frusturated. You do all the work on a deal. You do all the analysis, the research in the market, you fly into all the stores, you take pictures of all the stores, you’re working like a dog. You make a bid, and then someone else outbids you. You spend all this money and time, and you have zero. Goosegg to show for it.
So it was a very frusturating experience. But you have to have perserverance and you have to have a dogged determination to do this. These projects were costing us money. We weren’t getting paid a salary. Once we decided to do acquisitions, we no longer had income. We were just spending our savings. So you’re spending your savings to live, and you’re spending your savings to live on these projects and it’s frusturating when you’re not turning anything over. So for a year and a half, we weren’t getting anywhere.
It just so happens that as we were in the middle of doing this, 9-11. I’m sure you’ve heard that phrase, ‘9-11 happened.’ Because I’d gone to West Point, because of my family’s background having escaped Cuba, with my sense to serve with an obligation to succeed in this country, I felt obligated again to go serve the country.
I faxed my resume to the White House with a note saying, ‘I’m here to serve. I’ll do whatever you need me to do. I’d love to apply my skill sets.’ The White House responded saying they had a lot of management problems. They wanted me to interview with a couple of the different secretaries of departments we had.
Zach: You sent it to the White House directly?
I mean, I just said I’m going to fax it right in. It’s a department called Presidential personnel. The White House is a huge office. It’s not just the ‘white’ house. They’ve got offices off the White House grounds.
So I faxed it in. I got a good response from the White House. I went and interviewed with a couple departments. The Treasury ended up being the best fit. So I went to the Treasury. My job, again, was catered towards my skill sets. I was the senior advisor to the chief operating officer and chief financial officer. It’s the same person doing both jobs. The COO and CFO. They have management responsibility for all the 13 operating bureaus in the Treasury, which is the U.S. Mint Bureau of Engraving and Printing. Where they print the paper. The IRS. The Alcohol and Tabacco Tax. Trade Bureau. Bureau of Financial Services. Bureau of Debt. They sell all the $8 trillion in debt the country has. They sell that off and manage that. The Treasury audit. The audit of our country financial. All that stuff. That individual is responsible.
It was my job to make their life easier by tackling special projects. So I did a couple of those. We set up some new offices to tackle Terrorism Financing. I helped out with that. And after about four months, based on the work that I did, they decided to make me Deputy to the CFO/COO. So I was then the #2 person managing all that stuff.
Z: How much would you say you were working during this time?
I would fly out Monday morning at 6am to Washington because my family stayed here in Chicago. I got back Friday evenings at 9pm. Then I worked about fifty hours a week there. I may do a couple hours of work on the weekend. One weekend of every six weeks I would stay in D.C. to catch up. So I did that two year commitment with the White House. My first four months I was senior advisor. My second four months I was the Deputy to the CFO/COO. And when the CFO left, they made me CFO. They made me CFO because they had liked the work I had done and liked my approach to problems.
I wasn’t expecting that kind of a job. That’s a much higher level job for a person my age. But it was a great opportunity. I loved serving the country. I loved the people I worked with. Very dedicated civil servants.
I did that for two years. At the end of my commitment I left. I came back to Chicago. While I was at Treasury I met a 1970 Anapolis grad who was actually my chief of staff. He’s a high net worth individual. He saw how I worked. He was already a retired CEO. He was in this for the same reasons I was. He just wanted to serve his country. He had been a retired CEO twice over. He had a company in Silicon Valley which he built and sold. He had a couple other companies he ran. He was a marine pilot. When he left the Marines in the 70’s, he ended up going to IBM. He grew up through IBM. He moved up through the IBM sales ranks. He was an executive at IBM and left to go start up one of his own technology companies.
We took a liking to each other because we had the same philosophy in terms of how to motivate people, how to work with people, how to take care of them in an organization. How to manage by numbers and goals. How to hit targets. So he made me an offer I couldn’t refuse.
He said, ‘Look. Instead of going to work at some consulting firm or private equity firm, or a Fortune 500 company, why don’t I back you, and we’ll go out and buy companies and do acquisitions. I said, ‘Great!’ I couldn’t turn that down.
So we formed a partnership. When we got back he said to take a month off and not worry about it. In July of ’05, we started looking for convienance store acquisitions. In order to pay some of the bills, we did some consulting projects. We did some financial advisory projects. We started in July ’05, we signed our first purchase agreement in March of ’06. We started doing bidding and bought our first chain in March of ’06. We signed the purchase agreement and then it took another six months to close. Which was frustruating. All the lawyers, we were spending money. It was just forever.
