Episode 83 - Jailhouse Business with Pete Ochs
Today’s episode takes us to jail. Well...not exactly. But we are interviewing a man who owns and operates a business that is run out of a high-security prison.
His name is Pete Ochs, and in addition to working as founder and chairman of an impact investing company, he’s also working to make Hutchinson Correctional Facility in Kansas the best prison in America. How? Well, we’ll let him tell you…
But what you should know is that Pete’s approach to business, and to life, has less to do with leadership and stewardship, and everything to do with Lordship. You’re not going to want to miss this one…
Useful Links:
Jailhouse Business of Generosity
Inmate Confesses God’s Love at Seat King
EPISODE TRANSCRIPT
*Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.
Henry [00:02:32] Welcome back to the faith driven entrepeneur podcast. We're here with one of our favorite subjects, our favorite leaders, our favorite stories, Pete Ochs. Pete is a character and a leader that many of you would've known if you've been following Fator of Nationa for a while. We featured a video on Pete and seeking maybe the third or fourth bli that we ever produced. I think that we've got maybe eight or nine hundred of them up now. But when we thought about how we might want to get out there to encourage and equip and inspire entrepreneurs, we thought about Pete Ochs and the story that he has. And so it's a great blessing for us to have Pete on the program with us today. Pete, thank you for join us.
Pete [00:03:09] Henry, terrific to be here. Love what you guys are doing.
Henry [00:03:12] Pete, you call yourself an entrepreneur by birth, and I've heard you say that before. And I'd love for you to just to give our listeners a quick flyover of your early days as an entrepreneur. Businesses that you started early, you get started very early. And what those successes and failures looked like.
Pete [00:03:29] Yes. So I'm a fifth generation entrepreneurs, if you can believe that or not. I came from a long line of parents and grandparents who started businesses and ran businesses. So my dad was a farmer and an investor. I went to the University of Kansas, got a degree in business, came out, gotten the banking business, and I did that for eight years.
[00:03:52] I think one of the most important things that I have done in my life at the age of 25, I read a book on how to write a personal plan. And I wrote my first personal plan at the age of twenty five. And in that, I put that I wanted to be an entrepreneur. When I was 30. And so my twenty ninth birthday rolled around and it was towards year end. And when I'm doing my annual personal planning and I went to my wife and I said, Hey, Deb, we've got one year to figure out how I'm gonna be an entrepreneur. And so I begin that process. I will tell you that at this time I had two older mentors and I spent a lot of time with them. I will tell you that those two mentors are still alive. I've not made a major decision over the last 40 years without asking them. Is Nidhi and one's ninety three. So any way they step me through this whole process of going into business for myself and they really did it from a godly perspective, which I will tell you was very powerful. I didn't understand the power of it. So I'm just a big fan of mentors and I'll put that plug in right now. So I start my own business side. You know, my work hours doubled and I took a 75 percent pay cut for the privilege of working twice as hard as very interesting. First few years were difficult. So the first business I started was actually an investment banking company where we were the middleman in middle-market company trends.
Henry [00:05:19] So my first business was as a T-shirt seller and your first business was as an investment banker. Well, that's quite a way to get started.
Pete [00:05:29] I really liked on that when I was in college. But I sold antiques and then I kind of always had a few things going on the side. I went from making $40000 a year in that commercial banking business to ten thousand dollars a year for the first three years in the investment banking. So you can see it was a very glorious thing that I did.
Henry [00:05:58] Wow. But those are nineteen twenty one dollars though. Right.
