How I Built This with Guy Raz - Backroads: Tom Hale. How a desk worker became a trailblazer in active travel

Episode Date: November 10, 2025

In his 20’s, working an office job he hated, Tom woke up in the middle of the night with a wild idea: why not take people on bike trips? No playbook. No investors. Just a sense that he could make a living doing what he loved. His first trip? Four guests riding through Death Valley, pitching their own tents. From there, Backroads scaled to hotels, while weathering a bike burglary, a van rollover in the desert, 9/11, the Great Recession, and a pandemic that brought tourism to a halt. Today, Backroads runs 5,000+ trips a year in 60+ countries.This is a masterclass in savvy cash flow, scrupulous quality control, and dogged iteration. If you care about travel, brand, or building a services business at scale—listen to this.What you’ll learn:How a 5,000 mile solo bike trip laid the groundwork for Backroads The first guided trip in Death Valley: four people, high winds, 50 miles/day How to get your stolen bikes back: confront the thief yourself The “collect early, pay late” flywheel that powered growth without investorsHow Backroads survived 9/11, 2008, and COVID—and what changed after each shockAvoiding the Instagram trap and delivering peak, uncrowded experiencesTImestamps:7:24 – Tom’s epiphany and the eight pages of notes that started Backroads10:15 – From cubicle to road bike: the solo trip that shaped the company’s DNA12:46 – Trip #1: Making mistakes in Death Valley—and learning fast24:47 – Tom’s DIY recovery operation after a warehouse burglary29:21 – Cash without capital: spend your deposits, pay hotels later 30:55 – The Nevada rollover: walking out of the ER…and running the next trips40:06 – Recovering after 9/11 and the financial crisis—and rebuilding the company’s value prop45:46 – Post-COVID surge, and avoiding the tyranny of the travel selfie This episode was produced by Casey Herman with music by Ramtin Arablouei. It was edited by Neva Grant. Our audio engineers were Patrick Murray and Jimmy Keeley.Follow How I Built This:Instagram → @howibuiltthisX → @HowIBuiltThisFacebook → How I Built ThisFollow Guy Raz:Instagram → @guy.razYoutube → guy_razX → @guyrazSubstack → guyraz.substack.comWebsite → guyraz.comSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. So we were driving, crossing the Nevada Desert, and the driver went off the embankment, and we rolled the van a couple of times. I felt like we were in a rock tumbler, and it was all, uh, steel tool chests, propane containers.

Just imagine all that was going around as we're spider-manning through the air. And anyway, we came to arrest and made it over to the edge of the freeway. We're laying there side by side. And Bill, one of the leaders, said, well, I guess that's it for the summer. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movie. movements they built. I'm Guy Raz, and on the show today, how a midnight epiphany led Tom Hale to quit his job

and launch backroads, a bike touring company that grew into one of the largest active travel companies in the world. Have you ever taken a trip that left you feeling different when you came home? Not because of what you saw, but because of how you moved through it. Well, that's what Tom Hale has built his entire life around. Back in 1979, Tom quit his job with no plan, no investors, and almost no experience. Just this idea that people might actually want to ride bikes and camp their way through places like Death Valley. His first trip, just four guests, and Tom led it himself.

To stay afloat, he washed dishes at night. He lived in a house with a bunch of roommates and chased down stolen bikes from the backroads of. office, but over time, his bet paid off. Backroads grew from a one-man operation into one of the world's largest active travel companies, offering hundreds of biking and hiking adventures in more than 60 countries. And Tom did it all without taking a dime of outside capital. He grew up in California, and he ran track at the University of Oregon alongside the legendary Steve Prefontein. After For injuries put an end to his running career, he earned a master's degree in environmental planning. And his first job after grad school, it took him somewhere unexpected to Las Vegas, a place that was

very different from what he was used to. Yeah, no, it was a very weird place. I remember I started commuting by bike to the Valley Bank building and would go past the clubs that had lines out the door at six in the morning. It was just like such a juxtaposition. Everything about my life. It was just odd, really. You worked for like the city of Las Vegas?

The city of Las Vegas, yes. I worked on air quality, water quality, solid waste plans, et cetera. And, you know, I remember driving up the coast and my mom was saying, Tom, you are somebody that needs to be passionate about what you're doing. But the implication was, Tom, you don't love what you're doing. and she could not have been more more right on that count. And I think I recognized that when I was in Las Vegas and I didn't like Las Vegas. So the whole do something you love to do, I made the wrong decision. I see so many kids doing exactly what I did, which is I love the environment.

Okay, I always have. I've been running out in the woods all my life. I love the environment. Well, I love the environment. So why don't I do environmental planning? there was nothing about that job that resonated with me. You were in an office. You were sitting in a cubicle.

