Thursday, April 24, 2014

Q&A: Mark Kini, President of Boston Chauffeur


Mark Kini


Mark Kini is president and founder of Boston Chauffeur, a premier global provider of executive sedan, limousine and event transportation services.

Founded almost 15 years ago, the company has grown organically in the hyper-competitive Boston market, and continues to flourish through the hard work and high standards championed under Kini’s leadership. In this compelling and candid interview, Kini tells us how he got Boston Chauffeur off the ground, shares his veteran insight on how to stay competitive in a crowded regional market, and sounds off on the many regulatory challenges faced by small businesses.

How has this historic winter weather been affecting Boston Chauffeur’s operations, and what measures have you taken to mitigate that effect?

Well, as you know, we’re powerless against the weather, and it’s certainly been a brutal winter. The first quarter is typically the slowest quarter for us anyway, and that was just compounded by the weather with a record number of flight cancellations, and travelers being wary about getting stuck in other cities. It impacted us greatly. January was a really tough month, but somehow we were able to turn it out right at the end of February. On a positive note, we’ve started March out remarkably strong.

Let’s back up a little. Can you share the origin story of Boston Chauffeur? How did you get started in the luxury ground transportation business?

I was kind of at a turning point in my life when I was about 30, back in 2000. A friend of mine that I had worked with in sales had somehow gotten into the chauffeur industry, and this was right at the height of the tech boom. He bought one car and put a few ads on the internet—this was before the internet became so hyper-competitive with Google AdWords and things like that—and he started doing remarkably well out of the gate, working off a cell phone. He said, “You should look into doing this.”

"One thing I am a real stickler for—where I  have zero tolerance—is being late for a job."
So I took some courses at the SBA—they gave me a small grant at the time—and I got my father to cosign a loan for my first vehicle, and for the next two years I literally worked 24/7. Between driving, answering the phone, doing billing, and everything else in between, I had no social life whatsoever. It was just a time in my life when my body was conditioned to do something like that. I would typically drop a client off at 1 am, and I would go to my 4  a.m.pickup and park down the street, set my alarm clock on my cell phone, and sleep until my 4  a.m.pickup. I’d shower when I could, and pick my battles, but I was at that point working primarily off a cell phone.

Where our office is currently located is a monster corporate office park; Tristar is also located here, coincidentally. It’s like a college campus...I don’t know how you can describe it...it’s like a town within a town. There’s a lot of bio-tech and technology companies here, a whole variety of different corporations. So I started handing out flyers, got some calls, set up some accounts, and I noticed there was a small office that someone was looking to sublease. 9/11 had hit at this point so business had slowed down quite a bit, and I felt that if I had an office presence it might give me some more credibility. So even though I would have the phones forwarded to my cell phone, I was paying $500 a month for this office. Then I hired my first employee and she worked nine-to-five answering the phones while I was out driving.

Since then it’s just been a series of baby steps, sometimes one step forward and two steps back. It’s been a learning curve. I’ve made a lot of bad hiring decisions, and I’ve made some good hiring decisions. I guess I made more good decisions than bad decisions because I’m still in business, but it’s clearly been—as I look back—a journey.

Can you unpack the thinking behind your tagline, “When being late is not an option?”

One thing I am a real stickler for—where I  have zero tolerance—is being late for a job. I have a sales background prior to getting into the chauffeur industry, and when I go out and pitch accounts, that’s one of the things that I tell my clients, that we’re always on time. Our policy is that we get to our pickups 15 minutes prior to the pickup time, so it gives the client an extra sense of comfort that the chauffeur is there. We don’t want our clients to have the extra stress of looking out their window when it’s a 5:30  a.m.pickup, and the chauffeur’s not there at 5:27, and then they get nervous and have to call us—that would just start the whole service off on a bad note. I would say our on-time percentage is a consistent 99.5 percent.

Can you talk about your approach to marketing your services? What approach yields the best results, and what can other firms learn from your strategy?

