Founder Focus: How Serial Entrepreneur Steve Hall Leverages Conscious Capitalism to Improve Company Culture

Welcome to another episode of Founder Focus with Steve Greenfield, founder of Automotive Ventures. This ASBN original series dives into the inside stories behind some of the most impressive entrepreneurial journeys. In this segment, Greenfield sits down with Steve Hall, a serial entrepreneur who has founded companies like the Make It Matter Foundation and Drivers Select.

Transcription:

Steve Greenfield:
This is Steve Greenfield from Automotive Ventures. And thanks for joining us this week, I’m excited to welcome our guest Steve Hall, who has an incredible story of how he took a fundamentally different approach to serving car buyers. Steve’s journey with Drivers Select began back in 2004 with a belief that there had to be a better way for all stakeholders, including consumers, employees, suppliers, local communities, and competitors to experience the used car industry.

Steve Greenfield: In his first four years of business Drivers Select was one of the top three fastest-growing companies in Northern Texas reaching revenues over $70 million and generating very healthy profits. But at this point, as we’ll get into shortly, Steve recognized that he had to play the long game, creating win-win-win relationships and becoming more aware of the impact business and its leadership has on being a force for positive change and elevating humanity by implementing the principles of conscious capitalism, fast forward to 2017, he credits his conscious capitalism journey.

Steve Greenfield:
As the major reason Drivers Select was acquired by Sonic Automotive, which became the model to accelerate their consumer-centric EchoPark brand. Steve helped scale to over $1 billion before stepping down to pursue more entrepreneurial opportunities in the auto sector. Today, we’re going to peel back the layers a bit to understand what motivates Steve, how he thinks about innovation and motivation and how he built his business. So with that, let’s welcome Steve, to the show, Steve, how you doing?

Steve Hall:
I’m doing great. Steve, thanks so much for giving me the opportunity to talk about some of my favorite subjects, automotive conscious capitalism entrepreneurism, and just been great to have the opportunity to explore those with you today. Well,

Steve Greenfield:
It’s great to have you here and let’s dive right in. So, um, you’ve had an incredible success story. You know, I’ve read multiple articles about it and re really have enjoyed getting to know you or more recently, but let’s start how you originally got into the auto industry.

Steve Hall:
Yeah, it started out really as a summer job as a way to make money to help fund school. Um, and I had the opportunity even through my college experience, it was a local auto auction near the college, and I was able to continue to work in the industry through college. And when I got out, I felt that I had a decent understanding of what it would be like to have a career in automotive. And so it’s a space that I had the most familiarity and decided, you know, throughout my twenties is really spend that time learning the trade working with some really good mentors and coaches in the automotive space, trying some my entrepreneurial, um, motivations there. And I think those experiences working in some really great organizations and working in some toxic organizations taught me a lot. Um, it also gave me appreciation of just trying to do things myself and recognizing what dealer principals have to go through to be able to fund this type of business.

Steve Hall:
And that was back in the, in the nineties, it’s gotten so much more capital intensive, as you know, and then the thirties for me were more about taking a lot of those lessons that I learned in automotive and putting them on ground and starting my own business and trying to grow that I never really understood during that timeframe why it was when the business was so good that I wasn’t doing good internally, but I remember in times like the great recession, the business was terrible, but yet I was doing okay. Um, and that became put me into my forties, which I really think was the unlocking move for me at a time when I had just gone through a leadership academy here in Dallas and got introduced to the movement conscious capitalism and why I think that was so significant for me.

Steve Hall:
Um, it put me around leaders that I had never been exposed to, they just thought differently and I was just so impressed with the way they looked at business and how they practice capitalism much different than the way I was taught in business school and, and mentors, and even by entrepreneurial parents. Um, I just knew if I hung around these guys, um, I could learn a lot. I learned from these folks that they really led first with their core beliefs their principles, um, and, and leading with their core beliefs and principles, allow them to get really clear on their purpose and they created extremely strong purposes. And what I learned through that journey from them is when you have a strong purpose, and this is what I was missing, I think a lot in my twenties and thirties, um, you know, you always hear is what’s the higher purpose of the business.