But we perservered. Now we have a foundation and a base to build off of. So we closed in Nov ’06 with 15 stores, $135 million in sales.
Z: Are they in the Chicago area?
It’s about three hours west of Chicago. So now I’m commuting again, unfortunately. But I have a very supportive wife. I’m gone about four nights a week. I’m back on Fridays and the weekend. Sometimes I have to stay the weekend over there because things go on with the stores.
But, again, building for the long term. Building for the long term. We’d like to have 500 stores in less than ten years. That’s our goal. My partner and I, that’s our goal. We’re going to be at 19 stores by October 15th. We’ll be at about $45 million in sales. The base sales are growing, plus we have these new stores that are growing.
I’ve been working on several other acquisitions where we’ve been selected as the buyer. It’s going to take a half a year, a year to close. It’s the same thing it just takes forever.
Z: Are the stores not called the same thing?
My philosophy on marketing and branding is when you first get in there, don’t think you know more than the other people do. You think you do, but you don’t. You have to get in there and listen, learn, and observe before you change anything. So our approach to this particular industry segment is that when you buy a chain of stores, you don’t change their name. You leave the name alone. It’s either very specific, rational reason for why you’re doing this after you’ve learned about the customer and the consumers hand in that market first. Going in there and saying, ‘Hey. I’ve got a better brand than you do.’ And slapping it on. Like a lot of companies do. A lot of retailers do that. That’s not the approach I’d take. For me it doesn’t work. Maybe it works for them, but it doesn’t work for us.
So what we like to do is, as opposed to coming in and changing everything, we like to come in and build on the legacy of the previous leaders and employees. And let them know that they’re doing that. We’re building on your legacy. What we do over time is keep the good things and we weed out the bad things over a year or two.
We believe that long term, that builds a better company. As opposed to coming in and cost cutting, changing the marketing plan. Firing people and bringing in new people. We think ultimately we get some short term hits. But then you have all of these invisible costs that start to pop up.
For example, you go into a meeting, and you may have heard this or not, but I’ve been in a meeting that when we changed such and such, we didn’t realize that XYZ was going to happen, and now it’s biting us in the butt. What are we going to do about it?
So all the gains you’ve made in the first three months, all of a sudden you’re paying it back because you didn’t realize something was going to happen because of the change you made. When you change something, all these other little things change also. They’re invisible. You don’t realize until after the fact. You get this upfront gain that you thought you were going to book, and all of a sudden you’re spending money on the backside because you didn’t listen, learn, and evolve the change in a planned way.
We think that if you do it the way we do it, you keep the goodwill of the employees. They then are going to work better and harder for the company because the company is listening and engaging them. Very valuable of the part of the organization. And that makes all the difference in the world. Because then you got fifty people in the world thinking about the problem instead of two people thinking about the problem. Fifty heads are better than two. I don’t care how smart the two heads are. Fifty heads are going to be better than two.
That’s how we approach our positions. We integrate the acquisition slowly. We’re going to build on the legacy of the company we’re acquiring. And if they have a great brand and we can leverage that brand, we’ll leave that brand alone. We’re not going to touch it. We’ll just do all the things behind the brand on the supply chain side. We’ll be efficient. We’ll integrate. We’ll solve problems. Those kind of things. With the employees help. Not from the outside with arbitrary decisions. Because that’s thinking you know more than them. That’s not our approach.
So you pretty much just ran down your whole life story. I was trying to nail down the high point and the low point. But I was wondering what you consider the point where you were at the low point.
The low point, I guess in all of my opportunities was about halfway through the time when I ended my year off, after Dominic’s, and going to work at the Treasury department. That was about a three year span. Right in the middle of that, it was a low point, I didn’t feel good because we hadn’t closed on any acquisitions, we had spent a lot of money trying to close those acquisitions, and it was extremely difficult. Despite the money I made at Dominic’s, having spent all this money was extremely difficult economically. I still had plenty of money to live off but knowing that you had this much, and now you have this much.
So why do you keep going?
