Speaker 1:
From the Library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership, and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now, welcome Inside the ICE House. Here's your host, Josh King, of Intercontinental Exchange.
Josh King:
Almost 400 episodes into our nearly six-year run Inside the ICE House, we've huddled up with our guests for discussions spanning a wide array of business landscapes. These little chats we've had hit on their successes, failures, moments of turmoil, and moments of pure joy.
What we've come to notice is that business is often filled with unexpected challenges and uneasy situations that leave those at the top, sometimes pining for calmer moments. Now, sometimes these are alleviated by the stroke of luck, but in other more common instances, businesses need to adapt or completely transform to break away from harsh surroundings. Our guest today, Ron Shaich, founder and former CEO of Panera Bread, as well as a current lead investor and chairman of Cava, that's NYSE, ticker symbol CAVA, or Cava knows well these trials and tribulations. It's perhaps part of the reason why when Cava went public here, the company transformed our experience square outside our building on Broad Street into an oasis of nourishing calm. But he has also shown, throughout his career, a propensity to adjust when necessary. In his newly released book, Know What Matters: Lessons From a Lifetime of Transformations, Shaich takes the reader through the many changes he and his company underwent to make Panera Bread what it is today, a national brand with over 2000 cafes and the staple of fast casual dining.
I'm a customer of Panera Bread, but I was also a customer of its predecessor company, Au Bon Pain, which was born in my hometown of Boston in 1976 at Faneuil Hall Marketplace when I was but a boy of 11 years old. My Au Bon Pain was Chestnut Hill Mall where I loved the smoked turkey with boursin cheese sandwiched in a fresh warm croissant. I can still taste it today 47 years later. Might I ever get to meet the man who scaled it into Panera Bread? Our conversation with Ron Shaich on his journey from a small general store owner to Panera Bread founder, how we dealt with all the difficulties along the way and the future of Cava. It's all coming up right after this.
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Connecting the opportunity is just part of the hustle.
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Josh King:
Welcome back Inside the ICE House. Remember to subscribe to the podcast wherever you listen and rate and review us on Apple Podcasts.
Now our guest today, Ron Shaich, is the founder and former CEO of Panera Bread. He's currently a lead investor and the chairman of Cava, that's NYSE, ticker symbol CAVA, as well as Tatte, Life Alive, and Level 99. He makes his investments through Act III Holdings, a $1 billion plus evergreen investment vehicle where he also serves as managing partner and CEO. Welcome, Ron, Inside the ICE House. Glad to have you back here at the New York Stock Exchange.
Ron Shaich:
Glad to be back four weeks after the Cava IPO here, Josh.
Josh King:
What were your memories of that day when you came here?
Ron Shaich:
It's the third time I've done this and it never gets old. It's a wonderful experience to be around the energy of what happens in an IPO. Having said that, I'll share with you something. I view that IPO celebration, that ringing of the bell as a bit like a wedding ceremony. Everybody gets excited about the party, but the reality is, what matters is what happens after the wedding celebration. And what matters is the relationship between a company like Cava and its institutional investors, its retail investors over a long period of time. And Cava, I'm pleased to say, is perfectly set up to be a superb public company.
Josh King:
Now, we are not in a large room here in the library of the NYSC. It doesn't really have enough space to fit an elephant, but if there was room for an elephant in this room, Ron, it might be some of your comments that you've given in other places to say most companies shouldn't be public, most companies shouldn't have an IPO. What's different about Cava?
Ron Shaich:
Well, to be clear, what I've said is when asked, I would suggest that about 90% of the CEOs who take a company public live to regret that because they're not prepared to be public, their company isn't right to be public. Being public is right for some companies, not everybody. It's right for Cava. Cava is a brand that operates in a powerful category, Mediterranean. Mediterranean is the number one diet in America. Mediterranean, quite frankly, brings bold flavors to the consumer. Mediterranean has the potential to be the next Mexican. Having said that, Cava itself is the dominant brand in that category. And this brand has been tested, it's been in 20-odd states. It's worked in suburbia, it's worked in urban locations. It's simply a question at this point of building out the system. And the management team led by Brett Schulman, our superb CEO, they've been tested essentially in a run-up to being public.
We've been doing quarterly earnings calls with them for over a year. They know what it is to be in a public environment. The truth of the matter is, for many people who go public, it's getting to the IPO that's the thing that matters. For the team at Cava, it's what it means to run a public company. And because they're prepared and because they have the kind of brand they have in the kind of category they're in, this is a business that has the potential to be industry dominant and that's what the market's paying for, the market's paying for growth.
Josh King:
Ron, I saw a tweet of yours a couple of weeks ago about Live Alive Cafe and your thoughts about positive eating. Now, I had that positive eating experience back at the Chestnut Hill Mall circa 1983. What's the difference 40 years later?
Ron Shaich:
I think 3% of Americans are, today, vegetarians, but 40% are trying to eat more plant-forward. People understand things like the Mediterranean diet. They understand that there's a better way to eat if we want to feel better. And so what Life Alive is about is another powerful category. The powerful category for what we would call craveable wellness, positive eating. People want food that tastes good and yet they know is good for them, that when they're done eating it, they feel better than they do so often when they consume some of what we consider what people are eating. And the reality is, this is another category, just like Mediterranean, that if somebody gets it right, it's going to be a powerful category with huge tailwinds for the future. And so we made this investment in Life Alive. We've been with it now for a number of years. It's producing very high volumes and we're excited about the prospect of building, yet again, a category-defining business in positive eating.
Josh King:
You mentioned that Mediterranean could someday challenge Mexican at that levels. How big do you think Cava could get when compared to Chipotle, NYSE ticker symbol, CMG, or Panera when you built it? We've had the Chipotle folks in here Inside the ICE House as well.
Ron Shaich:
I never answer those kinds of questions. Never did when I was running a public company for 27 years. We don't know what the future brings, but what we do know is if we get Cava right, Cava has the potential to be another one of those very few industry-defining enterprises. This thing could be one of the powerful companies in the industry. Why? Because Mediterranean is powerful and this is the dominant brand in Mediterranean and they execute so very well. It's really good food, really well executed. It's humanity, it's heart, it's health. It brings together all the things that people want and where the future's going. So the tailwinds are with us. It's in our hands to get this thing right.
Josh King:
Talking about humanity, reading your book and the very first pages of it, 25 years after you lost your dad in Cambridge, I lost mine in Newton, June of this year. His death brought a reckoning of sorts for you. Tell me about him and his final lesson that he taught you as you reflected on his life.
