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Title: Oral History Interview with Lonnie Poole, March 22, 1999. Interview I-0085. Southern Oral History Program Collection (#4007): Electronic Edition.
Author: Poole, Lonnie, interviewee
Interview conducted by Mosnier, Joseph
Funding from the Institute of Museum and Library Services supported the electronic publication of this interview.
Text encoded by Mike Millner
Sound recordings digitized by Aaron Smithers Southern Folklife Collection
First edition, 2006
Size of electronic edition: 156 Kb
Publisher: The University Library, University of North Carolina at Chapel Hill
Chapel Hill, North Carolina
2006.
© This work is the property of the University of North Carolina at Chapel Hill. It may be used freely by individuals for research, teaching and personal use as long as this statement of availability is included in the text.
The electronic edition is a part of the UNC-Chapel Hill digital library, Documenting the American South.
Languages used in the text: English
Revision history:
2006-00-00, Celine Noel and Wanda Gunther revised TEIHeader and created catalog record for the electronic edition.
2006-04-13, Mike Millner finished TEI-conformant encoding and final proofing.
Source(s):
Title of sound recording: Oral History Interview with Lonnie Poole, March 22, 1999. Interview I-0085. Southern Oral History Program Collection (#4007)
Title of series: Series I. Business History. Southern Oral History Program Collection (I-0085)
Author: Joseph Mosnier
Title of transcript: Oral History Interview with Lonnie Poole, March 22, 1999. Interview I-0085. Southern Oral History Program Collection (#4007)
Title of series: Series I. Business History. Southern Oral History Program Collection (I-0085)
Author: Lonnie Poole
Description: 202 Mb
Description: 32 p.
Note: Interview conducted on March 22, 1999, by Joseph Mosnier; recorded in Raleigh, North Carolina.
Note: Transcribed by Unknown.
Note: Forms part of: Southern Oral History Program Collection (#4007): Series I. Business History, Manuscripts Department, University of North Carolina at Chapel Hill.
Note: Original transcript on deposit at the Southern Historical Collection, The Wilson Library, University of North Carolina at Chapel Hill.
Editorial practices
An audio file with the interview complements this electronic edition.
The text has been encoded using the recommendations for Level 4 of the TEI in Libraries Guidelines.
Original grammar and spelling have been preserved.
All quotation marks, em dashes and ampersand have been transcribed as entity references.
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Interview with Lonnie Poole, March 22, 1999.
Interview I-0085. Southern Oral History Program Collection (#4007)
Poole, Lonnie, interviewee


Interview Participants

    LONNIE POOLE, interviewee
    JOSEPH MOSNIER, interviewer

[TAPE 1, SIDE A]


Page 1
[START OF TAPE 1, SIDE A]
JOSEPH MOSNIER:
With Lonnie Poole in the Waste Industries headquarters' office in Raleigh, North Carolina, on Monday, March 22, 1999 for the Southern Oral History Program's North Carolina Business History Series. My name is Joe Mosnier. This is cassette 3.22.99-LP. Mr. Poole, to begin I thought we might start with just a quick background sketch on your personal history, education, early career activities.
LONNIE POOLE:
Native born in Wake County in the country, Eastern part of the county. Attended public school. Grew up on a farm. Went to high school in Garner. Went to North Carolina State. Graduated civil engineering, 1959. While there was in ROTC, three years of military service as an aviator. Back to UNC Chapel Hill MBA program, two years. [intercom] I'll unplug this thing. UNC Chapel Hill MBA. I graduated in '64, '65. Went to work for Ingersoll-Rand Company. Later went to work for the Koehring, K-O-E-H-R-I-N-G Company. They were involved in heavy construction equipment design, development and sales. I served there as both an engineer and a businessperson, primarily in sales. During the course of that time between growing up in Garner and when I finally formed this business, Waste Industries, I had moved twenty times in ten years. So I left North Carolina in 1960 in the military, and I returned to form Waste Industries in 1970.
JOSEPH MOSNIER:
I think you had gotten as far as California if I remember from what I had read. Did you get to Oakland?
LONNIE POOLE:
Yeah, I did. I worked in Oakland and lived in Lafayette. All of those were big moves. I've lived in New York; I lived in Atlanta, Colorado Springs. One son was born in Frankfurt, Germany; one son was born in Berkeley, California.
JOSEPH MOSNIER:
Tell me this, what was it that led you—how did your thinking come together there around 1970 to head you in the direction of starting a company like this?
LONNIE POOLE:
I think there was a lot of change in people's goals and objectives. Getting married and having children has a pretty dramatic impact. The moving gets to be tougher. You've got more stuff. But it—one of the driving things was you really need to live where you want to live. Where I had moved from was where I decided I wanted to move to. So I moved back to North Carolina. Second, the other two things that I kind of came to the conclusion is one you need to do what you like doing. Third, you need to do it with who you like doing it with. Those three objectives, if you can get those lined up, then everything else

Page 2
pretty much falls into place. Being self-employed, you can determine who you're going to be working with. The garbage business was something that was emerging at the time. One of my final assignments with the Koehring Company was to help find and develop an innovative product. One of our plants manufactured compaction equipment. It was a very mature product, a lot of price competition. The plant really and truly needed something innovative to do. Research found that we were going to attempt, I think, as a society to do a better job of getting rid of garbage. The EPA was not, hadn't even been formed at the time. But a lot had been written. The open burning dump was a health hazard and a nuisance. The way we stored our garbage was in fact not well done. It was a menace and a threat to public health. So the product that the Koehring Company developed while I was there was a landfill compactor. In the process of doing that research to kind of find an innovative product for a new service, I found out that the garbage business had some pretty good upside potential. It was relatively new. It was not an industry. As a result of that, when I decided what I was going to do when I came back to North Carolina is I decided, 'Well North Carolina's got just as much garbage as anybody else. So I'll be in the garbage business.'
JOSEPH MOSNIER:
Did you see North Carolina as and the region as a hot growth area? Did you anticipate that in broad terms that the region would take off the way it has?
LONNIE POOLE:
No.
JOSEPH MOSNIER:
No. You were just coming home.
LONNIE POOLE:
I moved back here because I wanted to live here. No it was not—that motive was, the three motives. Live where you want to live, do what you like doing with people you like doing it with. I liked the people of North Carolina and I've grown up here. I liked to live here. Garbage was going to be the first attempt to find something to do. But I was not concerned if that didn't work out, I'd do something else.
JOSEPH MOSNIER:
Anybody else trying to get a similar sort of business underway on the model that you had in mind early on? Or did you think you had an opportunity to do something different?
LONNIE POOLE:
There were a few people. Basically the one thing that I didn't fully understand or take into consideration in writing up my first business plan, and I did have a five-year business plan, was that the cities were very involved in it. Little did I realize, that there would be a reluctance on their part to discontinue what they had been doing. The more modern up to date term is privatization. Privatization of the garbage business was really not something that cities were thinking about a lot in 1970. So when I tried

Page 3
to convince them that we could run landfills as a commercial enterprise, they were not very receptive. The end result is that that was a bigger uphill chore than I thought. Nevertheless we did in fact have five landfills operating by 1973. We weren't making any money, but we had five landfills. Because we weren't making money, the people that were, the other folks that had gotten into the business, were actually in the collection business. They were picking up in rural areas that were not serviced by the cities. So as a result of that, we bought six trucks and entered three separate markets, Wilmington, Henderson, and Raleigh. We were offering commercial and industrial collection service.
JOSEPH MOSNIER:
I want to make sure that I understood you. Your business plan that you drew up did or didn't take up the privatization concept.
LONNIE POOLE:
Yes, it anticipated that privatization would be welcomed by cities.
JOSEPH MOSNIER:
And then your experience was that it wasn't.
LONNIE POOLE:
And the experience was that it wasn't. And where did I kind of come to that conclusion? I lived in California, which had been privatized since the early 1900s. I had lived in a number of places, and the private companies did a substantially greater part of the solid waste function there than they did here. Even that's true until this very day. Overall in the whole country, a little less than thirty percent of the solid waste function is performed by governmental entities. In the South and Southeast and even a broader area than North Carolina, it's probably somewhere between forty-five and fifty percent is still done by city forces.
JOSEPH MOSNIER:
Tell me about—what were the key initial challenges. For example, how'd you find capital?
LONNIE POOLE:
A little bit of luck. I had managed to save up some money. So I had the equity in my house which was about $10,000. That's in 1970 dollars. So I had that money. What I didn't anticipate was that I had not lived here in ten years, and that I did not know people in banks, and people in banks did not know me. So when someone comes in that has moved twenty times in ten years, you have somewhat of a problem on your application for a loan, for a house, for a car and especially for garbage trucks or bulldozers. Anyway, it dawned on me that I was going to need capital, and I still had to support my family. One thing that I knew how to do was to sell construction equipment. A friend of mine, a cousin Jim Poole as a matter of fact, indicated that he was aware of Gregory Poole Equipment Company and suggested that they were looking for someone. And I might want to go and talk with Greg Poole who was the owner of

