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Keep on Going

By Don Longo, Convenience Store News - 12/11/2006
When W. A. "Bill" Krause slows down enough to write his autobiography, he may title it, "Don't Look Back, We're Not Going That Way." Or, maybe he'll call it, "If You Fail to Hit the Bulls-Eye, It's Not the Target's Fault."

He might even want to use a favorite saying of Tony S. Gentle, his late partner and father-in-law, "Work Works Wonders."

Any of the titles would be appropriate as they each represent an ingredient of the formula that made Krause, co-founder with Gentle of the Kum & Go chain, an American success story and a true legend and pioneer in convenience retailing.

Krause, who this fall was inducted into the Convenience Store News Hall of Fame, certainly didn't look back when at the age of 15 he left his family's failed farm and hired himself out to a Quaker family for $10 a day. The determined young man put himself through high school and college, graduating from the University of Iowa in 1957.

Krause's rags to riches story continued after college when he took a job with Continental Oil Co. (Conoco Phillips). In 1959, his personal and professional lives were changed forever when he fell in love with and ultimately married Nancy (Nan) Gentle.

"I was making $400 a month for Continental Oil when Nan's father, Tony Gentle, said, 'I'll pay you $300 a month to work for me,'" said Krause, at the Hall of Fame awards dinner in Des Moines, Iowa, hosted by Convenience Store News. Of course, that relationship led to the partnership that formed the foundation of today's Kum & Go convenience store chain with 445 stores in 13 states. (The Kum & Go name is a play on the phrase "come and go" using the initials of founders Krause and Gentle.)

A testament to Krause's standing in the industry as a true pioneer was the list of c-store luminaries who turned out to honor him — a roll call that included John Hansen, the 2002 Hall of Fame inductee and current chairman of the board of Sterling Stores LLC; Alvin New, president and CEO of Town & Country Stores and Leon Westbrock, executive vice president and COO of Cenex.

"I have great respect for Bill," said another retailer guest, Roy Strasburger, president, international division, Strasburger, Temple, Texas. "He is not only a pioneer in our industry but he is a wonderful human being and role model for a family-oriented business. Bill lives by the credo that family and customers come first. It is something that he shares with my father and a lofty goal that I try to achieve."

On the Go at Kum & Go

The co-founder of one of the largest family-owned enterprises in America was a few minutes late to his office the day after the Hall of Fame dinner. But that was because he had a business breakfast to attend earlier that morning. Bill Krause, even at the age of 71 and having overcome several health-related problems, still keeps the pace of a much younger man, managing his responsibilities not just with Kum & Go, but for a dozen other ventures, including Liberty Bank, the Des Moines Menace soccer team, Solar Transport (a refined fuel transporter) and Teamwork Acres, a collection of farms in southern Iowa. The Krause family is also majority owners of the Swing of the Quad Cities, a minor league baseball team affiliated with the St. Louis Cardinals.

"I knew that the only chance I had was to do my best to outwork anybody who wanted to work for me," said Krause, as he settled into his modern office with floor-to-ceiling windows overlooking a lake and flat Iowa landscape at Kum & Go's headquarters in West Des Moines, where the company moved in 1988. "I believed that if I set the proper example that ultimately it would become the culture here at Kum & Go."

Today, Bill's son, Kyle, leads Kum & Go operations as CEO and president. Both Bill and Kyle recognize the importance of extending the culture and values of Kum & Go to every one of their 3,600 associates.

"The reason I believe that father-son enterprises work is that the parent has to know when he's starting to hang around. I don't feel that," said Krause. "Kyle and I have a tremendous rapport. We both have an insatiable passion for retailing. I can visit 10 Kum & Go stores today and feel no different than I did when I built them myself.

"I see my role today as assisting in sustaining the Kum & Go culture," Krause said. "The thing you protect in a company is the culture."

Don't Look Back

A major part of that culture is the willingness to try new things, and make quick decisions without studying an opportunity to death. And, whether something works or doesn't, the inclination at Kum & Go is to move on to the next big opportunity without celebrating the successes or dwelling on the failures too long.

"I have a very strong propensity to err on the side of expediency," said Krause. "I will tend to go and do a project, and ask questions later."

Krause related a conversation he had with one of the other retailers at the Hall of Fame dinner. They compared risk management in a large corporation compared to how decisions are made in a privately-held, entrepreneurial business. "I contended that everyday he [the retailer at the large corporation] puts his job on the line. I put my ideas on the line," Krause said.

"I am an entrepreneurial type of guy, but I would not say a reckless entrepreneur. I am calculated, but quick."

For example, 15 years ago, Krause launched a ladies' apparel retail chain that "I thought would be beating down Chico's doors." Called Your Style, it sold ladies' ready to wear, with everything priced at $12.99.

"Our research consisted of reading business magazines, visiting existing stores and talking to the ladies in our office," said Krause, describing the type of ad-hoc information gathering that an entrepreneur uses to make business decisions.

Krause opened eight stores in different Iowa towns, but the concept failed to catch on. "A woman is the smartest shopper there is," noted Krause. "She figured if it was priced at $12.99, we couldn't have paid $10 for it [the garment]."

