#372 - Pete Ochs - Founder @ Enterprise Stewardship - Stewardship Vs Ownership in Business

Chris Powers: Pete, thank you for coming and joining me today. It's a pleasure to have you on the show. 

Pete Ochs: Chris, it's my pleasure. Trust me. I've been following you for a while, and I've gotten to know you pretty well over the last year or two, and it's fun to see the evolution of your life and how it's changed and your focus and clarity and what you're up to. So, thanks for having me on. 

Chris Powers: Well, I appreciate it. And you've had a huge impact on me, and just getting to learn from you and some of the things I'm sure we'll talk about today have been really eye opening. It's something I never had really experienced or seen anybody do at the level you're doing it. I’m so excited to be your friend, but excited to talk about some of those things today and share it with others. So, I thought we would just start with, we can kind of start and then work backwards a little bit. But you said, at 40, I learned that the purpose of business is much more than making money. So maybe let's start with what happened up until 40. What were you thinking before you hit 40, and kind of what was the revelation that you had that maybe there was more to business than just stacking money? 

Pete Ochs: Yeah. Great question. I think I bought into what the world is really encouraging us to do, and that's what I would call success. And if I'm honest about it, I would say that I was, as I looked at success, it's about answering three questions: Who am I? How do I live? And what do I own? And the simple answer to all those is about pride, pleasure, and possessions. I worked diligently to do that during my 30s. I would call my 30s a decade of pursuing success. Then I had a major bump in the road with my business. I had gotten out of college, went to work for a commercial banking company, and then started my own business at the age of 30. We wound up buying our first acquisition a little before the age of 40. It didn't go very well. I came close to bankruptcy. And through that, I just came to the conclusion that there's got to be more to life than just the pursuit of success, of more pride, more pleasure, more possessions. And I think it's really about viewing business as this platform to create flourishing. And I've been on that journey now for 30 years. I've learned a lot. I'm not there, but it's been a great journey. 

Chris Powers: Can you just go a little bit deeper as like what you were thinking at the time when you were pursuing what you called in your 30s success and then what it's really like to kind of lose or feel like you're losing it all? Like what happened during that period that you came out of it going there has to be so much more? Clearly there was like a deep pain or you felt like you were being upended. 

Pete Ochs: Yes. So, I came out of the commercial banking business working nine to five, nice salary, comfortable life. And then I chose the entrepreneurial route, and I went from nine to five to five to nine, I went from making $40,000 a year to $10,000 a year. And about three years in, my wife came and said, Pete, you need to go get a real job. And so, I learned a lesson there, that you can really work too hard. I was working seven days a week, and my wife and I went through a- we had a bit of a discussion, I'll put it that way, and she literally said, you've got to change your ways. So, I said one of the things, I'll quit working- I won't work on Sundays, and I'll only work a half a day on Saturday, and I'll give that time back to you and the kids. And relatively quickly, my business just took off. Well, fast forward eight or nine years, so I get close to 40, we acquired a bank, and that bank was a failing bank. I just went in and I was a madman. I was cleaning up, I was suing people, repossessing assets. I was counter-sued by one of my customers. I had purchased the bank from a man who was not in the banking business, and he'd violated a number of lending rules. And so, I took this lawsuit to my attorney, and he said, basically, Pete, you might as well file bankruptcy. You're done. Very stressful time in my life because I'd had some success in five or six years, but now, I came to this point, and I think it was a time for me when my Christian faith became real. It wasn't this thing that I kind of set on the shelf. I would say up until I was 40, I lived a bifurcated life. I had my Christian life, which was kind of the Sunday thing, then I had my business life, which is kind of Monday through Saturday. But when I really came to understand that I may lose it all, it changed the way I viewed life. 

Chris Powers: Okay, so you get through that period, and then what happens next? 

Pete Ochs: I get through that, and as I began to just inwardly look at my own life and how I'd lived, I would say up until 40, it was about pride, pleasure, and possessions. And that was really about putting Pete in the center of things instead of other people. And my faith, instead of being on the shelf, became a focal point for me. And I think the transition for me was when I understood that I really wasn't an owner, but a steward. And this whole concept of stewardship began to sink in. And when I understood that I didn't own it, but I was just the manager of it, I didn't come into this life with anything, and I wasn't going to leave this life with anything. What I was here to do for that 60, 70, 80 years that hopefully God gives me, then what am I going to do with that, that revolutionized the way I began to think about business. And I began to think that business was- I believe business is the greatest platform we have to impact the world. And there are three things we need, people need to flourish, and that is, to be very simple about it, you need a good job, you need good friends, and you need a purpose greater than yourself to live for. And if you've got those three things kind of figured out, a good job, good friends, and living for something greater than yourself, good things start to happen. And I began to see that. And I believe business, we're in this unique situation as businessmen where we can provide good jobs. We can show people how to have good friends and to work together. And then we can show them there's more to life than just living for yourself. Those things become very powerful. 

Chris Powers: I remember when I first heard your story, I think it was maybe Jess or somebody, and then they said, and he moved his business into a prison. And I thought, there's no way that anybody has ever done that. And then I watched the video before I met you for the first time. So maybe let's jump to that next step. So, you put these things in practice, but then let's talk about how this began to play out. It's easy sometimes to say those things, but I think one of the things that's so unique about you is you've put them into play in ways that most people can't even dream of yet. And you're going to spend the rest of your career helping people do this. So, let's talk about this, some of these businesses that you've owned and what you've done. It's absolutely incredible. 

