Prior to the 1980s, most Point of Sale interactions consisted of cash or check exchanges at clunky checkout machines that were limited to a single store’s accounting information. But with the invention of the microprocessor, slowly, cash registers evolved into much more complex machines that allowed Point of Sale transactions to become quicker, more accurate, more connected, and more helpful for companies trying to track their financials.
One of the people who saw the potential of this was Pete Catoe. And in 1989 he decided to start a company that specialized in POS transactions utilizing electronic cash registers. He called this business ECRS, or Electronic Cash Register Services. And today, it’s known as one of the most sustainable employers of the High Country.
Tune in to hear the story of how ECRS came to be built and the important lessons Pete Catoe learned along the way.
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Note - Transcripts are created using AI technology and may not read 100% accurately. We apologize for any misspellings or mistakes.
0 (1s):
Customers know what they want to change about your product, which is great information, but they don't know the products they're gonna want in the future. And that's the out of the box thinking that you have to have. And the longer I've been in this business, the more I, I can, I think out of the boxes, I've seen so many things change that I'd never thought would've been possible. So now I think everything's possible.
2 (37s):
Welcome to Maid in the High Country, the podcast that takes you behind the scenes of Western North Carolina's entrepreneurial landscape and the people within it. I'm Samantha Wright, and on the show today how one ASU dropout imagined what a marriage between microprocessors and cash registers could look like, and how that idea took him from $7,000 in debt to the owner of one of the most profitable companies in the high country. Prior to the 1980s, most point of sale interactions consisted of cash or check exchanges at clunky checkout machines that were limited to a single store's accounting information.
2 (1m 24s):
But with the invention of the microprocessor, slowly cash registers evolved into much more complex machines that allowed point of sale transactions to become quicker, more accurate, more connected, and more helpful for companies trying to track their financials. One of the people who saw the potential of this was Pete Catoe, and in 1989, he decided to start a company that specialized in point of sale transactions utilizing electronic cash registers. He called this business E C R S or Electronic Cash Register Software, and today it's known as one of the most sustainable employers of the high country.
2 (2m 6s):
They employ close to 200 employees and are known for their competitive wages, friendly work environment, and sustainable business practices. Their products are used in over 10,000 locations nationwide. And if you're ever shopping around Boone, you've likely interacted with their software and hardware at places like Earth Fair Boot Drug and Peabody. The story of how E C R S came to be built has a lot to do with Pete's eagerness to be in control of his own destiny at a young age. He saw just how fragile that control can be when his father was transferred for work with at and t, which at the time had been broken up by the government to avoid a total monopoly over phone systems and telecommunications.
2 (2m 52s):
This was in 1984, Pete's senior year of high school, and his family was moved from his hometown of Columbia, South Carolina to Sparta, New Jersey. Fate would have it though that the same relocation story was occurring to another family who had a daughter in her senior year of high school as well. And this boy meets girl's story is how Pete found himself following a girl to Boone, North Carolina because it was there that his now wife wanted to go to college. Pete studied marketing at Appalachian State University, but he was so eager to get out of school and start his own business, which you'll hear about later on, that he left ASU just a few credits shy of graduating.
2 (3m 33s):
But despite the lack of a diploma, Pete certainly left his mark on ASU as being credited as the co-founder of the ASU Entrepreneur Club in 1987.
0 (3m 45s):
I did. How'd you know that?
2 (3m 46s):
Oh, I did my research.
0 (3m 48s):
Yeah. Yeah, I started that with a few other entrepreneurs. Stacy Hopson was one of 'em, and David Sprague was another. And there was an organization called the Association of College Entrepreneurs, and it was started out at Wichita. We got it chartered. We had the first, ASU had entrepreneurship activity for a long time, that's for sure. I'm inspired by a lot of the entrepreneurs that came out of the eighties and nineties out of, out of ASU and have started incredible businesses here in Boone.
0 (4m 30s):
Yeah.
