John Hewitt, founder of both Jackson Hewitt as well as Liberty Tax Services, talks about being a world traveler without ever leaving the USA, fighting with his father while also making business history, the secret sauce of franchising, the biggest lesson from almost facing bankruptcy, competing against his own software and systems (and winning), why he might be the one person on Earth who thinks Berkshire Hathaway is doing something wrong, the pain of change, and practicing extreme brevity.  And listen to the end to find out how Action Catalyst fans can get his book for free!

Mentioned in this episode:

Learn more at SouthwesternConsulting.com/Coaching/Students

Southwestern Student Coaching

Welcome back Action Catalyst listeners. I am

your host, Adam Outland. And today, I'm pleased to welcome

John Hewitt, the Hewitt in Jackson Hewitt Tax Service, the

second largest tax service in the United States, which was

founded in 1982. Afterwards, John also founded Liberty Tax

Service, which is the third largest tax preparation service

provider in the United States. Since exiting both companies.

John has authored the fascinating book, I compete and

now accept the CEO of loyalty brands, which we will hear more

about a little bit later. John, good to meet you.

You too. My pleasure.

But reading up on your background a little bit

more. And at first, I was like, Oh, wow, he grew up in Hamburg

and Greece. I was like, please, really traveled the world. And

then I read the clues were smaller towns in New York,

right?

Yeah. My girlfriend now lives in Italy, Texas,

Italy, Texas. Yes. Right. 35 miles south of Dallas.

So you tell all your friends you go to Italy?

They asked you to bring back some wine and you say I don't

know if you want wine from Italy.

Exactly.

You've accomplished so much. And a lot

of your story I think starts with working for H&R Block, was

that while you were still at university or...

Yep, I was attending the University of

Buffalo. And I took a tax course for h&r block. You know, I was,

I've always been self confident, if not cocky. And when I was in

high school, I decided I'm going to be a millionaire. I no clue

how my major was mathematics. And my dad interceded. And he

was always wanted to be an entrepreneur, but had too many

children too quickly. And we were too poor. But he called up

h&r block in 1969. And said, we'd like to buy a franchise in

Hamburg, New York. And they said, as a matter of fact, we're

going to open a company store there this year we already have

and it's right. It's right on Main Street. And it was life

changing. One of the biggest blessings of my life is when I

was 20 years old, I found out what I wanted to be when I grew

up.

Not many people can say that.

You know what, most people don't know if they're 20,

30, 40, 50. Most people don't know what they want to be when

they grow up.

Yeah, vision is lacking for a lot of people and

and so they find themselves drawn to other people's visions,

which I guess it's okay.

It's ok for people like me that have vision. I need

people like that. That's right. Yeah. Every industry needs CEOs

and visionaries. And I've always been a crazed competitor. You

know, it's with me, it's show me a good loser, and I'll show you

a loser. So I've always had this fanatical, obsessive desire to

win. And so whatever I did, I learned something when I was

about 17, to solve arguments, because I'm so argumentative.

And my friends that I would be listening on the car radio, and

I saw would come on. And I'd say it was the Moody Blues, they'd

say, it was three dog night, and we'd argue and no one would win.

Right? So I invented a game that I played to this day, that I bet

you it out, you have to either have to stop arguing or bet it

out. And so I bet like a million dollars in my lifetime. I only

bet one at a time. I don't bet $10 or $50. Yeah, I'm incredibly

competitive. In 1980. I became a regional director and I

foolishly 10 years earlier said that's my dream is to be a h&r

block Regional Director. And I previously set that goal and I

made it and I was so excited and and then my dad, he took me down

a notch. He said, John, I'm going to computerize taxes, and

I want you to join me. It took him six months to convince

finally he convinced me and we both quit our jobs. And in 1981,

we built the first tech software for an Apple computer.

What was it that made you feel that you guys

would be good business partners and that that would that would

work out?

Well, as a teenager, I mean, my dad and I

bought like cats and dogs. I mean, he wouldn't talk to me for

months on end. I was just so rebellious. Isn't it my

rebellion wasn't drugs or, or crazy stuff there was I wanted

to hang out with my girlfriend so I'd sneak out at night and

hang out with my girl. But he wanted someone that would obey

the rules. In my career I've had my mum worked for me, my dad, my

sisters, my ex wife, my children, my nieces. And I've

had lots of people work, but not everyone worked out well, I had

to fire my ex wife, fire one of my daughters, and I'm fired by

one of my sons so that everyone worked out well. But it was so

bonding with my dad, and that it took him from this rebellious

teenager, I had 45 years with him, where we were almost best

friends that we had something in common. He was partners with me

and building the software. He was the board of directors of

Jackson Hewitt, he was on the board of directors of Liberty

Tax. And when it came to business, he always gave it to

me, but in any in every other face of his life, our lives he

would not pay any attention to.