Pete [00:06:03] I wish. So over the next 10 years I had a terrific run towards the end of that 10 year stretch. We bought our first business, so we started moving from being the middle man to actually being a principal. And the first business we bought was a bank that was in trouble. And God really taught me a lot of lessons about faith. It was during that experience that I really came to understand that God's word was true and. Powerful and meaningful. And it was something you ought to be reading every day. So that was really powerful. During the next 10 years, we moved more out of the investment middleman business and we started acquiring companies. So we acquired a health care company. We acquired a outdoor advertising company. We acquired several manufacturing companies during this time. And if you remember, during the 90s, the LBO leveraged buyout was big. So now our formula was put down 20 percent, borrow 80 percent double earnings in five years and pay off all the debt. So essentially what we would do is put down two hundred dollars on a thousand dollar deal. And in five years our goal was to walk away with two thousand dollars. So we would turn $200 into two thousand. And we did that a number of times, in fact, several times it better than that at the beginning of that run. God use several things to get my attention. And he brought me from the concept of ownership to stewardship. And when that happened, it really changed the way I did business. So while we were making lots of money being entrepreneurs, I really became possessed with giving money away. And I equated financial generosity with stewardship, which ultimately was wrong. And then in 2001, 9/11 showed up and all these great little businesses we had weren't so great. And we came very close to bankruptcy. And I think if I were to summarize my life up to the age of 50, I spent the first 40 years pursuing success. The next 10 years being significant. And at the age of 50, God said be just not about significance. It's about surrender. It's about being all in for me. And it's not just about making money and giving it away. So from that time till now, I've tried to view life from a more surrendered perspective.
Henry [00:08:26] So I want to unpack that with you. A time when you talk about how you've come to understand stewardship and it's not just about giving it all away. Maybe William or Russel chime in on that. Before I do that, though, I do want to mention this one entrepreneurial endeavor that we had featured on the Web site before and that you're still actively involved in. That's really interesting. Is it completely different type of company than our investors are used to listening to? It's a phenomenal story. You can see the video on it on the Web site. We'll put it in the show notes. But tell us about seeking, please.
Pete [00:08:57] Sure. So a few years after the 9/11 experience, I came to this. We had had a business framework where I wanted our businesses to do more than just make money. And so that's where we came up with this concept of the triple bottom line. But we defined as being economic, social and spiritual capital. OK. We talked about that a little bit, but a few years after 9/11, we came in, we had a rapidly growing manufacturing company in a small town in Kansas that happened to have a maximum security prison there. We could not hire enough entry level manufacturing people. And so somehow we wound up hiring work release inmates. These are folks that are about ready to get out. They put them on a bus in the morning. They ship them DA business. We work them during the day and they take them back at nights. We did that for two or three months. And I went to the warden and I said, hey, I could use 10 more of those guys. And he said, well, unfortunately, I don't have any that I can bring to you. But he said, I've got twelve hundred guys in my prison behind the walls that are not at that stage where they can go out. But if you can figure out how to move your business in behind the walls of a maximum security prison, I've got twelve hundred guys ready to go. And I said that. Perfect. So within within 30 days, we'd moved our business inside the walls of a maximum security prison. Now, you may say, how does that work? All prisons basically have areas of industry where inmates work, but they typically work for the state and they make things like license tags or furniture for the state or they so close for other prisons, things like that. But they're not truly jobs that would be in a business that's in the marketplace. So that state was getting ready to shut down part of their industry inside the prison. So that freed up about twenty thousand square feet for us to move a business into the prison. So in two thousand six, we started actually building product inside a maximum security prison.
Rusty [00:11:03] So, Pete, you know this, that you're unique because most employers actually think just the opposite. Right. Do everything you can to make sure that you never hire anyone who has any kind of criminal background. That's how we do criminal background checks. And yet you turned that in, flipped it all the way around. So on this podcast, can you give us your learnings, your enlightenment, if you will, about that? Whole process that might actually open up the eyes of others to think about that as a talent force, if you will, for them in the future.
Pete [00:11:41] So I would really like to take credit for what has become a really terrific business and a terrific impact on society. But I did it out, agreed I needed employees and the only employees I could find were in a prison. But I think God used that. And once I got in the prison, I went in there. It's interesting because we had this philosophy of business that we wanted to really treat people well and create social and spiritual capital. But when I went into the business, I didn't go in thinking that this was going to be a great place to do that. I went in there thinking, these are guys, I can work. They committed bad crimes. I can work them hard. I can help make them pay by working them hard. Those kinds of things. But it was interesting. Within just a few months, I came to realize that they were human beings, just like you and me. And unfortunately, they had made a mistake. And I often joke about the only difference between them and me was that they got cut and.
[00:12:47] That's a bit too much, probably, but yeah, this this was a maximum security. This is not this is a maximum security prison. Most of the folks are in there for a long time, 20, 30, 40 years. And they've done major felonies, murder, rape, drug dealing, etc..
