Karl McMillen, Jr. Founder of The McMillen Family Foundation Interviewed

Karl McMillen Jr interviewed by Andrew Martin

Andrew: It is such a pleasure for me to be sitting here with Karl McMillen, the founder of The McMillen Family Foundation, and many other enterprises as we will discover, along with Merle Countryman, the CEO of The McMillen Family Foundation, and Carol McMillen is here joining us as well, wife of Karl. Thank you so much for joining us today at Serene Scene Magazine. Now, Karl, I want to ask you, first off, how did you find yourself in this station in life today?

Karl: Through hard work, education, work, father teaching me how to work, honesty, loving contracting background, history going into Todd Pipe, knowing what the customer needs, and then, giving back.

Your life is divided into three things. One, learning; two, making a lot of money; three, giving back.

Andrew: Now, you’ve had tremendous experience not only in business, but also in your personal life, particularly when it comes to experience with addiction. So, can you tell our readers a little about how you found yourself interfacing with the addiction world?

Karl: My sons got involved with drugs early on, probably because of moving to the beach, and surfing, and the timing of 1968, I think it was. And also, business going full on, not spending a lot of leisure time, but being engaged in the business. However, my wife was on top of it. And then, I would say, just compounded itself, from one jail to another jail, one drug program to another. Trying to find out, well, how to get this thing corrected. I had people doing studies for me. When the drugs started about that time, I think, in the South Bay, people didn’t realize what was going on.

Andrew: Were your sons involved in your business at the time?

Karl: No, they were too young. They were like, all 12, 14, into surfing, winning a lot of awards in surfing, which put them at the top of the ladder, probably for socializing and drugs.

Andrew: This kind of thing turns a family inside out. Do you remember how it impacted yourself and your wife, your friends, and of course your business?

Karl: I had a very good friend who was a principal of a high school, and I had him doing studies for me on the drugs. We would study the different drug programs, visit them, etc. But time and time again it didn’t work. Well, then as it got worse, jail time, and this and that. And then visiting all the different prisons and so forth. It was, well compounding.

Andrew: How do you handle that as a father when your kid’s in jail?

Karl: Well, my wife was helping at the South Bay Hospital, a caregiver and etc. And the business, we try to work it all together. We were busy.

Andrew: Now you wrote a book about your story called Triumphs and Tragedies: A True Story of Wealth and Addiction. Incredible book, and I recommend it to anybody that wants to read an incredible story about a unique man and your journey through all of this. I’m interested to know how that journey led to The McMillen Family Foundation.

Karl: Well, I guess after my sons had passed away, then it was a pretty obvious time to give back and so forth. So first we setup a drug program in Torrance Memorial. I had a very good attorney who I still have. As we progressed along, it was time to give back and so we set up the foundation.

Andrew: You’ve built a large business enterprise and Todd Pipe and Supply, focusing on customer needs and satisfying those needs. Does that same philosophy follow along with The McMillen Family Foundation? Are you now focused on the needs of the grantees, satisfying those needs?

Karl: We try to help people off the street that need help, that’s where we concentrate.

Andrew: How does McMillen Family Foundation help those agencies?

Karl: Dollars, we get an increased number of people who can help, by buying houses, getting more beds, maintenance, repairs and so forth. Helping their facilities.

Andrew: Let’s talk about some of the grantees. Are there a few grantees that really stick out in your mind, that are just outstanding organizations?

Karl: Yes, Beacon House in San Pedro, First Step House in Costa Mesa, House of Hope, all of these places get the people straightened out and try to get them employed so they can have a better life.

Andrew: Now you mentioned Beacon House in San Pedro, which I believe is a men’s program, isn’t it?

Karl: Yes, they have, well, 100 clients. Which is a large establishment. And they get them jobs and so forth.

Andrew: You had mentioned First Step House which is also known as Charlie Street, what do they do there?

Karl: They take people off the street. They take people that need to get cleaned up.

Merle: They have to be using when they come into Charlie Street. And they put them in an observation room for detox, a social detox for 24 hours and then they put them in the sober living, give them 10 days of sober living. And you can go there once in a year and three times in a lifetime. And it’s totally free. One person at Charlie Street receives pay, everybody else is volunteer.

Andrew: Okay, you also mentioned House of Hope which is also located in San Pedro as a women’s program.

Karl: Well, Merle’s been the chairman of the board there for one or two years. I think he can summarize it much better than I.

Merle: House of Hope is a residential treatment program, has about 60 beds in it. Karl’s purchased one house for them, remodeled another couple, and paid off the mortgage on another one for that, The McMillen Foundation has. They have a pretty good rate of good results and about I would say, up to 100 clients graduate from there every year.

