291 - Building a Better Business: The Importance of Listening and Employee Well-Being with TXB's Kevin Smartt

Welcome to Listening with Leaders. I'm Doug Noll, lawyer turned peacemaker. I teach executive leaders how to listen to emotions rather than words so that they can become the leaders everyone wants to follow. And I teach those same leaders how to be authentically present, available, and connected to their families despite being insanely busy. I have learned that we are 98% emotional and only 2% rational. Learning how to listen to emotions is, in my experience, the foundational skill of life. Stick around to the end of the show and I'll reveal how you can be on our next guest in 15 to 20 minutes. So let's get started.

Kevin Smarr, welcome to Listening with Leaders. You are the CEO of TBX Stores, which is community stores, as your website says, in Texas. 48 stores in Texas and Oklahoma, if I read correctly.

And you have a whole bunch of other businesses, interests in Texas.

You are the Austin area. Thank you so much for joining me today.

Absolutely. It's a pleasure of mine to be here. And it is TXB Stores.

Oh, TXB. And that's what my notes say. TXB Stores.

Yeah, there you go.

Texas born.

Texas born.

There you go. So tell us a little bit about your backstory. How— I know you've got a lot of different businesses and the TXP business is just part of it. Tell us a little, give us a flavor of where you come from and how you got to where you are today.

So, own a chain, a host of other companies that are vertically integrated, if you would. So I have a fuel wholesale business that sells gasoline products to our stores, but we also sell to about 150 other convenience stores in the state of Texas. We have a trucking company that kind of vertically integrated, supports our store, supports our independent dealer stores that we sell to. And we also have a propane fuels business and we sell to a large group of retail consumers, residential consumers in North Texas, Southern Oklahoma. We have a food manufacturing business, um, and we have a real estate company. And so all of it supports branches of the business. And you've been very fortunate. Started out in the business in '90, went to work for the company on the retail side, did various jobs. I'd worked for Frito-Lay before that in their corporate office, understood retail and marketing, just worked my way through the company. And in 2001, myself and another gentleman bought the business. And, and at the time it was teeny tiny, about 20 stores. Hardly any dealer business, very little trucking business. And so we grew and developed the company over the next 20 years. We actually today, I think we're at 55 stores. We've been opening stores quite a bit over the last 2 years, year and a half. It's been good growth and it's just been a good business. And we rebranded to TXB in 2020. We started the process in the year 2020, and before that we were known as Quick Check. And so we wanted a brand that really connected and resonated with our consumers. And we thought that the TXB really did that for where we operate.

What is it that separates your stores from the big brands like 7-Eleven, people like that?

Yeah, all good competitors, but I think what we do well at the site level is I think we do fresh food better than just about anybody. So all the food we do is fresh in our store. We have very large kitchens, trained personnel. We have innovation chefs on our corporate staff that are constantly helping us think about different products to, to that we can make in the store. But our food just sets us apart. Our technology for the size of chain we are also sets us apart. So we've invested heavily in technology over the last probably 8 years. And, and I think it shows when you come to our new sites. And then the last is Even though we have great competitors, very few match our heart. And we laughed earlier talking about community and what we stand for, but it really is, it's part of our speak every day. It's our culture. Our motto is to leave them better. And that means our communities, our customers, and our internal employees.

And in the model that you have, are these all company stores or do you have a franchise model that you're using too?

All company stores.

Wow.

Yeah. So we own and operate all of our assets and we like that model. We control the brand, we control the food safety and everything about it. Yeah. It's all corporate.

And, and are, are you all up through, I know you've got 55 stores. I know you're in Southern Oklahoma, I think, and also Texas. Are you, have you saturated Texas? Are you expanding out or you still have a lot more?

Oh, we got a lot to go. Texas is a big state. So, you know, yeah, we're 1,250 miles north to south and we're 950 miles east to west. So I have an incredible team of operators that help us navigate such a big geography of land for just a few stores.

Yeah.

Wow. It also sounds like you made some really interesting business decisions around fuel, propane, food manufacturing and food service, all these things that feed in and help make the stores themselves profitable. Yeah. That integrated operation sounds really interesting.