Wow, and from there, how did you decide that

franchise was the route you wanted to go?

We started with six offices in August of 82. By

January, we had a lot. So we bought six offices from Bell,

Jackson's widow changed the name to Jackson Hewitt, and had 11

nose then the second year we had 15. And the third season we had

22. So in two and a half years, we had gone from six to 22. So

that's pretty good growth. But my goal from day one was to have

more offices in h&r Block than they had nine bows. And I

realized I'd be like 600 years old by the time I got to 9000 at

that rate. So we immediately start change. I decided we're

going to franchise we need h&r Block franchise, and we exploded

we went from 22 to 49 to 197 to 350. So we exploded with

franchise, Adam, the beauty of franchising that no one ever

talks about because I think they they feel guilty, is I get

someone like yourself a very talented person, and you pay me

to work for me. I mean, if I went out in the marketplace and

had to hire you, I'd have to pay you hundreds of 1000s of

dollars. But you pay me I get a great person like yourself, who

wants to change their life, and you pay me to work for me. So

that's almost a scam except for I've made 1000 millionaires and

my 5000 franchises and hundreds of 1000s of employees. I've

changed 10s of 1000s of people's lives.

And what you offer, I feel and then you can

correct me is when you buy a franchise you're buying into in

some ways, especially in the early days coaching and direct

mentorship, you're paying for the systems in the organization

to say this is the value proposition that you're buying

into. And there is 100 I think for a lot of successful people

to have that kind of mentorship and guidance and tools, because

they're motivated, but they prefer a little bit of a

shortcut on the learning curve, right?

It's a huge shortcut it saves years and

years. Yeah.

Because you hit those potholes. So they didn't

necessarily have to.

I've either made every mistake or I've seen every

mistake. A couple of times, we almost went bankrupt. One year I

had an opportunity. We are growing by leaps and bounds. And

remember our number one goal was to be bigger than the 9000 HR

blocks. And there was a company in the country that had about

250 locations. And they decided to offer tax where there was

they had a relationship with a company come up every ward,

which also doesn't exist anymore, which is a miniature

Sears and they offered to sell us the Montgomery Ward contract.

Well I had just I had just hired my two favorite people from h&r

block that were running 300 offices, and I just done an

offering and raise money and it would make us immediately that

year, six years after we started we'd be number two largest in

the country. And so we didn't do enough due diligence but we

bought that relationship and we opened in about 150 Montgomery

Ward's Welcome to Buy Now they had treated the they had had a

horrible season and they treated the taxpayers all over the

country. And these countries they were in like 27 state. So

we went from three states to 27 states and they had such a bad

year the previous year. They hadn't paid their prepares so

the prepares were angry with them. They didn't either they

quit some of them a couple of situations they competed so mean

and miserably that they would come into the Montgomery Ward

because these are little kiosks and oh my god reward they would

come in and and Rick Truth to customers right from under our

nose and said, I'm over. You know, I've been doing your taxes

for three years. I'm over here, come to me. So we had to go to

Montgomery Ward that we have to shut down honor to these

locations. We're getting killed, you almost went bankrupt. Wow, I

took zero pay. And many people took a 50% pay cut. But we came

out of it very robustly bigger and stronger than ever.

What was the number one lesson that taught

you?

Don't roll out anything on a national level. If

you're going to test anything, do it reasonably small tests

before you go take it out and do it nationally.

But in your, you know, in your position, you

know, would you say that your risk tolerance is relatively

high?

I say it's off the charts. Adam. Think about it. We

had six stores. And I went through my investors and said,

our goal is to be bigger than h&r block. Now my word is my

bond. We only got to 6000 Jackson, it has 6000 locations,

but it became a billion dollar company. And Molly one, one of

1000 people in the country that are going to be at our company.

We didn't get to 9000. But but everyone made a lot of money. If

you invested 5000 with me in 1982 it was worth 2,000,015

years later. So I had no investors that were disciplined.

But I set big, hairy, crazy, audacious goals. I am so much

risk taker. I walk the tightrope of insanity.

And then you did kind of repeated this again.