Rusty [00:13:07] And you weren't paying them like all the movies. Tell us in the books. Tell us you weren't paying him a dime an hour right? You were doing beyond that.
Pete [00:13:19] Yes. So if you are an inmate today and work for the state of Kansas in their Kansas Correctional Industries business, you'll make somewhere between 50 cents in a dollar a day. But if you work for us, we literally pay our inmates prevailing wages. We don't even set the wage. The state of Kansas does. So if we have an inmate and we hire him and he's a welder and by some chance, maybe he's got three, four or five years of welding experience. We may pay him $15 an hour.
Rusty [00:13:48] The state of Kansas actually sets the wage for them and leave us with on this. We're in transition to some other topics, but leave us with the two or three learnings or advice you would give to someone who's considering hiring, someone who's, you know, an ex-convict or who served their time.
Pete [00:14:09] Yes. I never understood the power of work. I grew up on a farm. I started working about the time I started walking. And I just thought it was something everybody did. But so many of these young men never had fathers or families that taught them work. And so I really came to understand that work is worship. And when we work these men, we give them training.
[00:14:37] We teach them skills. We set high standards. We demand a lot out of these guys. I mean, and they are setting their own standards now. But when you do that and then you come along beside them and give them respect, treat them as human beings. Oh, my goodness. Just look out. Great things happen.
Rusty [00:14:58] And what about the spiritual impact? Because you said economic, social and spiritual impact. How's that play out with that workforce?
Pete [00:15:05] Yes. So, you know, our philosophy is that we want to lead with economic capital. We want to give them a job first. The second thing we do is we follow up with social capital. We build great relationships with them. We respect them. For example, when I go into the prison, which is typically two or three times a month now, I literally start at one end of the plant and I walk the floor and I try to talk and touch every one of the inmates. When I do that, I am showing them great respect and they just well up when they see me coming because they are excited that the boss man will talk to them. So when you do that, when you start give them a job. Economic capital, give them great respect with a deep relationship. Guess what happens to spiritual capital? They want to know why you're different. And so consequently, most of these guys are living in a desert of human flourishing. There is no money. There are no relationships. And they don't have a purpose for living. And so when you come along and they see this and you they see this and others, and all of a sudden they're very interested and they start asking questions. So then that's when we come in and say, here are Bible studies, here are leadership lunches. We started a seminary. We've literally graduated eight young men from seminary. And we've got another twenty three that are in the second class. It's amazing that when you present hope to them and purpose in life, they will grab onto it.
William [00:16:39] That's amazing, Pete. William here. Thank you for sharing that story. To think about such a countercultural idea, as Rusty put it.
[00:16:46] In Rusty's HR background, I'm sure he's built a lot of screening systems to think about you taking that system and turning it on its head and saying, we know what can God be doing here? Reminds me of a quote as a pastor named Francis Chan, who I heard him talk one time and he said, I want someone to look at my life. And I wanted to be unexplainable without the presence of the Holy Spirit.
Pete [00:17:10] Powerful.
[00:17:11] And when I see a story like Steve King, I would say that's unexplainable without the presence, the Holy Spirit. That doesn't make any sense. Right. And I feel like for a lot of faith driven entrepreneurs, that's exactly what the company looks like when they're done, is that this makes no worldly sense. I could have never done this by myself. God is clearly along this journey with me. And so I thank you for sharing that. I want to transition to a little different topic here. And I want to talk about stewardship versus ownership. You know, I feel like a lot of entrepreneurs and business leaders end up asking them this question a lot. I know I continually do. And I think others do, too. You know, it's easy for me to comprehend God's resources, right? I'm a steward. I can say that out loud. But I also work hard. I feel like I do things. I have a family. You know, we want to do things. But I'm interested in how you have thought about this through your life, how you think about kind of the basic question of how much is enough. You know, I've heard some different variations. That's what Alan Barnhart on the podcast that has a take on how God called him to steward his salary and compensation. Now, I've heard someone recently told me, you know, the question shouldn't be how much do I give away to be how much I keep? I think all these are interesting frameworks. I'd love to know how does God take you through that journey?