Ron Shaich:
Well, my dad died of lung cancer. He was a great athlete, and unfortunately, it was at Dana-Farber. And unfortunately, he was in such good shape when he was diagnosed it took a while to really knock him down. And in watching him over those last couple of years, he moved in with me for the last year, and watching him, I really saw him go through his own judgment day. And as I say in the book, I can't tell you there's a judgment day up there. That's a personal spiritual decision for each of us. I do know if you have chronic illness, you're going to have your own judgment day. And it really struck me that the time to be doing that life review is not in the ninth inning with two outs.
It's not when you have no opportunity to do anything. It's actually in the seventh inning, fifth inning, and third inning. And out of that came a view for my own life that I wanted to do a pre-mortem. I wanted to step back every year and try to figure out where I wanted to be in my life five years from now, 10 years from now, on my deathbed relative to my relationship with my body, my relationship with my family, the people that matter to me, my relationship with my work, and ultimately, my own personal spirituality. And I began to do that. And then I began to say, "Well, how do I create what it is I'm trying to live into, that future?" And that led to a process of literally every quarter sitting down saying, "Am I doing the things that I said I needed to do to get where I wanted to get to?"
I then took that lesson and brought that to business. And I can tell you that in every company we operate with, we sit down and we say, "What is it we're trying to do in terms of our go-to-market strategy? What are we trying to do to differentiate? What are we trying to do to be special in the eyes of our target consumer? What are they going to say in five years and what are they going to say about us? What are the two or three or four things?" And then we bring that forward to where we are at that moment and say to ourselves, "What do we have to do to literally get that done? What are the initiatives and what are the projects?" And I think that at the core, that's what we're talking about with this book, beginning a process of telling ourselves the truth, really understanding, really knowing what matters. And then, really, the hard part is actually getting it done because so few companies, so few people actually get it done.
Josh King:
Talking about being in the ninth inning with two outs. What about being in the 12th inning with two outs, talking about being in Boston in the 1970s? Let's hear Dick Stockton calling game six of the 1975 World Series.
Dick Stockton:
And the wind blowing out. We've had three homers tonight. All in right field or center field. Carbo was the dead center, the other two to right. There's a ball.
Carlton Fisk:
There it goes. A long drive. If it stays fair, home run.
Josh King:
That's Carlton Fisk, '75, game six of the World Series. Ron, there's a Store 24 in Kenmore Square that I'd go to after games, a place that I would get a shitty burrito and throw it into the microwave. We had a Clark University alum on our show not too long ago, Mark Lazarev, of the class of 1981.
Ron Shaich:
Good friend.
Josh King:
What did Ron Shaich of the class of '76 do to improve campus life with that Store 24?
Ron Shaich:
I got tossed out of that Store 24, right? It was around the corner from campus. Later ended up on their board, but I came back to campus and I said, "This is ridiculous. They're not taking care of us. They don't realize we're the customer." And I said, "We should just run our own nonprofit convenience store." And because I was treasure of the student body, I had the wherewithal to propose a tax on the student body. They agreed to what we raised, just shy of a hundred thousand dollars and decided to go build this store. We didn't know who was going to build it, so I volunteered to do that. We didn't know who was going to run it, so I volunteered to run it. And it was a powerfully revealing experience to me. For a kid from New Jersey who couldn't dance, who couldn't sing, didn't have much in the way of creative skills, this was the most creative experience I ever had in my life.
For me, it was live performance art, and I loved it. I discovered the power of what business was as a mechanism for creativity, and frankly, as a mechanism for impact, for really having impact on your world, which, I think, as contemporaries, we were all searching for in our lives and some of our political action. And so I opened that store and it opened me to a world I could have never imagined. And I don't think it could have happened anywhere else other than at Clark.
Josh King:
In your book, know What Matters: Lessons from a Lifetime of Transformation, there is an nod to political action. You and I had some similar origins in politics, me with Mike Dukakis in 1988 and then Bill Clinton in 1992 and '96. You and campaigns, eventually the founder of No Labels. So how did someone so set on thinking about politics find themselves venturing away from that, opening this general store on campus while you were a student?
Ron Shaich:
Well, first, a, one of many co-founders of No Labels, but I'm really a supporter of Nancy Jacobson who really created it. But I would say to you, I grew up in a time and a world in which the Vietnam War was raging. There were really serious issues in this country, much like we have today. And I think a lot of us felt called to help make a difference, to have an impact. And I can tell you that I probably would've gone off, gone to law school and tried to have an impact in a more conventionally political way. Having said that, I had this experience with the general store. I found that business was this powerfully creative process. And what I learned after that I had opportunities to go to business school. I went to Harvard Business School, I went back to DC, started to run political campaigns.
You're from Massachusetts. I ended up working with Mass Fair Share, put them into business. I did it in Ohio, I did it in California. And as I said, I ended up in DC in a political consulting firm. But what I found is when I did business, it always was about building a small society. That's what running an organization is, and it's literally political. And when I did politics, I was always doing strategy. And I got to conclude that a business was a campaign that never ended and a campaign was a business with a target consumer that had one day in which the consumer voted, election day. So it's the same thing. It was trying to figure out what moves people, what matters to people, and then to actually find ways to deliver that in a real way.
The last comment I would make goes full circle at some points, I did look at becoming much more politically active, actually running for office, and I concluded that business may be the last vestige of places you can really have impact. When you think about it, why does one society perform one way and another society performed differently? Why was the old Soviet Union doing what it did and America doing what it did? And same people, wasn't the people were different, it's the system. Same in an organization of business. Why does Chick-fil-A perform as it does compared to KFC? Why did Panera perform as it did compare to Corner Bakery? What is it about that system and how do we design systems that engage people and get them to choose to see it in their self-interest to do what's good for that system and delivers for the folks that actually make a difference for the organization?
Josh King:
Let's talk about some of those systems because after you met Au Bon Pain CEO, Louis Kane, the company went public in 1991. While there's usually optimism and excitement with an IPO, you wrote that Louis was euphoric, you were a bit more apprehensive to the idea and described your mood as kind of dark and foreboding. Take us back to that day, what you worried about the IPO, and what it meant for the future of Au Bon Pain.
Ron Shaich:
Yeah. Well, I just first tell you that when we merged my cookie store, I had a cookie store in downtown Boston, Park Street Station, and Louis had three Au Bon Pains and they were in a lot of trouble. We put these two companies together and created a new company called Au Bon Pain Co Inc. That company which we formed in 1981 was actually the very same company that I sold in 2017 for 7.5 billion as Panera. Now, we'd gone through four major transformations, I'm sure we'll cover them, but the first of those transformations, which led to the public offering, started with what I speak about a great deal in this book, listening with empathy and then making the changes that matter.
