A higher calling

By Hedda Schupak

Scott Moorehead took over his parents’ cellphone store chain in 2008 at age 30. Since then, he’s grown revenues from $137 million to more than $2 billion. He and his family are also investing heavily in philanthropy and corporate social responsibility. 

The year was 1982. After an antitrust lawsuit that had dragged on for eight years, the U.S. Department of Justice mandated that AT&T Corp. end its vertically integrated monopoly on telephone service in the United States and Canada. For most Americans, the breakup of Ma Bell meant confusing choices and even more confusing bills. But for family-owned, Marion, Ind.-based Moorehead Electric Co., it was the start of an evolution from a local industrial electrical contractor to one of the nation’s largest retailers of mobile phones.

“Suddenly Ma Bell stopped at the wire outside, and different companies could take the wire inside and [install] the phones,” recalls Phyllis Moorehead, 70, a former second-generation owner of Moorehead Electric who is now retired.

Phyllis says her husband, Steve Moorehead, 79, “figured if electricians could run electrical wire, they could run telephone wire. So as part of Moorehead Electric Co., we started Moorehead Communications.”

About the same time, cellular phone technology was becoming commercially viable. Early car phones were expensive and required professional installation, but consumers snapped them up anyway. By 1990, Phyllis and Steve sensed that cellular phones would present an opportunity far bigger than the breakup of Ma Bell.

“When they put up the first cell tower in Marion in 1990, we said, ‘We’re in the telephone business, we have this building by the railroad tracks, why don’t we sell cellphones?’ ” says Phyllis. “We activated one cellphone in November 1990, but we figured if we sell one to everyone in Marion who needs one and we still go bust, so be it.”

Moorehead Electric was founded by Steve’s father, Edward Moorehead, in 1937. Edward retired in 1968 and passed away in 1976.

In 1991, Steve and Phyllis sold Moorehead Electric to focus on the cellphone market. The new owner “didn’t want to deal with this little telephone thing, so we bought Moorehead Communications back as part of the sale,” says Phyllis. That “little telephone thing,” of course, soon became a necessity rather than a luxury. The Moorehead family was in the right industry at the right time.

In the first few months, the business grew from one store to three and, by the end of the first year, to 12. The stores were called The Cellular Connection.

“We were doubling every year at least,” Phyllis says. “It was all I could do in accounting to keep up with them!”

Under the leadership of Phyllis and Steve’s son Scott, 41, the company — now called TCC — has grown exponentially. Scott, who took over in 2008 at just 30 years old, has expanded the company from about 125 stores to nearly 1,250 in 43 states, and from $137 million in annual revenues to “north of $2 billion,” he says.

TCC, a Verizon authorized retailer, is part of a holding company called Round Room LLC. The holding company, formed in 2015, encompasses TCC; other cellphone stores operating under the names Wireless Zone and Wireless Advantage; a partnership in Redux, a technology that dries out water damage in electronics; and Culture of Good, a consulting organization that addresses employee engagement, corporate social responsibility and corporate culture. Culture of Good was co-founded by Scott with Ryan McCarty, his parents’ former pastor.

“Culture of Good is a little bit philanthropy and a little bit corporate culture,” Scott says. “It was birthed in TCC in our corporate stores, and it was such a good idea that we decided to do consulting around that.”

“Scott and I are both really passionate about corporate good,” says Scott’s wife, Julie, 39. “We like to think that influencing [our employees] to do good in the world is better than selling phones or becoming a manager.” She and Scott have two children, ages 12 and 10.

King Arthur and Phish
Steve and Phyllis retired in 2008, sold the company to their sons, Scott and Timothy, and moved to Florida.

When their sons were teens, Steve and Phyllis had gifted each a minority interest in the company. Over time they transferred more shares down, but the brothers were still minority owners until 2008. Steve and Phyllis had planned to sell the rest of the shares to their two sons equally, but Scott and Tim themselves came to an agreement that Scott would buy all their parents’ shares and Tim would have only what he already owned. Scott always was more involved with Moorehead Communications than his brother.

In July 2018, Tim, now 39, sold his interest to Scott. He’s now a franchisee of tech repair brand uBreakiFix and has several stores.

“When my brother was around, we decided to get more diversified and create a holding company to let each entity be its own,” explains Scott. “Tim and I were both uncomfortable with the Moorehead name being the main entity. We had such a great group of people that we wanted to deflect the credit.”

