Meet a son of MAMO KACHA, a DC business tycoon

Home         Mission      Coffee House        Radio & TV        Entertainment        Contact         Photo Gallery

Mamo’s father, Yenberber Mamo, was a public transit mogul who manufactured buses and ran the first fleet to provide service across Ethiopia. The operation made his father’s Mamo Kacha bus line a household name in the East African country. It provided a nice life for his family. But it rendered him distinctly unpopular with the Marxist junta that ruled Ethiopia between 1974 and 1991. The elder Mamo was jailed two or three times by the regime. Some of his property was confiscated. As his son approached draft age, the patriarch looked for ways to send him overseas.

That’s how Joe, at the age of 13, found himself attending Catholic boarding school in North Dakota. “He didn’t know the difference between North Dakota and New York City. We didn’t know until we got there,” says Joe Mamo, whose given name is Eyob. But he got used to the cold winters and moved to Chicago after graduation. While he attended community college there, he got a job pumping gas. By 1987, Mamo had moved to Washington, where an old friend had settled among the region’s large Ethiopian community. This too was “an accidental move,” he says. “I didn’t know Washington that well but I liked it here because it was much more diverse than Chicago. There’s a lot of Ethiopians, a lot of different cultures.” And while Mamo remained far from home, it turned out that his entrepreneurial DNA was still intact in North America. “I always wanted to be a businessman like my father. The only business I knew was a gas station, so I decided to lease a gas station,” Mamo says.

Mamo scraped together his savings and a little money from his father for a down payment. Within months of arriving in Washington, he signed a lease on his first station, an Amoco on South Dakota Avenue. His two brothers were his only employees, Mamo says; they all worked 18-hour days. Mamo still owns the station, which now operates as a Shell. Over the next quarter century—and in a manner more deliberate than accidental—he has built a network of stations around the region, acquiring them slowly, at first, and then, starting in 2009, at high speed. Riding a wave of industry transition, he went on a buying spree that expanded his empire from 25 to around 240 stations. Nearly half of all stations in the District are controlled by Mamo; he runs a quarter of the region’s stations.

He’s occasionally been painted as a rapacious tycoon, and sometimes been cast as an exemplar of the American Dream. In fact, Mamo may be a bit of both. But what’s striking is how rarely he’s been painted at all. During his rise from gas station attendant to the chief executive and board chairman of the Springfield-based Capitol Petroleum Group, Mamo, 44, has kept a low profile in the industry and shunned interviews with reporters. The little-known tale of how he went from dodging an authoritarian government’s draft to dominating Washington’s fuel business is one of politics, ambition, luck, real estate, hard work, race—and, of course, gas.


Within the industry, there’s “a bit of a mystique” around Mamo, says Steve Holtz, news director at CSP Information Group, a trade publication that has covered Mamo’s business ascent. But as rapid as his rise may have been, “mystique” is hardly the first word that comes to mind for a burly, plainspoken businessman who lives next door to his mother in a modest ranch-style house in Annandale and runs his enterprise from a no-frills office space in a Springfield industrial park. Despite his reputation as an aggressive businessman, Mamo seems almost humble when he sits down for the first in-depth interview he’s ever given. He credits good luck as much as entrepreneurial savvy for his recent string of successes. He may be a mogul, but he still comes off as what oil folks call a “jobber.” In the parlance of the oil industry, the companies that do the drilling and processing, like ExxonMobil and Shell, are “refiners.” The local business people who run stations are known as “dealers.” Companies like Mamo’s that get the fuel from the oil companies to the gas stations are called “jobbers,” though Exxon refers to its jobbers as “branded wholesalers.” For decades, competitive flaps in the business pitted the refiners of Big Oil against the ma-and-pa operations of dealers, who generally rented their land from the companies. But in the last five years or so, the drama has shifted. The big companies have sold their stations and gotten out of the retail side of business. That’s where Mamo found what he considers a “once in a lifetime” opportunity. Washington-area stations were among the first in the country to be spun off. BP sold nearly 200 area stations to Annapolis-based Eastern Petroleum Corp. in 2005. Germantown-based Mid-Atlantic Petroleum Properties, LLC, among other jobbers, saw similar expansion in the suburbs.


The effect of the purchases was to make the dealers’ principal suppliers into their landlords, as well. Mamo picked up nearly 200 Shell and Exxon stations and became the king of D.C.’s gas business. “Over the years we were able to grow the business one at a time, and now given the new opportunities we had, we could move really fast in the last couple of years,” Mamo says. “But you don’t have any choice either. You buy now or once it’s sold, it’s sold.”