Yeah, it is. The company started off— the origin of the company was a fuel wholesale business back in the 19— it started in 1972. And so the original company sold, you know, fuel on little bobtail trucks to farmers and agriculture accounts in North Texas. And so that's, that was the origin of it. And as it grew a little bit, it sold some fuel to back then a gas station and then another. And then over time they got into the convenience store business kind of out of necessity because they really were having a hard time collecting from their customers. And so they ended up getting into the business. So they started there and then the company just, it took shape. They got into retail and shortly after they got into retail, that's when I came to work for them. And then I helped them develop systems and personnel and things like that. And that's where we started to grow, but. The food, the actually food manufacturing business was an interesting foray for me because I bought a salsa company probably about 10 years ago. And, and that kind of put me into the food manufacturing business. And, and at, well, at the time we were selling our products in grocery stores all over the US. So it was a really interesting learning to be on that side of the fence, so to speak, not on the retailer side of the fence, on the manufacturer side and selling to grocers all over, all in distributors all over the country. And so, but we really took that and took those learnings and spun those into really today what is our base for our private label, right? Label offerings. So we today have a salsa, but it's a TXD salsa now. Yeah. Yeah.

And so the, and the, so the food manufacturing provides the private label stuff that you sell in the stores.

Some of it.

Some of it.

But it, some of it, but it gave us the learnings to how to go out and find other people who could, we could source products and co-pack through and still do our own and not have to do it all ourself.

So this is a pretty complex business you're operating. I'm curious, and you've been doing it for quite a while. What is it that gets you up in the morning and gets you excited to go to work?

I've always loved a challenge.

First of all, you've got some here, don't you?

I do. And I think as you grow in business, you learn, I think, what I call soft talents and hard talents of people. I think I would say one of my soft talents has been I've been a good— I've been— had the ability to separate and move from a moment to a moment, not carry things with me so much, if that makes sense.

Yeah.

And I think having a complex business, a lot of people, a lot of things happening, it enables me to be able to do that, right? Like I can focus, I can do what I need to do, and I can go to the next thing. And I really do think I still have the energy every day I wake up. I'm still feeling excited about business, about the world. I love my people. We've got such a great team of people that's been with me a long time. I love seeing them every day and having conversations with them. So yeah.

How many employees do you have in your combined operation?

Oh, wow. Uh, probably 900.

So it's a pretty good size operation.

Yeah. Yeah. Yeah.

Yeah. And how do you manage?

You've got these stores spread out all over this vast geographic area, which is Texas and Oklahoma.

How do you manage all of that?

Uh, with great people.

I expected that answer.

Great people. Great people. And Some modern technology obviously helps, but it really is the base of it's great people. You can have great technology, but if the people, if you don't have the people aspect, you're gonna struggle. And, and I've been fortunate in that, in that area. And I've learned over years from people that either I'm, I grew up under and watched and learned some great things. And some, I think, I hope people could say the same about me. A lot of great learnings in life come from good things in people. And then just sometimes misses where you go, huh, I wonder why they didn't do this or they did this, right? So for me, one of the things I saw early in my career, especially in this company, was the struggle to try to go out and really recruit good people and pay those good people. And that was always a struggle. And so at one point in time, I remember I was trying to buy a piece of property building this store on And ended up getting the deal done. And simultaneously, I was trying to look at hiring a person to come in and help me run the business. And, and I looked at what I was struggling over in terms of what I was paying them. And then I looked at what I just paid for this piece of property. And I went, this is nuts, right? These people are way more valuable to me than these pieces of property, and they can do way more for my business. And so I started looking at it as an investment for the company. And that's, I think that was the real turning point for us and who we brought into the business.

So when you started realizing that if you pay well, pay good people, they'll be loyal, work hard, they'll grow.

Yeah.

That will grow your business.

Yeah. And I think that's a struggle for a lot of small companies when you're trying to find that, that tipping point as you grow and what you can afford, right? Versus what you've been used to doing.

Yeah. Yeah. It all comes down to cash flow. Absolutely.

Yeah.

And you gotta manage that and make it—

which comes first, the chicken or the cash flow? Cash flow comes first.