It was very clear working in these French bakeries, people would walk and say, "I want that baguette." And I'd say, "Sure." And they'd say, "Slice it." And I'd slice it as you slice bread. They'd say to me, "No, slice it from top to bottom." They'd pull out a bag from Stop and Shop. They'd throw on some smoked turkey and boursin. And again, you didn't have to be a Harvard MBA to realize there was a powerful opportunity in sandwiches. What people wanted was not the croissant bread for its own sake, they wanted it as the sandwich. That became a revelation, and that revelation led us to change Au Bon Pain from a bakery to a French bakery cafe. And ultimately, what was a pretty broken company with a ton of debt took off. Every developer in the country wanted one of these bakery cafes in there, and it ultimately led to our IPO in 1991.
And so 1991 arrives, we go public. It sort of goes to the core of this book, discover today what's going to matter tomorrow. And for me, that IPO represented a whole set of new responsibilities, a whole set of new investors that actually needed to be cared for and cared about. And so what I was very conscious of, the IPO, was not the celebration, which is actually a byproduct of decisions we'd made years earlier when we converted to a bakery cafe, but the implications of what it meant to be a public company and what it was going to mean to do this well and care for it in the right kind of way.
Josh King:
So if that was '91, Ron, in '93 with the acquisition of the St. Louis Bread Company, you did that in a way that put you on the upside of the new growth curve as Au Bon Pain's own growth was beginning to slow. You write in the book, I'm going to quote you here, that "people will tell you that everything bad contains something good, but I believe the opposite is true." Do you think this acquisition, looking back on it now, is the beginning of the end for Au Bon Pain?
Ron Shaich:
No, I actually think it created new opportunities. And so what we were searching for by '93, our comps were flattening. It was clear there were some powerful forces occurring in the marketplace. I wasn't quite sure how to give voice to it and understand it, and I was searching for that. And we had decided, again, to be respectful. The market pays for growth. If you don't have growth, you shouldn't be a public company. That's where the multiple comes from and that's where the valuation comes from. And as Au Bon Pain's growth was clearly slowing down, it worked great in Boston, New York, and DC, it wasn't right for California, it wasn't right for the malls. I was searching instead of being a lemming like so many public companies and just chasing that growth right off the edge of the cliff, I said, "Slow it down." And I said, "Let's backward integrate into manufacturing."
We had always done manufacturing. We can sell some of our manufactured product into other channels. I said, "If we're the best in the United States in high density urban feeding, let's build an international business." We went out and did it. And then I bought this little company called St. Louis Bread Company. At that point, I imagined it as maybe 300 stores, maybe 500 as a suburban alternative to what Au Bon Pain was in the urban marketplace. And again, part of running a business, part of life is not knowing everything, is living with the uncertainty of what you don't know. And we have this model of ourselves, and particularly we as business leaders, that we can control everything. We can't. In fact, I heard an interesting factoid the other day. The only thing that's been consistent in the last 50 years of financial history is there's been a Black Swan event every year. Nobody knew what it was going to be.
Josh King:
Yeah.
Ron Shaich:
And I think that's the reality of life and what we faced. And so in the acquisition of St. Louis Bread Company, it was fortuitous. I bought that company for $23 million. It ended up being at the center of what was a seven and a half billion dollars purchase some 25 years later.
Josh King:
On the topic of control, our own founder and CEO, Jeff Sprecher, holds the special place in his heart for Steve Jobs, the founder of Apple, as the two of them were born on the same date. I want to listen to a little bit of Jobs's commencement address at Stanford University in 2005.
Ron Shaich:
I love that speech. Let's hear it.
Steve Jobs:
I was lucky. I found what I love to do early in life. Woz and I started Apple in my parents' garage when I was 20. We worked hard, and in 10 years, Apple had grown from just the two of us in a garage into a $2 billion company with over 4,000 employees. We just released our finest creation, the Macintosh a year earlier, and I just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew, we hired someone who I thought was very talented to run the company with me. And for the first year or so, things went well, but then our visions of the future began to diverge and eventually we had a falling out. When we did our board of directors sided with him. And so at 30, I was out, and very publicly out. What had been the focus of my entire adult life was gone and it was devastating.
Josh King:
You write that most leaders in Jobs's position never get a second chance. Why is control so important to you?
Ron Shaich:
Because it's the ability to play out your vision. Ultimately, so much of what makes for, really, the high quality companies, the valuable companies, are not the guys that are focused on value creation. They're the guys that are focused on building a better mousetrap, building a better competitive alternative. And the byproduct is value creation. If you believe in that, if you see an opportunity to meet a need that's unmet, you want very much to follow through on that. And typically, that doesn't happen in step function. It doesn't happen in an easy, logical way. It doesn't happen, as we'd like to think in public companies, with 15% growth per year. It happens through an arc in which momentum gets built up and then there's an inflection point that takes off.
And so as an entrepreneur, as a business leader, I want the ability to care for and to protect that vision, that opportunity I see, and to play it out. And I think one of the great mistakes people fail to really appreciate today is when they take money, whether it be in the public marketplace or the private marketplace, the best metaphor I can think about. It's like having a child with someone, you are bound. You're bound for life at that point, and you better be clear, what are the values, what are the goals? What are the objectives of that person you're having a child with and what your investors are, because they can have dramatic impact on your life. Ala Steve Jobs.
Josh King:
Jobs's invention in 2007 of the iPhone, someone might say it's the greatest thing since sliced bread. So I want to focus in on bread for a second. You bring up Wonder Bread in the book, and I wonder if you ever took the Wonder Bread tour in the factory in Natick, Massachusetts like I did. But what sets Wonder, which you noted, sells loaves for, at the time, three loaves for 99 cents, and say, San Francisco's Grace Bakery or Vancouver's Taro Breads, and how did that lead you to Ken Rosenthal in St. Louis of all places?
Ron Shaich:
I think a lot of our role as leaders is to separate the wheat from the chaff, the signal from the noise. Again, to know what's going to matter, what's going to matter in three years, in five and 10, and then, get it done. And so I was traveling the country a great deal, and I began, I was working with some friends, one of whom is my partner today, Dwight Jewson, and he said, "You want to understand today's consumer, look at their beer bottle. That beer bottle is a mirror for who they perceive themselves to be." And what he was really saying to me is there was an evolution occurring in the marketplace. Post-1950, everything was local. By 1990, every major consumer category become an oligarchy with two players usually competing on advertising dollars and shelf space. Anheuser-Busch and Miller in beer. And then you had Maxwell House and Folgers in coffee.
And in every one of those oligopolies lent themselves to people who woke up in the early nineties and said, "I could do it the way my grandparents did. I could do a specialty product." We saw that in beer, craft beer. A good friend of mine in Boston, Jim Cook with Sam Adams. You saw it in coffee with specialty coffee. You saw it in soft drinks. Coke and Pepsi morphed into Snapple [inaudible 00:28:01]. Same thing was going to happen in restaurants. I could feel it. Fast food was commercial, it was processed. It was a self-service gasolines for the human body. One out of three consumers were rejecting fast food. They didn't have an alternative. It was fine dining or fast food. Yet they held their noses when they walked in, they wanted something special. They wanted something distinctive. And I began to say, we could change the currencies. Fast foods currencies were a lot of food for not a lot of money.
