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Get Four
|  | DECEMBER 22, 2003
Herb Kelleher on the Record, Part 1 In the first of a three-part series, he relates Southwest's legal battle against established airlines' "business harassment" What sort of smarts, determination, and ingenuity are required of a world-class entrepreneur -- one who starts an airline against all odds and goes on to build the only consistently profitable carrier in the U.S.? That's what BusinessWeek Managing Editor Mark Morrison hoped to discover recently when he interviewed Southwest Airlines (LUV ) founder and Chairman Herb Kelleher in front of an audience of business leaders and MBA students at the University of Texas' McCombs School of Business. In a rollicking session, Kelleher displayed the passion, irreverance, and can-do attitude that has characterized the rise of Southwest from long shot to long-term success in a business that's notorious for its financial turmoil. The airline has grown from serving three cities with three Boeing 737s in 1971 to 35,000 employees and 375 Boeing 737s that cater to 63 million customers at 59 airports in 30 states, as of the end of 2002. In Part 1 of this edited interview, Kelleher retraces his steps from his childhood in Haddon Heights, N.J., to his move with his wife to Texas, where he gained entrepreneur Rollin King as a client, and the two drew up a plan on the proverbial napkin for an airline connecting Dallas, San Antonio, and Houston. In Part 2, he'll describe the arduous process of getting Southwest to take off, then devising unique methods of employee compensation to keep it aloft. In Part 3, Kelleher will lay out the strategy and management philosophy that has helped Southwest continue to prosper. Q: Herb chose James Parker and Colleen Barrett to succeed him as chief executive and president, respectively, in 2001, [and now] stays out of day-to-day affairs. He's now leading Southwest's lobbying in Washington, where airport security and terrorism insurance are on the industry's front burner. And he maintains control of [Southwest's] schedule planning and aircraft acquisitions. A: Boeing likes me a lot. Q: Herb, you have amazing energy and drive. When did you start feeling so motivated? A: I was always motivated.... Even the things I wasn't supposed to do, I undertook with great energy, dedication, and perseverance. In grammar school, high school, and college, I stayed up later than anybody else, talking about philosophy, of course [laughter], reading for my honors exams. You hear what I'm saying? I'm a good role model [laughter]. Q: Were there any keys to your getting a good education and then moving on from there? One of your parents? A: My father died when I was 12. And one of my brothers was killed in World War II, in January of 1942, and my other brother went into the Navy...despite his heart murmur. People were very motivated by duty, honor, and country at that time. My sister went to New York to be an expediter for the RCA Co. So [at home] it was my mother and myself. She was extraordinary...a great father and mother. She treated me as an adult, and her interests were wide ranging. We would stay up till three, four, five in the morning, talking about business, politics, ethics. She was a splendid person, and she gave me a wonderful foundation. Q: What got you interested in law school? A: I figured that I could put off working for three more years [laughter]. No, I took an aptitude test in college, and it said there were three things I'd be fairly decent at: Being a journalist, an editor, or a lawyer. Q: Did you like law? A: I enjoyed it greatly. Going to law school and practicing law was exceedingly valuable training. Find out what the facts are, not gossip. Identify what the issue is, then find a resolution. That's helpful in anything you do in life. Q: How did you meet the Texan you ended up marrying? A: Joan was going to Connecticut College in New London. Our team played the Coast Guard Academy in New London, and she was a blind date. We went to dinner with a friend of mine and his girlfriend, and it turned out that we [men] didn't have any money. So we had to ask our dates to pony up for dinner. We called Joan "JP" after that, for JP Morgan. Q: After you got married, you got to know Texas a little? A: I did. I was working for the New Jersey Supreme Court, which had essentially the same schedule as college -- a couple of weeks off at Christmas and Easter and a month off during the summer. So we would spend all that time in Texas. Joan never said a word to me about moving. [But] I wanted to be an entrepreneur, and I went home one night and said: Let's move to Texas to see if I can start a law firm or a business. She was standing at the sink, and tears started to roll down her cheeks. And so I came to Texas, and it worked out okay [laughter]. I was going to try cases, so I was constantly practicing [talking like a] Texan. [At the] gas station: "Howdy! You mind filling 'er up?" I knew I had made it when I was at a buffet at the University of Texas, and the fellow behind me said: I know where you're from. And I thought: Oh shit! And he said: West Texas, right?
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