Pete [00:18:25] Yeah, very interesting question. The journey for me probably began 20 years ago when I was at a conference with three or four other entrepreneurs. And the speaker asks how much was enough? We all took that to mean how much is enough from a net worth perspective. Interestingly enough, we all got together a few months later and spent a weekend trying to answer that question.
[00:18:47] So on Sunday when we were leaving, the goal was that we'd all go around the room and we'd say a number, which we all did. And then our agreement was that we would get back together every year thereafter, share our personal financial statements. And if we exceeded. How much is enough? No, we would give that away. So, no, we really agreed that, you know, if we exceeded those numbers, we need to start giving it away. Well, we got back together the next year and the next year. Well, amazingly enough, we all exceeded those numbers and we all own privately held companies. And none of us were called the cellar company and give it away. So we began to ask, what does this mean? And here was what we came to realize. And I think this is very important. It's not how much is enough from a networth perspective.
[00:19:31] It's how much should I be paid to manage the assets God's given me? If God's given you the ability to make money, go make as much money as you can. He's given you that gift. Go stewarded it. Well, the question is, how much should we be paid to do? To do that, what most of us do is when our net bottom line continues to increase and get very big in these privately held companies. Our standard of living follows it. So a few years later, all of us said let's hold each other accountable to maintaining a middle class lifestyle. The best we can. And if we grow in earnings and net worth beyond that, let's maintain our lifestyle. Let's cap our lifestyle. But let's let our business assets run well. And when you do that, guess what happens? You have lots of discretionary income, forgiving or reinvesting or whatever. So over the last 20 years, there's been a handful of get togethers of new folks have come in.
[00:20:36] And so every so often we get together and just share with each other what our lifestyles are and we ask each other. You think I'm doing too much, too little, so on, so forth. It's been a very healthy thing.
William [00:20:48] It's amazing to have that level of accountability and just questions. I mean, I feel like if entrepreneurs are listening, I don't know if you have some other piece of advice as you've been in your age personal journey. But one of those I hear is just having a group of people around you to ask you questions to dig in. Community is so powerful and maybe with an encouragement for you, for some of our entrepreneurs, to just maybe find community or maybe ways that you found that uniquely how God's brought the right people around you on your journey.
Pete [00:21:17] You know, I think if you want to have friends, be a friend. Oftentimes, I think we sit back and as entrepreneurs, we're so engrossed in our business and whatever, we don't take the time to go to conferences, to reach out, to take a little bit of time, to get to know people and know friends. I think if we do that, I look at the conferences a lot of us go to. And my. Sarah, people that you'll get to know there that are gonna be great friends and just start walking that road with them. And if it's meant to be, then you'll go deep with them. I would say one other thing. I think here is the question for entrepreneurs and it goes along with how much is enough? Question I think the question for those of us who are in business and particularly entrepreneurs, is the economic capital question is how do we allocate the bottom line? And there's I think really only four places where the economic the net operating income can be allocated to. One is Uncle Sam. You're gonna pay taxes. Number two is how much do I retain and the business to grow that business. The third one is how much am I going to dividend out to the shareholders? And the fourth one is how much am I going to give away? Really, all your discretionary income in a privately held business should go in one of those four categories. So my dilemma is always this how much do I retain and grow versus how much do I give away? And I don't think there's a firm answer. We have businesses that throw off lots of cash. So we have excess. We don't need it to grow and we give that away. Other times when we're growing, let's say in Mexico, et cetera, we may not have the dollars to give away. But we've gone from one hundred people to two hundred people. And look at the impact we going to have on our employees. So I don't think there's a set formula. But I do think we constantly need to ask that question almost on an annual basis. And that's part of your maybe social and spiritual capital planning. How much should I retain versus how much should I give away?
Henry [00:23:13] And to do that and community. So there are a whole bunch of different things I took away from this episode. And Pete, I'm just really grateful for your story and your faithfulness and also your vulnerability and transparency. I know you well enough to know that you weren't a felon, that this didn't get caught. But I also know you well enough to know that you're a man of humility and that you don't want to have your motives held up on a pedestal in such a way that might otherwise be unattainable to our audience. And there's Proverbs 21 and 26 to both get this concept of all the man's ways seem pure to him, but his motives are weighed by the Lord.
