Not everyone gets the opportunity to build a business from (literally) nothing into a multimillion dollar operation with a foothold on four continents. Actually, most people don’t.
Scott Vollero did. He was fortunate enough to build his firm, Autocats, into a top-tier international supplier of recycled auto parts and precious metals within the space of a decade. By the time he was done, Autocats was among the top offshore secondary market precious metals recyclers in the world.
Vollero learned a lot along the way. It helped that he’d had substantial entrepreneurial experience before starting Autocats, and that he had plenty of connections that helped him through the tough early going.
But much of Vollero’s finely honed management and process efficiency philosophies — competencies he continues to put to use in his ongoing consulting work — exist thanks to his work with Autocats. Here’s how he turned a good idea into a great company. Budding entrepreneurs, take heed.
Identifying a Compelling Value Proposition
Like many other successful businesses, Autocats began with a great idea.
The elevator pitch goes like this. Catalytic converters, the automotive components that scrub exhaust of harmful emissions, have substantial amounts of precious metals in them. Depending on the make and origin of the converter, that metal could be worth hundreds of dollars or more. Anyone with the technical know-how to extract the valuable material from the not-so-valuable husk, scale the process to the point that it’s cost effective, and find willing downstream buyers stands to make out well.
Long story short, Scott Vollero figured out all three components of the equation. And so Autocats came into being.
Venturing Into a Capital Intensive Business
Vollero knew from the get-go that his chosen business would be capital-intensive. Used catalytic converters are abundant, but they’re not always available in the quantities that make for an efficient, profitable extraction and offloading process. Moreover, storing precious metals is a risky business.
Although Autocats was profitable, the nature of its revenue and expenses was lumpy: It might have to make a large outlay to fund the purchase of a new batch of converters, then wait weeks to receive payment for the metals it extracted.
Scott Vollero quickly developed relationships with downstream buyers willing to extend Autocats ample credit to fund its ongoing operations. While the availability of credit didn’t totally solve the lumpiness issue, it certainly made the business easier to run.
Building a Best-in-Class Team
Vollero founded Autocats with decentralized and flexible business model that allowed Autocats to “get close to the customer” and still achieve “low cost – economies of scale” that underpinned the company’s business. Around this core-concept, he added a layer of competent, experienced team members who knew various aspects of the automotive and/or recycling businesses well.
Vollero also took the time to learn about — and forge partnerships in — the emerging markets that provided the bulk of Autocats’ raw materials. Even though they weren’t directly employed, his “team” extended to the on-the-ground partners who made doing business in places like India, Dubai, Australia and China possible.
Fostering a Strong, Honest Corporate Culture
Scott Vollero has always been one to lead by example, and that’s just what he did at Autocats. His team always knew where they stood, always knew what was expected of them, and always knew how to treat their peers. There’s a reason Autocats was regarded as one of the best automotive recyclers to work for during Vollero’s tenure.
Identifying Key Strategic Partners
Early on, Vollero realized that Autocats wouldn’t thrive if it were held hostage to the volatile commodities markets or forced to engage in myriad retail-type transactions to stay afloat.
Accordingly, he tapped his on-the-ground partners to help create a network of collection facilities that dramatically simplified the task of collecting used converters. Even more importantly, he built strategic partnerships with downstream buyers — namely, auto parts manufacturers and multinational automakers’ regional subsidiaries — to boost the model’s predictability and ensure that a sudden price drop wouldn’t prove fatal for Autocats.
Heading for the Exits on One’s Own Terms
Scott Vollero didn’t found Autocats with the intention of selling it, but he also didn’t wait very long to start thinking about how that would look. In fact, Vollero’s strategic partnerships proved to be key to the company’s eventual sale — both in terms of demonstrating that Autocats was a viable concern and helping to identify partners interested in becoming something more.
What Comes Next?
Scott Vollero’s story didn’t begin with Autocats, and it’s not going to end with Autocats. While he’s still in the process of figuring out what comes next, he’s able to reflect on what he’s learned — and achieved — along the way.
Vollero’s key takeaways from his Autocats experience, and his entrepreneurial endeavors in general:
- Keep your network strong. Autocats wouldn’t have been the same, and probably wouldn’t have gotten very far at all, had Vollero not kept in touch and cultivated a network of capable and motivated people.
- Be slow to hire and slower to fire. It’s a brutal cliché that also happens to be true. The golden rule of the hiring process: Avoid making a decision you’ll regret later. Once you have made the decision to hire someone – you have an obligation to expend your efforts to make them successful at your company. And when you have done everything you could to help them succeed and they still can’t – you need to aid them in their transition to another job.
- Trust your business partners. Vollero worked with many upstanding business partners during his time at Autocats. He also encountered a few not-so-stellar people and firms. Choose your associates wisely.
- Take some risks. Autocats thrived thanks in large part to Vollero’s willingness to get off the beaten path and explore the underbelly of the booming and emerging overseas markets such as India, South America and China. Don’t be afraid to take equivalent risks with your own business.
- Start with your exit in mind. Don’t think of your eventual exit as a cut-and-run — think of it as your reward for years of hard work. Before you get very far into the nitty-gritty of running your firm, game out your exit options and start steering toward the one that makes the most sense. Like a marketing plan, or production plan, your exit strategy should be stated in your overall business plan.
Do you think you have what it takes to scale your own business?