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HATTIE: Hi. I'm Hattie Bryant. We created this program to help the millions of us who have a business and to encourage those of you who want to start one to go for it. Today's program is about a company who's been to the brink of failure and now lives to tell about it. Every week here at Small Business School, you have the opportunity to spend 30 minutes with a pro, with a person who's willing to tell you how they've built their business. We call this 30 minutes a Master Class. Just as music students have teachers, they also attend Master Classes taught by professional musicians, pros who make a living doing music.

Now join our Master Class and meet a pro who has built a business, John Hawkins, Cloud 9 Shuttle.

HATTIE: (Voiceover) Every day 35,000 travelers fly in and out of San Diego's Lindbergh Field. Once they arrive, they need ground transportation, and for a growing number of passengers, it means hopping on Cloud 9.

Unidentified Man #1: Welcome to Cloud 9. I'll take that for you.

HATTIE: (Voiceover) I met the man behind the incredible turnaround of Cloud 9. Where else? At the San Diego Airport.

JOHN HAWKINS: San Diego's--it's an international airport, but it only does about 13 million people a year.

HATTIE: (Voiceover) John Hawkins and his colleagues took over a failing super-shuttle franchise, created a new company, and captured 75 percent of the shared-ride market. And this was John's first experience as an entrepreneur.

JOHN: Much of the stuff I've done through my career has been start new programs, create something out of nothing, but it was always for somebody else, so this was exciting because you're playing with real bullets.

HATTIE: Your money.

JOHN: I, with another fellow, came down here as part of a turnaround team to fix a very broken thing. We had fixed other broken things in our careers in big companies. What we probably didn't realize was that in the process of fixing those things, we had very deep pockets; and if something went wrong, you could just kind of pull out a great big cannon and shoot it and it would go away. It would be fixed. Here, we came in and thought we could apply all the smart business school textbook things and it would work like magic.

It didn't.

We did eight weeks' worth of investigations, due diligence and sorting things out and told the then owners that it was dead. It wasn't broken; it was dead. So what we had to do, we put it into Chapter 11, we turned it around, we stopped the red ink and the bleeding, fixed it up, shored it up and brought it out of Chapter 11 through some of the normal classic things that one would do to fix a company -- reduced wages, changed our marketing focus, sold assets ... did all those things.

In the process of getting it out, we sold our houses, we emptied our pockets, we did everything we could to save our own bacon and to save the bacon that we had put in the fire. You know, I worked for five years for no income. That's very hard.

HATTIE: How do you stay motivated yourself?

JOHN: Well, life is fun, you know. This is ... business is a great sport.

HATTIE: Wait a minute. You sold your house. You didn't take any income.

JOHN: Got divorced.

HATTIE: What?

JOHN: I had all kinds of loss.

HATTIE: You're one of these nice homeless people in San Diego.

JOHN: Yeah, exactly. But, you know, we were -- we got in so far that we didn't have any choice but to come out the other end of the tunnel.

HATTIE: (Voiceover) It's not surprising Cloud 9 won an award for San Diego's most enterprising business. You took a dead company...

JOHN: Got it back to life.

HATTIE: You renamed it. You re-invented it completely.

JOHN: Nurtured it for a little while.

HATTIE: Forget re-engineering. You re-invented.

JOHN: I think that's probably true. We changed it from a franchise to something that was independent, and we thought that independence would work in San Diego because San Diego doesn't like being a suburb of LA. And we were an LA-based company's franchise.

San Diego wants to be itself; it wants to have its own personality. I think San Diego does envision itself as paradise, and Cloud 9 kind of fit with that paradise-type environment and palm trees and sunshine, so all of that chemistry actually worked to our advantage. But the real guts of this was textbook, stick to the netting, follow the script, don't deviate from your plan, make it work based on solid business principles.

And as we went further down the line, we quit doing experimental things like what you might do in a big company because you couldn't fail.

We wanted to, you know, get singles; don't try for home runs. Get to the plate. Get a single, get on base, move the guy along, get him in, score runs, win games day in, day out, and so we started to try to do the real simple things, academically correct, day in, day out, and I think that that's what we do today.

What we do looks fun and flashy and cute, but it's really core business principles. Differentiate yourself, make yourself unique, become something -- brand yourself as a product that someone would want to prefer or name. Those are all business academics.