And I'm in an office now, actually, a lot of the time. But it's a very different environment. But yeah, so that was in the back of my head or the front of my head. You mentioned by commuting, I read that you, because of all the injuries as a runner, you kind of switched to cycling like that because that wasn't as obviously, it's not as impactful than as running is. Is that, is it right? I think that's pretty accurate. I was, I never really gave up on running.

But biking did. I, you know, I commuted by bike and, uh, and it was six months into the job that I woke up in the middle of night with this idea that I wanted to take people in bike trips. Had you, were you at this point doing like bike trips or cycling or had you been on one before? No. I rode my bike up the California coastline. Oh, wow. Against the wind.

That was it. I think I did that maybe in between quarters or something when I was at UCLA. All right. So you had already done a pretty intense bite, and you went up Highway 1? That's right, yeah. So you had done that. And you get up in the middle of the night thinking, I want to lead bike tours. That's right.

Woke up about two in the morning, got out of bed and took eight pages of notes on what it would take to do this. Where does it come from? I mean, clearly you liked being around. or you liked the idea of leading people or not or it was just completely random. It's about as random. I have asked myself that question hundreds of times and I cannot remember anything that led up to me waking up. I literally think it was a reaction against Las Vegas. I believe I had got a hold of a book, What Color Is Your Parachute? Which I could summarized by saying find something you love doing that you're really good at but what I saw as I

read it is like oh my God this is a perfect thing for who I am in my personality whether as far as wanting to have control of my life wanting to do something exciting I might have seen something in a bicycling magazine maybe a classified ad I'm not sure there weren't too many companies doing this sort of thing I don't even know if I had seen a bicycling magazine at that point, but it must have been something like that, some trivial thing that said, well, that's interesting maybe. Yeah. This shouldn't have worked.

I didn't have a nickel to my name practically. And, you know, just jumped in. I'm just curious, if you can take me back to that time in 1979. Did you have a vision of like a large, huge company or did you think I just was as simple as I want to just lead people on bike tours in different places? Well, I didn't do it like a lot of people. do it, which is they keep their day job, and then they start this sort of hobby thing. I quit my job that I had gone to school in college for seven years. So I quit my job, had no income coming in.

So I was going to make something out of this, a company that would lead bike trips. But I couldn't see beyond my hand as far as where it was going to go. Right. You didn't know what it was going to be, but you knew, and you were young. I mean, you were 26, 27. So it was a risk, but it wasn't a catastrophic risk. like you could go back to a drudgery of a desk job if you had to. Yes, but that was never going to happen. Right. I made my mistake once. I wasn't going to make it again.

All right. So this is the late 70s. You decide you want to lead a bike trip. And you're obviously a pretty good bike cyclist. You cycled up the California coast. But, you know, you had to presumably do some kind of, I don't know, reconnaissance or planning or studying. What was the first thing you did to figure out whether this was feasible?

Well, I came up with a name for the company, backroads, and that was the first name I came up with. And I was going to go on a bike trip. In Las Vegas. You were going to take a bike trip on your own. Yeah, on my own, across the country. Across the United States, the whole country? That's what I was going to do. But then I realized there's a whole lot of cornfields to get through.

I thought going around the loop in the West of the United States, I did about a 5,000-mile loop. I started in San Francisco, took Bart to the end of the line and got out of Bart and rode down the coast and went counterclockwise around the country, or around the west. Around the west. And you just had a backpack and a sleeping bag, I mean a tent? I had a Panias on the bike. Okay, so right, Paneers or whatever they call. Yeah, I don't know they pronounce it. Is it Peneers or is it Penaes?

Panyers, I think. Okay. All right. Thank you. very helpful. I always said panneers. Yeah, you might be right. I have to go check that. I had to know. So you had those bags in the side. Okay. And there was a tent in there, camping stuff? Camping stuff, yeah, which it turned out, I didn't, I was by myself. So going through the Mojave Desert, I remember stopping at night and listening to all the critters out in the sagebrush,

lizard, snakes, et cetera. And they're really loud at night. So the thought of putting a sleeping bag down, amongst those critters is not very pleasant. So anyway, that was my trip. Tom, I'm curious, in 1979, I mean, today it's so common to see packs of cyclists everywhere, like just all over the country. But in 1979, was it kind of an oddball thing to do to get on a bike and just ride around the country? Like, there wasn't the infrastructure. There weren't bike lanes.

There weren't. No, no. But there still aren't necessarily bike lanes where a lot of people do long bike ride. So you're sharing the road with cars. And so riding a bike by yourself is a very solitary experience. You almost never, and back then, like you say, there weren't that many bikes out. So I was by myself the whole time. A lot of room for introspection and thinking about, well, this is a good idea.

