When you love something, you notice the details.
In
a relationship, that might be a partner's laugh or particular way of
moving. For Howard Schultz, who grew Starbucks from a local Seattle
coffee shop into a globe-spanning giant, love was in the details of the
coffee-making process — the hiss of the machines and the smell of the
beans.
So in 2008, eight years after Schultz resigned as CEO, when
the company's new management replaced hand-operated espresso machines
with automated ones that took the theatre and romance out of coffee —
basically everything the Starbucks Schultz had built was about — he
noticed. And he cared.
How much? He returned as CEO. In his own
words, "when you love something as much as I love Starbucks, there is a
huge responsibility that goes with it."
Exchanging Bootstraps for CVs
Love
might sound a flaky topic for hard-nosed business leaders, but there
are many similar stories of founders returning to their companies for
love – those of Michael Dell and, of course, Steve Jobs, for example.
And, on a much, much smaller scale, my own story.
I started Coffee
Republic with my brother Bobby in 1995 (before Starbucks hit our
shores). I had seen the new style coffee bars in New York and wanted to
have skinny lattes and the muffins I had there in London. We had no
experience in coffee or retail, but we went for it and learnt along the
way. Our guiding light was looking at everything from the customer's
point of view.
Which was easy because we were customers ourselves.
So instead of paying for market research, for every question we asked:
"if I was a customer, would I like this?" With this attitude we built
Coffee Republic to 100 stores and were recognized by the
Financial Times as one of the brands of New Britain.
But
by 2001 we felt the pressures most founders experience. The company was
getting big. We had thousands of employees and a market cap of £30m. In
a way, the baby we had brought into the world had become an adult, and
the sense we got from the board and the new, more experienced management
(with the proper CVs whom we couldn’t attract at the beginning) was
that we, as founders, had reached our sell-by date. The entrepreneurial
phase was over — the time for dreaming and passion was over. It was time
to hand over reins to ‘proper’ management.
And so we did. We
found a professional, polished blue-chip CEO with a great CV and plenty
of experience in retail, and we handed over the reins. It seemed like
the wise thing to do — clearly we were not equipped to run a big company
(we had bought into the theory, or so we were made to believe). But the
feeling we got was like a pat on the head: "Good job so far. Just give
it to the big boys to run." We kept our shares and resigned from most
positions.
Packing Founders Away
Rather
naively I kept my desk there, knowing I was so connected with the
marketing and brand. Surely I can be of use to the new manager, I
thought. I was willing to do the position for free. Why? Because, like
Schultz, I loved the brand.
So it was quite a shock when on my
first Monday morning after leaving the doorbell rang and I found a
courier at my door — with all the contents of my desk packed up. Clearly
the new CEO didn't want any trace of me there. I knew that
professionals feel threatened by founders, but to this level, I had no
idea.
I
was forced to watch from the sidelines as the company my brother and I
had founded declined. The new CEO, despite his CV, had no idea how to
run an agile, fast-growing company. The share price started to drop and,
as customers, we watched the brand we so loved be neglected.
A
particular moment will stick with us forever. My brother and I were
sitting in the window of one of our coffee bars one Sunday morning
looking out when the newly appointed CEO stopped to buy papers from a
nearby newsagent. To our amazement he didn’t even crank his neck to look
at the Coffee Republic next door. It clicked that, of course, for him
Coffee Republic was work, and this was his Sunday.
Passion Has No Sell-By Date
This
brings me back to the story of the second acts of the founders like
Shultz and Jobs. On paper, entrepreneurs may not have the experience or
qualifications to run big companies. But, time and again, perfect CVs
fail where passion succeeds.
I remember reading about the rise of
eBay and how the CEO Meg Whitman took over from the founder Pierre
Omidyar. She said to him, in spirit, 'I will run the company if you stay
by my side.' I was so moved. From a personal perspective, leaving a
company you founded can be a real bereavement.
But staying close
to your company after 'the professionals' take over isn't just about the
emotions of the person who founded the company. It's also good
business. Whitman didn’t let ego take over. She didn’t drive out the
very person that built the business in the first place. She was aware
that, as a professional manager excelling at processes of management,
she missed the creativity and passion of the founder and wanted to take
advantage of the intuitive connection founders so often have with their
companies. Omidyar stayed involved, and Whitman grew eBay to a
billion-dollar company.
It's certainly not easy to manage
the relationship between founders and professional managers given that
they approach business so differently, so why is the involvement of a
founder worth the hassle? Saying too many cooks spoil the broth and
packing away the founder may seem tidy, but founders have been immersed
in every tiny detail of the business and, many times, are themselves the
prototypical customer. Even the best-credentialed managers armed with
the best spreadsheets can't duplicate their passion and intimate
knowledge of the customer and brand.
In today's
fast-changing business environment, where success often hinges on
agility and innovation, that sort of love isn't flaky. It's essential.
(As for the rest of my story with Coffee Republic, that'll be the topic
of a future post.)
Sarah Hashemi has said
Thanks for reading:
Can Founders Let Go? What Love's Got to Do with Leadership
