Dan Brettler, CEO of Car Toys Business and Pleasure

Brettler, Dan

I am going to introduce the speaker this morning. I want to again that this Dean Speaker series occurs every quarter. We bring in professionals from the business community to speak to our students and inspire us to all the good work that we do in group business. We are privileged to have Dan Brettler to the chairman and CEO of Car Toys. Most of you have purchased some kind of Car Toys. That is good. He has over 1100 employees and 52 stores in four states: Washington, Oregon, Texas and Colorado. They have jumped to every part of the country. There is probably a story with that. At the end he also founded other businesses including Wireless Advocates—wireless services and phones through Costco stores. I am sure that was an interesting story as well. IN addition, Dan has offered us expertise to the community. He is currently chairman of the United Way of King Country board of directors. He serves on the board for Boys and Girls clubs in King Country. He has been co-chair for the committee to end homelessness in King Country. I hope that you will engage with him this morning about his business and about his civic work as well. He is the father of 2 high schoolers Quinn and Max. One in college now actually. Great. Dan, thank you very much for coming.

Thank you for the introduction. Good morning everybody, how are you doing? Good so I graduated with a marketing degree 27 years ago so you can see that anything I learned in college is applicable or not but I can tell there is one thing that has not change and that is nobody ever wants to sit in the front row. And that is the case 27 years ago and it looks like that is the case now. It is nice to see everybody. I appreciate the opportunity to share some of what I do with you this morning. Probably can do that for 30 to 45 minutes and then we will open it up to questions as long as you would like to do that. It is interesting to me, how the bio rolled out because it reinforces hopefully I am on topic. I usually speak with my profit business hat on or I speak independently with my non-profit hat on. But rarely do I speak with both the same time. So we will see how that goes. It is interesting, It caused me to developing a PowerPoint last weekend to sort of think about the skills that have crossed over and I suppose that is one of the outputs we have this morning. So what I want to do is give you a fair amount of information at a fairly quick pace. So if it is too fast just raise your hand and ask a question if you like along the way. I thought I would tell you about my two businesses Car Toys and Wireless Advocates, some of the lessons I have learned looking in the rearview, some of the things we are working

Seattle Pacific University Transcriptions on going forward as we continue to evolve both of those businesses. Then I am going to show a short video to you involving homelessness that the community has and that will hopefully work as a good segway and then we are going to talk about what I am deeply involved in as well which is the 10 year plan to end homelessness. We will see if we can put the things together form a skill set and output base at the end. So with that here we go. We will talk about Car Toys and Wireless Advocates. Is the working okay for you guys? Ok, thumbs in the back. So at 10,000 feet this is kind of the organization that I run. We have got 2 businesses. Between them they represent about 2700 employees and about 425 million dollars of annual revenue and about 430 outlets 49 actually Car Toy stores in the 4 states you just heard, 381 Costco kiosks so if you go into a Costco today you see what is called a 4 pallet kiosk and it says “wireless phones”. It is not represented as Car Toys. If you look at their badge closely enough it says Wireless Advocates. We try to look like we are Costco employees. We operate as if we are in their living rooms and servicing their members but those are actually our employees. There are about 1700 employees in 381 Costco’s across the country. We will talk about that. We have been growing the business and we will get more detail. This is just kind of a high level look both form a retail channel from Car Toys and also from outside non retail channels and an online business and in Costco we are primarily wireless phones and service. We also support their satellite Direct TV business and we are doing what is called a broadband test with a Clear Wire. So that is just a high level look and when I refer to the word enterprise over the next half hour please allow me to be referring to both Toy Advocates and Car Toy Advocates. That is sort of what I call the enterprise. So in summery 430 places, 425 million revenue, 2700 employees, pretty strong growth. We will talk about the Costco story a little bit. Our core competencies include, we think we know the mobile electronics business. We have been selling car stereos for 21 plus years now. We think we know the wireless business. I was around when phone, I will date myself several times here this morning; I was around when phones first got sold, first turn into Seattle. Most of you probably weren’t born; probably none of you were born yet. Because that was back in 1983 or so. Was anybody born then? No? So I thought. So phones launched 3200 dollars. they had this thing called a transceiver. Transceiver you take for granted. Anybody not have a cell phone in this room? One, one in the back. We know what to get him for Christmas. OS inside that cell phone it is called a transceiver. It is a chip. If used to be about this big. If you think about a car amplifier right, that are about this size these days. It was bigger than most amplifiers you would ever buy and we had to find a place to stick it under the seat or in the trunk and then the hand set was like your old-fashion corded hand stet and it sat on a base station. Back then cars had these hubs for the transmission so you mount the box on the

Seattle Pacific University Transcriptions transmission hump. You would have a handset on a cord and you would have a big amplifier called a transceiver that you would have to find. It was 3500 dollars back in the early 80’s when the phone is launched. So we think we know a bit more since the beginning for better or worse. On the Car Toy side we refer to ourselves as specialty retailers. It is all about adding value. It is all about better customer experience and we have got pretty good what we think, in the last two years, certainly lots to learn about the store within a store, big box retail. So that is that kiosk model within a big warehouse club. Of course I wouldn’t be here if I didn’t have lot of people working around me. So as an organization or enterprise, we will try to drop down in a minutes. We will try to build the best class retail organization within those two large channels and competencies. We are trying to be a great place for people to work within our industries, just a general because of the tracking of talented employees. It is just critical for anything to get done. We want to be a great place for people to come in a buy from us either place we would much rather have a good experience for people to come in and buy from us. We want you to have a good experiences in something that you feel comfortable telling your friends that you would go back to, that you would send them to. We always need to be fully accountable with the results, do what we say we are going to do. I have shareholders that I am responsible to so for those shareholders we need to deliver that creates jobs that create return on all of our investments. As an enterprise our mission to grow the business at least 10 percent per year both individual and within each sector and combined and then culturally we want to build a best class organization that is build around our customers that every decision that we do should be right for our customers. That operationally executes very well because that keeps our costs down of our transactions to do things right and on time the first time that we retain our employees so it is less expensive to train them than it is to recruit them although we spend a lot of money on training. We continue to become experts. We never want to say that we are experts. We hope that we are good. We just always want to get better. So this is a slide that is always really interesting for me to talk about and sometimes I tend to put the life of running these companies in phases. Within each phase the behaviors and characteristics in my job has been very different. So in the beginning, in the first ten, eleven years of business I refer to sometimes as entrepreneurial. We didn’t have a lot of infrastructure. There wasn’t any email back then, by the way. We didn’t even have fax machines the first year we opened the business. There wasn’t voice mail. If you wanted to get something do you had to pick up the phone and holler. And before you sent something by postal mail. But it was a fast moving period. We could change very quickly because we didn’t need a lot of infrastructure. It was a smaller company. We could sort of pick the people we wanted to work for us. We always had