Pete Ochs: So during the 90s, after I'd come to this epiphany about ownership versus stewardship, we began to, I really felt that the purpose of business was to make money and to give the money away and help the world. And particularly as that was driven by this kind of newfound faith that I had come to embrace. And unfortunately, I thought stewardship meant financial generosity. I didn't understand that it was much broader than that. And so during the 90s, we began to buy more companies. We got into the leverage buyout game. We'd find a company, we'd put a little down, lever it hard, run it for five, six, seven years, flip the thing, make a lot of money, give a lot of money away, do it again. And then 9/11 rolled around. And for us, it was traumatic. Black ink went to red ink, generosity ceased. I became a bit upset with God. And I think what he was really telling me is, Pete, it's not about you. It's not about your money. Stewardship is not about just money. I had just taken making money for myself and said, oh, I'm going to make it for God. And I think it's way beyond that. And so I learned another lesson that this whole concept of stewardship is much more holistic. And I will tell you, Chris, a few years after that, I learned that second lesson. In fact, I will tell you, my thirties was the pursuit of success, holding on tightly to the things that Pete had achieved, to moving into significance during my 40s, holding on lightly so that God could do whatever he wanted to do with them, to what I would call in my 50s surrender, taking everything I had, put it on the table and say, I'm just a steward, how can I manage these best to create what we would call economic, social, and spiritual impact. And a few years after I came to this epiphany in 2001, 2002, we had a rapidly growing manufacturing company in a small town in Kansas, in Hutchinson, Kansas, and I couldn't find enough entry-level labor to work in that business. And I heard about a program at the local prison where they would, it was a work release program. They would put inmates in a bus, ship them to us. We'd work them during the day, and they'd go back to prison at night. I did that for 30 days. I think I had 10 men do that. It was one of the best things we'd done. And so I called the warden. I said, we need more of those. And he said, I don't have any more, but if you can figure out how to move your business inside the walls of my prison, we are vacating 20,000 square feet, so I've got room for you, and I have about 400 guys ready to work. And literally within 30 days, we'd moved our business or a portion of it inside the walls of a maximum security prison. 

Chris Powers: Okay, so first thought, if you didn't know who you were, you'd think, okay, this is crazy. You are moving into a prison with, quote unquote, people that have done some pretty bad things. There's no way you could run a business out of the prison. So, what- walk me through that first few days once you're on site. What was day one like, and did you have a plan? 

Pete Ochs: I'm a ready, fire, aim kind of guy. So, we just waltzed into this prison and started doing what we had to do. But it's interesting. This is a maximum security prison, and you're bringing semi loads of stuff in and out every day. And so that's a challenge. Plus, you are literally shoulder to shoulder with murderers, rapists, drug dealers, normally what the world considers bad people. And so I think if I'm probably honest with you, I went in there out of sheer greed. I needed workers. And so, I went in there, and we started working. This is interesting. I thought, this is the way I justified it, I'm going to get in there, and these guys are bad. They need to pay for the sin they committed and the crime they committed. So, I'm going to work them really hard and make them pay for some of the crimes that they did. And then I thought to myself, they'll show up on time every day and they'll come in uniform. And this is just going to be terrific. And so within about 90 days, I realized that maybe the only difference between them and me was that they got caught and I hadn't. Now I'm being a bit facetious here. But these men, most of them were in there because in a fit of rage or stupidity for a couple of minutes, they wound up in prison for either a few years or a long time. And so, when I got to know these men, and I had, a few years earlier, I'd come to this epiphany that business should be to create flourishing. And it was interesting that God put me in a desert of human flourishing, a maximum security prison to teach me a few lessons. And I think the lesson was that we need to love our brothers as we love ourself, even if they're not so good people. And so, we began to work through this process of how do we create flourishing inside of a human, a place of no flourishing, which is a maximum security prison. 

Chris Powers: Okay. Let's say, let's just ask the next obvious question. How did you begin to do that? So, you it sounds like you had an epiphany about 30 days in that these people, although they've done some horrific things, aren't horrific people at some core and that you're going to work with these people for a long time and that the business can have an impact not only on their lives but others. So how did you start putting things into practice to make this sustainable to where everybody was winning? 

Pete Ochs: Chris, I think what I did was I just started to get to know them as human beings. They had a label stuck on them, and so that label forced me to think of them differently. But when I really got to know them, they weren't much different than the rest of us. They'd committed a bad crime. And so, as I got to know them and hear what their needs were and heard their story, we began to say, what could we do to help these men rehabilitate, as it were? You see, they put you in prison to break you down because most inmates or residents of maximum security prisons need to be broken down, but they never build them back up. And so I saw the breakdown, but I never saw anything being done to rebuild them. And so I remember, I believe that vision is a really powerful thing. And I said, we need to have a vision for these inmates. And so, I began to think about that. So here was a vision I stood up and cast for them. So there were some simple things that we did. I would come into the prison. I would walk. Every time I was in the prison, I would go and spend three, four, or five minutes with every inmate. I began to get to know them. So, a personal relationship is critical in any situation. Once I got to know them, I began to say, what are they missing? How can we help them? Well, of course, they needed a job. Most of them didn't have friends, and most of them didn't have a purpose for living other than to serve out their time. So I came up with this vision, and I remember one of the things we did, the warden would allow us to bring lunch in from the outside. So instead of getting prison chow, they would get McDonald's or pizzas. And this was an amazing thing for an inmate. We had a guy that, I remember the first time we brought in McDonald's, I think we had 20 guys working for us. So we bought 40 Big Mac meals. And I remember going up to a guy, and he goes, this is the first time I've had a Big Mac in 25 years. So, something that is so... and it was just like the biggest, sweetest thing for him. And so, at lunch, we'd bring in lunch for them, and then we would have, I would typically give them a 10 or 15 minute leadership lesson. And the lesson I was giving that day was that you needed to have a vision for your life. And the vision I wanted to share with them is that I wanted to have the best prison in the United States of America. That was the vision I cast for them. When I said that, they literally laughed me out of the place. They were slapping their hands, slapping their legs, laughing, don't you understand this is a maximum security prison? I said, guys, I don't know. It may be crazy, but here's how we're going to put the vision into action. We're going to have the best prison because my promise to you is I'm going to make you the best person you can become. And a few of them bought into that pretty quickly. And I will tell you, over the next four, five, six months, as we began to invest in them economically by giving them a good job, socially by loving them like we loved ourselves, by just befriending them, and spiritually by talking about there’s more to life than just this life, we began to see men change. And today, I will tell you that prison is a- there's great flourishing going on inside that prison. It's amazing. 