Page 4
that business. That was Greg Sr. In the process of that interview for a job to sell construction equipment, they are a Caterpillar distributor, Greg became interested in the notion of starting a garbage business, which I had told him about. That my plans were to moonlight in garbage and sell equipment full-time, but if my garbage business did in fact catch on and survive and thrive, then my intentions would be to be full-time in garbage. He became intrigued with the idea and suggested that he put some money in it. This is Greg Poole, Jr. Greg, the Poole, that Poole family and I'm not related—.
JOSEPH MOSNIER:
No relation.
LONNIE POOLE:
Had good credit facilities. They were very successful as contractors then later coal mining, then later Caterpillar Construction equipment sales. So they were well connected with the local banks and whatever. So Greg came to Ohio. We visited, and then I came back here a couple of times. At that point I had not moved. We did in fact, I presented him with a business plan. He became a shareholder almost from inception. We incorporated and issued stock as opposed to it being up until that point a proprietorship. Greg really became what is now termed in the trade as an angel and provided venture capital. Then I in turn issued him actually a majority interest in the company. So the capital was very important. Just by luck, meeting Greg Poole, it just brought it all together. First Union, which he was very affiliated, very much affiliated with at the time, became our first bank. So with First Union's help through loans then we were—.
JOSEPH MOSNIER:
On your way?
LONNIE POOLE:
Well, we thought we were on our way. We at least had capital.
JOSEPH MOSNIER:
Let me ask you to reflect back on your MBA years at Chapel Hill. Were you able to reach back and exploit any kind of relations or connections built during those years this many years later when you arrived here in the early '70s? Were those ties a little too distant and diffuse at that point?
LONNIE POOLE:
I had one person that I had studied with—when I went back to Chapel Hill, I had a part-time job. My wife was teaching school. We had one child. So there was not a lot of time left to develop relationships with people. I did have a studymate, Jim Nelson, who was with the NCNB Company. Through Jim Nelson, he was able to introduce me to some people. But most of it was really through the connection of Gregory Poole Equipment Company. Being an MBA graduate and a NC State graduate helped in a general sort of a way. It gave you some kind of instant credibility because a lot of people that

Page 5
were in the local business community either attended one or the other of those schools and in some cases both. Jim Nelson was actually a Duke, Carolina MBA. So through that I was able to meet some people. But mostly through Greg Poole. Greg Poole, Sr. I might add was very helpful. He was readily available with capital and the kind of support that came with that, but Mr. Poole was just so highly thought of. He was in his own rights a pretty significant mentor, not only for our business in the beginning, its earliest beginnings but also for a lot of other business. He had helped a number of other businessmen, especially contractors, loaning them money, renting them construction equipment, providing them with the wherewithal to start construction type businesses or construction related businesses. It was something that he did, and he did it very well.
JOSEPH MOSNIER:
Did you find your way very quickly into networks of other sorts of entrepreneurs? Were those kinds of networks yet much in place? I wouldn't think maybe so.
LONNIE POOLE:
No. It wasn't called networking. Networking didn't exist.
JOSEPH MOSNIER:
Right. Right.
LONNIE POOLE:
It was, you could call it collaboration. It's not who you know but who you knows. People have been making friends and influencing people for years and years and years. Networking is a recent sort of a terminology given to it. But no it was not a, it was a way of doing business.
JOSEPH MOSNIER:
How did you turn the first important corner in the business?
LONNIE POOLE:
The first important corner was very slow coming. As a matter of fact, well there were a couple of important corners. Let me tell you about meeting another person. I guess I had been in business about three or four months. We had incorporated. I'm just running all over the state. Talking with any county or city that would talk to me, trying to talk them into privatizing their landfill operations. They were basically dumps. I was going to clean them up, do it the way it was supposed to be done, and then charge a user fee.
JOSEPH MOSNIER:
You weren't talking about selling a management service. You were talking about acquiring them, is that right?
LONNIE POOLE:
That was right. I was going to come in. There were some laws beginning to emerge that said you had to get rid of the open burning dumps. They were a health hazard. My sales pitch was that I'll come in and I'll clean it up. I'll put the fire out. I'll kill off the rats, get rid of the stench, bury all that stuff and

Page 6
then run it like a sanitary landfill. In return I'm going to put up a gate, and I'm going to limit access. I'm going to charge people to bring their garbage here, which everybody thought I was an idiot. That that was the craziest thing they'd ever heard of. It was totally foreign. But nevertheless that was the concept, and I was running around trying to talk folks into that. My wife's cousin had married a young man named John Bradsher. He was a CPA. He was just up the street here on Six Forks Road at North Hills Shopping Center at a thing here called North Hills Office Mall, and I didn't have an office. We had two small kids and an even smaller apartment. It was not a home office sort of arrangement. So I had made arrangements. John had an extra office, and I had borrowed that office, which is where I kind of hung my hat. I'm there one day and Greg Poole called and said he would like for me to meet a young man that he thought had a lot of possibilities. I said, 'Well this is a great idea. We don't have any business. It's always good to meet people that have a lot of possibilities so sure. I've got time.' Over he comes and I'm there in my little small office. The only way you could really get a chair in this office was to kind of turn it sideways and in walks a man by the name of Jim Perry. Jim is getting out of the Air Force. He has a management, the equivalent of an MBA degree. It's a management in, Master's in Business Management. Anyway, it's a Southern California degree. He had an undergraduate degree in Ag Engineering at NC State. He was just as impressive as Greg had told me he would be. He was looking for a job. I didn't really have a job to offer, but I was thoroughly impressed with him. We talked and I said, 'Well, all I can tell you is what I plan on doing.' So I laid out what the plan was. He said that that sounded really good, and how much could I pay. I said, 'Well, not very much. But just to kind of keep me going, I'm making four dollars and fifty cents an hour or about that. So you probably ought to make a little less, so it'll be four dollars an hour', which was not a lot of money. What needed to be done was to find someone that we could talk into privatizing these landfills. He did have a car.
JOSEPH MOSNIER:
Key asset.
LONNIE POOLE:
I made him an offer of a job, and he took it. So Jim Perry who is now the President and Chief Operating Officer of this company and one of its major owners joined the company. I don't know if I have kind of made this up later but people have always said, 'What did you tell him that you wanted him to do?' I have always said, 'Jim you need to go do something important, and you need to do it quick.' So anyway, Jim joined the company, and we divvied the state up. He took half of it and I took half of it. We went out

Page 7
to sell people on the idea of us doing their garbage service. Things didn't go well. About a year later, we're really examining whether or not this is really going to work at all. In the meantime, Wake County had employed me to do a consulting study for them and to develop a solid waste management plan.
JOSEPH MOSNIER:
How did you find that bit of consultancy work?
LONNIE POOLE:
Well that was really easy, and it brought in money and paid some bills. But by this time, Jim at four dollars an hour and me at four fifty an hour plus we were paying each other six cents a mile for car, this was really cutting into our equity.
JOSEPH MOSNIER:
I'm sorry, I didn't put the question very well. What was the connection that led to that consultancy work? How did you have this connection with Wake County?
LONNIE POOLE:
I was trying to talk Wake County into—.
JOSEPH MOSNIER:
Your notion.
LONNIE POOLE:
Into the notion of doing landfills. Well at the time, City of Raleigh had a landfill, okay and Wake County did not. Wake County thought that it needed a plan. Wake County had never been involved in the garbage. City of Raleigh had always been kind of the way it was done. So Wake County said, 'Okay why don't you do us a plan because we've got a lot of trash out in the remote areas, the non-incorporated areas?' So that was what it really was all about. Anyway, after about a year, we still didn't have any business, and we talked it over, and we decided that we were just draining our equity. Greg had a job at MacGregor Downs to develop streets, put in water, and sewer. MacGregor Downs is a golf course community that his father had started and that the general manager, president and general manager would be probably retiring within a year or two. So it was a good fall back position. It was something that he thought I could do. So if I would, to go out and understudy Charlie Harris, the President. So I talked to Jim about it and I said, 'Jim this is kind of the way I think I'm going to have to go. We just aren't hitting it here with the—I mean there's a lot of resistance to privatization of garbage. So what we need to do is give it a rest a little bit and do some other things, but still do it on the side and maybe something will come out of it.' Jim went to work for the Credit Union, North Carolina Employees' Credit Union, and I went to work for MacGregor Downs Development Company. Within I think around just a few months, maybe a couple of months, we got a letter first from Wake County that they did in fact think they needed to put in a landfill. If I were to find a site and get it up and going. So there is a contract, which later turned into two landfills.

