- Posted by Action Catalyst
- On February 28, 2023
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- alumni, author, Business, entrepreneur, family, motivation, Southwestern Advantage, success
Magnolia co-founder, TV personality, bestselling author, and Southwestern Advantage alumnus Chip Gaines chats with host Adam Outland about nature vs nurture and chicken vs egg, recalls the best day of his life (which sort of wasn’t so great), shares his Austin Powers moment, reflects on being too broke to declare bankruptcy and how he initially thought the offer for Fixer Upper was a scam, and talks about deploying his secret weapon: Joanna Gaines.
Chip Gaines is the co-owner and co-founder of Magnolia, and a New York Times bestselling author determined to keep everyone on their toes. Along with his wife Joanna, he is constantly reinventing the wheel on what they can achieve together as a company and is always eager to give back to individuals and communities.
Born in Albuquerque and raised in Dallas, Chip later graduated from Baylor University’s Hankamer School of Business with a Marketing degree. An entrepreneur by nature, Chip has started a number of small businesses and has remodeled hundreds of homes in the Waco area.
But more than any good adventure or hard-working demo day, Chip loves an early morning on the farm and a slow day spent with Jo and their five kids.
Learn more at Magnolia.com.
The Action Catalyst is presented by the Southwestern Family of Companies. With each episode, the podcast features some of the nation’s top thought leaders and experts, sharing meaningful tips and advice. Learn more at TheActionCatalyst.com, subscribe below or wherever you listen to podcasts, and be sure to leave a rating and review!
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(Transcribed using A.I. / May include errors):
Adam Outland: Welcome back to the Action Catalyst. This is Adam Outland. We’re continuing the discussion. We began in episode 417 with our guest, Magnolia founder, bestselling author, and entrepreneur, Chip Gaines. You know, you brought up a couple of things that I jotted down. One is, you know, why you do what you do.
And one of the mottos that you guys have carried, I think, since inception was we believe in Home. I love that. I was gonna ask a little bit about that in conjunction with how you, how you figured this out. How did you go from all the different experiences you had into knowing that, you know, we believe in home motto and, and jumping into renovation and construction.
Chip Gaines: Yeah, great question, man. I mean, I, I’ll give you, I’ll try to summarize. I’ve been a little long-winded on these other couple. Simple story is that I started a little lawn care company. I started a half dozen companies and I joke with Jo in, in kind of public forums. There’s just like all my businesses were nonprofits. I mean, until I met Jo, none of the things that I thought were gonna be life-changing. Multi-million dollar opportunities, right? Zero of those things happened. You know, I was workless, I was an entrepreneur, a serial entrepreneur, literally. But I mean, I could not figure out like how to make any of these things actually make money, how to make ’em work.
And then Jo was definitely the secret ingredient that that was added to the. To the pie that made it, uh, made it finally start coming together, if you will. But, but I, I did work really hard. I mean, I, I learned that again as a young man, really in my parents’ house. We just, we worked, I mean, you know, on Saturday you woke up early, you were pulling weeds in a flowerbed.
You were mowing grass. If it wasn’t for free for your rent and board and your own. Which was kind of our, you know, general upbringing philosophy. It was to neighbors houses, and you could keep that money and buy yourself, uh, something that you were, you know, I kind of always, you know, I grew up in one of those that all my needs were taken care of, but the wants were kinda like on, on my side of the ledger.
So if you wanted something that was outside that need, Category, you went and did what you needed to do to make it work. And if it worked, great, if it didn’t work out well, you, you know, you went without the want and, uh, just kind of, you know, settled back down, you know, to wherever you were before that idea popped into your brain.
But as I wrestled through this hard work, and Southwestern again, kind of put a cherry on top of that already, Pretty formulated foundation was just this idea that, man, I can do this. I can do hard things. I can do things that most people can’t. And so I kind of took that into my college career. And then after college, I just worked, I mean, sun up to sundown.