Not one to blame the target for his own mistakes, Krause didn't waste time closing the venture. Even though some of the stores weren't doing too badly, Krause determined that the concept just wasn't going to work.

"Every Monday morning, several of our investors and I sat at a table to review the business," recalled Krause. "Finally, one Monday morning, I said, 'have this business closed by Friday.' There was total silence. They couldn't believe I would make that kind of decision so quickly, but it was a good lesson for me. I knew we could get out that day with half our money. If we stayed, all we'd be doing is using up the other half of our investment."

Ironically, though Krause's venture into fashion retailing was unsuccessful, his daughter, Kate Krause Prange, has been quite the success with three apparel stores in Chicago. One store, called Shop Girl, sells classy upscale apparel to such customers as Julia Roberts and Oprah Winfrey; a 'tweens boutique called Spoiled … But Not Rotten; and a maternity shop called Show & Tell.

Not the Target's Fault

But, the failed apparel chain wasn't Krause's biggest mistake. That dubious honor goes to a venture that the entrepreneur thought would be best new business idea: TouchPlay gaming machines. "We've got $17 million worth of shrink-wrapped slot machines in storage somewhere," said Krause.

According to Krause, Iowa state lottery chief Dr. Ed Stanek sought him out last year to take the lead and purchase 1,765 TouchPlay devices to get the state's new slot-machine-like gambling program off the ground. Krause formed a company called Royal Financial, which bought and distributed the machines to various outlets, including Kum & Go convenience stores, last year. According to a published report, three Kum & Go stores housed six of the top seven machines in the state based on wagering totals. The top machine in the state, with more than $298,000 wagered over eight months, was a Kum & Go store. The state got 24 percent of all revenues raised.

"Our run rate was $35 million in revenue per year from that venture," said Krause, until the Iowa legislature, bowing to pressure from an unlikely partnership of casinos and anti-gambling advocates, voted to ban the gaming devices earlier this year. Krause is currently suing the state for reneging on its commitment.

Of course, a person doesn't amass the kind of accolades and riches that Krause has without registering many more successes than mistakes along the way.


From the moment he partnered with his future father-in-law, Krause was determined to prove his own worth. "When I asked for Nan's hand in marriage, I also told Mr. Gentle that I don't ever want him to co-sign a note or lend me a dollar — which, looking back, is something for a guy who had less than $100 in his pocket."

Krause and Gentle converted their single gas station in Hampton, Iowa, into one of the industry's first convenience stores, offering fuel and merchandise. In 1963, they purchased Solar Transport and built that firm into a successful trucking business. In the 1970s, they added a snowmobile distribution company to their portfolio, which then included 65 convenience stores employing 327 people. Associates were given the opportunity to become stockholders in the company, with many of them becoming millionaires from their company holdings, according to Krause.

Kum & Go evolved throughout the '80s, adopting many of the innovations seen at other c-stores across the nation, like adding branded foodservice options. Banking became another convenience, as full-service banks were opened adjacent to 11 stores. In 1988, Kum & Go headquarters were moved from Hampton to West Des Moines and by the end of the decade, the company operated 134 stores. To accommodate its growth, the company completed an expansion of its corporate headquarters last June.

Kum & Go expanded rapidly in the late 1990s and early 2000s. In addition to opening new stores, Krause Gentle purchased unwanted stores from other chains, such as 7-Eleven, QuikTrip and Git 'n' Go. Earlier this year, on Krause's January 13 birthday, the company opened a 5,000-square-foot, Fifties-style store called Founder's Store 1959, in his hometown of Eldora, Iowa, just a few seconds' drive from his alma mater, Eldora High School (See exclusive story, CSNews, July 17, 2006).

In late June of this year, the company lost its co-founder Tony Gentle, who died at the age of 92 after a long battle with cancer. Krause has said he "owes everything" to the son of Italian immigrants who provided the retailing and merchandising acumen behind Krause's entrepreneurial vision and leadership skills.

Looking Forward

The future of the company is now clearly in the hands of Krause's son, Kyle, who assumed the titles of president and CEO prior to his grandfather's death.

"A couple of years ago, during our 45th anniversary as a company, I had been struggling in my own mind about how, at some time, this has to become Kyle's company," said Krause. "I hopefully provided 45 years of foundation and now Kyle will amply fill out 45 years of the future."

Passing leadership from one generation to another in a family-controlled business is one of the most difficult acts and phases that a company and family can go through — especially when the older generation is still involved in the business. "Mr. Gentle would say, 'Bill, we only need one boss.' He gave me an enormous amount of responsibility and I always knew I had his backing," said Krause. Now, the elder Krause is looking forward to providing that same kind of support to his son, Kyle, while giving the younger executive the same opportunity to steer the company's future.

"It was difficult for me to step back," Krause acknowledged. "But for the benefit of our associates, I wanted them to know their company is just getting supercharged about the future under Kyle."

If it's hard to imagine this larger-than-life character taking a back seat to anyone, it's probably because of his reputation for being a demanding workaholic with plain-spoken traditional values. For example, when asked about relaxing the home office's longtime business dress code (jackets and ties for men), Krause famously remarked, "Maybe we'll have a casual Saturday."