Seattle Pacific University Transcriptions people waiting line to work there. I knew a lot of people for a lot of years there. And it was a big successful period. Then in 1999 or prior but the growth was in 1999 but there was a huge growth period. We decided we would be larger than a Washington Oregon company. We were going to try to be as broad as western region, maybe someday national company. This was just Car Toys at the time. So we invested at the front of that and along the way, significantly a management organization. That is what we were called by some presidents and cars and a those kind of things and computer systems. We built a lot of infrastructure in the systems so you can support the growth which is critical otherwise you would explode. Unfortunately we have had great growth in 1999 and 2000. Coming out of 2000 we were very successful. Coming out of 2001 and 2002 we entered the Texas markets which did not go well for us at the beginning. Our brand in transfer although we did the same amount of research, we had the same type of research and the same results and basically launching markets as we had several at the time and no we were just as successful. It turned out the people in Texas were not all that excited to see us so therefore they didn’t come in the same pattern to buy as we thought they would in the other markets. We doubled the company at the same time, unfortunately that war and recession hit. And that was 9/11. So when war and recession hit, the economy dragged. It was the first down years for the car auto industry. The capital markets tightened up for the wireless industries so it literally took two years for the developing technology that is largely what gets you guys to replace you phone every couple of years with something cooler and more useful. For a couple of years there was nothing cooler or more useful and so that slowed the wireless down and all the years we sold wireless was the only non growth years. So in our own backyard we had declining sales because the external environment was extremely challenging and at the same time these new markets, we were not prepared for brief but none the less failure. So that [put us in a turnaround period and that turnaround period was from 2000 2004 and that is a lot about reducing expenses saying, “ok, this hasn’t gone quite the way that we hoped, we are going to have to cut back on our overhead, we are going to have to cut back on our expenses. We are going to tighten up through this economic downturn. We are going to fix where we have issues so that when we can prepare for growth again. We were successful in doing that but not necessarily the most enjoyable two or three years of my job. Out of that in 04 for and then 05 I recall it to be sort of the high growth expanded channel period. That is where we created Wireless Advocates. Wireless Advocates is a pretty interesting development perhaps. We were testing with that business with Costco. We were talking about get the deal in 2003 we started a test in Spring of 04 and Car Toys basically with the existing people that we had we operated the test. We were awarded the contract to build kiosk in every

Seattle Pacific University Transcriptions Costco in the country. In September 2004 we had 5 kiosks open. By November 2004 we had 66 open. By October 2005 we had 363 open and hired about 1400 people in about a 12 month period. Form the same time period of 2004 to 2005 we build a company that was twice the size of Car Toys that was about 19 years old at that time. So for me it is kind of funny how we got there. We will talk more about that. Out of that 2008 we looked just for good growth out of both companies about that. So if you have ever been in a Car Toy store there are a couple pictures of what the inside looks like and in some cases the outside happens to look alike a store in Oregon. So a little bit about Car Toys, you are somewhat familiar some of you. 21 years of the markets we spoke of, in most of the markets that we are in we have acquired number 1 market share branch share and branch share come typically before market share. For example in the Seattle market we have been very fortunate that people have liked doing business with us and value that every day. We have at bout a 51 52 percent share so one out of every two people buy a car stereo system are buying it today from the Car Toy market and then the other markets about 30-45 percent. Our three year plan in brief form, we have got it with a longer form of course, we have got it in longer form of course, is ten percent same store sales. If you don’t know what same store sales are that is the same number of stores year over year, how fast you grow, high level digit growth for our non retail channels. For us that is our online business. We have a small wholesale wireless business. We are pretty large commercial business which is largely about car stereos and video stuff up to dealerships and insurance replacement and Fleet Enterprise deals. Because we are in product categories that are somewhat mature, Car Audi has been around for a lot of the year so the growth within some of those categories are not as robust as they used to be. We are rapidly working on what else of we sell? So if you have any ideas of what you want maybe you could share it with us towards the end. But we think we can legitimately get to anything that is pretty automotive of communication related that our core conference would attach that and we would like to, if not build a new Car Toy store for several years, would like to get back to doing that but we would need to get higher velocity today out of our sales to justify the investment into those because of the mature categories to a very healthy stable business but because of categories of mature categories has shrunk in the last three four years.

Why do you buy form Car Toys? Some of the reasons hopefully are if you do you guaranteed low price, a large selection, value proposition. Hopefully friendly knowledgeable sale experts. We think very strongly that if we want to pick a car stereo based on installation that we don’t mean to make it sound like a commercial at all. This is the value proposition. We think it is intrinsic to being specialty retail, that if you are going to past 16 other places before you go past

Seattle Pacific University Transcriptions ours, you choose to, there has to be enough reason for you to do that. It is a consultative sales process. That means we are motivated hopefully to take time and listen what your needs are and find what is best for you and somewhat convenient in locations.

