- Real Estate
- Food & Drink
By Jodi Schwan
Kevin Tupy is in his element.
It’s his first time at the nation’s largest retail real estate convention, and Tupy – retail franchisee, investor and property owner – is feeding off the energy surrounding him and roughly 35,000 others in Las Vegas for a few days of deal-making.
Tupy is here because he wants to keep growing his portfolio of retail investments, to “get out of the Sioux Falls bubble,” as he puts it, and take the pulse of his industry.
He already owns 20 retail properties in the Sioux Falls area. He has already grown his stake in wireless stores, from opening a single store on West 41st Street to becoming the largest Verizon premium retailer in the country.
But his drive and energy suggest he might just be getting started.
“It’s about being in the hunt,” he agrees. “I love the deals. I love the art of the deal.”
Tupy is one of those silent giants in the Sioux Falls-area business community – widely successful and not the type to talk about it. His sense of humor and “what you see is what you get” genuineness become apparent quickly after meeting him.
So does an aura of humility that likely comes from an upbringing that would not have suggested he’d become a serial, successful entrepreneur.
“He’s not afraid to be himself,” said Raquel Blount, vice president of commercial real estate for Lloyd Cos., who has leased properties for Tupy since he began in the industry 16 years ago.
“He’s such a vivacious personality. He makes decisions and responds quickly, and he’s a passionate person about the market. He wants to see things happen.”
A young Tupy growing up in a Valley Springs mobile home almost didn’t graduate high school.
“I remember standing in line for government cheese,” he said. “My friends would come over and say my mom’s grilled cheese was the best they ever had because nobody had that cheese.”
At 16, he dropped out of of school and moved into the Albert House in downtown Sioux Falls. Friends convinced him to go back to high school, and he graduated in 1987.
No one at the time would have predicted he would be successful, he said.
“I was a nobody burnout,” he insists.
He went into the Army, was asked to leave before his commitment was up and then moved to California where his mother lived. He traveled Europe running the sound system for a Christian rock band in the early 1990s.
He returned to Sioux Falls shortly afterward, when his father got sick, and met his future wife, Delena.
Jobs at Taco John’s and other restaurants eventually led him to work at SPS Payment Systems. He was a manager-in-training working on his business degree when it was acquired by Citibank.
“I became a number,” he said. “I was given a set of responsibilities and a role, and just became a cog in a machine.”
He had two kids, was making about $40,000 a year and said he “would have been happy living and dying in middle management” except that he felt the corporate entity didn’t care about him or the hard work he felt he was investing in it.
He was miserable.
Becoming his boss seemed the best alternative.
“For me, entrepreneurship was not noble,” he said. “I was so miserable I would rather try and fail than be in the current situation.”
Tupy’s brother, working in a California mall, told him to look into Dish Network.
“I didn’t even know what satellite was,” he said.
But he liked the enhanced television it offered and thought it would be a good fit, especially in rural South Dakota, so he opened a kiosk in The Empire Mall on Oct. 1, 2001 – less than a month after the Sept. 11 attacks that sent the economy temporarily spiraling.
“Great timing,” he said. “But it started going pretty good.”
Inspired by the success of Radio Shack at the time, he decided to expand six months later and opened a store on 41st Street.
“I said, I’ll bring in a wireless carrier, sell my Dish Network and sell remote-control cars and TVs and everything Radio Shack was doing,” he said. “It quickly became apparent that Verizon, the carrier I chose, was going to be the predominant revenue driver.”
Still, he drove around the block a few times before going into his future location to sign a $1,300-a-month lease on 41st Street.
“I thought, if I’m not successful, this is going to bankrupt me,” he said.
He signed the lease.
“And just worked that business from open to close seven days a week,” he said. “I was head down growing the business.”
But it started paying off.
Tupy opened Z Wireless stores in Omaha, Lincoln, Neb., and Duluth, Minn.
By 2008, he had 60 stores. And then times got tough.
“I had expanded so fast and so large, that the ramp-up of newer stores started to overtake the profitability of the more established and good stores,” he said. “It was precarious.”
A godsend came in the form of a store in Watertown, where Unicel had just been acquired, and Tupy’s Verizon store received an influx of customers.
“It was enough to completely get me into profitability,” he said. “Sometimes, it’s just about staying alive.”
Tupy then doubled in size to 120 stores while still bootstrapping.
