Episode 59 - Saying No to Sam Walton and other Entrepreneurial Stories with Drayton McLane of the Houston Astros
Today the team took a trip deep into the heart of Texas to hear from Drayton McLane, the visionary business leader behind McLane Company and former owner of the Houston Astros. Drayton is widely known for his leadership within Walmart, as well as his generosity toward his two alma maters—Baylor University and Michigan State. On this episode, you’ll hear a list of lessons that we were able to glean from Drayton’s extensive experience as an entrepreneur, business leader, and philanthropist.
The stereotype of today’s entrepreneur centers around young, sleek tech startups. If you’re reading about the new and popular businesses, you’re likely to hear about twenty-somethings who have come up with market-busting ideas. And maybe you’re one of those people—if so, great! This podcast is for you too. Drayton McLane provided a look at entrepreneurship over the past 50 years. His scope is immense and so is all the wisdom he has learned during that time.
While McLane Transportation was anything but glamorous, Drayton shared the mindset that made them successful. He discussed what it looks like to create a working environment that makes sure everyone is winning and how to make work, and starting a business, fun. He also tells the story of how Sam Walton of Walmart eventually bought his business—it involves a phone call from Sam to Drayton’s wife trying to convince him to sell—and brought Drayton and his team on board as their grocery supplier. At the time, Drayton may have referred to supermarkets as a ridiculous idea, but now he’s pretty glad it worked out the way it did.
What makes this podcast special is the story-telling. Talking with Drayton McLane was like sitting on the front porch of a seasoned veteran who knew the lay of the land better than anyone. With 37 years of experience as a CEO it’s no surprise that Drayton has his fair share of stories, all of which can help entrepreneurs of any age along their journey.
Whether you’ve been an entrepreneur your whole life, or whether you’re in the midst of your very first start-up, Drayton McLane has wisdom, counsel, and a story or two just for you. We hope you enjoy listening to this episode!
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Local Businessman Helped Lay Foundation for Houston Astros World Series Win
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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.
Rusty [00:01:42] Drayton is a visionary business leader behind McClane Transportation, and he is our first, but hopefully not our last owner of a professional sports team. And in this case, it's the Houston Astros. Drayton is widely known for his generosity in so many different causes. And he is more than generous to two places that he truly loves, his two alma maters, Baylor University and Michigan State University. Henry, William and I, we had the pleasure, the blessing, if you will, of getting to glean some of drain's experiences and lessons, a lifelong set of lessons that he has for other entrepreneurs. Let's listen in.
Drayton [00:02:26] Can I tell you a quick story about you need to observe what you're doing. One night I was stopped by a 7-Eleven in Birkinshaw and Sipple gets up there and the Grocery Store Authority not have it. And this a clerk in there might ask you out of that. And he said, well, we don't have very good grocery supplier. And I thought, oh, wow, that's business. I that I should've thought of this before. And he said, we're buying it from a grocery shop in Houston. And it's unreliable. Man, what about stock is not good. So I say, well, who's your boss? He told me I was lying. I remember that. No, that was 1968. And he gave me out of line numbers. The next day, I called out and lied. He was a supervisor in central Texas from several other. So I. To know, but said we do have a bad supplier so that like some say you about being the supplier in central Texas. And he said, I just manage as a result and I deal with it. He said it is a individual in Dallas that controls who we buy from. His name is Pete. Excellent. I asked him for his number and he said, I don't have his number. Citizen 7-Eleven's I was in Dallas. So the next day I went to Baylor undergraduate. And then I they feel good business. They had a course in business letter writing. And I whipped out my course in business letter writing, and which meant about two or three hours I wrote one send me this letter to please axolotl.
[00:04:01] I really worked all hours at my office to see their father in about four or five days later. I got what really ticked me off.
[00:04:10] He wrote on the bottom of my letter, not interested and sent it back to me and really picked me up. He sent my letter back. So I thought, well, I'm sorry, rest and get the best of me. And so I decided that on the 1st of every month, I would write him another creative original letter. And I wrote, Man, Straight Brothers first learned, never heard a word, crow never had a peep. But it is the first of every month. And one day they get it from me. Hello. And they said McClane. I said, yes. He said he'd exmormon. Wow. He said, Be in your office at Zagar tomorrow.
[00:04:55] I said, Yes, sir. So I'll be there. I was in total conversation. So that was the start of McClane Company starting to serve. Convenience stores in 1968.
[00:05:08] And I said we were growing by 10 percent per year. So for the next 32 years, we moved 30 percent more per year in the next 30 years. And it will serve as a convenience stores, fast food restaurants, discounts or it's it all.