Chris Powers: I can hear it in your voice. On the economic piece, can you pay- how do you pay people in prison? Do you just pay them like you would a normal worker? 

Pete Ochs: Yes. So typically in prison, if you work for the state of Kansas, which most every job, and they try to get every inmate to work in prison, and you work for the state. And in Kansas, it's somewhere between 50 cents and one dollar per day. When we went into the prison, we paid what they would call prevailing wages. We actually don't even set the wage. So, if we have a welder, let’s say, somebody’s going to do welding for us in the prison, the prison will look at the prevailing wage in the state of Kansas and say a welder should get $20 an hour. So, we pay them $20 an hour. So all of a sudden when you provide this economic input, when you give a man a job, most of these men never had a job. They were drug dealers. They didn't have a legitimate job. Let me put it that way. When you give a man a legitimate job and give him a goal to achieve, most of them will step up to that. And when they accomplish that, I never understood the power of a job, a good job for someone with regards to self-confidence, self-worth. These men changed because they were working. And I think work is such an important thing. And then we started doing other things. We started training them about business. We actually have 15,000 hours of online training that any inmate can have access to. They can learn about entrepreneurship. We have fathering classes. We had personal finance classes. You could get a black belt in lean manufacturing. So all of a sudden, when we started creating opportunity for these people, life began. They began to flourish. Pretty simple. 

Chris Powers: Okay, I'm going to ask the question backwards. Maybe you've never been asked this before, but you walked in and gave them a vision, which let's make this the best prison. If you had to sit back and think for a second and say what have those prisoners, what vision have they given you? Whether they said it out loud or it just changed the way you think, I would imagine it's reciprocal. There's probably, getting to watch these people in action over all these years, they probably helped your vision develop. What have you gotten from them? 

Pete Ochs: Oh, my goodness, Chris. I would not be sitting here today talking to you if I wouldn't have been in that prison. The personal transformation that that has I'm going to say forced in my own life is incredible. To see men that are down and out begin to flourish inside the maximum security prison because these very simple things of giving a person a job and really treating them like a human being and casting some vision for a greater purpose in what you're doing in life is revolutionary. What's amazing is it's not complicated; it's simple. So where that has taken me is this was in 2005, so we've now been in prison 20 years. We started with eight or ten men, we now have 200 or 250 men in two different prisons that are working for us. It's changed the way we do business outside of the prison. So we have about, we have a thousand folks working for us outside of the 200 inmates that work for us inside the prison. And what we do for them, the way we think about business, has totally changed all of that. And to the point that six years ago, I exited the business and turned, we have several manufacturing companies, I stepped out of the day-to-day of those and turned those over to my son and a group of young leaders. And so, at 72 years of age, I'm probably working harder than I've ever worked, literally, but what I get to do is coach other businesspeople on how to create a flourishing business, and it's totally changed my trajectory and the way I view life and particularly the way I view retirement. For those of you who are listening who are approaching retirement, don't retire, get re-fired. 

Chris Powers: I love it. 

Pete Ochs: Don't retire, get re-fired. You have so much to give. And I was kind of thrown into that. I hadn't expected this. And so, to see what those men have done for me, it's changed the trajectory of my life. It really has. 

Chris Powers: Unbelievable. I asked you about economic capital, and then there is social capital and spiritual capital. Will you just go a little bit deeper on what each of those means? 

Pete Ochs: Yes. So, our strict definition of social capital is the mutual benefits derived by a group of like-minded people pursuing a common cause. Social capital is the mutual benefit derived by a group of like-minded people pursuing a common cause. So, you and I are involved with a group of 20 men, and we get together once a year, and we come together, and we are like-minded, we've built relationships, and we're encouraging each other to go forward. Families, I believe, are really the creator of social capital. Within a family, number one, you're born, number two is you learn to live and fight and hate and argue and come back together, and the family is so critical. So I think that the family is the creator or the starter, the provider of social capital. But then, there's all kinds of things, whether the Rotary Club, YPO, your church, anytime you come together with a group of other people and are like-minded in doing something, I believe you're creating social capital. The goal of social capital is to create great flourishing communities, to improve the common good for all of us. And that I think is such a powerful thing. Spiritual capital is simply, we define it as the norms and beliefs that you hold that create how you live out life and the way you- the moral code and the rules that you live life by. That is really spiritual capital. And as a Christ follower, I believe really God's word is what leads me to, I believe his word is the operating manual for my life. Don't lie, don't steal, don't cheat. Love your neighbors as you love yourself. So spiritual capital is important because it lays down the rules and the guidelines as to how we should create economic and social capital. I'm an avowed free market capitalist, but free market capitalism without a moral code winds up typically in greed. It's about me. But economic capital, when done for a greater cause with godly rules being put in place, typically leads to generosity. Social capital on the other hand, government without God results in totalitarianism. But government with God typically results in freedom and democracy and the great republic we live in. 