Because I told myself that I’d get 99 ‘no’s’ to a ‘yes.’ I budgeted 99 ‘no’s.’ I budgeted 99 failures. Whether I had them or not, it didn’t matter. I told myself I know I’m not going to have 99 failures, but if I budget 99 failures, then I’m not going to give up. Because no matter how many failures I run into, I’m just telling myself that’s failure 13. I got another 86 to go. I just told myself I was going to fail 99 times before I got to the top of the mountain. That gave me the endurance, the stamina, the perserverance to get through that three year period. Because it was tough. We looked at 20 deals. 20 different markets I flew to. I put the books together. Took the photos, I went to the bank. And then someone else would outbid us. We’d be running, but then someone else would pay $500,000 or $2 million more because they were bigger companies. They would just pay more than we could. So we’d spend all this time working fifty, sixty hours a week with no income coming in! Zero. Making no salary, no money. Spending our savings in doing this with no revenues coming in.
It’s different when you’re starting a company. If you open up a shop or a distribution center or factory, yeah you’ve spent your money, but at least you’ve got some revenue coming in and you see the light at the end of the tunnel. Here, all the money is going out. We’ve got no revenues at all. Zippo. And that was frusturating and disheartening. That was a real low point.
But I knew deep down that if I perservered, it would only be a matter of time before these big companies would be so busy that there would be an acquisition I would bid on, they wouldn’t have time to increase the bid. Because we were bidding pretty well. These other companies actually had to outbid us. When they do that, they have to do more work. They have to make sure they’re not screwing themselves because they’re not overbidding.
I figured that if I kept at it, eventually I would find an acquisition that would fall through the net. That they didn’t have time to do, or it didn’t fit their strategic portofolio, and I would end up with that chain.
Now the other frusturating thing was the absolutely lowest point was when 9-11 happened and I knew I felt the responsibility to go serve, but I had just spent all this money. And now I was going to put it on pause? That meant my broker network was going to go cold. My banking network was going to go cold. Because I was putting all this on hold for two years. I was going to make a two year commitment. I was going to get cold, but it was important enough for me to serve to do that.
It turns out, and I didn’t realize this at the time, that having the CFO title of the Treasury Department, CFO of the U.S. Treasury, actually made it easier for me to get a loan from a bank. It gave me more credibility. So even though I didn’t know I would get that benefit, for going back to serve the country, and having done that job, it actually turns out by fluke, it has actually helped me tremendously in getting these deals closed. Because it gives me a lot of credibility.
I didn’t think about that when I was going to do these jobs. It didn’t dawn on me til after the fact. When I realized that I was going into these meetings and people were telling me that a big part of this meeting is because you were the CFO of the Treasury Department. They might have to pay a higher price, but I have the credibility now. People were willing to work with me.
That was a benefit that I did not plan on having. So that was the low point. That halfway point of struggling through, not having any successes, and having to perservere.
So one of the things that we’ve come across in our travels and about a hundred interviews in the last two months is that pursuing your passion is associated with an upper middle class status. Coming from an immigrant family, going to Miami, I was wondering what your thoughts on that were.
Don’t let anyone ever tell you that you can’t be what you want to be. Because it’s not true. You work hard enough, you work long enough, you really do have your destiny in your hands. The problem with that is you have to be self accountable. Some people can’t deal with that. Some people can’t deal with the ‘Who I am and what I am is up to me.’ They want to blame someone else or they want to blame the environment or whatever.
And yes, it’s not a fair world. Some individuals start out with a lot tougher road than other individuals. You can’t change that. So if you can’t change that, don’t focus in on it. Don’t worry about it. Worry about what you can change. It is what it is. If you’re born into a family with a billion dollars, yeah, it’s going to be a lot easier.
If you’re born into a family that doesn’t have any education or doesn’t have any money or financial resources, yeah, it’s going to be a lot tougher road. Guaranteed. It’s going to suck half the time. It’s going to be tough. But, if you focus in on the things that you can control, and you excel at those things, and you perservere and you work hard, really the future is in your hands. No one can tell me that’s not true because I’ve personally experienced it.
When we got here we didn’t English. We didn’t have a dime. Nothing. My dad started fishing for a living. He went out in the morning. He caught a bunch of fish. He came back in the evening and sold them at the pier. That’s what he did. That’s all he knew how to do.
Then he bought a little gas station with the money he saved up from going fishing. Right? Because he knew how to fix engines. He knew a bit about fixing motors, so he bought a gas station. He worked that for awhile, and that didn’t do so well.
