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Tossing the dirt over the next slat
By Edward Southerland
Nov 19, 2019
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(The first part of this story, in a slightly different form, originally appeared in Texoma Living! Magazine, August 2009.)

If you live in North Texas, you may have noticed that many of the local gas stations have recently changed their colors, giving up the red of Exxon-Mobil for the blue of Valero. Behind this change is complicated economic transition led by the area’s leading Exxon-Mobil and Valero distributor, Douglass Distributing and Lone Star Food Stores. The man behind this change is William Douglass, Bill to just about everyone who knows him. He is one of the great innovators in the convenience store business. But wait, we are getting ahead of the story. Let’s start at the beginning...

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“My father was a professional basketball player, William Patterson Douglass. He played for the team in Philadelphia before the NBA came into existence. My mother obviously liked jocks, because when she divorced him when I was only one, she married a professional football player, William Henry Weldon Hitchcock, who had played for the Frankford Yellow Jackets, although by then, he was working for the telephone company.

 

“I was born in Philadelphia, because that was the big medical center, and my mother’s father was a doctor, but we never lived there. We moved a lot. By the sixth grade, I had been to five schools. I was always the new kid, and you always had to fight.”

 

By the time Douglass reached high school in the late 1940s, the family lived in the small town of Trappe, Pennsylvania. It was near Valley Forge in the country of the Amish and the Pennsylvania Dutch. “My mother was very emotionally unstable and very sickly in the sense that every year she went into a mental institution on her birthday, every spring, just like clockwork.

 

“I was essentially a kid with a part-time parent and a stepfather who was always broke because he took care of her. He would pay to put her in a private institution because the state institutions at that time were pretty barbaric. We were so poor we didn’t have a car. If you don’t have a car in the country, you’re poor.”

 

Growing up on the edge of the community, without the things other kids have and without a lot of supervision, is not only difficult, it is dangerous, and young Bill Douglass was edging toward wrong choices and bad decisions. Then help came along, in the unlikely form of a stern minister of German origin, Reverend Russell W. Zimmerman of the Augustus Lutheran Church in Trappe.

 

“He decided that if he didn’t take an interest in me, I was going to become incorrigible or worse. He knew what was going on. I was raising myself. My father had to work, and he worked long and hard, and my mother was pretty fragile,” said Douglass. Zimmerman asked the teenager, he was fourteen at the time, to take on a job caring for the church grounds. “It was known as the ‘Oldest Unchanged Lutheran Church in America,’” Douglass recalled. “It was built in 1743.”

The learning process started early with Reverend Zimmerman. “The church had a coal fire, and the first thing I had to do was haul away the ashes, so I asked him how to do it, and he said, ‘You figure it out.’” So Douglass figured it out. He borrowed the sexton’s car, taught himself how to drive it, and hauled the ashes to the dump. It may have been lesson number one on the road to success—“figure it out.”

 

After that, Zimmerman’s lessons were more down to earth, below the earth actually. “He taught me how to dig the hole you set the headstone in at the graveyard,” Douglass recalled. “There is a way you shape the hole so the frost won’t push [the stones] out of the ground.” Once Douglass had mastered headstones, there was no way to go but down.

 

“We dug our graves by hand,” he said. “I made eighty cents an hour, which was better than the seventy cents an hour I got mowing the grass. Digging a grave was tough, because as the hole got deeper you had to throw the dirt higher, and they made you throw it into a box because you couldn’t put dirt on other people’s gravesites. When the box got full, they’d put another slat in it, and when you’re down there at five feet and the slats are up to five feet, that’s a long toss, especially if you’re a kid.”

 

Applying success-lesson number one, Douglass figured out that tossing dirt out of a hole in the ground did not offer much in the way of a future. “It taught me that I had to get an education.” he said. “This was not a way out.”

 

Douglass worked at the church for two years while the minister worked on him. “He was really my mentor, my father figure. He taught me how to do what you were supposed to do, if that makes sense? He was very precise, very German. If I was due in at two and came in ten minutes late, he would call me in. He said, ‘What you do for me is you show up on time.’” That may have been success-lesson number two.

 

At sixteen, with a newly earned driver’s license, Douglass got a job and a raise in pay to a dollar an hour at the newest business in Trappe, a brand new Esso gas station. (Esso was a predecessor of Exxon. On January 1, 1973, Esso, Enco and Humble became Exxon.) With the job came an introduction to a new world of possibilities.