Page 8
They thought they needed two landfills. So we were going to have two. I was also awarded a contract to do the same thing by the City of Henderson in Vance County. And shortly thereafter I got another proposal we had put out was to find and construct a landfill in New Hanover County. All of a sudden now we've got business and two full-time jobs.
JOSEPH MOSNIER:
Right. But you said that you weren't making money early on in these landfills, the first couple of years, eh?
LONNIE POOLE:
Well, that brings you up to about the end of—those contracts were put in '71, we did little or nothing except the management contracts. Those contracts were put in in '72. By '73 we were operating actually five landfills: two in Wake County, one in New Hanover, one in Vance, and we were doing one kind of on the side for the town of Wake Forest. We were not making any money. The rate that we could charge at the gate was not enough to support the cost. So we bought the trucks. By 1979, we still were not making very much money in the landfill business. By that time, the EPA had been formed. RRCA, which was one of the driving pieces of legislation, was passed in 1976 by the Congress, Federal.
JOSEPH MOSNIER:
RRCA?
LONNIE POOLE:
RRCA, Resource Recovery and Conservation Act of '76. We had seen the first drafts of the regulation, which was not actually promulgated until 1980. But it had a substantial amount of risk associated with operation of landfills. So what little money we were making was not consistent with the degree of risk. So at that time, we got out of the landfill business and concentrated totally on our collection business, which was doing quite well and making money.
JOSEPH MOSNIER:
Yeah, can you tell me about the transition or the thought process the step through into purchasing the trucks and going the direction of collection?
LONNIE POOLE:
We bought the first trucks in '73, and we started with six. That probably, if I had it to do over again, I would not have done that. We went into three markets simultaneously, quite remote from each other. But anyway, Jim was at that time running New Hanover County. That was an interesting dinner convincing his wife that he should give up his job with the Credit Union and come back to work for this garbage company that may be successful. But anyway we took her out to a nice Italian restaurant—.
JOSEPH MOSNIER:
And won her over.

Page 9
LONNIE POOLE:
And we were persuasive. I was persuasive. So that involved Jim not only giving up his job but he gave up his job and he moved. He did New Hanover County contract, which was to find a site and get it up and running. Then I did the Wake County sites. Then I acquired a small grading company business, and the guy brought his equipment and everything over to Henderson whole dump and cleaned it up. He became—we bought his equipment, and he became the manager. The thought process at that point was to put in three garbage trucks or two garbage trucks in each of those places. One that picked up the dumpsters and the other one that picked up the big containers that we call industrial. To not only have a landfill to take it to, but to have trucks that could go out and get it because at the time if you charged fifty-five cents, a lot of people would drive their trucks fifteen or twenty miles to avoid having to pay the fifty-five cents. So we decided that what we were going to have to do was get our own trucks and pick it up and we could , since we were closer at hand, we could make it up on the transportation. Anyway, that's the way we did it. The landfill wasn't making money and the collection was, so we just kept adding trucks. Actually we made a goal to open one new collection operation per year. We pretty much stuck to that plan until we went public in 1997. We opened up one new market every year.
JOSEPH MOSNIER:
What—.
LONNIE POOLE:
The business plan that we started with in 1970, except for the fact that we discontinued landfill and we added in trucking, we pretty much at the end of the fifth year had gotten to where we wanted to be dollar wise. Maybe we were a little behind on the bottom line. We did another five-year plan, and then we did another five. We just keep doing fives, and then fives turn into twenty, and now here we sit. Our company's twenty-nine years old.
JOSEPH MOSNIER:
Did you ever have to walk the halls over in the Legislative Building and the Capitol Building and try to twist arms. Was that ever a part of your—.
LONNIE POOLE:
Oh yeah.
JOSEPH MOSNIER:
Yeah. How did you find your way into that?
LONNIE POOLE:
The first ten years, I spent more time in City Halls and County Courthouses, and our involvement was more at the local level. But I guess I would have to say that in the middle '80s the Federal acts, you had the Clean Air Act; you had the Resource Recovery, RRCA '76 Act; as well as a number of other Federal mandates that that precipitated state legislation. In that legislation we often found that

Page 10
especially in North Carolina that the private sector was almost forgotten as an alternative. It was a city/county function almost to the complete neglect that the private sector even was involved or had any contribution to make. So the first ten years I would say from '80, all during the '80s, it was a matter of carving out a place for private companies.
JOSEPH MOSNIER:
On this theme—.
LONNIE POOLE:
The legislation always was written and the law was written for cities and counties. Well, there were a lot of things that were different in cities and counties. One, we pay taxes; they consume taxes. There was almost, there was an evolving standard that was expected, and the inspections were not made on an evenhanded basis. The inspections were much tougher for a private company than they were for a public company. It was, government when it regulates government is probably seen in its worst form because it was not a level playing field economically or legislatively. So finding myself in the halls of the North Carolina Legislature and South Carolina Legislature was primarily one to try to in some way to level the playing field. It was extremely unlevel at the time. North Carolina was the first state through, and I've got to brag on our company, through Jim Perry and my efforts down there, we were the first state to get three major pieces of legislation, and they may seem small but one was weight relief. Our trucks got stopped and were overloaded, and we paid serious fines. Cities and counties did not. We did not get that practice discontinued totally, but we did get a ruling that cities and counties could be fined for overloading trucks if caught on the public highways.
JOSEPH MOSNIER:
When abouts did that happen, that ruling? In the '80s.
LONNIE POOLE:
The second thing is if our trucks did get caught is that we and cities and counties would be entitled to a fifty percent fine rate. So that was good legislation. That was one part of it. Second part is a just comp piece of legislation that says if a city annexes my business, then the city it amounts to a taking, then the city must pay us a multiple of our monthly revenues. That was the second part of it that we got approved.
JOSEPH MOSNIER:
And that legislation specified the multiple?
LONNIE POOLE:
It did.
JOSEPH MOSNIER:
Okay.

Page 11
LONNIE POOLE:
And it's still to this day somewhat novel in the entire country. There are probably thirty or forty states that have now adopted that legislation, which was first adopted here in North Carolina. The other was, is that we had to compete against cities, and we were paying fairly substantial fuel taxes. For the large part that fuel was being used to compact the waste, and we were not actually consuming the fuel on the highway. So it was a combination vehicle that used the fuel for dual purpose. One to compact and to collect and lift it up and do all these things plus transport. So we got another piece of legislation called Fuel Tax Rebate, and we actually get back in this state to this day, a third of our fuel tax.
JOSEPH MOSNIER:
Who were the key legislative allies in these efforts? Can you single people out? I'm interested in particular not so much the names, but how you built relationships with them?
LONNIE POOLE:
If I just carved out one, and it was a personal friend of mine and I knew him through Poyner, Garety Hartsfield and Townsend is now a part of Poyner and Spruill. The attorney that incorporated us, Tom Norris was from there. But in the process I met a person named Marvin Musselwhite, who later was elected to the House of Representatives. Marvin, we hired to help us walk this legislation through the halls. Then I can't remember the name of, Ramsey from the mountains—.
JOSEPH MOSNIER:
Liston.
LONNIE POOLE:
Liston Ramsey, Liston Ramsey's secretary married Joe Barber who came from Garner who actually came from Route 2 Raleigh, which is where I was born. I knew Joe Barber and through Joe Barber I met his wife. His wife was Liston Ramsey's number one person. Then the other person that helped Liston a lot was a fellow named Roger Bone. By that time we were doing work down in Wilson County, and Roger Bone sold International Equipment. We bought some International Equipment from Roger. Roger introduced us around in the Wilson community, and we did garbage work there primarily for Firestone. Roger Bone was one of Liston's right-hand people when Roger was in the legislature.
JOSEPH MOSNIER:
Did, I don't mean to ask an indelicate question but did you—.
LONNIE POOLE:
I went to school and graduated with Jim Hunt for goodness sakes.
JOSEPH MOSNIER:
Ah well. Okay. Okay.
LONNIE POOLE:
He graduated at NC State in 1959.
JOSEPH MOSNIER:
So you had known Jim Hunt in college?

