Karl Eller – Advertising Entrepreneur

May 16, 2006
Posted in interviews
May 16, 2006 brett

Karl Eller graduated from the University of Arizona in 1952 and claims to have made more money in college than he did in his first six years thereafter. He went into the billboard business where he worked his way up from a lease man, to a sales rep. He then gathered up the confidence to apply for the president of the company at 26. He was turned down, only to receive a phone call a few years later from the former boss saying that he wanted to sell his advertising business to him for $5 million. Karl managed to raise $5 million in ninety days, (during the early 60’s mind you) and began what would be his path to advertising success.

Some great business advice that he gave us was to make ten deals and see how they turn out. According to him, one will be a home run, two of them you will be fortunate to break even, and seven of them will fail. Karl Eller is no doubt driven by these home runs and that is what makes him a successful businessman. He dwells on his successes and downplays his short-comings.

Mr. Eller emphasized the importance of integrity, saying that it is all you have in the business world. He explained creativity as seeing something that others don’t. He stressed that these two principles were fundamental in his achievements and the level of excellence that he and his company’s have aspired to reach.

Interview

When I was your age I was graduating college.  I went to the Army for 2 years after high school.  I went to the University of Arizona from 1948 to 1952.  I got married two days after I graduated.  Now you guys don’t married until several years down the road.

I got married and I didn’t even know what I was going to do.  I was an entrepreneur in college.  I had all kinds of deals and I had more money while I was in college than for the first six or seven years when I got out of college.

But I was always interested in advertising.  I grew up interested in the advertising business.  I went to college and majored in marketing, didn’t learn very much, but in those days you don’t have the type of education that you get today.  It was mainly on your own, and you took the basic courses in accounting and statistics and stuff like that.  But really, I was always interested in advertising.

I didn’t know what I was going to do.  I got married and was going to work for the University in the graduates management office for awhile, and shepard the Arizona football team and run the stadium and stuff like that. 

I answered a want ad in the newspaper to be a lease man for a billboard company.  It was the advertising business, so I thought I’d give it a shot.  I got the job and went out leasing space.  It wasn’t exactly my passion, but it was close to it.  I became a lease man and a year later I became a salesman.  I moved to Phoenix and my wife was a school teacher so she was helping support us both on $200 a month, which was a lot of money in those days.  In a way.

I moved my way up the ladder and ended up becoming a pretty good salesman for Foster & Kleinsman Co.  They moved me to Chicago and I ended up running the Chicago office for them.  The Metro Media company came and bought Foster & Kleisner.  The guy who owned Metro Media was in the television and got into the outdoor billboard business.  Pretty big media guy. 

So then I decided that, well, they were looking for a president.  I was 26, 27 years old and I decided for some unknown reason, call them on the phone, and apply for the job.  Why I did it, I still don’t know.  I don’t know if I had the guts to do it, but I did it.  I applied for the job.  I knew it was going to happen, but I knew the owner of the company was going to say that I was too young for the job and needed experience and all that baloney.  Which he did.  He said you got a great future and all that stuff. 

For some reason, I always said that I wanted to get other experience besides the billboard business, and I had some job offers from advertising agencies in Chicago, so I decided to take one of them.  I took a job with an advertising job in Chicago and pursued my advertising passion.  I was an account executive.  That’s how I continued to do it.

In 1961, I had two kids and was living in Evanston, Illinois.  I think I was making, which was pretty good money then, something like $20,000 a year.  Which was pretty good in Evanston.  This one day snow was coming down and you couldn’t even get across the street to the supermarket.  I get this phone call from the owner of Metro Media.  He says, ‘How would you like to move back to Phoenix?’  I said, ‘Well, it’s only ten below zero.  Yeah, I’d love to get back to Phoenix.’  He said that he was going to sell his billboard companies in Phoenix, Tucson, Bakersfield, and wanted to have me buy it.

I said, ‘What are you talking about?’  He said, ‘I have an offer for $5 million, but I rather have you run the business.  I’ll give you ninety days to see if you could put the deal together.’  I said, ‘Where am I going to get $5 million bucks?’  Which in those days, today it would be something like $100 million.

For some unknown reason again, I said I’d give it a shot.  What I did was I went back and tried to figure out how to do this.  That’s how I started the Entrepreneurship School down in Tucson.  I said someday, I hope that young guys like me that want to go into business for themselves get the opportunity to do it.  You don’t learn anything about the environment of having a business plan, how to get investors, how to get financing, how to do all the things you have to do to make projections.  I knew how to write a marketing plan, but I didn’t know how to do that. 

