Darrell W. Chambliss has been Executive Vice President and Chief Operating Officer of Waste Connections since October 2003. From October 1, 1997, to that date, Mr. Chambliss served as Executive Vice President – Operations of Waste Connections. Darrell has more than 28 years of experience in the solid waste industry and holds a B.S. degree in Business Administration from the University of Arkansas.
Episode Transcript
[music]
00:07 Matt Waller: Hi, I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be EPIC, the podcast where we explore excellence professionalism innovation and collegiality and what those values mean in business education and your life today.
00:27 Matt Waller: I have with me today Darrell Chambliss, who is on the founding management team of Waste Connections, and he's currently the Chief Operating Officer of the company. He graduated in December of 1987 from the Walton College of Business. Of course, it wasn't called the Walton College of Business then. His story about building this business really starts in the LTL arena.
00:57 Darrell Chambliss: That's correct.
00:58 Matt Waller: Where are you from originally?
01:00 Darrell Chambliss: I call Arkansas home. Spent half my growing-up years in the Chicago area and then the second half in Arkansas and Tennessee, and then attended the university.
01:11 Matt Waller: And when you attended the college, you majored in transportation.
01:16 Darrell Chambliss: I did.
01:17 Matt Waller: And back then there weren't a lot of transportation majors, I know.
01:21 Darrell Chambliss: I don't think so, I think there might have been 15 of us when I was an undergrad.
01:26 Matt Waller: This year. I think we're gonna graduate something like 250 people in that area. Now it's, went from being called transportation to logistics and now it's called Supply Chain Management. And the demand for it it's very high. So you were certainly a pioneer in that area. What made you decide to major in transportation?
01:47 Darrell Chambliss: Basically I kind of fell into it. My uncle owned a truck line in Memphis Tennessee, back in the days before it was a deregulated industry, and my mother had worked for truck lines during my high school years, and I worked summer jobs on the loading docks occasionally, and just really got interested in the... All of the movement, all the activity. It was really fast-paced, and that's what I liked.
02:13 Matt Waller: Now, right out of school, you went to work for ABF, which is now ArcBest.
02:22 Darrell Chambliss: That's correct.
02:23 Matt Waller: And in LTL, less than truckload transportation. And what did you do in your first job?
02:29 Darrell Chambliss: I started out as a management trainee. I spent six months in Fayetteville actually, post-graduation at the terminal they have there, learning the business. Actually, prior to that, I had worked as a part-time employee for them at that terminal, and then they put me in their management trainee program upon graduation, and so I spent six months there learning the business. Having Walmart as one of the largest customers was a... What made it quite interesting to say the least, with the amount of activity we were doing with them at the time. And then after six months they transferred me to Wichita Kansas to become Operations Manager of the terminal there, and I spent about two and a half years in Wichita in that role before leaving the LTL industry.
03:16 Matt Waller: So being in that role, how did that help prepare you for the future? What in particular did you gain from that position?
03:25 Darrell Chambliss: One of the things I had some really great examples to learn from mentors if you will. My first terminal manager in Fayetteville was a long-term industry veteran, really understood the business, and really knew how to teach the business. When I went to Wichita my terminal manager there was probably the polar opposite. He taught me everything not to do from a leadership perspective, but I think one of the things that it helped me prepare long-term, is that I was this 24-year-old punk kid, trying to get these middle aged men to go out and do their jobs mostly in a union environment taking direction from a 24-year-old kid when they had been doing their job for 25 or 30 years. You had to learn how to communicate. You had to learn how to build trust. And so you could still get the job done effectively. And that helped me for all right through my career.
04:20 Matt Waller: Yeah, those skills are invaluable. I think, taking jobs like that, where you're forced to work with people older than yourself, maybe more experienced, it's a good way to learn generally how to get along with people and...
04:35 Darrell Chambliss: Very much so, it also will teach you how to stand up too, and hold your ground, when you need to hold your ground. It gave me a well-rounded aspect of people and getting things done through others.
04:46 Matt Waller: After ABF where did you go then?