And I was initially going to start a company in a geographic area like the Northern California where I'm from. But I got back and realized that there's all these national parks that would be great to do. So that was, that 5,000 mile ride became a formative aspect of the company. Yeah. And tell me about the first trip that you organized. How did you do that? We had four people on it. Okay.

And it was camping trip. And camping trip where? Death Valley. Death Valley, okay. And we still go to Death Valley. We don't do camping there anymore, but we do go there. And it was such a fun experience. But, you know, we couldn't have done more things wrong because of the camping.

venue, the weather conditions, the winds are crazy. But, you know, we had a good time and we ran a trip. And this was just, and how many miles a day were you cycling? We bike more back then than we probably do now. It was probably more like over 50 miles a day. Wow. So you had to be pretty good shape to do that. Yeah, I'd say so. Yeah. Got it. Okay. And would everybody on the trip pitch their own tent or would you do that for everybody? In the very beginning, I believe we felt like it was a good thing to have people participate. I think that could not have been more ill-founded personally. But so they did actually pitch their tent.

And anyway, it didn't take it very long to realize that they don't really want to. And what about food? I mean, you know, obviously in the late 70s, there already was like meals ready to eat and food you could take for camping. It wasn't as good as it is now. It was like a lot of powdered. Yeah, we didn't eat any of that kind of food. It was real food.

You had food on your bike for everybody? No, no. We had a van. The van would come. Yeah, yeah, yeah. And the van carried like the bags and the food, basically. Yes, exactly, yeah. You know, we were cooking with Dutch ovens.

It's made some great, great food. Learned the hard way. Like Dutch ovens, for instance, you don't want to put the rickets right in the middle of the Dutch oven when they're stacked up. It gets too hot and they crack, which they did. And when you're out camping, food tastes better. But we did a really good job, made lasagna, all kinds of good things. So the people on those early trips were essentially they were paying to pitch their own tents, cook their own food, and cycle 50 miles a day. There you go.

Sounds like a great deal. No, but I'm sure it was amazing. And how did you know what to charge people? We would charge what we felt was fair and what people could afford to pay. And we look at how much we spent and that we got to make a lot. a margin. And so we charged way too little probably back then. But, you know, we learned pretty quickly. And when you when you got back, right, I mean, you were in that first year, I imagine, leading the trips, but also we have to organize them. You've got to advertise. Where were you

advertising these trips? Like, were you putting bulletin boards? Bicycling magazine, outside magazine. I think outside was in existence at that point. And we probably rented some mailing lists. bike club mailing list? I don't know. You know, to this day, I have no idea if much of that paid off. It's so different now you do digital advertising and today and tomorrow you know if it worked or not. Back then, you'd like find out a year later. How did you have the money to buy those ads, Tom? Well, they didn't cost very much. And I worked on the side at night at fondue Fred on Telegraph Avenue in Berkeley. I chipped the cheese out of fondue pots. You were like basically a dishwasher there.

It was worse than a dishwasher because it was chipping cheese out of it, a fondue pot. Yeah, but I don't understand why you'd have to do that. Fondue is soft and melty. Wouldn't they just take the pot and, like, put hot water in it after? Everybody shared tips, so it didn't matter to me. I didn't want to talk to anybody. And so chipping is fast. They're like good.

And we listen to music. So you, this is a make some side money to finance this business. Okay, so you basically, the idea was very straightforward. you were going to do biking trips where people would camp, but I guess pretty early on, maybe even in the first year, you realize that maybe camping wasn't the way to go. Tell me about that. So we continued to do camping for 38 years, I think, but it had flatlined towards the end of that period and everything else was growing rapidly.

So I think it was our second year pivoted to hotel trips and quickly. that became the majority of what we did. So you basically cycle for a fixed amount of time during the day and then you overnight at a hotel or motel. Really nice. Even back then, they were nice hotels, yes. Yeah. Okay, so you're doing these bike trips in different places around the Southwest in the U.S.

And I guess the first several years are these are just bike trips, right? Right. Like later on it would become hiking and other things. But at this point, they're bike trips. And I guess from the beginning, you were providing the bikes. You were like holding them and storing those bikes somewhere to be used on these trips? We were. I shared a house with six roommates.

Most of them spoke Norwegian. And it was in a nice neighborhood up in foothills of Oakland. Five Norwegians in one house? Yeah, they all spoke Norwegian. In Berkeley? My high school friend, they had a exchange. How does that happen? It's a country of four million people.

There are five of them in Berkeley? Yeah, I'd come into the kitchen in the morning, and Norwegian is a very sing-songy language. Tussendok. I didn't understand a word. I loved them all. Anyway, I'm still in touch with several of them. Anyway, but Backrose was one of the roommates. I was a roommate, and the rent for Backrose was $135 that included the office that I was in in the garage.

