Competition
The transporter
How Jon Monson moved MV Transportation from $24 million to $450 million in eight years
By Kristy J. O’Hara
Smart Business Northern California | June 2007
Page 1 of 1
Fear lurked in the back of Jon Monson’s brain and deep in his
heart when he decided to join MV Transportation Inc. as president
and CEO in 1999.
While it’s natural to feel anxious heading into a new position,
Monson’s fears didn’t stem from questions of whether he could do
the job. They came from the act of taking the helm of a family-owned business.
“I was fearful because I had seen it on the other side, where people go to work for an entrepreneur as a CEO, and they are promised, ‘You’ll have control,’ but then when it comes down to the
brother-in-law and friend of the owner, those people can’t be
touched, and you have all sorts of issues with that,” Monson says.
MV’s founders wanted to grow the company and had tried to do
so, unsuccessfully, with a few different people. Now it was
Monson’s turn, but there was an urgency to his task.
At the time, MV — which provides bus and van transportation
services for government agencies and private entities — had about
$24 million in annual revenue and had seven offices in the Bay
Area. But as the industry experienced more consolidation, if MV
didn’t establish a national presence, it wouldn’t be able to compete
with these rollups and would get run over by its competition.
Self-assessment
Monson’s initial fears about taking over a family-owned organization proved un-founded. Owners Feysan and Alex Lodde gave
him a free hand to run the company, leaving Monson to face the
problem of how to grow MV Transportation.
The choices were to do it by acquisitions or do it organically.
Monson had previously seen a company he worked for pay about
$100 million to acquire a business generating about the same in
annual revenue. Three years later, it brought in only about $60 million.
He’d also seen companies eliminate key people after acquisitions, which inevitably eliminated customers that respected and
had bonded with those people. Because of these experiences, he
knew he would grow the company the hard way — organically —
and he had to do it in a way to ensure success.
“The most important thing to do is grow in a way that you don’t
risk the company by having too many assets or too many long-term commitments, like real estate, so that if your business starts
to decline or your revenue starts to decline, you quickly become a
company with a big loss,” he says.
He decided MV would target contracts that were less asset-intensive so it could achieve growth without adding debt. To get those
contracts, though, Monson first needed the right people on his
team. So he started by assessing everyone’s strengths and weaknesses.
“You have to spend time with them,” he says. “You have to look
at their work product and see how they interact with their teams,
and you have to look at what their priorities and values are.”
He spent much of his first 30 days reviewing the balance sheet
with an outside auditor, which revealed that the debt-equity ratio
was about 17-to-1 and the balance sheet was sometimes used to
pump up earnings. Because of that, he didn’t trust the chief financial officer, so he let him go.
“I made that decision very quickly because having solid information is extremely important, especially when the company was as
leveraged as this one,” Monson says.
Within the first six months he also replaced the chief operating
officer and the executive in charge of business development.
“Those are some of the key people that can fuel growth, and in
all three positions, I brought in people I had known for many years
and trusted,” Monson says.
Doing so ensured that he didn’t have to worry about getting buyin for his strategy because the new people already had the same
ideas as Monson, and they were able to move forward together.
External relationships
Monson says all businesses are relationship businesses, and that
proved true within six months when MV landed its first out-of-state contract in Portland, Ore., through a customer Monson had
known from his previous firm. Through other contacts, in early
2000, it also picked up contracts in the Midwest, which eventually
led the way for East Coast expansion.
Creating those external relationships and reputations is crucial
to growing. MV’s founders travel throughout the year talking to
customers to find ways to improve. But you can’t focus just on
people already with you; you have to prove yourself to potential
and new customers as well.
Two years ago, MV won a huge contract in Washington D.C., but
as part of the transaction, the client wanted Monson to personally
do the start-up. While many executives would say they don’t have
time to do such things themselves, Monson spent six months in the
nation’s capital developing strong relationships with the new customer and making sure things got done the way it wanted.
“That loyalty and that commitment will last for a long time,” he
says. “There’s a certain amount of loyalty that you have to people
that you do business with in a service industry, and it’s hard to buy
that — you have to earn it.”
As MV continued growing, Monson and the founders realized it
was time to also build relationships with advisers.