[00:05:28] They did by just stopping in that 7-Eleven that night and put numbers up and they didn't have. So my point is we said, well, everything has got to be in that plan. You run over many opportunities. So be creative and be there.
Henry [00:05:47] But that was great story. Great. And this is Henry. I'm grateful that you'd share that with us. One of the questions I'd want to ask you and we may revisit this is tell us some of the things that were formative in your journey, some of the things that might be an inspiration for the younger entrepreneur. And I heard a couple right there, which is you saw a new opportunity for growth and he seized it. You were relentless in your creative in the way that you went about it and it paid off. It's a great story. So I want to go back also to the evolution that businessy go ahead and you increase your growth rate. So much so that a certain entrepreneur in the state of Arkansas gives you a call one day and asked to come and visit. Tell us about that call. Tell us about that visit.
Drayton [00:06:28] Are you done about Wal-Mart?
Henry [00:06:30] I am. Unless you've got one with a bigger one. We'll go with Walmart.
Drayton [00:06:34] Oh, well, we're done pretty good. And that we started with 7-Eleven and other convenience stores, all cash. So that was in the late 70s and it was a little different. I'll actually go up and make things happen. And Wal-Mart came out of northwest Arkansas and they were growing in Missouri and Arkansas and Oklahoma and really hadn't come much in detections.
[00:07:00] And several people told me of them. So I rather something like make I wrote Sam Walton didn't know I've ever seen. Were saying he was a God and wrote him several bad and never, ever got a reply. And then I met a friend who his father knew, Sam and I got a meeting in Bentonville with sales. And he fired me and he said, hey, we got our own. Whereas if we got on drugs and we did some meetings like you do in a similar story, I would go up there every month. And I well, one that measure that was as much as a lie. You're wasting your time. I got more warehouses, bigger warehouses, and I got bigger computers and you got more trucks. I don't need it. I used to live in the same story he told me one day. I got a problem with our snack board. Would you want to come over and talk to me about it? And as we met so one up there and what he wanted me to do. We could not make money doing.
[00:08:05] Yes, what I told you, we knew it.
[00:08:08] And I came back and told my management team what a great crew they were ready to shoot. He said that is dumb as saying we're going to lose a fortune on boats as you have. But we started on this. And he sees our integrity and honesty and how well we've been before. Please don't give us nothing, any kind of work ethic. So you got to be willing to take risks. And if I could make one others, I found that. I think the more education we get, the more risk averse we become. We over analyze everything.
[00:08:49] And we need to make Dyckman business to claim Black made it a crime, make a mistake of making mistakes as long as an honest mistake. And it's honorable. And for most are executives that make mistakes. And I had three rules and this said no one, if we're gonna do something, is not meet every law that's out there, valid law.
[00:09:15] We go to jail. Number two, it has to have great integrity and value to say a great integrity to it. And we can't violate our values or eating one else's values, as Bob said, the one.
[00:09:32] And the third one was don't bet the company store on control how much investment you have in that one. And if it goes bad, you've certainly lost some money, but you can recover less than if you won. Oh, sorry. And the thing blows up and it blows your clothes off of you and it says, use your hair. You're in great shape and violate the law and violated by his integrity. You didn't bet the company on it. And you're still alive so well. So I push people to be research and to be a woman more daring what they call a nothing. Oh, my goodness.
Henry [00:10:17] So fast forward a bit. You end up clearly doing a good job with the relationship that you again, relentlessly pursued with Sam Malone. They come in, they buy McClain in a great transaction for you, and then you get involved in another business, the business of sports and entertainment. I'd say virtually every listener to his podcast is a sports fan of some sort and is always curious about the parallels between business, the business of moving things around in grocery stores and the business of a free agents and hitting home runs an I.R.A. and things like that. And World Series. In your case, talk to us about some of that risk taking. Talk to us about some of how you're being a CEO for 37 years. Translated transferred into the world of sports.
Drayton [00:11:06] Oh, gosh, could I say something? Before we get to that one, of course, we were doing Wal-Mart.
[00:11:13] We provided groceries to Wal-Mart and others. And why it give you something? We become very. We get too caught up in what we're doing. And I had really good friends with Sam while he and I felt like he was about 15 or 20 years older than I was. But we had good friends. And he would always say that three or four days a week touring stores and this and so was it. He would go and meet me in Baton Rouge tomorrow, make me the little rubber, meet me somewhere, and I would not travel with him. It's amazing. He called me nicely. Finally one day and said, I've got a big idea. All I'm talking about is going to come to see us. Absolutely. And he said, I want to bring David Glass, who was the CEO and chief and ran Wal-Mart.