And I lived on nothing pretty much, you know, peanut butter, sandwich. And that's just the way it went for the first few of years. And you stored the bicycles there in that garage? Yeah, in what we called the, well, it was a very dark basement, but yeah, we sort of in there. It was a nice neighborhood and we probably overstayed our visit there and then we moved down to San Leandro to the world's most decrepit strip mall. San Leandro also in the Bay Area, sort of south of Oakland. Yeah.

And so in terms of like just when you would have a trip in those first few years, all the bicycles were kept in a warehouse in the Bay Area and then what you would like load a van and then drive that van to Yellowstone and meet people there? We would do the loop. So we would drive to first we do New Mexico, then we do Colorado, then we do Wyoming. And so yeah. So it was linear. You'd organize like five or six different trips, but it would be on this loop path. And so you would take the bikes, you'd meet people in the first trip, which will say New Mexico, then they would say goodbye when they were done.

Then you'd pack the bikes up and drive to the next place, which was only a couple hours away, maybe in Utah or Arizona, do the same thing and then keep going until you get back to Berkeley. Yeah, and it actually was probably a two-month loop. that was almost the extent of our offer. We also did run a higher percentage of trips in the Northern California area. And these were point-to-point trips, right? You would start in like one part of Zion National Park, let's say, and you'd end up in another part at the end. That's right.

In the canyons, I always went there on my birthday. I remember because I was leading the trip on September 20th. And it's a beautiful time to be there. The Aspen are changing. but we went from Cedar Brakes to Bryce Canyon to the North Rim and to Zion. We did all of that. It was a seven-night trip. We ran longer trips back then.

Who were you finding to work with you? Because you were saying we. So I'm assuming it was you and maybe one other person who would lead these trips. So I met somebody on my 5,000 mile bike ride in Fairplay, Colorado, who was working in a diner there. Is a woman or a man? A woman. What was her name, by the way? Linda, Linda Petty.

She, I struck up a conversation with her or her with me. I don't remember. And we had a really nice chat about what I was embarking on as far as this business. And she was just like really interested in it. So we said, well, let's keep in touch. But she had expressed enough interest to where she was pretty pumped on it. So she became a 50-50 partner for about. two and I'm going to say two and a half years. I'm not sure how long it was. And then she

kind of woke up and said, wow, this is really a lot of work and we're not making any money and decided to get out of it. And so that we dissolve the partnership. So basically, yeah, I mean, two and a half years in, it's a grind. You're not making money. And so you probably bought her out. The business wasn't worth anything at that time. No, it was, yeah, it was a kind of a long story on how we came to a agreement on that. But yeah, it was, uh, You know, she was smarter than I was as far as seeing the writing on the wall, that this is always going to be a lot of work. So, you know, 24-7 for ever.

When we come back in just a moment, how a rollover van accident in the Nevada desert almost puts an end to the story of backroads. Stick around. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 1980s and time. Tom Hale is busy leading bike trips around the southwestern U.S., backroads is growing at a steady pace, but it's still a pretty small company.

And Tom is about to face a setback he cannot afford. The bikes were in our warehouse in San Leandro. We got burglarized and they stole half of our bikes. That was a problem. I reported police and we put out a reward for information. and this young fella came by and said, hey, I know who stole your bikes. And I said, well, okay. And it was in the neighborhood.

I said, well, let's walk over. And it was at night time at that point, walked over to the corner. He said, that's the house, like two, three houses away. So I was like, oh, my God, I hope that this is right. And I hope they don't come to the door with a gun. But I went to the door. And this young fella answered the door. And so I just took it upon myself, say, well, by the way, I think you've got about

12 of my bikes. And I think, oh, and I also added, and what was his name? The police guy, Detective Ritter says this is still a prosecutable event. So if you don't want that to happen, get your bikes right now. I want to know where the bikes are. So he went up into the attic and started dropping bikes down. Wow. Anyway, you know, I got my bikes back. So. All right. So you, I mean, I'm just thinking of the logistics of doing this. And again, this is like early 80s, pre-unernet, you know, it's like mailing letters, phone calls, hopefully people will pick up. How did you figure out how to plan all the logistics for each of these trips? I mean, you had an office in San Leandro. You had to figure out enough food for each trip. You had to figure out the right bikes to bring

because there were different sizes for people. You had to bring water. And I mean, how did you start to figure that out? You know, well, first of all, it's not rocket science. And secondly, I love logistics, and I'm good at that sort of thing. And thirdly, I never was without a notepad in my pocket and a pen. And so I was constantly improving and thinking. And it's actually a very complicated business now. We're spending tens of million dollars on technology to harness everything we have and how we communicate, blah, blah, blah.