We began to say, what happens if we gave them specialty food, real food, environments that engaged them, people that cared and an experience that was special enough it elevated their self-esteem as opposed to diminishing their self-esteem? We saw the same thing, getting back to your question, Josh, we saw the same thing in bread. Bread had once been locally baked in ovens, stone deck ovens, no chemicals, no preservatives. By the 1990s, all that had gone away. It was three loaves for 99 cents at Kroger, chemically produced bread. And people began to wake up and say, I could do bread the way my grandparents did it, no chemicals. And we began to say, there's a powerful opportunity in specialty food. If we hook that up, if we join that with a platform in specialty bread, it would be a position, a point of differentiation, which would be as powerful as could be.
Now, what I didn't understand at that time is that thinking, that understanding became the thinking that was the underpinnings of fast casual, which ultimately, became a hundred billion dollars segment of the restaurant industry. And Panera, St. Louis Bread Company, which was renamed Panera, ultimately became the poster child for the execution of that vision or that understanding. And so in the end, that understanding about Wonder Bread and its, shall we say, the ways in which it didn't fully serve the customer, the target customer of the nineties led to Panera Bread, and ultimately, fast casual.
Josh King:
It's not all about the bread, Ron. As you begin constructing the idea for Panera, coming up with a concept essence that helped create the original cafes, you decided to stray away from the social norms of the time. You wanted people to stay longer like Howard Schultz was doing with Starbucks. You wanted this new establishment to be, as you put it, an oasis where families and friends could come together. Why were you convinced that you could break away from the patterns and trends, come away with something new and not only have it work in the short-term, but the long-term as well?
Ron Shaich:
We have to talk about something that's central to this book and I wrote about a great deal, and it's the difference between means, ends, and byproducts. And I want to tell you by way of a story, Josh. I have a friend who's a type one diabetic. His goal in life is to stay alive as long as you and me, but he can't make that happen. It's a byproduct. What's it a byproduct of? Keeping his blood sugar between 80 and 180. When he does that, he stays alive. What's his means? Diet, exercise, and insulin control. Business is the same thing. We may want value creation, we may want to have more valuable companies, but I can't make that happen anymore than I can make for happiness. It's a byproduct. The end I can do is build a better company, something that people really want, and the means to that is what I spend my time on. It's the few things that are actually going to matter in building that better mousetrap.
And so for us, when we talk about a [inaudible 00:31:36] statement, when we talk about trying to put in language, what we're trying to do, what we're really talking about is what is the end we're designing into? Think of it as a script for the theater show that we're putting on, the live three-dimensional live performance art we're conducting. Think of it as a north star that you're trying to build your organization to deliver on. And if you have that, it becomes much easier to do the creative work in support of that effort. What happens in so many companies is there's a reversion to the mean and actually a focus on what your competitors are doing because there's no clarity about what you're trying to do. I would argue that the focus of business leaders is to be forward-focused on what they're trying to create five years from now as opposed to listening and looking at what their competitors are doing.
Josh King:
I think perhaps one of the first Panera Breads that I walked into is probably the early aughts when I was living in West Hartford, Connecticut. And you go into that store, I remember seeing the ovens and the color of the walls and the wood of the tables and the way back of the store looked as warm and comfortable as the front of the store. What went into that concept essence in the whole design concept to make a person feel so at home when they walked through that door?
Ron Shaich:
Because we started with the intention of designing a place that you wanted to be in, literally. Not a place that fast food designed, which is to get you out quickly. Tables bolted to the floor, hard formica chairs, team members that were extensions of the cash register, essentially in paper hats. We were designing an environment we wanted you to feel at home in. And the reality is, if we couldn't encourage you to buy something, if our food wasn't attractive enough and desirable enough while you were there to buy something, we were flawed as a merchant. The reality is, I can't think of anything that is more central to being a better competitive alternative, a better concept then filling my establishment with customers, the positive energy. We all come from a political background. There's nothing better than bringing a candidate into a room that's too small for the crowd.
Josh King:
Absolutely.
Ron Shaich:
Because there's a powerful energy that occurs. Nothing worse than bringing a candidate into an empty room.
Josh King:
Exactly.
Ron Shaich:
It dissipates energy. We wanted to create positive energy in those Paneras, so we designed it in such a way that, one, you got the sight of the bread, you got the smell of the bread. Everywhere you looked, I used to say, it was visual candy. I used to love to do my interviews there. I used to see the soccer moms. I used to see the Bible study groups. I'd walk into a town, and I remember Birmingham, Alabama, guy comes up and says that the city council meets here every Tuesday. We come to lunch here. That's the kind of experience we were creating. Instead of viewing community, which was really dissipating in our country at that point, as the enemy, something we're trying to push, I wanted to fill those establishments with people. And I knew if I filled them with people, I could literally create a more powerful business.
Josh King:
As you write in the book, Ron, in the early days of Panera, you viewed the brand as this hidden gem with untapped potential, but the growth was being halted by really the overhang of Au Bon Pain. It was clear that maybe for Panera to take off, you had to sort of shed Au Bon Pain. How difficult was it to sell off something that you referred to as your firstborn child?
Ron Shaich:
The most difficult decision of my life. The reality is I loved Au Bon Pain. Au Bon Pain was the name of the company. I helped birth, took public. Having said that, by 1998, I was kind of feeling bummed. I had a public company, four divisions, professional managers in every one. And like many public company, everybody was fighting. The guys in Au Bon Pain were trying to figure out why I wanted to take the money and put it in Panera. The guys in international didn't understand why, they didn't want to call home. The guys in manufacturing, they didn't understand why they were in a retail company. And the guys down in Panera, which was the renamed St Louis Bread Company, they didn't have a clue what was about to hit them and what growth was all about. And I was bumming and I looked at a friend and I said, "Look at this thing, Panera." I can tell you, I know it has the potential to be nationally dominant, but for every thousand people that say that, one ever makes it, it's really hard."
And I said, "I'm afraid we're going to screw this thing up. It's not going to get the capital it needs. It's not going to get the people it needs. We're going to really mess it up and I'm really bummed about it." This friend looked at me and said, "Ron, what would you do if Panera owned Au Bon Pain, Au Bon Pain International. Au Bon Pain Manufacturing?" I thought for a second I said, "If I had any guts, I'd monetize every asset we had, take that capital and use it to fuel the growth of Panera. And then I would take the best people and I'd go down there myself, the human capital, and I'd make this thing happen because this is the gem. This is knowing what matters. Making this work is the key."