I finally got it done.  I pursued my passion from then on out in the advertising business. 

The other thing is, people often ask me why I even took the job with the outdoor company.  I was just always interested in billboards.  When my family and I traveled back from Chicago, where I was born, in those days you saw billboards.  But I was really enamored with these Burma Shave signs.  These little signs that have slogans along the road.  I really loved those signs, so I fell in love with the billboard business. 

When I had a chance to go into it, maybe it was something that I’d love to do.  When I got into it, I liked it.  So that’s what happened.  In the billboard business, everyone should start off as a lease guy, not a sales guy.  You go out and lease a property.  I used to love to do that.  In fact, I still do it sometimes.

The one lesson I learned? I learned a lot of lessons.  There’s so many of them.  The one thing you’ve really gotta learn is perseverance.  If you want to do anything in life, don’t give up.  If you have a passion for something, stick with it.  Sometimes you have ups and downs, but you have to stick with it.  Hang in there.  That’s the number one thing.

The main thing is to never sacrifice your integrity.  I’ll throw something I heard on the radio last week.  It was a really complicated integrity situation.  The guy was talking about how he was in high school on the east that he had a teacher that had very liberal teaching about politics and life in general.  He was brought up in a conservative line of thinking.  And he disagreed with the teacher.  A lot of the papers he wrote the teacher was going to fail him in the class.  He decided he needed to change his attitude and his writings so he could pass the class.  That was a very interesting integrity question.  I throw that back at you, what would you do in a situation like that?  I’ve thrown the same question at my wife, daughter, and I get pretty different answers.  It was kind of an interesting question in your own integrity. 

If you believe in something, and you knew you would fail the class, what would you do?

My teachings is that you never learn by your successes, you only learn about your failures.  I’m not going to put you on the spot, but think about it.  A lot of kids would do exactly what that kid did.  They don’t want to fail.  And it shouldn’t be that way.  But it is. 

That’s the hardest thing in life is to maintain your integrity.  Because in the long run, you’re going to be successful.  If you don’t, you have the integrity and you do bet that it’s going to catch you.  That’s probably the most important lesson.  But there’s seven or eight things that you just have to learn from your failures.  That’s what you do.

What’s the largest obstacle you’ve had to overcome in your career?

Oh boy.  Well, I don’t know if I really had any obstacles.  I’ve had ups and downs.  The largest obstacle I had to overcome was when I was running Circle K and I got into bankruptcy.  When you get into bankruptcy, the CEO is the one that has to take the heat. 

I was the biggest shareholder in Circle K and the stock went from $50 to $0.  I couldn’t sell or do anything.  I owned a lot of real estate at that time, in the early nineties.  And I was in debt, about $100 million bucks.  My lawyers urged me to take personal bankruptcy.  I just couldn’t do it.

I had a good friend of mine who owned Discount Tire by the name of Bruce Halley.  He had lost his wife about three years before that to cancer.  We were at a party and he put his arms around me and said, ‘You know Karl, I know you’re going through hell in high water but I’d change places with you right now.’

I said to myself, ‘I don’t have a worry in the world.  I better figure out how to get out of this mess.’  So that’s when I decided to see every creditor that I had.  I was 65 years old.  Everybody retires at 65, I guess.  But I went to every creditor and said, ‘Listen.  I’m going to try and pay you back, or I’ll settle with you.’  Half of the creditors I was running to settled and half stayed with me. 

After I got that cleared up, I had to say what am I going to do, and what do I know best?  By that time I had been in the movie business and every kind of business you could believe.  I said, ‘Well, the billboard business is what I know best.’ 

I was riding around Phoenix and saw how badly the business was being ran by Gannett, which I’d sold the business to years ago.  I went after them and asked them to sell me Phoenix.  Again, this is where perserverance comes in.  The first time they turned me down.  I went a second time and they turned me down.  I went a third time and finally the CEO says, ‘Make me an offer I can’t refuse.’  I said, ‘Well can I have some numbers or something to work with?’  He said, ‘I’m not going to give you anything.  You know the plant better than we do.’

So I went back with an offer he couldn’t refuse.  And then I had to figure out a way to finance it, which I got done and built another thing.  But that was pursuing your passion.  I was 65.  That was 12 years ago.  There is luck involved.  I think.  Luck is hard work and seeing what others don’t see. 