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HATTIE: OK. What's in a name? Stop on that a minute.

JOHN: Nothing's in a name. Band-Aid, Kleenex, Charmin. But if you go back to the great companies in America--Ford, Disney, Nordstroms, DuPont--those are people's names. They just named the company after themselves because they didn't know any better. What did those names come to mean was something radically different than old man Ford or old man Disney or Nordstroms or DuPont. Those people built in a real brand identity with their name.

So our name is cute, it's fun, it's unique, it's different. It's largely differentiated from what other people do in airport transportation, taking people to and from the airport, but for us, what we wanted to do is brand ourselves like those people that had done such a marvelous job in branding.

Cloud 9 came about because in 1991, when we started this thing, we wanted to go get a vanity phone number, and we wanted to get 1-800-4-SHUTTLE because we knew that'd be easy to remember and people would dial 1-800-4-SHUTTLE and they'd get us and we'd take them to the airport. 1-800-4-SHUTTLE belonged to the US Virgin Islands. We went back to White Plains, New York, tried to get AT&T to break the rules and to give it to us and we were going to spend money, which we had none of, to get this number because it was so important, but we couldn't get it. Pac Bell had 1-800-9-SHUTTLE. We said, `Well, a little bit is better than nada. Take 1-800-9-SHUTTLE.'

MIKE DIEHL (Cloud 9 Shuttle): It's about the marketplace. Why not...

HATTIE: (Voiceover) The former Director of Marketing, Mike Diehl, recalls the renaming exercise.

MIKE DIEHL: You know, we sat in a room and sat down and we made the decision at that time that 'if we weren't gonna be Super-Shuttle and we weren't gonna be Sure-Ride, who were we gonna be?' When we took a picture of all the competitors in the marketplace, we had to ask ourselves what they were selling, and it really just showed that they were hauling things. And we wanted to capture an opportunity of a personality, put a name that's sellable.

HATTIE: Pain Reliever...

MIKE DIEHL: Oh, we had it all. We had from Golden Retriever, On Spot on Time, Peppered Express, Sun Diego Shuttle, Paradise Shuttle, Super Ride, which was common. But it wasn't until one of the gentlemen in this group here, Jeff Nauser, he says, `You guys got the name sitting in front of you. You're just not leveraging it.'

We had this 1-800-9-SHUTTLE for a long time as Super Shuttle. He says, `You're talking about comfort. You're talking about reliability and safety.' He says, `You live in paradise,' unlike today; it's a little gray, but it's winter. He says, `You're on cloud nine.'

JOHN: And we all said, `You are on Mars. You are crazy. You're the weirdest guy in the world,' which he still is. And he's terrific. But he said, `The best that I think it's got longevity. It's graphically extendable. It's legally protectable.' And we had all those things written on the wall. You know, it has to be a good name, it has to be these 36 characteristics. If it passes that screen, it's a good name. He said, `This one passes that. It's unique. It's different. It's sellable. It's cute. It's appealing to young and old, male and female, visitor or residents. It's got long legs in the San Diego community. You guys can make this happen.' And we thought he was crazy, but then we put it back through this very academic list of things one had to do to be able to name a product successfully, whether it was Coca-Cola or Kleenex.

It passed all those screens; so we said, `OK, 1-800-9-SHUTTLE is Cloud 9 Shuttle.'

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JOHN: Like Mouseketeers at Disneyland, you can't have a bad day. When you show up at the park and you put on your Disney uniform, you are on stage. So--and we actually said that. This tie makes you on stage. So when the shuttle driver gets out and says, `Welcome to Cloud 9,' how can you not have a smile on your face? This, in fact, is a management tool. This telegraphs what we--and I think it's our strongest point-of-sale management tool. It telegraphs what management believes the customer is supposed to see and feel. So if we tell too many people in San Diego this stands for quality, this stands for service, this stands for enthusiasm, this stands for somebody being on time and being a neat person, then that person has to live up to that standard because we've told two million people 100 times that's what this means. And our drivers put this on, and we tell them now if you aren't signed up to do that, don't put the tie on, 'cause that's what it's all about. And our customers know that, and they expect that.

