Change is a constant, so embrace it. Whether because of fear of uncertainty or failure, it’s common for people to resist change in both their personal and professional lives. This is certainly true in my industry as retail auto businesses have been strikingly slow to adapt to technology change. But change is inevitable. In our case, we embraced it and resolved to be the disruptors. No longer trapped by conventional thinking, we were open to new possibilities and passionate about innovation. One of our first moves — informed by our own analysis — was to cut longstanding industry gross margins in half because we knew we could make it up through increased sales. We referred to this as the Southwest Airlines approach, modeled after that airline’s decision to take the bottom out of the market on its airfares, contending that it would not only beat its airline competition on price, but even the cost of gas to drive an automobile. In 1976, they introduced $19 fares from Dallas to Houston, filled up their planes, and have enjoyed over 40 consecutive years of profitability in an industry notorious for bankruptcy and government bailouts.
I had the pleasure to interview Daniel Chu. Daniel currently serves as founder and chief executive of Tricolor Auto Group and Ganas Holdings. Chu has distinguished himself as a successful entrepreneur, having founded six companies over the past 25 years, including two which became public. Chu currently serves as the founder and chief executive of Ganas Holdings, a national used vehicle retailer focusing on the integrated sale and financing of vehicles to Hispanic consumers. The branded chain of thirty dealerships across twelve metropolitan markets operates in Texas as Tricolor Auto Group, and in California as Ganas Auto Group. The company has been recognized by Inc. magazine for five consecutive years as one of the fastest growing companies in America, while also receiving distinctions as one of the ten fastest growing privately-held companies in the greater Dallas-Ft. Worth area.
Thank you so much for joining us Daniel! Can you tell us the story about what brought you to this specific career path?
Two formative early adult experiences provided me with unique insight into what being an entrepreneur might look like…oddly enough in sports. I both played college basketball at Washington University, which had resurrected the sport after a ten-year absence, then coached basketball at the University of Miami, beginning in its inaugural season upon reinstating the sport after fourteen years of dormancy.
The opportunity to be an important part of building these two separate programs from the ground up — -in particular, to experience first-hand the challenge of creating a vision and then getting highly diverse groups like players, fans, boosters, and media to buy-in — -was both fascinating and invigorating.
It’s now easy to see that it helped shape my philosophy around gaining consensus and mobilizing teams — whether on the court or in the boardroom — and catalyzed my passion to be an entrepreneur.
Can you share one of the major challenges you encountered when first leading the company? What lesson did you learn from that?
Nearly everyone shudders when they think about the prospect of buying a vehicle, and with good reason. For decades, the retail auto industry lived its stereotype — an extremely parochial industry that relied on an “old school” mentality and created deep ruts justified by a “we’ve always done it that way” mentality.
The used car segment of that industry, especially one focused on low income buyers or those with poor credit, is exponentially worse. There is an unyielding resistance to change that permeates nearly every organization from top to bottom. This is perpetuated by a narrow-minded view that talent should only be sourced from within the industry, leading to consistently poor — if not outright predatory — options for buyers.
We set out with a vision that was incongruent with the industry. Our mission to deliver high quality used vehicles at affordable rates to low income, credit invisible borrowers was impossible to achieve using the tribal knowledge of the industry as it existed. Instead, we learned that it required decisive, transformative leadership from a team committed to innovation and best practices across industries.
This very pronounced pivot changed the cadence of our execution — -in terms of both speed and conviction — -and eventually shaped a team with a continuous improvement mindset passionate about building a unique and compelling business.
What are some of the factors that you believe led to your eventual success?
There are so many people and factors that have helped propel me along my path. But in taking a big step back, I believe there are two key influences that have been at the root of much of my success.
The first is my education. As you might expect with my being raised in an Asian culture, education was the priority in our family and my parents were determined to provide me with the very best education possible. But I deviated a bit from the norm and their expectations along the way.
Both of my parents were engineers, and they naturally emphasized the importance of math and science. However, the most rigorous and — more importantly — most valuable school training I received was in mastering the English language. I truly believe that developing verbal proficiency — -the ability to speak and write effectively — -provided the critical foundation for my success.
The second experience was coaching college basketball, which I believe provided the best possible training for business. It forces you to develop incredible powers of persuasion under fire: convincing 18-year old recruits that you are the best person to prepare them to play professionally, assuring parents they can trust you with the development and well-being of their child, satisfying faculty and administrators that your players will succeed in the classroom, and persuading fans and the media that your team will win on the court.