Page 12
LONNIE POOLE:
I had, I think it was my junior year four of us decided we would put together a slate of officers, and we would run for all of the junior class officers. It didn't look like much competition to us, but unbeknownst to us there was a young farmer boy from Wilson named Jim Hunt. He decided that he wanted to be the junior class president. He kicked our butts so bad it would've been an embarrassment to our mothers. Anyway we did run against him. It may have been our sophomore year, but whenever we ran Jim Hunt even in that day was a master politician, and he really did great. Those are some of the names that come to mind.
JOSEPH MOSNIER:
Let me ask you this, two questions. One is did this acquaintanceship with Jim Hunt matter in a substantive way over the years to the businesses' fortunes or just it was a helpful thing in the background?
LONNIE POOLE:
You know I guess, if I had to list it in the debits and credits, I have served as a resource to Governor Hunt to a much greater extent than I have, I've never—I don't recall asking him a favor. I have warned him about legislation that was really bad. I have tried to alert him that while you gain a lot of authority over garbage, it's one of those things that you've got to be careful what you wish for. Wishing yourself into a position of authority over garbage can have both its upside and downside. I've tried to offer some advice. I've served on a number of study commissions in the state. I served on North Carolina Energy Development Authority, which was to investigate ways to convert garbage into energy through incineration. I've got to turn to those three pieces of legislation. They became somewhat of a milestone for our national trade association. It came to light. I didn't think much about it, but the trade association thought that was absolutely wonderful. So I was elected to the board of directors of the trade association. Later elected to last vice chairman, they used a rotation system, last chair, fifth chair, and fourth chair. So anyway, and ultimately became the chairman of the NSWMA, which is National Solid Waste Management Association, which later during my reign really was changed to Environmental Industry Associations. It was completely reorganized. So I served for two years as the spokesman of a national trade association. That got me to Federal, to the Federal level. Actually I testified in both the House and the Senate on various environmental laws. During my term as chairman in the first year, as I recall, there were about 880 pieces of state legislation that were up for passage in the various state legislatures. It was a time of—this was 1991-92. It was a time of massive amounts of state legislation. Some of which were good and some of which were bad. Some of which were absolutely adverse to the private sector. In the early '90s the private

Page 13
sector was probably doing maybe sixty percent of the function on a national basis and about forty was still done by cities. The privatization movement was still continuing. The industry was still continuing to consolidate. In other words we started in business in 1970, there were about 14,000 such companies as ours. So at some moment in time we were number 14,000 in the pecking order. I'm not sure what year, but I think we made the top one hundred in '92 or '93.
JOSEPH MOSNIER:
How about that. Let me take you back, and I'm anticipating lots of conversation about those years as well, but first a couple of questions. You had mentioned your sense of the uneven playing field, public trash and landfill operations as against private. Obviously saw an economic opportunity there. Was it also a matter of political philosophy for you? Were you engaged at that level in way of motivation or were your motivations more that it was a business plan that we can execute and make some money?
LONNIE POOLE:
It was more business than political.
JOSEPH MOSNIER:
It wasn't that this thing just caught in your craw that they had set up the playing field not in a balanced way, and you had some deep philosophical objection to that that got you out of bed every morning.
LONNIE POOLE:
Not sure I understand the question.
JOSEPH MOSNIER:
There are folks you come across—.
LONNIE POOLE:
I actually was—yeah I got caught up a little bit at the time into the pro-government what government should do and what government shouldn't do. I had my own notion, and it was with bias of course.
JOSEPH MOSNIER:
It was with bias?
LONNIE POOLE:
With a lot of bias. Anytime that a governmental entity would decide that they were going to run their own landfill and charge a fee, which was essentially my idea. Their reason for doing it was that if I could do it and make a profit, then they could do it and save the taxpayers money. I found that argument to be somewhat hollow because technically with an unlevel playing field, government can do everything less expensively and save the quote taxpayers money. I'm certainly not of the camp that believes government should be all things to all people. If they were already involved in it and running a good show and had a good sanitary landfill and they complied with all the of the regulations and wanted to do that as part of a tax supported services, then that was certainly within the prerogative of the city to do that. But on

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the other hand, if we had the idea of making it an enterprise activity and brought the idea forward and did the research and found the site, we did that in a number of cases only to have the idea and the site pirated by municipal forces. That would, that can kind of grate on you when you come up with good ideas and whatever. So that got in to the philosophical area but basically my motives were always to make a profit. I only got philosophical about it when I lost the deal, and I was trying to find well is there some redeeming benefit that's going to come out of this. I would find maybe some day. But not right now so it was always the business.
JOSEPH MOSNIER:
These efforts to work the halls in Raleigh and try to make sure that you get some—you mentioned the three key pieces of legislation that finally got passed over there that helped straighten things out for you folks. Did you ever find it necessary as a business decision to be involved in the electoral realm of politics supporting candidates? Did you judge that necessary to the fortunes of the business?
LONNIE POOLE:
No. As a matter of fact, I've always been pretty careful to—I give what I can to help people finance their campaigns. But there's a real fine line between that and paying off people. I never wanted to consider it to be a bribe or pay off or a kick back. I found—.
JOSEPH MOSNIER:
I certainly didn't mean to suggest that.
LONNIE POOLE:
There's somewhat of an inconsistency between the term of the politician and the term of a garbage contract. If you took, we now currently do 155 contracts. My oldest contract is 1973. Never, no interruption, 1973 to current in a city picking up at the house. We are and have been their public works department through many, many, many city council people. Okay, so you have to be real careful is it may get you the engagement, the contract, but it also if not done properly will cost you the contract. The time we got in the business, what do you call it—it's like nepotism it's, partisan politics was the—we didn't have city—.
[END OF TAPE 1, SIDE A]

[TAPE 1, SIDE B]

[START OF TAPE 1, SIDE B]

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JOSEPH MOSNIER:
This is side B of the first Lonnie Poole cassette.
LONNIE POOLE:
So in the conversation about making contributions, the intent in our contracts is for the contracts to last for long, long periods of time. People run for elected office on two or four years schedules, and even sometime they don't serve out those entire periods of time. So you have to be very, very careful. At the time we got in the business, if the Republicans came into power, basically they got rid of everybody, the county manager if they had one or the county administrator, the clerk, the tax collector, everybody. Some with cities, partisan politics, when a new broom came, it came sweeping out the old. If we weren't very, very careful, we were part of the sweeping. We got swept right away with the politicians that got swept away. So we made it a point to distance ourselves from the electing process, and we basically provided a service for a city. Whoever was in power at that particular time was who we served. It was up to them to get into power, and it was up to them to stay in the power. We did a good service in what we did, either collecting the garbage or running the landfill as a way of doing that and not necessarily through contribution to their political campaigns. As a matter of fact, we've had to be very careful over the years to not let politicians put their vote getting signs on our dumpsters because it can be misconstrued by the opponents that we actually through our truck driver had them put on there. So it's a delicate little subject.
JOSEPH MOSNIER:
I can see the point. Let me ask to focus sort of late '70s. Company's been up and running for five plus years. What are the marketplace dynamics in which you're operating and how is it that waste industries is emerging as a successful growing company when lots of these other 14,000 are fading away? There's a consolidation process I suppose even as early as that or not quite yet?
LONNIE POOLE:
Yeah, by the late '70s we had not acquired a lot of companies. Our primary means of growing was through bidding on contracts and simply knocking on doors. We had put a couple of sales people in place. But it was no, not the consolidation. As far as what were the dynamics, a lot of the little towns were beginning to believe that privatization of their solid waste function really was the way to go. We took on our first one and to provide residential collection in 1973. Still have that contract and it's in the town of Oxford.
JOSEPH MOSNIER:
I'm sorry, Oxford?