But back then, it was just figuring it out as we went. And who were the people initially going on those trips? I mean, there was a culture of cyclists, but those kinds of cyclists, I don't think, would have gone on organized trips like this necessarily, right? Those are hardcore, like, were those the kinds of people going on your trip, or was it more casual cyclists, younger people? It was, no, I would say that the demographic was probably a lot of folks in their, you know, 40s and 50s and certainly younger and older, who had some amazingly, fit people in their 80s on our trips that probably rode the younger folks outrode them like crazy. But we weren't really targeting gung-ho cyclists. We were really interested in this as being a much more holistic experience. And I would say that we've always been

experts at accommodating mixed abilities. Okay. I mean, given how intensely cadence was, right, You are leading trips or you're back at the office trying to prepare for the next one. And it seems like at times it was a house of cards because you're on a trip and somebody in the back up, like somebody manning the store, I don't know, quits or there's a problem. Like you don't have cell phones. It's like you could all just kind of collapse maybe temporarily. But did that happen where there's situations or times where you're out on a trip and you've got to go back because there's like a fire that you have to put out at the office? Well, you know, the best example I can think of is when I, this is very early on when we only had one office person and she quit in the middle of me leading a trip. And so I had to come back and man the office.

And, you know, that was just kind of stupid to only have one person maybe. Certainly didn't do that again. And we, we, I, built up a very strong structure around supporting everything we have to do. I'm curious about expenses. Like at what point, because you didn't have any investors, right? I mean, this was all. Didn't have any investors. Never. It's remained a 100% closely held family business for 46 years. And my dad and my uncle and my best friend from graduate school, they all, for some reason, I had this $30,000 amount in my head that that's what, they provided as a loan and it was always a loan to get a very short-term loan to get through the winter. We are a very strong cash flow company. I read this little book when I was thinking about starting this company up. It was a really small book called Buy Low, Sell High, Collect Early and Pay Late. And you didn't even have to read the book. You just read the heading. And if that's the

kind of business you have, it's a really good thing. You know, or our guests, Yes, first of all, are paying their deposit maybe 90 days in advance or more on average. We are paying the hotel sometimes. The balance due is paid after we have already finished the trip. So I didn't know that that would become so important, but it made us able to do this. Right. So it was like a pre-order almost for a product. You basically get the deposit.

So you've got some cash to work with. Then you get the full amount, you know, within a few days of the trip starting. then you do the trip and then the hotels don't have to be paid until after the trip is over. Right, exactly. I read a story about an early trip you took and I want to kind of talk a little bit about this because there was a serious accident. Like you were in a van and it like flipped over and tell me what happened. So we were driving crossing the Nevada desert just east of Elko, Nevada. and the driver reached down to Swata bug off her leg or something.

Anyway, she went off the embankment and we rolled the van a couple of times. I felt like we were in a rock tumbler and it was all steel tool chests, propane containers. Just imagine all that was going around as we're spider manning through the air. And anyway, we came to arrest and made it over to the edge of the, freeway and I was um we're laying there side by side and bill one of the leaders said well I guess that's it for the summer and didn't miss a blink it's like my response to that well I don't think so um we'll figure it out so we uh we we took the ambulance to the hospital and we actually walked out of the hospital was amazing I had broken ribs and they had neck braces on and we were really beat up we

made it to the, I think the Salvation Army to get some clothes. We didn't have a thing on our person. And we walked out of there with these puffy slippers. And Kathy could, one of the leaders, she could only walk about, I don't know, 50 yards with that before she had to like kind of sit down. But they, Bill and Kathy went on to lead the next two trips. I went back to get another van to meet them. And we finished. It was pretty rigorous because we had to keep moving the seats in the van in and out. And they were heavy, and we had to move big heavy picnic tables around. So my ribs never got well. We were sleeping on the ground.

And got back to Oakland, pulled into the driveway. And I kid you not, one of the tires went flat right then and there. And we pulled open the sliding door of the van. and it fell off the hinges. It was like a omen from somewhere. But it was a hell of the summer. I'll say that. Tom, at what point, I mean, so for the first few years, you're leading trips mainly in the western, only I think in the western United States, the loop, right? This loop through national parks in the western United States. At what point did you or somebody who you worked with say, hey, Maybe we should go to somewhere else, like maybe outside the U.S. Yeah, so this is a seasonal business.

It's a seasonal business now. I mean, we run, you know, probably. It's mainly spring to fall. Spring to fall, yes. And so it was totally spring to fall then. And so it didn't take much to think that we should branch out. So we started with, let's see, we did Baja, Hawaii, and New Zealand in pretty short. order as well as Bali, I think it was. So you, because I read you started Hawaii in 1984. So at this

point, you're like five years in to the company. So you have some experience. But really, all the logistics are being done. I mean, you've got your warehouse, you've got your bikes, you've got your van. How are you going to do that in Hawaii or two years later in New Zealand? Let's start with either of those. I mean, you had to basically. replicate that without the van, without the bikes, right? You're right. So, you know, you figured out how to ship bikes. I don't know if they had rules back then in all of these places that we should have been adhering to.