I didn’t, I don’t have a lot of hobbies even to this. Day. I would say if I have a shortcoming and a thing that I sort of like, oh, I wish I kind of have a regret in this sense, it’s that I just literally don’t have hobbies. My hobbies are my family. My hobby is sitting daydreaming about another business that we could start if we were to put these pieces of the puzzle together.
I mean, it’s kinda like I’m Hobby list is, is is a real shortcoming that I have and, and try to communicate and confess cuz at the end of the day, you’re gonna have to give up on something. Something is gonna fall short of. Life’s, you know, best case scenario and, and if that’s your family and you’re willing to concede there, well then great that that’ll be something that falls in a secondary or third dairy category.
For me, it’s always been opposite, you know, my family, whether this business works, whether we end up famous, whether we end up broke or on the opposite side of that, you know, my family’s gonna be one of these things that I’ll be able to. And right off into the sunset, knowing that I put it first and, and cared most about it over all these other alternatives.
But, but when I was wrestling through these like little business ideas and these little concepts and whatnot, I basically was rocking and rolling nearly 24 hours a day on this lawn business. And it was a lawn care landscape. We did irrigation, we did this little package of, of concepts, but I, again, never could really break out of the mold and really make big.
Real money out of it. It was always kind of a 30 to $50,000 kind of annual income that I had right outta college. But I also had this washing fold and I made a little money there. So I had three or four things always going that all put together into one pot. We’re about what all my buddies were making at their bank jobs or working, selling copiers, you know, somewhere.
So I, it just took a lot of effort for me to just equal what everybody who normally goes to college and graduates and then starts a normal career, you know, it’s like, Hey, you’re making blank amount of dollars a year. Well, I had to do three or four different businesses in order to, uh, make that, yeah.
Exactly to make that one number happen. And so when Joe came into the equation, what I had started doing and pretty early on in, in my career for sure, was I would take this money from mostly the, the lawn care business and I would invest in these little residential properties and we would, you know, fix ’em up.
And then we would either rent ’em, Or sell ’em or, or live in ’em. You know, we always had these kind of abs and CS options. Well, Joe came into the equation. Uh, she was the secret ingredient and just the things that she would do in these little spaces really set these, these units apart. So not only did Baylor students wanna rent these units over other units that were available next door and down the street, but then people that wanted to buy houses wanted to buy these units instead of units just down the street.
So again, we weren’t doing this in a real large scale. Since, but I’d probably do about 10 of these a year. And Joe and I both early, early in our marriage and early in our kind of business relationship, if you will, started realizing how important that space called home is. And then Jo and I both e even grew up in real similar environments in the sense that how.
Comfortable and how safe and how stable we felt in each of our lives growing up, despite the fact we had so many differences and there were so un and so many unique things about Joanna and her family. So many unique things about me and my family, but bottom line, the thing that was not unique and was not uncommon between us is just this vein that our house.
Our literal home felt safe and felt like a place where we could express ourselves, felt like a place that we could be o open and honest. Our parents were great, our siblings were great, all of these things. So Jo and I really started really sinking in with this idea that if, and I mean it’s a big giant if, because even as a society we, you can.
Strategically and statistically that when you get this thing right, this thing called home, right, you can build from there and things are possible that are very difficult if that thing called home is not right. And so for Jo and I, we have landed in this beautiful place. Now again, as, as, uh, you know, I’m nearing 50, she’s kind of in her mid forties.
We’ve just landed in this very beautiful place that our mission, you know, our purpose on planet Earth is. About home. And when you think about restoration and renovating homes, which is obviously where most people, uh, were introduced to us through the show Fixer Upper, where we did that practical, you know, very functional thing.
But then now as we’ve evolved into Jo having a magazine and us having a network and, and the business that is Waco and, and Magnolia, and Magnolia silos and Magnolia restaurants and Magnolia coffee shops, all the things, you know, we really kind of always. Back to this place when we’re here. When you’re here, we want it to feel like home to you.
We want it to feel familiar. We want it to feel safe. We want it to feel encouraging. You know, all of these things that if done right, and that’s the million dollar, uh, point is that not everything is, is great as it relates to home. There’s lots of people that think of home as a. Scary, traumatic place, opposite of the way I re recall it or the, the way I hope my kids recall their childhood home in that sense.