Page 16
LONNIE POOLE:
Oxford, North Carolina. But it gets back to, the market dynamics would be the economy of scale. When a town has just a very few houses, they wind up with fractional trucks and fractional people. We on the other hand were doing more than one town, so we gained the economy of scale that was being achieved by the larger cities. We could find out and understand the cost of the things by getting involved in the larger cities trying to get their work. But where it really paid off for us was in the really small towns. Small towns it was a headache anyway. So if they could get rid of the old truck they had and the people, and in many cases we offered the people the jobs and bought their old trucks. So that's where the collection thing was beginning to really take effect and do us some good.
JOSEPH MOSNIER:
When did your revenue growth really start to move up? Has it been fairly—?
LONNIE POOLE:
Let me—at zero and by, as a ten-year-old company our revenues hit four million, 4.4.
JOSEPH MOSNIER:
1980.
LONNIE POOLE:
Right. By 1990, we were at 32 million, and this year we're going to wind up at 171 million. So I would say that we kind of went backwards a little bit around '78 or '79 because we were closing the landfills, and that was going backwards at the same time we were going up. But I can't remember the year that we hit a million. I know that we made a profit in the third year. We actually made a profit, and it was some time in the fourth year that we had actually gotten back all of our investment and we were in a mode then that it was not a question of return on investment, it was return of investment. So we got back our money, and then we hit kind of a lull in '82. Greg Poole, who I told you about earlier, had other business activities. His father had passed away. He had some fairly significant estate matters to attend to. So he actually sold his interest—.
JOSEPH MOSNIER:
Back to the company.
LONNIE POOLE:
Right. It was actually a recapitalization. It had all of the markings of a leveraged buyout, but we did not actually, well we did in a way. We bought some of his interest, stock back and the company redeemed some of it. The end result of it was Jim and I became the significant owners of the company. Greg stayed out until 1988. One of the things that he had thought was that he may get his situation cleared up. If he did, he would like an opportunity to come back. So we gave him the opportunity to buy back in the form of warrants, which he exercised in '88 and came back as not as significant a shareholder percentage-wise, but significant dollarwise.

Page 17
JOSEPH MOSNIER:
The warrant structure was part of that recapitalization.
LONNIE POOLE:
That's right.
JOSEPH MOSNIER:
Let me ask about this. I'm curious to know about how the early environmental movement so to speak that's just kind of beginning to be kind of recognized in the US in the '70s, how does that come to impinge if at all on your business over time, recycling, landfill environmental concerns those kinds of things? We talked a little bit about that earlier, but how did that begin to be part of the landscape where you were operating?
LONNIE POOLE:
There's really never been a time in the history of our company that public policy hasn't had a pretty dramatic impact on our business. Now, it's not been the same thing over the whole time, but public policy and public emotions and the political winds have always had a dramatic and direct bearing on our growth as a company and development as a company. We were not—in 1970, we were not an industry. We were a mom and pop business. There were 14,000 or so of us. There were ten thousand landfills. The inventory that comprised the infrastructure was really not known. It was a kind of a by guess and by golly sort of numbers. There was not an EPA. There was not a regulatory framework. But the first Federal initiatives and studies and grants where they found out what was in garbage and what are the bad health hazards that can emerge from not doing a good job with your garbage did in fact stir the public interest up. The public actually, once they were sensitized to it, found it quite offensive to have a burning dump right outside of town. Now it was very convenient, but those people who lived over there, it was kind of an obnoxious mess. It had rats and smoke and stink. In the bigger cities, which North Carolina doesn't really have any big cities, it was an even more of an obnoxious mess. It was a health hazard. The stuff was either being put into a, the place you put garbage is normally into a swamp or into some ravine. We just did a really bad job of it. Once the public got onto that, then they expected more and then that drove public policy and legislation to do a better job and to develop and construct sanitary landfills. Then the public said that we don't want the landfills close to our house. We know we need them, but put them next to somebody else. That's the not in my back yard syndrome. So the end result of that was it became very, very difficult. We were closing substandard sites, but no one wanted you to open up another one. So there was a period of time that we went through this great fear of having a lack of capacity. When that occurred, anyone that had landfill capacity started charging rather serious amounts of money to use up the quote air

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space. That was in the middle '70s. There were actual lawsuits later that that had been contrived by certain business people and there that was, it was a contrived capacity scarcity thing only to feather their own pocketbooks or line their own pocketbooks. That was not the case, but that was a very big issue back in the '70s. I guess if you had to name the major driving force. It comes down to this we talked about doing a better job and standards but the recovery, resource recovery, that's the recycling part of it. The public embraced that to a much greater extent than even the politicians in their wildest dreams thought they would. The public said, 'We have got to recycle these resources.' With that, up until that point, we had basically a singular waste stream. It was some 200 million tons of solid waste. It was in this singular stream. It was all headed to the dump or the sanitary landfill, whichever way you call it. When we got into recycling, we also got into multiple classes of landfills. We excluded certain landfills, and we said that the landfill is not the final destination. There are multiple destinations. The upshot of that was due to public demand is this waste stream singular, split into thirty or forty components and taken to different places. The sanitary landfill wouldn't take a rubber tire. It had to go to yet another place. The sanitary landfill wouldn't take brush. It had to go to another place. So what that created was a lot of processing, and it created a lot of transportation, and it created a lot of work. That work took this from being a four billion-dollar industry in 1970 into the '90s, it suddenly became a thirty-five to forty billion dollar business. So what had an impact on us being successful is that the public said, 'Let's split it into thirty-two different piles and take it to different places that are further away.' That creates such an immense amount of work, we of course charged for that kind of work but the public wanted it. We were there geared up and ready to provide it and that had a dramatic bearing on our company.
JOSEPH MOSNIER:
When was the first time that Waste Industries started to recycle some part of the waste stream? Do you know what year that would've been?
LONNIE POOLE:
'70-uh, we did a short time in '74, '75 and we lost our shirt. We were baling cardboard. Seventy-four, '75—we bought a baler and put it in a building over here on Wake Forest Road . We went around to the grocery stores and put in a system whereby they could segregate the meat and the lettuce leaves and all that stuff and put it into giant plastic bags. Then when we would get those containers, we would dump them out. We would take those giant plastic bags, and we would put them back into a garbage can and all the cardboard would be left clean and nice. We'd bale it up and sell it. Well, it was a great idea,

Page 19
but several people had the same idea bout the same time. The end result was the price of cardboard went to zippo, below twenty dollars a ton. So we were trying to bale—this is a lot of candy for a nickel to bale a ton of cardboard boxes for twenty bucks. So it was not profitable. So we sold the baler and put in a garage in that same building. We didn't really get back into the recycling big until we had the mandates and that was some time in the, momentum really started to pick up in the late '80s, early '90s.
JOSEPH MOSNIER:
What was the character of those mandates?
LONNIE POOLE:
What was it?
JOSEPH MOSNIER:
What was the character of those mandates?
LONNIE POOLE:
Well, the Federal government said that we needed to recycle ten percent of the waste, and that was a Federal thing. It had to be, the part of the legislation said that a state would have a solid waste plan. Part of that solid waste plan would be a ramping up of the amount of either recycle, reused or—what was it—recycle, reuse—
JOSEPH MOSNIER:
Reduce.
LONNIE POOLE:
Yeah, or reduce, but primarily recycle. They wanted it ramped up. Let the state start at ten and go up to fifteen, twenty, twenty-five. The state had to put in a promotional mechanism to achieve that and convince the people that that was a worthwhile goal. That goes on until this day. It was initiated basically at the Federal level as a part of the RRCA Act of '76, which later became a part of the state solid waste plans, which the state actually spent money on and promoted. Then cities and counties embraced that. Then they required that we embrace that. The end result was that we achieved in this state around twenty, twenty-five percent recycling now.
JOSEPH MOSNIER:
What's your sense of how far along in their maturity are all of these attendant industries related to the reprocessing of recovered materials from the solid waste stream?
LONNIE POOLE:
I think they're in their infancy.
JOSEPH MOSNIER:
Still quite in their infancy.
LONNIE POOLE:
Yeah it's so crude. The markets are chaotic in it right now. I can look at it through our viewpoint. We wind up with either too much or too little all of the time. We've got too much cardboard; we've got too little cardboard. The way the thing works, we can't send a notice to people and say, 'Well you know we want all of your cardboard this week.' and then say next week, 'We don't want any.' You have to