Steve Hall:
And it sounds like a lot of, you know, just good to do things, but does it really make business sense? And I watched and learning the journeys or the folks in conscious capitalism. I could just feel how that purpose allowed the organization to actually pull faster toward their goals. Um, I think it also created such clarity that even during the most difficult times, um, it allowed people to hang in there, roll up their sleeves, really dig in, um, and having a strong purpose. You can just see it moves the organization ahead faster, through good times, through bad times. A lot of the struggles that I was having with keeping up with growth in the good times, and trying to stay in business during the bad times, I could see where that higher purpose really fit in. And then I learned that when you get a higher purpose and you get really clear on your beliefs, um, it’s easier to set the right goals.

Steve Hall:
A lot of the goals I was setting in my twenties and thirties were more socially defined probably than self-authoring right. And these folks were extremely clear on what were the goals that really were important to them. And I don’t think they could have done that work without having a higher purpose. And by having the right goals, what that did is it put them on the, the right path and the right path, meaning they were very, very clear not only what they needed to do, but what they didn’t need to do. And they weren’t as tempted by, um, you know, small short-term opportunities. You know, they had such great clarity that they were able to say, no, not just a good ideas. They were able to say no to great ideas, right? And when you have the, when you’re operating with the purpose and you have your right goals and you’re on the right path, you end up living such a much better lifestyle.

Steve Hall:
Um, you’re more balanced. You have better relationships, you had better health. And so that’s was some of the things I really learned through that journey. Um, and what came out of that was I had the opportunity to really start challenging a lot of the big assumptions that I made in the industry, um, that I would always taught that were, that I believe were truce. And these folks showed me a different path. And when I started questioning those truths that I thought were, um, needed in business, um, and allowed them to practice a different way. My business started to change

Steve Greenfield:
For somebody who feels, there’s a gap between current state and what you’ve just painted in terms of a picture, how would one get started to move an organization in that direction?

Steve Hall:
So I, I remember one of my coaches telling me, phrase leaders, get the organizations they deserve. If you don’t like the conditions that exist in your operation, don’t look out the window, look in the mirror. And if you want to create great cultures, um, you gotta work on yourself. And so I took that to heart and I quickly started to understand the greatest thing that I can give people is the opportunity to work for great leaders. And great leaders are only going to be attracted and hang around if I’m doing the work on my own myself. And so I was re I recognize after it, you know, it took me a while. Um, but I recognize that if I was going to create the kind of organization I wanted to enjoy, I had to work in filling a lot of my leadership gap, because if I wasn’t willing to do the work that’s mine to do those leaders around me, had to spend their time fixing their own leadership gaps as, as opposed to working on themselves.

Steve Hall:
But when I started to do the work on myself and fix my own leadership gaps that created the space for them to do their work, and then the folks under them would do their work. And it was like a flywheel starting to take off where everybody was doing their own work and not trying to compensate for those around them to do that. And I think if I would’ve done that much earlier on, um, I, I probably would have had a lot more success you know, in my twenties and early thirties. So

Steve Greenfield:
Let, let let’s focus on that for a minute. Now you have the opportunity to coach people much earlier in their career. So let’s talk about resources, whether it’s groups, they should join books, they should read, um, content. They can get online. I mean, if you were going to sort of like provide someone yourself, let’s go back to yourself in your twenties and say, Hey, look, you’ve got to do this. You’ve got to read this. You’ve got to join these groups. What kind of advice can you give the audience out there?

Steve Hall:
Um, you know, I think the first piece of advice that I would probably get is get really clear on what matters, and this is advice I’m giving myself not to the audience again, because I don’t have the context that that they’re dealing with. But for me, my 20 year old self, I would say, just get really clear on what matters, um, understand that the greatest gift that you can offer those around you is your own continuous unfolding. Um, I have a good friend called Donna Pawnee and he uses this example, a tissue. He says on the four corners of the tissue, you have your work, your family, your community, and your spiritual sword source, and draw a.in the middle of that tissue. And if you pinch the middle of the tissue and you lifted up, what are you doing to the four corners? You’re lifting all those areas of your life up with it. So the greater that you invest in yourself and the more you grow, those areas grow with you. And so I think that’s probably the thing that I’ve really enjoyed the most over the last 10 plus years is just working on myself to really make those around me be able to provide value and lift those. Great, great. Um,

Steve Greenfield:
Let’s switch to books, um, any books that you would recommend entrepreneurs out there read as like must reads that, um, they may not have heard of before.

