CEO Stories: The Can-Do Attitude of American Capitalism

This is Capitalism: Erik Olsson

RH: This is Capitalism. I’m Ray Hoffman. Between 1980 and 2000 the metropolitan population of Phoenix grew by 45 percent. As amazing as that might seem, consider the growth in a suburban or really exurban city, like Chandler, Arizona, 22 miles from downtown Phoenix. It grew by 460 percent. Peoria, Arizona, 14 miles out, grew by 740 percent. Perfect conditions for the creation of a company called Mobile Mini to provide contractors and other jobbers with mobile secure space for storing their stuff on site.

Thirty-five years later, Mobile Mini is doing $500 million a year in sales and not only is it a national brand but, under CEO Erik Olsson, it’s become less dependent on the ups and downs of the real estate cycle. Today it’s known as Mobile Mini Solutions, offering not only job site storage space but mobile office rentals and containment systems for water and other fluids.

Erik Olsson grew up in Sweden. What brought him to Phoenix? You might say capitalism. Having grown up in a nation known for a kind of benevolent, cradle-to-grave type socialism, do you remember when you were a student at the University of Gothenburg what your impression of Capitalism was?

EO: I did and I do. I think back then the United States…I think was really the icon for capitalism and looking at the values, the concepts of freedom and choice, free markets, private ownership, entrepreneurship and innovation, the small government and robust institutions, all these pieces that make up capitalism in my view. And when I compared that to my home country of Sweden I found Sweden sorely lacking in these concepts.

RH: And over all you’ve experienced, managing and leading on three continents, I’m sure you understand even more about it today.
EO: Yes, yes, definitely. I can see what I didn’t understand maybe as much back then in my student days but clearly now is the value or the importance of incentives. Everybody reacts to incentives, whether they are negative or positive, but everything that the government or a company does you know has impacts on people and has consequences. That’s the biggest added learning I had since back then.

RH: I guess that goes back to human nature and capitalism understanding the differences in human nature better than socialism.
EO: Right. Absolutely. And giving individual people the freedom to do their thing and the opportunity of choice and innovation, for example, and I think socialism stifles all of those things.

RH: Is there an obvious difference managing and leading in Europe, in South America and in the U.S.?
EO: Yes, yes there is. I think in Europe, managing is regulated to a higher degree. Obviously much more unionized and there is a lot more legislation that impacts the relationship between management and an employee. So it is much more difficult, I would say, in that sense.

South America, the manager or the leader is the leader and people do whatever you tell them to do, which is sometimes you have to be careful how you express yourself because they will actually do exactly what you’ve said.

Whereas in the U.S., I think the drivers or the incentives that people have–they want to better themselves, they want to better their lives and therefore they contribute to a much greater degree, I would say, to the betterment of the company. And the relationships, I feel, between management and employees are much, much better here, actually.

RH: The others I’ve interviewed, who have started their careers outside the U.S., tend to talk about a can-do attitude in the U.S. that changed the way that they were able to lead their companies.
EO: Yes. The can-do attitude, I think that is part of the American dream that we have here and that is so strong. Whereas it’s really hard to find in Europe. The relationship is much I come to work and I know my hours and then I go home. And what the result is, it’ll be what it’ll be. Whereas here there’s a very, very strong can-do attitude, which I find very, very invigorating.

RH: Are there any specific examples you can think of off the top of your head of how this has impacted either of your U.S. companies?
EO: My prior companies, RSC Holdings, we were the No. 2 player in size but we clearly were the No. 1 player in terms of any metrics and growth rates, etcetera, that you would want to look at. And I think a lot of that stemmed from our attitude that we’re gonna show the rest of the world we can do this, we are much better than everybody else here in this industry. And I think that attitude was a big part of our success.

RH: Let’s go back to Atlas Copco, the Swedish maker of mining equipment. Am I correct about this–this was your first employer out of school?
EO: It was, yes.

RH: Was there anything in particular about the culture of that company that helped you grow up as a manager?
EO: Absolutely. I have Atlas Copco to thank for being where I am or what I am. Atlas Copco is a great company and very decentralized organization and very crystallized levels of responsibility. And very early on you get to experience the accountability, whatever position you’re in. And seeing that and learning that over a global company on a global scale was a great, great learning experience. And I have taken that away with me wherever I’ve gone, the importance of really crystallizing who is responsible for what and that you drive down the decision-making to the lowest level possible and then you hold people accountable for that.

RH: How old were you when they sent you to Brazil?
EO: I was 28 or 29.

RH: Big cultural shock, big problems in the country in which you were in inserted.
EO: Yes.

RH: You were there right in the middle of the hyperinflation. I remember talking to you about this years ago.
EO: You know, it was a blessing and a curse, mostly a blessing really. Of course it was very turbulent and trying to manage a P&L or a balance sheet in hyperinflation, you know, 50 percent per month, that accrues to I think 12,000 percent per year. We had three different currencies while I was there because the computer systems at the time couldn’t handle the number of zeroes that the inflation drove.

But having said that, it was also the best school I can think of for a finance guy to really learn what’s important and how you manage when…in an environment like that because there are lots of things you can take back with you to the U.S. or to Sweden when you’re managing the concepts of focusing on your cash flow and focusing on reducing your assets as much as possible and so on. So all in all it was a great experience.