Chris Powers: Why is generosity so important? 

Pete Ochs: I think it is the ultimate bottom line. Generosity is the ultimate bottom line. I think in business, we have this little framework we go through, and we talk about honoring God where it starts with principles, and then principles define people. People then determine practices, and practices derive profit. And what do we do with profit as business people? There are three things we can do with it. We can reinvest it in the business. We can share it with employees or investors. Or we can give it away. And I think this whole thing of generosity about not only giving your money away, but giving some of your life away for social capital and to give away some of the hope that you have on spiritual capital are really, really important things. And those are what change lives. And without being generous, I don't think you can really move people to a different place. 

Chris Powers: Okay, so when you think about business, there's a lot of entrepreneurs that listen to this podcast, so the economic capital piece seems like an obvious, I mean, that's what you learn in business school. The social and especially the spiritual side, it's kind of like, eh, I don't know if we can get all three of these into a business, or at least that's kind of how the world teaches you. So you said you're spending the next, the rest of your life and have spent the last six years kind of focused on this new operating model, which we'll talk about. But let's just start from like, if you've been in a business for 10, 15, 20 years and maybe haven't begun to incorporate some of those other forms of capital, how would you even begin that process? It seems like you'd have to totally upend your company. 

Pete Ochs: It's really not that complicated, and it's the little things that you do that make the difference. I believe that the church is really responsible for spiritual capital. I believe the family is a provider of social capital or the founder or creator of that. And I believe that business's primary goal is economic capital. But that being said, this platform of business is unique because while our primary driver is to have net operating income, the way we do it is by fostering social capital, which is a culture within your people, and to some degree, the spiritual capital that says we're going to lay down the rules as to how we do this. So for us, it's pretty simple. We measure the output economically, which is net operating income. We're fanatical about making sure we're highly profitable, and that's the output. On social and spiritual capital, we don't worry about the output, we worry about the input. What are the things we can do for our team members that will make them better members of society, have a purpose for living. And so to give you an example, things that we do is, as I explained in the prison, we have 15,000 hours of online training. We throw lots of parties, we celebrate, we have fathering classes, we have chaplains. Let me hold that thought for just a minute and focus back on social capital. There are things that we do. We sponsor a day-wide city event in Hutchinson, Kansas, to bring the community together. So, as a business, and this comes back to generosity, it costs money for us to create these social activities and events that bring people together. But we think that's where generosity is important. And that's why creating economic capital is important, so we have that money to create some social capital. On the spiritual capital front, it's pretty simple. What we try to do is to just say, we're going to create an environment where at some point in time in a person's life, when they're facing a tragedy, and they need to think about a purpose that's greater than themselves, where they need to have a potential relationship with God himself, we create this environment so that we start by giving them a great job, we love them like we love ourselves socially, and at the point in time they have a need, they should know that we have created this space and we have some ideas for them that will give them hope for not just a great life now, but a great life eternally. And that's the hope and power we have in this person called Jesus. We just try to share that in a winsome and winning way. It's not that we're... if you came into our business, we don't believe we should beat people over the head with the Bible and say, you need to live like this. What we try to do is be an example of God's love. And at the point in time, they have a need for that, if they have a need for it, they know that we have an answer for them. 

Chris Powers: Do you have like a favorite way that you do that? Is there a certain thing that you do in the business as it relates to maybe a core value or something where, again, you're not beating someone over the head with maybe a Bible, but you're living it out just in the daily actions? 

Pete Ochs: Yes. So we like to follow the example of the parable of the Good Samaritan. If you'll remember that parable, there was a traveler who was beat up and left for dead by a bunch of thieves. Along came the priest and the Levite, the spiritual guys, and it says they walked around him. And I'm thinking, they were thinking that, if this guy just gets Jesus, everything would be fine. But that's not the way life works. Along came the Good Samaritan, who I like to think of as the faith-driven entrepreneur or the guy that has been really motivated, the Christian business guy who's living out his life. What did he do? He stopped and picked the guy up and he took him to the hotel. I don't think he even talked to him about Jesus. He gave- he led with economic capital. That's what we do by giving you a good job. We follow by loving you like we love ourselves, treating you like a good human being, even if you've murdered someone. And then we let God open the doors to spiritual capital. So, when we do these first two things, provide them great economic capital, great social capital, give them a good job, love them like we love ourselves, it's amazing what happens and how people will begin to trust you with sometimes this greater purpose of life, and that's where am I going to spend eternity. 

Chris Powers: Okay, let's go back to you're not retiring, you're refiring. So, what does your day-to-day look like? How are you working with other companies right now? What does that kind of process look like? 