The brothers, who are rabid Phish fans, looked to the band’s songs for name inspiration and were drawn to “Round Room.” They also were inspired by King Arthur’s Knights of the Round Table.

“Everyone sitting at a circular table with an equal voice, and a round room. Those two things converged, and Round Room was what emerged,” says Scott.

Under Round Room, The Cellular Connection name got shortened to TCC. “It was a mouthful. Nobody says ‘cellular’ anymore,” says Scott. About two-thirds of the TCC-branded stores are operated by TCC; the remainder are operated by third parties under a licensing agreement.

In 2016, Round Room acquired more than 350 stores in the Wireless Zone franchise system. In addition, it bought a majority stake in Redux, whose technology was invented by fellow Hoosiers.

“Their genius invention and my ability to monetize it was a really great match,” says Scott with a laugh. Redux equipment is available in TCC’s stores and other wireless locations, and the company is diversifying into drying out other water­damaged electronics, like medical devices and hearing aids.

In May 2018, Round Room acquired 45 Wireless Advantage stores. Those stores are being moved under the TCC banner.

In total, Round Room has more than 2,300 employees. Scott’s wife, Julie, is executive director of TCC Gives, the company’s philanthropic arm. Julie’s brother Jason Buck, 45, joined the company in 2012 and is executive vice president of sales. Company headquarters moved from Marion to Carmel, Ind., a suburb of Indianapolis, about five years ago.

Comprehensive training
Phyllis put together Scott’s training program while he was a student at Purdue University working part-time for the company. Back then, the only mobile phones were car phones, so each store needed an installation bay. That made it more challenging to open new locations than it is today.

Scott’s training program involved working in every position in the business — more than 32 jobs at the time. They included pulling wire when the company still installed landlines, retail sales in TCC’s store #59 in West Lafayette, Ind., and working in the warehouse.

“There was never any question that I was going to come into the business,” Scott says. “I wanted to go work with Mom and Dad. I worked with them for about seven years till they agreed to sell it.”

The leadership transfer was instantaneous, says Scott. “They were the owners and they were running things till they sold it. The minute they did, they were gone.”

Phyllis’s training plan ensured a smooth transition. “It’s a way for the employees to understand this new young guy coming in, and to respect him,” she says. Because Scott had worked alongside them, they were unafraid to approach him to discuss problems. “He was very open to everything they had to say,” Phyllis says.

There are several secrets to Scott’s entrepreneurial success. Because he had personally done every single job in the company and listened to employees’ concerns, he knew what worked and what needed to be changed. He has a risk-tolerant entrepreneurial personality and grew the business the right way. He has also stayed focused on the long term, rather than on immediate gratification.

Like his parents, Scott has capitalized on opportunities in the mobile phone industry. “The [product] was very quickly moving from a luxury item to a commodity,” he says. “There was a lot of [industry] consolidation, and a lot of opportunity for acquisition, as long as you had a stable base.

“We made a conscious effort to build teams that could work fast and hard and [a system that could] repeat itself over and over. It was a mix of organic growth, with teams able to pull that off, and we had a whole other acquisition team that identified good businesses and could teach them to do things the way we did it.

“We had a track record of productivity and a great deal of success making our partners — the Verizons of the world — very happy. The better we did, the more opportunities we got.”

Scott acknowledges that there have been some bumps in the road. He grew the company to the breaking point not just once, but three or four times.

“When you’re so focused on growth and moving so fast, you forget to make sure all the pieces and parts are put together properly behind you. I challenge you to find a company that’s experienced massive growth that will tell you any different.”

Doing good and building connections
About five years ago, Scott and Julie were looking at ways to expand on the philanthropy his parents had begun.

Phyllis and Steve donated to various community charities and talked about doing something bigger, but nothing was formalized until after Scott took over. The Moorehead Family Foundation was established about eight years ago, focusing mainly on Marion.

Once the company moved and became a nationwide business, TCC’s philanthropy needed to grow with it. The Moorehead Family Foundation had given away nearly $2 million in five years of its existence, says Julie. “But if you were to ask anyone in the stores about the foundation’s giving, they wouldn’t know. Scott and I wanted [TCC’s philanthropy] to be unique, special, and have a program element like a non-profit does. And, most importantly, we wanted employees to be involved and engaged.”

Under Julie’s leadership, the Moorehead Family Foundation was dissolved in 2016 and replaced with TCC Gives, a public charity rather than a private foundation.