Who else? Well what we sell today is pretty complicated so one of the things we think about is selling solutions. To some extent we are solving problems. There is a lot of interesting product categories that are kind of coming together. Navigation, video, what we refer to as OEM integration which is if you buy a car today what will happen is you will take the radio out of your dashboard so how will you integrate within those. You have got Bluetooth, you got your iPod coming into your car you have got your cell phones coming into your car, and you have got your portable nav. coming into your car. How do we put all of those things for you together so you do not have twenty cables, nothing but clutter and mess and God forbid you should be safe driving at the same time. So have got a lot of convergence and also what we think is the next four years is about making it easy for you to integrate those devices into the mobile environment.

Switching gears to Wireless Advocates you are not a Costco member and have never been one that is what the kiosk looks like. It is just a center with one to two to three people who are working there at any point in time. That is four pallets which is probably in less the space than these four chairs and about 275 million dollars at this business and 381 or those. So it is about the Costco and it is pretty efficient model and it is really because Costco is a best of world class retail that has tremendous traffic and high quality customers working in their store. So it is interesting because what we did was take that Car Toy value proposition, to some extent shrink it down because the selection is less, Number of sales people are less, choices are fewer, prices are very good etcetera and according to a small space and do a lot more business because of the organic traffic that walks in everyday. 21,000 people a week on average walk into a Costco store so there are some stats that I have talked about that I won’t repeat again and again out core competence in that environment you really start to cross over store to store of constitutive sales but what represent more than Costco is being able to do everything for them. So they provide the great customer to customer traffic and give us a place to drop from real estate perspective and pretty much do everything else. We run all the people, we run the entire business, and the co-partnering in a marketing opportunities and we even ordered a product for them and manage their whole supply chain so they don’t staff themselves to be able to run complicated businesses and they don’t typically have, but the only optometrist in the optometry department were the only what you would refer to as a third party operator on the floor, employees that don’t technically work for Costco. Verses if you going to Sam’s of you go into a Fred Meyer or any grocery story today you see banks and grocery stores you see a lot of third part operators. Our goals at Wireless Advocates is to build a long term sustainable business with Costco as a soul host so if we do nothing else, we think it is a great business

Seattle Pacific University Transcriptions taking care of Costco but we would also like to position ourselves to do other Costco’s, other retailers and other environments around the country . Same similar goals, 10% growth. At Costco the 10% growth comes from three places selling more each year. So their traffic grows about 1 percent each year, 2 percent, same store traffic 3percent. But we should sell 1, 2, 3 percent more phones every years just off of their traffic then we can raise the average sale price of the product which happens these days because even phones get less expensive there is more expensive phones coming into the market place that folks like yourself and myself, we are trapped to it so we may not just buy a free phone these days. We may spend an extra few dollars on a phone to get better ones. Then adding new stores, adding about eighteen to twenty a year and then what else can we sell in the Costco environment? So there are three different ways to grow our businesses within the Costco stores. To support additional hosts, that is really about people. So it is really about having people in the business that allow us to go into other businesses and feel that we are stable enough to deliver the customer in our other businesses while we are pulling people out and saying “we would like you do go into this new business”. So it is all about recruiting, hiring, training, new people building a bench so they will always be people ready to be promoted, and retaining our employees. So we spend a couple million dollars a year just investing in that. Every year significantly probably the fasted growing expensive organization. It gets tougher and tougher to keep good people and it gets more and more critical for us to do it. (Video)

Is the reflection of our community and there are many people that need help. Homelessness is a regional problem, it always has been. Now we are admitting it. Housing is the first thing. You can’t deliver healthcare. We can’t make sure the kids say in school until they have a safe secure home. So it all starts with housing. But much of the population needs more than a house. They need to stay in the house and that requires a lot of wrap around services.

Because if you have been away from it for a while it is hard to start getting back into things. So the wrap around process would be employment, making sure that they are trained for employment , giving them the tools they would need to have to get a good paying job; childcare so that they don’t have to worry about their kids.

Whatever that array is that is necessary for individuals, families or young adults, it has got to be in place in addition to

I became homeless after I got out of the army. I got lost in the thoughts of my mind and wandered the streets. I would get a job, get a place, get depressed and run away. And a man from the VA said “how can I help you and he kept calling back even if I got my own apartment he just kept calling back. So I got depressed. I didn’t hear the voice, the depression talking to me. I heard his voice.

Seattle Pacific University Transcriptions There are two reasons for any homelessness. One has to do with the simple human fact that as community we should not be letting out brothers and sisters, our kids, our aunts and uncles to become homeless. The other is that it is very expensive and very inefficient to deal with the issues of homelessness through our emergency systems.

It is extraordinarily expensive and the real tragedy is it doesn’t fix the problem.

All this is a drain on our local tax payers that is far greater than if you tried to find them a place to live.

This is something collectively that we can solve. It is an action plan, not a talking plan. This is ten year plan to end homelessness. It is a clear 56 page road map describing what we need in prevention and creation of new programs to end homelessness. It calls for 9,500 new units over ten years and describes the support services we need to make those programs work. The programs that it calls for have been proven across the country and in king country to be effective. It starts to but in real terms what we currently have in resources and what is missing in terms of housing and support. You literally can lay it out each year, the progress that is needed.

It is a cohesive, national, private public nonprofit effort to say that we are going to end homelessness. People are really coming together from all different sectors: from the business community, from government, from the faith community.

And I think the ten year plan talks about doing things in a significantly different way. And that fills me with a great deal of hope. The walls and the silos are being broken down. And really I believe with all my heart that this is the only way we are going to solve this problem. I believe the ten year plan gives us the infrastructure and momentum to do that.

If you are on the street, if you want help, you can get help. It is a wrap around service where you can get help and take care of yourself.

