How the Stars of 'Fixer Upper' Transformed a Town in Texas
This story appears in the December 2016 issue of Entrepreneur. Subscribe »
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One night a few years ago, Dustin Anderson was having dinner with his wife, and he spotted Chip and Joanna Gaines out with some friends. Anderson felt immediate tension. He owns a Waco, Tex., glass shop called Anderson Glass and had been doing some work with the Gaineses, who owned a construction company. But the Gaineses were past due on paying him -- 30, maybe close to 60 days over.
“There was an elephant in the room,” Anderson recalls. “We sat down for dinner, and then after a while, Chip walks over and slides into the booth, puts his arm around me, and says, ‘Hey, buddy. I know we’re behind. Things are rough, but bear with me. I have a solution.’ And he just kind of loved on me. When he got up and left, I told my wife, ‘That’s what I want.’ Just talk to me. Tell me. Keep me in the loop.”
The moment was pure. Chip: He’s a lovable, charming guy. But he’d also gotten used to conversations like that. Back then, around 2011, Chip and Joanna didn’t think they’d make payroll most weeks, as they flipped homes on a shoestring budget. (“It’s not like shiplap was always my top design choice,” says Joanna. “I was just trying to save money.”) Monday and Tuesday would be full of angst as they crunched numbers. Friday would be gut-wrenching when they had to ask employees or contractors to hold checks. “I think it would have been easier to quit if it was just me and Chip,” Joanna says now. But many of their employees had worked alongside them for years. “And we had these guys who were now family. We knew their wives; we knew their kids. We were like, ‘We can’t not do this for them.’ Even though they couldn’t cash their checks on some Fridays, they were the reason why we were like, ‘We’ve got to make this work.’”
Their fortunes changed in 2013, as any fan of reality television knows. Chip and Joanna became the stars of an HGTV show called Fixer Upper, a home-remodeling program in which their loving rapport takes center stage, and it turned them into America’s sweethearts. Viewers live-tweet episodes with the hashtag #RelationshipGoals and heart emojis. Now the Gaineses are building a personal empire: They run the construction and design business (which is booming) and the show (which just wrapped filming of season four) alongside their new magazine, The Magnolia Journal. (“Magnolia” is the Gaineses’ umbrella corporate name. Their construction company, for example, is Magnolia Homes.) Their first book, The Magnolia Story, came out in October and became an instant best-seller. Joanna has a line of furniture, and they’re considering a second show focusing on her design process.
Reality television has, of course, transformed many such struggling businesspeople before them. But the couple’s response to fame has very much separated them from their newly famous peers: They’ve invested heavily in Waco, a city of 130,000 that’s also something of a fixer-upper. In opening multiple businesses there, they’ve helped turn the city into a certifiable tourist destination -- sparking not just an ecosystem of other businesses that serve the tens of thousands of fans rolling in each week but also a model of how entrepreneurs in other cities, even without the backing of a cable TV show, can make an enormous difference.
It’s something the Gaineses are proof of: Successful entrepreneurs inspire other entrepreneurs, and their collective success is transformative.
“We want Waco to be part of the package, part of the equation,” says Chip. “It’s become exciting to watch people come to town and go back home and say, ‘We had a great time. This place was great.’”
Waco was once booming. In the late-19th and early-20th centuries, it was Texas’s major cotton exchange. Today most people think of it as the stained site of sensational tragedy -- the siege that destroyed a cult called the Branch Davidians in 1993 -- but the city’s troubles began long before then. The Great Depression left lasting damage, followed by an F-5 tornado in 1953 that shredded the town like a colossal rogue weed whacker. After that, downtown Waco began to look like a far-flung first cousin of the small, forgotten cities that make up the Northeast’s Rust Belt.