But when you say that, that’s important to Jo and I, I do wanna land on this exclamation point that it’s just like, we really believe that if you can get this thing called home right, the way you build out from there really can change, really can change everything.
Adam Outland: I think if anything we look back and say, it started off with, we believe in home being that the household, and you summed it up really well in saying that home has probably expanded a little bit in the sense that you’ve, you know, changed the landscape of Waco to represent some of those same belief systems and values that you have.
I mean, you see your imprint. In your community now, uh, and, and even, you know, larger on a national and global level through your brand and the people that follow that. So, uh, you know, while the, I don’t think that mission’s ever changed, it just is encompassed more and more important and you’ve invited a lot of people into your, your home.
Chip Gaines: Absolutely. We love Waco and we’re thankful that this, uh, platform has given us the opportunity to really shine a really much needed light on this beautiful community cuz it’s not perfect. And, and we, we fully embrace that imperfection and understand it or not naive about it.
But in the same token, we’re just so proud, so proud of Waco and what it means to us and our family and, and so many people really get to come to Waco in most cases for the first time, if it’s through the show and through Jo and i’s through our relationship. You know, people come here and they’re typically like, wow, you know, this is, this is great.
What a beautiful community and, and we’re just thankful that we’ve been able to kind of shed that kind of. Light on, on a community that that has for, you know, for decades kind of, uh, had the exact opposite, uh, persona.
Adam Outland: I love it. Well, I, listen, just a personal question from watching you and, and what you just shared. We coach a lot of our, our kids and our clients on vision being an important factor. I just wanted to ask. In the early stages of, of you and Joanna sitting down thinking through the big picture of what this is gonna become. Do you feel like that your vision was so big it could fit all this in it and more from, from the beginning or did the, the creation stretch your thinking and your vision around this?
Chip Gaines: Yes, and I think this is a great thought, and unfortunately I kind of fall squarely in the opposite side of this, this perspective. But again, it kind of goes back to that chicken of the egg. Nature and nurture. It’s like really, there is no right or wrong answer. You know, it’s a little bit of both. And for some people it’s more nurture than nature, and some people it’s opposite.
I mean, for me, specifically, I, I do believe this for sure. I wanna overcommunicate the idea of positive thinking and positive, um, self. Self-evaluation. You know, it’s just like if you don’t believe it’s possible, I will argue. And I mean, to be very frank, this kind of chokes me up because there’s so many people that don’t value themselves in a worthy way and worthy can be working at the local.
Big box store, you know, shelving, groceries. It’s not about what you do or what you bring home, or the value you bring, quote, unquote net worth. You know, it’s like I’m talking about your value as a human being, and I would say that I had a strong value of who I was. And so in that sense, I wanna. To the idea that yes, I believed all of this was possible and all of this became possible because of that preexisting belief.
But I mean, I’ll, I’ll just be perfectly frank. When Jo and I got through season one of Fixer Upper, I sat her down. And I mean, I wish I coulda, uh, recorded this cuz it would’ve been like one of the funniest, uh, you know, moments in time to where now you know, I’ve arrived as a businessman and I’m gonna express these thoughts to my beautiful wife and explain to her.
Things have been rough the last couple of years, maybe close to a decade of our marriage. But, you know, I can see the future and here’s the deal. And I set Joe down and I mean, dead serious, like in a real formal, I mean, I, I surely I didn’t, but I can almost imagine I wore a tie for the first time in years and I was gonna really.
Impressed Jo, and I was like, well, I’ve done all this research and I’ve done all this math and I’ve got a little business plan together. Jo, you’re gonna be so proud if things go the way I see them going with Fixerupper and the show and the kind of introduction to, of us to the, you know, quote unquote world if you will, first season was pretty normal in somewhat uneventful in, in a lot of ways.
People kind of think it happened instantly. It really didn’t. Season one. And, and I’m telling her, and I was like, if we play our cards right, Joanna, if we do all these things, and I mean, I had listed ’em out on a piece of paper. If we do all of these things, we’ll be the largest home builder in central Texas.