Pete Ochs: So, over the last 20 years, we've really tried to codify our own internal system as to what does a high impact- what is the culture and what are the systems that are needed to run a high impact company? And that would be one that would create economic, social and spiritual impact, as it were. So, when I left the company six years ago, I began to coach businesspeople, and very quickly, I understood we needed a process to take them through. So I hired an assistant. We spent three years just codifying an operating system, as we would call it, that would incorporate this concept of creating economic, social and spiritual impact. And so we've got a framework. We think there are four really important things in business that you need to figure out. What's your purpose? What's your strategy? Can you do operations excellently? And how do you execute on that? So those four disciplines. So essentially, we'll come in with a company, and we talk about implementing those four disciplines. And if we do those well, there are really three things that I think you have to have in a business to create a great impact. One is culture, and that's about people. So we focus a lot on culture. Secondly, we focus a lot on systems. That's really what drives the bottom line. And then lastly, it just takes time. We live in a drive up world where we order a Big Mac, and 30 seconds later, we've got it. And if you're going to create culture and great systems, it takes time. And so you've got to spend, we think you've got to spend an hour or two a week as a leadership team working on the business and not in the business. Our businesses are so frantic where there's a problem every minute and we're just running, but we never stop, sit back and say, what's our purpose? What's our strategy? What does operational excellence look like? And how should we execute? And so, I think driving culture, driving systems, and taking the time to make sure it happens is really an important thing. 

Chris Powers: Okay, so let's take your- one of your businesses, I believe you make like high-end leather seating. Is that right? 

Pete Ochs: It's actually seating for off-road equipment. So, zero-turn lawnmowers, regular lawnmowers, agricultural equipment, we would build seats for that industry. 

Chris Powers: Okay. And I would say, Pete, I mean, what can your purpose really be? You're making seats for outdoor deal. So walk me through, how do you think about purpose when it relates to, when you think about any business, but when I think about outdoor seats, maybe the business school would just say, hey, your purpose is to make high quality leather seats and make sure they're done affordably so your customers can afford them. How do you kind of flip that on its head? Like, how do you think about it? 

Pete Ochs: Exactly. So, let's go back to Milton Friedman, if we could for a minute. Everybody knows about Milton. Milton won a Nobel Prize for this statement: The purpose of business is to maximize shareholder value. He won a Nobel Prize on that statement. Now, I'm just a Kansas farm kid, and what do I know about economics? But I'm going to disagree with Milton for a minute. I think the purpose of business is to be a catalyst for flourishing. It's way different than just making money. We're going to do- if we just make money, we're pursuing economic capital. If our purpose is to flourish, we're going to make money. We're going to create this culture, this social culture in our business. And we're also going to give people an idea that, look, at some point in time, you're going to be six feet under, and where are you going to spend eternity? And I think that's really important. And so we try to share that hope that we all need in life. So our purpose in business is to create economic, social, and spiritual impact. Our business is simply our platform. If I could go back for just a minute, Chris, I believe for me personally, my purpose is to honor God. My passions in life should be service, excellence, and stewardship. And my platform is my career. It's my profession. And too often we as business people, we think that our platform is our purpose. I believe that our purpose is far greater than our platform. Our purpose is to create flourishing, and our platform is our business. And our platform is the venue God's given us to live out this purpose and these passions that we have. And that's to honor God, serve people, be excellent, be good stewards. 

Chris Powers: Things tend to be upside down when you think about it through a God lens. Why- you said earlier on, you said, we don't come into the world with anything, we don't leave with anything. But while we're here, we tend to think that everything's ours and that we have to keep a close grip on it. And I certainly fall victim to this all day, every day, and I have to remind myself. What was it that it made you realize like we are just stewards? And if somebody is listening to this, like what is your kind of message to them of how to start looking at the things they own or the things that they, the businesses that they own more as stewards rather than as owners and kind of what that will do to them once they're able to have a different heart posture towards it?

Pete Ochs: Yes, so if I could go back to probably the two kind of defining moments in my life. One was at 40 when I about lost everything. And at that point in time, I realized that life is a favor. And I will tell you, I'm now 72. I've lost a number of friends. I view life differently than you do it. And I'm not trying to get you to fast forward to me. I want you to live where you are. But I wish that I thought about life a bit differently. And this stewardship mindset, it’s really freeing because it allows me to take risks that I maybe normally wouldn't take. It allows me to do things that's kind of outside of what the world would say – oh no, Pete, you need this career, you need to do this, you need to do that. But if I'm a steward, I'm saying, God, you've given me this, what would you like me to do? And when you really come to that concept that you can't take it with you, but what you can do, your legacy is really how the world is impacted after you're six feet in the ground. That is really what legacy is about. And unfortunately, it takes age sometimes to bring that legacy into focus because we're so enamored and we are so caught up in what the world is doing. Have you ever seen an ad on TV that says why don't you try cutting up your credit cards? Why don't you try giving some money away? No, the world is hounding us and social media is killing our young people with all of these things that they say are important, but they're really not that important. 

Chris Powers: Did this flow out of the idea that you were a steward? One thing that I remember is we were sitting at dinner one night and you're like, yeah, I capped my salary, and Jess and all the buddies had capped their salaries. And I was like, what on earth do you mean? I've never heard of that. Well, one, talk about the story of capping your salary, but then talk about maybe how that blends into being able to be generous, being able to be a steward, being able to focus on those other parts of your life because you're not worried anymore about I just made more money, I gotta go buy a new house, I gotta get another car, I've got to buy... like this constant feeling of maybe it is mine and I got to keep making more of it to keep up with this ever burning overhead that I keep bringing on. 