So you want me to give you the recipe to my secret sauce? [Laughs.] We have an extremely strong web presence. I have an excellent SEO person, and that’s been a game changer for the company—following up on leads that we get from internet bookings, trying to convert them into accounts, grooming the accounts and the customers, and being vigilant with that process but also patient. Sometimes you have to plant the seed, water it, wait for it to grow and then wait for an opportunity to come about.

I recently decided to delve into a little bit of direct marketing, targeting specific households in the more affluent communities with a promotional offer. I’m trying that out, but they have yet to go out so I can’t yet give you any feedback on the results. We also run promotions monthly on our website. It’s still a work in progress.

I read that you have incorporated some hybrid and flex fuel vehicles into your fleet. Can you speak about the demand for these types of vehicles? Do you anticipate adding more to your fleet, and would you advise other companies to take the same “green initiative?”

That’s a great question. We did try to aggressively move in that direction. We had a couple of Toyota Hybrid Camrys, but the demand was very low and the vehicles just weren’t profitable. So we do have a couple of flex fuel vehicles, and we have a couple of new
Mercedes with fuel efficient technology—the engine will stop running when the car is sitting at a light—but we do not currently have any hybrid vehicles in our fleet. I am very attracted to the Tesla Model, but the infrastructure is not here in the Northeast yet like it is in California, so I just don’t see the client here in the Northeast wanting to request that type of vehicle.

Although you say the demand is low, what types of clients are requesting those types of vehicles?

The best example I could give you—and you’ll laugh at this one—we had Al Gore. He flew in on jet fuel in a private plane, and then hopped into a hybrid. That is a pretty typical scenario, I’m not kidding you.

It’s worth mentioning that we have started to transition over to the vehicle that I’ve picked to replace the Town Car, which I think is really important. There are so many options now in the marketplace, but I finally decided upon the Mercedes E350—we already have three of them. We also have two S550s, including a 2014, the brand new one that just came out with the new body style.

"We really micro-manage each reservation, and if there are any issues with the customer, we go above and beyond to make them happy, even if we have to eat the ride and take a loss on the job."

My understanding is that Boston is a pretty competitive market. How does your company differentiate itself to remain competitive?

They say it’s the most competitive market in the country. Boston is a relatively small city with major powerhouse chauffeur and limo companies based there: BostonCoach, Commonwealth, LTI, Dav El, the list goes on and on.

I would say Boston Chauffeur is more of a boutique type of company, so our primary focus is on service. We really micro-manage each reservation, and if there are any issues with the customer, we go above and beyond to make them happy, even if we have to eat the ride and take a loss on the job. I’m a big proponent of “the customer is always right,” and keeping that client retention. Also, all of our vehicles are three years or newer, we pay our chauffeurs the best in the market, and I feel we have one of the best chauffeur teams we’ve ever had in terms of experience and competency.

What would you say is the biggest regional challenge faced by Boston Chauffeur?

Massachusetts and California are the two most highly regulated states in the country. Massachusetts has the most stringent independent contractor statute, so we really have to rely on doing everything by the book, because there have been a whole slew of lawsuits that have infiltrated the Boston market. Dawson Rutter, the CEO of Commonwealth Worldwide, even said in a recent interview that with all the regulatory challenges, he is considering moving his company out of Boston. Some of the big companies have gotten dinged pretty bad. So we pay by the hour, not by the job; we pay overtime; we’re required to pay health insurance, and that’s been the case since 2005 since Romney was in office. Everyone’s talking about Obamacare and all the new implications associated with that, but we’ve already  been dealing with it for years. So we pay 50 percent on health and dental for all our full time employees. We do paid vacation, paid sick days, workman’s comp—we do everything by the book.

The one thing that’s enormously frustrating to me, particularly here in the Boston market on the subject of these regulatory issues, is that we are not all on an even playing field. My deal is, I just want to be able to put my head on the pillow and sleep at night, but there are a lot of companies that are falling under the radar, and because of that they are able to offer lower rates. We just can’t play that game, because I would say more than a third of our rate structures are fixed costs alone.