Karl: And we probably increased their occupancy, 30% or something.
Merle: Over the time we’ve been supporting them, yes. That’s an ideal program. These are women that are below the affordable care model. They aren’t even touched by it. And they’re women that basically come off the streets and we help them to lead sober lives.

And I’d also add that some of Karl’s and Carol’s relatives have graduated from the House of Hope. No names mentioned, one quite recently.

Karl: In those type of programs, we’re probably one of the largest donors they’ve ever had.

Merle: Not probably, you are the largest donor they’ve ever had.

Karl: Charlie Street?

Merle: Charlie Street, yes, you are the largest donor there. And in many other cases you’ve been the largest donor the Foundation has.

Andrew: There’s some other grantees that I’ll mention here. There’s Pathways to Independence, the Lynn House, Friendly House L.A., Shawl, Mary and Joseph Retreat Center, the Via Center, Turrill Transitional Assistance, the South Bay Alano Club, and the Garden Grove Alano Club.

How does the foundation work? If somebody were interested in applying for a grant, how do they do that?

Merle: We have a website called The McMillan Family Foundation. On the website, one of the drop-downs is a grant application. We request that all grantees send a letter of application to us in writing. Our target client is revenues of between a million, and a million and a half, no more than that. Have been in business for 10 successive years, are a 501(c)(3), and their program is dedicated to education, prevention and treatment for alcoholism and drug addiction.

Andrew: So, if it’s all right, Karl, I’d like to talk to you about your own recovery story. And I understand that at a very young age you entered into the service. Is that part of your story?

Karl: I was going to summer school at Los Angeles City College, and I was graduating from high school. I think I was 17. I graduated from high school, and I had a speech class, I gave a speech on if you went in the service before the end of September 1944, I guess, you could get the GI Bill. And if you analyze the different services, the Coast Guard and the Marine Corps were only two years and you can get four years of college.

So I found myself in two weeks marching in San Diego in the Marine Corps. In boot camp, I hurt my leg and I didn’t go in the hospital, or I didn’t go to the first aid station because I thought it was kind of a chicken thing to do.

So a week or two later got it infected, and they had to put me in the hospital. And so I was in the hospital for three or four weeks. And when I got out, the platoon was graduating, and away we were going to different locations. And I ended up in two different platoons at the same time. The first platoon was going to Inyokern or something like that. And we asked the sergeant, where is that? And he said, it’s a great place up by San Francisco. It turned out that it was about 60 miles from Mojave in the desert. It was a Navy base for the atomic bomb and that type of stuff. And the Marine Corps, there are about 110 people that are the security guards. Anyway, there I was. I got stuck there because I only went in for two years. I couldn’t go overseas or anything because you have to have two or three years banked to do that. So anyway I got out.

And the Marine Corps got kind of sharp. They figured it out that we don’t need these short timers here. And so anyway I got out after about 20 months, but I got my four years of school. Not too bad. Well, when I got out, I started working as a plumber again. My father was a foreman for a large plumbing shop. And so when I got out, I ended up with three years of union time because of that connection with my father. And so I worked as an apprentice for a while.

Andrew: When did you start drinking?

Karl: In the Marine Corps, a little. But that was regulated, you might say. Then after I was out of the Marine Corps and in college, I went to the University of New Mexico because I couldn’t get an SC because I didn’t have a language requirement. So I was at the University of New Mexico for a couple of years. I ended up as the treasurer for the fraternity. And having the funds, naturally I would invite everyone after the meetings to the local beer place.

Andrew: And did it progressively get worse as you went on and gained success in your life?

Karl: I would say yeah, it was probably a plus, if I want to rationalize. All plumbers drink. And when we got into the plumbing business after college, at one time we took a group of general contractors to breakfast and I thought it was kind of interesting. I went to the restroom and told the waitress, make mine a double, Scotch and water or whatever it was. And she said, that’s funny, that’s what the other gentleman said. At that time, I think all general contractors and the people in the field drank.

Andrew: Do you remember when it became out of control for you?

Karl: Well, about 30 years later or so, my wife called up my head guy in the plumbing business and she said, it’s time to take Karl to breakfast and tell him he’s drinking too much and it’s hurting the business. So with that, I quit, and I now have a 20 year chip.

Andrew: How did you quit?

Karl: I just quit, period.

Andrew: Now I know that it takes a whole lot of effort, a whole lot of intelligence and passion. But it also takes a whole lot of contacts to build a business such as yours. Who helped you along the way?

Karl: After I finished two years of college in New Mexico, then I transferred to SC. In the business school. And so, the head of the finance department, Doctor Travis, I kind of bonded with him. His father was a blacksmith, and I assumed that he started out well, from the bottom like I did, you might say. And so, anyway through the years he was a big benefactor. At one time as a plumbing contractor, our attorney and our CPA were in a discussion as to how to reduce our income tax. And they were putting us into five limited liability companies. Where the first one gets the job, the second one supplies the labor, the third one supplies the material.