Mamo’s 45 District Exxon and Shell stations represent about 42 percent of the gas stations in the city. Eastern Petroleum is in second place with 30 BP locations, according to current public records. A hodgepodge of small businesses and big jobbers operate the other three dozen or so stations under the banners of lesser-known brands such as Lowest Price Gas, Hess, and Crown. “We just happened to be the right time and the right place,” says Mamo.

But it’s hardly that easy. Mamo managed to come up with money for his buying spree at a time when many businesses simply wouldn’t be able to tap the kind of 35-percent equity financing the oil refiners require. “For Joe to be able to get financing in the last two years, he had to have his ducks in a row before [the economy] fell apart,” Holtz says.

Those successes set him up as “someone to watch not only regionally but nationally,” says Holtz, who thinks Mamo’s enterprise may someday become a household name—the next Wawa or 7-Eleven.


There have been a bunch of different narratives about Mamo over the years: Ask Jerry Schaeffer, the taxicab mogul who is Mamo’s friend and mentor, and he’ll describe a “rags to riches” immigrant success story. But the Rev. Jesse Jackson Sr. and Mamo’s longtime lobbyist, John L. Ray, have cast him as an African-American civil rights crusader. At still other times, he’s has faced sharp hostility from African-American neighborhood activists who don’t see the Ethiopian-American as one of their own. Mamo has played David to Big Oil’s Goliaths but also plays the heavy in the ongoing drama with small-time gas station operators.

Even the irony of a gas-pump titan living in a humble ranch home isn’t the whole story: As it happens, Mamo also owns a nice spread in Chevy Chase, and harbors hopes of one day tearing down his Annandale place and the adjacent homes of relatives in order to build a whole new townhouse development. The one thing everyone agrees on is that Mamo has thrived in an industry that’s driven others into bankruptcy and oblivion. Besides hard work and business sense, his success has relied on a generous portion of another potent ingredient: politics. Learning how to navigate the chutes and ladders of city government is a skill Mamo picked up from Schaeffer, with whom he talks a few times a week. Mamo says the taxi king has been a source of “social capital.” When Schaeffer’s daughter got married, Mamo attended the wedding. And when Mamo got engaged, Schaeffer and his wife went to the party. Schaeffer also invested in Mamo’s business, making a crucial loan about a decade ago, when his young friend had an opportunity to buy additional Shell stations but lacked the cash. He continues to hold a stake today. While Schaeffer says he doesn’t get involved in Mamo’s day-to-day decision making, their relationship has clearly been much more meaningful than that of a passive investor.

Early on in Mamo’s career, Schaeffer says, he began taking the ambitious young gas station owner with him to political fundraisers, introducing him to local power brokers. “Well, I did introduce him to people—lawyers and lobbyists and people who gave him connections,” says Schaeffer. “He didn’t have political connections. We’ve been in the city a long time. We did know all the mayors and the city council people.” In the last election cycle, both gave to both Adrian Fenty and Vincent Gray, as well just about the entire D.C. Council, as well as many unsuccessful candidates.

Schaeffer also introduced Mamo to Ray, who during the last decade or so has made hundreds of thousands of dollars in lobbying fees. Mamo has paid Ray’s firm more than $250,000 in the last two years, according to D.C. Office of Campaign Finance records. Ray did not respond to multiple requests for comment.

In an industry with lots of government oversight, Mamo is not alone in filling politicians’ coffers. But he has outdone most of his competition. Mamo, his companies, and his close family members have given nearly $60,000 to D.C. mayoral and council candidates and another $42,100 to candidates for state and federal offices in the last decade, records show. In D.C., the bulk of the contributions—$52,750—were made since 2006, when Mamo’s business fortunes began to soar.


And then there was the event Mamo orchestrated to help Vincent Orange’s mayoral aspirations five years ago. Orange pumped gas for residents for a cut-rate $1.99 per gallon at a Shell station on Rhode Island Avenue NE. Residents lined up around the block in a spectacle Mamo at the time said had cost “about $10,000” (and didn’t help Orange win).

Mamo has been much more generous than rivals. Eastern’s chairman, J. Kent McNew, and other company executives have given a little less than $7,000 in the last decade, mostly to Maryland politicians; they’ve given zero to District candidates. Koo Yuen, who helms Lowest Price Gas, an independent label with several D.C. stations, has spent just $3,450 since 2001; not a cent went to local pols. Mamo and Schaeffer say they’re not asking for special favors, just playing by the unofficial rules of D.C. politics. “If you want to participate, you’ve got to put in,” says Schaeffer, who has “put in” more than $15,000 in campaign contributions in the District since 2002, according to public records. “It’s good to be on good terms, at least talking terms with people. Sometimes they’ll return your calls,” he says with a wry smile. Just what those returned phone calls might lead to is less clear. Around the time Mamo needed city officials to wave lot size requirements for his plans to build a Shell station on Maryland Avenue NE in 2007, Mamo and his brother Tamrat donated $1,000 apiece to Kwame Brown’s campaign fund, the maximum allowed. Besides those contributions, seven of Mamo’s companies donated an additional $1,000 apiece. Total take for Brown: $9,000.