I let it sink in a little bit and I'm this kind of guy, I sit with it for a while and it was so clear to me it was the right thing to do. The problem was, how do you sell the namesake brand? How do you sell three quarters of your company? How do you sell, literally, your firstborn child? We made the decision to do it. The next year and a half, there was blood on the floor as we sold all the other divisions. It's horrible. Change is horrible. Transformation is horrible. I've been through a divorce, it's horrible. It's not something you want in your life, and yet you go through things in the interests of where you're trying to get to. That's why we do a pre-mortem, and you're fueled by knowing what matters, which is protecting and caring for Panera.
And so on any given day, if we're really being truthful, Josh, you could have convinced me not to do the deal. But we stayed with it, we got it done. Ultimately, we sold off all the other divisions. Same public company, simply renamed Au Bon Pain, Panera Bread, and off we went. The irony of the whole story is, in retrospect, it looks brilliant, but when you're going through it, it's the most painful experience you can imagine. People say to me all the time, over the last 20 years, "Ron, why didn't you tell me about this back in 1999? Why don't you tell me about it?" And I look at them and I want to say, I was telling you, I was telling you you could buy the stock by the wheelbarrow load, but nobody wanted to hear it then.
At that point, the stock was a penny on the dollar, one penny on the dollar of what it ultimately sold for, but nobody wanted to hear it. Very few people are able to live into that future and are reacting to the present and we could see and feel the future, and that's what we were building into and that's what fueled our ability to make those very hard decisions to sell off the other divisions and our first son and go through the pain of that transformation.
Josh King:
In the early two thousands, you were approached by McDonald's, that's NYSE ticker symbol, MCD, looking to buy Panera. I want to hear a little clip from Michael Keaton as Ray Kroc in 2016 as The Founder.
Mac McDonald:
How is everything?
Michael Keaton:
This might be the best hamburger I've ever had in my life.
Mac McDonald:
We aim to please. Mac McDonald.
Michael Keaton:
Oh, Ray Kroc.
Mac McDonald:
The Multi-Mixer fellow who spoke with my brother, Dick.
Michael Keaton:
I did, yeah.
Mac McDonald:
What are you doing way out here?
Michael Keaton:
I'm in Los Angeles, business meetings. I thought, I'm in the neighborhood, I should just swing by and say hello.
Mac McDonald:
Well, I'm sure glad you did.
Michael Keaton:
This whole thing, this is some operation.
Mac McDonald:
Care for a little tour?
Michael Keaton:
Of the? Yeah, I would.
Mac McDonald:
Well, finish up. I'll come back.
Michael Keaton:
Alrighty, thanks.
Josh King:
Ron, you admitted in Know What Matters that you weren't looking to sell, but you took the meeting with McDonald's as an opportunity to get an inside look in the food service giant. Like Ray Kroc meeting Mac McDonald, what do you remember about McDonald's message and what did you take away from the meeting that ultimately helped Panera grow?
Ron Shaich:
To be very direct, how little they really understood about the food business and the consumer. What they understood was their business. They understood franchising, they understood real estate, they understood all the functional disciplines. But like so many large companies at that point in time, they had lost the ability to really deeply understand their core consumer. They'd lost the ability to discover where that customer was. We, at Panera, were on the edge of some great things at that point. I could see it, I could feel it, but companies like McDonald's didn't know how to separate the wheat from the chaff. They, frankly, were confusing us with Donatos. And we walked out of there and said, "They're going to have to have some major changes here until they get it." The consumer was changing.
What happens in businesses is what I call the discover delivery dilemma. When a business is first formed, when it first grows, it requires a powerful effort for somebody to discover a better way to do something. Think of how difficult it is to start a business. You don't have scale, you don't have awareness. You got to get people to walk across the street. Some people break through, they discover a better way, and then that business starts to take off and it starts to develop some scale. And often, capital comes in, and at that point people say, we could benefit from some people that could help us deliver better. What does delivery mean? It means being efficient as opposed to effective. Delivery, at its core, are disciplines like financial planning and purchasing and a whole range of services. And what ends up happening, delivery makes a difference.
The margins of the business get better, the business gets stronger, but something else happens along the way. Delivery and discovery, usually measured over multiple years, even a decade or more, begin to have conflict. The language of delivery is quite frankly the language of, prove it to me. It's the language of spreadsheets. Think of it as prose. The language of discovery is the language of imagining what I don't know. It's can you imagine we could do this? Could you imagine we could touch the customer in that way? Could you feel that? And they're very, very different. What ends up happening is in so many companies, delivery becomes predominant and delivery drives out discovery. Discovery doesn't feel comfortable.
And so often, we see these billion dollar plus companies in which they're excellent at delivery and have lost all that sort of generalized discovery capability, the ability to bring multiple disciplines together. And is it any wonder that so many large billion dollar food service companies are actually excellent at delivering for consumer of years ago and yet the market has changed and they haven't. They're very efficient, not effective, which is what creates opportunities for entrepreneurs to come along and be more effective in delivering, literally delivering and discovering a better way to do it for that target customer. I think that's the way I think of it.
Josh King:
Delivery and discovery. We're going to talk more with founder and former Panera, CEO Ron Shaich right after this.
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Josh King:
Welcome back. Remember to subscribe to Inside the ICE House wherever you get your podcasts and rate us on Apple Podcasts. Before we took our break, Ron Shaich and I were discussing his new book, Know What Matters, Lessons from a Lifetime of Transformations and his journey from Clark University up to the founding of Panera Bread. Ron, you dedicated a whole chapter to making smart bets. Specifically you focus on the decision to equip each Panera cafe with free high-speed wifi for the consumer to which, at the time, was a unique concept. How do you know when to go all in on a smart bet? And why was free wifi the right one to make at that time?
Ron Shaich:
Well, to go all in on a smart bet or make a smart bet by watching consumers. What I argue for in this business is discovering today what's going to matter tomorrow. The way you do that is through empathy. The way you do that is in walking in somebody else's moccasins, trying to see and listen to the extreme purveyors who are doing a better job, not the big guys, the little guys who are really breaking through and trying to understand what they're touching in consumers, what it is consumers want and why. And it was very clear to us that in those years that wifi was starting to break out. We had created these wonderful environments for people. They wanted to sit there.
And I remember our friends at Starbucks had introduced a national wifi system. I believe it was through T-Mobile. And they were charging, I don't know, it was some amount per month, maybe some amount per day. And I realized, we both competed in this third place. We called it a gathering place. But quite honestly, they had just a couple of seats in a cafe. We had a hundred seats because we were serving a big lunch. And I thought to myself, we're like a large plane. They're like a tiny plane. They're charging. If we came along, gave away for free, we had all these seats anyways, it wasn't going to cost us anything incrementally to fill them and they couldn't match it. They were at a competitive disadvantage to match it because they didn't have the seating. So they were going to be stuck between customers who were saying, how can Panera give it to us for nothing and you don't? And yet, if they did, they would literally blow up their cafes. So it seemed like a fun idea to play out.