Page 20
do it all of the time, and then that creates gluts. Then the gluts drive the price down. Then it rambles all over the place. We are also impacted by other things. When the pine beetle attacks the trees in North Carolina, South Carolina and Georgia, all of the sudden the best thing for the big timber companies to do is get the big trees out of the woods. We've got lots and lots of trees. Or then a hurricane comes through and knocks down worlds of trees. All of a sudden everybody's cutting trees and nobody wants cardboard, used boxes. That's the way they're making paper. Then they say, 'Hey let's, this is a great growth year. Let's leave the trees in the woods and let's use the old boxes and up goes the price.' Everybody and their brother gets in it so it just wanders all over. You have the Shah of Iran or the OPEC. This is a great one, OPEC can't agree. Should we be selling the oil at twenty-two a barrel or should it be twelve? Well, let me tell you, it makes a lot of difference when you're recycling plastic bottles. So plastic bottles all of a sudden go to a worthless kind of raw material when oil's at twelve. Twenty-four, twenty-five or at forty, price of those bottles goes way up. There needs to be a mechanism for selling futures contracts. That hasn't been done.
JOSEPH MOSNIER:
A decade, two decades, three maybe down the line do you think for that industry to begin to mature in a real substantial way?
LONNIE POOLE:
Let me come at it from another perspective. We in the business and the big manufacturers have to go out there and they spend ten, fifteen, twenty million dollars on a plant to use recycled commodities and everybody says, 'Hey, I don't want to do this anymore.' So the public whim stops, or they know us to be up and down. Our primary core business is collecting garbage. But we do this and all of a sudden, they've got a ten, twenty million-dollar investment that's dependent on us and the public. So they too have their reasons for not investing too much and getting too far out front. So we could all benefit ourselves and I do believe that it would be recyclables would be viewed as a primary raw material inside of ten years, inside of ten years.
JOSEPH MOSNIER:
Let me turn your focus back inside the company and have you talk about, were there central internal management issues that you had to tackle along the way? Any particularly noteworthy developments in the '70s, '80s, early '90s that presented you challenges as a manager?
LONNIE POOLE:
No and actually we had discovered that we have a particular style of management that's different from other companies. That's one of the problems with being in the same company for a long,

Page 21
long time is our management style and structure has evolved as a result of one, I went to Chapel Hill and then I went into military service. I was not especially fond of an autocratic, highly centralized form of management, which you find in the US Army. I was also exposed to a very centralized and very autocratic style of management in Ingersoll-Rand Company. The Koehring Company was a diversified conglomerate of construction equipment manufacturers. They employed a decentralized management style. I didn't sit back and ponder these. So when I came to North Carolina and started this business the style that I personally liked more without analyzing and pondering it was the decentralized form of management. The other thing is just basic practical reality of things is a couple things. One I can only drive one truck at a time. That's it. So you become very dependent when you hire the first driver, you then have to give him some latitude. In fact what you do is you give him that truck and then I had my truck and Jim had his truck. We ran our trucks. I didn't run his and he didn't run mine. That was number one. Number two is that garbage customers won't put up with any guff. You either picked it up, or you didn't pick it up. And you either get it within the next hour, or I'm getting someone who will. So there's a complete intolerance of a lack of service. I mean, it is a short span of time.
JOSEPH MOSNIER:
I hadn't thought about it but I guess that's right.
LONNIE POOLE:
You either get it. So we are now in three places a hundred miles apart so it has to be decentralized. I personally like it, and it's what you have to do in a service-related business that requires responsive service. So what we have is what has evolved. It was not to sit down and let's design a management system. It was not until we tried to put that on a piece of paper and define it for our public offering that we really said that there is a unique style of management. We are, we have a decentralized form organization structure. They wanted us to write that out, and we did.
JOSEPH MOSNIER:
Over the years, what have been your most important sources of what I'll call sort of intellectual stimulation of a business and company sort? What have been your idea inputs? Where have your sources of information come from?
LONNIE POOLE:
Other people. Other people.
JOSEPH MOSNIER:
Folks in the trade association I imagine, friends, colleagues, social contacts.
LONNIE POOLE:
Well, you do know it's a myth that you're in business for yourself? You're your own boss. That's—nothing could be further from the truth. In finance, I'm guided and impacted and led by my

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banker. We borrowed, over the years, we've borrowed tremendous amounts of money. For what it's worth, it takes about a dollar, today it takes about a dollar and fifty cents of capital to get a dollar of annual revenue. That hasn't changed dramatically since 1970. At that time, it cost about a dollar. Today it's more, then it was more labor intensive. Today, it's less but not a lot. So you're guided financially and led by your banking relations. The operational side of it is that competition can often get an upper hand on it. So you're led by your competition is that you don't want them to get a better mouse trap or provide a better service or gain any efficiencies over you by having better equipment. So you develop your technology through watching competition and listening to vendors and suppliers because the innovativeness is their stock and trade. They sell you a better truck, a faster truck, a lighter truck, a safer truck, a more durable truck. So you follow that end of it operationally. Marketing is run by a lot of things. We're in both the selling to private companies and to the public sector. So there's a way that you sell to the governmental entities and then there are ways that you sell to companies such as IBM, Glaxo, and whatever. So in marketing, it's primarily through just getting out and talking to people. The good thing about our business is that you don't have to isolate your customers. Everybody's got garbage. That's one of the, kind of the beauties of this thing is everybody is potentially a customer. So anyone I meet is a potential customer. So marketing is kind of where do you get information about it is being active. That drives primarily on external sources. We've long been members of Chamber of Commerce, all organizations. I need to catch a guy that is walking out.
JOSEPH MOSNIER:
Sure, sure. About the acquisition strategy you've pursued over time and how you've implemented that.
LONNIE POOLE:
We have acquired a few companies, but in the history of the company, we have acquired, I think, thirty-seven companies. Of that, we've acquired thirteen in the last twelve months. So we've really stepped up that activity in the early part of '96. That was primarily to prove that there were one, enough companies that we could buy, and two, it was to layer that method of growing on top of our internal growth rate. That was one of the compelling reasons for doing a public offering.
JOSEPH MOSNIER:
How about the course you've navigated as against the wider trend within the industry towards consolidation, and I'm thinking of say BFI, Waste Management and so forth. Can you kind of paint your position in that wider landscape?

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LONNIE POOLE:
They both started before we did. They grew almost totally as a result of mergers and acquisitions. They have also grown with some internal growth. It's interesting that you should ask. BFI is currently being sold to a company called Allied, and Waste Management was acquired last year by a company called USA Waste. Those were number one and number two in the industry for as long as I can remember. So we are a little slower, and we still exist. We're in the top eight publicly traded companies now. Come second quarter of this year, neither one of them will be. Waste Management is already out. Now there's a company called Waste Management, but it's a case of a smaller company buying a larger company. It may be true that big fish don't eat little fish. It may be true that fast fish swallow slow fish.
JOSEPH MOSNIER:
Let me turn to what is page two of this letter that I wrote you with some questions for this conversation. Let me ask you a few questions out of what is designated there as section three, business in society. How about your sense of—these are turning to matters that are a little more philosophical—your sense of the proper corporate role in relation to the wider community. How have you tried to position the company in that regard?
LONNIE POOLE:
Well in the context, we have four basic cornerstones in our overall corporate strategy. It comes down to building value, and we first try to build value for customers. We second try to build value for employees. We third build value for shareholders. A fourth part of that is to build value in the communities where we serve. As long as we do all of those things and keep the priorities right and keep the balance right, then it's good for the company. If you skew it too heavily toward one or the other of those groups or neglect any one of those groups, then I think philosophically a company will have problems.
JOSEPH MOSNIER:
How about your perspective on the broad business climate in North Carolina across these years, uniquely a good place to do business, or just a good place to do business that's done especially well?
LONNIE POOLE:
It's better now than it was in 1970. But it wasn't bad in '70. Is it unique? Probably not. I think that North Carolina is part of a bigger thing called the Southeast. I think, it certainly as it applies to our business. There are two things that we see growing faster in the Southeast, not just North Carolina. One is the economic activity is about a third faster than the national average in population growth is about a third faster. The two primary drivers of garbage generation are people and economic activity. So from our perspective and those are kind of what we look at, it is certainly great in North Carolina. It's better in some