So if a customer is calling around and checking for rates, we try to stress the level of service that we provide, but of course some customers are fixated on rate structures. We have all heard the expression, “you get what you pay for,” but there are a lot of companies that are still cutting corners—some of them the established ones, and I have great admiration and respect for some of the owners.

They are 1099ing their chauffeurs, and they are not offering health insurance because they are defying the independent contractor statute, which basically says if you work within the same industry, you cannot be an independent contractor; you are an employee. So it makes it pretty black and white, yet they’re still doing it, and I’m sure at some point they’re going to get hit by a train. But for the time being, I’m the one getting hit by the train.

Massachusetts also has the Treble Damages Law for employment issues, and it can pierce the corporate veil, which means they can go after your personal assets, your house and everything you own. So most of these cases are settled outside of court, because it saves on attorney fees, and nobody wants to pay triple damages. But even one of the market’s largest companies just got dinged for $900k. It is a pretty well-run company, but the action was that they weren’t paying chauffeurs for down time.

That is certainly a big ding.

Yeah, that would smoke me; I wouldn’t be able to survive something like that. And if a company like that is doing it as a routine practice, it makes it that much more difficult for me to survive in this market. I hate to throw out specific names, but that is the biggest conundrum for me right now. I’m doing everything by the book—health insurance, comp, overtime, paying my people properly—yet some of my peers are not.

I almost feel like I have to be an employment attorney. I even have to get EPL insurance, a proactive insurance just in case I get sued. That’s insane. There are other markets throughout the country that have very little enforcement, as well. Texas is pretty lenient market, but Massachusetts and California are just brutal, and I think Massachusetts is even worse when you factor in the high level of competition.
I heard David Seelinger speak at the Atlantic City show, and basically what he said was for years he treated his chauffeurs differently than his internal employees, and he ended up getting hit with a huge lawsuit, which finally made him have an epiphany about looking at the chauffeurs as employees, and compensating them accordingly. So now all of their chauffeurs are employees; he doesn’t pay them as IOs. So he had spent enormous resources trying to circumvent the system, but now he has just conceded to it, which is in essence what I’ve done.

I’m afraid to even open up my mail because there are mystery bills that come all the time—a license for this, a permit for that—it’s absolutely crazy. Our chauffeurs have to be licensed through the town we’re in, and when that started it was ten bucks; now it’s $50. Each vehicle has to be licensed each year through the town, and then we have to be licensed through Massport for each chauffeur. Medical tests are required if they are going to drive vehicles with a passenger capacity of eight or more, which entails a special physical and license after that. Hiring each chauffeur is about a $500 investment up front before training, and before they are in a position to generate revenue for the company, so we’re very selective about who we hire. It’s therefore a lot more challenging to find good quality chauffeurs. Before you could just hire a guy, throw him on the road and hope for the best. Now we can’t afford to do that.

It’s just brutal. I don’t even want to get into the whole Uber conversation, and how they’re able to bypass all the regulations. I don’t think they’ve impacted my business, but I think at some point they will. They are expanding into my area—you know I’m 20 miles from Logan Airport and they are now advertising that they have cars in this market. So with their money and the backing they have behind them, they’re really looking to take over, and now there are several others who are following a similar model.

You’ve got to have eyes in the back of your head. You’ve got to keep thinking one or two steps ahead, but I always just come back to “service, service, service.” That is the only secret weapon I have.

Sounds like a good strategy to me.

If you know a better one, I’d be more than happy to hear it.

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Boston Chauffeur Welcomes New Addition
Since our interview with President Mark Kini, Boston Chauffeur has announced a new addition to its staff. Kini and the Boston Chauffeur staff have recently welcomed Daniel Krueger as the new managing director
of the company. Krueger brings years of transportation industry experience to his new role at Boston Chauffeur, which we can attest to, as he is an active participant in the Limo Digest group on Linkedin.
We enjoy and appreciate all of his contributions to these social media group discussions, and congratulate him on the beginning of his new role at Boston Chauffeur.

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Written by
Associate Editor & Digital Media Manager
adam@limodigest.com

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