It has worked. If you put some more services around and you give someone a door with a key and the room on the other side is theirs it makes an enormous difference on how they regard the world, how they regard themselves. We know what works. We are seeing it work. Each year we are helping over3000 people avoid homelessness through temporary assistance and our prevention work. We have added over a thousand units in our system. With that we have helped people on our street for years and years end homelessness end homelessness and reinstate their lives. We have helped hundreds of families across the county come back and move on. We have helped youth find the support that they need to become adults who have stable living situations. We know what works. We have got the momentum. We need to finish the job.

Seattle Pacific University Transcriptions (End Video)

So what is a car stereo guy doing by ending homelessness? The truth is, not much, a little more than I did five years ago. When I started I had no social health service experience. But I got in there for a few reasons. I got in there because in no particular order, I think it is unacceptable in the extremely wealthy community that we live in Seattle King County that people don’t have a place to sleep at night or food on their table or medical or education, basic clothing, basic needs and necessities. We can change that. Two, I have been fortunate, I have worked hard, I have worked for everything that I have. The community has been good to me and I think any successful business person of persons have chose to accept responsibility to get give back to the community. I am a parent, I want my kids to grow up and learn that. I think that that is important. Three, I kind of stumbled into it. I picked up the paper one day and there was an article about a person who became a friend of mine who was on the front cover with another gentlemen and they worked for united way. One was on the board, one was an employee and still are today and they were going to end homelessness. The article, it was one of those weird moments where it sort of changes your life some and I said, that is kind of bold, these two guys are going to end homelessness. They are not saying they can do it themselves, in fact they are saying they can use some help. It was one of those weird things. I picked up the phone and called Vince and I said that “I read that you are going to end homelessness. I am wondering if you can use some help.” We kind of laughed and I met him for some coffee and he said “there is one thing about volunteer work, if you volunteer, you better want to do it. Because they never say no. In fact when you accept something, it is usually about three times more that you signed up for that you even realized. So be prepared for that too. But you bring a lot when you do it. So we talked, he said “sure we would love to have you on the committee on the time.” I said “you know what I need a few months; I need some time in my life because my time is really full from business to family, to friends, to having some fun too. So if I am going to add something I am going to have to subtract something.” About three months later I called him back and I got involved. One thing lead to another. I was involved for the first two years about three or four years ago writing the plan. We spent about two years with about thirty different organizations, writing a ten year plan to end homelessness. Most of it was leaders of faith and faith leaders in the community as you saw some as detailer, wonderful person from St. Marks, government, the mayor, county council men, former governor Michael Lowry, different foundations, a little form the Gates foundation, our foundation, others have been involved and are involved A couple business peoples not much these days are starting to get involved and then a lot of agency organizations. We wrote this ten year plan to end homelessness. Let me tell you a little bit about that. The goal of that of course is to put a roof over every single head in King county, that every man woman and child who wants to have a roof over their head have an opportunity to do so. So back around facts I will go through quickly so we don’t run out of time, King Country is the scope we are going to talk about. 4,000 people every year come into

Seattle Pacific University Transcriptions the homeless cycle. Many come in and go out. Some stay in the cycle. On every given night there are about a thousand people on the streets and in the shelters, couch surfing in hotels on Aurora Avenue etcetera. 8,000 plus people that are homeless. About a third of the people are in shelters in transitional housing are women. One of the interesting things you many not know of is there is almost no transitional housing where a man and woman can go together. So if you are a family and are homeless and you want to have a place to sleep at night you have to break up every night. You can’t go with both genders. A thousand homeless are children, 3,000 under the age of 17, 1,000 under the age of I think it is 6 or 7 years old. 50% are single women with children. That is largely where you get those very young children. 2000 plus are what we consider as chronically homeless. Those are first of all the people with the most needs, the biggest problems, the ones you see in Pioneer Square, typical stereotype, unfortunately African American male significant alcohol drug, other disability problem. It is more than just that but it is very heavy that. 2000 chronically homeless, people who have been homeless for years and bring on a significant amount of challenges. There is also, when you start to look at these stats, there is a little more racism in our society than we maybe want to admit or think about. Because people of color are over represented in the homeless population 6% of our county’s populations are African Americans but 37% of the homeless populations are African Americans. Why is that? Veterans as well. 19% of our population are veterans verse 10% of the country are veterans. So we see there are a couple of populations that are negatively affected as well. A couple others, I think relevant facts. The housing wage is $21.78 per hour in Seattle. If you don’t make $22 per hour and work a fulltime 40 hour week, you cannot, an average afford house in King Country. That is kind of scary for you guys growing up. and that probably doesn’t include, my kids are a little bit younger, I don’t know what age group you are, I have a freshmen in college but you know when I was growing up we paid a $17 a month phone bill and that was all you had. Thank you very much. And now you have got data bills and expensive phone bills and you have got computer bills and you expect your computer to work whenever you want. You have got cable bills and so the cost of living is going up let alone gas. So a little scary for all of you I am sure as it is for my children. 25% or more of the people who are homeless need a support of services meaning you can give then a house but they won’t make it just with that. They need a lot more help. If you want to build housing it costs about $225,000 to do it. And what is really frightening is we have been in this for four years now, two to write the plan and two to execute the place and we gave ourselves ten years to do it. We just did a one night count, we do it every January, one often cold night it as two Fridays ago, about 400 of us go count from 2 to 4:30 or 5 in the morning. You are literally trying to count homeless people, separate from the shelter count, separate from the bus count, separate from those who are in Harborview or in drug rehabs, you are literally counting the people in the streets sleeping in the doorway, sleeping in their cars. And with all this work it still went up 15 % year over year which is a frightening statistic. It says that in spite of the good work and I could tell you all the facts

