Entrepreneurs

How this founder convinced Warren Buffett to work with him—and built 2 multimillion-dollar businesses

Source: Wheels Up

Most people can't start sentences with "Warren Buffett told me…."

Kenny Dichter can.

"Warren Buffett told me that once you fly private, 'going back to commercial is like going back to holding hands,'" Dichter, co-founder of $700 million company Wheels Up, a private plane subscription service, tells CNBC Make It.

It's a sentiment that Dichter agrees with. In fact, he's built two multimillion-dollar businesses around it.

But Dichter didn't start out living the luxe, private-jet life, hanging with Warren Buffett. He grew up on Long Island in the 70s and 80s and has always worked. He got his first job in sixth grade, delivering newspapers on his bike every weekday afternoon and on Sundays. He's been a busboy and started his own T-shirt business at the University of Wisconsin. He had three retail locations by the time he graduated in 1990.

In fact, Dichter, now 49, remembers the first time he flew private. It was in 1998. A friend had lent him his Hawker 800XP plane to travel from Teterboro Airport in New Jersey to Kiawah Island in South Carolina.

Dichter looked out the window and then looked at his business partner sitting next to him and said, "We gotta make a business out of this."

"It was love at first flight," Dichter tells CNBC Make It. That's how Marquis Jet, his first aviation business, was conceived.

It's also how he met Warren Buffett.

Warren Buffett
Getty Images
Warren Buffett

As a first-time entrant into the business of private aviation, Dichter knew he'd need access to planes. Rather than raising massive capital to buy them, he wanted to partner with someone already in the game — someone like Richard Santulli, the founder of private jet company NetJets, which is now part of Buffett's Berkshire Hathaway. He had to "convince them that they should be in business with people like me," he says.

Santulli's New Jersey NetJets office was just a 40-minute drive from Dichter's, so the young entrepreneur set out to meet the titan and pitch his idea for the Marquis Jet Card, a service to allow pre-paid leasing of private planes.

Dichter and his Marquis co-founder, Jesse Itzler, had already sold Alphabet City, their sports-marketing and music business, for more than $4 million, "so we had a little bit of street cred," Dichter explains.

Still, it took the pair seven or eight meetings in as many months to convince Santulli, the OG of private aviation, to partner with them. "You need to be gritty" to be a successful entrepreneur, says Dichter. "You have to be willing to just keep moving forward, willing to take advice and most importantly, you need to be a flexible thinker," he says.

Every meeting Dichter and Itzler had with Santulli, "we took away a nugget or an idea," says Dichter. "We didn't know it at the time, but he was helping us shape our proposal so that ultimately we could go together to Buffett and he could get a blessing from Warren.

"Every meeting we listened, which I think is key," he says.

Each time, Dichter and Itzler made the tweaks Santulli suggested. Then, in February of 2001, Santulli called them to Woodbridge, N.J., for a sit down with the Oracle of Omaha himself.

"We shook hands on that day and got the business going," says Dichter.

"Working with Warren Buffett is like playing basketball with Michael Jordan," Dichter says. Over the years that followed, he studied Buffett in action. He says he learned three main things from the iconic investor.

First, Buffett taught him to "keep it simple." In fact, Bill Gates says that same advice is some of the best he's ever gotten from Buffett too. According to Gates: "His ability to boil things down, to just work on the things that re ally count, to think through the basics — it's so amazing that he can do that. It's a special form of genius."

Buffett also showed Dichter that "reputation and integrity are everything," he says.

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently," Buffett has said.

Finally, says Dichter, Buffett made clear that you have to "work harder than everyone else."

Dichter did just that for a decade. Then after selling Marquis Jet to NetJets for an undisclosed sum in 2010 and seeing the company through the transition, he was ready to get back to being an entrepreneur.

In 2013, Dichter founded Wheels Up, which offers private jet memberships. Dichter likes to say that "Wheels Up is more Netflix than Netjets," and he also compares it to Amazon Prime. "We're a subscription business," he says. (NetJets is fractional jet ownership.)

With this business model, Dichter says Wheels Up increases the addressable market for private aviation from "a couple of hundred thousand to a couple of million."

Beechcraft King Air 350i
Source: Wheels Up
Beechcraft King Air 350i

Wheels Up has its own fleet of 80 planes, including 65 Beechcraft King Air 350i turboprops, which Dichter calls "flying SUVs" for their roominess and durability, and 4,000 active members, including both business accounts and consumers. Individual/family membership requires a one-time initiation fee of $17,500 and $8,500 annual dues beginning in the second year. Corporate membership has a $29,500 one-time initiation and $14,500 dues after the first year. Both also pay fixed hourly rates for occupied flight hours.

In October, the company completed an equity capital raise of $117.5 million, valuing the business at close to $700 million with an enterprise value north of $1 billion, according to a statement by Wheels Up.

So what's next for the business? Dichter says he may be eyeing an IPO in the next year.

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