Cash flow comes first. Exactly. So what is it you think? First of all, I wanted to say that what you just described for me is something that as I talk to a lot of my guests on this show, I've learned from listening that the most important thing, the most important asset you have in your business are your people. And the most important thing that you can do if you're gonna scale is make sure you hire people that know how to scale. But you don't only, you don't only just hire a vice president who can do X, you hire a vice president who can hire somebody who can eventually become a vice president. And they've got to have the ability to spot the talent themselves. It can't just be you. And I suspect that's pretty much how you're operating things. And I don't think you probably would have gotten to where you are if you hadn't had good people like that. Yeah. What do you think it is, Kevin, that's unique about you that you bring to the table that has really made all of this work?

Yeah, that's a great question. I think consistent day to day. So what is what you get day to day. And I don't have big highs and I have big lows. And I love my people and, and I, and my people that work for me know that jumping up and down, high-fiving when a mistake's been made, but at the same time, it's not the end of the world. So I, I've always looked at some of the mistakes as our best learning to get better as a company. And I've always told our people when we have meetings and things, if you could think of a diagram, if I'm here and they're here, I may go here to get to the end result and they may go here to get to the end result. As long as we're getting to the same end result, I'm happy. We don't have to be followers. And if we have to make mistakes along the way, as long as what I call they're honest, good mistakes, that's how we're gonna get better and learn. And I think my team now, they operate out of a sense of love and having fun. They feel the camaraderie of the others in the company. And the word, I think culture does get overused today in our society, but I do think that it's a real thing for us.. And, and so we rally together. We chip in when we have to chip in. We have to be there for each other. And even though we have 900 people, it's still a small company, right? Our executive pool's probably, you know, I don't know, 12, 15 people.

The, one of the, one of the things that, uh, has been most fascinating to me is it was called the Athena Project that came out of Google, what, I don't know, 4 or 5 years ago. And the psychologists were asked to study. What is it that, that, what is it in the top 1/10 of 1% of the highest performing teams at Google? What separates them from everybody else? And you're hinting at what they found, that when leaders can create what they call psychological safety, in other words, people, they don't feel criticized, they don't feel judged, they can make mistakes with, within reason, but they, when the leaders create a sense of belonging That's what separates the highest performing teams from everybody else. And it, you, you've alluded to that and that sounds like maybe what you've been able to create with your company is that people feel safe. They're happy. Yeah. Safe. And they are, and it goes downhill. Yeah. So even the clerk in the stores are gonna feel the same thing that people at corporate might feel.

Yeah. And I would extend that a little further and I don't wanna, I I don't want to make it sound like, um, we're super noble or high and mighty, right? But I would say I feel like I take a long game approach to running the business, and I take it very seriously about having a dedicated team of people. And so decisions I make, obviously there are bottom line decisions, but the decisions I make, I try not to make always based on a dip or are a bump in the bottom line, if that makes sense. When the pandemic happened, the month after it hit in March, our sales were down 50% through all companies, right? All companies. And I remember having a meeting with our executive team and we were talking about what we were gonna do. And I made the decision and they agreed. We ended up making it together that we weren't gonna lay anybody off. We weren't gonna lay any drivers off. We weren't gonna lay any maintenance team off. We weren't gonna lay anybody off. That it was more important to try to keep that sense of culture, that sense of we care about you beyond just the nickel and a dime. And so we lived through some pretty tough months for about 6 months and then came out of it. And then the next year, it was tough, but the next year was probably our best year we ever had.

Wow.

I mean, you talk about people fired up and wanting to come to work because they're hearing stories all around of people getting laid off or this and that happening, right? And it was just like people were supercharged and that wasn't the intent. Right. The intent was just to be, hey, let's just be the best company we can be. Right.

Right.

And not worry about the short term here.

I think that is really critical. And I think a lot of companies miss that.

Yeah.

And I won't say abuse their employees, but they don't take care of them in the way that you're talking about. And I think that, again, cash flow is king, but within reason. Yeah, that's really the the secret to success, I think.

Yeah.

This show is called Listening with Leaders. I don't know if you know anything about my background as a lawyer turned peacemaker, but I discovered that listening is the foundational skill of life. And we're not taught how to listen. In fact, as children, we're ordered to listen, right? Listen to me. Children should be seen, not heard.

Yeah.

And then in school, we're ordered to listen. And then in the workplace, we're ordered to listen. We really never, nobody ever teaches us how to listen. But for somebody who has been successful as you are, you have to know how to listen. And I'm just curious what that developmental process was for you to learn how to be an effective listener.

That's a great question. And I think sometimes maybe environment growing up helps.