Seattle Pacific University Transcriptions about the thousands we have got now out of homelessness already and we have increased the units of housing, it probably means that because of the economy we have got more coming into homelessness than we expected. Perhaps the most frightening statistic is that no one in the US is the federal minimum wage enough to afford the fair market value of a two part bedroom apartment. There isn’t a single place. The whole concept of minimum wage is absurd. it doesn’t get you anywhere. You can’t house yourself anywhere for minimum wage. What caused people to become homeless? There is a variety of things. it is a complicated problem. Mental illness, chemical addiction, racism, domestic violence is unbelievably prevalent in our community. It is probably the reason that 50% of women with children are homeless today. Lack of access to healthcare, so if you get sick and you don’t have money and it pushes you bills an you didn’t expect it and you are one check away from being homeless, next thing you know you are on the street. People like you and me and people who are the majority on the street. High costs and shortage of affordable housing institutional discharge to homelessness so when I am discharged, not me thankfully, I am discharged out of Harborview if I don’t have enough money I am discharged to homelessness. But I am discharged out of the jail if I don’t have a place to do, I am discharged into homelessness. Literally, those things that are supposed to be good for our environment produce homelessness. But of course the number one thing, because when we get to solid homelessness sometimes we say, how do we solve these things along with world peace and everything else. And we can’t. It really is about poverty. At the end of the day, we may not solve mental illness and chemical addiction and racism if I put a roof over somebody’s head but if they can afford housing, they can begin to put their life back together. All of us go home every night, we take for granted often, myself included, the fact that we go home at night and there is a dry place to sleep.

So why do people care? Well, hopefully you would hope that everybody would say that it is unacceptable but too often in a big city we say homelessness is a condition of a big city. Every big city is going to have some. But most of us who are involved, I’m sure many of us in this room, says homelessness doesn’t work and it comes from your heart and soul. It is just not acceptable, the 24,000 people on the streets and 30 or 40 people actually die. But to ultimately solve homelessness and this is where we maybe begin the intersection between business and philanthropy from my perspective; we have to have an economic solution. The isn’t enough money from public sources to solve public transportation problems, education problems and homeless problems in this town, and build stadiums for sports teams all at the same time. It isn’t going to happen. Not public funds that is why we have these problems. So to solve it we have to have an economic problem that not only raises new resources but shifts resources existing in the system matching homelessness to ending homelessness. We will talk about that a little bit. At the end of the day if we can save money actually in doing this, everybody buys in. I will show you some interesting stats that will begin to tell us who we are going to do that. Aid organizations, there is a quick list of teams coming together that said homelessness has got to

Seattle Pacific University Transcriptions end, let’s start working on it. I was asked to show up on behalf of United Way King County, that is what got me in there. What is the overview? We will end homelessness. We have got enough political and public view that believes that failure is not an option. We need to look at prevention, affordable appropriate housing and support services. So as I look in the Car Toys business and say we are going to grow in navigation, we are going to grow in OEM integration, and it is similar sort of skill sets in saying what are the strategies to achieve this. We need leadership just like you do in business, you need political will and we need always to report how we are doing. Most critically we have to shift because of the fixed amount of money in this community; we have to shift financial resources from paying to maintain people who are homeless into ending homelessness. To take an alcoholic from Pioneer Square off the streets for one night and put them in Harborview, can anybody guess what that is cost? Anybody want to guess? Thousands is right. $2,200. Tax payer dollars, a person shouldn’t have to sleep. I am not saying it is a bad thing to do. I am just saying it is a really crappy solution. Because the next day they are back on the street. $2,200 one night in Harborview. Okay? So it is about changing the paradigms. It is about changing the rules. It is a shift in approach. We are asking to end homelessness and not maintain homelessness. We are asking to do it in ten years, we are asking to start up stream and prevent people to come into the homeless cycle. We are saying people don’t just need a roof over their head; they need services to go along with it. At the end of the day we need to build we think 9500 units of housing and services. But if 15% of people come in every year the 9500 is going to have to go up. Most importantly to prevent taking 9500 people off the streets and having another 9500 come in we are going to have to address the systems that contribute to homelessness. I think I have referred to all these things so I will go past it: prevention, moving people quickly out because you are never going to keep everybody from getting in and changing the public and political will to end homelessness. The politicians in the market place and people, all of us who live here need to get to a point to say, homelessness is no longer acceptable. Hopefully the really wind is that cultural shift translates to medical benefits, to food, to clothing, to education, it is really what we are talking about. What in the world do we want our kids to grow up into today? So to get there we have to increase the capacity of housing, we have to provide services so people can succeed in house and we have to increase the resources. Like any business and perhaps when I started with thirty other people writing the plan, it was kind of a fun and frustrating exercise for me because first of all I am a CEO. First of all I am used to sitting in a room listening to people having a dialogue taking the best ideas and saying “okay, let’s go do it”. That can happen in an hour sometimes or days or weeks depending on the issue. And also, you know I am not the CEO. I am the vice chair in the room and I suppose I have the authority but it is not going to work that way because the people in that room are not used to making decisions like that. They are all agencies mostly and they are all in survival mode because all they are trying to do is help people in crisis mode every day. They are really not talking about business plans, they really are not thinking about budgets