 

“The sales rep that called on us always came in wearing a tie, a nice sport jacket and a hat. In those days everybody wore a hat. He had a real shiny company car. That car was a big thing in my mind, because we didn’t have a car. Having a car was a big achievement, a status symbol.”

 

Status symbols usually don’t come easy, and from the rep, Douglass learned that he needed to go to college, get a diploma and get his obligation to Uncle Sam and the Selective Service out of the way before he could apply for a job. “He said, ‘When you get out of the service, you can use me as a reference.’”

 

Douglass was now a man, or at least almost a man, with a plan. Along the way he found the time to participate in school events, crack the books enough to finish in the top ten percent of the class at Collegeville-Trappe High School and find a girl to be Queen to his King of Hearts at the big Valentine Dance. The girl was Joan Elizabeth Ledger, and the royal couple have been together ever since.

 

He was also an athlete, a halfback and linebacker for the Collegeville Colonels, and his play on the football field garnered the attention of Coach Rip Engle at Penn State, who offered Douglass a scholarship. This was playing with the big guys. “Lenny Moore and the Roosevelt Grier were in my class,” Douglass remembered. “And the varsity players were so big I couldn’t see over them when we scrimmaged.”

 

A severe bout with mononucleosis in the middle of his first semester at Penn State ended his football aspirations and his time in the shadow of Mount Nittany. When he recovered, Douglass enrolled at Muhlenberg College in Allentown, Pennsylvania.

 

The Lutheran school was founded in 1848, and their athletic teams are called the Mules. You’ve got to figure that a college with a mule for a mascot is a pretty “get it done” place, and Bill Douglass was ready to get it done. He had lost a year to illness, and so he double up and finished in three.

 

Semper Fi

 

In the mid 1950s, a yellow light in the career path of American young men was the Selective Service System, the all-but-universal draft. At eighteen you went down to your local draft board, signed up, stuck the draft classification card in your billfold and assumed that sooner or later the letter which opened with “Greetings” would come in the mail. There were no wars, nothing major at least, at the time, but “going in the service” was a common experience. Even Elvis was drafted.

 

Bill Douglass spent four years at Penn State and Muhlenberg College on a student deferment, but he knew that sooner or later, once he was through with school, the call would come. He figured sooner was better than later, so before he graduated in 1958, with a B.S. in business administration and a wife—he and Joan were married in 1957 during his senior year at Muhlenberg—he enlisted, with a deferred entry date, in the Marine Corps for a two year hitch that just happened to coincide with the Cuban Missile Crisis in the fall of 1962.

 

“I was on a team set to go into Cuba, capture a Russian technician and bring him back on a raft to a submarine,” said Douglass, but it never came to that. After thirteen days in October with the eagle and the bear staring each other down, the bear stepped back, and Russian Premier Nikita Khrushchev agreed to remove the missiles from Cuba. “That’s when I got out,” Douglass said. “They sent me on leave, said they were going to reassign me, and I was never reassigned. I was one of those people who got put on leave and is still on leave.” It was time to get back to the plan.

 

Riding the Esso tiger

 

Douglass had never forgotten the offer of the Esso rep he had met when he was in high school to give him a reference. So he called in the marker and applied for a job with Esso.

 

“The guy who was the regional manager for Esso was a retired army colonel. His trick question in the interview was, ‘What do you think of the service? How well organized are they compared to a business in executing their mission?’ “I said, ‘They’re the best in the world.’ It was the right answer.”

 

Someone in Esso’s upper management had marked Bill Douglass as a comer, and the promotions, responsibilities and opportunities to succeed, or fail to, came quickly. He ran Esso’s heating oil business in the region before becoming the assistant manager of a small grease and lubrication oil refinery in Pittsburgh in 1968, handling the marketing side of the business. Then, after a short stay in the steel city, Douglass moved west to Albuquerque, New Mexico. “I was promoted twelve times in twenty-one  years. I never stayed in one job long enough to figure out if I could do it again,” he said.

 

Texas was next on the Douglass’ itinerary. In Dallas, he took on a different sort of job, manager for marketing investments in the Western United States. “Marketing investments are all the assets it takes to move the product, stations, distribution points, terminals.” He stayed in Dallas for two years before moving to the company’s domestic headquarters in Houston.

 

The next stop was the Big Apple and Exxon Corp., the international holding company in Manhattan where three hundred people run the multiple companies that make up the Exxon empire. If Douglass could make it there he could...well, you probably know the rest of the line. By that time he had the connections. “If the chairman wanted to play in politics, I had the entrée. My job was to tell the chairman what he could do with certain officials to help us.”

