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#221: Hertz – 10 Years After The Model “T”

#221: Hertz – 10 Years After The Model “T”

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 Walter Jacobs was an automotive geek. From the assembly line to owning a Ford dealership to Rental Car King. Walter built and Empire. Dave Young: Welcome to the Empire Builders Podcast. Teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Simple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is ... Well, it's us. But we're highlighting ads we've written and produced for our clients, so here's one of those. [Travis Crawford Ad] Dave Young: Welcome back to the Empire Builders Podcast. Dave Young here alongside Stephen Semple, and we're talking about empires. We're talking about big businesses that started out as usually smaller businesses. None of them ever start big, Stephen, when are we going to talk about businesses that just started huge? Stephen Semple: I don't know that they're as interesting, Dave Young: But today we're talking about Hertz Rental Car. Stephen Semple: Yes. Hertz Rental Car. Dave Young: And in my mind, they've always been the big one. They're the big guy. They're the top dog. Stephen Semple: Well, actually in the market today they're number two. Enterprise is the largest one, and they're number two, and then Avis is number three. Dave Young: But the Enterprise combined ... They conglomerated a bunch of them, right? Stephen Semple: Yeah. And there's even a few that are under Hertz as well these days. None of them are just one banner anymore. Dave Young: Yeah. Everything's becoming one brand. Stephen Semple: They're big. They do over nine billion in revenues in 160 countries, and they're part of the S&P 600. So they're a big deal. Dave Young: They've been big for a while. Stephen Semple: They've been big for a long time. Dave Young: I remember when Avis started, this was back in the Mad Men era. The big idea, the big advertising slogan for Avis was, "We're number two, but we try harder." So at that point, Hertz was number one. Stephen Semple: Yeah. We'll find out as we go into the story, Hertz was the first national brand as well. Dave Young: Okay. Stephen Semple: So they really, and in many ways, kind of created the car rental business as we know it today. Dave Young: Awesome. Stephen Semple: They were founded by Walter Jacobs in 1918 in Chicago. And as I was saying, today they do like nine billion in revenue. So it's 1918 in Chicago, and the Model T Ford has been out for 10 years. There's about six million cars on the road, which is about 60 cars per 1000 people in the United States at that time. So they're pretty new, but you'll see a car. They're not foreign, but they're not new. It's kind of at that stage where you'll see them. Dave Young: Sure. Stephen Semple: So now back to Walter Jacobs. Walter's this real car junkie, and he had started out actually working on an assembly line, and now he owns a Ford car dealership. He really sees cars as the future. And when he opens the dealership, he has some sales success, but he runs into a problem. Lots of people are coming in to test drive a car, but they really still see them as a novelty. So if you think about it, there's no driver's license. Vehicles are standard, they're not automatic. And he would take people out for this test drive and it's kind of exciting, and it's a thrill, but what he's finding is that people are coming to do these test drives for the thrill. They're not really buying, to the stage where people come back and offer him money to take the test drive. Dave Young: Do another test drive. Stephen Semple: It was almost like an amusement ride for them. So lots of people want to drive, they don't want to buy it. And Walter looks at it and goes, well, people like the idea of a car.
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