“It used to be at our board meetings, ‘Well, we already know all of
this stuff, so what good is it doing at this point?’” he says.
To become productive, three years ago they added another
board member, and then expanded to seven members a year later
to help MV prepare for the future.
“Look at balance and different perspectives, and have people
that add value to the company,” Monson says.
One addition was a politician, who advised the company on how
to better work with its customers — governments. Another headed an insurance company — crucial for MV because of its risks.
One was experienced in financials and the other in organic
growth.
“They’ve really helped us focus on how we would be viewed if
we were a public company,” he says. “Because we’re privately
held, we don’t have the same scrutiny that a public company does,
so we’re becoming more public-like in our management as we
grow, and that’s a good thing. If we do decide to do an IPO someday, we’ll be ready, and we won’t have as much of a trauma as we
would otherwise in entering that arena.”
Internal relationships
As MV competes for larger contracts, Monson sees people as the
most critical factor to the company’s successful growth.
“Usually the most important factor in selecting a company [for a
contract] is the general manager you propose to run that local
office,” Monson says. “Finding enough general managers is a real
key and is probably the biggest limiter to our growth. It’s not capital — it’s just people.”
As the company’s employee base grew by 30 to 40 percent each
year, Monson saw MV outgrowing some of its people’s capabilities.
“It became apparent to me — as cracks started showing up in
things like fringe benefits not being solid or excess amounts of
complaints from employees about their benefits or payroll not
being properly administered — the person who was doing our
human resources function was not a human resources professional,” Moultrie says. “While we certainly gave this person time to
improve, it became clear to me about three years ago that this person was in over his head.”
With people being key, Monson hired a recruiter who helped him
bring in a human resources executive with experience at much
larger organizations, such as Charles Schwab and Avis.
“We started bringing in other people that I didn’t know but who
worked for companies much larger than ours and knew the kind
of systems and programs we had to have in place to be a larger
company,” Monson says.
As he brought people on, he used an industrial psychologist to
help evaluate personalities, strengths and weaknesses of candidates to ensure the company got a balanced fit and didn’t end up
with a group of yes-men and yes-women.
“If you don’t have a diverse team in terms of personality and values, you tend to get this group-think, and you could go down a path
that later, when you look back, you say to yourself, ‘Well, how
could we make this strategic mistake?’” he says.
Additionally, Monson needs managers who genuinely care about
and listen to their people.
“When you have a problem that develops and you call your boss,
the first response they should receive is, ‘What can I do to help
you?’” Monson says. “It’s not, ‘Oh crap, you have a problem,’ or getting angry ... it’s a culture of how can we better support our field
offices and, in turn, they develop the trust to call us if they’re having a problem.”
To help foster that trust, employees have a toll-free line to dial if
they need to speak directly to Monson or the founders about an
issue. Listening to employees and collaboratively solving problems
helps them feel valued.
“You have to have a culture where people are free to stretch their
abilities, where people will make mistakes from time to time,”
Monson says. “When they do make mistakes, how you react to a
mistake is critical. If people believe they won’t get shot, then
they’re more likely to come and tell you early on. If people believe
that they’re going to have a blindfold put on them and tied to a
stake if they make a mistake, then they’re going to hide things until
they blow up and cost you more money and credibility in the market.”
Monson also gives his people the authority to make decisions by
creating smaller business units within the company, each with its
own management chain.
“It would be tempting to say, ‘We could have some synergy and
reduce the level of middle management in our company,’” Monson
says. “That would be a big risk because sooner or later, that would
affect our customers and employees and cost us money.”
To know when to expand that span of control, Monson says to
just observe.
“That’s just kind of having a feel for the business, and when you
start seeing cracks come in the walls, you know it’s time to build a
stronger wall,” he says.
And as Monson continues to build stronger walls, he sees the
results of his construction all around him. His initial fears have
long subsided as MV Transportation has grown from a local $24
million company in 1999 to a national transportation provider generating about $450 million in annual revenue, and Monson knows
it’s only because he’s done for his people exactly what MV’s
founders let him do.
“While we all engage in discussion about the future of the company, and they remain the majority shareholders here, they have
lived up to their word to let me run the company, and that’s what I
do.”
HOW TO REACH: MV Transportation Inc., (707) 863-8980 or www.mvtransit.com