2 (4m 31s):
Such
0 (4m 31s):
As very inspirational. Well, I mean, I saw, I was Joe, Joe Miller started Chief Joe's Art Supplies when I was during my, during my time in school. And I, I spent a lot of time talking to Joe and, and Joe Junior now runs that. He's a great, great leader and he's running that organization, so national company. And heck, I can remember when Mass General Store moved downtown and you know, I saw, so I got to see the transformational aspect of entrepreneurship in a small community.
0 (5m 13s):
You know, just got a first, I got a first, you know, I got a front seat view of it all and they kinda inspired me.
2 (5m 24s):
What in your mind makes Boone such a unique place to start a business?
0 (5m 28s):
A lot of people up here that started their businesses because they wanted to cut their own, they wanted to cut their own path and, and you could do that up here. It also has an insulation of insulating effect Boone does. When things are haywire, when the economies go haywire, it just seems like Boone is just so much more stable for your workforce and everything. Everything's just, just more stable. I don't think E C R S would exist if, if boom didn't exist. It, it gave, we, we just sailed right through all kinds of labor shortages through the years.
0 (6m 11s):
This is like the second time when we had the.com bus before the bus. We had this, we saw the same type of stress in terms of trying to get people and retain people. E C R S never had any of those problems. We've never experienced any issues hiring or retaining people.
2 (6m 29s):
Why do you think it is that E C R S has never had a problem with finding the labor and the talent that you need? Because that's not a sentiment that I hear from all business owners. A lot of them kind of say the opposite. They say, gosh, you know, I'm looking for this person or this person, and just not finding the right talent.
0 (6m 47s):
We treat everyone in the company as an individual, and I think a lot of people are attracted to that. And my father, when he was having to transfer a lot for at and t, I never felt like he was treated like an individual. And that was really, I think that's always, am I reflecting back on why I even wanted to work for myself. I think more about that it was, it was so bad back in the, in my dad's time, that when they would do layoffs, they didn't even, they didn't even look at your performance. They just kinda laid off based on a spreadsheet. So it's, that was how, so I, I saw the extremes of it. I got a sense of what it would be like, you know, what I didn't want in a company.
0 (7m 30s):
And then every, and we still, we still work every day to try to build this sculpture that we'd wanna work at. And that's the bottom line. What kind of culture do you want? What's the culture a place where you wanna work? I work every day, so I wanna work in a, a, a nice, pleasant place and balance that with focusing on our customers, making sure that we're serving them and, and providing the technical leadership they need and, and then balancing all the other things that you would want in an environment where you were day in, day
2 (8m 8s):
Out. That is such key advice right there. We hear that word company culture a lot. And what I'm hearing you say is that you created a culture at E C R S that reflected the kind of place that you would wanna work for. And that sounds simple enough, but perhaps some bosses out there might take that for granted and, and need to hear that lesson. Now that's E C R S, which clearly is a successful company. I know the local areas, very grateful for its existence. You've done a lot of the right things there. But let's go back in time a little and talk about the first company you started while you were in college called Simple Solutions, which was less successful by all measures, let's say, but nonetheless was a very important step in your journey to where you are today.
2 (9m 3s):
So I think it's important to, to go back and tell that story if you're willing so people can sort of see where you came from to and how you got to where you are today
0 (9m 15s):
That, that, that company was started in the dorm room. Basic. Well, I didn't, I wasn't in a dorm room. I was in an apartment, but the same concept. I was in college still and, and it was really like three of us where we, the microprocessor was just started this really, really take off in the business world, which is really hard to fathom right now. We're, we're covered up with microprocessors are everywhere and we touch 'em every few minutes and, but back then it was relatively, you know, getting PCs and the people's offices was a new thing.
0 (9m 57s):
And it was, it was hard for your typical business to, to actually not only acquire the PCs, but also get 'em in a, provide the applications that actually helped them run their business. So, I mean, like that was our concept. I, and I would say, you know, simple solutions was a was more about let's start a business than it was about let's have a business plan or a, a sustainable mo business model. And
2 (10m 32s):
It was more just about doing something.
0 (10m 34s):
Just do something, do it right, just do it. And it lacked a, it lacked a sustainable, you know, business model. And which is, I still find that today I review on, occasionally I will review startups who were looking for investment and, and I, I see that pattern sometimes and it makes me, brings back memories. It doesn't, it doesn't end well, that's for sure.