Mamo, with or without help from elected officials, got his way. Brown, now D.C. Council chairman, recalls meeting Mamo, but says he doesn’t recall the Maryland Avenue zoning controversy. Nevertheless, he says he stood with the small dealers against jobbers last year, when the council passed a measure giving dealers the right of first refusal to purchase their stations. “We must protect the local small business operations,” Brown says. “We did everything we could.”

On Dec. 8, 2008, Mamo, his brother, and four of Mamo’s companies each gave the maximum $2,000 contributions to the Fenty campaign. The total $12,000 contribution came as Mamo was battling the right of first refusal bill—and at a time when Fenty was considered a lock for re-election. In that case, the law was enacted, though it came too late to stop the wave of sales that put a majority of D.C. stations in the hands of Mamo and other jobbers.

Mamo’s contacts played a role in a more successful effort to fend off new regulations—particularly an extension of the city’s divorcement law. Starting after the oil shocks of the 1970s, D.C. and many states passed laws barring the refiners from operating stations. In 2004, the D.C. Council revamped the law to include jobbers, though it gave jobbers a grace period to get out of the gas-pumping business. But the measure never went into effect. The council reversed itself in 2007 with an amendment that removed all mention of the distributors, who, by then, owned more than two-thirds of D.C. gas stations.

At-Large Councilmember Phil Mendelson, who voted against the amendment, credits its passage to “heavy” lobbying orchestrated by Ray. But Schaeffer insists it’s not the contributions that matter so much as having a chance and taking it. “All educated people always say it’s better to be smart than lucky,” Schaeffer says. “But to me it’s better to be lucky. Luck is the most important thing—being at the right place at the right time. Joe was at the right place at the right time and he had the guts to take a chance.”


By the time Mamo made his big expansion, he’d also spent some time engaging a group even more powerful than politicians: Oil executives. Way back around the time he built his first station, in Capitol Heights, Mamo met Michael D. Baskin, a former Mobil executive who had just launched a consulting business. Mamo hired Baskin to help negotiate a supply contract with Mobil for the new station. As Baskin recalls their first meeting, he drove over to the construction site. They signed his contract at the McDonald’s down the street. His first impression of Mamo: smart and confident, traits that seemed to bode well for his future. Most gas station owners never gain more than a few stations. But a few years later, Baskin helped Mamo execute a gambit that set him apart from his competition.

In 1996, a recruiter for Texaco called Baskin to see if Mamo would be interested in becoming a distributor. The oil company had just settled a lawsuit by African-American executives over racial discrimination. “They needed a lot of heat taken off of them. Joe was the best known minority operator at the time,” says Baskin, who negotiated the deal that made Mamo the company’s first African-American distributor—a big break in an insular industry. Being able to capitalize on the evolving needs of big companies—and to occasionally use public relations pressure to help them see things your way—proved to be a useful skill. A couple years later, the Federal Trade Commission ordered Exxon and Mobil to sell some of their stations as part of a merger. The order put several D.C.-area properties into play. Mamo lobbied aggressively for the right to make a bid. But executives rebuffed his overtures. When the stations were sold to another distributor, one of Mamo’s companies, DAG Enterprises, Inc., sued, alleging racial discrimination. Trial lawyer Willie Gary, famous in legal circles for civil rights litigation, argued the case, which dragged on for about a decade. Mamo also called in Ray and his team of lobbyists at D.C.’s Manatt, Phelps & Phillips, who labored so energetically on Mamo’s behalf that lawyers for Exxon complained in a March 2001 court filing: “DAG simultaneously aggressively pursued a lobbying campaign with Congress, the White House, and the Department of Commerce to influence the [Federal Trade Commission] divestiture decision.” Jackson’s Rainbow PUSH Coalition had led the public condemnations of ExxonMobil for unfairly shutting out a minority business. Jackson’s group had also picketed in front of BP stations after Mamo sued that other oil giant in 2005 also alleging racial discrimination in the selloff of area stations.

As it happened, Mamo and his family members contributed $30,000 to Jackson’s Keep Hope Alive Political Action Fund in 2006 and 2007. Mamo says there was no quid pro quo. Rather, he says, Jackson’s organization was in a cash crunch and had put out a fundraising call, similar to ones he has always answered from civil rights groups. “We’ve been supporting Jackson for the past 10 years,” Mamo says. “To me, it’s my obligation to contribute to African-American organizations.” Jackson did not respond to requests for an interview. Mamo lost the BP fight when the U.S. Court of Appeals for the 4th Circuit dismissed the suit in 2008. But a decade after Mamo’s suit against Exxon, the now-merged firm’s relations with him have changed dramatically. In 2007, when ExxonMobil embarked on plans to sell its remaining Washington-area stations, the firm’s director of U.S. retail sales, Ben Soraci, requested a meeting. It could have been awkward since Mamo’s discrimination suit was in its eighth year. But Mamo and Soraci, who had spent time in Ethiopia while overseeing the company’s East Africa operations, hit it off immediately over a meal at Zed’s, an Ethiopian restaurant in Georgetown.

