Tireless. Kim Lorenz
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course, selling new tires and retreaded tires went along with this, but no other company was in this space doing what we believed the customer really wanted but did not know how to do. Anybody could sell a tire or lower a price, but that was not what the customer really needed. All companies strive to find ways to do business more efficiently. Any business running trucks needed to buy tires, and if somebody could show them a better way to do that, it would result in a win-win situation. To fulfill this vision, we were hiring staff with no experience in our industry and training them how to do it our way. We wanted people with no baggage or bad habits.
The opportunity was right in front of thousands in the industry, but nobody, especially the global companies, could visualize it. Those big companies just wanted to sell more tires, but the customer could realize huge cost savings by changing the way they operated and used tires. Why would a customer hold $100,000 of inventory when we already had a warehouse? This will all make more sense as you read further.
Our largest success story was with Boeing. They operated several thousand trucks and equipment over several cities that all ran on tires. They spent about $500,000 a year buying tires. We saved Boeing over $600,000 in direct costs by changing how they bought the tires, managed the tire program, and warehoused the tires. Really, they still spent $500,000 on tires after changing to our company as a supplier, but they also saved $600,000 a year in cash as we assumed the management of the tire assets, warehousing, and maintenance. We won a huge award for this, covered a little later in this book. Trust me, it was not rocket science, and anyone could/should have been able to do this. However, nobody did until we came along with our vision and new company.
After that all-night planning session that led to the founding of our first company, John agreed to research the availability of the plant equipment to fit within our budget, while I would discuss our ideas and plan with the major tire companies we would want to use. We both agreed that the likelihood Michelin would even consider us was low, but we had to shoot for the moon anyway. Even if the chances were small, we both knew that in order to fit this new model, we had to become a Michelin tire dealer. The Michelin products fit our model of business. The Michelin truck tires lasted longer and could be retreaded more successfully than any other tires, and we made more money (and the customer saved more money) using retreads.
From the time the Michelin brothers started the Michelin Tire Company in the late 1800s, almost every advancement in tires, even today, has been first introduced by Michelin. The company saw an opportunity to make a simple bicycle tire that was filled with air in 1889. Up until then, all tires were solid rubber. Ouch. Michelin was (and still is) a global, innovative, industry-leading company. Every car, truck, or vehicle that has tires is benefiting from something invented first by Michelin. Michelin invented the pneumatic tire (tires with air inside), the tubeless tire (and wheel), the radial tire, and so many more products we all use today. But more of that story and the parallel reasons for our success later. Michelin had vision, and for over 130 years, they focused on what the industry needed and invented it. They had a similar focus to our own.
After John and I settled on our marching orders, off we went on our separate ways, planning to stay in touch with any and all updates until we found the manufacturing plant. After we secured the building, I would need to resign from my job.
Just like that, we had decided to start a new business together, leaving the security of our old jobs behind. Would we succeed? Could we make it into the five percent of new businesses that make it longer than five years without failing? We didn’t know for sure, but what we did know is that even the best plans have no guarantee of future success. You will never know unless you try, and our company started from nothing just a few months after that meeting.
2 By the way, failed retreaded tires are not the cause of the rubber pieces we all see on freeways, but something about that later.
Chapter 3
Taking the Leap
A few weeks after our all-night session about starting this new business, I found myself in Sitka, Alaska, sitting at the Shee Atika Lodge. I was still working for the tire company who hired me out of college. This Sitka trip was to meet with and present a proposal to Alaska Lumber and Pulp, a very large pulp mill. I had called this company for years, but had not yet done any business with them. They had hundreds of “rolling stock,” meaning equipment using large industrial tires. I traveled with Bill VanSomeron, the West Coast Manager for Michelin, along with our Michelin sales representative, Norm Toomey. Both were great people to work with, and fun to be around. We had all been collaborating on a proposal for this pulp mill.
That day, during the meetings, we succeeded in getting all the business. Later that evening, we were celebrating in the bar. The bartender came to the table, asking if there was a Mr. Lorenz there who could take a call at the bar.3 It took a moment to realize that the Mr. Lorenz she was referring to was me! At the ripe, young age of 26, the only man I’d heard called Mr. Lorenz was my father. Curious, I picked up the phone at the bar, wondering who might be on the other end and hoping my wife and the kids were all okay at home.
“I found a retread plant that will work for us! I just booked a flight to Kansas City to look at the equipment. It leaves tonight at midnight; red eye.” John’s familiar voice rang out on the other side of the phone. It turns out there was a complete retread manufacturing plant in a bankruptcy sale, and it was well below what we had budgeted. It seemed like the perfect scenario.
“If we buy it, you will need to resign from your job next week. Are we still good on our plans to start the company, Kim?”
Pausing for half a second to get a grip on the fact that this was becoming a reality, I made my reply. “John, we shook hands on a deal—at 4:30 AM, nonetheless. I am committed. Let me know as soon as you find out how this goes with the equipment acquisition.”
Needless to say, a lot was going through my mind as I made my way back to the table where the Michelin guys were seated. I had a new company car, a new beautiful office in Seattle, and I had just landed another promotion. Making the choice to walk away from all of that without knowing how the future might unfold would be a very bold move, to say the least. My wife and I had just barely moved into a new home, not to mention having two children who were only two and four years old. Reality started setting in, and my thoughts raced a million miles an hour as I prepared to break the news to the table. All the initial and very primitive plans we had discussed about starting this new business involved having a Michelin dealership agreement in place. At that time, only the large, well-established companies had dealership agreements with Michelin. Having the Michelin dealership was something I felt had to be in place for John and me to succeed.
I sat down, took a drink from my glass, and looked Bill and Norm straight in the eyes.
“Gentlemen, I am planning on leaving the company and starting my own tire company.” I took a deep breath, expecting the worst. After all, what company like Michelin would want to take on some small fledgling new company with no credit, no assets, and no customers? Their reaction nearly made me fall out of my chair. Bill, the head of all the West Coast, slammed his fist on the table and shouted, “Damn, Kim, this is the best news I have heard all year! It’s about time you realized it was time to leave this company and start your own tire business!”
Not skipping a beat, I launched into my next order of business.
“Well, Bill, we need to have Michelin to make this work. What are the chances we could have a dealership?”
“I do not care what it takes on our end. You’ve proven that you’re a smart kid and you know what you’re doing. Congratulations, you’re going to be a Michelin dealer! One way or another, I will make this work!”
Before I could even thank him (or pick my jaw up off the floor), he continued, “Kim, this is fantastic news. Whatever it takes, we are going to make this happen together!”
I didn’t sleep much that night, reeling with excitement and anticipation. I had a long trip home the next day, and I had to sit down with my wife as soon as I got home. While the Michelin deal far exceeded my