Yeah, exactly when I sold Jackson Hewitt that I

started Liberty Tax and now when my non compete and then I had

to, I had to compete with my own name, my own software, my own

system and my own people. And now, Jackson unit 6000 offices

and h&r block at 9000. Guess what goal we set to be bigger

than block. And again, I didn't get to 9000, I only got the

4000. I did it five times quicker than I did it at Jackson

Hewitt I and I formed another half a billion dollar company, I

formed, again, one of the top 100 largest retail chains in the

country. I'm the only one that's founded to the top 100 retail

chains. But Adam, when you start out and you're competing against

a 9000 chain, and a 6000 chain, and the 6000 chain as your own

name and your own system, you have to be almost stark raving

mad to believe that you can do it.

What phase of business building are you most

attracted to, the early stages where you have to be kind of

scrappy, or do you like the large scale sweeping side of it

once you've gotten to scale?

It gets boring to me when we stop growing by when

we're not growing by leaps and bounds. You know, the culture in

your organization is critical to the quality of your

organization. And it's so much easier to have a great culture

when you're growing exponentially. If you're if you

ever get to a vantage point where they're not growing,

they're flat. Right to me, if you're not growing, you're

dying. That's not my leadership scope. I'm a builder and a

fighter and a scrapper as you said. But no, once it gets to

out, turn it over to the suits at that point. You guys take

over? Yeah, it was that growing double digits or more, or 50%?

Or is that growing by over 10% don't even waste my time. I've

got better things to do.

And so because you were again, bored at your

enormous amounts of success that you had, you decided to start

something new again.

After I sold Liberty Tax and we started

learning to branch out in each of the first two iterations that

Jackson Hewitt and liberty There was just one franchisor. At

loyalty, we have eight different franchise awards. And we're

exploring some extra some new concepts. And between the

brands, we're exploring mentorship, I can mentor CEOs of

each brand. We're exploring my vast array of people around both

the United States and Canada who believe in John Hewitt who have

either worked with me at blocked or Jackson Hewitt or liberty. So

when we go to a city when we when we go to Houston, there are

hundreds of people that have worked with me that believe me,

so they could be a customer, they could be an employee, they

could be a franchisee, so we're exploring that opportunity.

simplistically, it's just an umbrella company of a different

franchisors. So instead of standalone franchisor like

Jackson Hewitt, we're in liberty. We have a tax and we

have zoom and Grumman and we have inspection boys home

inspection. We have a different companies instead of just one

branch. Nice work. I've been always disappointed in

organizations like Berkshire Hathaway that couldn't cross

work. You know, they have a stable of great companies Coke,

Geico. But to my knowledge, they don't ever get the two groups

across the market. You know how many people at GEICO drink Coke?

And how many people had coke by Karcher, you would think there

would be some attempt at cross marketing, but they do nothing.

And what's the vision going forward for you?

The vision has something to do with my age, I'm

74 years old, and I'm going to work forever, they gotta kill me

to stop me. But I only I don't think I have energy to go more

than another five or six years in eight brands, I think I think

that we're going to get down to just one or two industries over

the next five or six years. So and that's more related to my

age, and then to any other business reason. So we'll sell

off the lesser performers, or the ones that I don't enjoy as

much. And then alcohol, I personally down soon have the

management that then that I put there. So have access to the

mentorship. But my focus is going to be just on one or two

different industry, there's no retirement again, they got to

kill me to stop me when I was young. I said, You know what,

I'm going to be a mentor. I don't know how I'm gonna be

there. And you know, I have the greatest line, I just go retire.

You know, I'll be 20s or 30s. And I'll just have the screen

sight. And I realized along the way, what would I do? I mean, I

don't like fishing. I don't like golfing. I don't like sitting I

like fast ADHD, fast, go, go go, changing lives. But I enjoy

business and helping people more than anything else.

I love that mindset. Often leaders are asked

to share their best advice they ever receive. But I kind of want

to flip that question. And ask you, what's some of the worst

advice that you've ever received?