Steve Hall:
Yeah. Um, the books that, well, I’ll, I’ll speak to the ones that have impacted me the most. Um, how will you measure your life by Clayton Christiansen? Um, essential ism by Greg McKeown, I thought was probably one of the biggest motivations for me to build the business and lifestyle, um, by really understanding where are you spending your time and what’s get clear on what’s essential and try to reduce, but the more clear you get on what’s essential in your life, the less time you’ll spend on the trivial, um, conscious leadership by good friend, John Mackey, who was one of the founders of conscious capitalism, um, principles by Ray Dalio and how he bill Bridgewater capital all have had tremendous impact. And kind of the way I think about business capitalism, entrepreneurism, um, if I was starting out and a business as an entrepreneur, I would probably enjoy the most reading. Jim Collins is a beyond entrepreneurial-ism 2.0 right. Great

Steve Greenfield:
Advice. Um, good really reading list for me to pick up a couple of those as well. Um, so let’s go back to drivers select. Um, so you, you, you recognized a big need in the market. You kind of started to optimize this through your forties, et cetera. Um, what would you say was sort of like the, the magic sauce of drivers select? What, what worked well finally when the company really started to prosper,

Steve Hall:
What are the folks that I met in the conscious capitalism community was getting Jim Senegal and he was the founder of Costco. And he really helped me understand, um, the concept of making deliberate. Trade-offs like, so if you think about Costco, they probably have 4,000 skews compared to 40,000 skews at Walmart and target and other have, and you got really clear is I don’t need to beat them on all 40,000. I just need to pick the 4,000 that I’m really gonna win on. Um, and for me, um, I believe that when I, when I looked at the used car space, our belief was that these are value conscious consumers, and they have high levels of price sensitivity. And if I could be the low cost producer retail retailing used cars that I could win a lot of market share. And so I started thinking about are what are the, the two biggest things that drive up the cost of used vehicles.

Steve Hall:
And I chose to focus on personnel and depreciation. And the key for us was if we could reduce the complexity and those two areas, um, we could make our people a lot more productive and we could turn our inventory a lot faster avoiding the depreciation curve. So things we did on the inventory side was we decided that we’re gonna be able to get card we had, because we didn’t have new car franchises. We had to buy most of our cars from auctions. And so we wanted to make sure that how do we get those cars from auction through reconditioning to the front line and the quickest, most efficient, lowest cost way so we could pass those savings onto the consumer. Um, and what we figured out was we don’t need to have a large spread of inventory from one year old cars to 10, 15 year old cars.

Steve Hall:
So we chose this sector, all knit, we pointed nearly new, and it was really competing as much against the new car buyer as it is a used car buyer. And these were one to four year old vehicles under the factory warranty that we didn’t have to spend a lot of money reconditioning we’d go to the auction. And we would say, you know, when some of the things we would tell our buyers is, look, don’t try to steal cars pay good money for good cars, so we can get them to the front line, because we just believed the auction was a very efficient marketplace and that the ideas of really stealing cars consistently it was going to be difficult. So just find the really good suppliers, usually a lot of manufacturers that fleet lease rental companies that had consistent quality that we could replace quickly by a high con CRS on those cars.

Steve Hall:
So we didn’t have to do a lot of reconditioning and priced them very aggressively day one, right. And that removed a lot of the complexity on the people’s side, you know, as explained it is when we got really clear on who we were, what we stand for, why we did what we did, and more importantly, what we didn’t do and why we didn’t do it. It gave people the clarity to, to know how to spend their time and what to spend their time on. And then the investment that we all did and, and working on our own leadership gaps, supporting one another, creating this, what we call this culture of care, which is really around, um, a acronym carrying acts randomly expressed throughout our stakeholder community. When we started do those things, we reduce the complexity and the people side. And, and I think that’s probably, it’ll never show up on a PNL or a balance sheet, but it probably will reduce costs more than any other thing we do.

