right direction: “beach,” “stadium,” “stables,” “greenhouse.” The property also has an aviary, where he raises birds.
The house itself is modeled on the Biltmore, the stunning 250-room, French Renaissance–style vacation home that George Vanderbilt built for himself during the Gilded Age in the North Carolina mountains. Like the famous Vanderbilt estate, Jones’s home is built from stone and stucco and stands several stories high. It has a slate blue roof and a copper dome that had to be flown to the property by helicopter and installed by a crane operator.
“Everyone was laughing when I started buying property up here,” Jones told me as we stood in the marble entranceway to his home, a high-ceilinged room with a sweeping staircase. He felt vindicated, he continued, when in recent years Cleveland’s moneyed set started building in the new development down the hill, where Toby McKenzie had been constructing his home. “That’s where I’m a visionary,” he said. “Now everyone wants to be in this part of town.” He invited them to see his home shortly after it was built. “They saw the estate that I was capable of building,” he said and, as he imagines it at least, “no one is laughing at me anymore.”
They were certainly chuckling back in March 1996, though, when the big news in town was Jimmy Logan’s revenge. Tennessee might not have expressly outlawed these high-rate short-term loans but state law didn’t permit them, either, and Logan filed a class-action suit on behalf of several clients challenging their legality. At that point, Jones, in addition to the several dozen Check Into Cash outlets he had in Tennessee, was operating stores in Kentucky, Indiana, Illinois, and Wisconsin. His pretax profits for the year would exceed $2.3 million. Yet he faced a formidable foe in Logan, an ambitious lawyer with a nose for notoriety who was starting to appear on lists of Tennessee’s top attorneys. Jones opened forty-five stores in 1995, but he would open just seventeen in 1996. “Here’s this lawyer everyone is telling me is so powerful,” Jones said, “telling me he’s going to put me out of business. I was scared.”
Jones saw the suit as an act of revenge. When we met in Cleveland, however, Logan would claim he sued Jones and several other big payday chains as a matter of principle. He felt they were operating in violation of the state’s usury and consumer protection laws and he was intent on seeing them stop making these “loans that were destroying lives.” Jones, the former wrestler, wanted to “drive Logan into the ground,” he said, to “prove to him that I wasn’t as dumb as he thought.” But after months of distractions, Jones agreed to a $2.2 million settlement that included a $600,000 payout to Logan and the lawyers he had enlisted to work with him. That was on top of the $500,000 Jones had already squandered fighting the claim and the untold sum he then had to spend convincing the Tennessee legislature to explicitly legalize payday lending, which it did in 1997. “They hired a Noah’s Ark of lobbyists,” a state senator told a reporter for the Associated Press. “They hired a black lobbyist to get the black votes. If we’d have had a transsexual, they would have hired a transsexual lobbyist.” Campaign finance records show that Jones and his family donated more than $29,000 to local officials in Tennessee in the months leading up to the vote.
Jones emerged from the fog of those lost months fighting with Logan more determined than ever to grow his expanding empire of payday stores. For that, he needed cash but all the bankers he knew proved to be squeamish about venturing into this shadowy world of fringe financing. He ended up securing the $3.5 million he was seeking from a private equity firm at an interest rate of 14 percent. Check Into Cash opened more than two stores a week through 1997. Jones secured an additional $11 million line of credit from NationsBank at the end of the year, allowing him to open an average of three stores per week through the first half of 1998. Jones promoted Steve Scoggins to president and gave him a 2.5 percent share of the company.
What is there about the entrepreneur who, if he owns two stores, can think of little else but growing his holdings to four or six or ten? Or the corporate executive successfully managing 100 outlets dreaming of running 500 or 1,000? Blame it on Sam Walton, the founder of Walmart, or travel further back in time to the turn of the last century and blame Frederick Winslow Taylor, who might reasonably be dubbed the world’s first efficiency expert and also its first management consultant. It was Taylor, a student of the manufacturing process, who championed the notion that a business was nothing but an immense and expandable management-designed machine populated by replaceable cogs whose only job was to learn the processes that the top managers had put into place.