Page 24
places than others. Is it just unique to North Carolina? No. It's a southeastern thing. But are there other markets that we think exist in areas outside of the Southeast that are just as exciting. But we just happened to be here, and this is our market and we like it. I'm glad we have a robust economy.
JOSEPH MOSNIER:
How much is North Carolina hanging onto what maybe a full generation ago was a certain regional distinctiveness in business activity and character?
LONNIE POOLE:
Are you talking the Triangle area or—.
JOSEPH MOSNIER:
Well perhaps, or your experience here. Is North Carolina still a Southern or a regional, does it have that kind of feel any longer? Has that given a way to a different kind of business style?
LONNIE POOLE:
It does to us, but a lot has changed. We speak of global, and you're as close to someone else as you are to your computer through Internets and websites and all kinds of different forms of communication. It certainly is a smaller world. I don't think a thing in the world about going on a day trip to a business meeting a thousand miles away. When we first started in business, I didn't do that because one it was cost prohibitive, and secondly I couldn't afford it. In today's business world, taking a day trip to Dallas for a two-hour business meeting is not unheard of. Most of the background and backdrop for that can be done in faxes and communicating through email and whatever. So then you're only down to just those things that require the personal eye to eye contact. There are still many, many things that need to be done that way. Does North Carolina still have that local flavor? I think it does. From our perspective, we see the communities where we work, and they're still small towns can have just as many bad small town habits as it did twenty-five years ago. Kind of what was it Andy Griffith and Mayberry? Not quite that bad, but small towns can still be the ultimate in small townisms. But on the other hand they're a part of everybody recognizing we're part of a bigger more global thing. Communications are faster. Information is instant. It's all hooked together, and everything moves at a much faster pace. Have the good and bad of both.
JOSEPH MOSNIER:
Let me ask you for your reflections on a few issues of the wider North Carolina economy. What do you think are the most significant factors leading to the tremendous, broad economic expansion across say the last generation in North Carolina? The move beyond the traditional say textile, tobacco, and furniture sorts of manufacturing industries to what you see out there today? Why here in North Carolina? Why such success?

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LONNIE POOLE:
I know more about this particular area, the Research Triangle Park. One, you have state government and three major universities that are not really knocked around and beat up nearly as bad in economic downturns. So there's more stability to the economy. As a result, as private businesses have moved in, they've enjoyed the benefits of that good stable economic situation. What we have attracted is more in the way of intellectual endeavors. It's been mostly in computers and medical research, which were the first companies to really visit and embrace the Research Triangle concept and to build a closer relationship between the university system and various businesses that moved here. A number of businesses that are involved in just pure research. Then the thing kind of expanded beyond that because as these three universities grew, you had the community college thing and that is a way of taking applied technology and moving it out to folks that can really use it to fix your commode. That's important because you can have all this high tech stuff all you want to, but you also have these practical applications. So the community college system trained the people who did the work. That was very important. Then the greater North Carolina, I read in the paper I think this morning, some of the greatest assets we had was at the greater University of North Carolina, which we've seen Wilmington, Charlotte, East Carolina grow into major universities in their own right and Greensboro. So some of the schools that were nothing back in the days when State, NC State had three or four thousand students. Some of the lesser, they were not even on the map. They weren't even a full dot. They now have three and four thousand students in their student body. The whole state has expanded through education, getting into more intellectual things. That in fact has replaced to a large extent an agricultural society and one that had gone into furniture in the West and textiles in the Piedmont and fishing on the Coast. So we're a more diversified state. We still haven't completely gotten away from the impact of tobacco. Only time will tell how orderly that exit will be. But one thing's for sure; tobacco will place a lesser and lesser role.
JOSEPH MOSNIER:
What's your sense, some people are even in the midst of all of this tremendous growth, some people observers will ask the question, how well and equitably is all this new economic activity being distributed down the socio-economic ranks. What's your sense of that? How well North Carolina's doing, bringing all of its folks along on this ride? Do you have a sense of that, a perspective?
LONNIE POOLE:
I think I'm correct, my dad ran a service station for another individual when I was going to college. He made fifty dollars a week. I made whatever I could picking up part-time work. It was reported

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in the newspaper not too long ago that my family's worth 138 million. So I have seen at least both ends of this spectrum. If you ask me where it ought to be in between where I came from to where I am at, I can't say I really know the answer. But I can tell you that I have thoroughly enjoyed both ends, but I'm glad that I'm at this end now. Where should it be? I'm not into equitable distribution. I don't think all of what I have done is luck. I took a great deal of risk. I take a great deal of risk every day of my life. It just turns out that I'm pretty well adapted to it, and I've succeeded at it, and this is extremely fertile ground. But you've got to remember that I do a very humble job in a very harsh environment. Picking up garbage is not an easy way to make a living. I've had a lot of friends laugh at me and say, 'Surely with an MBA degree and an engineering degree, you can do something besides pick up garbage.' You know, I took a very simple task and have attempted to do it very well. We have as a company. Does that still exist? I really do believe it can. I think as time goes on, I mentioned facetiously a minute ago is that you've got to move the technology out in to the field. Somebody's got to fix the commodes. Somebody's got to wire the houses and put up the sheet rock. So I see craftsmen making better money than they've ever made, and I see that continuing to increase. Further see it happening voluntarily as a result of employers recognizing the value of people to a much greater extent and not having to put up with the interference of labor unions. I think one of the things that kind of hurt the textile people is that the early inroads were made through textiles by unions. It served I think in hindsight more as a deterrent a way of not distributing the wealth so to speak than it served to redistribute it.
JOSEPH MOSNIER:
How has, what is your experience been like in the way of managing around the issue of say race and gender? Certainly in the last generation there have been tremendous changes in society for African Americans or other non-Caucasians and for women. Has that been something, have those issues been issues to which you've had to give much attention as a manager in your experience? Or have they largely generally sort of taken care of themselves?
LONNIE POOLE:
I can tell you that I'm less sensitive about such issues than I think most people. More of my neighbors were black than white. So I've basically grown up and the people that I played with and worked with were black. The people that I went to school with were all white even up through, matter of fact NC State had admitted the first black when I was in school there. Now we had made great strides with the women. We had admitted fifty-two of them. So I went to a lily white, all male university. It was the topic

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of conversation, and I once wrote a paper. I told them I did not know the answer nor did I know when the answer would evolve. But I did know how to recognize when it had and that would be when we were able to tell black jokes or white jokes and all in the group both black and white would find them funny. We haven't gotten there. Do I have to pay attention to it? Absolutely. We employee 1500 people. The government has become very involved in making sure that we have racial equality and gender equality and there are agencies set up to police and enforce those things. We have to be aware of them. While I have my own philosophy, I don't hire many of the people in this company nor do I manage most of them. When you get to be a 1500 person company, I must set policies that are consistent with good human decency and second comply and abide by the law. So we are very conscious of that. We have more black employees in this company than we have white.
JOSEPH MOSNIER:
Any last thoughts on issues I haven't raised that you think are important to this broad sort of survey that we're making here? I have one other question that actually has popped into my mind. Maybe while you're thinking on that, let me go ahead and ask. How about your sense of the state's spending priorities these days. Are you essentially more or less happy with how the state's spending your tax dollars or do you see the need for certain programs that aren't being brought forward? I'm thinking too—.
LONNIE POOLE:
I'm not so sure that I could, you know the state spends money on things that it probably shouldn't. On the other hand this company spends money on things it shouldn't too. The difference is that, there's a huge difference in magnitude and size, and the state of North Carolina has become a very, very big enterprise. I really do believe that government has a difficult time of becoming decentralized with its citizen legislature. The end result is that I guess what I would have to say is that government runs the danger of getting so big that it loses all kinds of efficiencies.
[END OF TAPE 1, SIDE B]

[TAPE 2, SIDE A]

[START OF TAPE 2, SIDE A]