Steve Hall:
If you can eliminate the drama that happens inside, I’m a big believer that most businesses get fail from internal toxic cultures, and they do external market forces. You know, we tend to hear about all the external market forces, but we don’t really hear about the toxic cultures that, that destroyed business. So those were the two things, and we got those right. We were able to eliminate so much complexity in our model that that was able to turn that inventory faster, which meant we had lower price, the lower price, um, you know, helped us just continue to drive sales. And we had, we kept asking toward the end, we just said we had an acronym is , we kept asking ourselves any major initiative that came in. The question we would ask is great. It sounds good. Does it lower price? Right. If it doesn’t lower price, let’s, don’t, let’s, don’t do it right, because we want to continue to focus on how do we create that clear separation. That’s great.

Steve Greenfield:
So it must be hard. I imagine when it’s time to decide you want to sell your business or not, um, walk us through that process. And how did you ultimately decide that it was the right time and Sonic was the right buyer

Steve Hall:
Conscious capitalism journey was to promote the tenants of conscious capitalism, which is conscious leadership, conscious culture, having a strong stakeholder orientation that creates value for each stakeholder and operating with a higher or strong purpose. And we did that through tours. And so we started putting on tours for other businesses. A lot of them were automotive. And one of those folks that came through was president of Sonic, and he visited us you know, w for a few hours became a whole day. And, um, we spent a lot of time just talking about the business and our, just our core beliefs and philosophies. And, and you’ve been there. You you’ve, you’ve talked to people and you go, gosh, you know, this person sees the world very similar to the way that I see the world. We may have different approaches, different ways of getting there, but values were really aligned.

Steve Hall:
And I remember, you know, throughout, um, discussions, when they were talking about their growth plans of echo park, I quickly realized that the opportunities that they can give, not just to our employees, but also to our customers and to our suppliers and to local community, they were going to do more with this model than I was ever going to be able to do. And so my question, um, to them at the time was walk me through how you can be a better steward of our stakeholder community than we can do on our own and credit to them. They actually walked us through, here’s how we’re going to help you deliver a better, higher quality consumer experience with higher levels of transparency. We’re going to give you access to inventory that you don’t have that creates a higher product. Here’s what we’re going to do for your employees and career opportunities and training and development.

Steve Hall:
Um, here’s your supplier, the suppliers that you’re working with, that we’re going to keep paying the small guys on time. We’re going to keep investing in their businesses, helping them grow the larger suppliers. You know, we’re going to continue to work on their dealer advisory boards and work with them to bring more innovation and creativity. Here’s some of the things that we’ve done in the communities, and here’s some of the things that we would support you continuing to do in the community. So that was really the thing is, is you walk through those things and you see how they think about each of the different stakeholders. They’ve done a great job with the culture, with the, with the people. And I, you know, today I continue to work with them, you know, on a weekly basis and just been fun, watching them grow up. That’s great. That’s great.

Steve Greenfield:
Um, so Steve, last question for you. So what are you doing now and how you spending your time now?

Steve Hall:
Um, a couple things, one, um, doing some work in an organization called YPO, um, helping our Palm beach chapter great, a new five-year vision. Um, I’m doing work. I serve on the board of conscious capitalism, Inc. Um, I was really excited about helping entrepreneurs, especially in the automotive space where I think I have a having a lot more fun and probably can make a bigger impact and outside the space. So looking forward to bringing conscious capitalism into the auto sector, supporting a lot of entrepreneurs, investing behind some entrepreneurs, um, joy talk, and, you know, w we talk frequently and just I continue to get energized talking to visionaries people like yourself. Um, and then, you know, spending time watching three fun kids. And I wish I could get more time with but you know, they they’ve got their own priorities, so I love spending time, time with them. , so yeah, that’s great.

Steve Greenfield:
Well, Steve, thank you for joining us today. I really appreciate you carving out a bit of your day and sharing insights with the industry

Steve Hall:
Always have is for the great work you’re doing state.

Steve Greenfield:
So that’s it for this week’s Founder Focus our dive into the inside stories behind some of the most impressive entrepreneurial journeys. Please feel free to contact me anytime I look forward to catching up, to discuss the industry with you. Thanks for tuning in to this week’s founder focus, and we’ll see you next week.

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