Krause affirmed that his son's management style differs greatly from his. The younger Krause thrives on discipline and structure and believes in the Six Sigma principles of quality control, said the father. "I didn't have nearly as many rules as Kyle does, but when Kyle took over, we had 300 and something stores to run. He is highly motivational, but he will grow the company according to a plan."

It should be noted that Kyle Krause's ambition is no less than his father's, as he plans to expand Kum & Go to more than 600 stores by the end of 2008 — more than doubling the size of the company in four years.

Looking ahead to the future, the elder Krause foresees more c-store industry consolidation. "I don't know how you can avoid it," he said. "There are incredibly high entry costs to build new stores and you compete with companies like Walgreens and McDonald's that have no respect for land values when they make up their mind on where they want to be." The cost of opening a new store today leaves no room for mistakes, said Krause, and he expects Kum & Go to be one of a handful of major retailers who will be acquiring all or parts of other chains in the years ahead.

"My success, if you ask people who work here, is that I strived to make sure that each and every one of our people improved themselves," said Krause. "I would hope that I gave exponential care and concern to run a company with integrity, discipline and professionalism.

"We have a room here at headquarters called our 'One-liner' room," Krause continued. "The walls are lined with aphorisms, like 'It's nice to be important, but it's more important to be nice.' That's the legacy I hope I am leaving."

Gary Braaten, retail support manager for CHS Inc., whose Cenex brand is the largest member-owned petroleum brand in North America, worked in the Kum & Go organization several years ago and spent time with Krause. "Since that time, I have frequently referred to him as one of the most influential leaders and personalities to positively impact my work life," Braaten told CSNews. "Leadership is at best an ambiguous topic. Whether it is good or bad, you sense it. Mr. Krause's strong leadership is apparent by simply conversing with his team. Quickly you will notice the similar drive, passion and innovation that he has imparted."

Braaten pointed out that business aptitude is a given attribute for a company leader. "However, his legacy is to impact the personal lives and communities where Kum & Go has a presence."

Kum & Go manages 50 Cenex Petroleum Convenience stores in South Dakota, Montana, Minnesota, Iowa and Wyoming.

The Krause family and Kum & Go are huge contributors to charitable causes. Krause and his wife support a number of University of Iowa scholarship and athletic programs. The Krauses and all three of their children and their spouses are members of the Presidents Club of the University of Iowa, which recognizes the UI's most generous contributors. And, the company each year gives back 10 percent of its profits to the communities it serves. Donations go to such causes as Junior Achievement, United Way and Juvenile Diabetes. In addition, Kum & Go associates follow the bosses' example, holding fundraisers for community causes.

Working hard, taking calculated risks and focusing on the future are three attributes that contributed greatly to Bill Krause's success. But, perhaps it's his focus on serving his family, his company's associates and his customers that really sets him apart among today's business executives. "Our No. 1 question to a customer is always: 'Did we earn a referral today?' We feel we've done our job right only if that customer is so satisfied he or she will refer others to do business with us." With today's two-income households and a plethora of after-school activities for the kids, it's rare when the entire family can sit down together in the evening for a family meal.

You might expect it to be even rarer when the father is one of the busiest entrepreneurs in the state. But, in the Krause family, supper time in their Iowa home was a daily ritual that was one part "show and tell" and one part company board meeting.

"I grew up around retailing," said Kate Krause Prange in a video-recorded tribute to her dad, W. A. "Bill" Krause, last year. "I sat to my dad's left at dinner. Dad would come home from work with these incredible stories. He had such a great passion and sense of adventure. I think it just wore off on me," said Prange, who finds time to run three apparel stores in Chicago and be mother to four of Krause's 12 grandchildren.

"I would call them board meetings with delicious food supplied by my wife," smiled Bill Krause. "We would start every meal with a prayer. Then I'd ask each of them [his three children] 'what did you accomplish today?' and I never took 'nothing' for an answer."

After discussing schoolwork, the conversations inevitably turned to sports and business — both of which have been major pursuits of all the family members. Son Kevin, a lawyer, is the former president of Liberty Bank, an affiliate of Kum & Go, and is currently president of the Swing of the Quad Cities, a minor league baseball team affiliated with the St. Louis Cardinals. "Growing up, the thing my dad always taught me was that you do business with people who do business with you," said Kevin Krause.

"I've worked for the family business since I was nine years old. As part of that, I think I was groomed for the role I have today," added Kyle Krause, who is now president and CEO of Kum & Go, and also owns Solar Transport, the largest Iowa-based refined fuel transporter; the Des Moines Menace, a Premier Development League soccer team; and AMICI Espresso, a line of contemporary coffee houses throughout Des Moines that he established in September 2005. "Early on, the conversations around the dinner table were about business. I would literally miss school when I was in the seventh or eighth grade to go (with my Dad) to try to buy a bank or do a business transaction somewhere. I think the first five times I went, we didn't get the bank bought so I am not sure I was the best of luck … It was a great experience. He exposed me to all types of businesses and tried to teach me and groom me to be what I am today from a business standpoint."