And I can remember, it's like so many great innovations. I said to Scott Davis, our head of R and D, I said, "We're opening a new store in Aurora, Illinois. If I arrived there and we don't have free wifi moving in that system, you and I we're going to have a problem." And Scotty went out that morning and literally bought a wifi router at Best Buy because he didn't want me to walk in without free wifi. That's how it started.
Josh King:
So if free wifi was a good bet and a smart bet and a winning bet, you got shareholders to please though, Ron. How do you know when it's time to walk away from a bad bet like pizza or the Crispani?
Ron Shaich:
Crispani.
Josh King:
Crispani.
Ron Shaich:
It was a great bet. Vince Lombardi had a wonderful quote. I believe it was Vince Lombardi. But he said, he never lost a game, he ran out of time. And part of knowing how and when to fold is actually time and to think about time. And in running a public company, I have thousands of investors, thousands of people I have to please. Some are worried about the next inflection point, tomorrow's comps. Others are worried about a three or five-year strategy, and I have to decide how I balance all that out. And the Crispani product was extraordinary. In fact, we introduced it on an analyst day. The stock popped, I think it went up, it doubled and there was so much enthusiasm for it.
The problem is, once we rolled it out, in order to get customers to be aware of it, to break through with customers, to get it on their shortlist, in order to do that, we had to take all of our limited advertising dollars and feature that, which meant we didn't have anything to talk about the exciting new news that was going on in our cafes relative to our lunch product, our sandwiches, and our salads. It was very clear, I couldn't do both. At the end of that year, I was putting a lot of money into Crispani and I realized I didn't have the time. The time was going to run out on me. I didn't have the time to fix Crispani or to allow it to settle in with the pressures I had of running a public company and the short-term needs to move the profitability forward quarter by quarter. And so I let it run for a year and I said, "Look, no big thing, I'll take the hit." Everybody was too excited. We'll pull Crispani, and maybe someday we'll bring it back.
Josh King:
You talked about time running out and Vince Lombardi looking at the clock and realizing that he is not going to lose, but he is going to run out of time. When you decided to step away as CEO in 2010, you turned over the position to then-COO Bill Morton, but you eventually really never did leave the company. You stayed involved and eventually sent Bill a memo discussing what you called Panera 2.0. And before we dive into that concept, what kept you glued to Panera instead of soaking in this retirement and being able to escape the pressure of running a public company?
Ron Shaich:
Well, to be honest, I never left Panera to suck in the sunshine and relax. I'm put together, I want to make a difference, and it's one of the things that we talk about in this business and why I'm still doing what I do today. But I left because I felt like I had learned so much at running Panera and I want to share it in this book. But I had learned so much, I wanted to apply it to civic society. I wanted to help make a difference in broader ways. And as I think I write in the book, I was having discussions with the Obama administration at that point. I couldn't leave Panera, I was so connected with it. And I decided if I wanted to go make a difference more broadly, I had to step out of the CEO's role, but I didn't know really where I was going to go.
I was literally jumping off a high diving board to see what I would feel like and what I would figure out about how I had impact. The day I stepped down and handed the keys to Bill in a big public event, the very next day I opened something called Panera Cares. Panera Cares were these community cafes in which we had no set prices. It was the height of the recession. I built these as a way to help people in need and as an experiment in testing what the human condition is really like. Would people pay it forward or would they see it as lunch on Uncle Ron? You come in, there were no set prices. And I'm pleased to say we opened five of them. We served tens of millions of customers through them, and most of the time people did the right thing. And it was a fascinating human experiment. I did that.
I began to get involved in the No Labels movement. I began to think about a number of other things, but I was still connected to Panera, was its largest individual shareholder. I was still chairman. I was still doing some of the M and A work, and I was doing some of the customer-facing work. And I'll never forget it, I came back from a trip to San Francisco and it just hit me. I sat down at my computer that weekend and I started laying out how would I compete with Panera if I weren't part of Panera? Frankly, how would I screw with the company if I weren't Panera? That's how I was thinking about it. And I basically was calling for a whole bunch of themes that weren't present in the industry at that point. Digital access as a way to allow you to place an order and have it made while you're driving to the store. Delivery from the table.
I called for clean food, no artificial preservatives, chemicals of any kind. I called for a loyalty, which didn't exist in the industry at that point, was coming out of Tesco in the UK and had begun at Kroger's in the United States. I called for omnichannel, which included delivery, a whole bunch of different initiatives. I didn't quite understand it, but it was a vision to take on the sacred cows of Panera, and actually, with all of our success, figure out how to do a better job of delivering for our guests. And Bill Morton, who literally I was speaking to as I was driving to meet with you today, Josh, still my very dear friend and a guy I profoundly respect. Bill looked at me and said, "Ron." He says, "This is pretty insightful. Would you go work on it?" I looked at Bill and said, "Sure, Bill." And he just sucked me right in.
And three months later, six months later, nine months later, there's the executive chairman working 80 hours a week building a prototype for this digitally-enabled system for Panera with all kinds of new production systems and the like. And I got to spend $150 million building all this out. I didn't have to deal with any of the ceremony duties of being CEO. It was wonderful. Unfortunately, Bill came to me at one point. He had an inability to travel, given some things in his life. Ultimately, we made the decision simply to swap roles. I became CEO again, he became executive vice chairman, and I came back and I really put in place those elements that I had envisioned.
Now, I had never fully envisioned where that transformation would take us. Not only did we take on digital access, we took on production. We had to redefine our concept essence, our go-to-market strategy. Going through that transformation, I ended up transforming most of the senior management team. It was a horrific experience. Transformation is painful. It's like losing 50 pounds. It's like evolving. And yet, it's what you need to adopt to the marketplace. And again, if you don't tell yourself the truth, if you don't really go deep and know what matters, what you're trying to do, and then most importantly, if you don't get it done, it's a horrible experience.
Josh King:
Talking about Knowing What Matters, and taking maybe a little bit of a sidebar into maybe this phenomenon of the last couple of years that we've seen of the boomerang CEO. We mentioned Steve Jobs and Howard Schultz earlier. Howard came back to Starbucks twice, I think Michael Dell returned to Dell. And now, we're witnessing Bob Iger's attempt to do it at Disney in real time. And Iger had taken that executive chairman role in which he was going to only focus on creative while his successor was focusing on running the business. Would you have advised Bob to stay away and run for president as he'd long hinted he might do? Didn't work out so well for either Howard or Michael Bloomberg.