“My credit cards were maxed, my mortgages, 401(k)s were cashed in, I had stretched my resources to the nth degree,” he said. “I literally epitomized fake it ‘til you make it.”
It was around that time, in 2010, that a random call popped up on Tupy’s BlackBerry. The caller asked if he was in the wireless business and how many stores he had. About 120, Tupy replied.
“He’s like, ‘OK, I assume your EBITDA is about x,’ and I’m like, ‘I don’t know what EBITDA is, but my net profit is around this, and how did you know?’ Because he was close, and that was a trigger for me.”
The conversation ultimately led to a partnership with private equity group Atlantic Street Capital in 2011. The portfolio grew to 600 stores.
Five years later in 2016, Tupy and his partners joined forces with Lone Star Capital, and Tupy became what he calls a “significant shareholder” in the business, a board member and adviser to management.
The group was renamed A Wireless and now includes about 1,200 Verizon authorized retail stores.
“They’ve been great partners,” he said. “They allowed me to have a second career.”
After years of leasing space, Tupy has shifted to become the landlord for dozens of retailers.
His real estate holdings are under the limited liability corporation LLAP LLC, which stands for “live long and prosper,” Tupy’s fan-driven homage to Spock from “Star Trek.”
He primarily has invested in retail buildings and loves evaluating new retail concepts.
“Kevin always had ideas and aspirations to have other concepts, and he was very interested in the Sioux Falls real estate scene,” Blount said. “He very much has a gut feel for what’s going to work and what isn’t.”
One original concept, a phone repair and resale store called Phone-n-Fix, doesn’t stray far from his wireless roots. It started in The Empire Mall and recently signed its third franchisee, who will open a new location on West 41st Street.
This year, Tupy launched another business, CarSwap, with partners. It’s a used-car business with two locations on West 12th Street that markets its “low-mileage, late-model, high-quality” inventory, and the plan is to expand to more locations.
Both businesses fit Tupy’s retail-investment criteria of supporting “anything that Amazon can’t impact.”
“Service-related industries,” he continued. “Industries that have a high barrier to entry, such as high capital or input costs. Some restaurants. That’s what’s really appealing to me about CarSwap. It takes a lot of capital, and that means not every Tom, Dick and Harry will be involved in it.”
He also is a partner in flooring, tile and cabinetry business Sunderland Brothers Co. and has investments in other retailers out of state.
“Retail is not dead,” he said. “The retail of yesterday is dead. The retail of blandly merchandising and filling up 50,000 square feet is dead, but strategic retail is alive and well.”
Tupy’s other focus is building up Crescent Venture Capital, a platform he founded for startups and midsize business acquisitions.
“Making money is obviously important, but it’s really succeeding and doing something – growing a business from nothing to an entity that is helping serve a purpose in the business community, and growing and developing entrepreneurs. I work passionately at these businesses because I want these people to succeed. I can’t let them down.”
His success is unquestionable. He reluctantly allowed The Wall Street Journal to feature his home recently in a story on the Sioux Falls luxury real estate market. He took his private jet to the Las Vegas retail convention. He is a quiet but generous philanthropist who is particularly drawn to support epilepsy research. His daughter suffers from a controllable form of the disease, which his wife made part of her platform as the reigning Mrs. South Dakota.
Success hasn’t changed him, said Blount, who has known him since his first deal.
“And I’m so happy for him because he’s such a good person,” she said.
Tupy, however, still feels like he’s on a mission.
“I spend the majority of my time trying to prove I’m not just a one-hit wonder,” he said, pausing while the reality of the statement seems to hit him.
In the coming years, expect him to get into multifamily development and pursue a project downtown, he said.
“I used to say if it’s not by The Empire Mall, I don’t want to hear about it,” he said. “Now I wish I would have bought down there four years ago.”
Like others in his industry, he’s looking for “the next hottest thing to bring to Sioux Falls,” he said, while adding low retail vacancy and low unemployment can complicate pursuing new prospects.
For Tupy, though, tackling the tough stuff is part of the draw.
“I think you just have to be a smarter businessperson. Maybe there’s less room for mistakes these days,” he said.
“I’ve been involved in very competitive businesses, so that doesn’t scare me. One of my favorite sayings is there’s opportunity in complexity. I got into one of the most competitive businesses. And then used cars – we’re phenomenally successful after four months. That’s what gets me up in the morning. Let’s be the next great success story.”
Kevin Tupy grew from the owner of one store to become the largest Verizon authorized retailer in the country. But he might just be getting started.