04:50 Darrell Chambliss: Left ABF in the summer of 89, and I went to work for BFI Waste Systems. Moved from Wichita Kansas to Los Angeles and started as a management trainee there as well. Learned the business for a year, and I was with ABF for about six years, and then I went to work for another company in the waste industry called Sanifill and spent about two years with them, and then worked for a brief period of time for a company called United Waste before being asked to be a part of the founding management team of Waste Connections.
05:26 Matt Waller: What did you think about going into waste management as an industry?
05:31 Darrell Chambliss: Honestly, when I was a kid growing up, seeing the garbage guys come around and pick up the trash at the house, I told myself I'd never be involved in that. Never say never, I guess. But actually I had a couple of friends that had joined BFI and they told me about the company and about the opportunities. And really, the principles of garbage collection at least are very similar to LTL freight. You're picking up and delivering garbage to the landfill, instead of picking up packages and delivering them to the terminal, or to the customers.
06:00 Matt Waller: And so then you started building your operations with those principles?
06:00 Darrell Chambliss: Yeah, it really gave me a good basis to understand the concept of routing and the concepts of asset utilization and workload, if you will, for the drivers.
06:00 Matt Waller: Tell me a little bit about today. The company has grown dramatically, your revenue is almost 5 billion a year.
06:31 Darrell Chambliss: We started out... We started the company October 1st of 97. We did an initial purchase of operations in Vancouver Washington, Issaquah Washington, and Idaho Falls Idaho. That totaled about $28 million of revenue, and when we went public in May of 1998, we were only... Our annual revenue run rate was only $35 million dollars.
06:58 Matt Waller: What was your market cap?
07:00 Darrell Chambliss: The day we went public was approximately $350 million dollars, approximately. We went public at $12 a share. I think we issued about 127 million shares initially.
07:14 Matt Waller: What's your market cap now.
07:16 Darrell Chambliss: Just north of 20 billion.
07:17 Matt Waller: Wow, that is impressive.
07:19 Darrell Chambliss: Thank you.
07:20 Matt Waller: 20 billion?
07:21 Darrell Chambliss: Yes. We've been very fortunate. We've worked hard, but we had a lot of good fortune come our way.
07:27 Matt Waller: Not many people in their career have the opportunity to build a company of that much value, I mean you... This company has gained so much value over a relatively short period of time.
07:44 Darrell Chambliss: Yeah. Our focus has been to operate in predominantly in suburban and rural America where there's less competition. We'd be the big fish in the small pond. And so, we've always focused on returning value to shareholders, and being very disciplined in our acquisitions, done over, probably approaching 400 acquisitions in the last 20 years and not trying to put dots on a map, but trying to acquire companies where we could leverage our strength, leverage our market position, and then therefore, return value to shareholders.
08:16 Matt Waller: So you've been doing acquisitions a couple a month.
08:20 Darrell Chambliss: At least, yes. Not every month, but they're... In the early days of the company, in the first two, three years, there was one year we averaged one a week.
08:29 Matt Waller: This must have been so hard to manage.
08:33 Darrell Chambliss: It kept us busy. We're all on the road full time. Luckily we were attracting quality assets and companies to buy and in the early days, in a lot of those cases, the former owners agreed to stay on with us and continue to run their business for us, just under our ownership, so that helped handle the volume and managed the exponential growth.
09:01 Matt Waller: Obviously, you've been focused on returning value to the shareholders, that's clear, but I would imagine that since you've created so much value through MNA work, did you develop processes to make the MNA work more repeatable and efficient?
09:23 Darrell Chambliss: Yes. We did. One of the things we did from really virtually day one of the company is that once an acquisition is closed the former company never closes on their own books again. In the first 30 days, post-close, and we convert the accounting to our corporate accounting system. That way we have immediate control of the revenue flows and the expenses and things like that. We really don't look to go in and change, wholesale change what the companies are doing, because quite frankly, they wouldn't be successful if how you get the job done doesn't have to be exactly the same everywhere and in every case. We left a lot of the day-to-day stuff alone for the companies on their policies of time off, safety bonuses, things like that, that it was minimally invasive or disruptive if you will, to the employee base that we were acquiring, so they could continue to run their business in a lot of ways, as they had before. We control the check book but we want them to be entrepreneurs.