At the time, my dad was involved with trying to go back to Cuba. He would buy guns and stuff and try to go back to Cuba because Castro was still there. So for the first five years we were here, I failed first grade because I didn’t know how to speak English. I failed first grade because I didn’t know how to speak English. Because my dad and my mom thought we were going back to Cuba. We thought Castro was going to fall.
When it became obvious he wasn’t going to fall, then we decided to start learning English. My dad said, ‘If you don’t get good grades, even if you pass, I’m not going to let you pass, so you’re not going to be with all your friends.’ So I got good grades, so when my friends went from second to third, I would go second to third. Because my dad told me that if I didn’t get A’s and B’s, I wasn’t going to third grade. He was going to pull me back voluntarily (laughs).
So from then on I always got good grades. And then it became a habit of getting the grades. And then it became a desire to get good grades. But if you work hard enough and long enough, you will achieve your dream. It may take you longer than you think. It might cost you more than you think. And then you have to decide if it’s worth it. Is it worth it?
When I was at Dominic’s I had those purple spots. They went away after seven or eight months because I got used to it. Because when I got to Dominic’s I didn’t know a lot of things. I had to learn. In order to do the job well and not knowing some of the things a lot of the executives knew because they’d been there for twenty years, and I just got there, it was very stressful to succeed in that environment.
But I perservered. I lasted. The spots went away. And I did really well there.
I think the key to success is, part of its balance. You have to have a balanced life. Even though I worked hard, I always went salsa dancing. I went out with friends. I went to go see the Cubs game. I always found time to enjoy life. So I hate the term work hard, party hard, but I always managed to have a good time with a work life balance.
So if there was just one piece of advice, if you could go back to when you’re 22 years old, and offer one thing to say to your 22 year old self, what would you say?
Buy real estate. Don’t rent. If you can afford to buy. I’d buy. Then when you move, keep it. And rent it out. And hold on to it. I’ve got about five or seven units now. I know that’s not life oriented advice, but instead of driving that brand new Celica, get yourself a dumpy old twenty year old Datsun, as long as it gets you from A to B. Take the difference in that money, save it up, and go buy real estate. Because you will be a little mini real estate mogul with a lot of money.
Because over time, if you buy real estate early in your life, over time, as you pay that real estate down, and you own more and more and more real estate, it actually becomes your own personal bank. Because whenever you need to go get a loan, you go to the bank and say ‘Hey. I’ve got fifty percent equity. I want to bring it down to twenty. I need a loan.’ Boom! Overnight, they’ll give you a loan. You always have access to money if you start at a young age and build up the real estate portfolio.
Yes it’s a lot of work. Yes they call you at three in the morning with the plumbing backed up. But again, is it worth it? I think it is.
You start young, you buy a little condo every two years, every three years. But the time you’re thirty-five, you’ve got five or six of these things. The first one is a third to a half paid off. And now you got rental income coming in.
Z: Can you take the equity out of the first one and buy the second one?
You can do that, but that takes longer. If you don’t have new equity coming in, you wait for the first one to build equity, you may buy one every four years or five years. But you have to be careful. You have to know what you’re doing. You have to buy the right place.
It’s not as easy as it sounds. But I’d submit to you guys to start at a younger age.
Sometimes you move so far that you have to sell. But then you make some money out of it. If you buy in the right places. Then you take that money out and put it in the new place you move and immediately you find something and buy it.
One way to do it is if you move to a new place, buy the place you’re going to live at, and within three months when you’re settled, buy another condo. Buy that one and rent it out, or buy that one and rent yours out.
You will build wealth, not at the very beginning, but at the second half, you will build tremendous wealth in your life if you start early. I didn’t start in real estate until I was thirty three years old. It was the first piece of real estate I bought. That was the one regret I had. If I go back, and if I could start my real estate at 22 or 23, instead of 33, I’d have even more financial resources than I would even have now.
Z: How old are you now?
Right now I’m 43.
The angle: If Jesus is the hardest worker we have, which is represented nicely by his purple spots on his arms, then we have a winner. Son of Cuban immigrants, failed the first grade because he didn’t speak English, worked hard all the way through WestPoint and Fortune 500 companies to become the CFO of the U.S. Treasury. Now acquires properties and spearheads a convenience store business worth $45 million. All because hard work and perseverance.