Seattle Pacific University Transcriptions other than having enough money to increase, maintain or just protect their services. They are really not forging partnerships. They are not leveraging best practices. All these things that are sort of innate to how I try to approach my world, I don’t always do it that way but it is how I try to approach it, didn’t exist in the room and so they fight. They tell you they get along very well. But they fight. So we had to bring it all together. It took two years to write a 50 page plan but to where everybody would embrace it. So then we said we have to measure results and they said “what”? What does that mean? What does it look like? What are your key metrics? How do you go about measuring your business today? Well we don’t have a key metrics? What is on your dashboard? Well, we don’t have a dashboard. So it is very critical that we measure and communicate to the community what we have got and tell them about our progress. The number of people known to be homeless, moving people into housing me measure how many chronically homeless people do we get into permanent stable supportive housing, how many new housing units do we build each year? How much existing housing did we secure? You might have read a story about Laura Lakes Apartments a few months ago. They are going to tear down 175 units of perfectly good housing because the Port Authority said it was insufficient housing because you could hear airplanes over their head and it was too noisy for people to live. So instead of saying that well, it is not great that those great big airplanes fly over your head and make a lot of noise. They said we are going to have 175 people be homeless because we are going to take the housing down. So big fight, long story short anyways the housing go saved and it took an amazing amount of work to do it. We have to maintain the existing housing or we are going backwards. Prevention and ultimately success number of people who stay in that housing. So that is our dashboard for ending homelessness. That is recorded at many levels on a monthly and to the community on an annual basis. What is interesting is it is starting to inspire a lot of other really bold moves. As I introduced to you I am on the current board chair for over 18 months for the United Way for King County but I have sat on the board for about five years now and have been very active in United Way and because United Way is a great organization but there is others doing this, I am just using this as an example because we got to a point where they believed that we could end homelessness and there was a road map to do that. They said how can we help out that much more? So the United Way is currently in process of raising 25 million dollars which will leverage with city and state funds generated about 200 million dollars which will take a thousand of the two thousand chronically homeless people off the street and give them permanent housing. It doesn’t end homelessness but 9500 is the goal. It is one at a time and it is a thousand of those 9500 so we are starting to spur those types of tremendous efforts in the community. A couple quick accomplishments: these are not mine. I spent a lot of time for me in it but the real heroes that spend every hour of their day in it. I am not one of those. We have achieved much; we have a very long way to do. In 06, 3000 people were prevented from becoming homeless but if we didn’t have the infrastructure in place improved we would have 3000 more. Over 2500 people

Seattle Pacific University Transcriptions in 07 were removed from homelessness into permanent housing. I won’t read everything to you. 1498 additional housing units towards that 9500 were brought online. We have got 84% of all municipalities in King County have supported and embraced the plan and said we are in. Interestingly enough United Way did a survey that asked people what are the three biggest problems in the community. Number one anybody got a guess? Transportation. Exactly. Two good guesses, you win. Who is his teacher give him good graded. Number two, where are we, education. Number three, homelessness. That is good. You wouldn’t say homelessness is the number one problem. Transportation certainly belongs to that. Education probably deserves to be number two but the community said homelessness was the third largest problem to solve the county. Most importantly the right people are at the table. Mayor Nickels has come out and said “this is important to me, I have got to get it done” He has come out and said I have got to get it done. Former Governor Mike Lowry has come out and said we have to get it done. Key faith leaders have said that we are starting to get the business community involved. Here is an interesting; I think I am just about at the end here. Here is an interesting story I just wanted to share with you about delivering results. So it is about systemic change so there is a great organization downtown, you saw it in the video. It is called Plymouth housing. Plymouth Housing builds housing for very specific populations. They started to change the model. For years we said if you are homeless and you are an alcoholic and we are going to take you off the street you are going to have to stop drinking. Guess what happened. People didn’t want to get off the street. So it didn’t work. Now we say if you are homeless and you are an alcoholic we are going to give you this housing, and there is not enough for everybody, we are going to have to give you this housing, there is not enough for everyone, you are going to have to play by the rules. You can’t be a threat, you have to operate in a community, you have to respect the property and the people are in the building, you don’t have to stop drinking you just have to do it in private at your own place. And by the way, on the first floor, second floor, basement, wherever it is there are a lot of councilors and a lot of services. We would love to have you stop drinking too but it is not a requirement to be housed. So with that sort of change in approach, in one year, for twenty people this is pretty staggering. We have a significantly less have returned into the jail system. 13 trips amongst those 20 in the prior year went back to jail, reduced to 7. Not great but almost half: $2200 a night at Harborview prior for these 20 people. That is all we are talking about. In one year they made 57 trips to the hospital and 191 ER contacts. I am not exactly sure what contact means. That was reduced to 13 and 50 respectively for these 20 people in the prior year these people had 349 sobering center visits. A year later with housing over their head no requirement to stop drinking, they made 11. Out of the 20 people a year later 85% remained housed after the first year. So the costs, I don’t know if you can see that, because that I the punch line that is most valuable. It costs us as tax payers 1.6 million dollars. $80,000 per person in the prior year to support these people because we at least try and support them. Instead we gave them housing for $225,000 a unit so you can write

Seattle Pacific University Transcriptions numbers down and do the math, it is pretty interesting. For $225,000 a unit we put 20 people in housing instead of consuming $1.6 million of our taxpaying dollars, the consume $406,000 the first year, $1.2 million reduction. So that is what I talked about earlier about moving money from maintaining homelessness into ending homelessness. We are starting to see that it works. So I am thinking, in close, how you put some of these things together and I hopefully this is in line with what you expected. For me because I am not a social health service novice either; I can talk it, I know a little bit but I have no education background, very limited experience in social health services. So what I to do is bring my leadership skills to each of the market places and add value where I can. So to me I think where they intersect for me, maybe it is just my view, they intersect and have a plan. That sounds so obvious. You would be amazed at how many agencies and businesses don’t have a plan. It is just kind of a get up in the morning and do it. You need to have budgets and a financial plan. I am sure you are taught that in school. You would be amazed at how many don’t have more than less. When I started Car Toys before that I sat a small business association meeting, a bunch of round tables a couple of hundred people in the room and they said, first line was “one out of ten small businesses make it five years.” I will never forget it. I am sitting around a table with about 14 people and I know that everyone of us is thinking we are the one and nine out of every ten of us are wrong. That is because of some of these things. You have to have key people. I am very fortunate that I not only have I been able to keep a business us for twenty years but I can carve out time for my family and for my nonprofit stuff because I surround myself with really smart people, much smarter than me. You have to have a dashboard. How are you doing? Whether it is business of philanthropy, I believe in always thinking customer first. So it is pretty obvious that all my customers at Car Toys and Wireless Advocates I think my customers at ending homelessness are those who are homeless. I think that that is what keeps us honest. It is what is best for those people. It is interesting because we get together with all these people with big titles and everything else and we talk about ten years and we have a couple people at the table that were formerly homeless that are sitting next to governors and mayors and they say, “well that sounds great but it gets cold tonight.” What are you going to do? It keeps you honest when you are thinking about the customers. You need to be accountable for our results that we are spending money; we are hireling employees or spending money. We need leverage key partnerships. It is a lot cheaper and a lot more effective if you do it with more than just yourself. There are a lot of great people all over the place, better systems if you look for economies of scale of look for efficiencies; you get it done better cheaper. And ultimately where I try to be involved because I think otherwise someone is just going to kick me out someday is why I can create value. Each of us can create value in some place. Not in all places. So that is my theory. That is my story and I am sticking to it. Is that what I am supposed to say? … Thank you. Appreciate it. Time for questions. How would you like to do it?