10:31 Matt Waller: Do you share with them best practices? I know you've told me of some of the best practices about making sure you pick the right customers to serve, not putting yourselves in... Or other people in danger.
10:43 Darrell Chambliss: Yes.
10:44 Matt Waller: And then I remember you telling me about the cameras on the trucks.
10:49 Darrell Chambliss: The event recording technology that we have on our trucks. Yes. We have a formalized sales training program for those locations that require sales people in the field to teach people how to... What the most effective selling process is. As far as our safety program for the company is we provide everybody the best practices of how to have an effective safety program, and our safety program is really behavioral-based. We try and change the bad behaviors of our employees, maybe eliminate those bad behaviors, to improve and minimize the risk for our employees while they're doing their jobs. We have a event recording technology in every truck that... Every vehicle, whether it's a collection vehicle or even a support vehicle like a pick-up truck. We have an event recorder in every vehicle so that if there is an incident, we have a video of what occurred during that incidence, so that we can know what happened and have a learning experience from it. In many, many cases over the last 12 or so years, we've been using this technology. It's actually exonerated our drivers in many cases where you have an incident, the person gets out and says, "No, he hit me." It's finger pointing, it's he said, she said, and we just have the police officer watch the video and it eliminates any question as to what occurred or didn't occur.
12:12 Matt Waller: I would also imagine it gives you a bit of an advantage in the sense that drivers can learn a lot about how to do things right.
12:21 Darrell Chambliss: Yes, they can. We use the clips for the driver that may have exhibited a bad behavior. We use the clips to show them the bad behavior so that they can change their behavior, but we also use the clips for general education for our drivers to show them what can happen if certain... If you do or don't do certain things while you're operating the equipment.
12:47 Matt Waller: So, as chief operating officer, what are your primary responsibilities here?
12:52 Darrell Chambliss: So I oversee day-to-day operations of the... Of all of our locations throughout the 42 states and 5 provinces of Canada. It's about 500 operating locations. I also have fleet maintenance, procurement, routing, and safety and risk are all under my area of responsibility.
13:13 Matt Waller: Since you've grown through acquisition, I would think in your business, routing is really important.
13:18 Darrell Chambliss: It's very important. As the customer base changes, especially in the competitive markets that we operate in, there's gaining customers you're losing customers, so you really need to be looking at your routing for efficiency purposes on a minimally on an annual basis to make sure that you don't have unbalanced routes or overloaded routes what have you. That can also be an invaluable sales tool as well because we can tell the sales reps, "Okay, we have all... Here's the dots of all the customers we have in this 10-block radius, go after everybody else." And that's all incremental revenue that can come on in at a much higher margin than the other revenue because you're only adding that extra little bit of time and disposal to get it collected.
14:03 Matt Waller: In the trucking industry in general, there's high driver turnover.
14:07 Darrell Chambliss: Yes.
14:08 Matt Waller: And there's a shortage of drivers.
14:10 Darrell Chambliss: Pretty much.
14:10 Matt Waller: Is that true in your business as well?
14:11 Darrell Chambliss: Absolutely, absolutely. All, anybody who relies on a commercial drivers is suffering the same impacts of the... We currently are going through right now with the economy being what it is, the demand is exceptionally high for CDL drivers and there's more CDL drivers retiring currently than there are CDL drivers coming into, people going out and getting their CDLs.
14:43 Matt Waller: I would think it would be challenging to train the drivers for customer service, but I would think it would be more challenging for you all to design that into your processes.
14:55 Darrell Chambliss: Well, yeah, because we don't have as much facetime interaction if you will, as an airline has or many other service industries have. The reality is, is that most people, as long as their trash can's empty when they get home that night, they're happy. When it's not, then they call and that's when the service breaks down. So really, we focus on making sure the drivers complete their routes and they leave their... The customer containers back in the same place where they found them and there's no litter left on the ground, things like that, and that's not hard to do. The good thing is we, at a minimum every new employee, whether they have industry experience or not, they go through a 10-day onboarding process with our company, so they go and they spend 10 days with a veteran driver. Those guys are the best of our bunches if you will, and they teach them how to do it right, and that's... So that's key to making sure they know the expectation and the expectation is set very quickly and right at the beginning of their employment.