“We broke bread as we joked and got to know each other on common ground,” Soraci recalls. Citing a confidentiality agreement, neither Mamo nor Soraci would discuss the details of the settlement that ended the lawsuit. But news that the case had been resolved broke on the same day in June 2009 that the oil giant announced it was selling its 30 remaining Washington stations to Mamo. Today, he owns about 200 Exxons and 40 Shells. All are in the greater Washington area, except 71 stations he purchased last fall in the outer boroughs of New York City.

Since that first meeting, Soraci says the Capitol Petroleum chief has repeatedly impressed him with his knowledge of the industry and even such minutia as his stations’ mystery shopper scores—the grades stations receive from company agents sent out anonymously rank station cleanliness and customer service. “He knows his scores and he’s very proud of having the highest scores even in the worst, most challenging parts of the market,” Soraci says.


For most drivers, gas is gas, and one gas station is little different from another. But there’s one population that’s been distressed by Mamo’s quiet acquisitions: D.C.’s old-line, ma-and-pa gas station operators. As a few increasingly large jobbers have bought up the country’s gas stations, dealers have been finding their new landlord is also their principal supplier—a situation, many of them say, that puts them at a competitive disadvantage. Several D.C. dealers banded together and took Mamo and ExxonMobil to court in 2009, charging unfair business practices. They say, among other things, that he has raised rents and the cost of gas, forcing them to up their prices, which has driven away customers. Wholesale prices are set and publicly posted at terminals in Baltimore and Northern Virginia by the big oil companies. But dealers also pay for delivery. And they can’t usually shop around, since their station leases lock them into multi-year supply contracts.

 

“Because we could not compete, all dealers could stand to lose their businesses to Mamo,” says Roland Joun, who is a partner in a Mamo-owned station in Georgetown.

Anyone who regularly buys gas in the District knows it’s usually cheaper to fill ‘er up in the suburbs. Experts tick off a variety of reasons why: high real estate prices, the city’s 23.5-cent gas tax, credit card charges, the smaller size of D.C. stations, which means fewer convenience store sales (the true profit centers of most stations). But, some critics allege, the business ambitions of owners like Mamo are also a factor. In buying up so many gas stations, Mamo has in fact moved from being strictly a player in the gas industry to being a major real estate owner. The land, after all, could just as easily be leased to a supermarket or a bank—or sold to a condo developer. Stacy Milford operates Circle Exxon, a station and garage near Chevy Chase Circle that one of Mamo’s companies purchased as part of the multi-station deal in June 2009. Milford says it’s unsettling to know that once his lease runs out in a couple of years, Mamo may find it more lucrative to sell the property for condos rather leave it as a gas station. “It used to be that the oil companies wanted to just sell gasoline. Now they want to be real estate companies,” says Milford, who followed his father into the gas-station business but says he would “absolutely not” suggest his kids do the same.

Mamo dismisses most of the dealers’ concerns as unfounded. “I think their future is as bright as it was in the past,” he says. “We love having tenants that have long service to the neighborhood and the community. We rely on them. So I don’t see any changes in their future…we actually encourage them to stay.” Mamo also rejects the dealers’ allegations that prices at the pump have risen in D.C. as a result of his company’s growth.

He is frank, however, about his real estate aspirations. “We are really a real estate company,” he says. “We’re in it for the real estate.” Mamo considers the coming transition inevitable, given the high cost of D.C. real estate and predictions about “peak oil,” alternative fuels, and electric cars that might eventually make gas stations obsolete. “Long term, the real estate is where the value is,” he says.

In fact, the “long term” has already arrived for some of his properties. Mamo sold a former station property at 1024 Pennsylvania Ave. SE on Capitol Hill. Today the site of the foreboding-looking Butterfield House condos. He has lined up the necessary zoning permits to do the same with gas station property at the corner of North Capitol Street and Florida Avenue. And stations like the Key Bridge Exxon in Georgetown, which he purchased in the 2009 deal, could also be redeveloped, says Mamo, noting that the District now has fewer than half the gas stations it did when he leased his first station in 1987. “The market is changing,” he says. “A lot of properties are being used for best and highest use, as the properties become more expensive. So the chances are less and less gas stations in the future.”  Source (Washington City Paper)
Comments