Ron Shaich:
I think the principles of running a business are often applicable to running society. Not so much society, but government. It's about bringing people together. It's about solving problems. I often think about it, we compete with the Chinese, they have 20-year plans. We can't agree on a budget for 20 weeks. How do you exist if you don't think long-term? How do you compete? How does it exist if you can't get people excited? I think there are many common skills. I also think when business people leave business and go into government, into politics, I think they find they are stymied by the very real checks and balances that we have in government. And so I do think it's a different experience, though I think we could frankly benefit by some of what we in business have learned, not about being right, but about getting the job done.
Josh King:
But in Iger's position, in some ways he might've left at which point the most profitable days of Disney could be behind it, or maybe he's got another great chapter to write. You had, at Panera with 2.0, the whole digital plan and everything else that you were envisioning with the memo. So you had more work to do. Iger might be presiding over sort of a downdraft in the entertainment business as the model changes.
Ron Shaich:
Well, all right, so here's a couple of things. So Howard went back twice. I only went back once. Bob went back. The biggest difference I think that exists between me and Bob and Howard is I think I was smart retrospectively. I sold the business. Each of these guys stepped down and had a successor, but yet they still had that responsibility. I think one of the gifts in selling the business is that I fully recognized it was JAB's, the folks that bought it, their business, and not mine. And in some ways, that situation, the fact that it was sold, actually helped me to separate from something that I deeply loved.
It's really hard to separate and it's really hard when you see something you love and you care for that's floundering or is going through transition or going through issues. It's very hard to not come back when you know how to do it and care for it. And I think that's what Howard felt. I'm sure that's what Bob Iger felt. When you literally sell it, it doesn't allow you to do that. Frankly, in retrospect, it was a gift that the business was sold.
Josh King:
And let's talk about that decision to sell to JAB in 2017. $315 a share. What pushed you into deciding that it was time to go private?
Ron Shaich:
Look, this was an extraordinary deal that JAB offered us. This was the largest US restaurant ever done up until that point, and among the highest multiples ever done. And they, as my lead independent director, Dom Kawasaki, said to me, "Ron, they're buying forward 5, 6, 7 years of where we're going. In five years, you're going to have to have another transformation plan. Are you up for that?" And it just seemed like it was a powerful way to take care of all of the constituents I cared about. First and foremost, the team members. They had a long-term philosophy at JAB. They had a philosophy of bringing people in. It was a powerful way to take care of my franchisees, to have a strong private company backing it. And it seemed like a powerful way to take care of my guests in terms of the vision of it.
Now, it meant giving up complete control, but I saw that potential in it. And so the price for it for me was that transformation that I had begun in 2011 and '12 and really took a chunk of my hide out in executing. It was the most, again, very difficult and painful experience. And I try to talk about this in that book, speaking about transformation. But what I ultimately did in selling, is, by 2017, it was really working. Comps were up strongly. EBITDA was up in a powerful way. That's what attracted first Starbucks, but later JAB in this big deal. And I knew I was cheating myself with that victory lap, quite frankly, of the transformation. But it seemed like the right thing to do in my role as a steward for all these constituents.
Josh King:
Thinking of the 2017 victory lap, then, Ron, under your leadership, Panera generated annual returns of 25%. You outperformed those competitors-
Ron Shaich:
Over two decades, Josh.
Josh King:
Over two decades. And over those two decades outperforming Chipotle, Starbucks. Thinking about all the risks that we've talked about, all the big betts that you've mentioned, if you had to boil them down, what were the top one, two, or three keys to the overall success that you achieved when that number of 315 a share was offered?
Ron Shaich:
Being prepared to transform, anybody who's been with us for 30-odd years, watched us transform every 7, 8, 9 years. First transformation from a bakery to a bakery cafe. Second transformation, understanding the power of fast casual and transforming Panera Bread into a poster child for fast casual. Third transformation, understanding the power of Panera to be a nationally dominant brand, selling every other asset of the company to bet at all on Panera. Fourth transformation, understanding that what had worked in the early 2000s as a competitive advantage no longer worked. Redefining how Panera went to market around digital, loyalty, clean food, and omnichannel, and then actually executing what I think became one of the largest transformations in our industry. All of those transformations are what allowed us to get to where we got to. And frankly, running any large company is about continual transformation.
Josh King:
In addition to those transformations, you bring up a couple times in the book the idea of this future back process in life, constructing your future first, then working through the initiatives to get to your goals. And that could be from what you did at the general store at Clark University to what you did with Louis Kane and Au Bon Pain and then Panera, and now here we are in 2023 with Cava. How much was that process in your mind with each decision that you made throughout the years?
Ron Shaich:
Always. I literally would go every Christmas week, both personally and professionally, and try to figure out what it is I'm trying to get done. What's the Wall Street Journal article? What's the New York Times article? The Restaurant News article that I wanted written in five years? And after they wrote the lead, the headline of about what we accomplished, I wanted to understand what were the two or three or four things that we did to get there. And I literally used that to drive the key initiatives of the company. I used that to drive the calendar of the company. I literally took two or three of those and I called them gold chaos. And I said, "If we don't get them done, if I don't ensure they get done, I should fire myself, because this is the stuff that matters." And too many companies are built about reacting, they're built around doing what they did yesterday.
And what we were trying to say is let's build into the future we want, let's build into the future that we could be. But in order to do that, we need to know what matters and then literally have processes that help us get it done.
Josh King:
Let's finish up then with the present day and Act III Holdings and the various investments you've made. What should we have our eyes on outside of Cava, which we discussed earlier? What do you think could be the next big thing?
Ron Shaich:
Well, it's very funny. People have been asking me for 30 years, what's the next big thing? And the reality is, the restaurant industry, food industry, consumer is the second oldest profession. It's been around for a long time. People have been eating and feeding. And the reality of it is, at its core, it doesn't really change. It's about the quality of food. It's about hospitality. It's about bringing people together. And so I think that within the restaurant industry, even within entertainment, there's evolution on the margin. But at the core, it's being a better solution, meeting the needs of your target consumer in powerful ways. Now for us, as I told you earlier, we made a bet on Mediterranean and we've been part of helping build Cava to be the dominant player. It's going to take that role, it's going to do that.
Secondly, we're doing it with positive eating. We have a powerful brand in Life Alive. I think this has the potential to be one of the great companies in this country. Third, we're doing it with what I would call third wave bakery cafe. This is, again, Mediterranean-infused. A combination is Israeli, Lebanese, Turkish influence, it's third wave coffee. It's really, really interesting bake goods. And then we have a chef in every one of our establishments. It's food you wouldn't find anywhere else freshly made and freshly prepared in an aesthetic. Our founder, Tzurit Or, is so powerfully creative in an aesthetic that invigorates you and livens you. That's Tatte. We have 38 of those. They're doing very high volumes and I think it's the next generation of where bakery cafe is going.