That helps a lot.

Helps create that. And, you know, mine was probably interestingly or oddly enough, it was not a good situation as a kid, right? Like, I was abusive parents and some things there, and moved all the time. So I went to 13 different schools by the time I was in the 9th grade. Wow. But I think I've thought about this before, because a lot of being in business or having a lot of employees, you gotta walk into a room, you got to meet people, you got— you need a listen, and you got to listen with your eyes as well, right? You got to read the room, you got to listen to people, you got to learn quick. And so I had to do that a lot as a kid, right? Every time I moved, I had to figure out what the situation was at the school. It was in charge of the school, who was going to hurt me, who was going to help me. All those kind of things went into effect really quick. And so you had to be a quick learner. And I think, I really think those times really helped mold me as an adult, and a lot of my employees will give me a hard time because I'll go around another department or some other people and I'll come back around a little bit. I go, "Hey, did you know so-and-so-and-so, this was going on?" They're like, "No, I had no idea. How did you know that?" And I said, "I asked. I could kind of sense their shoulders were slumping or they weren't making eye contact with me. So I just asked, 'Are you okay? What's going on?'" And I think a lot of times you can listen with your ears,. But you really have to be all intuitive watching people's body motion, how they move, how they react, right?

Absolutely. Uh, yeah. There's a very famous study from the 1960s that says that 93% of all human communication is nonverbal.

Yeah.

So yeah, I, I bet through that childhood experience, which sounds pretty painful, you got really good at what, what in the decision-making field we call, um, pattern recognition. So by the third or fourth school, you began to see the same things over and over again. Who are the bullies? Who are the teachers you can work with? Who are the teachers who are the jerks? And start sorting out, sorting everything out pretty quickly and getting a feel for how, what the kids were, the politics of the teachers and saying, okay, I got this. I can manage this.

Yeah. Yeah. No, you're right.

That's a hard way to learn the skill, but it's, I think it's a skill that's probably served you, served you really well. So how do you groom and develop the people underneath you and bring them along as leaders?

Obviously a lot of verbal coaching, but I, the way I structure my weeks, I'm really big on doing one-on-one meetings with my key people. And it's, it is time consuming, but it's, I think it's one of the most important things that I do. So a lot of times we do store tours together. So we'll make stores as an exec team. I'll sit in on department meetings. So we're around each other, a lot of cross processes within the company. But then I want to have that one-on-one time with them. And it's very structured. So they come to me with— I told them roughly what I'd like to see on the agenda, but it's their time to come to me with this agenda filled out and to ask me questions. And then I get to ask them questions. And then a lot of what I ask them is about their team and their team development and how things are going and where people are. I wanna make sure they're connected. And I think smart people, good people, a lot of times emulate their leaders, right? So I'm hoping when they see me listening to them bring me their agenda and listen through it and respond, I, I'm hoping there's a lot of emulation happening there between the two of us. Right. Or absorption from them emulated me back out in the workplace.

So that's exactly right. I don't think leaders recognize how important modeling the kind of behavior and attitude you want your people to have is.

Yeah.

And people in every organization will look to the leader and said, this is how the leader's behaving. This is how I must have to behave this way too. And I think you probably learned that as a kid. Yeah. Right. Going through school. So I'm just thinking of a hypothetical. You've got 55 stores and I'm sure you've got metrics on these stores down to the 10th digit, like for example, sales per square foot per hour, stuff like that. So when you're seeing—

when you're—

and, and not all stores are equal and not all stores perform the same. What's the kind of process you go through in helping a manager who's got a store that's underperforming a little bit, who needs some help? How do you help them, help that person become a better leader and manager?

Gosh, that's a big question because it could vary so much from the type of issue it could— performance issue it could be. If it's literally a matter of understanding how to schedule more effectively, and effectively doesn't mean less labor, right? It could mean moving labor into key times because sometimes you're missing the key time of having extra labor there when you need to have it there to take care of the guests, right? It could be making sure maybe their math skills could be a little soft. So really helping them understand like Business 101 for a, a unit that. Sales, gross profit, cost of goods, shrink, all the things that can really affect that store besides the labor component, right? And so we have created a system where we do like P&L walkthroughs with that manager in a store where we break it down and we go through it. So we really try to teach them. And again, the thought is, hey, we hope they stay with us forever, right? But we also go, we also want to leave them better off, right? So if they ever want to go open their own business We want them to understand how to run a business, right?