2 (11m 8s):
Usually. Yeah. Well cause that the ending of that story for you was, you, you were left with $7,000 worth of debt, right?
0 (11m 15s):
Yeah.
2 (11m 16s):
What hap what happened from there? Tell me the story about Kurt Kennington and how you met him and
0 (11m 23s):
Yeah. When I met Kurt, so we, I was, this is when I was by myself, the, I took the debt and other other guys left and I started a new business. Basically I was selling a application for pos or point of sale application. It, the idea was to help retailers automate and, and have inventory control. One of the customers or prospects I was looking at was a pharmacy, I think it was called Independent Pharmacy. I'm pretty sure it was independent pharmacy. So back then you would look up the customer's name in a phone book. Lot people I don't like, a lot of people know what a phone book is anymore.
0 (12m 6s):
And I was looking up under independence and I saw independent cash rusher Dealer association listed, which was based in Charlotte. And, and I had thought of the idea of, of integrating a cash register, traditional electronic cash register to the inventory system. And I said, what the heck? And I called that number and the reception said at, passed me through to Kurt. Kurt at the time owned a cash er dealership, but he was also the secretary of the inter independent cash er dealers association, which was based basically out of his office, but had members all over the country.
0 (12m 46s):
Anyway, I met with Kurt, told him what I was up to. He thought I was a great idea. I thought there was a big need for it. And we, we became partners pretty much right on the spot. And yeah, Kurt, Kurt was, he was, he was really a neat entrepreneur, very traditional businessperson that had built a great business from scratch and had a contacts all over the country. And so we, we, we started the company and it's called E C R S because electronic cash register software. So it's, it's, it's a pretty old brand form started in 1989, basically.
2 (13m 31s):
Was it hard convincing Kurt this already successful business guy to go into business with you? I mean, what, what do you think he saw in this opportunity at the time?
0 (13m 42s):
Yeah, he, he, the, you know, I basically, after I, I, I told him what I wanted to do. He, he thought it was great. It was a need for that. And, and even I, you know, I could see why he'd be interested in that because, you know, he was in his sixties, didn't know a lot about micro microcomputers, didn't know much about systems. And so I could see where he would definitely see the, the need and, but also the energy, I mean the energy of any entrepreneur is when you see it, you know, you just, you, you, you, you know it. An entrepreneur can spot it.
0 (14m 24s):
And so, yeah, I think he, I think he saw that. And, and of course I knew from his success, his connections that, you know, I could learn so much from him. And that pretty much was the exchange. He literally, I gave him 50% of it, which I wouldn't recommend that to anyone. I don't think 50 50 is a very good arrangement. It wasn't a problem for me, me and Kurt, but I think we, just, because we locked out, I mean, it's, it usually doesn't end well. Someone needs to be the, the majority shareholder in, in, in the end. But anyway, we did, we did a 50 50% arrangement.
0 (15m 7s):
He actually loaned me another, the 7,000 now owed, so I could get clear and remind, you know, I was only 23 years old. So it was a pretty big deal for me. And, and then we started, we did the integration, we had the integration done to a cash register, a very popular cash register at the time. And, and then we, he, he introduced me and I just started, I took off from there. And, and of course I think it was maybe 10 years later, I asked Kurt if I could buy a mountain. And he, he, he, he had no problem.
0 (15m 48s):
He, he sold me the sheriff's back. He made a good return. And I mean, it was a great return, but he could have asked for much more and I would've paid it. And, but you know, I think he, you know, I think he, he was just ready to, to let me fly.
2 (16m 13s):
One thing that's interesting about E C R S was that it was entirely self-funded. Do you, was that important for you after that first experience you had had that had left you in debt from your first startup failure?
0 (16m 25s):
Yeah, I think, you know, I believe everybody's motivated by different things. And I've always been motivated. You know, I, I don't know if I should, even if it's a bad thing, but I've always been motivated with control. And I guess debt to me is a form of, of a loss of control or the potential for loss of control. So I've always been aware of it. That doesn't mean that you shouldn't use debt. A lot of times debt is much more, is much better than equity selling equity. Yeah. But it really comes down to if you have a sustainable business model.
