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Last Update: Thursday December 14, 2017

Key Idea: Buy A Big Company's Mistakes

John Hawkins reinvented a bankrupt Super Shuttle franchise in San Diego; he  turned it into a thriving operation known as  Cloud 9 Shuttle, then he sold it to Super Shuttle!  You meet John in the earlier stages of his journey.    More...

Key Question:

A: 

John Hawkins was able to look closely at the problems of the San Diego Super Shuttle franchise as he was hired to give advice to the failing company.  He realized that not only were they breaking under the cost burden of the franchise system, John realized that they didn't know who their customer should be.

Q: What significant marketing change did John make very quickly?

A:
By asking themselves who their customer is, Cloud 9 figured out they have tourists and residents using the shared-ride service. They also calculated that the residents spend more for a ride because the distance from the airport to most residential areas is farther than the distance from the airport to most hotels. Also, there are more residents than tourists and residents will ride more often than tourists. So, the future of Cloud 9 depends on its ability to attract and keep the hundreds of thousands of San Diego residents who want a shared-ride service to and from the airport

Tourists coming into the San Diego airport often are going to the convention center and the hotels close to the harbor, downtown and Mission Valley. These destinations are close to the airport which means a ride might only earn Cloud 9 $5 to $8 per person. The strategy to go after locals raised the average ride to $30 per person! We call John's insight counter-intuitive marketing.

Q:
Why has an entrepreneur been able to do what a franchise organization could not do?

A: Plenty of reasons! First, we all know that if there is a viable market for a quality product or service, the key to success is leadership. John Hawkins or another entrepreneur with a burning desire to achieve can out perform 20 middle managers. Second, a small company can throw out all of the rules that bog down a big operation. Third, a new business can build a fresh team made up of people with plenty of energy and new ideas. Fourth, a locally-owned company can act local.

John explained that people who live in San Diego want to buy services from locally-owned business. The Cloud 9 Shuttle has a spunky personality with brightly painted vans that look very different from the Super Shuttle which can be found in many airports today. Also, Cloud 9 is experiencing great success with it's advertising on the back of the vans. Some of this is paid which creates revenue; some is in-kind for radio spots promoting Cloud 9; and some is done as good will for the community. Being locally-owned is part of the entire marketing strategy of Cloud 9. 

Click on the question for more answers.

Think about it

What mistakes are the big guys making now in your industry? What can you learn from those mistakes? How can those mistakes help you gain marketshare?

Clip from: Cloud 9 Shuttle

San Diego: Meet John Hawkins and learn about his company, Cloud 9 Shuttle; he threw out conventional marketing wisdom, pulled the company out of bankruptcy, turned employees into owners, and installed key technologies. It just doesn't get any better than this. Not that it has been easy for John and his team; it has been very tough. Yet, this is the great American success story. He may not have made billions of dollars, he did save a business and he instills confidence being a good citizen is good business.

Upon arriving in America's Finest City with her beautiful, cloudless skies and moderate weather, you quickly discover that there are ubiquitous clouds at city's airport, Lindbergh Field. Here, the clouds are "Cloud 9" vans, a shuttle service from the airport to anywhere.

But it wasn't always so perfect in this perfect city.

This is a turnaround story. It's a branding story. And, it is a love story. To begin this story we went to the airport to meet the man who knows San Diego better than anyone. John Hawkins just loves this community and her people. And because of his service, when we asked about a business to study, everybody recommended John -- the Chamber of Commerce, the Convention & Visitors Bureau, the Mayor's office, Economic Development and many others. 

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Cloud 9 Shuttle

John Hawkins, CEO, founder

3550 Kurtz Street
San Diego, CA 92110
858-505-4900

Visit our web site: http://www.Cloud9Shuttle.com

Office: 858-505-4900

Business Classification:
Transportation

Year Founded: 1991

Buy A Big Company's Mistakes

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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