And so we try— yeah, that's right. They're running their own business.

They're running their own business. It's mine, but it's theirs. So we try to teach them that. And you learn a lot of things when you take that time to go through it, when you're listening to them, right? Because all of a sudden they'll start saying things like, the construction crew we had that was coming here for 2 years, they've left and they've gone to this other store now. Why did they go over there? Because we weren't taking this specific credit card. The system didn't work for that credit card. Oh my gosh, let's get that fixed like now, right? You learn those things that somehow you just miss through the natural process of business. Wow.

Interesting. So where do you see the company go first?

Yeah. Where do you see the company going in the next 10 to 15 years?

We're still growing, right? So we've been on a pretty hard growth spurt. We're trying to build 5 to 6 stores a year. We're trying to do it all in Texas. They're big modern stores and we're really relying on food and technology and people to make the difference in these stores. And so when you go into them, they're just large convenience store, very modern, very nice, great food. And then our technology, we, we always talk about we want the customer experience to be frictionless, and that doesn't mean they don't have to touch anything. It means they get to choose how they want to shop is what it means to us, right? So if they want to check out on their phone, they can do it on the phone. If they want to go to a clerk and check out the traditional way, they can do that. If they want to go to self-checkout kiosk, they can do that, right? So we've leaned into all those technology options. And so we think combined that all of those things will make us successful, especially if we stay connected to the communities that we're in.

And how about you? Where do you see yourself in the next 10 years?

I sit right here.

You love what you do.

Doing another podcast, talking about what I do. No, I don't know. I love it. People always ask me what my endgame is, and I say, I don't know. I don't know that I have an endgame. I still have a lot of energy. I have a lot of fun. I had a lot of opportunities to sell the business. I've declined them all. And I use this kind of analogy, but, but it really is true for me, right? I've got a lot of people I've literally watched their kids be born, grow up, and now they're in college. And, and so I go, I feel so lucky and blessed that I've made a lot of money and I've got to connect with these people and be a part of their lives and help their families. And I don't know what I'm gonna do. My middle daughter's in the company now. She's our TXB brand manager. And it's fun watching her grow. And I'm just, I'm thinking, hey, we're just gonna, we're gonna keep riding this train, growing the business.

There you go. I just turned 74 and I don't ever see quitting doing what I'm doing. Yeah, no. Yeah. As long as I'm healthy, I'm gonna keep moving.

Yeah, there you go.

Good for you.

One more question. I'll let you go. Uh, sure. What's one thing about yourself that we would never know about? Unless you revealed it to us.

Yeah, you'll have to tune in for the next podcast to learn that one. Gosh, I don't know. That'd be a great— that's a great one.

One thing, it could be a hobby or just something interesting that's happened to you in life. You wouldn't know it, but I'm a jazz violinist.

Oh, wow. Well, I can't say anything that interesting. I don't know. I used to think my childhood dream was to be an actor, and that never came to fruition. I never really put much effort behind it. I got derailed in life, but I did like it. I did, I did think that would be something. And so when I meet my friends, they always see me as a really serious business person, right? And then when I meet him and we've done some icebreaker things, and so that come up, everybody goes, I just can't believe that. I can't believe you wanted to be an actor.

Good for you.

Yeah, this has been a great conversation, Kevin. Thank you so much.

Yeah, you're welcome. I've enjoyed it.

Absolutely. Okay.

Doug Noll here. Thank you so much for listening to Listening with Leaders. If you are a successful executive leader who would like to be on this program, please visit podcast.dougnull.com/podcast. If you got something out of this interview, would you please share this episode on social media? Just do a quick screenshot with your phone and text it to a friend or post it on the socials. If you know someone that would be a great guest, tag them on the social media to let them know about the show and include the hashtag #ListeningWithLeaders. I love seeing your posts and guest suggestions. We are regularly putting out new episodes and content to make sure you don't miss any episodes, go ahead and subscribe. Your thumbs up ratings and reviews go a long way to help promote the show and mean a lot to me and my team. Want to know more? Go to my website, DougNoll.com, or follow me on LinkedIn, Facebook, and Instagram. That's @DouglasEnoll. Thanks for listening, and we'll see you on the next show.