So when you say what’s the most important, I think it’s just everything.  Everything in your life.  You just have to be asute and aware of what you’re doing.  Have integrity.  Be a good salesman.  Sales is a pretty hard subject.  I’m surprised.  I’ve tried to get the University to teach a class about ethics, and salesmanship.  But selling.  You’re selling yourself, you’re selling your product.  You’re always selling something.  Selling is really listening.  When you want to sell someone, you go listen to the guy you’re trying to sell.  He usually tells you, if you ask the right questions, he tells you what you can sell him.

The other thing besides listening is when you make a deal, be sure to get out of there as fast as you can.  Before he changes his mind. 

But those are things you just learn as you go through life.           

How do you gain confidence?

Experience.  You can’t get it over night. What you do is you earn it.  You earn it with your banks, you earn it with the people you deal with, you earn it with yourself.  You earn it with your friends.  You earn the respect. 

Do you think you lost it at that low point?

I thought I was going to be over with.  I mean, if it wasn’t for Bruce giving me that shot in the arm…because truthfully, I didn’t have a worry in the world.  Look at Bruce.  He lost his wife.


The over thing is that you have to have confidence in yourself.  If you don’t have confidence in yourself, that exudes to anyone you talk to.  My integrity through my whole business career, when I dealt with investors or financial people or anybody that Wall Street and all those places, I always told the truth.  I told them what was happening, the bad things as well as the good things.  Never did anything that I thought was out of wack with my numbers.  There’s a lot of gray areas in accounting.  All these people getting in trouble today, you can’t blame them for some of the accounting.  Accounting is screwed up sometimes.

I always had my word.  When I was in trouble, that helped me come out of the trouble.  But otherwise, I really mean it, it’s how you lead your whole life.  You never know when it’s going to go on to bite you.  If you were a kid in college and accidentally got in some trouble, that may come out to haunt you someday.  You never know.  Integrity is the same thing. If you have a history of not having integrity in your business dealings, you’re not going to get business. 

I had a lot of things going for me with the outdoor business because I knew the business.  I knew what was happening there.  I had some experience that really helped me out.  I also knew the CEO of Gannet because we were together at one time in the company.  All those things fit into place.  But I had to execute it to get it done.  There’s no hope for having it done. 

Maybe you call it, I don’t know how to put it.  Maybe you call it an accidental happening.  But really, it isn’t an accidental happening.  It was years of hard work (laughs).  And experience and being able to pull it off.  And creativity is important in life as part of the answer.  Creativity is not creating art work.  It’s creating something that you see, that no one else sees. In advertising it’s a marketing idea.

Everyone talks about innovation today.  Innovation is the buzz word of business.  Innovation isn’t technology or anything like that.  It’s how you sell or market your product differently from other people.  That’s what it’s all about.

I had a couple role models.  One was my football coach at Tucson High School named Ronald Rigley.  He was a teacher and a disciplinarian and a guy with complete integrity.  If you missed practice or came late to practice, you didn’t play the next game.  He put rules down, and he enforced them.  That taught me discipline.

When I was starting out at Foster & Kleisner there was a guy named Bernie Arbuckle.  He was one of the executives and oversaw the Foster & Kliser deal.  He took a liking to me as a young kid and told me once that every ten years you should change professions.  Ten years is long enough to be in a space.  In a way, I did that.  Not marking ten years, but it just happens.  Every ten years I decided it was time for me to change and it worked out pretty well.  He ended up being the Dean of the Stanford Business School.  He was the CEO of Wells Fargo Bank at one time. 

What deal are you most proud of?

There’s so many of them.  One of the initial deal of buying the company was a pretty big deal for me.  Probably getting back in the billboard business that became the largest in the world. 

What’s your thought process when analyzing business deals?

I do have some investments.  Some are good, some are bad.  I’ll give you a little theory.  You make ten deals.  This is in the movie business, investing, whatever it is.  One could be a home run and you might some money on it.  Two you might get your money back.  Seven you’re going to lose.  You just have to understand that you’ve got to have the guts, and the ability because you’re going to lose on at least seven out of ten.  Sometimes the odds are going to change, but those are the odds. 

Investing is mainly- you invest in the people.  The people, the integrity of the person, the hard work…all that stuff comes into it.  Second comes the product and the idea.  Last is the financial part.  Once you have a good product and a good idea and a good person to run it, that you can trust and knows exactly what he’s doing…did you guys go to the finals of the entrepreneur thing this year?  You didn’t?  It’s too bad you didn’t.  There were 3 undergraduates and 3 graduates.  Those were the finest business plans I’ve seen in 22 years.  The finest presentation by the youngsters.  Great ideas.  I’d say out of the six, three or four of them will make it if they go to market with it.  And that couldn’t happen if they hadn’t had this opportunity to put it together.  That’s what it’s all about.