And, uh, I mean, in three to five years we’ll have, you know, you know, nearly, nearly, you know, a cornered the market. You know, if we’ll just do these things right. And little did I know that, you know, hilariously now close to a decade. Forward construction is a very small piece of our business. I mean, everything that Joe has done, retail wise, the magazine, the network, I mean anything other than construction are like these enormous mind boggling, you know, circumstances.
And then here my little construction company is, and I mean True story, my construction company, which really is my construction company. We have a construction company, A passion of Jo. Both. It’s kind of our first love, if you will, is not much bigger, if bigger at all than when we started this thing five or 10 years ago.
But every other category not related to construction is like a hundred x. And so, uh, I, I want to kind of speak out of both sides of my mouth that yes, I, uh, believe and agree wholeheartedly that if you start off with a sour impression of who you are in your heart, like in your soul, who you are as a person, it’s very, very difficult to go off and do.
Big, grandiose, incredible things. It’s just, I mean, I’d almost say it’s virtually impossible. You know, you’ve, you’ve already locked all of those doors that could potentially be open just cuz you really don’t believe that you’re capable of walking through them. That it, you don’t think you’re capable of, of accomplishing any of those.
Thing. So you just discredit yourself before you ever even get into the box, before you ever even get, you know, your first at bat. You’ve already said, I, I don’t qualify. I’m not good enough. And, and Jo and I both really believe sincerely in our hearts that we did qualify and we were good enough. But to say that, I had this big vision and, and there was this business plan that included all of these great entities and we were gonna tie ’em together via this thing called home.
I mean, heck no. This was a miracle in every sense of the word, and Joe and I were just recipients of putting one foot in front of the other very biblical kind of feeling to where it’s just like we just had a flashlight that that revealed just a step or two out. And then we would take those few steps and we’d take a few more steps, and then eventually finally came out of the.
Of the cave, and you did realize you were in this incredible place, but it wasn’t because of strategy or or brilliant business, you know, acumen. It was just, uh, just real faithfulness and, uh, dedication to doing the next possible good thing that we could do with these opportunities that kept presenting themselves to us.
And then, Because of our ability to believe in ourselves and believe that we were capable and qualified to keep doing these things, we kept doing them and we just kind of kept proving ourselves, right, if you will, on the idea that I love this thought. Bet on yourself. It’s like we just kept betting on ourselves and that stack just kept getting bigger and thicker and, and more powerful.
And we just kept pushing it all. Okay, well that was fun. You know, let’s push it back into the pot and see what happens next. And, and, and some great things happened.
Adam Outland: Well, chip, don’t worry, you still can be the largest construction company in Texas. No, it’s amazing. You kept open arms and open eyes to, to opportunity as it presented himself, and yes, you’ve grown up knowing what you know now.
I mean, just. Looking back at 21 Chip Gaines, 21 year old, uh, Baylor graduate, you know, doing his four businesses to, to pull together an income , what, what advice or what feedback if you could give that 20, 21 year old version of yourself, would you just provide knowing what you know now?
Chip Gaines: Sure. I’m so passionate about this thought because for me and Jo really, and especially because of my personality, I building it up in some positives for sure, because there’s so many positives about being a quote unquote salesman or being confident enough to stand up in a lunchroom and, and do things that most kind of would shy away from naturally.
But I would say that that because of my. Self-esteem, and I would argue high self-esteem. And, and again, kind of in the positive sense, not in the arrogant, egotistical, narcissistic, negative side of this thought, but just the positives that could come from confidence and self-esteem. I would’ve been a bad person, had success had come to me so early.
I remember my. 30th birthday party. I refer to it as my, the best day of my life. And Jo’s always pretty offended by that. You know, just like, cuz there’s been some great things, obviously five beautiful children and a marriage to the love of my life. And then obviously all the circumstances that come with the, you know, uh, success and notoriety and all these things.
