Three days ago, Ebby Halliday died in her sleep at the tender age of 104. With her fame largely limited to the Dallas area, Halliday succeeded in growing a real estate company that she founded by herself–generating $2,500 in first month sales in 1945–into a regional empire that employed 1,700 people and generated $6.5 billion in annual sales. I found some great snippets of her life that can give you a picture of what she meant to the Texas business community.
When a customer or acquaintance would inquire “Does so-and-so work for you?”, Halliday would nod her head affirmatively while gently correcting to say, “Yes, she works with me.”
We’ve all seen the corporate trend towards referring to the employees as “family” or other endearing terms. This move often backfires–or at least rings hollow–as the employer actions fall short of the expectations created by the affectionate terminology.
But Halliday was ahead of this political trend, and most importantly, actually meant it when she said it. The average real estate agent worked under Halliday for 18 years. How many firms with 1,000+ workers have that kind of stability? Flexible hours, solid middle-class pay, and personal expressions of thankfulness made Halliday’s real estate company a place that workers would see as their end game rather than a stopping point on the road to bigger things. The best way to earn long-term loyalty is to deserve it.
There is also a semantic lesson. Halliday won’t say, “No, they work work with me.” That would sound snobbish and alienating. Correctly people using the phrase “Yes, and” can accomplish your desired ends without creating any unwanted emotional baggage.
Halliday rode a pony in 1920–at the age of 8–from rural town to rural town selling Cloverine salve to treat bug bites to people working on farms. She mentioned that she felt the world owed her nothing, and she had to take concrete action to create a destiny she found desirable.
I loved this quote because it focuses the mind on the two-step process to accomplishing something desirable. First, you have to acquire the knowledge of the step process to make something happen. Then, you have to actually do it.
Sometimes, people have knowledge just bubbling under the surface. They see people swiping Visa cards everywhere–they see Visa advertising heavily on TV during European soccer matches or become the lead sponsor for Fox’s televised NFL games on Sundays in September through December. That bubbling knowledge does not come useful until you actually study Visa and see what a wonderful long-term investment it is, and then actually dedicate capital from your labor to make an investment in it.
Knowledge plus action. Knowledge plus action. Knowledge plus action. That’s the formula.
In Halliday’s case, she heard that farmers were getting bitten by mosquitos, and she actually developed the knowledge to figure out what kind of treatment would be cheap. Then, she would actually apply that knowledge by taking the Cloverine salve to wheat farms across Abilene, Kansas in the roaring 1920s. If she wasn’t curious about the market, and prepared to act upon the unserved need she found, she wouldn’t have built her initial capital pool.
When asked to name her favorite customer, she would point to her rolodex and say, “The best customers are the ones that I already have.”
This is a notion that is frequently neglected in business. Growth is the ultimate objective, and every businessman makes the subconscious assumption to think, “I need to find someone new to buy my goods or services.” The pursuit created by this initial assumption is why businesses frequently alienate their loyal customer unintentionally. People with physical paper subscriptions to their home-town paper get miffed when they see new customers offered introductory discounts of 50% or 80% off while they pay full sticker price. Restaurants and businesses in communities seeking revitalization often suffer indignities when new businesses are lured with tax credits while they pay higher rates for supporting communities during hard times. Some governments and businesses seem to have anti-loyalty processes where the most loyal customers are the ones paying the highest sticker price.
During her early entrepreneurial days, Halliday would develop a discount system that gave laddered deals based on the amount purchased and the loyalty demonstrated through repeated business orders. It seems exceptionally common-sensical, but she gave people a reason to do additional business with her, and it worked. She put into specific practice the notion of excellent customer service that businesses aim to achieve in the abstract.
She created “The Ebby House” to provide shelter and basic necessities to young women that had aged out of government-provided foster care. She would remark that once she had enough money to take care of all her own needs and growth projects, she wanted to use the rest to serve something greater than herself.
This is exactly how Confucius advocated approaching charity. Your first obligation is to make sure that you yourself do not become a charity case. Then, you take care of your family. Then, you focus your attention on improving your local community.
There is also a motivational aspect to this approach. Although there is no indication that Halliday was one of these people, some people that find financial independence early in life struggle to find motivation to get up in the morning and do something with their life because there is no required need to be productive. The Halliday approach is valuable because it ties creates additional incentives and consequences tied to actions–by growing her business, she was able to provide better support to the women at Ebby House by knowing that the growth of her real estate operations improved dozens and eventually hundreds of other lives at that moment.
In 1938, Halliday was the manager of a W.A. Green Department store where she was the regional leader in hat sales. After selling a hat to the wife of famous Dallas businessman Clint Murchison–who would eventually become most known for owning the Dallas Cowboys–he asked her to go into real estate under the theory, “If you could sell those crazy hats, you ought to be able to sell my crazy houses.”
Even though she was putting together an exceptional career selling hats to women, she was willing to start from scratch in a business. That decision to switch professions enabled her to generate over $1 billion in earnings over the course of her life.
It can be very difficult to give up something successful to start something new, but a good operator knows that the following three factors lead to success: Efficiency. Scalability. Repeatability. People who focus on those three factors tend to grow faster than they ever imagined because those characteristics determine growth more than nebulous concept of “effort” alone.
It also explains why firms like 3G Capital–which in some ways is the opposite of what Halliday is about–can enter new industries such as beer, cheese, ketchup, and fast food, and then earn high profit margins than the people who have been the long-term operators in the industry. 3G placed efficiency on an altar whereas Halliday placed a premium on repeatability, but the general focus is on the right areas that lead to improved business performance.
Even at the end of her life Halliday, still went to work every day. She would say, “Oh, work isn’t work unless there’s something you’d rather do!”
Enormous results await those who are good operators that also have the discretion to exercise their authority in an area in which they are passionate. Halliday would mention that she thought about selling homes and improving her business after waking up in the morning, while she put on her makeup, when she drove to her office, and when she would get settled in for the evening.
The advantage of compounding isn’t something that only applies to reinvesting dividends. It also applies to people who are naturally talented that spend 16 hours per day thinking about their traded compared to someone who is naturally talented and only spends 8 hours per day thinking about problems. There is nothing wrong with the latter, but the Halliday “thought compounding advantage” provides a clue on how one person can grow a business from $2,500 to $6.6 billion based on sales figures.
It is also interesting to observe how Halliday responded to discrimination in the 1950s by entering a male-dominated field. Halliday was nice to everyone, and avoided putting bad things in writing and quickly changed the topic anytime she was tempted to speak ill of someone or discuss politics (this is in contrast to someone like Nebraska Furniture Mart’s Rose Blumkin who eschewed most rich businessmen because she remembered how they treated her when she was broke).
Halliday was a lifelong Republican who knew that she could risk losing some clients by going public with her views, so she kept her mouth closed and wrote checks to Republican politicians. That’s the same approach that Charlie Munger and Warren Buffett adopted in their early days–they let their checks talk more than they did.
As her life comes to an end, she provides those of us who never know her many instructions on the advantages of being politically savvy, unfailingly polite, driven by process, and willing to connect knowledge with action. Her success was a mixture of soft and academic factors–a reminder of why entrepreneurs that bring up their own businesses often create a more enduring legacy than MBAs that hop from lilypad to lilypad over the course of their careers.
Originally posted 2015-09-11 17:12:24.