 

Douglass was breathing the rarified air of business and politics at the highest levels. He had risen very far, very fast, and the next stop for the Douglass-Exxon express was Saudi Arabia, but he didn’t really want to take his family to the Middle East. He had also grown tire of answering to someone else. He wanted to be making the decisions. He wanted to win or lose on his own hook. “That’s when I decided...I was an entrepreneur at heart, I was always an entrepreneur...you only go around once in life, and I just wanted to do it that way—a different way.”

 

Lone Star State of mind

 

Douglass was looking for a location that Exxon was converting from agent to distributor. He found it in Sherman in 1980, the only site available at the time. “I got six service stations, two trucks and a facility.” It was an opportunity, but it was also a big step down on the economic scale. It was a long way from 1251 Avenue of the Americas, Exxon’s Manhattan office building, to a grimy gasoline terminal on Montgomery Street in Sherman, Texas.

 

“It was tough,” said Douglass. “I was here at least fifteen years before I made as much money as I left.” Douglass was forty-four years old, and he was starting over. Not from the bottom to be sure, but starting over all the same.

 

From his days in high school, Douglass, Inc., had really been Douglasses, Inc. It was double harness hitch all the way. Joan Douglass helped put Bill through college, she followed him through his service in the Marine Corps, and then she moved, and moved, and moved, and moved again as he rose through the Exxon organization. She had had enough too.

 

“She’s been really patient,” said Douglass. “That’s why I can’t move her out of this house. When we moved to Sherman, we had about two weeks to find a place to live. There were only about half a dozen places in our price range, and the best of the worst was terrible compared to where I had moved her from. It was moving from a big executive place in Connecticut to a small development house in Sherman, which we still live in. “She said, ‘You’ve moved me ten times, and you’re not going to move me again.’ And she meant it.”

 

Six gas stations and two trucks weren’t going to make it, so Douglass went looking for capital to expand his business. “Howard Hackney of Merchants & Planters Bank loaned on character, and he loaned me a quarter of a million dollars. Now remember, this is when Jimmy Carter was president, so I got to pay 20 percent interest,” said Douglass.

 

“The interest rate was so high that I had no disposable income. We had a two-wheeler that we used to roll four-hundred-pound barrels around. It broke, and it took me two days to figure out if I had the $90 to buy a replacement. We rolled the barrels on their edges until I got the money together.”

 

Early on, Douglass had doubt as to the wisdom of his decision. Exxon had changed the business arrangements, making it more difficult for him to expand his operation, but he persevered. He kept on tossing the dirt in the box, even when they added a slat.

 

One by one, he added stations and distributorships, picking up businesses when others fell on hard times or decided to quit. “A lot of these guys were World War II veterans, and they were retiring,” Douglass said. When he started in 1980, there were thirteen gasoline distributors in Grayson County; now there are three. Not only are there fewer distributors today, there are fewer brands. Mergers, acquisitions and changing business conditions have brought down the signs familiar to American motorists for decades.

 

Gas and Groceries

 

In 1983, the station at Texoma Parkway and Loy Lake Road burned, and when Douglass rebuilt it, he brought it back as combined service station and convenience store; from that point on, the business model was gas and groceries. “The convenience stores in those days didn’t have fuel,” said Douglass. “So we would go in and put in tanks, pumps, a canopy and fuel. We didn’t buy the stores; we just put in a fuel concession. That’s what we did. That’s how I spent my first ten years.”

 

There is always a blueprint or artist’s rendering on the table because because Bill Douglass always has a new idea. photo by Edward Southerland

 

By the time Douglass got into the convenience store business, the idea was well defined by the success of 7-Eleven. Despite the Dallas chain’s claim, sung by a cartoon rooster and an owl, “From soup to nuts / That’s why we sing / 7-Eleven’s got everything,” the stores were really a place for those staples moms forgot to pick up at the supermarket, bread and milk being big sellers, and one supposes, aspirin for the grownups who got headaches from the singing rooster and owl. The stores were also stops for kids in search of a soda pop, candy bar or inexpensive toy.

 

To that mix, Douglass brought gasoline, and all the marketing come-ons associated with gas stations for decades, trading stamps, free glassware and give-a-ways for the kids. “We had all that stuff. We were putting up the signs and hanging the pennants and all that, but we kind of hit the wall with that in 1992.”

 

The cost of doing business was going up, and individuals could no longer afford to build expensive stores in the locations Douglass and his team had identified as prime locations, even with Douglass Distributing picking up a substantial part of the cost. One of those locations was the intersection of US 75 and US 82 so Douglass decided to acquire the property and build on it himself.