But I still remember this 30th birthday party, my. Jo, uh, surprised me with this. So I go golfing with a couple buddies and I hate golf, and I was kind of actually a little mad that it was like, why are we doing this? I don’t even like to play golf, and here it is my birthday and I’m doing this crappy thing.
I don’t even want to do this. And then they brought me home from golf and I basically walked in to like this party. And it was in this 800 square foot house. Joe and I could not have been broker. I think we had a kid or two at the time. So we were just little bitty infant babies. But I mean, everybody was there.
And I remember this party just being this incredible night with old friends and new friends and my wife and family, I mean, all mixed together in this. Perfect, perfect pot. But I remember the next day my parents were kind of wrapping up and leaving and they came over and they said, Hey, chip, does it, does it hurt your feelings for some of your old friends to come over like that?
And I was, I was almost like taken aback. I was like, why would that hurt my feelings, mom? I was like, the best day of my life. What? And she was like, well, you had to have noticed the two or three of those. Kids that you thought you were going to be at least on par with, if not like their bosses, they all drove up in cars that are as valuable as the house you live in.
Like surely that dawned on you and I swear to God it hadn’t. And the way my mom said it, I remembered it was that kind of this moment, and I joke all the time, if you’ve seen Austin Powers and one of. Series of Austin Powers, somebody tells him that he’s got bad teeth. And his whole life, he didn’t realize he had bad teeth cuz he’s from, you know, he’s from Britain and obviously, you know, people in Britain have bad teeth.
It’s kind of like this, you know, superficial kind of stereotypical funny joke. And the rest of the scene, he’s kind of covering his. Teeth up, like, oh my gosh, I’ve got bad teeth and nobody’s ever told me this. It never dawned on me that the house that Jo and I lived in, that we had invited all these people, some of which were Dallas and Austin and, and, and, and, uh, Houston.
Big relevant 30 year old superstars. Like I thought I was, I thought I was. Doing all these things. I had 10 or 15 rental properties. We were flipping a few of these. I was doing this small business and this small business mom kind of runs that thought past me and it was almost like it dawned on me in this pretty sad way.
Like, man, I thought, and it didn’t dawn on me until she said it. And then the next few weeks I really was processing through this idea, like I thought I would’ve been further in my career by. And I just want to encourage those, uh, of you that are listening, that it’s just like, this stuff doesn’t typically happen overnight.
And for those of, of us, and not me, but just anybody, the the human race, the where it happens really early, you know, I, I think some real, uh, uh, Uh, very important moments happen in those young people’s lives to where they better figure out what’s important to them and quickly, because the success can over, can, can paint over, you know, real problems, real insecurities that we each have in our own hearts and our, our souls and our lives.
And with Jo and I, all of those insecurities and all those circumstances were really raw. They were really exposed. I was a 30 year old who was voted most likely to succeed. Most likely to be the next president of the United States. And you’re literally going, did I peak in high school? Like, is this, is, was that the be, was that the most I was ever gonna do is all these accolades in a yearbook somewhere tucked away in a closet?
I mean, I had a real moment as a 30 year old adult now with a kid or two on the ground and a young marriage. And so from that point, I just started remembering just kind of noticing. As our, as our career evolved. And I mean, it evolved quickly in, in a positive way, but then the cra the real estate crash, really affected Jo and I cuz we had a lot of, of irons in the fire at exactly the worst time imaginable.
Very, very, very little cash and a lot of debt and a lot of projects that we were, that we were, um, pushing. Towards the horizon and that oh 8 0 9 2010 kind of crash occurred in our literal backyard. And I mean, it almost bankrupt. Jo and I, and I always joke, it’s like, I think if we, we didn’t have enough stuff to actually declare bankruptcy.
Everybody was just like, bro. You’re not gonna make it. You know, this isn’t gonna work. A and B are not equal in C. And so there were just, it was almost a two year period to kind of dig ourselves out of what felt like an enormous crater, an enormous hole. And then all of a sudden magically like, like, like God knew what he was doing.