My guess is they probably did have rules and we probably weren't adhering to them. So we basically did things as close to how we do them in the states as we possibly could. we used our national leaders, which are U.S. and Canadian at that point for the most part. And then we also used some local guides in places like Bali. But we really wanted our own leaders to be leading our trips because they were really heavily trained. And we could trust them and they knew what they were doing, et cetera. And we'd do the trip. I want to ask you about training people.

How did you train people? I'm assuming you train them by just bring them on trips. No, we have always had a training program, recruiting, hiring, training, and performance management. Always from the beginning. No, excuse me, almost always, yeah. Okay. How did you develop that? Trial and error, for instance, we used to have a combined hiring and training event.

and it was a three-day event, and at the end of that, we would choose our leaders out of that. But it took us way too long to realize, well, that's a stupid way to do it. You're spending all of this time and money training people, and you're only going to hire half of them or whatever it might be. So anyway, we now have all of our leaders go through 10 days of training that is really pretty intense, and then we have performance management happening for everybody all the time. And we're a heavily metric-driven company. We survey to the nth degree. We started out by surveying our guests, for instance,

and what we came to see is, well, that would say something about the overall experience. Great. But we then started asking people, well, how are the restaurants? How are the hotels? How are the local guides? and a handful of other things, and we track all that and try to improve the trips.

All right. So basically, you continue to expand these trips in New Zealand and then Peru. And really, for the first like 10 years, I think, it was bike trips primarily, right? It didn't expand to hiking

and walking trips until later on. That's right. Our name was back roads, bicycle touring for the first 15 years or so we didn't officially change it until after that. So great name decision because we could split off backwards if we wanted to, but we held on to that longer than we probably should have. We were known as the biking company long after we were much more than that. And now we're one third biking, one third hiking, and one third multi-adventure.

And really, a lot of the business was coming from repeat customers, right? people would go on a trip and then they'd come back the next year. Yeah, we have a very high repeat and referral rate. That's also about one-third, one-third, one-third repeat referral and new business. But word of mouth is everything in this business. You can't do it without word of mouth. When we come back in just a moment, how surviving two massive downturns teaches Tom some vital lessons, which help him get through the biggest challenge of all,

a global pandemic. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So by 2001, Backroads has grown from a one-man show into a pretty solid business. Tom has stopped leading trips himself and is now focused on running the company. And up to this point, most of the setbacks have been pretty minor. But in September of that year, all of that changes. 9-11 was just so shocking.

And one thing I've learned in this rather seasonal business is that if you have something happen, bad happen in the world, please have it happen late in the fall. Okay. So this wasn't late enough in the fall on September 11th, but it was still late enough to where we'd run most of our trips. But September was our biggest, most busy month. And so that was crazy. We basically said, if you're on your.

way to the trip, feel free to go to the designated meeting place. We said the same to our leaders. And we have some amazingly great trips run that week, even that week. And then, of course, we had to kind of figure out the next few weeks. And so we lost a lot of business there. So things slowed down. Yeah, slow down. And that lasted for quite some time, but obviously it recovered. And then you have that the financial crisis, of course, in 2008, 2009. Right. And what do that mean? I mean, did it have a significant impact on people booking trips?

Yeah. So that had a much bigger impact. We had a 43% drop in business that year. So that, you're kidding. A 43% drop in business, that's going to kill us. We laid a lot of people off. It was really hard. But we were able to look at our business very differently.

And so I asked the question of what are we doing that's better than what the competition is doing? What are we doing that we're really doing a great job? If the answer was this is something that we're doing a really great job on, then the next question was, are we doing enough of it to be able to talk about it? Because one thing we noticed was that, you know, all the companies kind of look alike. They all put out a nice catalog, blah, blah, blah. But we were better. And I knew we were.

but we weren't doing enough of these things to talk about it. So we retooled the company. And instead of having two leaders, we had three leaders. Instead of having one van, we had two vans. And went on and on and on. And we went from really low profit margins to much higher profit margins because we were talking about what we do and how well we do it. And more than anything else we do, we have the best leaders out there.

And we treat them well. They're not independent contractors. We house them between trips and just have a lot of, we just don't subcontract. How many total employees do you have? We have about 1,300 employees, I'd say right now. And some of them are tour leaders. Some of them are in the headquarters. So are all the employees full time? I mean, are some of them seed? No. All of the folks that are working more or less in the outside of the leader ranks are full time. Many of the leaders are full time, as full time as they want to be. It's a lifestyle job and it can be really demanding. So there's plenty of leaders that are happy to take the winter off, but others want to work all the time. So, yeah.

