Who hasn't had a U-Haul experience? Several times, I rented a U-Haul while in college – and many times since. It's really a brilliant idea and also a great story of American entrepreneurialism on par with McDonald's Corporation (NYSE: MCD)'s Ray Kroc or Wal-Mart Stores, Inc. (NYSE: WMT)'s Sam Walton. And now there is a new book on the U-Haul story, called A Noble Function: How U-Haul Moved America.
The author, Luke Krueger, covers the first 20 years of the company's history. To bring the story to life, he interviewed dozens of the key players who built the company. "They welcomed me into their homes, fed me, and most importantly, shared their memories with me," writes Krueger.
Right Idea, Right Time
Sam Shoen, along with his wife Anna Mary, launched U-Haul in 1945. They were struggling financially, having to live with Anna Mary's parents. But their idea was quite innovative: one-way trailer rentals.
Moreover, the timing was spot-on. With the end of the Great Depression and World War II, America was anxious for economic growth. It would mean that millions would move across the nation, setting up their homes and businesses. For example, there were 69,500 new car sales in 1945. Five years later, there were 40.3 million registered cars on the highways.
Early on, Sam had ambitions of going national. To do this, he focused on standardizing the production of trailers. He also had to educate his customers. Interestingly enough, Sam used cartoons to explain his new approach.
Even as U-Haul grew, the company was mostly short on cash. It meant that Sam had to mortgage his property as well as get creative. For example, one smart strategy was to partner with operators of service stations, who would then become dealers. It wound up being a key source of growth and cash flows.
While this worked well, the system meant even more problems. How do you keep track of the trailers? How much money should be paid to each dealer?
To handle such things, Sam built a reporting system, even making it part of a separate company. He also purchased several International Business Machines Corp. (NYSE: IBM) mainframes to keep track of the volume of business.
Regardless of the challenges, and there were many, U-Haul always seemed to find solutions. No doubt, a big factor was Sam's knack for hiring entry-level people. From there, he allowed for a decentralized organization -- and somehow the organization would get things done.
In fact, in 1957, Sam's wife died (at age 35) and no doubt, he was distraught and withdrew from the business. Despite this, U-Haul continued to grow and innovate.
But it was a couple years later when U-Haul's team made a key move: introducing trucks. According to Krueger, this "stuck a dagger in the heart of the competition."
What Comes Next?
Unfortunately, the book does not provide any recap on what happened to U-Haul since the mid 1960s.
So, I had to do my own detective work. For example, U-Haul is a part of AMERCO (Nasdaq: UHAL), which also operates AMERCO Real Estate Company, Republic Western Insurance Company and Oxford Life Insurance Company. The company has a network of more than 15,950 locations and a fleet of more than 100,000 trucks and 78,500 trailers.
And what happened to Sam? Again, there is no follow-up from Krueger. So I did a Google (Nasdaq: GOOG) search and found a New York Times obituary.
Some additional details: Sam, who married five times, had 13 kids and even sued some of them for control of the company during the 1980s. Then in 1999, Sam committed suicide. He was 83.
So even though Krueger has put together good book, I think he should have had a recap chapter – so as to put things into context. Then again, if you want a good look at an American icon and learn some important business lessons, this book is still worth reading.
Tom Taulli is the author of various books, including The Complete M&A Handbook