Allan Jones has never heard of Frederick Taylor; nor did he attend any of the symposia put on by those who had rediscovered Taylor’s ideas. He is not a man who has much use for management theories, but Taylor would certainly have approved of his approach to growth. Jones established the systems and routines intended to make his business run most efficiently and then ruled over his burgeoning empire with an iron fist. Hiring the best and the brightest was not necessary. With an effective template in place, the only thing that was required was obedience by all those replaceable parts residing in the lower reaches of the organizational chart.
Simplify, routinize, monitor, control—those were the watchwords of Taylorism and they were also the principles that Jones and Scoggins employed as their budding payday loan empire grew. Marketing, payroll, human resources, and other functions that could be centralized were handled by the home office and an expanding core of vice presidents were charged with keeping close tabs on the performance of individual stores. The company would hire a new regional manager every time they added ten to fifteen new stores, depending on the size of the region, and a new divisional vice president would be hired in Cleveland for every five to seven regional managers. Bonuses were granted based on the performance of those directly below them on the organizational chart. If the stores under a regional or district manager saw an increase in fees collected—assuming those financial gains were not washed out by bad debts—they would receive a bonus for that month. If not, well, the disappointed divisional managers chewed out their regional managers, who in turn dressed down the laggards among their store managers, who also were paid bonuses only if their numbers rose.
Store managers tended to have a year or two of college on their resumes; assistant managers typically had high school degrees. The managers were flown to the mothership for four days of intensive training and then, according to a Check Into Cash document, “closely monitored on a daily basis for two to three months.” While in Cleveland they were given a policy manual that they were instructed to treat as if it were the word of God handed down from the mountaintop. The manual spelled out in intricate detail the most mundane of tasks, from the proper storage of bank receipts to the number of times a day a manager should phone a bank to see if a customer’s postdated check (the check a customer had written when initially taking out the cash advance) was good. There were daily business reports that were to be faxed to the company headquarters at the end of each day and also weekly and monthly summaries.
Study, evaluate, jigger, refine. With time Scoggins and company perfected their system for scouting out new locales. First they would seek out a town’s name-brand grocery stores and discount retailers. The Holy Grail was a shopping center anchored by a Walmart, but a shop close to a Kmart or a Kroger was also pretty much a guaranteed winner. The next choice was typically a strip mall because it tended to offer cheap rents and ample parking. Trial and error taught the Check Into Cash brain trust that they should cluster stores rather than renting wherever a scout happened to find a good spot. Clustering meant better oversight and a more efficient use of marketing dollars. It wasn’t uncommon for Check Into Cash to open one store in an area and then open a bunch more, even if that meant opening branches no more than a few miles apart. On average a new store would start showing a profit less than five months after opening. By its ninth month, it had typically generated enough cash to cover the initial start-up costs.
The new stores all looked exactly the same. Uniformity meant expediency—the ability to move in quickly and cheaply while also helping to build a brand. By 1998, a Check Into Cash team could open a new store in less than two weeks at a cost of $20,000. The new look conjured up something like a bank branch, though one outfitted by the local Office Depot. The walls of each new store were painted the same pale yellow, its floors covered by the same industrial-strength tufted mauve carpeting, the furniture made of particleboard finished with the same cherry wood veneer. Male employees were instructed to dress in a starched blue or white cotton shirt and tie; female employees were told to wear similarly professional attire. Clothing expenses would be borne by the employees, who were paid salaries in the high teens or low twenties.
When Jones first got into the payday business, he was cautious about how much Check Into Cash would lend a borrower, but he gradually loosened those guidelines and by the late 1990s the company established the lending standard that it still uses today: A person can borrow as much as one-quarter of his or her monthly paycheck. Predictably, that increased the proportion of people unable to pay back the money they had borrowed (the percentage of loans the company wrote off doubled from 2 percent in 1993 to 4 percent in 1998) but the company’s financial statements from that period show that the change made economic sense. The increased revenues more than made up for the jump in people who failed to pay back a loan. Profits soared.