Actually this is great. This is a nice combination of skills. So anybody have a question?

Seattle Pacific University Transcriptions I want to ask you from a financial standpoint how do you plan to expand largely in your business for your social venture and how do you execute that. Because sometimes it does not always go the way you want but how do you plan for maintaining and also spending?

The reason why I call it a budget forecast is because you know right away it is never going to go exactly how you want it. From a planning process on the business side we do somewhat high level, three to five year plan. Sometimes we have done it three to five years and that is not that detailed but nonetheless there is a lot of roll up and thought behind it. That is what tends to guide our activities. So one of the problems with retail is it is just a daily report card. It is a pretty intense grind and how much you sold yesterday is now you have today and so you can kind of captured in that world if you are not careful. SO by having a three or five or multiyear plan that guides, in addition to running day to day how do you want to grow and evolve the business. The nonprofit world is so tough. We are four years into it and we can just barely talk about how much money is spent in ending homelessness. You have got this money all over the place and the sophisticated way of knowing how many people are on the street and to have 400 people walk around and count. Today’s IT world and how you get there, that is all changing but it doesn’t start there. That information and infrastructure, that whole process wasn’t there. So it has been kind of a torturous exercise mostly for the city and the county to go through their worlds and say how much are we spending today. It is fairly easy to say what is the cost to go 9500 units and so what we decided interestingly enough was to launch a plan two years after writing it and we didn’t have an economic plan to support. We had big debates about do we send it out now or do we spend a year a half to figure out how much money we spend in the system where is all this money coming. We ultimately decide, even though it is kind of incomplete, we would be further ahead by getting it out now than rolling an economic plan and support it two years later. That is pretty much it at that point.

Actually that is pretty much where the social venture may come in handy because they generally have to search for revenue for supporting this because your savings do not include the costs of housing. So actually if you have the costs of housing, it would be different.

It would be. It is interesting more of a macro in today’s environment we are amazingly blessed. It is kind of a historic thing. I think we will all look back that we live in a town with the Gates family. It is a pretty remarkable place to be. They are changing in my opinion dramatically. United Ways is a good leader as well but I think the Gates Family is the nonprofit company that says let us run nonprofits like we run businesses. We need to be accountable and all those sorts of things. That is forcing everybody to change the model but ultimately that is what is going to bring it much more into it as someone can sit in front of you and say “here is what we are going to do. Here is the plan. Here is how we are going to measure yourself and will be able to tell you every few months how we are doing.” But if you take 9500 units of housing, you take ten

Seattle Pacific University Transcriptions years, you need about 950 a year but we always knew that we wouldn’t always generate the same in the first few years as the back but we sort of set ourselves a goal of 950. We are running about 5 or 550. So that is a lot more than what it was at the beginning but if we don’t ramp it up it is not enough. So I don’t know what score you would give us, I am not sure we set appropriate expectations at the beginning. I know we just have a lot more to do to where I can look you in the eye and say we are absolutely on track. Having said that, we know where we stand. It doesn’t surprise me where we stand and we are pretty close to having I think a five year plan to get there.

You talk about bringing a business model to a nonprofit. I have worked in both sectors and there seems to be a fundamental difference in some people’s mind between selling a product or service or selling something intangible, an idea. Do you see similarities or differences in selling phone verses selling the idea of ending homelessness?

That is a good question if you start with what does the customer want and I think it is about always trying to understand assessing the needs of the customer and identify the solutions. From that perspective it is similar. If you are buying a piece of goods or services in the economy you have everything from car stereo which nobody needs. The world goes on fine without it to cell phones which we should say nobody needs but we all think we need them today, to food which you need. I think there is national lines to end homelessness in town and it was on a panel yesterday and the panel was a lot about how do you get the business community into that, into the social venture side and into the giving and how do you get people involved and it was a lot about trying to understand a couple of us on the panel was saying, “no more emails. That is not how we are going to do it. No more meeting. Don’t do it that way. And no more auctions and breakfast. Don’t do it that way. We are stuffed.” Somehow you have to get a way to get in front of us. You have got to figure out that I want you in front of me somehow and you have got to understand what my needs are. It is that line of thinking that is the same and I think that thinking about the customers is a good place to start. People too often try to do it from a shotgun approach rather than a customer center approach. Hope that answers your question.

I know there are a lot of companies that are giving a percentage of what they make to a cause like this. I am wondering if Car Toys or any of the companies whose chair people are involved with this program are giving a portion of what they are making on a certain product and kind of integrating that with the program.