[00:23:48] And what I love is the way that God has redeemed you as you've sought him, and maybe the things that you started off in doing. Maybe your motives weren't as pure, but that you are faithful enough to hear from God throughout it, that you are able to take something that maybe even if you just had a for profit motive, you seemed to be open to a guy with Tanya and how the Holy Spirit was leading so that you were open to being able to have that business run by God and you're able to seize opportunities as they became manifest to you, as you loved on your employees, to understand how you might endeavor to serve them. And by having that commitment, they asked you for things and you gave them you inquired of God and he showed you. And so now you have a very virtuous business. And the end fruit of that is because even though maybe you didn't have purest motives in who does among this listening audience, but you were able to seek God every day and with time he unveiled this plan to you and you were obedient enough to follow it. And so that's a great role model for me and for our listeners. I'm grateful for the way that you process generosity in a way that you think about investing. And I'm grateful for our friendship in our partnership in this ministry. Now, Pete, you've written a book before. You got a new book, this coming out in the Q One on business, and then you've put some work behind developing a framework for listeners who've listen to this. Morgan Of course, we'll have a link to the video we talked about before and also have links this website. Tell us for those who are just listening right now and aren't in front of a computer, where can they go to find more information, please?
Pete [00:25:24] Sure. I think probably the best place would be to go to the website called EnterpriseStewardship.com. Or you could go to our business website called CapitalIII.com. And that's capital, CAPITAL, i i i dot com.
William [00:25:46] And as we come to a close. We always find a lot of joy and just finding out where God has you and his word. You know, it's such a as we all know, it's a living document and it continues to challenge us, push us to reveal itself to us in new ways. And I'm interested for you. Is there a particular part of scripture, maybe in the season, maybe this morning, that maybe during this time your life that's speaking to you in a way that it hasn't before or in a way that it is for the first time, just let our listeners into your world one layer deeper, if you wouldn't mind.
Pete [00:26:15] Thanks, William. You know, I moved out of all operating duties a couple years ago in the business, and I have spending a lot of time just thinking about, you know, what is a high impact business or a virtuous business look like.
[00:26:29] And I keep thinking my life just going to smooth out and everything is going to be great. And I even find at the age of 60, so. Then that courage is something that I need to continue to have. You get in your later years and you think life is just going to be nice and easy and this and that. But as long as you're in the game, I think it takes courage. And I think as we look at the world and as crazy as it gets, I think if we look at Washington and then we just we just look at all the problems in the world. As Christians, we have got to exercise courage. I'd been the last month or two literally in my quiet times.
[00:27:10] I've been asking myself the question, how can I be a courageous person? And I've come up with I'm a famous process guy. If you know me for two minutes, I'll be talking about some kind of a process. And so here are the five things that lead to courage. And the first one is truth. We've got to seek the truth. The truth will make us free. I don't care whether it's economic, social, spiritual marketplace. We have to know the truth. When you know the truth and you can go to the second step, which is faith, you'll start believing it. And as you start believing the truth, God gives you through the Holy Spirit this ability to start living it out. And what I call character. So it's truth, faith and character. You work through that system. And then I think the fourth step after you've started living it out is I think God begins to give you a vision for your business or for whatever he's put on your heart. And as you get that vision, and for me, I get really excited about vision. There comes a point when I say that vision is so big. I don't think I can do that. And that's where the fifth step humility comes in. And if we understand that this isn't going to happen unless God comes along beside us and makes it happen, then it's going to work. And then at that point in time, you are going to probably run into a roadblock. There is going to be something that happens in this journey of entrepreneurship. So as you start your business, start with truth, believe it through faith, start living it down with character.
[00:28:48] Pray that God gives you a great vision and then pray that he gives you the humility to understand that it's only going to happen with him when that difficult time comes and you have to stand up and exercise courage. You'll have it. I just I've seen that numerous times. So I would just encourage people start with truth, end with humility, and God will give you the courage that you need.
William [00:29:15] Hey, man, thank you so much for sharing that. Really, really appreciate that, Pete. It's been an honor to have you on. And thank you for spending so much time with us and our guests. And just a true joy.
Pete [00:29:26] You bet. Keep up the good work.