The losses kept mounting. In 1964, 5,000 people were out of work when Waco’s James Connally Air Force Base closed. Nineteen years later, 1,400 people were out when General Tire Co. shuttered its plant -- and left a 300,000-square-foot factory to stand vacant, a symbol of Waco’s daunting future. “When I was younger, I couldn’t wait to get the hell out of here,” says Kristina Collins, senior vice president for economic development at the Greater Waco Chamber of Commerce, who has lived here since the early ’90s.
The city did have one potential economic engine: Baylor University, a private Baptist college in the heart of downtown. But like many small cities with big colleges, Waco struggled to keep its freshly educated young people in town. They’d often drive an hour and a half to Dallas or Austin, where they’d find better job opportunities and a more vibrant community. Chip and Joanna could have been a part of that common story. Neither grew up in the town they now call home.
Chip was raised in the Dallas-Ft. Worth area and moved to Waco to attend Baylor. He’d considered himself a serial entrepreneur since his teens, and by his sophomore year he’d launched a business mowing lawns; a wash-and-fold business would follow, and he even experimented with selling firecrackers at a roadside stand. After graduating in 1998, having saved up some cash, he decided to buy and fix up a local house. The profit he made when he sold it six months later was more than he’d made in a year of mowing lawns.
“That’s when things started making real sense to me,” Chip says. So he did it again, learning as he went. “When I bought the house, the windows were broken, so I had to figure out how to fix windows. The wood floors were rotten, and I had to figure out how to replace hardwood floors. It was a backward way to do it, and I wouldn’t recommend it.”
The year 2001 brought the meet-cute story that Fixer Upper fans are familiar with. Chip had always admired the photo of a pretty girl -- the owner’s daughter -- at his local auto shop. Then one day he went in to get his brakes fixed, and there was the girl: Joanna. She grew up in Austin, but her family moved to Waco when she was a teenager. She is four years younger than Chip (he is now 42; she is 38) and had recently graduated Baylor herself. Their hashtag-able chemistry sparked, and they were married in 2003.
The two wanted to make life work in Waco. They liked living in a small place that was only an hour-and-a-half drive from major cities, should they want a big night out on the town. Joanna opened a home-goods store in 2003 but closed it a few years after so they could both focus on Chip’s construction business and their growing family. Joanna became a self-taught interior decorator so she and Chip could work as a team.
By staying in Waco, the Gaineses unwittingly joined a new kind of small-city American story. It goes like this: Local entrepreneur gets serious about saving (or simply improving) the city they love, and, with success, becomes the focal point for a bustling business scene that changes the way that city sees itself. “Twenty years ago, the most talented people tried to find their way to New York, Boston and San Francisco,” says Weston Wamp, principal of Lamp Post Ventures, in Chattanooga. “And some people still do that. But now, because of the way the world works, anyone in any sector can do it in any place of their choosing.” Case in point: Lamp Post operates a venture capital fund that lures companies from the coast to the often overlooked core of America, including Chattanooga, a city that used to lose young professionals to nearby Atlanta and Nashville. Lamp Post is now transforming an old hotel into tiny apartments for all the new startup types it has lured there.
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Among the top 10 most expensive U.S. cities, 51.1 percent of people moving out are 18 to 34, according to Trulia, a rate significantly higher than that of average migration. Sometimes, these millennials are just moving to the suburbs to start families. Other times, they’re headed to places where somebody has sparked an entrepreneurial fire.
“Twenty years ago, talented people tried to find their way to New York, Boston, and San Francisco. now anyone in any sector can do it in any place of their choosing.”
The igniter can take all forms, and it doesn’t have to involve couples made famous by reality television. In Greenville, S.C., it’s a small-business incubator. In Baltimore, it’s a craft-brewing incubator and Under Armour. In Madison, Wis., it’s companies like Epic, the largest healthcare IT company in the country. “Epic started up with a handful of people, and now they have, like, 8,000 employees,” says Bill McMeekin, an editor at Livability.com, a site that promotes small- and medium-size cities, who sees stories like this one all the time. “Those employees are leaving and starting their own companies, and doing that in Madison, creating a really vibrant scene.”