It is a really good question. In Car Toys the answer is no. Not in a linier sense. So my challenge is and it is not meant to be an excuse, is that I have private equity investors. They don’t care so much, that doesn’t mean that they are cold and ruthless but they are not all that motivated about what sort of social causes we solve with their investments in Car Toys. So I tended, I chose to approach it differently. I chose to approach getting our employees involved so we pay

Seattle Pacific University Transcriptions for volunteer days, we do matching funds, we allow pay reductions for annual giving campaigns. So we leverage our resources slightly different. We give money, Car Toys back to the community but most of giving frankly ended up becoming my family and through our personal foundation so we approach it like that. The other thought that your question inspires is there are tremendous opportunities if you go back to the world doesn’t need anymore breakfast or options. How do you raise more money? We are not very creative. So what would happen if at a hundred restaurants around town if you had the opportunity to add it onto your bill for solving hunger? What kind of money could you raise? How do you motivate volunteers? Today I get people all the time after giving speeches about homelessness they say how can I help? I struggle with that answer. You could give money and so we got that. How else can we help? You go, well I am a researcher. I am a teacher. I am an accountant. I am a lawyer. How can I help? There is not a great answer for that. You can go to the United Way website and it is an ok answer. There are some opportunities there but how do you leverage those tremendous resources. I think there is a lot, it is difficult, it is time expensive for a company to figure out all those things. You have to be highly motivated and dedicate the resources to be able to afford it or people have to come with easy solutions. There are a lot of people like a friend of mine from Nordstrom’s who was on the panel last night who said, “you know I get all of the giving part but if I run a healthy company, that is the best thing I can do for ending homelessness and for the other things because I am employing a lot of people and I am generating a lot of sales tax.” There are a lot of different opinions on that topic.

You know the population makes it a lot tougher to decide who you are going to target and in marketing class we set the market price up and say “I am going to target these people and this position here, the product. It is kind of interesting for your example that you are doing a lot of things but it appears to be that you guys a lot of people who are worst off and try to move and so on… Target young people and try to get those kids off the street and get new jobs. So they don’t need apartment housing form us. They have moved on. So how do you make those kids of decisions in terms of deciding should I go after the people who are just in really bad health and they go to Harborview and so or should I go after the younger people who possibly in terms of long term possibly greater risk.

That is a great question. I probably didn’t do a good job so thank you for raising that an explain it to you an actually population based the plan is. It is hard. The entire world is targeting customers and here it is kind of population based sort of thing. There is more focused a little bit today on crime and the reason that is because we think we can affect the public and political will the most by that because it is the face of homelessness but the plan if you have any interest in reading it, pull up cehkc.org. Committee to End Homelessness in King County.org. That full cehkc.org, the whole plan is there. You will see that it is right down to each of the sub populations. Insurances are very different. We talked about the Plymouth Housing project for

Seattle Pacific University Transcriptions the chronically homeless with significant disabilities that can’t work verses the youth who are kicked out of the house because he got in trouble or often fled the house because it wasn’t a healthy safe place for them to be. And those people don’t want to be homeless. They haven’t been homeless for very long and they just need a transitional housing. If you go up to Sandpoint up to Magnuson Park there are six or seven buildings three age groups at a time for homeless kids. 15, 14, 16, 17, some your age. So the plan is to start over there. Some are easier to solve than others. Chronic is the hardest. Single moms with children are the biggest population and they have very different needs are very specific.

AS college students it is very hard to figure out what we want to do next in life, what did you do when you were younger? Were you in a position to start a business to fellowship with, when you were in college?

First of all as a parent I had an 18 year old who started college in Boston and as a parent I would say I think it is ok not to know specifically what you want to do. The odds are you change your mind a bunch of times anyways. So it may or may not be consistent with what your parents or teachers are saying. That would be my opinion. It is also good to know what you want to do. I think that is healthy so either situation is ok. I got out of school and thought I wanted to be an environmental lawyer. Then I discovered that third year law students were knocking on doors for green peace and I didn’t want to do that. So I said I guess I don’t want to be an environmental lawyer badly enough. So I started selling stereos and solve the world’s problems. So I became a sales person then I became a business person. Then I became a business owner. So I think I know I am not doing a good job answering your question. Tell me the question again.

What did you do y when you got out of college and did you have any possible did you have specific goals? Were you planning to be where you are right now at all?

No I don’t think you can. When I started Car Toys, when I asked my wife to marry me I thought it was going to be a five store company and now I have 430 outlets. And she thinks I am crazy. Not because I lied to her, but because that is what I thought she was going to do. I don’t think you can ever predict where you are going to end up. In 2000, 2001 that turn around period those were scary times. I would not be standing here today if we didn’t make the right decisions, we could have been out of business. So think about from a value structure what is always important to you. Is that about making friends? Is that about leaving the planet ten, twenty, seventy years later and making it a between place. If that is what is important, try and, whatever is important to you as a person, whatever you want to go to sleep at night with, try to stay core to that and I think the rest of the journey will flow as you find what intellectually interests you and what your priorities become. For me one of the biggest lessons I learned is we always make choices. My wife used to tell me when we were studying business for years and I

Seattle Pacific University Transcriptions was working 24/7 and there were 28 hours in a day or 8 hours in a week I would work those too. She would say, “Honey, come home for dinner.” “You don’t understand. I can’t. I have pay roll to make. I have bills to pay, people on the floor. You know what, I make choices.” Uhhuh. What choices? I don’t have any choices. There are employees and customers. I have no choices. And all of a sudden things happen and five years later you kind of go “wait, wait, you know what? It is not like I was not potentially involved in something often. You can make choices. You can choose where you want to put time into. Four or Five years ago I said you know what, I spent a lot of years in business and I don’t spend a lot of time giving back to the community. I don’t have any more time. I need to start nonprofit work and take it away from my family. I would give them more time too. How do I carve time out? I think if you stay true to your soul and your purpose and not worry so much about what that career path what is interesting is along the away, look. Business skills when you work with nonprofit is extremely important.

Absolutely. There is any time or career you want to put into non profit, there is a big wanted sign out there. It is unbelievable how many people are not well off in this community or any community and how our resources starve. Again, you will make compromises and choices doing that. You have to stay true to what you want.

Thank you.

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