And then what may be the most interesting of our businesses is in a whole new category that's evolving called immersive entertainment. This category extends to everything from the Puttshacks of the world all the way up to things like Meow Wolf. And we're right in the middle of it with a concept called Level 99. It's 40,000 square feet, 40 different challenges. Each one to three minutes. They're physical, they're mental. But we couple that with a farm to table restaurant, craft brewery in the middle of it, right in Natick Mall right near where we all have lived in the old Sears in Natick Mall. And again, this could be the biggest of them all. We'll see where it goes.
And then we have another business we're involved in. We've had a lot of institutional investment friends. I've been part of making them billions of dollars over the years. They've asked us to come in and help them with certain companies. And so we have a strategic services division with public companies where we generally take warrants in the companies and provide strategic services and oftentimes capital to a system. So it's an interesting form of transformation for myself. If before I was doing it, at this point, what we're doing is really guiding and helping. And when we invest in Act III, we're doing it again differently than anybody else. We're betting on the niche, we're building the category dominant, but we're doing with something we call founder-friendly capital. So when we make an investment, it's generally common stock. More importantly, we do continuous capital. If we make an investment, we're prepared to take all the follow-on rounds of capital.
One of the fallacies, I think in today's venture industry is that people believe that fundraising is a lifecycle event like a birthday. You do it every year, and the goal is to get a maximum valuation. Wrong. The last thing you want to be doing is spending your time on fundraising. And the last thing that matters is valuation. The only time valuation matters is when you're buying and selling. So we say to our investments, we'll take all the rounds, the follow-on rounds of capital, we'll take a right of first refusal on any other capital that are pre-agreed to multiple. We've never turned down one of our investments. We're happy to fulfill all their capital needs. They focus on being a better competitor alternative.
The second thing we practice at Act III is what we call Sherpa Management. Building a nationally dominant company is tougher than climbing Mount Everest. Nobody climbs Mount Everest without a Sherpa. We think it's very appropriate to have a Sherpa help guide you as you build a nationally dominant company if you have that potential. And so our role in the boardroom is never focusing on the next liquidity event. In fact, we've never really sold anything. We are in for the long-term. We could stay in for posterity. We're quite pleased to. And when we're in that boardroom, our role is mistake avoidance, helping you think about what you're doing and making sure you get it right. It's not focused on financial engineering nor the next liquidity event. So it's sort of fun guiding people.
Josh King:
Well, I will be up in Newton the weekend after this one. I will check out Level 99 at the old Sears in Natick Mall. You do have a chapter, Ron, in Know What Matters called Innovator in Chief. And I can't let you go without acknowledging that our current commander in chief is 80 years old. His likely opponent next year is 77. If innovation is what's needed in the next four or eight years in our country, is that a job for an octogenarian or even a septuagenarian like Joe Manchin, who's 76? Or do we need a fundamentally different style of leadership in this country?
Ron Shaich:
I think we would be well served by having a new generation of leaders in this country. I think, as somebody who's now 70, I'm glad I'm guiding and not running, and I can't imagine how I'm going to feel in doing that in 10 more years. Having said that, we're going to deal with the choices that we see in front of us. I think No Labels is trying to provide an alternative choice, a choice that is less polarizing and that brings us together. But we're going to see a choice, and obviously, as voters, make the best choice we can with the candidates we have. But I truly wish for this country that we have new energy and new perspectives and a willingness to work together.
Josh King:
As we wrap up, you and I have one more I think shared experience. We both watched Randy Pausch's last lecture at a pivotal point in our lives. Let's take a quick listen to one of his closing comments.
Randy Pausch:
Get a feedback loop and listen to it. Your feedback loop can be this dorky spreadsheet thing I did, or it can just be one great man who tells you what you need to hear. The hard part is the listening to it. Anybody can get chewed out. It's the rare person who says, oh my God, you are right, as opposed to, no, wait. The real reason is we've all heard that. When people give you feedback, cherish it and use it.
Josh King:
That was less than a year before Ron passed away. What did his words teach you that you share in Parish Priest in a Business Suit?
Ron Shaich:
Well, I think that the reality is that the most powerful skill we have is listening and listening with empathy, and then using that listening and that empathy to try to make sense of things. And I think one of the most powerful roles for a CEO is actually providing that context and that perspective. And I think one of the things that people who've worked with me often find powerful is we try to help people understand where we are in the journey. A lot of where I spend my time is trying to help people understand where we've been, and based on where we've been, where we are today. And then every bit as importantly, based on the decisions that they make as members of this community, as part of this team, where we're going to be tomorrow. I can't do it as CEO. I can only help others understand what are the implications of the choices we make.
And I think that's no different than a parish priest, a rabbi. A lot of what we're helping people understand is how they put their lives and the meaning of their lives in the context of where they've been, where they are, and where they hope to be. And I think that's really what we're talking about here. And I will share with you this as we talk, Josh. I think one of the things that I really wanted with this book, unlike a lot of these books of this genre, is one, yes, I wanted to share the stories, but I wanted to use the stories to talk about, how do you actually do it? What does it mean to be an entrepreneur? What does it mean to run a large company? What does it mean to run a government that works, a society that works? But every bit as much, I wanted to speak about the humanity of it all, the pain of it all. The process of tension and pressure that you feel when you're taking tens of thousands, hundreds of thousands of people through transformation when you've got billions of dollars sitting on your shoulders.
And I wanted to talk about what it feels like when you are not sure. And yet as a leader, people are counting on you to take them to where they want to go. And so my hope for this book is it's not simply the stories, but every bit as much something that people have as a takeaway relative to how you do it, and then even more importantly, how to process the experiences they go through, the emotional experiences as they're living a life of building and running organizations.
Josh King:
Listening with empathy, Ron. And it has been a pleasure over the last hour or so to be listening to you. Thanks so much for joining us Inside the ICE House.
Ron Shaich:
Thank you, Josh. This has been a great interview.
Josh King:
That's our conversation for this week. Our guest was Ron Shaich, the founder and former CEO of Panera and one of the current lead investors and chairman of Cava, that's NYSE ticker symbol, CAVA. He is the author of Know What Matters: Lessons From A Lifetime of Transformations. If you like what you heard, please rate us on Apple Podcasts so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, make sure to leave a review or email us at [email protected] or tweet at us @icehousepodcast. Our show is produced by Lance Glynn with production assistance, engineering, and editing from Ken Abel. I'm Josh King, your host, signing off from the Library of the New York Stock Exchange. Thanks for listening. We will talk to you next week.
Speaker 1:
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