BBC #13: 9/10/13

Wyatt Mackie on His Experiences with Wiley Gunters,  http://wileygunters.com/

For our main presentation, Wyatt Mackie discussed his experiences as a bartender/GM at the old Sly Fox Pub, his eventual buyout to full ownership and transition to Wiley Gunters.  Like most of our presentations, we held more of an open discussion with questions & answers throughout.  Wyatt also allowed us to host the meeting on the second floor of Wiley’s, which certainly added to the conversation.

Wyatt began working in the bar/restaurant business as a bartender while in school at Virginia Tech.  After graduation, he began working at Sly Fox Pub (old Wiley’s) on Fort Avenue in Baltimore as a bartender and became the General Manager relatively quickly.  The owners of Sly Fox owned other establishments in the Annapolis area and dedicated more of their time South and Baltimore.  This gave Wyatt a little more autonomy and responsibility than other GM’s might have in a similarly sized bar.  While GM at Sly Fox, the bar was doing okay (or slightly worse than okay) financially and the Fox brothers worked out a deal with Wyatt to trade part of his salary for equity, partly to help with cash flow.  This helped keep the bar open, and eventually led Wyatt to the opportunity to buyout the Fox brothers.

That opportunity came about three years ago when the brothers offered Wyatt the opportunity to buy them out and become the sole owner.  The negotiation process took about a year to complete, but Wyatt was able to combine his vested equity and take out a small business loan to cover the rest of the purchase price from the Fox’s in what both parties felt was a fair deal for Sly Fox.

The buyout was contingent on a few things, including a name change away from Sly Fox, for obvious reasons.  The deal closed around the summer of 2011 and the Fox’s did allow for a 1 year transition period to change the name, which would be accompanied by other renovations.  They allowed the one year transition because of football season around the corner, which is one of the more lucrative times for the bar, and it would have hurt the business to begin renovations during the season.

Once football season did end though, Wyatt began the name change and embarked on major renovations in February 2012.  This included fully renovating the downstairs and upstairs of the bar.  Rather than hiring a contractor to complete the work, Wyatt saved himself tens of thousands of dollars by doing the renovations himself and with the help of friends.  With two floors, he worked on them one at a time.  The full changes took about 8 months to complete, but he was able to keep the bar open throughout the process, keeping cash flow coming in while saving a ton of money in the process.  We’ve talked before about the importance of bootstrapping a business in the early stages and this was a great example and success story illustrating the importance of stretching financial resources as far as they can go.

Before Wyatt took over, the bar’s financial performance wasn’t awful, but it certainly had “room for improvement.”  Originally, Wyatt thought he could increase the customer base and make the bar more profitable with a goal of paying off his business loan in 5 years.  Thanks in part to bootstrapping his renovations and increasing the bar’s revenue, he is on track to pay it off in two.  This is a lesson we can all apply in life and other business ventures.  Sometimes it might make sense to keep on an original payback schedule, but if you can grow the business without reinvesting all the profits into growth while still growing, you can put yourself in a stronger financial position and give yourself more options in the future by paying off debt quicker.

One of those options for Wyatt is the possibility to purchase the building.  With a 5 year loan schedule, this was always possible, but was also a long term endeavor.  With the bar’s performance and financial discipline, this goal now moves from a long term objective to one with much closer and realistic prospects.

Throughout the discussion, we also addressed many of the questions we usually touch on when a live business is the topic including some of the lessons learned, biggest challenges faced, social media’s impact, the utilization of things like Groupon, and future plans.

Overall, the discussion offered excellent insight into a business we have yet to discuss at the BBC and we are all looking forward to see Wiley’s continue to grow and develop into one of the Fed Hill/Locust Point’s premier bar/restaurants.

Mike Kirby and Elon Musk’s Hyperloop

Elon Musk, currently the head of Tesla Motors, Space X, and chairman of SolarCity, released initial plans this summer for the development of transportation system between San Francisco and LA as an alternative to the current high speed rail in development.  The system is called the “Hyperloop” and has been discussed in theory prior to this, but Elon released a 57 page paper documenting initial design plans.  The hyperloop is based on tubes connecting cities and pods that travel within the tubes.  The tubes on pressurized and designed to reduce air friction so that high speeds can be reached and maintained with significantly less energy than current transportation systems’s require.

His team’s research is open source and although he does not plan to have an active role in it’s development in the short term, he wanted to make the research open source in hopes that a team would come forward and devote the resources to make it a reality.  The concept of the hyperloop is a new mode of transportation that is better than planes, trains, and automobiles for mid-distance trips, with future generations having the capacity to travel further distances more efficiently than planes.  His motivation was the approval of a $70 high speed rail between between the two cities.  In theory, the hyperloop will be able to reduce travel time to 30 minutes as opposed to 2 hours between the cities, at an overall cost of $7 billion as compared to $70B.  Our discussion introduced the proposed project and some of the possible implications.  Some exciting possibilities are the potential for coastal travel from LA to NY in 30 minutes (at speeds 4,000 miles per hour) for less than the cost of a plane ticket.  Since our conversation, two high level engineers have taken the lead on the endeavor and it’s development.  It will be incredibly interesting to see how this plays out over the next few years and if we are really at the beginning of new and superior 5th mode of transportation.

Seth Franz and a New Take on Non-Profits

Seth is currently working on a non-profit with a significantly different service model than is currently seen in the non-profit world.  He firmly believes that people, specifically young professionals, have a desire to volunteer and help worthy organizations, but lack an organized model to make it easy.  He also believes he could generate more participation by modeling it after social clubs or similar organizations.  Think Habitat for Humanity meets Baltimore Sports and Social Club or Grouper.  People will volunteer for a few hours, and then meet up afterwards to have some fun.

The exciting part about the discussion was the current state of his model.  Seth is close to launching his first event, and hopes to do so later this fall.  We discussed a possible “event” taking place on a Saturday.  Volunteers meet in the morning and volunteer for several hours.  Once the work is complete, a social event will be held and a local bar or other social establishment.  He hopes to be able to partner with local organizations to offer drink discounts etc.

Seth is developing his plan using the Business Model Canvas we’ve discussed several times here.  This was his first real attempt to use the model and so far he is excited about the results and how it has aided in his development process.  We hope to keep you updated with the status of the project as Seth continues to make progress.