March 10, 2004
Entrepreneurial Spirit Runs High at Flores Speech
By Amy Corenblith
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James Flores became an entrepreneur by necessity. A “C” student at Louisiana State University, Flores said he had no choice but to go into business for himself.
“I like talking to the ‘C’ students,” the guest speaker for the Energy Finance Group and Texas Entrepreneurs told a group of students on March 4. “They’re going to have to be entrepreneurs. The ‘A’ students have a choice” of working for an established company or starting their own businesses.
Flores, now chairman and chief executive officer of Plains Exploration and Production, described the post-college job market in the 1980s as less than inviting, which led him to start a leasing brokerage business. “I figured out that if I could get other people to go out and work for me, I could stay at the office and make the contacts,” he said. “Then I had a business.”
And what a business it was. Flores moved into energy and built Ocean Energy from the ground up. The company’s revenues surged and Ocean Energy merged with Houston-based United Meridian Corp. in 1997. Its annual revenue exceeded $1 billion and boasted more than $5 billion in assets in 2000.
So how did the C-student from LSU build one of the largest energy companies in the world? “Debt,” Flores said. “If you want to make a lot of money in entrepreneurship, use debt. It’s not a bad thing, you just have to use it wisely. We live in a debt society.”
He and his partner borrowed $300 million from Enron at 22 percent interest to secure a large business deal, and they pulled it off, earning $600 million for themselves. “I’m telling you how far you can push the risk meter,” he said. “You can’t push it much farther than that. If you start it all with debt, you can’t afford to fail.”
Flores urged students to take the plunge into entrepreneurship early on. “If you want an opportunity to take risks, do it young,” he said. “It’s much easier to take risks when you can shut down and eat pizza for three months than it is when you have kids and responsibilities.”
He also emphasized the merits of the energy industry, even as other business sectors struggle. According to Flores, the energy business looks strong for the next decade. There’s no better time than now to begin a business, he said. “Money is free. What’s Visa—7 or 8 percent interest? You’ve got it a lot better than 22 percent.”
Notable Soundbites
On starting a business
“Don’t ask your parents. Parents are pessimistic and
worried for you. Do ask for their advice.”
“Learn your business. Start small.”
“When you come up with a good quality product, it’s
easy to finance. If you have a good idea, a good
concept, you’re going to have to finance that on your
own.”
On advice for graduates
“Too many people nowadays think, ‘I’ve gone to school, I deserve a job.’ You have to give to the company, figure out what you can do for them. And you have to do business with people that you like to be around.”
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