Ask the Legends: Clive Beddoe

The WestJet founder looks back on his trailblazing entrepreneurial career

Written by ProfitGuide

Clive Beddoe, Chairman, WestJet Airlines Ltd.

Location: Calgary
Age: 61
Birthplace: Leatherhead, England

Career highlights:

€¢ Launches and grows Calgary-based Hanover Group, a commercial real estate developer, in the 1980s
€¢ Acquires Western Concord Manufacturing Ltd. in 1994; frequent business trips among Vancouver, Calgary and Edmonton prompt him to purchase a twin-engine Cessna 421, which he pilots himself
€¢ Launches WestJet with co-founders Donald Bell, Mark Hill and Tim Morgan in 1996
€¢ WestJet goes public in 1999 at $10 a share, raising $25 million
€¢ The WestJet founders win Entrepreneur of the Year in 2000
€¢ In September 2007, Beddoe moves from CEO to Chairman of WestJet, which has 66 aircraft and 6,000 employees

How did you come up with an employee-ownership plan that empowered your staff, was manageable and wouldn’t break the bank?
Alana Elliott, President
Nonuttin’ Foods Inc., Duncan, B.C.

It’s employee participation, through three avenues: profit-sharing, a very generous stock-purchase plan and, for pilots, stock options as well. It’s actually pretty simple. To have a stock-purchase plan, you have to be a public company or plan to be a public company. You could do it in a private company based on a multiple of earnings, but I wanted our employees to put hard cash into the company — not because we needed the cash, but because I wanted them to feel a sense of ownership. I found the most generous program around, which offered 5% or 6% of an employee’s salary that the company would match. Then I quadrupled it. Bear in mind, the average employee at that time was making $28,000 a year, so even if you take 20% of $28,000 a year, it’s a relatively small amount of money. It also doesn’t break the bank because the employees get remunerated significantly out of the increased profitability of the company.

What opportunities did you see in the airline industry that led you to believe that WestJet was a good business idea in 1996?
Wayne Edgar, Managing Partner
Trade Exchange Canada

No. 1, there was no low-cost carrier in Canada. No. 2, the two incumbent airlines, Air Canada and Canadian Airlines, had evolved out of the regulated airline industry, so they had extremely high cost structures and were very inefficient. A model down in the U.S., called Southwest Airlines, demonstrated how you could achieve what we have achieved using a very different format. So, here was this very inefficiently operated multi-billion dollar industry and an efficient model to replicate in Canada. No one else was doing it. It was a huge opportunity.

As my company expands, I’ve had trouble raising private capital. How did you overcome this difficulty?
Fred Spinola, VP, Operations
The Zachry Group, Richmond, B.C.

It was one of the simplest things I ever did. I just told the story of Southwest Airlines — it was just staggering what they had achieved in an industry that never makes money. So, we said, “We’re going to do the same thing in Canada.” I had no experience in the airline business, but borrowed some expertise. My partners and I were successful in persuading [JetBlue founder] David Neeleman to come and join our board and be a guiding light for us. Financing depends largely on the type of business you’re in. But in any industry, I think the most important thing is to be passionate in what you’re doing. If you’re passionate, others will be passionate, and your passion will become infectious. But if you’re not, you’re never going to raise a dime. Sell the dream.

How do you typically spend your time when you fly?
Jennifer Cole
JCP Enterprises, Vancouver

On a WestJet flight, I usually wait until the last hour or half-hour of the trip, and then I introduce myself to the passengers. I thank them for flying with us, encourage them to fly with us again, tell them about our future plans and ask them to give a round of applause to our employees. Then I schmooze with the passengers and help our flight attendants pick up garbage.

When do you think the federal government will face the inevitable and allow consumers the increased benefits and choice of an “open skies” policy?
Harv Mock, VP, Sales & Marketing
Planned Legacy, Winnipeg

Open skies would mean a U.S. carrier could operate within Canada, picking up people inside Canada and flying them to other Canadian destinations; that would have to be reciprocated by the U.S. In concept it sounds great, but it cannot be reciprocated. First, the government of the U.S. would never allow a foreign carrier to fly in and around the U.S., picking up and dropping off American citizens. Second, there are so many U.S. carriers in bankruptcy or coming close to bankruptcy that they couldn’t afford to have greater competition, and they certainly won’t allow it for security reasons after 9/11. Third, if it did happen, Canadian airlines couldn’t get equal access to gates and runway slots in the U.S., whereas U.S. airlines could get access here in Canada. That’s because carriers there own their gates, and the airports are so congested that there aren’t enough gates available.

How did you know now was the right time for you, personally, to vacate the CEO’s chair?
Angela Wishart
Pickering, Ont.

I’d been planning it for two years. After 11ÀšÃ‚½ years of running WestJet, I know that my creative juices are running dry. I have less energy at 61 than I had when I was 51. The energy and enthusiasm of our younger executives is inevitably greater than mine, although I still think I can bring value as a mentor, a coach and as a guiding light — someone with a finger on the pulse, just to make sure everything’s going fine. But there comes a point when you know in your heart that you cannot do as good a job as you were once doing. This is a growth company. There’s a lot of potential left, and it’s going to take a lot of energy to drive that growth.

I think most business owners believe that it is very difficult to retain employees and deliver outstanding service. How difficult do you think it is?
Teresa Pippus
Mission, B.C.

If you believe it’s difficult, then it will be extremely difficult. Employees see through you if you aren’t passionate about your fundamental beliefs and values. If you believe in a way of doing business, and put energy into making sure that’s how your business functions, then it’s very easy to retain people — but you’ve got to believe it first. I used to say that if you’re not having fun at WestJet, you’re fired. It’s a joke, of course, but if people are having fun and feel comfortable dealing with you, they’ll be open with you. If they don’t like you and they’re not having fun, they’re never going to communicate with you. Communication is essential, because from communication comes trust.

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