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JOSEPH MOSNIER:
3.22.99-LP.2 the second cassette in the March 22, 1999 interview with Mr. Lonnie Poole of Waste Industries in his office in Raleigh, North Carolina. We're just spending the last few minutes here on the last couple of issues.
LONNIE POOLE:
We were talking about government and its spending priorities. By and large I don't think I can argue with it but I think if I got into some real micromanagement, that's kind of where I see things. I see things where the rubber meets the road. In small towns and programs that the government puts in, I guess my criticism would be that the government gets so big and so inefficient that it has difficulty being nimble enough and especially when governed by a volunteer, not volunteer, but citizen representatives that it just becomes highly inefficient. I guess I'm philosophically against big government, and I'm certainly all in favor of government making every attempt to get things done by the people for themselves as opposed to the government trying to be all things to all people.
JOSEPH MOSNIER:
Any big issues the company has a key interest in in front of I mean over in Raleigh these days or up in Washington? Any issue that's pending that would matter a lot to you specifically?
LONNIE POOLE:
An issue that's been around since 1904 involves flow control of garbage. What that does is it gives governmental entities the right to control where garbage must go. That unto itself sounds good because government in order to manage it must control it. Unfortunately, any time you can control something like garbage, it's an awesome amount of power. In fact, it serves as what should be a regulated utility. Unfortunately, in the case of flow controls, governmental entities were granted the authority and power to control the flow but without regulation, especially without economic regulation. That particular matter has been heard by the Supreme Court I believe six times. I think right now it is dead even, three wins and three losses for the private sector and vice versa. Currently it is an interference with interstate commerce to control the flow of garbage. In other words, garbage can move back and forth across state lines virtually unimpeded so long as it is in compliance with other regulations that have to do with public health and safety. To artificially to cause it to go one place or the other is unconstitutional. I don't think it's gone away because it's such an awesome amount of power, and it has so many dollars involved. I can't see that municipal and county governments will let that dog rest very long. So there will either be other forms of manipulation of the waste stream, or there will be a resurrection of flow control. Once again we'll go

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back to the Supreme Court, and we'll hear it all over again. That has been going on ever since I have been in this industry. It is our thing that goes on forever. I guess the second big thing that's going on now is that for a great part of my career and history of this company, I believe we've been guided to too great of an extent by political expediency and public emotion and too little by good science. By that I mean that we do things because it's simple to explain and it, we believe it to be right. A great example is, a green bottle. There's a Heineken's bag right there. Heinekens makes beer and Heinekens puts them in green bottles. There is more environmental harm to picking up and recycling a Heineken green bottle than it is if we just simply bury it in the ground. That's the scientific answer, but the public emotion answer is we're going to recycle that bottle even if it hurts us. That's kind of where we are. I think in the next couple of years, a think called a lifecycle analysis that will emerge. It will be computer driven. It will give us the ability to investigate the environmental burden placed on where we live by virtually any product. It will tell us in the first place whether to make it or not. If we do make it, whether to reuse it or to recycle it or to bury it in the ground or to burn it. The answer in various locations will change and the answer as to what we do with a clear glass bottle in Los Angeles, may not be necessarily what we do with a clear glass bottle in Phoenix, Arizona. Yet they're only a matter of three or four hundred miles apart. That's currently being done in the EPA. The EPA is the primary driving agency. But for the most part is being done with private dollars with private oversight. The reason I bring it up is that after I got out of the trade association, I got involved in a thing called the Research and Education foundation, Environmental Research and Education Foundation which raises private dollars to fund such projects. That's one of them. So that's one of the things, one of the activities going on. The upshot of that is that in the next ten years, the companies that are successful that are in the environmental business will be those that are innovative, and they bring to bear good science possibly to the exclusion in some cases of the politics and public emotions.
JOSEPH MOSNIER:
One last big sort of conjectural what if. What if the labor landscape in North Carolina had been unlike it is and this were a unionized state? Could you have built this company?
LONNIE POOLE:
Yes. I came from a union state, as a matter of fact, a closed shop state. California, the union involved were operating engineers.
JOSEPH MOSNIER:
So you're confident that by and large in this industry, you could've moved forward with the business.

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LONNIE POOLE:
It wouldn't have been as easy. That would've been yet another unleveling of the playing field. In North Carolina it is against the law for labor in cities and counties to unionize. So to have allowed that, especially in a closed-shop environment, would've been yet another thing that would've precluded privatization to have come as far as it has come today. Would it have precluded it entirely? I doubt it. Would it have impeded it? Possibly. Would we have survived as a company? We would have.
JOSEPH MOSNIER:
Last thoughts? Things I haven't brought up? I'm sure there are all sorts of things. Anything that's especially pressing?
LONNIE POOLE:
I guess the largest decision that a company had to make, we made in 1997. The, our company is currently publicly traded. Meaning that we registered with the Securities and Exchange Commission. Our equity, it is fully marketable. For those of us within the company known as insiders under the rules affectionately referred to as 144. That is yet another step. We were faced with a situation that we either had to be a part of the consolidation to continue and execute our growth strategy, which meant acquiring other companies, or we had to become an acquiree and become part of a company that had publicly traded currency. We examined all of the alternatives to sell the company or to grow the company and found that we needed to have the ability to raise capital through public markets and to sell our equity. We made that decision and did it in 1997. Are we really good at this? Not really. We'll get better. Once you get to a certain point in a company's history as it evolves, and I think we were ready to step up to the next milestone, and that involved going public. It's a very, very big decision. But it came down to actually three strategies. We had to have—we wanted to pursue a growth strategy that is more aggressive and that takes capital. Two, we had to have a succession strategy. That means that we could attract and hire people, middle management who could have a piece of the action, have stock ownership. You could do it, attract them through stock options. Three, they are smart enough to figure out that they are not tied necessarily to a family or a few owners who may decide to retire or sell out. There's a little more security there. So succession becomes a second strategy. A third strategy was an exit. Anytime you've got 1500 people, the likelihood of all of them wanting to do one thing, exercise one exit strategy at the same time is unlikely. In order to allow people to exit on their schedule it required you to have marketable currency. We made that decision that we wanted to be a publicly traded company and went through all that. It has its trying moments. It is considerably different than being private. On the other hand, if I were asked is it worth it at

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this juncture, the answer is yes. We're granted a license to print money. No one or no country is going to give you that right without tying some strings to it. We are having to get used to those strings, but on the other hand we are enjoying the ability to print money. We are acquiring companies for a combination of stock and cash. It's nice to be able to do that as opposed to going down to the bank and borrowing yet another huge amount of money, which is how our company has to this day grown and become the size that it is.
JOSEPH MOSNIER:
Did the IPO come off largely as you expected and hoped?
LONNIE POOLE:
Yeah. It did. It was a—the filing range if I remember correctly was 10.50 to 12.50. Actually during the period of time that we did our road show, the whole market rose so we did our boat rises with the tide. We actually went, did our public offering at 13.50. There were lots and lots of people looking for emerging growth companies at the time. We had about eight times more orders for shares than we had shares to offer. Yeah.
JOSEPH MOSNIER:
Who's your underwriter?
LONNIE POOLE:
The underwriter was at Alex, Brown, which is later been acquired is now called BT, stands for Bankers Trust/Alex, Brown. The comanager was the Deutsche Bank, which traded as a company called DMG. Deutsche Bank has just announced its intent to acquire BT/Alex, Brown. We think we're in the consolidating industry. Golly, one of the biggest changes, and I forgot to mention it just now. The thought occurred to me and crossed my mind. One of the biggest changes as we saw the state go from an agricultural and textiles and all this stuff is that way, way back we allowed banks to branch. It was a very, very big deal. By branching, our banks learned how to cover broader geographic areas. As a result, we've watched NCNB, the best little bank in the neighborhood become Nations, and they've now acquired Bank America. NCNB banked us for the middle part of our history. Even a little bank that we're with now, BB and T is the biggest bank in North Carolina as far as high share of North Carolina market. Our initial bank was First Union National Bank. I've got to say one of the biggest changes has been in banking. Banking, I don't know where it ranks. Do you know where it ranks as an industry?
JOSEPH MOSNIER:
In North Carolina?
LONNIE POOLE:
Yeah.
JOSEPH MOSNIER:
I don't know the answer for that on the roster. But it's got to be right up there.

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LONNIE POOLE:
Tremendous change.
JOSEPH MOSNIER:
Yeah.
LONNIE POOLE:
Tremendous change. Banks are into a multiplicity of services. They're into brokerage; they're into insurance and estate planning; and the trust departments are huge. I just visited when we broke up today, this bank is actually Detroit, and they're down here because they're industry focussed, and we are in the top ten. So they are here wanting to do a part of our business. They've been over today to see BB and T. The banking world and the North Carolina banks in particular have just grown by leaps and bounds. That includes the other tier of banks. You've got First Citizens which is very much a local bank. Then you've got Wachovia, and I think when we first started banking, I think Wachovia was the biggest. Now you have Nations, which is Bank America, which is truly global. That's been a huge change.
JOSEPH MOSNIER:
I really want to thank you for taking all of this time. You've been very generous.
LONNIE POOLE:
Okay.
JOSEPH MOSNIER:
And I really appreciate it. Thank you.
END OF INTERVIEW