The Magnolia Story

I remember reading about work on Alaskan fishing boats where, if things worked out, you could earn north of $6,000 a month. It was grueling, potentially deadly stuff, but with no overhead, the money was all yours. These were the kinds of things I’d sit and think about while I was in class. I realized most people don’t want to do what it takes to do a lot of things. I made up my mind right then and there—I would do whatever it takes to be successful.

The second summer, in the middle of selling books, I went to east Texas to open a fireworks stand. You can only sell fireworks in Texas during the two weeks before the Fourth of July, so I took the money I’d earned from half a summer’s worth of bookselling and bought a fireworks stand and inventory. This probably seemed like a bonehead move to my parents, but I’d heard there was good money in it.

My friend Eric and I went in on the stand together. And it was not easy—no doubt about that—but I learned a lot. It was my first experience with investing. I did that the next two summers as well, opening three or four stands in east Texas, and my friend’s uncle, whom I call Uncle Ricky, played a huge role in all of that. From selling books I knew I enjoyed hard work and the thrill of selling, but it was Uncle Ricky who recognized the entrepreneur in me and encouraged me to follow that dream.

There was something about the way Ricky would say, “Chip, you can do this,” that made me believe I could. He really believed in me and trained me to some extent about simple business practices like paying taxes or understanding assets versus liabilities.

I took all that experience and used it to open up a lawn-mowing business, which quickly expanded into a full landscaping business with employees, equipment, and clients. Then I got the idea to buy some cheap properties on Third Street in Waco—sort of on the other side of the tracks, so to speak, but within a mile or so of the Baylor campus—so I could rent them out to incoming college students.

I was rocking and rolling. I wasn’t inventing Facebook or anything like that, but I was definitely what you would call a serial entrepreneur.

Chip’s experimentation with lots of different kinds of businesses had eventually evolved into flipping houses. By the time we met, he’d successfully done it for a few years. Flipping seemed to be his thing. I have to say it quickly became my favorite venture of his too.

When explaining to my friends and family what Chip did, I was always a little at a loss. He wasn’t a realtor—at least people would’ve been able to understand that—and I’d never known a career could be made out of buying and selling houses. So even though I spent a lot of my time with Chip kind of playing catch-up to understand it all, it was exciting to me.

As I said before, Chip was a smart guy. Unconventional, maybe, but he always had the entrepreneurial spirit and business sense to back it up. I was intrigued by this lifestyle of his, maybe because it was wildly different from the “safe” world I’d grown up in. Every day seemed to bring a new adventure, because Chip really did refuse to be put in the nine-to-five box people filed themselves into after college graduation.

Even when things got complicated, Chip remained fearless. It seemed as if nothing could stop him, and I was hooked. I think that’s why, when we were first dating in our twenties, we were doing things most people our age weren’t doing.

Before he ever graduated from college, Chip had already figured out the game—banking, negotiations, selling, all of it. Most people in college are studying and dating, and Chip was certainly doing his fair share of that. But mostly he spent his time thinking, What’s the next business I can get into? In that regard, he was kind of a step ahead of a lot of our peers.

By the time I started helping him with his properties, Chip was known as the unofficial “Mayor of Third Street.” He owned a bunch of tiny little houses along this stretch of road that was also home to a school for troubled youth. Before he came in and fixed up some of the old houses to rent to Baylor students, a lot of people in Waco just steered clear of Third Street. But Chip was his fearless self and saw the area as a spot full of underpriced properties with potential.

The kids at the school were young, and there was something about that age group that made Chip think he still had time to make a difference. He would cruise up and down that street on his four-wheeler, checking on the progress at his various properties and checking in to make sure the tenants didn’t need anything, and when he saw those kids walking by after school, he’d get into conversations and joke around with them.

He wound up convincing a few of those kids to help out doing lawns and odd jobs on the properties he owned, and he paid them well, which ended up making him a pretty popular guy with them. It seemed that every time he’d give one a job, four more would show up the next day, ready to earn a little money. It was inspiring to watch him work and to see how well he got along with everyone from his crew to his clients to those kids to Uncle Ricky, whom he introduced me to early on.

An interesting side note: Ricky and his wife made a hobby of importing antiques from Europe. They turned their little backyard into an absolute oasis full of old metal and wooden architectural pieces that he built into the landscape, and every time we went over there the backyard had some new feature added to it. It was like walking from an ordinary Texas front porch into an exotic vacation every time you walked out the back door. I remember thinking, even back then, I would love to do something like that someday.

So when Chip asked me to help him out that first summer we were dating, as he repainted and generally got his properties fixed up before the new Baylor students arrived in the fall, I was happy to do it. I didn’t know anything about interior design or construction—I’d been a communications major, for heaven’s sake—but I was more than content being his gofer.

To be honest, I didn’t know any more about interior design or construction than Jo did. I learned it all on the fly. If I needed to put a fence in—or anything else, for that matter—I would just get my hands dirty and figure it out. Everything I did was that way. Story of my life!

I was still working at my dad’s shop, too, but it was fun for me to see Chip’s collection of little houses get all cleaned up. I liked thinking about the students who would soon be living in them and remembering what it had felt like to move into my first apartment. I wanted to make sure everything was right for those kids.

Most of the houses weren’t much bigger than eight hundred square feet, so there wasn’t a lot to work with, but I quickly saw how new carpet or a fresh paint color could change the whole atmosphere in a house that small. I liked the feeling of getting these jobs done and then watching the way those kids and their parents would go nuts as they were moving in.

There was something rewarding about that kind of work. Even if it was something as simple as painting one room, each project had a beginning, middle, and end. You could stand back and actually see what you’d accomplished at the end of the day, and there was something very satisfying in that for me—on top of how much fun it was just to watch Chip do his thing and try to imagine what he might do next.

It was more than just business. With Chip, it was everything. He was wild at heart, really. If you tried to give him a rule, he would break it. If you gave Chip a boundary, he would cross it.

Chip was just Chip. There was no box for this guy.

There’s this movie, Legends of the Fall, where the character named Tristan goes off into these wild places. I’ve always thought of myself as kind of like that.

And (case in point) the things that would come out of his mouth were unlike anything anyone else would ever think to say. Sometimes it would take me a second to figure out whether he was joking around or drop-dead serious. He kept me on my toes—and I liked it.

Chip Gaines & Joanna Gaines's books