“The biggest difference is that a foundation typically involves a business and/or family distributing money, but a public charity has to bring in additional funds,” she explains. One-third of what’s given must come from outside funds.

“TCC is still obviously our largest donor, giving $600,000 annually, but I have to raise $200,000 from outside sources, and it can’t just be one big check from Samsung. It has to be from multiple donors.”

The passion to do good helps the business, says adds Julie’s brother, Jason. “It makes us a different retailer,” he says.

He describes Scott on stage at sales rallies. “He doesn’t focus on KPIs [key performance indicators] or talk about how many phones we sell or the number of states we do business in or the usual things a CEO talks about.

“He’s in the position to do something bigger than just sell phones and accessories and make customers happy, and he talks about giving back.”

For many TCC employees, especially younger ones, TCC Gives is their first experience with community philanthropy, Buck says. “It really bonds all of us and keeps us together. It’s a legacy far greater than how many lines we activate or how many upgrades we do this year.”

At Phyllis and Steve’s urging, Scott went to an egalitarian church service in Marion where he met Ryan McCarty, a young, hip pastor with a Mohawk, earrings and a tendency to use four-letter words most pastors don’t.

“His message was, ‘Your why equals your what,’ ” Scott says. “My employees’ ‘what’ was fairly obvious — they’re coming for a paycheck. But how do I give them a ‘why’? I asked him to go to lunch for free advice and he ended up talking me into hiring him. Where I was coming from and where he was coming from is where Culture of Good found its birth.”

Culture of Good was created because “I wanted employees to be more engaged, to have a reason why they want to come to work that’s more than playing with cool gadgets every day or solving problems,” Scott says.

“The further and further away you got from headquarters, the less it felt like a family company. How do I give people the same passion I have for this business? What’s the glue to help hold everybody together? We went into several iterations of [ideas] that didn’t work. We tried stupid things like Mustache Mondays to force people to have fun, but we needed something deeper than that.”

To get employees engaged, giving must touch on their passions, says Julie. First, TCC Gives initiated a local grantmaking program. All employees are eligible to sponsor a grant to a local organization near their store. The criteria are intentionally broad: Organizations receiving grants must serve people, the environment or animals.

An initiative called More Than A Phone, which gives phones and service to survivors of domestic violence, was launched as a pilot at three Indianapolis domestic violence shelters in 2017. TCC gave each shelter 50 phones and two months’ service, which soon changed to 25 phones and four months’ service. The project ties in with Verizon’s involvement with domestic violence as a cause.

More Than A Phone now has donated phones and service to nine shelters; growth has focused on under-served rural areas. “We’d like to get 12 more communities this calendar year,” Julie says. “We’d like to perfect the program before we go bigger, but we hope to be able to have that program everywhere we are,” she says.

In October, employees purchase and wear purple T-shirts to raise awareness of domestic violence and money for victim services. They’re encouraged to volunteer, collect used phones and support shelters’ fundraising events. Last year a tailgating event at an Indianapolis Colts football game raised $15,000, which Julie hopes to double this year and keep doubling.

This effort has intersected with TCC’s local grant initiative. “Once we’ve created a relationship with a shelter, we hear of needs other than phones,” Julie says. “For instance, one needed a new gate. They applied for a grant and we gave it.”

Other Culture of Good initiatives include quarterly themed giving events: distributing backpacks filled with school supplies in July, honoring veterans in November and teachers in February, and animal rescue in May.

The Mooreheads’ efforts to rapidly escalate their company’s philanthropy didn’t always go smoothly, Scott admits. “We said we’re going to go into this movement to be charitable and give to the community, but a lot of folks decided that selling and customer service was a secondary part of the job, and that started to suffer. I had to say, ‘Sales and service still matter, and if we can’t tie it all together, it’s missing the point!’ We didn’t correctly communicate that.”

If Round Room were a public company, the board would frown on the amount Round Room gives away, Scott says.

“Being a privately held family-owned business allowed us so much flexibility to do the right thing,” he says. “I believe it [charitable giving] to be a massive business asset, not a drain. We have a really strong balance sheet because we’re not greedy. We could do what we want to, and if meant us getting less, so be it. You can’t do that with pressure from external stakeholders. I prefer what our result is.”           

Hedda Schupak is a frequent contributor to Family Business. She recently wrote about NextGen innovation.

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

Article categories: 
July/August 2019

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