Tom, I'm curious about COVID because COVID really was, I mean, it was disastrous for anyone in the service industry, but all of a sudden people not only weren't traveling. They were scared to be around other people. I mean, airline business almost collapsed. Right. When it became a reality in March of 2020, you know, this is when you're just about to launch your spring trips. What happened? Yeah, it was just disastrous. And the only reason we had any sign-ups that year is because we had sign-ups before February and March.

But, yeah, we basically stopped all revenue, more or less stopped for about a year. And we laid off people. We did temporary layoffs, full-time layout. But we even reduced pay, and then we made a lot of that up after we came out of COVID, but we did everything we could think of. And the one thing that I've gotten pretty good at is, you know, we're going to come out of this stronger than when we went into it. And I attribute my belief in our ability to do that to the experience we had with 9-11

and Great Recession, because we, as tough as COVID was, It was just hellacious. All of the rules we had to follow and, you know, everybody was in the same boat. But we came out of COVID faster than anybody purposefully. There was some, I think our guests were incredibly generous with us. You know, we always survey our guests how to go. And they were, you know, quite honestly, well, I think they were overly generous because, you know, the National Park restaurants aren't exactly known for their fine cuisine to begin with. but it went from that to boxed lunches because of COVID.

And so really, I think our guests were just so darn happy to be outside and doing something with people that we shot up in business in 2022 like you can't even believe. So now, I think, how many trips on average do you offer a year? We'll do about a little over 5,000 trips this year. 5,000 trips. Yeah. So, Tom, I mean, when you, when you, when you. you look at, I think about COVID, for example, and how people talked about COVID is going to change everything. And in fact, it didn't really change everything. You know, people went to remote work

for some time, but more or less are back in the office. People said you wouldn't shake hands anymore, that masks would be the norm on airplanes. I don't see masks on planes very often. Do you think that travel or the way we travel or how we choose to travel or why to go through those places will change. I mean, I, let me just give you my take for a sake. I think it has changed already because of social media, right? When I, when I was a backpacker in Europe in the 90s, you'd go to places and it was a frontier. Right. There's no one there. And now you go to places that there's nothing is hidden anymore. There's no secrets. There's no, only the insiders know this, because it's all on Instagram. There's somebody who has set up a tripod and is posing for photos for

seven hours in one spot because they want to get the right social media photo. I'm astonished that people would travel around the world to wait three hours for gelato and skip seeing a masterpiece in the museum that nobody is going to. I experienced that in many cities in Europe. The museums are empty in many of these cities, unless it's the Prado or the Louvre or the David statue, but the other ones are empty. But people are waiting for two hours for gelato, waiting to get the perfect selfie to put on Instagram. Well, I'll back up just a little bit, which is to say that I will avoid those kinds of places that you just referenced to the nth degree.

I hope that most of our guests will avoid those kinds of places. I don't care. Of course they can't. They can't. You want to go to Florence. Well, Venice. That's not the part of travel we do, though. The way we travel, we're biking.

By the way, there's not 25 of us going down the road as a pack. You are 100% riding at your own pace. And so you can never see another guest on the trip, but you're out there interacting with little towns we go through in these beautiful European villages. There's a little sidewalk cafe. It's not an Instagram heavy environment. I'm not saying that there aren't those places that we have.

And even on our hiking trips, we're out hiking. And so I agree. It's an unfortunate thing, but we do our best to avoid those kinds of places. Sometimes we're able to go in the morning and miss something, that negative aspect of a place. And sometimes we just don't go there anymore. Yeah. You know, it's an interesting point because I think that as social media, you know, has kind of become a reality, sort of just a reality of life, if you go to Venice, The only time to see Venice, and by the way, if anybody listening is going to Venice, get up at 5 in the morning and walk around Venice between 5 and 7 in the morning.

That is the time to see Venice because that's when the delivery people are out and the people working in Venice are, you know, opening the shops. And the streets are amazing. It's beautiful, quiet. You can really get a sense of that city. But really after 10 a.m. And that's the, that's true with every city. That's what I do. I take a run in the city at five in the morning, maybe six.

And you're so right. And you can do it. You can take a walk. But yeah, you want to get out there before the crowds arise. It's an entirely different place. So where, I mean, how do you think that technology is going to change, if at all, how people are going to interact with what you're offering, right? I mean, you know, now, like I'm going to, we're going to go on a trip, a family trip in December to Asia. And I've already done this.

A lot of my trip and travel, I now start with AI to help me kind of. And then I'll do deeper dives of my books and other things. But it's made it really, really interesting, actually, to work with AI. Yeah, I think there's a lot of opportunity that we will. I know there's opportunity and we will take advantage of much of it. And I know at the same time that we are going to be hypervigilant about where it hits a boundary that we don't want to mess with. We want to have our voice be our voice, but I think there's a lot of ways to make life more efficient also. Having to do travel copy from scratch all the time may not be the best way to do it.