HATTIE: (In the Studio)We've all heard the term 're-engineering' for years. But John had the opportunity not just to re-engineer, but to re-invent, with a core of great employees and a business built on the foundation of tourism in San Diego. The leadership came to the conclusion that they could build a shuttle company based on uniqueness. San Diego is a special place, and the shuttle to and from the airport could be and should be special. Super Shuttle franchises are found in many cities. The leadership came to the conclusion that they could come up with a name that would convey personality and uniqueness. What should a name be? Something different, something easy to remember, something that conveys the quality of the product, unique, fun, positive, upbeat, crisp, clean, San Diego oriented, and something that won't go stale. The name grew out of an asset they already had, 1-800-9-SHUTTLE. They replaced Super Shuttle with Cloud 9, and the strategy is working. What's in a name? Everything. Maybe you should change yours.

JOHN: The weird thing is, I mean, I'm looking at myself in the mirror, saying, `I'm gonna tell the guys I went to business school with that I'm in charge of Cloud 9?' And I thought, `They're just gonna laugh me out of the park.' But then we went to the other end of the... HATTIE: They all want to come to Cloud 9. JOHN: No, but we went to the other end of the spectrum, you know, because people laughed at Disney when he started. `You're gonna create a feature-length cartoon, "Snow White"?' The rest is history.

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JOHN: So we thought, `Well, yeah, OK. I'll tell my friends I'm in charge of Cloud 9 and you're still working for a living. You've done something wrong. We're having a ball. We're on cloud nine.'

So we started out and all our prices were gonna end in 99 cents; we had the nine commandments, which would be our drivers' rules. All our vans would be 901, 902. We wouldn't call them `vans' anymore. We'd call them `clouds.' And instead of Van #123, it was Cloud 999.

Then we started a culture of this is gonna be fun. And we introduced this to our employees and said, `This is who we're gonna be,' and we walked them through the same logic system. And they all said, `You're giving up this national franchise name to become Cloud what? Cloud who?' And some of these, they thought we were crazy; they thought we'd just, you know, lost our marbles. We had put no science into this.

Some people quit. Some people didn't want to work for us. People are security conscious. They thought we were crazy. We said, `We think this is gonna be differentiated by a bunch (of clouds!). And then we went out to build quality in that name ... to make it Nordstroms. To build an equity behind our name and to make it a household word.

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JOHN: So we joined every board, we joined organizations. We donated rides to children. We did things for the YMCA and Convention/Visitors and the Chamber of Commerce and the Better Business Bureau, and we said, `We want to play.'

HATTIE: (Voiceover) Cloud 9 has tried to be a good member of the community. The vans carry ads for non-profit organizations.

JOHN: But 10 of our vans we give to good things every month, so this is a good cause.

JOHN: Yeah, March of Dimes, Think Ahead, Healthy Babies, you know.

HATTIE: So they didn't pay for that.

JOHN: No, no. This month it's March of Dimes. Next month it's the Buick Invitational at Torrey Pines. The next month is `Happy 85th birthday to the Girl Scouts.' The next month, April, is `Good luck, Padres, opening day.'

HATTIE: So you have all this in your head?

JOHN: Oh, yeah, 'cause it's so much fun.

HATTIE: But when you started working with this industry, you were with Super Shuttle. Or, was it a Super Shuttle?

JOHN: Oh, it was a Super Shuttle franchise.

HATTIE: And they wouldn't allow this advertising on...

JOHN: No. No. HATTIE: ...the back of the vans, so...

JOHN: Well, they're a franchise so, you know, their indicia is very, very important to them to make sure that like McDonald's, they wouldn't want somebody use creative liberty on their Golden Arches. So Super Shuttle had a special or certain way of doing business, and that was it. And you couldn't do anything to generate some local identity or, in our case, by advertising on the back, create barter moneys with radio stations to get airtime for outdoor advertising.

HATTIE: (Voiceover) Half the people who fly into San Diego are visitors. The other half are residents. John realized residents spend three times as much per ride as visitors, so he shifted the marketing target to residents. As a result, Cloud 9 is seeing revenues rise with the longer ride and repeat business only residents can give them.

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JOHN: People like to live in San Diego. Then we try to hire folks that were born on the right side of the bed and then teach them what we do. And they just are born with a smile on their face. Our most important asset is our people. If our most important asset is our people, we'd better well make sure that we've invested a huge pot of money in their success. And whether that's compensation or whether that's cultivation, you know, whatever it takes to get that done. You can buy vans -- anybody can buy vans. To make them work, to make them dance, to make 'em sing, it takes people.

