H. Wayne Huizenga The Billionaire Garbageman
H. Wayne Huizenga
Chairman of AutoNation Inc.
"I enjoy building something good and having a successful product and making money."-H. Wayne Huizenga
H. Wayne Huizenga is considered by many to be one of the greatest idea men in the history of American business. With his uncanny ability to pick a fragmented industry ripe for consolidation and create a company that dominates that industry so quickly that his competitors are left out in the cold, Huizenga has made himself a billionaire. Voted by Forbes magazine as one of "Corporate America's Most Powerful People," he presides over a multibillion-dollar business empire that includes everything from professional sports teams to the nation's largest car retailer. And it all started with a single garbage truck.
The fact that Huizenga would become one of the world's most successful entrepreneurs is no surprise. In fact, entrepreneurship runs in his family. His Dutch immigrant grandfather started a garbage business in Chicago and his father was head of his own construction company. When he was a boy, Huizenga's father told him, "You can't make money working for someone else."
Young Wayne took his father's advice to heart and set out to make his mark on the business world. In 1962, at the age of 25, Huizenga started the Southern Sanitation Service by borrowing $5,000 from his father and coaxing a local trash hauler in Fort Lauderdale, Florida, into selling him a used truck and a few accounts. Each day, Huizenga would set out on his route at 2 a.m., picking up garbage and toting it to the dump until early afternoon. Then he'd shower, put on his best suit, and spend the rest of the day calling on homeowners, supermarkets and retail stores to solicit business for his company. "I didn't know anything about the business," he admits in an interview in The New York Times Magazine. "I just worked hard and gave good service."
The approach worked, and by 1968 Huizenga owned 20 trucks and was servicing customers as far south as Key West. It was around that time that a relative, Dean Buntrock, who was running the disposal firm originally founded by Huizenga's grandfather, suggested merging his company with Southern Sanitation. Huizenga agreed, and Waste Management was formed.
Buntrock's vision was to create a nationwide sanitation company. To accomplish this goal, he and Huizenga embarked on a buyout spree, acquiring 90 trash haulers in a nine-month period. It was during this time that Huizenga developed the key strategies and skills he would later use to run his other companies. The buyouts were made mainly with Waste Management stock. Huizenga and Buntrock felt that diluting their ownership stakes was better than taking on oppressive interest payments that could bury the company in a downturn. They also generally kept the former owners on as managers, believing that if their companies were good enough to acquire, so was their expertise. Thanks to this strategy, Waste Management eventually became the largest garbage removal company in the country, making Huizenga and Buntrock millionaires.
By 1984, Waste Management revenue was topping $1 billion. But Huizenga had grown tired of the garbage business, and he retired at age 46. His retirement wouldn't last long, however. Restless and worth at least $21 million thanks to his share in Waste Management, Huizenga began buying small local businesses. During a three-year period, he acquired more than 100 businesses ranging from bottled water and lawn-care services to hotels and offices buildings. As one writer remarks, "[Huizenga] so dominated Fort Lauderdale that a typical resident could pass an entire day using nothing but his services." By 1986, Huizenga's prosaic collection of businesses had annual revenue of $100 million. But he had yet to strike the deal that would make him a household name and a business legend.
In 1987, John Melk, a former employee, and Don Flynn, a Waste Management senior vice president, convinced Huizenga to look into a small chain of video stores called Blockbuster. Originally, Huizenga balked. He'd always associated video stores with dingy, pornographic ventures. But when he saw that Blockbuster stores were clean, well-lit and staffed with clean-cut employees, one word popped into his head: "McDonald's." Like the famous hamburger chain, Huizenga realized that Blockbuster was an easy, one-product concept that could be aggressively-and profitably-nationwide. Within one week, Huizenga, Melk and Flynn owned a controlling interest in Blockbuster.
Now in charge, Huizenga embarked on what had become his standard strategy: acquisition on a grand scale. When he bought into Blockbuster in 1987, it owned eight stores and franchised 11. Just one year later, Blockbuster was the largest video-rental chain in the world. By the second quarter of 1991, the store count had reached 1,654, not counting 27 stores in the United Kingdom and 51 in Canada.