 

“We designed that store ourselves. We had gourmet coffee, electric doors, canopies that came back from the island. Card readers, we had the first card readers in Grayson County. We put in an automated car wash—the first touch screen car wash. It was a carpeted store, the first carpeted store. Carpet is quieter and cleaner.”

 

 

No one had ever seen a convenience store quite like the one in Sherman. Douglass sold French pastries and gourmet sandwiches to go with the high end coffee. When Starbucks was just starting to expand, North Texans were sipping high-end brew at the Lone Star Convenience store in Grayson County.

 

The store attracted attention, envy and admiration from others in the convenience store business all over the country. In 1997, the store was named Convenience Store of the Year. Douglass followed that award with another a few years later for the store in Van Alstyne. The mix of fast gasoline, fast service, and now fast food was registering with customers. At one time or another, his stores have housed Burger King, Baskin-Robbins, Subway, and Dickey’s.

 

The ideas start here. photo by Edward Southerland

 

Douglass will admit that some of his ideas have not quite panned out. The French pastries and salmon sandwiches were a little ahead of the curve for the doughnut-and-burger tastes of North Texas, and his most radical departure from convenience-store and fast-food conventions never got off the ground.

 

A few years ago, he planned to build a store with the first fast-but-elegant dining concept  at the intersection of US 75 and FM 691. The idea was top-class food, served in an atmosphere of casual elegance—silverware, glasses, cloth napkins—for travelers looking for more than a hamburger and a Coke.

 

The idea fell by the way when Sherman went wet. “Its claim to fame was that it would have been the closest source of alcohol to Sherman, and that would have helped support that elaborate dining idea. We had a fabulous, fabulous design for that place. It would have been the most elegant facility in the county.”

 

The original plan called for a butterfly atrium. “We were going to get the butterflies from Costa Rica,” said Douglass, “but we learned that the Department of Agriculture had all these requirements about the butterflies. We had to have all kinds of elaborate measures so the butterflies couldn’t escape, and when they died, we had to dispose of them like medical waste. And another thing the people in Costa Rica didn’t tell us this until we had $80,000 invested in this thing, we would have to keep the temperature at 80 degrees and the humidity at 80 percent.

 

“Well that killed the butterfly thing, and it killed our enthusiasm for the elaborate thing. We were trying to build a destination. We had a $1,000,000 in the ground and $140,000 in the design, but it just wasn’t going to work anymore.” Douglass eventually got his money out of the property, but he still thinks wistfully about those butterflies. Sometimes it is risky to think so far outside the frame.

 

So, can Sherman and Denison expect any great new advancement in convenience stores in the immediate future? Probably not. “Right now, with our population density and the convenience store density, it’s impossible to build a facility that would pay out. Here I mean, not in the high growth areas.”

 

Slower than heralded growth in Grayson County—the big boom always seems to be just down the road a piece—means that there are few opportunities for the almost daring innovations that Bill Douglass thrives on. Doesn’t that mean no more dreams of butterflies in the dining room? Not really, he’s just adjusting his sights.

 

“We’re changing our business model. We’re over built. We have eighteen new restaurants in the last five years, but the town has grown by only a few thousand people. With the big box retailers, the grocery business is probably overbuilt. Everything here is saturated for the population. So I don’t need to build here. All I’ve done is remodel.

 

“But we’ve expanded our business. We supply the City of Dallas with oil products. We are in the bio-fuels business. We buy it, and we blend it right here in Sherman. We put in a $280,000 facility last year. Its growth will become explosive whenever the price of crude goes up.

 

“Is it as much fun? No, retail’s more fun, big fun, but that’s the world.”

 

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Much of this story appeared in Texoma Living! Magazine in 2010, but as we noted at the beginning of this story, a lot of things have changed in the Douglass universe. And that is what we will look at now.

 

Flying a New Flag in 2019

 

“It’s about the industry economics,” said Bill Douglass. “About a year and a half ago, the Trump administration decided that the oil companies could export oil since we were now crude sufficient. We had been under an export ban for the last 30 years or so, but now, we were fully independent of world oil sources. We still buy oil from other sources, but it’s for economic reasons, not by necessity.”

 

With the ability to sell its excess crude production, American oil companies started look for markets in South America. Many of those countries were crude short, and the deficit was exacerbate by the collapse of the Venezuelan supply brought on by two socialist regimes, and  those factors started to have an effect on where American oil went.