0 (17m 5s):
And so ECR s is a very efficient, has a very efficient business model, which basically means it generates more cash than it needs. And so because of that, we were able to take advantage of that and not, not incur debt and to also keep our capital structure as simple as it could possibly be, which basically means there's only one shareholder and Right. And it just keeps us, it makes the, in many cases, that's combination of efficient and efficient self-funding system with no debt.
0 (17m 47s):
And once one owner makes the organization very, very stable, yeah. You don't have partners arguing over, you know, I, you know, you know over how much money should be issued out or how much, you know, dividends and things like that. And, and most of the money just gets plowed back into the company, which makes the company stronger and stronger. And that's, yeah, that would, that pretty much describes what happened with our company.
2 (18m 16s):
As far as other companies go, what sorts of things do you think other startups should be considering when it comes to finding capital for their business? Like what, what's the equity landscape like out there today,
0 (18m 30s):
Now, more than ever, and there is so much money, the money is, I mean, the world is a flush in dollars now. Companies like E C R S, we have access to almost unlimited amounts of capital. I mean, people are banging our doors down trying to get us to take money, but I
2 (18m 50s):
Getting, trying to get you to take money. Oh, like lenders, like, okay.
0 (18m 55s):
Not, not just lenders, but you know, private equity companies, ah, and the money's out there. And of course I know I just, cuz I, I know a lot of entrepreneurs, a lot of successful companies and I know they have a lot of money to invest. You know what, what scares is a is entrepreneurs who have a sustainable business model and they have passion and energy. That's what's, what's scarce. And, and that's a, you know, and that's a, that's not the same as a, what you would call a unicorn investment where you're, you're literally, you know, going to invest, you know, hundreds of millions of dollars in order to buy and acquire customers.
0 (19m 47s):
You know, I don't know much about that type of financing. I know that's the, I think that's something a lot of entrepreneurs chase, but there's another, the other alternative is to build a sustainable business. Not one that you're trying to sell, but one you're trying to build. And I think that's a rare thing I see a lot of entrepreneurs are just, they want to, they want the quick, the quick startup and quick sale. And I just, I think that they're missing some opportunity there and, and to redirect and focus more about, to build something special, to build a cultural organization, to build a sustainable corporation that helps all the shareholders, stakeholders.
0 (20m 39s):
That's an opportunity. I think it's just, there's just a lot of opportunity out there
2 (20m 43s):
For that. Yeah, yeah. You've really built something that has roots, you know, something that's here to stay and, and that stability, especially for a small community like Boone, that's so important. You know, for you, your shareholders, the employees, the community, there's so much positive impact. So I love that. Cuz you're right, there is this really glorified vision of that, you know, fast growth entrepreneur right out of the gate that's raised, you know, a hundred million in capital and, and all the focus is on, all right, how much more money can we bring in, bring in, bring in, and then how much can we exit? How quickly can we exit?
0 (21m 19s):
And, and that's far, I would say that's very far to me. But I see it a lot. But to me, I don't, I can't, I don't understand it. I, cuz I believe, you know, I, I think that, I think money is a byproduct of running a successful organization and the idea that money's your, your wealth's gonna come from selling an organization. That's okay if that's really what turns you on and that's really what's gonna bring you meaning in your life. But there is an opportunity to build sustainable companies where you can do quite well financially.
0 (21m 59s):
And, but it, it's just a lot of work. It's, it's a long commitment. And some of our best companies don't really start taking off until their 10th, 15th year. It takes time, but then you end up with something special
2 (22m 22s):
When you are getting started, you know, the E C R S, it provides a very specific product to a very specific customer. Yes. Specializing mostly in groceries, beverage, re retail stores. Do you have any advice or can you share anything about your, your early marketing strategies of, or it doesn't even have to be early, you know, what, what has led to your success of getting the message of your product in front of the right people?