Fixerupper came right on the tail end of, I’d say there were two years of real hardship. Mm-hmm. to where Jo and I were literally doing the, the rice and beans kinda, uh, you know, very frugal. Trying to pay off debts, trying to dig ourselves out of this, what felt like this overwhelming, uh, circumstance that we had found ourselves in.
But little by little by little, and we got to where I’d say we were kind of at third base, not in the positive sense that we were. Like, we could see the horizon was beautiful and we were just about there. But I mean, just third base in the sense that we were almost out of this miserable scenario that we had founded ourselves in.
And about six or 12 months from that point, Fixerupper, uh, it was actually a production company, and they called and said, Hey, can we feature your family? We, we love what you’re doing. We’d like to follow you around on a couple of shows. We had no, I mean, a couple of projects, we had no earthly idea about television or anything about it.
It lit literally, generally speaking or literally speaking. We were just like, who are these people? I truly thought it was a scam. I thought it was like, One of these things to where you were gonna send somebody $5,000 and you were gonna inherit, you know, some, you know, middle Eastern fortune or something like that.
I thought literally it was that much of a scam. But all that to say was like, we got to that place and we said yes to that little opportunity and they came down. They were real people. We connected with them in a lot of really cool ways, and we started building what eventually became fixer. But had that happened in, in my world, maybe 10 years prior, 15 years prior, I don’t think I would’ve been a great human being because I, I really got to learn so clearly humility and, and how, how money really works.
You know, people think money is gonna be the answers to some problem. It’s not. It’s a, it’s no different than saying it’s the shovel. An answer to some problem. It’s a, it’s an answer to the problem of you needing to dig a hole. But if you think it’s gonna answer the problem of how do I fix my life, or how do I make my marriage better, or how do I figure out, uh, what my purpose is on planet Earth, that shovel’s not gonna be any more helpful to you than the, than the man on the moon.
So, you know, money, just, there’s so many things that it gives you the ability to do. If you’re excited about philanthropy or business, you know, there’s amazing. Ramifications that can come from money, but, but there’s so many negatives that can come from it that if it’s not, if it’s not placed appropriately in your life and, and the importance of it is not clearly articulated, it can be such a destructive measure.
And, uh, so for Jo and I, we’re just so thankful that the kind of success and the circumstances happened to us a little bit later in life because we get to now look up and. Just realizing, look, it wasn’t about the money, it never was. So the things that motivate me to continue to put one foot in front of the other are always something else.
But I guess I would go back to my 20 year old self and just say, it’s not gonna happen overnight. And the, the success that does happen overnight, you don’t want it. You don’t want that kind of success. You want the kind of success that people are talking about when you’re in your seventies and eighties and, and Joe and I for sure, proof is not in the pudding.
Kind of knock on wood. We’ll see how it all shakes out, but we would love to be in a rocking chair somewhere, hopefully on the farm in Waco, Texas, looking back in the rear view mirror of our lives and say it, it worked. You know, the things that we thought, the things that. Uh, felt were the most important priorities to us have now all landed and have all created their own, you know, systems and their own, and their own roots are deep and their own growth is enormous.
And, and wouldn’t that be something to kind of be able to sit back and look and, and realize that, that, that the thing that you did that definitely took time and took lots of patience and took lots of hard work was really the better way to build that thing as opposed to the quicker option that maybe there’ll be people in the same pred.
Looking at their things that are all in shambles and, and have all washed down the beach, realizing, you know, you didn’t build it for the long term.
Adam Outland: I think our listeners are gonna appreciate the idea that patience is part of that, and that it comes sometimes on the heels of the low that you gotta, this has been, uh, this has been great. Really appreciate how generous you are with your time and, and some of the wisdom chip and love that we both have. The positive PTSD experience of having knocked on some doors and got rejected 3000 times.
Chip Gaines: So it led us to that next. Yes. You know, it was the 3001 that was the important one, wasn’t it?
Adam Outland: Yeah. Well, Chip, hopefully we get to do this again in the future. Um, I, I wish your family the best in what you guys are building.
Chip Gaines: Awesome, Adam, thank you for having me, man.