In fact, I realized that coaching college basketball is just 10% basketball and 90% people. The same holds true in my experience as CEO. It’s less about the product and more about how you create buy-in and belief amongst team members, partners, and customers.
Of course, my ability to persuade was built on the communication skills I learned during my education. The two of these experiences — combined with innate and learned skills like teamwork, positivity, and grit — formed the foundation of my framework for success in business.
What are your “5 Things I Wish Someone Told Me Before I Became CEO”? Please share a story or example for each. This answer will be a bit longer.
- Change is a constant, so embrace it. Whether because of fear of uncertainty or failure, it’s common for people to resist change in both their personal and professional lives. This is certainly true in my industry as retail auto businesses have been strikingly slow to adapt to technology change. But change is inevitable. In our case, we embraced it and resolved to be the disruptors. No longer trapped by conventional thinking, we were open to new possibilities and passionate about innovation. One of our first moves — informed by our own analysis — was to cut longstanding industry gross margins in half because we knew we could make it up through increased sales. We referred to this as the Southwest Airlines approach, modeled after that airline’s decision to take the bottom out of the market on its airfares, contending that it would not only beat its airline competition on price, but even the cost of gas to drive an automobile. In 1976, they introduced $19 fares from Dallas to Houston, filled up their planes, and have enjoyed over 40 consecutive years of profitability in an industry notorious for bankruptcy and government bailouts.
- Achieving a balance leads to the most favorable outcome. Personal experience has taught me that choosing extremes rarely results in the best outcome. My first equity sponsor was a newly created Bay Area private equity firm (my company was the second investment in their portfolio). With no prior investing or operating experience, their investment thesis was to follow the data. At the time, we were admittedly on the opposite end of the continuum, making business decisions based on gut feel or “texture.” But their approach was inspirational because it was successful. It eventually provoked a level of rigor and discipline around analytics that helped shape the future trajectory of our own business. I learned that real breakthroughs arrive as a result of leveraging data to guide decisions informed by experience — -balancing art and science — -enabling us to experiment and pivot to optimize our course.
- Don’t underestimate the value of emotional intelligence. Many believe that emotional intelligence (EQ) may be more important than IQ. Emotional intelligence begins with self-awareness and self-management, and underpins one’s ability to apply these same skills in evaluating the emotions of others. It enables you to handle pressure more effectively, create connections, and build trust and alignment. In our initial growth phase and in concert with early investors, we built our team and board prioritizing intellectual horsepower. It resulted in an amazingly pedigreed and intelligent team, but one that was equally high-minded, selfish, and painfully deficient in EQ. We learned quickly that arrogance impedes teamwork, sabotages collaboration, and drains energy. The trajectory of our business changed dramatically once we assembled an EQ oriented team that was connected — -by trust and respect — -and held a passion to achieve a common vision.
- Strategy sets the floor, but people set the ceiling. I believe that CEOs must prioritize their human capital strategy recognizing that people drive culture, and culture drives success. After some early challenges with hires, we implemented what we call the “best natural athlete” strategy to identifying executive talent. It takes elements of sports development and applies it to business. For example, an NFL team seeking a tight end could either draft a statistically superior college player or find the best natural athlete with skills uniquely suited for the position and then develop him. Incidentally, some of the best tight ends in the game were college basketball players developed using the latter strategy: Tony Gonzalez, Antonio Gates, and Jimmy Graham. Our company had been through four supply chain executives in three years because the intricacies of our business model and scale made it challenging to source the best skill set. Once we applied this new hiring mindset, we found an industrial engineer from the semiconductor industry with a deep background in Six Sigma lean process management. Today, our processes have been completely transformed, efficiency has increased to an unprecedented level, and our supply chain management is recognized as best-in-class in the industry.
- It’s better to lead from behind. I subscribe to the concept of servant leadership — “bosses push, leaders pull” — taught me by Coach Bill Foster. In 1987, he made me the youngest full-time assistant coach in NCAA Division I basketball. My primary responsibility was recruiting, a yearlong activity that is the lifeblood of any college basketball program. That first year, I traveled with Coach Foster to a premier summer camp and all-star game in Pittsburgh. We arrived in the pouring rain as part of a caravan of rental cars carrying coaches who wanted to see and be seen by these coveted players. One by one, I watched the assistant coaches drop their legendary bosses in front of the gymnasium — -Bob Knight, Dean Smith, and other famous personalities. When it was my turn to drop off Coach Foster, he turned to me and said, “I’ve got a wind breaker and you don’t. Jump out of the car here and I’ll go park and meet you inside.” His powerful message, communicated with such a subtle gesture of humility, self-awareness and yes, servant leadership, has continued to resonate me over the year. As the great Chinese philosopher Lao Tzu said, “If you want to lead them, you must place yourself behind them.”