0 (22m 55s):
One of our success marketing or strategies was basically focusing on a smaller subset and, and just being the best at it. And then, you know, and just, you know, just really serve that, that segment. And from there you pick other segments that are related but maybe not the same. And so you end up reusing 90% of what you've already done for one segment you can use for another. It's called vertical verticalization or going after vertical markets.
0 (23m 35s):
That, that's, that has been huge for our company and we still do it today.
2 (23m 43s):
Yeah, kinda like nicheing down is sort of the, the layman's term for that, right?
0 (23m 48s):
Yep.
2 (23m 49s):
Yeah. But I'm wondering how you got in front of the right people early on, you know, when no one knew your name, you were a new company starting out, how did you acquire those first customers?
0 (23m 60s):
Well, our first segment was to do, was actually to serve the cash register dealers out there, provide them software that they could sell that would work with their cash register. And of course Kurt gave us that market. And from there I selected health food stores and which really, I actually hired Otis Fleet who was really, really big into healthy stores, selling to healthy stores. And Otis helped us enter that market. So there's a pattern there. I hire people that are really locked into a market and, and we basically, I worked with those people to bring my product into those markets.
0 (24m 44s):
And so that was an early pattern. A couple other things we did, I think that were instrumental was the sell direct as opposed to we started moving away from resellers and moving more and more to selling direct. Now we still work with some resellers, but they're, they're very specialized and we work so close with them. It almost almost feels like they're part of our company. And
2 (25m 13s):
Oh, that's really interesting because you know, at first when you said you were, you kind of got your start in that reseller business and from the outside it sort of seems like, oh what a sweet, what a sweet spot. Right? Like they do all the sales work, you don't have to worry about that. Yeah. You just, you just deliver the product, you know. So what, what created that shift and why is that a better position
0 (25m 34s):
To be in? Yeah, that's a great question. The, when we sold the cash register dealers, it was, it was pretty straight. It was very simple. The software was very simple and didn't require a lot of training on their part. And, but as we moved into selling where we provided all the software, both the point of sale, the self checkout, the backroom inventory control, it got so complicated that it resellers couldn't put the energy or time into it. And so they weren't as successful. They were, they could not, a lot of 'em could not successfully install. And again, you know, I'm a, you know, I hate to say I'm a control freak and the thought that the software would be used incorrectly and the customer wouldn't be happy.
0 (26m 20s):
Yeah. And my brand was associated with it just kind of drove me to one to sell direct. And so working with folks like Otis and several other people, we, we learned how to sell direct, even these very, very complex systems. And we've been very successful with it. I mean that's one of the, our key key differentiators is we do sell direct and we sell everything. Software, software, hardware comes delivered right outta the box. Very complex systems.
2 (26m 51s):
So moving forward with E C R S, you're in it for the long haul. You're certified evergreen, you've really created a company with Roots. What are the biggest threats do you see to your company moving forward and and how are you dealing with those?
0 (27m 6s):
The biggest threat that we have is we have, our company has to, we have to replace ourselves. We have to, we have to bring new products to market that either improve or ultimately ultimately do away with our older products. So that's really the only, the only way for the company to stay around because the, the market is gonna change is changed a lot since I started, but it's changing faster and faster. And what we're, what we, what we do about that is we, we do a lot of research.
0 (27m 47s):
We do, we do a lot of things that our customers haven't asked for, but we know they're gonna want or we're gonna, we know or we have a very good feel that they're gonna need. And I think Steve Jobs was big about that. You, your cus a lot of times your customers know what they want to change about your product, which is great information, but they don't know the products they're gonna want in the future. And that's the out of the box thinking that you have to have. And the longer I've been in this business, the more i, I can, I think out of the box. Cause I've seen so many things change that I'd never thought would've been possible.
0 (28m 28s):
So now I think everything's possible. I don't discount any, any new technology and how it might impact in a big way the industry I I'm currently serving.