Pete Ochs: Yeah, exactly. So it's probably 25 years ago, myself and three or four of my really good friends went to a business conference. And one of the speakers at that conference, the topic of his talk was how much is enough? And he says- and Chris, I do believe this is a really, really important question. All of us have to come to grips with how much is enough. And that's typically the economic question. So anyway, the four of us, five of us walked out in the hallway and began to poke each other. Well, how much is your enough? How much is enough for you? None of us had an answer. A couple of months later, we all decided to hold up in a- we spent a weekend together, and the goal of the weekend was come noon on Sunday, we were to write down our how much is enough number. Now, we all thought it was a net worth number. So, we wrestled for a couple of days. Sunday noon came around. One guy said 2 million, one guy said 5 million, one guy said 10 million. And you see, all we had done is we’d just taken the risk-free rate of return, let's say 5%, and divided it by our standard of living. And that was our how much is enough number. So for instance, if my standard of living was $100,000 back then, and I could get a 5% return, I took 2 million. That was my how much is enough number. 2 million times 5%, that's a hundred thousand. I'm good for the rest of my days. Well, so we all agreed on that. We wrote that down, and somebody said why don't we get together every year thereafter and talk about if you've gone past your number then you need to start giving it away. So, three or four years in, guess what had happened. We all met, and most all of us had blown through our how much is enough number. We'd exceeded it. But now, this how much is enough number was in the value of our privately held companies because we were all private, all entrepreneurs. And we began to debate, well, how do we give our companies away? And we went through all this rigmarole. Somebody said, well, if we're truly stewards, why is the first 2 million mine and everything else God's? Isn't it a hundred, zero? That is what stewardship is really about. It's zero mine. I'm just the manager, and it's 100% God's. You see, here's a fact. Owners get dividends, stewards get salaries. I hate that. I want to be an owner, because at some point in time, I want to live the good life by doing nothing and just clip coupons. And so what we came up with was the how much is enough number is not a net worth number. The how much is enough number is a lifestyle issue. So at that point in time, we all began to say, what are our current lifestyles? So we agreed on a lifestyle number. And to this day, 25 years later, the four of us get together multiple times a year, and once a year, we talk about our lifestyle. And here's why lifestyle is so important. Let me say one other thing about how much is enough not being a net worth number. If it's a net worth number and you want to give away everything over that, I think that stifles the entrepreneur in all of us. You see what happened, when I understood it was not a net worth number but a lifestyle issue, that freed me up to go be as- to make as much money as I could because I believe God has given me the entrepreneurial instincts to do that. So that freed me up to do what I was good at. Now what happened is, because I froze my lifestyle, and my businesses did this, the delta between my lifestyle and what my businesses did could now be freed up to do three things. And there's only three things you can do in your business with your net operating income. You can retain it in the business, you can share it with employees or investors, or you can give it away. If you think about it, those are the only three things you can do with the net operating income of your business after tax. So as entrepreneurs, every year, the three biggest questions we have is how much are we going to retain, how much are we going to share, and how much are we going to give. And we always give 10%. We've just kind of made that a standard. We're going to give 10% of our operating income away. There are some years we give 100%. I also think there is- I used to think when I was in the 90s that business was built to give away money. I should use business, make money and give it away. I've changed my thinking on that. If you're running a flourishing business, creating economic, social and spiritual impact, why wouldn't I reinvest in my business? Why wouldn't I grow my business? Why wouldn't I add new employees that I can have impact on? Why wouldn't I get bigger to impact my community in a better way? 

Chris Powers: Wow. How much- like when you set the cap, are you able to ever adjust it? Is that an annual discussion? Like, how do you think about that? Because I think, even as a young person, you think, especially if you're in that part of being successful, which I certainly am at times, you just think, all right, well, there's all this stuff left to buy. And that creates this angst or anxiety because you gotta go keep stacking money to go chase some future dream that you may not actually want by the time you get there. One, like how freeing was it to know the limit? And then two, how do you- it's been 25 years, just I know I'm getting a little nuanced, but like, how do you think about it year to year? You have grandkids, families grow, things happen. What's like your ultimate barometer? 

Pete Ochs: Yeah, absolutely. Great question. First of all, I don't think there's a silver bullet and there's not a number for each of us. It may be a hundred thousand for one person, it may be a million for another. And that's what you've got to work out. It depends whether you live in California or Kansas. I happen to live in Kansas, so I get a lot of bang for my buck. And my how much is enough is going to be way less than a lot of people. But I think you just have to sit down and say, for the four of us who have gotten together, we said we want to live middle class, potentially upper middle class lifestyles. None of us are hurting. We live in nice houses, drive decent cars, but we're simply not extreme on some of this. And I have typically found the stuff I bought that I thought I had to have, a month or two after I bought it, I'm literally asking the question, what the heck did I do that for? You know what, you've done it, we've all done it. I gotta have this new motorcycle. I get the new motorcycle, and then I run it off the side of the mountain, and I'm going, I sure wish I was driving my old one. It's just crazy stuff. 

Chris Powers: Sometimes it doesn't even take a month or two months. Sometimes it's like 24 hours later. You're like, I'm an idiot. 

Pete Ochs: Exactly. And that said, when you have kids and you may be sending them to private education, you've got colleges you're sending them to, you're going to spend more in your 30s and 40s and 50s than you are at 70. And it's really nice for Deb and I to just say, we've got a really simple lifestyle. And do we take a few trips a year and enjoy the fruit of our labor? Absolutely. But I've just found that for me, spending more money doesn't make me happy. And I think you just have to kind of come to that. 