What advice would you give to your colleagues to help them to thrive and not “burn out”?
Develop and adopt an authentic growth mindset. By that, I mean shifting away from the depleting grind of running a business and instead embrace the experience as a process of continuous improvement. This will help foster a love of the journey that helps work remain both fresh and energizing. As Albert Einstein once said, “When you stop learning, you start dying.”
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I was extremely fortunate to have some remarkable mentors early in my career, none more impactful than my first boss at the University of Miami, Bill Foster, and I can vividly recall an experience which has resonated with me since. It occurred several weeks after the recruiting trip I described earlier and helped me realize just how bold Coach Foster’s decision to promote me actually was.
I had begun to hear remarks about the more qualified and experienced coaches that had sought the same position and the criticism Coach Foster received for selecting me. But Coach Foster never validated any of this rhetoric. In fact, as we were leaving the gym during a recruiting trip, a prominent head coach stopped to say hello to Coach Foster. After a brief and pleasant exchange, he glanced contemptuously at me and sarcastically said to Coach Foster, “By the way Bill, when’s the last time there was a great Asian player out here?” Without hesitation, Coach Foster laughed and replied, “Don’t really know, to be honest, but if there ever is one, we’re gonna get him.” Coach Foster then gave me a wink and we walked away.
Not only did I immediately grasp the confidence he had in me, but I also knew I would run through a brick wall for him. My loyalty and trust had been earned for life.
What are some of the goals you still have and are working to accomplish, both personally and professionally?
As a “student” of growth businesses, I’ve found that the profile of a founder/CEO required for a successful startup is rarely suitable for scaling that same business. Start-up CEOs are by nature creative, high energy, visionary, and accustomed to doing everything on their own. These attributes are immensely valuable when launching an idea but can be challenging when leading a high growth business. Sustained business growth requires much more than personality-driven traits like energy and charisma — -they demand execution and performance, which are characteristics of a corporate culture.
In the early days of my business, I equated my role to an orchestra conductor feeling the music and coordinating the musicians to create a harmonious sound — -it was more about texture than objective measurement. But scaling a company requires rigor and discipline instilled by a CEO that can develop strategy, manage to it and measure it with feedback and accountability. Consequently, I’m motivated by the challenge to continue developing the skills and cultivating the new behaviors that will allow me to capitalize on the market opportunity we’ve created even more.
What do you hope to leave as your lasting legacy?
I would hope to be remembered as a leader who inspired those around me to reach higher and dream bigger, but just as importantly, invested the time to share the truths I’ve discovered and cultivate the relevant, practical skills to pursue those aspirations.
You are a person of great influence. If you could start a movement that would enhance people’s lives in some way, what would it be? You never know what your idea can trigger!
I feel blessed that my parents modeled hard work and determination, then placed me in an environment that greatly enhanced my probability for success. That said, I chose a very unconventional path for a first generation Asian American, and one in sharp contrast to my extended family — nearly all of whom gravitated like my parents to engineering and applied science. I even remember my mother joking about my move from coaching college basketball to the used car business: “If you attend law school, you can make claim to the three most disreputable professions known to society!”
But in reality, through their example, my parents gave me the courage and grit to charter my own course, and my perspective has helped to form my own set of insights about the “bamboo ceiling,” a term used to describe the invisible barricade which prevents Asian-Americans from rising to leadership positions in organizations.
The key to breaking through this barrier is the same overarching truth which embodies all I’ve learned throughout my years as an entrepreneur: “everything you want is on the other side of fear.” Our mind is our most positive force enabling us to discover the opportunities which fear conceals — -it’s all about winning the battle of the mind first — -the underlying ingredient to success is mindset.
I feel called to share this message, serving as a catalyst to not only create awareness but also play an active role in mentoring and coaching. To borrow a Chinese proverb, I would like to believe that I can plant the tree that will provide some shade for future generations.
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