2 (28m 39s):
Yeah, I love that. That's such a great illustration of the difference between that word sustainable company and a a, a stuck company. You know, some people might hear a company that has a sustainable business model as kind of unchanging, right? They've got it under lock and key, they've got it figured out, they'll just keep doing the same thing over and over again and they'll survive. It's a self-driving machine. But really nothing could be further from the truth. To stay a sustainable company that has to be a part of your everyday business model is looking at what changes are coming and preparing for those and adapting. You can't stay stale, you can't stay stuck.
0 (29m 21s):
And I would you, you talked about the changes that are coming, I would say that even the, that's one sta that's one excellent level to be at. That's, I'd give that a b plus. The a status though is making the change. Yeah. Being the change. And I think that that's the, that's the hard part and there's risk involved. But, so we literally are making systems here at, in Boone in our labs that basically will replace, will basically change our business model. Wow. Change our cash cow products. In other words, you don't even need the, you know, it would eliminate the need for the, the some of the things that we currently sell our customers that are very important to our revenue.
2 (30m 11s):
But that's, is that scary?
0 (30m 13s):
It's not scary cuz it's just, it's just reality and you just have to deal with it. And I think the, you you touched on it that the idea that you, there's a lot of companies that have, have it all bolted down and is just producing great companies, producing great revenues, everything hunky-dory. And nobody's doing anything about wanting to change it. At least they, they don't wanna change it at all. I mean, and, and that you see that all the time. Like you, our last big thing, the glass big display of that would've been,
2 (30m 45s):
Would've been thinking Blockbuster
0 (30m 46s):
Blockbuster, yeah. Block. Why would they wanna change that? Remember we used to all go to the store and walk around our store for 30 minutes.
2 (30m 54s):
Yeah. I think we were clinging onto it as much as Blockbuster was that experience of walking into the movie store.
0 (30m 60s):
Yeah, but they but they just could not, and I don't blame item. I mean, it must have been very hard for them. They just could not let go. But you have to let go.
2 (31m 9s):
You do. And you have to have the energy for it. So that's like, one of my last questions for you, Pete, is you, how do you sustain that energy? You've been doing this for a long time and as we've been talking about, it requires a lot of keeping up with the times and research and just adapting, you know, how do you, how do you stay in that creative space so consistently?
0 (31m 29s):
So as I get older, I have to start, I have to start letting go more and more and more. And that's what I, that's the mode I'm in now. I'm in let go mode. And, and so a lot of the stuff, a lot of the activities of the company are slowly being taken over. We have a whole new generation of leadership coming up, you know, and, and they're taking over basically. And we have our navigators who are, you know, owning the technical aspects of the company. And that's the only way you're gonna do it. It's no, if the company's relying on me, it's not gonna have a very long future for what you, you know, cause what you said is absolutely true.
0 (32m 16s):
I mean, that is part of the scaling of the organization. Yeah.
2 (32m 23s):
Well, thank you Pete. This has been such an illuminating conversation. I appreciate your time coming here today. Before you go, we always love to ask our guests this closing question and it's, what's your latest, most favorite high country moment?
0 (32m 39s):
Moment? I, I, I, I have a, I live at a, in a very special home. Someone else built it. I'd never could built a home like this. And it has like a 40 view and that moment happens almost every day. It changes every day. I have a different view cause of the, the different weather conditions. And so I think that was my most recent icon that just to be here, you know, the stillness and the super green summer we've had, I've never seen it this green before and it's just stunning. It's a stunning place to live. We live in a rainforest basically.
0 (33m 21s):
So yeah, it's, it's, that's, that would be my, my moment.
2 (33m 36s):
Thanks so much for listening to today's show. This episode was produced and edited by me, Samantha Wright, community director at Startup High Country. Learn more about our workshops, resources, and events@startuphc.com. If you have just 30 seconds for you right now, please do us a solid and rate and review this podcast, then share it with a friend. It helps a lot with other people finding the show. Thank you so much. A special shout out to Matt Watson for the creation of some of our programs. Music Startup High Country is supported by NC idea, a private foundation that supports entrepreneurship in North Carolina through grants and innovative programs.
2 (34m 19s):
And thank you to the Wataga Economic Development Center for their support and for helping to build the entrepreneurial landscape of Western North Carolina. I'm Samantha Wright and you've been listening to Maid in the High Country.