You take a markup here and this and that. And I couldn’t understand how I could have five checkbooks and so forth. So I explained it to the professor, and he said Karl, I don’t know either. We need to have you talk to the head of the law school and get his opinion. And so he sent me over there to Dr. Irwin. My partner and I were there and he explained that he would put us into five family trusts. And we said, how does that work? And so he explained that they would reduce the income tax by having these five trusts.

But because of the access to these key professors, they really helped our business. Later, the finance professor and I, we owned property in. We had stock accounts together. Well, he helped me substantially.

Merle: And you might add that Karl endowed USC with a chair for Dr. Travis in his memory.

Karl: Even though he educated all these Wall Street bankers etc., it took a plumber to buy the chair.

Andrew: And when Todd Pipe and Supply was formed, did you do that on your own or did you have some help there?

Karl: Well, first we had Alert Plumbing, and we had three partners. And that lasted for about six weeks. And then I figured out that we needed to restructure and then we ended up with two partners. And we took that business and we were doing, like this magazine article that was written about us. And I guess that was the two facts, we were doing like 7,000 homes a year in Southern California.

We had about four locations, and these homes were really the smallest of the smallest, 850 square feet. They would build three or four of them behind, if you had an R3 property lot, say 50 by 400 feet deep or so, you could add three or four of these units behind you, assuming it was R3s only.

And that was a big deal. And that started about 1955, and about 1965 it started to slow down. And I had the professor out and I said Dr. Travis, here’s the numbers. We’re finishing more houses than we’re starting, and we need to revamp the business. Either close it, sell it, do something, cut back.

And he said, well, first, you could cut back. You can’t sell a plumbing business. You can sell a plumbing repair business but not a new work, it is very difficult. Anyways, so the bottom line was that reduce the labor force, and match the volume, go forward. And my partner said, you can’t lay off these people, they helped build the business.

And, so with that then we split the business, I took all the properties and got cashed out. From there I went on just with the real estate investments and so forth. And Ralph Todd, who was our buyer at Alert Plumbing, he can see it coming also and he got out and he started Todd Pipe. And I said Ralph, you’re crazy. Anyway, a year or two later, I came across Ralph and he said, you need to join me. I said, well, I don’t know and the professor came down again. And he said, Karl, you do need to join Ralph and this and that. But you need to give Ralph a bonus for taking the risk of starting the business. As we progressed along, we continued to expand and we ended up with nine branches. So anyway, about 2004, I decided that it was probably time to sell because we were getting over built.

As such, I figured the best outfit to sell to was Hughes out of Florida because they were coming to the west coast and by their expansion it would be good for our employees. So we sold to Hughes, they almost immediately went public and then sold to Home Depot. And then Home Depot became HD Supply. About that time, I had a five year non-compete. We did send all of our employees, the way it developed in the different segments of the industry. Some for other wholesalers, some for manufacturers, reps, etc. At that time then one of my key people at Todd Pipe, Dan Patrick had the idea of, look, as the leases expire, let’s take them back and start a new Todd Pipe.

And I said, you’re crazy. He said, no, no, listen to this. We have five partners, each one will have 20%, your 20% can go to the foundation and this and that, so it was pretty entertaining. They would occupy the buildings that I kept from the old Todd And so forth, so we did. That’s how the current Todd Pipe was formed.

Merle: And it just so happened that the same Dan Patrick in 1996, was the guy that took Karl to the breakfast and told Karl his drinking was hurting the business.

Andrew: So your 20% of Todd Pipe and Supply is what funds The McMillen Family Foundation, is that right?

Karl: Right.

Merle: Well, actually, Karl started the McMillen Family Foundation before Todd Pipe and Supply really started, so he had already funded it with a $5 million to start the Thelma McMillen Center. In addition to giving his own funds for the foundation, Karl intends down the road long after I’m gone and other people, when Karl goes, passes on his interest to the foundation, there’ll be a active owner of 20% of Todd Pipe and Supply.

And it wouldn’t be appropriate if we didn’t mention the importance of Carol McMillen has played in this foundation. She is the secretary of the foundation. She is Karl’s heir with a lot of these things and she helps Karl with not only the whole bookkeeping of the foundation, but also she plays a big part in helping Karl with the decisions on which of the grantees we support and we’re highly indebted to her.

Andrew: Thank you, Merle.

Karl: And Merle, he runs the foundation. This is a big job. We didn’t make this money easy, we want return on the money. Meaning we want utilization. That’s why, well, we think that helping the people off the street is the best use of the money.

Andrew: Well, Karl, Merle, and Carol, thank you so much for joining me with Serene Scene Magazine today and sharing your wonderful story and inspiration.

Merle: Thank you Andrew.

Karl: Thank you.

Andrew Martin