 

“America is divided into five supply zones,” Douglass explained. “The ones that concern us are the Gulf Coast, and the Mid-Continent, middle America.  The Red River is the boundary between these two zones. So, the refineries north of the Red River, in Oklahoma, supply the mid-west all the way to Canada; the refineries on the Gulf Coast supply the Dallas-Ft. Worth area of which we are a tributary and export much of their excess crude south.”

 

The oil companies are looking at the big picture, and the small markets like Grayson County and North Texas are not their primary focus. Gulf Coast oil bound for our area comes all the way from Baytown on the coast, so the transportation costs are significant. Because the Gulf producers have convenient markets outside the county, they do not have to compete on price with Mid-Continent refineries. The bottom line, and it is always about the bottom line, is that Douglass can buy Mid-Continent gasoline from Valero, the largest refiner in the United States, at a better price day to day than from the Exxon-Mobil and Shell operations of the coast.

 

“The center off all this is Cushing, OK,” he said. “Mid-Continent oil, most of which comes from the Permian Basin, is supplied and priced out of Cushing. They have a huge depot there. Cushing is typically awash in oil. So the price is usually better there. We actually get our product in Ardmore; that’s 70 miles away. The Baytown refinery is 450 miles away.” Douglass Distributing has not abandoned Exxon-Mobil, and they still distribute their products along Shell and Shamrock to independent dealers and their own company stores, outside of Grayson County. “And that is more than you want to know about the gasoline business,” said Douglass with a smile.

 

Always Innovating

 

Never one to rest on his laurels, the latest project in the Douglass universe is at the intersection of US 75 and FM 1417 in front of the newly opened Schulman’s Movie Bowl Grille. “It’s been painfully slow; when we finish, it be a year since we started, but should be open sometime in November.” said Douglass.

 

“It’s our biggest project, our biggest investment, and our biggest challenge, because since we decided to build it, Quiktrip announced they will build a store across the street from us. Right now there are two fuel outlets at that intersection, when everyone is open, there will be four, Circle K, Shell, Quiktrip and Valero.”

 

Douglass has never been one to shy away from competition, but what will set his new store apart from the others? “One is a 140-foot, fully automated car wash,” he said. “Second is sit-down restaurant called Pie Five. (The Pie Five restaurant will be a boon to local pizza lovers, offering quick pizzas at a single price with all the toppings you want.)

 

And third is that we will have the biggest variety of fuel offerings of anybody.

 

“We will have tanks that will handle gasoline without ethanol, regular gasoline as mandated by the government, as well as different blends of gasoline and ethanol. You save money by buying gasoline blended with ethanol, but you get less mileage per gallon. Another advantage for consumers is for use in boats and outboard motors, when non-ethanol fuel is preferred. It’s damaging to use ethanol-laced fuel in small engines such as lawnmowers and two-cycle engines.

 

“We will also have the only store in the area with its own automatic stand-alone generator so if the power goes out, we can still pump fuel. We have the same system at our terminal in Sherman.”

 

And there are other changes at Douglass Distributing that retail customers will not see such as the new vehicle maintenance shop for the fleet of silver tankers that deliver fuel and other products to the company’s stores and customers. And even more impressive is the facility for manufacturing a government mandated additive for diesel engines that makes them run cleaner and emit less exhaust and pollutants. “We’re manufacturing diesel emission fluid right here in Sherman and selling it to stores all over the country."

 

No more smokey diesels with the additive Douglass Dist. manufactures in Sherman and sells in stores everywhere. photo by Edward Southerland

 

The other part of the business, Lone Star Food Stores, is going head to head with Buc-ee’s in the space age restroom race with individual, enclosed facilities fitting with no-touch operations. But that is something you’ll just have to see for yourself.

 

The company now has 22 wholly owned stores, 400 employees, 120 vehicles, and sells 130 million fuel plus other petroleum products a year. For all these changes, the Douglass universe is still very much a family run enterprise. Joan Douglass, long in charge of watching the dollars and cents of the business has retired, but Bill is still the innovator he always was and having fun doing it. Son Brad Douglass is the CEO of Douglass Distributing, and daughter Diane McCarty is CEO of Lone Star Food Stores. Brad’s daughter Whitney Oestrich is the Credit Manager and his son, Kevin, is a senior down in Longhorn country.

 

The entire family, indeed the entire company, is deeply enmeshed in the life and activities of Sherman and Grayson County, serving on many committees and boards promoting civic improvement. They are a family and a company that gives back even if they have to toss the dirt a little higher to get it over the next slat in the box.