[00:12:01] That is one of the best businessmen ever know that. Oh, David thatagain down about it as a great guy, but you'll get more business. So we came down and we went over to my office and he said, right now I know you, I want you to listen to me before you react. Calm down. And he said, I want to bat my going government. He's been in my family, as he said since. I think that for wisdom and folks that people from all over the United States, Europe, Japan, and we never had to invite them on. So I'd job right up and said McClane campaign is not for sale. Then he said, we'll sit there. Let me tell you what my idea is. This was 1980. He said, we want to take that hundred and thirty five thousand square foot Wal-Mart store and split it apart. And right in the middle, put a fifty five thousand square foot supermarket in those days. There were no groceries. Then extended Wal-Mart and said, we want to put a full big fifty five thousand square foot grocery store right in the middle of it. And we want to build this 200000 square foot store. And open 24 hours a day, seven days a week and call it a supercell. And I said, Sam, nobody wants to buy groceries at 2:00 o'clock in the morning.
[00:13:31] And he said, Well, I didn't come down here to ask you your opinion. I'm your big idea. And said, we understand logistics, but we don't understand grocery logistics and perishable distance. You do. We want to acquire Macfarlan. Got it. You can continue to be CEO Kornienko.
[00:13:51] And then we want you to be the chairman of the Wal-Mart. We all get very self centered and what we do. You know what I say? I don't want to be a share my. Our remmeber point guy. He said if got more potential more. We want you to take the number three guy at Wal-Mart. I know why they won't do something. And glad you weren't over my head. No, I took them back to the airport, went home that night, and my wife, Elizabeth said, what is this big deal with Wal-Mart? What have you done that? You said, well, Sam called me and told me that you weren't listening to my message anyway. I just kept Hoople in it and thinking that's not what we wanted to do. And so continued to call naison lies continue to go. And I gave him excuses for about two to three weeks. My father, that was eighty nine years old. Not in the best of health, but came to the office to do three hours a day. I'm not involved in the activity of the business, but I sit down and talk to him every day. And I remembered that I had not mentioned this to him. I did more do it. And at about my dad, you'll tell him that I knew he was very old, too. Does he never want to sell? Well, I went and told him what the deal was. And he looked at me and said, Son, I think that's a good idea. You know, think about it. It's your decision. What do you think about all of you who Walsh is? Male and looking later? We get so wrapped up in what we do, we don't see the forces that are coming lavage. And I thought, oh, my gosh, an 89 year old man instantly. So something big that I didn't say. So get thinking about it. Software senior executives. I was the only one who was I it was a bad idea. We get wrapped up in our jobs bill and we need to look at a bigger picture. And that is a good on next work.
Henry [00:16:02] That's a great story. Tell us about what happened next. Tell us what happened next. And then bridge to the next large organization that you led.
Drayton [00:16:12] So the game the we merged, the two took about three months to do it. That was an interesting story. And at the time, we were doing about eleven billion as a private company and we merged into Wal-Mart and we were Panamax operating company. And I was CEO of Blank. And then I was spending more and more time in Bentonville with Wal-Mart. I'm spending more time with them learning their business. But it didn't have here we were doing eleven billion. And Wal-Mart was going 130 billion.
[00:16:44] Thirty. And show you the perspective.
[00:16:49] The first quarter we were probably all Wal-Mart was a public company, first quarter after our merger. They realized the president sent me a news release, a report released on their earnings. And, you know, you have to reveal any plans at everything that had happened. And he said to me, said, review it and call me back. I read it. Didn't even mention the acquisition Bill Macfarlan. Don Lemon and I called every day to day to day.
[00:17:17] This you forgot about putting the accusation look like it. He said, great hope you said now. But Wal-Mart is not material. That's when you don't feel very good, when you do it all as a big man down the block.
[00:17:34] If you guys aren't material anyway, you get to go out f ing yourself. And so I was involved in that but didn't have the skill. I'm an entrepreneur. I like to do things. And Wal-Mart was more structured than I was needed because they were doing then over 130 billion and on the way to really being bought. But I enjoyed that and made a lot of decisions and huge responsibilities. But did that took five years?