RH: What was your title there?
EO: I was finance manager, I believe, was the title.

RH: You had a very cyclical company in RSC Holding, renting heavy equipment and of course 2008-2009 is not a great period for renting heavy equipment. So I’m sure some of that experience has helped you make Mobile Mini less vulnerable to a downturn.
EO: Yes. We are constantly talking about those things and how we can get a steady state of growth and so on. This is, by the nature of the products and so on, less cyclical because we have the advantage of that no matter what he economy is, customers will still have to store their stuff somewhere so the swings are much less in this industry than in the equipment rental business where projects grind to a halt and then no equipment is rented.

RH: Is there one particular initiative that you’ve taken on that has made the company less cyclical?
EO: Here it’s been really a focus on national accounts. We had some national accounts here at Mobile Mini when I got here but it was basically just managing some regional accounts and so on. I put this strong team together now, starting about a year and a half ago, led by a person who actually was with me at RSC and we have had a tremendous success over the last 18 months in signing up national accounts and I think that is a great way of diversifying the business and creating stability no matter what the economy does.

RH: So before this, basically it was each location signing local accounts?
EO: Yes. And now we have on our portable storage side we’ve come almost 30 percent of our revenue is now under a national account agreements, which means that we have…Pricing is set, the relationship is there, and we can have one single point of contact, consolidated billing for the customer, etcetera, and just create a continuing, strong ,and good relationship on our tank business, which is roughly a 100 million dollars in revenue. Over 50 percent is a national account business. So again, it creates a very stable or a more stable environment I would say no matter what the economy is doing.

RH: And something at the center of that, and I wouldn’t have guessed this one, but you have a kind of customer service machine in Mobile Mini. I was looking at the net promoter score, highly regarded for customer loyalty and customer recommendations.
EO: Yeah, yeah.

RH: And the most recent numbers I’ve seen from 2016 show Mobile Mini ahead of Costco and Starbucks and Amazon and Apple.
EO: Yes, yes. I’m very, very proud of that. We want to be the premium-priced player in the businesses we’re in and we want to be that by providing high-quality products and great service to our customers.

RH: How is this culture of service created and then how do you maintain it as the number of locations continues to grow?
EO: We maintain it by constantly talking about it, by measuring. We measure the net promoter score down to a branch level so we can break that number down and see who is contributing to the number and who is dilutive to the number. And we hold people accountable, providing training, people are listening into salespeople’s calls and give quality scores on the calls and then coach our salespeople, you know, you could have said that, you could have done this better or this differently. So it’s a constant effort to keep this up but it clearly pays off.

RH: How many locations do you have now? How many did you have when you started?
EO: We have about a 150 locations and I believe we had maybe 120 when I started.

RH: How many do you plan over the next couple of years?
EO: Depending on the time frame here but I think there is room for 50 more locations here in North America. It’ll take a little bit of time to build that out but we have ample opportunities to put down the Mobile Mini flag in more areas.

RH: Here’s something I don’t know. Is it all franchises or all company owned?
EO: All is company owned and the reason is the net promoter score, being able to assert that we provide the customer a great service. We don’t want to outsource that or let somebody else come in between us and the customer.

RH: How much technology goes into maintaining your market lead?
EO: We have the benefit of being the largest player in our market so we can afford to invest in technology. The customer portal is a big thing. It’s an industry first, nobody else has it and I doubt that many of our customers could afford to put it in place. It’s a portal where you as a customer can manage your entire relationship with us from placing an order, from paying an invoice, from looking at your history. Actually, you can look on a map where you have units or rent where they are and create reports and things like that. So I think that will just advance our market lead.

RH: That site, that’s particularly important in terms of attracting national accounts, I assume?
EO: Right, exactly.

RH: Is there one thing that your mobile storage product is used for more than anything else?
EO: Mostly it’s used on job sites in the construction segment. General contractors or subcontractors, they lock up their stuff in our containers over night.

RH: How big can Mobile Mini get and how big should it get?
EO: Oh…[Laughs.] That’s a great question. I think we operate in a large, very fragmented market. We are by far the largest, as I said, but I don’t think we have more than a fifth or so of the market. So going forward here we can get much larger than what we are.

RH: You’ve been in the equipment rental industry, the wide industry, for more than a decade now. Do you like everything about it? Is there one thing you like more about it than anything else?
EO: What I really enjoy and this is almost taking us back to where we started this conversation is the competitiveness of the business and this (deed?) of the business to get an immediate response from the customer. And particularly in the equipment rental industry where it’s fast in the sense that we could introduce a change in the morning and say let’s raise the prices here or let’s lower the rates on this thing or let’s do this or that and we could see the impact the same afternoon.

RH: And coming up as a finance guy, are you surprised that you became so much of a customer service guy along the way?
EO: [Laughs.] Yes, I guess I am. You know, two things I had to learn or call it excellent or very good at when I first became CEO was the customer service side of it and the people side of the business because those are two things that normally on the finance side you don’t get very much exposure to.

RH: As Erik Olsson will tell you, those net promoter scores and good customer service in general are increasingly important in a free, competitive marketplace.

This is Capitalism. I’m Ray Hoffman.