HATTIE: (Voiceover) Every Cloud 9 driver receives three to five days of training, including everything from marketing and sales to routing and safety standards.

JOHN: He started as a driver.

HATTIE: Oh, you started as a driver.

MIKE THORNHILL: I started as a driver.

HATTIE: (Voiceover) The head trainer is Mike Thornhill.

MIKE THORNHILL: Well, we instruct our driver trainers into a little history of San Diego as well, so they're more than just driving a shuttle. They're somewhat of a tour guide, a problem solver. They have to be a mathematician. They have to think quickly on their feet, and they have to have some wits about them. It doesn't help to have anything other than a wonderful sense of humor about themselves.

HATTIE: So you're looking for attitude, sense of humor and what else?

MIKE: We have a number of retirees. People who have been retired from the military as well as from their 30 to 40-year careers. They're looking for something else to do and sometimes the spouses wants them out of the house. They're looking for something really fun to do and the majority of our drivers absolutely love doing what they're doing. Driving for Cloud 9 is fun because you're working in the people business and those individuals in the people business have a marvelous time with each other.

HATTIE: How do you find the right attitude?

MIKE THORNHILL: Well, we have the individuals come in and they stand up and have a chance to talk to us about why they'd like to be a Cloud 9 driver.

HATTIE: You mean they get up in front of a group?

MIKE THORNHILL: Absolutely.

HATTIE: They have to give a speech?

MIKE THORNHILL: Complete strangers--up to 40, 45, 50 individuals and...

HATTIE: Forty or 50 people in the audience and the person has to stand up and say, `Why I want to drive for Cloud 9.'

MIKE THORNHILL: Complete strangers. And if they have any intimidation factor there, well, we say, `You're gonna have seven strangers on board your Cloud 9 Shuttle. Why would you be intimidated by...'

HATTIE: So this is an audition?

JOHN: Yes.

HATTIE: It's like trying out for a play or the theater.

JOHN: But they're told they're gonna have to do this when they fill out that little form and they have a clean driving record, they're told, `You're going to have to come in stand up in front of a large group of people and tell them why you want to be a Cloud 9 driver. And you have to do it with enthusiasm and exuberance or you're not gonna get the job.' They're hired by their willingness to participate. And to have fun.

HATTIE: Well, do you find when you go for the personality you find also a person who, like me, hates to fill out paperwork?

JOHN: Absolutely. Absolutely. So that's the end of my speech, but bear with it, guys, it's really necessary because we all want to be on the same page in the hymnal so that it works for 300 people, not just one. If it was only five or 10 guys, everybody could have their own idiosyncrasies, but for 300, there needs to be some policies and procedures and practices. So bear with this stuff and it'll consume half of your energy for the first two weeks and you'll be really frustrated because you're a personality person, you're not a, you know, mechanical person who'd be very good at what we're trying to drive down, you know, square peg in a round hole. But once you get good at this, it'll be second nature and you can let your personalities come to the front, and that's what makes your incomes and gratuities and that's where you get a large proportion of your wealth. Unidentified

Employee #1: I love going to work every day. I have fun.

HATTIE: Do you make money?

JOHN: So do I.

HATTIE: You make some money?

JOHN: You've got to...

Employee #1: Well, you know, you could always get him to give me a raise anytime you want to.

JOHN: I'll give you more raise. I'll give you more--as soon as we make it, you'll get it.

Employee #1: All right!

HATTIE: OK, she has to get to her dance class.

Employee #1: Yeah.

JOHN: We've got a dance contest to get to, so scoot.

Employee #1: Got to get along. Bye.

HATTIE: Bye-bye.

JOHN: Bye. Thanks.

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JOHN: You know, people think that we take money from people--businesses take money. I think we collect wages. We don't pay wages. We provide added value for services rendered. We collect, collectively, a pot of money and distribute it to the people who generated that wealth.

MIKE THORNHILL: We have a number of retirees, people who've been retired from the military as well as from their 30-, 40-year careers.

Unidentified Employee #2: This is originally where San Diego started, in this area here.

HATTIE: When you retired, why didn't you just stay home and do nothing?

Employee #2: I'm not that kind. I just can't stay home and do nothing, and I like to talk to people and meet people, so I came out to Cloud 9 and it was really not Cloud 9 at the time, but another shuttle company.

HATTIE: Right.