[00:18:06] Never was this totally comfortable with that. And one day I told Sam Walton has passed away after that. And Rob Walton was chairman and son. And they devised without thought leader to step away from Wal-Mart and mcclements. They thought I was having a mental breakdown. They carried me home for two or three weeks and said, you'll get out of this. And I said, no, I want to do that. I didn't have any gear, but I just said, I'm an entrepreneur. I didn't create Wal-Mart. You might tell me to add. And so finally decided to do that and stepped away from being the vise chairman, Wal Mart would really sure why I wanted to go, but I wanted to be more of an entrepreneur again, like the 7-Eleven story. One day in 1992, a friend called his name was Bob Ansett. He owned a group of supermarkets in Houston and Dallas. Randall Sorge was big customers and knew him well. They called me one day and said, hey, we got a big idea. We want to be part of that's what we say, said the Houston Astros were owned by a individual at York City named Don McMullen. They don't know about 20 news. They not related. Well, the Houston people said we have five other individuals and we want you to meet the six and six of us wanted by the Houston Astros. And that's what I might be interested in.
[00:19:40] So I went to Houston over about six months and we negotiated six. I was I learned a good business lesson there. Six people that had accustomed to being a boss or not particularly good partners. And we fumbled all over each other. And that moment was not easy to deal with. And I was about six months. Love with Bob Östersund. We decided to dissolve this bag. It was. And I said, we're not getting anywhere. And he wants too much money part. And it's just you shouldn't do it. And we all agreed. And as I was driving home, I live 185 miles east of Houston. I thought, you know, I've never backed away from anything in my life that I thought were worthwhile.
[00:20:25] And the next day, I called the two men back. I said, no, Jack, if I tried to negotiate on my own, I can remember what, one year that. No, go ahead here. So I called John Macfarlan in New York. And I said I could come up with doubtfull.
[00:20:45] And I had a 14 year old son that was a fanatical baseball player. Unfortunately, your match. And they ask those who plan the backs of troops on July 1, they come home. Well, let's may be about the board. And over about a week about the human nature. I mean, the three major league games and my life when I was that game against the Mets. And then it was never a big baseball fan or football fan, but never a big baseball. So it must be interesting. I like to do things that you can add value. Get people excited about it. They have not really marketed the team well. And the teams which made me do the makeover must be interesting. So can I tell one sad story about this, please, by my wife that decided the bad. She said, you know, you got us in the family. You know what we were doing. Two sons and her when I was growing up as a young boy that my parents took us to church Sunday morning, Sunday night. We were not allowed to go to the movies or do other things like that on Sunday. We were very restricted and certainly didn't go to a baseball game at all. So I knew both my parents. My mother was dead. We're still alive. And I knew that we gathered this in the wrong way. So when we finally decided to buy the team, my wife, that she said that you got your tie out to your mother, don't want to see my dad. And he was in one room shoes and the other. I thought it'd be better separately and so did my dad each night here and one back to somewhere. And he leaned over and where we had in his hands and said, I used to be so proud of you walking down the aisle. Are you doing? And they said, well, you have your show at you. So I went in without my brother. And she could go instantly if she didn't like it. She said, I'll be all for it. But, you know, you can't play a game on somebody's mother. That's one of the better attended days of the week for baseball. And she said, Oh, no, thank you. Make the embodiment of this play lopsided. So I kind of Numata around it. So she said, I had a pastor whose name was Dr. One of the best ministers. Other Mido. And she said, why don't you talk to Dr. Yog and pray with me. And come tell me what he says. So I went to see Dr. Young. And I knew him very, very well. And I told him what we were lying about. But he was he was amazed. He thought it was small. But anyway, I told him, I said, I'm going to sleep. Is that great athletes are great role models. But normally for the football, baseball, they're not individual role models. And if we like the team, we're going use twenty five players, get involved in community project. What Bob and Christine graduates and expressed are Christian but said led to the pastor Ted. Okay. Me think about it.
[00:24:19] But within a couple of days, writer and he said, you know, I've been a bachelor over 40 years, if you will do that. I think that will be something worthwhile that you will use the team to express your Christian faith. I said absolutely. So I couldn't wait to go see my mother. I went back to see my mother and I did.
[00:24:42] And so I want to start on the morning so I can see get like that. And she said, well, son, you know, Dr. Young is retired now.
[00:24:53] You've got a new, younger bunch who want to go talk to you. But anyway, so she finally endorsed my wife and that by the Houston Astros. And we really when we made the announcement on the floor of the Astrodome and said that the mission of the Houston Astros is honesty, integrity and high Christian principles and everything we do. And then I said, we want to have a winning team. But our Christian mission most. But I was still pitching it. They must have had 50 or more reporters there afterwards. We had an interview. They asked me about, but I didn't have a clue who these players were. I didn't know anything about baseball. Not one of them made got honesty, integrity about not one single report. Ms.
Henry [00:25:47] It is interesting. But, you know, the fans heard it. You made a public announcement.