Chris Powers: Let's pivot back real quick to something that you did that you were talking a lot about this year up on the mountain, the use of purpose trusts to maintain principles, philosophy, and culture business. So, first question, what is a purpose trust? Never heard of this before until you mentioned it. 

Pete Ochs: Yes. So, just a quick context of that. Once I came to understand stewardship and generosity, I have literally for the last 25 years felt that money was the greatest, was going to be the greatest thing that would sidetrack me from having a really good life. And so I said, could I give my business away? So for 25 years, I've been having this concept of could I give my business away. And I ran down several roads and never came up with a good solution. A couple of years ago, and most of the listeners will understand this, there's an outfit by the name of Patagonia, who gave their business away a couple of years ago. And when I read that, I began to do some research on how they did that. And in the United States, we've had trusts for a long time, but the trust in the United States always had to have a beneficiary, which was limited to one of three things. The beneficiary had to be a person, a pet, or a cemetery plot, believe it or not. So you could take money and put it in a trust, and it would benefit a person, a pet, or a cemetery plot. Five, six, seven years ago, there was a new kind of trust imported from Europe called a perpetual purpose trust. So now what you can do is the beneficiary of your trust can be a purpose. So you asked me a little bit ago, what was the purpose of my business? My purpose is to honor God by creating a flourishing business. I can take that purpose, I now have a purpose, I put that- I take my business and I can put it in this trust whose purpose is to honor God by creating a flourishing company. And I've essentially given my business away. So, it's a very unique- now it's a perpetual trust. It's an irrevocable trust. So you're not going to give it away. So once you give it, you've given it. But what you've done is you set up this trust and you codify inside of the trust the way, the principles by which you want that company to be run for the next 100 years. We have about- we have a handful of principles that I've put in the trust, and I've put a few other operating things in there that this is how I want this, our company to be run. So once you've designed that and put that in the trust, you essentially take your business, put it in the trust, and here we go for the next 100 years. What you've done is you've bifurcated the economic- Typically in a traditional business, the economic part of the business and the control part of the business reside together. In other words, you have stockholders who elect a board, who elect management, and the management makes money and it comes back to the shareholders. What you've done in the trust is you bifurcate economics from control. So you take the economic piece and put it in the trust, and then you take the control and you shove it over here into a purpose board who manages the purpose of the trust, and they own no economic interest. You also have an operating board that goes ahead, and it's the typical board you and I are used to, and it's tasked with maximizing economic, social, and spiritual impact inside the business. So you have a purpose board that manages purpose, operating board that runs the company to the best of their ability, and the beneficiary of that is the trust. Now in addition to the trust, it doesn't have to own 100% of the shares, so you can carve out some for family, you can carve out some for employees, carve out some for investors, carve out some for charity. So it's a very flexible, interesting trust. To tell you exactly how Patagonia did that, they had a $3 billion business, and the Chouinards took that $3 billion business and they set up a trust. They put one voting share in the trust controlled by the Purpose Board, and they put all, most all of the economic value, they gave it away, they put a charity together, a 501c4, and they put $3 billion of value into that charity that will manage things for a long time. 

Chris Powers: How do you form the Purpose Board? Are you on that or do you just have to- is it people you trust or that share the same values? Like how do you get that part of the board put in place? 

Pete Ochs: Yes. So typically, the founder or the settler of the trust, the founder of the trust gets to choose the original board. And that's what I've done. I'm on the board. I've got my son, my son-in-law on the board. And I'll probably add a couple of friends to that purpose board. None of us will really get any economic interest out of the business going forward. When I pass away, I have built into the trust a procedure and a qualification of those board members, so it's a self-perpetuating board. When someone goes off, the remaining purpose trust board members elect new board members to come on. And they have to meet certain qualifications and they have to make certain pledges that this is how we're going to look after the business. 

Chris Powers: Okay, you said the purpose. Do you know any off the top of your head, what's maybe one or two of the principles that you've also layered in? 

Pete Ochs: Yes. So, in our trust, I have a declaration of the trust and our purpose is to create economic, social, spiritual capital. Then the four values that we believe you should run the trust by are to honor God, to serve people, to pursue excellence, and to be a good steward. And then we have also put in some additional things that I want certain debt to worth ratios not to exceed a certain number. Like for instance, we believe that debt to worth should not be greater than one to one. If you have a dollar in equity, you should have no more than a dollar in debt. So we put that in. I've also put some salary limits in so that the very senior guys, I've not yet decided on that number, but right now, if you were to force me to tell you that number today, I would tell you it's 20 times. So the senior executives should not get more than 20 times the lowest paid person. So if you have a person making $50,000, the executives can make a million. I see too many of these companies putting- the executives are getting 10, 20, 30 million a year. And I just... I'm an avid free market capitalist, but there is a how much is enough number. 

Chris Powers: And do you think that by setting that, it will just naturally attract the right people that you want running your businesses and the people that say, well, we're just going to go work for 50 million a year might not be a good fit? Like, how do you think about that from getting the best possible talent? 

Pete Ochs: Yeah, I think what you're doing is you're really hiring, you're really getting people to join a movement and a calling. To join the company is going to be a real calling to change the world, and it's not just about the money. And so, we're asking them to- Now, everybody can make more than that because you can still profit share out of the company. So, there are ways to make more than that. If the company flourishes, great. And I would encourage employee ownership. We've carved out a class of stock so employees can buy stock and enjoy the benefits of their labor long-term vis-a-vis the increased value of the stock. 