15:56 Matt Waller: Darrell, is there anything else you'd like to share with us about your company or your experience?
16:01 Darrell Chambliss: I think the one other thing that I'd like to share and I think it's a key very much a key to our success is our servant leadership philosophy in our company. We adopted this or started down this journey of servant leadership. It's not a process, 'cause it's never-ending. We started out the road of servant leadership probably now about 10, 12 years ago, maybe even longer but what we recognized was first and foremost our founder, Ken Blanchard, who's really the father of servant leadership and recognize that this is the way that we really need with the changing environment of the next generation coming up and really a way to attract and retain employees, at all levels. This is the way we wanted our company to be run by our field managers and everyone.
16:56 Darrell Chambliss: So I think that's been a key in our company for a variety of levels, one employee engagement, employee retention. I think it's also been a key for us to avoid a lot of unionization in our industry. We believe that we are here to be held accountable by the employees, not us holding them accountable. We work... We realistically work for them to help them succeed in their jobs every day.
17:26 Matt Waller: I think that perspective works in all aspects of life.
17:30 Darrell Chambliss: It really does. We've had many comments from employees throughout the company where they said that, now that they've learned and better understand the servant leadership philosophy and have practiced it for a number of years, they've actually become a better leader, but they've also become better at home and better in their communities.
17:49 Matt Waller: So Darrell, if you could go back in time and speak to yourself while you were in Walton College and say, "Make sure you do this" or have some advice for yourself and really for the current students because quite a few students will be listening to this. What advice would you have?
18:08 Darrell Chambliss: I always joke. If I knew then what I know now, I would have taken more psychology classes to learn how the mind works, 'cause it's very interesting when you get out and you're trying to lead people and where their perspectives are and things like that and why they think the way they think, sometimes, but I think it's not completely joking. I think that understanding and learning more about that is key for anyone who wants to be in a leadership role. I think the other thing I would go back and look at doing differently, or wish I had recognized back in my days at the university was taking more finance and accounting classes 'cause while, our industries an old-world industry, if you will, still got a fair amount of manual labor and things like that. We've got a lot of technology in our industry these days and more coming every day. It still comes down to, you gotta understand finances to be able to effectively run your business and to keep yourself on the right path for, whether you're a public company or a private company, to be able to have the assets and the cash and everything you wanna do to grow your business.
18:45 Matt Waller: I hear that a lot. That's a good one.
18:45 Darrell Chambliss: Yeah.
18:45 Matt Waller: So Darrell, based on your passion and things you're really interested in excited about, what would you like to see in terms of how maybe students of the Walton College go or how the Walton College itself goes? What are some things that you're passionate about?
19:48 Darrell Chambliss: One of the things I'd love to see in... We have some of it in... Going on right now in our company, but we need more, we need more young leaders. We need more people that are willing. And quite frankly, this is not the most attractive business for a recent graduate, if you will. They hear garbage and they're like "Eh, not me." And I get that, but I think to see these young individuals come out and really immerse themselves in our business and really our business or any other business, if someone coming out of school that is not afraid or is willing to really do anything, I think they will have a more fulfilling and well and successful career. To give you a prime example when I first got into the... My first day on the job was, second day on the job in the garbage business, I spent on the back of the truck, slinging garbage. Trust me, I wondered what I'd gotten myself into. But I think it's invaluable to understand the business, from what the frontline employees are doing so being willing to just do anything, whether... Even if it's not specifically your specialty. So I think that gives you a better perspective on everything if you're gonna ultimately become that... You get into a leadership position.
[music]
21:13 Matt Waller: Thanks for listening to today's episode of The Be Epic Podcast from the Walton College. You can find us on Google SoundCloud, iTunes, or look for us wherever you find your podcast, be sure to subscribe and rate us. You can find current and past episodes by searching BeEpic Podcast, one word that's B-E-E-P-I-C podcast. And now be epic.
[music]