Building that scene in Waco wasn’t easy going. Both Chip and Joanna had a lot to learn, and they leaned on others in the community. That’s how Chip first met Dustin Anderson, the glass contractor: “He said to me, ‘You’re the guy who knows the field. Tell me what I need,’” Anderson says. “Chip learned his craft that way. He listened to the guys who were experts.” In the forensic dissection of why an entrepreneur stays in a community, such moments cannot be overestimated. Local businesses in a small city like Waco are often collaborative; they know they need each other to succeed. “We’ve had so many times when we didn’t know if it was going to work -- if we were going to make it,” says Chip. “More of those than not,” Joanna chimes in. “We could cry when we think about the people who held their checks without us knowing it for four weeks. These people wanted us to make it, and we were wanting us to make it. It was like this family effort, and so looking back now, without their effort, we don’t know how we would have been able to do it.”
But they kept at it, and pure luck struck in the biggest of ways: In 2012, an HGTV producer came upon Joanna’s blog, where she wrote about projects and home life with Chip. The producer liked Chip and Joanna’s authenticity and set up some test shoots with them. Network execs swooned when they saw the footage and soon ordered up one season of the show that would become Fixer Upper.
The pilot aired in 2013, and demand for Chip’s craftsmanship and Joanna’s design sense soared along with their name recognition. It was an odd kind of fame. They hadn’t switched jobs or learned acting or moved to Hollywood or done anything, really, other than what they were already doing, but now with cameras rolling. Maybe this would have happened to them in any town; it’s impossible to know. But it happened here, with the people they’d known for years. They saw Waco as a natural part of their success.
On a Thursday this past October, Joanna is where she usually is: hunkered down in her office. While many of the homes she designs on TV are staged with whitewashed or pale shiplap walls, three of her office walls are black and one is yellow. The room looks like a Pinterest page come to life -- full of breezy quotes pinned to the wall (“It’s not the load that breaks you down, it’s the way you carry it”) -- and, today, a summertime candle from her home collection is turning the air bright with citrus. Her designers parade through in 30-minute blocks, one after another to present her with design options for the seemingly endless supply of projects on deck -- a new restaurant, a potential home for season five, a prospective vacation rental and so on.
As she works with her senior project manager, Kristen Bufton, sorting through choices for exterior lighting on an upcoming renovation, Joanna hears Chip’s voice boom through the walls as he tells a story a few rooms away, and she pauses.
“So loud. So long-winded,” she says, turning to face the direction his voice is traveling from. She smiles. “I love it.”
Chip is working on separate projects. Right now he is in the upstairs portion of their office space, balancing calls with the network and meetings with their real estate firm. In the years since the TV show began, the Gaineses have regularly increased their stake in Waco. The show certainly does some of the heavy lifting: It features local contractors like Anderson, which helps those businesses, and the homes the Gaineses flip sometimes become hot Airbnb attractions. Earlier this year, they bought a historic restaurant just outside downtown. When they saw a story in the local newspaper about another small-business owner seeking donations to open a grocery store in low-income North Waco, which has been dubbed a food desert, they held an auction to raise money for the cause.
Since the tv show began, the gaineses have increased their stake in waco. “We don’t want to end up stupid rich while people are trying to make ends meet.”
“We don’t want to end up stupid rich while a bunch of people are trying to make ends meet,” says Chip. “We want everyone to be on the opposite side of this decades from now, looking back and saying, ‘Hey, our lives are better because of us taking that leap of faith.’”
The city has clearly factored that into its plans.
Chip and Joanna, to be clear, are not the only thing going in Waco. In 2009, that old tire factory -- the one that closed in 1985 -- was donated to Baylor and slowly became the Baylor Research and Innovation Collaborative, a place to provide budding entrepreneurs with resources to help build their companies. It fully opened this year, and Baylor cites research showing that for every job created at a research park like this, 2.57 jobs are created elsewhere -- often in local, emerging industries. “We’re designed specifically to keep people here,” says Truell Hyde, vice provost for research at Baylor and the center’s director.
