Rooster McConaughey and Butch Gilliam, stars of CNBC reality series, talk about what they’ve learned working in the oilfields.
The first season of West Texas Investors Club aired last year and the entrepreneurs featured on the show were perhaps not fully prepared for what awaited them in the Lone Star State. Similar to the format of Shark Tank, the show stars successful oilmen Mike “Rooster” McConaughey and Wayne “Butch” Gilliam as they listen to business pitches and decide if the ventures are worth an investment — just in their own unique West Texas style that is far from the corporate boardroom environment.
The shooting of the second season recently wrapped up and new episodes began airing on CNBC on June 7. This go-around, the show’s featured entrepreneurs were more prepared — at least for the audience they’d be selling their idea to, if not their actual business plan.
“The shock factor is gone,” Rooster says. “They know more about us than we know about them.”
“We’ve had fun,” Butch says. “The people who come to see us seem to be really passionate. It’s cool to see that because it’s hard to hang on to that passion and enthusiasm in business.”
The two men have been partners in their investment company since 2007, but each has decades of individual business success, largely in the oilfields. Here they share some of the knowledge they’ve picked up over the years.
GOMC: What’s a lesson you learned early in your business careers that still sticks with you?
Rooster: Stay out of debt. Any way you can, just stay out of debt. The people who you think are there for you, such as loan institutions, a lot of times they’re not there anymore when things go south. They’ll pull the plug awful fast nowadays on people who probably would have made it had the bank stuck with them a little longer. Don’t get yourself in a situation where someone can shut you down.
Butch: Not having debt is one of the greatest business advantages you can have, especially during a slump like the one we’re in right now. Everyone wants to get big and rich overnight, and the problem with that is the problems grow exponentially with your growth. A lot of people aren’t able to handle it. The thing I’m proudest of that I’ve done, and I think Rooster has done the same thing, is growing as you can take the growth and not letting it get away from you.
GOMC: What are the benefits of taking that slow-growth approach?
Rooster: If you have slow growth, you can handle the downturns. A lot of times your competition goes away — the ones that are in it for the quick dollar anyway — and you’re still there. Maybe it wipes you out pretty good, but you’ll still be stable if you have slow growth. You’ll have a good foundation.
Butch: That’s what is happening in West Texas right now. Companies are dropping right and left because they’ve overextended themselves. They saw nothing but blue sky, went out and borrowed a bunch of money, and expanded beyond their capabilities. I like to be kind of conservative. I save up my money, and I go out and buy the equipment I need. I don’t owe a bank or anybody. I grow as my business allows me to grow. I have never allowed my business to grow because of the amount of money I was able to borrow.
GOMC: What are some of the mistakes you’ve learned from over the years?
Butch: That’s why we’re such good advisers to these young entrepreneurs on the show. We’ve run out of mistakes to make. We’ve done them all — some of them two or three times. For me, one of the biggest mistakes I’ve made is being a little too trusting of people. That’s just the way it is. It’s kind of like playing the stock market and buying 20 different stocks. You know some of them are probably going to go south over time, but you just hope that based on your research, more of them will end up doing well and in the long run you’ll be OK.
Rooster: That’s why we say we like people to have some kind of skin in the game, some kind of risk, where they’re going to lose too. It seems like they pay more attention then. There are people all over the country who will come to you and say, “Hey, I’ve got this great deal and we’re going to use your money, but I’ll ride hard on it.” Then they lose all your money and say, “Oh, don’t worry about it. I’ll find you another deal.”
Butch: Whatever business you’re in, it’s all very risky, but the thing I’ve learned over the years is the most difficult thing is after you’ve made some money. Then you get the real dangerous people coming out of the woodwork. They’ll come at you under the guise of being a financial adviser or someone on a wealth management team when they don’t have any experience going out and working and contributing an actual product to society. Yet they’re going to tell you how to handle your money. That’s where I’ve been burned worse than any other place in business. Not by people with deliberate intentions, but by people who come at you with a suit and tie or nice dress on. Those are the people you have to be aware of.
GOMC: A main theme with your show is that business success is largely about the person and not just a great idea or product. Why do you emphasize that and think it’s so important?
Rooster: It doesn’t make any difference how good a deal is. If you get in with the wrong person, chances are it’s going to go south. So you have to measure up the person. Now that doesn’t mean that just because they’re a good person we’re going to throw money at them if it’s an idea we don’t believe in. We’re not a charity. But if the deal has some merit, we’re going to invest if it’s the right person.
Butch: We learned the hard way. We’ve been involved with some businesses that were great but wrecked by a bad manager. And vice versa. We’ve been engaged with businesses that were really floundering, but you put the right person at the helm and they got back on track. We’re looking for someone who wants to work hard like we did and stay the course, and turn a business around. It’s not going to be an overnight deal.
GOMC: What often gets overlooked by the entrepreneurs who come to you?
Butch: One thing that I’ve seen that’s kind of inherent throughout the entrepreneurs is the passion for whatever it is they’re trying to do is real and it’s heartfelt. But the one thing that I think Rooster and I can agree is pretty prevalent is that they’re so passionate about it, they nearly become blind to some of the red flags. They’re emotionally caught up in wanting to be successful so badly, they can’t see the warning signs that may be all over their business idea.
GOMC: At the end of the day, what is the overall business philosophy you try to get across to these entrepreneurs?
Butch: Many of them have a different philosophy than we do on how they’re going to get to that destination of success they’re seeking. They want to skip the journey and just get to the destination. That’s not what we’re all about, so if that’s their mentality, Rooster and I can’t help them. All we know how to do is show people how to commit to something, stay the course, and wait for the reward over the long haul.
Rooster: One of the most satisfying things in life is being able to reflect on it. If you don’t have a story, what good is it?
Butch: The story is the journey. It’s not the destination. People get that mixed up. They think at the end I’m going to be rich and this is where I want to be. But at the end of the day, what do you really have that’s valuable? It’s the memories of that journey. On this show we’re trying to help people become successful. And that really, in our minds, isn’t as much about how much money you’re making as it is how satisfied and content you are with your life. You’re not just spending money, you’re spending your days. People think dollars in the bank account are more valuable than days. Well, when you know you’re fixing to run out of them, you’ll change your philosophy on that quickly.