Chris Powers: All right, Pete, so if- again, a lot of entrepreneurs listening, if they're sitting here today and they're like, how do we even begin to think about all- I mean, we've just heard a lot. It's overwhelming. It can be overwhelming the first time you hear it. Like, what do you tell people? What should they think about going into the next few weeks after listening to this? How would they begin to think about the next step forward?

Pete Ochs: Yes, and Chris, you are talking specifically about the trust? 

Chris Powers: Sorry, excuse me. I pivoted back. If they're thinking about wanting to run their business the way that you've done it, and they've just listened to all this, and they know what you're working on now, what should they be thinking about? What are the questions they should be asking themselves over the next period of time after hearing this for the first time? 

Pete Ochs: Yes. The first question is, do you just want to maximize economic value, or do you want to really create a business who will change the world? And if you really say, I want my business to change the world by creating economic, social, and spiritual capital, that's step number one. If you don't want to do that, just keep doing what you're doing. Nothing wrong with that. Maybe you just say, I'm going to make money and give it away. Great. That's perfect. The world needs that. But if you really want to say, I want this more holistic approach to flourishing, that's question number one. Question number two then would begin to work through, what does that look like? And you can go on our website and figure- we hopefully can answer some questions there. Call us, we'll talk you through that. One of the things we do is we do a no-cost assessment. So people can literally look at where their business is, they take a 95-question assessment, and they'll get a very good sense as to how flourishing their business is. We found this to be very impactful. And it's interesting, we found a number of companies, we've told them we can't help you. You're doing it as well as you can do it. So that's been very encouraging. So that might be another option. I think the main thing, Chris, is just to say, do I really want to run business differently? And I would also encourage people to think about changing culture, changing systems, and it's going to take time. And you see the trust is where I think time is important too. I talked about time being an hour or two a week where you work on your business. I also think time is the next hundred years. If you look at a compounded curve over a hundred years at 5%, at about year 50, 60, 70, that hockey stick curve starts to kick in. I don't know if it was Warren Buffett or Einstein or somebody, but they said compounding is the eighth wonder of the world. And it is. But what's happening, and let me speak just to the folks that are my age that are in your 60s or 70s, and you're entrepreneurs and you're worried, you're wondering about succession. What we're trying to do is really create a fourth option for you to succeed. Right now, you can sell it to outsiders, you can sell it to insiders, you can transfer it to family. If none of those work, we're trying to create a way where you could take your company and put it in a trust, work with your management team, and say we're going to run this business for a long time, and we're going to enjoy the benefits of what happens year 50 through 100 and get that hockey stick impact. 

Chris Powers: Last question. When you say it takes time, you can change culture, you should take systems and you need to be patient, is there an average amount of time that it takes to kind of see that transformation in the business? Are we talking months, years, it might take 10 years? How quickly do these things begin to come around? 

Pete Ochs: From our experience, you will see a few benefits and gains at a year. You'll see it'll double up. You'll get some quick gains in a year or two. It's probably year four or five when people are just, it becomes a habit. Once you learn... once everybody understands the habits of a high-impact business, then it's incredible, the flywheels turning. What happens now, just a quick example, it used to be when someone would come out of the prison and join our workforce, that it would take a year for them to understand what we were doing. Now, because everyone there understands the culture, within 30 days, the culture is so strong that a newbie that comes in is just set- they just sit him down. The old guys sit him down and say, this is the way we roll, guys. We're not going to have fights. We're not going to get into trouble. We're not... this is the way we roll. And it's incredible. 

Chris Powers: Okay. I said last question, but you got to tell one story. You had a gentleman that left the prison to start a tattoo parlor. Tell that story and then we'll bring it home. 

Pete Ochs: Okay. Very quickly, if you recall back to my little time when I stood up in front of the troops 20 years ago and cast the vision we're going to have the best prison in the United States, one of the men that was there bought into that vision immediately. He happened to be a murderer and was in for life. Long story short, he bought into our vision. He wrote a 40-page manual on how to be the best inmate. That earned him a parole hearing, which he didn't get out. But three years later, he got another parole hearing and he got out seven or eight years ago. He totally changed his life. Luis Gutierrez is now a free man. Luis is a phenomenal artist, and when he was in prison and understood that he was working to get out, we began to write a business plan to create a, to start a tattoo parlor. I'd never done a business plan like that before, I will tell you, but it was really fun. And so today, Luis is out. He makes a great six-figure income. His impact on the community and people he visits with is amazing. His wife has started an animal shelter and they're rescuing hundreds of animals of all kinds. Luis has been approached by a major network to do a 12-series reality TV show on redeeming life and redeeming tattoos. One of the things Luis specializes in is redeeming gang tattoos. Oftentimes when you're in prison, you will get a gang tattoo, and when they get out, those guys don't want it. So, he puts a cover up. He'll create a new tattoo over the old one, and it's phenomenal. So, what this major company is doing is talking to Luis about doing a 12 series thing where they'll find 12 gang members who have been redeemed economically, socially, and spiritually. And they want their tattoo redeemed. And so, Luis will be redeeming their tattoo and they'll be telling their story of how they are now living a redemptive life. In fact, Luis’ business is named Redemption Inc. 

Chris Powers: I love it. I don't have any gang tattoos, but if I do, I'm going to Luis. All right, Pete, this was awesome. So, appreciate you and look up to you in so many ways. So, I appreciate you sharing today. 

Pete Ochs: Chris, I appreciate what you're doing. Keep spreading the good word.