But Waco also knows the reach the Gaineses have and has given them the tools to expand. In 2014, it provided $208,376 in tax incentives for the couple to transform a 2.6-acre site, including a 20,000-square-foot barn, into what Joanna calls “an amusement park for adults.” With HGTV cameras rolling, they rebuilt the place as Magnolia Market at the Silos -- a sprawling space with a home-goods store, a garden, a bakery, space for food trucks and open space to lounge and play yard games. They also own a nearby vacation rental home called The Magnolia House, where visitors can stay for $695 to $995 a night.
Today white-sneakered visitors pour from a tour bus, phones at the ready to capture a photo sure to make their Facebook friends jealous. The place now attracts more than 20,000 tourists a week. The couple stops by when they can -- even in a city this small, they’re now often too busy -- and sometimes run into unexpected visitors.
“Chip would get into people’s cars -- he still does this -- and ask if they want a picture with him, and he’s out there doing that and then all of a sudden Laura Bush is there,” Joanna says, laughing.
Turns out, the former First Lady is a fan.
“She’s come to the Silos a couple times,” says Joanna.
“I don’t mean to brag, but I’d call her a mega-fan,” Chip offers.
“No,” Joanna chides him, trying to keep a straight face.
But Chip is on a roll. “I’d say stalker.”
“Stop.” Joanna is using her mom voice now.
“Mega-fan,” Chip tosses out before the subject is changed on him.
Laura Bush’s level of fandom aside, the city’s chamber of commerce is certainly a mega-fan. “What Magnolia has done has also spurred a lot of other businesses,” says Collins, the chamber of commerce executive who once wanted to flee her hometown. “Our downtown is going through a renaissance right now -- a complete rebirth.” The Gaineses’ project has spawned a design district that appeals to tourists, sure, but also a growing band of locals. Between 2011 and 2014, downtown Waco’s 76701 zip code’s population grew by 32 percent -- a deluge compared with the current annual American growth rate of less than 1 percent. Its largest gains are in residents between the ages of 25 and 34. Now more restaurants, bars and other businesses are popping up to support these new people. There’s even a renewed focus on improving downtown’s parks.
And no one is waiting to cash the Gaineses’ checks.
When Joanna met Chip, the two worked at different speeds. Joanna preferred to focus on one thing at a time. Chip wanted to run multiple businesses and flip multiple houses at once. It’s clear which partner influenced the other. “If we just have one house, we’re bored with that,” Joanna says now. “So I think Chip has taught me -- or has rubbed off on me -- but it’s, like, the busier, the better. We like to stay busy, and I think we love to stay inspired, and that’s the best place for us to be.”
Their shared insatiable appetite to keep going -- to keep building, to make Waco a destination -- has another side. In a short time, Waco has faced a lot of change. And the reality is, change can be hard.
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When the Fixer Upper pilot aired in 2013, the median home value in Waco was $96,102, according to Trulia. By 2016, it had increased to $110,254 -- up 14 percent. That’s still much more affordable than the median price in the U.S., which rings in at $187,000. But this kind of increase can easily affect up-and-comers’ ability to buy a place of their own. And even those who have already bought in saw big issues this year, when property assessments went up by as much as 50 percent. The Gaineses can’t possibly have caused all this, of course, but people around town often call it a Fixer Upper side effect.
“There’s been a tremendous amount of redevelopment in the downtown area, and the fact that you have all these visitors coming in caused property values to skyrocket and taxes to rise as a result,” says Collins. “And there were a lot of concerns with that, because we don’t want to stifle the growth and either force the people who have invested out because they can’t afford to pay their taxes or make it cost-prohibitive for new people to come in.”
Small cities that have yet to find their own Chip and Joanna might call this a nice problem to have. But it’s also a problem that could solve someone else’s problem: If Waco becomes too expensive, say, the next Chip and Joanna might move somewhere even smaller and start the whole cycle again.