Wow, I the worst advice that I ever received, the

one of the worst that when there's, there's a bunch of

statements I really despise. And one of them is that's the way

we've always done, right? I've always been at the cuts of

creativity in my industry and in DOD. And the people that I mean,

the dumbest advice I ever saw, written and made me was the head

of the US Patent Office 1899. He well, we might as well shut down

the patent office, because everything that can be invented

has already been invented. And this was in 1899. I mean, just

the human beings inability to improve and, and be committed to

improve and change in and just meeting tooth and nail, you

know, one of our 10 principles is improve each step. And one

one year, I had a sort of an epiphany. And I went to each of

my leaders at their year end review. And I said, How do you

improve? It was sorry, it was the salary state. It was like, I

read two books, or nothing about change of behavior. And change

is so hard for people and it's it's not the change. That's

hard. It's the pain of change. Everyone I know virtually any

every person I know if I say to them, Do you want to change? Do

you? Do you want to improve? They'll say of course I want in

from of course. But just don't ask me to change. Don't ask me

to get up earlier. Don't ask me to eat their bread. Don't ask me

to exercise different. Don't ask me to think different. Of course

I want to improve. Just don't ask you to change. You know, if

you do what you always did you get what you always got. Doing

the same thing and expecting different results is the

definition of insanity.

I love that one. And everything you just said

about coming back to the original answer your question

that one of the worst things for you to hear is well, that's the

way we've always done it. And I feel like that even points back

to when you approach h&r Block originally with the software you

design and said, Hey, you guys should should use this. And I'm

imagining the response was something like, well, this is

the way we've always done it.

Yeah, in that in that annual report. They said

people ask us why we don't computerize why should we

customers don't care? It doesn't save us any money. We're never

going to compare us. How could they be so inane to say, we're

never going to computer. I can see okay, we're not going to

computerize next year. What we're never going to computer is

how stupid is that?

Yeah, that's good. And then what's a habit or

practice that you feel has saved you the most time each day or

made you more efficient?

I'm like the world's best at that. I'm more

jealous of time than any human being you've ever met. So if

someone says, sends me a question, I'll say, Why are in I

won't bother. I won't bother sending a long answer. And if

someone makes the mistake of sending me an order question, do

you want to do it on Monday or Tuesday? I'll say I always say,

to irritate them and to get them to change. I always say what you

know that do you want to meet on Monday or Tuesday? I'll say why

not? Yes. Why? And so now they gotta come back. So my people

they used to, I try changing for a little while, like Monday or

Tuesday. I put one if I met Monday, and two of I met

Tuesday, but some people couldn't figure it out. So when

my my staff sends me an email, and I wonder, do I want to meet

one Monday or two Tuesday, so they have to type in one letter?

And I don't, the biggest savings is I don't talk on the

telephone. It's almost impossible to get me to talk on

the telephone. Now, when I say that I'm exaggerating a little.

I talked on the phone maybe once or twice today, but I hate chit

chat. I'm horrible at chit chat. I mean, let's get down to

business. Let's, let's talk I don't really care how I mean, I

tried to be nice. And how's your family? How's your child? I was

your spouse and but I'm not good at what let's get down to

business. So not talking on the telephone. And answering

questions very succinctly is my style. And so if you sent me an

email, it could be 100 words, it was almost impossible for you to

get more than 10 words back. I learned a valuable experience

with with people that just like to vomit talk. I mean, I've had

a couple of employees one person, one woman found me to

the door the bathroom, she'd couple times she found me it's

in a car. And she'd be talking, I'd be shutting the door and

driving away. And I realized that they're so used to being

there, the rude ones, and they're so used to it, that it

doesn't bother me. But that didn't affect them at all. The

next day, they were the same way. Talking too much time is

the only irreplaceable resource. You can replace gold and

diamonds. And every time you can't replace that.

Last question to end with, with all this

experience behind you, if you had an opportunity to sit down

across the table with a 21 year old version of yourself, what

what advice would you give that 21 year old version?

Yeah. What are the ways that I'm different than

other people? I never worry about what if I never go back

and think about? I know, I know. I mean, because let's say I give

myself the greatest advice in the world and went out got hit

by a bus. So don't have any advice I'll give. I'll give this

advice to every 21 year old, find something you like to do

work hard, persevere. Life's too short. A Monday morning, if

you're going to work and not looking forward to it, you're

going to the wrong place. So that's the advice I would give

each and every 21 year old. I don't ever think about what if I

had done something different. So probably somebody loves to do

work hard, persevere.

Great interview, great anecdotes. You wrote the

book, I compete. And if people wanted to follow your journey or

stay in contact with you in some way, what would be the best way

for listeners to do that?

Well, first of all, I'm on LinkedIn and Facebook and

then get my book for free. I will send it to him for free.

Just send me J O H N at loyalty brands.com and I'll send him a

free book.

I'll take you up on that. That's great. I really

enjoyed this conversation interview with you.

My pleasure. Thank you.