Drayton [00:25:51] Oh, yeah. Yeah. And where we went, which is.
Henry [00:25:54] Tell us how that worked his way out over your tenure. What does that look like for you as the owner of a baseball team and wanting to run it? Christian values?
Drayton [00:26:02] Yeah, we've got to have Christian values and Christian integrity. And, you know, you're involved with players. These players are relevant and you ask the motivator. And I would tell them of my faith. And I would say to them, you know, I one to convert you to Christianity or bad, you say. But I would tell you have heard that faith faces that plan. There were 30 major league teams. We were the first major league team. They got a hold chapela. And personally, I knew here GERSHOFF Christian Dier Temple with Waslin, great athlete. He did that and got him. He was salesmen's. Come so quickly. I got him to quit his job lubrication. And they said, well, what does a full bat chaplain do? I said, I'm not sure, but we'll figure it out together. And anyway, he would, yes, work with the players and he got the players where they and twos and threes would go to all kinds of civic groups, particularly Houston, as a big NBA center in America. He would take every week both player and meet with them where to be A and other places. And we really were grateful to the Salvation Army there, but to them, too many Christian functions as well as a problem. So that was fun. And some of them in baseball meetings provided would lay out some bad language. And that goes there in the tournaments. Have only 30 others in a row and they apologize to me. I do that for us today. But they yes, we try to let our Christian faith do the right thing and to be honorable and show joy and happiness and contentment in life. But most of you know, you can be butchered bakers or candlestick makers, and it's overdone. But you can't go this industry division issue if you've got this good judgment. And I think the key to that's a good business, man, is to understand accounting, understand accounting for everything.
[00:28:07] The business does need to be in almost any business and get people to really show you the details. And I've done that. No member and baseball, Rivlin-Domenici of baseball at all.
[00:28:22] And I've got a first name which tells Smith Thousand Rogan I was and he was considered one of the foremost authority on baseball and. A warm day was tell what I really need to know about baseball. Those X these were three games, baseball on Cleveland. What's that?
[00:28:44] He's a pitch in speed and defaults. So what points is hitting stuff? We said, hey, we had good pitching. They hadn't scored. And they said Bagian said it was only the ball.
[00:28:57] And then the second one was free. Yes. Good, great athlete. Good athlete would give an athlete the Margaux's. And then defense. You know, your third baseman. The ball's hit edges will come at you 200, 300 miles an hour. God gave you the ability to stop that ball that had it figured out by first baseman. So, you know, you learn whatever industry you're in. You'll learn the key things in that business. And then hold on to your great personal faith in the day.
[00:29:33] And then in everything you do, show joy. In baseball, you one takes me very rich. Your game. You win your division every day. That stuff being a business work where you win. Henderson.
William [00:29:46] I meant them in that's an amazing encouragement to leave all our listeners and as we we unfortunate come to a close. I feel like we could talk for a long time. We might have to invite you back. But one of the things we love closing with is exactly on that point. And we wonder where does God have you today? You know, you've had so many things going on in your world. And I just wonder what in God's scripture is he telling you today? You know, maybe this season, maybe today even who knows where he meets us, as usual. But wondering maybe some some part of his word that might be coming alive in a different way for you.
Drayton [00:30:21] You know, God blesses those many, many in many, many ways. She makes the rest of you awfully smart. He did make me work smart when he was given a mighty too good. Above about 4:00 in the morning and then about better than thirty five and have good health. So we have a family group here. I have two sons that are in it and myself. And God help. And then you're sent. They I think one of the problems in Texas and around America, we've got too many people living in the big cities where congestion, crime, housing is a huge problem. And we've got too much of America that doesn't have very many people. And the governor of Texas, Greg Abbott, has appointed me, the chairman of the Texas Economic Development Commission. And my goal is to have industry more diverse and smaller communities and smaller towns where people can grow up with no regulations to stay in those towns and work and have a happier, more pleasant block. So that's what we're working on. Well, we have on this.
William [00:31:32] It's amazing to see where God taken you and how he continues to move in your life through the years. And we can thank you enough for taking the time to spend a little bit of that time with us. We know you have a crazy schedule and I'm excited to see what you got coming next. Sorry, I'm more. You needed a sideline lightest.
Henry [00:31:48] Thank you very, very much for being with us. Thank you for the investment of your time and for sharing what guys taught you over the last 80 years. That's cool. It's very, very relevant. All for entrepreneurs will understand and learn from people who've been able to do it faithfully over a long period of time at scale. And you provided them that today. And I'm very grateful.
Drayton [00:32:08] Thank you. It was a joy.