Tom, when you think about, you know, this business that you started, right, when you were 26 and where it is now, I think you're one of the biggest adventure travel businesses in the U.S., right? If not the biggest one. I think so, yeah. And so when you think about where. you are now, thousands of trip options. I was looking through the catalog. It's unbelievable the options. And I wonder when you think about all of the, you know, this journey you took, right, and where you are now, how much of the success of this business do you attribute to the work you put in, the grind? And how much do you think happened? Because it just, the timing

was right, and you got lucky. Making the decision to do this initially in Las Vegas, waking up, in the middle of the night. I attribute that to luck and just a fortuitous moment. But I got to say that in general, the grind has been consistent, nonstop, embraced, and has meant everything. And it's, I don't resent it. I embrace it. And, you know, my original short-term partner who said, this is just a lot of work. You know, she really hit it on the nail.

It's a lot of work. And I don't think, you know, and people that start this as a hobby and keep their day job, I can't even imagine. Good luck. That's Tom Hale, the founder and CEO of Backroads. By the way, a while back, the company started offering e-bike options on their trips, and it quickly became a really popular choice. So much so that last year, in response to guest feedback, they started offering bike trips only for people who want to do it, old-fashioned way with no electricity and just legs. Hey, thanks so much for listening to the show this week.

Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gairoz.com or on Substack. This episode was produced by Casey Herman with music composed by Rumtin Ereblewe. It was edited by Neva Grant with research help from Sam Paul. Our engineers for Patrick Murray and Jimmy Keely. Our production staff also includes Alex Chung, Chris Messini, J.C. Howard, Carrie Thompson, Catherine Seifer, Andrea Bruce, Ramelewood, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This and don't stop the podcast just yet.

Because right now, you're about to hear an amazing small business story that you don't want to miss. This segment is presented by American Express, with a business platinum member. The membership, the best just got even better. And this week's story comes to us from Stephen Davis. Back in 2021, a friend of his had just moved to Arizona. To help out, Stephen decided to hop a plane from Detroit to Phoenix. I have found a flight for like $40 round trip on one of the budget airlines. It's a great deal.

But you add your carry-on fee. It was about $50 each way. So I was like, wait, for me to carry my own business. back onto the plane and put it in overhead. I got to pay twice as much as the actual flight itself. That just bothered me. That's how budget airlines get you, right? The ticket is cheap, but they'll charge extra for things like bottled water

or printing your ticket at the airport or carrying on a roller suitcase. But one of the things that are still free, a small personal item, like a backpack or a purse. And that's when Stephen noticed something at the airport. I just looked at the size of it for the personal item. I'm going to carry-on sizes. And I just was like, well, it's not too much smaller. I wonder if my suitcase could fit. I put it under the size of it.

And I looked like, well, if it didn't have these wheels, it probably would fit inside this size there. Stephen got to thinking, what if there was a carry-on roller suitcase big enough to hold all you need for a trip, but could also shrink down just a little to be the size of a free personal item? all you'd have to do is press a button and pop, you could take off the wheels. Take off. And he thought, that would make a pretty cool name for a luggage company too.

So despite no background in product design, and while working a full-time sales job, Stephen gathered up some seed money and found a manufacturer on Alibaba to build out a prototype. After five months of back and forth, the first run of suitcases was ready to be sent to his house, All 500 of them. The day the shipment came, I came home. It was suitcase stacked to the ceiling in our living room, in our garage. It was slow going at first. Stephen estimates he sold about 50 during the first few months,

mostly to friends and family. But his big break came after he posted a video of himself at the airport showing the takeoff suitcase in action. That got 700,000 views on TikTok and his full. first real sale. Her name was Courtney. She was like, I've been waiting on something like this. I travel, you know, budget airlines all the time.

And so I'm going to make a video of it. And that YouTube video is actually we'll start driving ourselves. Shortly after that video went viral, that first run of 500 suitcases sold out. And Stephen realized that building out a community of fans online was critical to his success. Having a tight-knit group of customers who champion our brand, which helped our growth. I actually read to a girl at an airport. She made me feel famous. She's like, oh, my God, you're a takeoff.

Takeoff has grown so much since 2021 that it's now Stephen's full-time gig. He's also launched new products like vacuum-sealed bags and a neck pillow that can be stuffed with clothes. We're trying to let people pack more without having to pay more. I'm sure that budget airlines doesn't like us. But, you know, we're here for the people. We like the rivalhood of the airlines. That Stephen Davis, founder of Takeoff Luggage, his small business story is presented by American Express. To build a business like no other, you need a card like no other.

There's nothing like business platinum.