Huizenga was making money so quickly that he couldn't spend it all on the company, so he went on another buying spree, this time purchasing all or part ownership of the Miami Dolphins, Joe Robbie Stadium, the Florida Marlins, the Florida Panthers, the Super Club Retail Entertainment record chain, Republic Pictures, Sound Warehouse and Music Plus. Huizenga had become one of the wealthiest men in America, worth almost $700 million. But once again, Huizenga felt the urge to move on. So in 1994, he sold Blockbuster to Viacom for $8.4 billion and began seeking out a new industry to conquer.
He found it in 1995, but it wasn't exactly a new industry. In fact, it was one that Huizenga was very familiar with. Investing $64 million of his own money and raising an additional $168 million, he bought the Atlanta-based sanitation company Republic Waste Industries. The move confused many Wall Street pundits. They simply couldn't understand why Huizenga would return to the trash business. In truth, he wasn't. "I was just looking for a shell [company], and this happened to come up," he explains in a Forbes interview. "It could have been anything."
At the time, the venture, which Huizenga promptly renamed Republic Industries, was a small company struggling in the trash-hauling and electronic-security businesses. True to form, Huizenga greatly expanded both aspects of the business, making them lucrative cash cows. Flush with cash, Huizenga trained his sites on his next target, the retail automotive industry, and began building a nationwide network of new- and used-car outlets. Over a period of six months, he bought 65 auto dealerships with 109 outlets selling 31 brands, opened 11 used-car superstores called AutoNation USA, and purchased three rental-car agencies, including Alamo and National.
Once again, Huizenga's "Midas touch" worked its magic. By 1999, Republic, now renamed AutoNation Inc., owned or had deals to acquire about 400 new-car dealerships and more than 40 used-car stores, and was operating nearly 4,000 rental car locations worldwide, making it the world's number-one auto retailer and the United States' second-largest provider of vehicle-rental services.
As for Huizenga, he remains one of the world's richest men. But ironically, the money doesn't seem important to him. He doesn't even bother to take a salary from AutoNation. What drives him is the thrill he gets from one-on-one competition between himself and a rival. That's why at a time when most people his age are considering retirement, Huizenga presses on and promises to remain one of the business world's most influential and successful entrepreneurs well into the next century.
The Midas Touch
Like the legendary King Midas, everything H. Wayne Huizenga touches seems to turn to gold. With the exception of the Florida Marlins, few of his ventures have ever lost money. Huizenga is quick to share the credit with his managers and partners. But it seems to be Huizenga himself who is solely responsible for his success. The fact that many of the businesses he started have floundered since Huizenga left supports this contention.
Consider the case of Waste Management. When Huizenga departed the company in 1984, it boasted revenue of more than $1 billion. Shortly after his departure, earnings began to drop rapidly, and the company would have gone out of business had it not been bought out by USA Waste Services. A similar result happened with Blockbuster. After Huizenga sold the company to Viacom in 1994, the embattled video giant experienced a troubled five-year run that led to Viacom selling 20 percent of Blockbuster to the public in 1999, with plans to sell all of Blockbuster by the end of the year. Discovery Zone and Boston Market, both at one time connected to Huizenga, have also had their problems.
This has prompted some critics to claim that Huizenga builds companies that have little lasting value. Huizenga instead points the finger at his successors. "I left these companies in great shape," he told U.S. News & World Report, "and to be blamed for their problems years after I left is ridiculous."
In Good Company
One of the secrets of H. Wayne Huizenga's success is his ability to delegate responsibilities to others that have greater expertise than he does in certain areas than he does. When he bought into Blockbuster, he saw it as a sort of video McDonald's-a one-product venture that could easily be duplicated and franchised. However, Huizenga had little knowledge of the retail business, so he sought help from the ranks of fast-food giants, where he found and recruited former McDonald's and KFC real estate manager Luigi Salvaneschi.
Salvaneschi's major contribution to Blockbuster's success was the site-selection mind-set he had pioneered at McDonald's: blitz major markets, add stores quickly, and never say "market saturation." In an interview for The New York Times Magazine, Salvaneschi told Richard Sandomir that Huizenga's special skills are in financing and accounting, but beyond that, "he knows what makes things go, hires good people and stands back to let them work."