Employee #2: And I decided that it sounded like a good opportunity for me to get out of the house for some days of the week and...

HATTIE: Well, now, did you have any idea you were gonna have so much fun?

Employee #2: No, I didn't. It was really kind of a mystery about what the job was all about. But they train you before they put you out on the road so that you can learn some of the basics. And from there on you just learn how to be a good driver.

JOHN: You know, the thing that seniors, I think, possess is an absolute love of life 'cause they've seen a lot of it and maybe they know they ain't gonna get that much more of it. You know, and I think that they want to live it to the fullest. They are just the best people that--you know, they're--and that was the generation, you know, whose parents or who even personally experienced the Depression and World Wars and hard work. These are honest, hardworking, good people. You've just got to love 'em, and, you know, you can't get enough of them because honest day's work, honest day's pay, all the right stuff. And I think as Mike Thornhill shared, these people--they're there because they want to be there, not because they have to be there.

HATTIE: (Voiceover) Cloud 9 vans are new, clean and always in top condition because safety comes first.

Employee #3: It's astounding. It really is. The quality that goes in--they spare no expense. The reason why we have my family ride it is because of the preventative maintenance program that they have. The average mechanic here has got 25 years or better. I've been doing it 20 years.

HATTIE: And you think that...

Employee #3: There will always maintenance . . . always need a mechanic.

HATTIE: Is this as good a company as you've ever worked for?

Employee #3: It is; the maintenance team is the best. The very best. I really mean that.

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HATTIE: (Voiceover) The marketing strategy has been so successful, John has had to slow down expansion to put the technology in place needed to sustain more growth.

JOHN: We won't make it without added technology. And it's actually great that there is the technology so we can continue to grow. The way we communicate with our vehicles today is basically walkie-talkies. Unidentified Employee #3: I need the last driver in the lot, please, last driver in the lot.

JOHN: (Voiceover) Somebody's inside our base and near the airport and our vans are all over the county. And that's fairly archaic. That's stagecoach and we need to be space shuttle. Employee #3: ...983, stand by, sir...

MIKE FORBUSH: Yeah, we've grown as large as we can manually. We definitely need the technology to grow any further.

HATTIE: (Voiceover) Mike Forbush started as a driver. He is now responsible for installing this new technology.

MIKE FORBUSH: The tracking system does three things. It tracks the vans for us, where they're at and how fast they're going, and if a driver gets lost we can walk 'em in because we can see exactly what street they're on and where exactly they are at live time. And it'll also send data through a computer screen to the driver telling them what runs to go, what time for the pickups. And the third part is the credit cards where the driver will just swipe a credit card like in a restaurant or something and the tracking system will process the credit card through for us.

HATTIE: So that's exciting.

MIKE FORBUSH: Yes. The drivers will like that a lot. The less they have to do, the better.

JOHN: Technology's not a bell or a whistle. It's not something sexy that we want to look good or have some fancy screen. It's an absolute necessity for us to continue to grow the business. And as long as there's demand, you know, your customers want to buy our products, we're duty bound to figure out how to create more product. So this is a breakthrough for our business and, you know, we never thought we'd--you know, it was always kind of, `Wouldn't that be great? You know, this is a bell and a whistle.' This is absolutely necessary now, so it's a huge investment, it's another one of those reach into your own pocket sacrifice for the good of the company, but, you know, it's the right thing to do long term.

HATTIE: One more year with no house.

JOHN: One more year with no house, probably. But that's OK.

HATTIE: Well, now does a person have to have an MBA to make it in business?

JOHN: No. Absolutely not. I mean, look back at history. The guy's who've made it haven't. Today, it's an advantage. It doesn't hurt you. But I think enthusiasm and will and hard work and all the old-fashioned things that, you know, you learned as a kid: work hard; work before play; all those things, that do your homework, the test will come out OK. You know, what made us successful was the will to get it done and the drive to not quit. Before you do it, you think, `Wow, this is gonna be easy. I can go out there and have the Midas touch and, you know, spin yards of gold.' In reality, it's harder. It's not as lucrative. Its highs aren't any higher. Its lows are much deeper. But it's exciting. You only get it once, you know. Just love it. Do it.

HATTIE: (In the Studio) What's in a name? Nothing or just maybe everything. Have you asked thequestion: how does my business name impact the bottom line? Maybe it's time for a change. We'll see you next week.