The Pomp Podcast - #1270 Ron Shaich | Panera Founder On Building Billion Dollar Companies

Episode Date: November 7, 2023

Ron Shaich is the Founder of Panera Bread, the Chairman of Cava, and the author or a brand new book called, “Know What Matters: Less from a Lifetime of Transformations.” In this conversation, we talk about innovation in the restaurant industry, how to evaluate people, how to deal with activist investors, investing through the full life cycle of a company, inflation & supply chains, and where his inspiration comes from.  ======================= Auradine, a leader in web infrastructure solutions including blockchain, AI, and privacy, has unveiled the world's first 4nm Bitcoin mining systems, featuring breakthrough EnergyTune™ technology, setting new standards in performance and energy efficiency. The Teraflux™ product line from Auradine offers best-in-class performance, efficiency, and total cost of ownership (TCO), positioning it as the optimal choice for Bitcoin mining needs. With EnergyTune™, a patent-pending technology, Auradine's Teraflux™ systems enable rapid demand response and optimal energy usage, fostering a symbiotic relationship with electrical grids, and contributing to sustainable energy practices. Designed and manufactured in the US, Auradine's Teraflux™ product line not only ensures cutting-edge technology but also mitigates supply chain risks and provides increased supply chain resiliency. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.auradine.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for more information the Teraflux bitcoin mining systems. ======================= Cal.com is leading the charge of scheduling platforms in the open-source sphere, offering you the chance to harness the efficiency previously reserved for elite corporations and tech gurus. That's right, Cal.com is transforming sophisticated calendar management into an accessible tool for all via a user-friendly interface. Discover how countless users are optimizing their time in unprecedented ways. Use code “POMP” for $500 off when you set your team up with Cal.com. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Ron Shaikh is the founder of Panera Bread, the chairman of Kava, and the author of a brand new book called Know What Matters, Lessons from a Lifetime of Transformations. In this conversation, Ron and I talk about

innovation in the restaurant industry, how to evaluate people, how to deal with activist investors, investing through the full lifecycle of a company, how he's thought about controlling things like inflation and supply chains, and where his inspiration comes from. Ron is a consummate entrepreneur. He continues to build businesses that serve things that people want year in and year out. Ron is full of insights in this conversation, unpacks only a small degree of everything he's learned over the last few decades. I hope you enjoy this conversation and learn just as much as I did. Here is an episode with Ron Shaikh. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast

are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. This episode is brought to you by Auradon. They're a brand new startup led by a number of Silicon Valley legends who just raised $81 million to build the future of internet infrastructure.

You're probably wondering what that means. Let me explain. There are numerous new disruptive technologies that are being adopted simultaneously, from blockchain to artificial intelligence to zero-knowledge technologies. In order to ensure that these technologies thrive in this new world, we need new infrastructure, and that is where Ardine comes in. They just launched their first product line called Teraflux, which is a Bitcoin miner powered by the world's first 4-nanometer silicon chip technology. These air-cooled, single-phase and dual-phase immersion cooling miners have unrivaled speed and efficiency.

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I'm really impressed with them. And if you want to check out more, you can go to Auradine.com. That's A-U-R-A-D-I-N-E.com. Go check them out at Auradine.com today. This episode is brought to you by Cal.com. What do I have in common with Chad Hurley from YouTube, Toby from Shopify, and Alexis from 776 and the co-founder of Reddit?

We all use Cal.com instead of Calendly, and we are all early investors as well. Cal.com is leading the charge of scheduling platforms in the open source sphere, offering you the chance to harness the efficiency previously reserved for elite corporations and tech gurus if you like to have your calendar organized and be able to have an efficient exchange when scheduling but you love all of the benefits of open source technology then cal.com's for you they are transforming sophisticated calendar management into an accessible tool for all via a user-friendly interface you can customize it and you can make your calendar work for you. Use code POMP for $500 off when you set up your team with cal.com today. Again, go to

cal.com, C-A-L.com, and use code POMP to get $500 off when you sign up. Cal.com, an open source tool that allows you to take back control of your calendar, be efficient when scheduling, and make sure that no one can steal your time. All right, guys, I've got Ron here. Ron, in the tech world, innovation is all about going to Mars or solving some kind of cancer, maybe even self-driving cars. And people would look at food and they'd be like, what do you mean innovation? You though, however, have led tons of innovation when it comes to the food industry. What are some of the things that you would point at when someone says, prove to me that you're an innovator? What are some of the things that you remember in your career that you guys have done

that really kind of pushed the industry forward and helped to build these businesses? Well, ultimately, this is a powerfully difficult business. I mean, you know, people say to me all the time, you know, it's what's it take to make a sandwich and pour a cup of coffee? It's just a bitch to do 10 million times a week in thousands of distributed units in which there's limited capital investment possible. And you've got to get people to choose to do it because it's in their interest to do it, the team members.

So this is a fascinating business in which any number of people have parachuted in from other industries and failed. Scale doesn't really matter. Capital really doesn't matter. It's the ability to have a better idea and a deeper understanding of that consumer. When I think about you, and you and I have had the pleasure of talking before and kind of understanding a number of the twists and turns of your journey. Yes. You were willing on multiple occasions to blow up a good thing to chase a great thing. How did you know when you only had a good thing, but there was the possibility for a great thing?

There's a lot of entrepreneurs who just don't know, when do I make a change that can unlock that upgrade? So, Anthony, let's step back. Let's talk about what an entrepreneur is. It's often confused. To me, an entrepreneur is a opportunist in the very best sense of the word. It is an individual who can see and sense the opportunity, generally an opportunity to meet somebody's need, a need that they have that's not being met as well as it could be met if you did something else. And to me as an opportunist, not a capitalist, because I didn't have capital when

I started, as an opportunist, I could see opportunities and feel those opportunities. And frankly, I'm risk averse. Most really good entrepreneurs are risk averse. When I see that opportunity, I'm going to do everything in my power to protect the ability to get to that opportunity, to make that opportunity come alive. And that may lead me to do things that others may consider risky, but I actually think it's the least risky because I'm protecting that opportunity that I see out there. So to come full circle to the answer to your question, it's not when do you have enough disruption enough enough demand to change that you change it's it's following where the opportunity goes if you can see and feel with empathy what's out

there and what's possible and what the real need is and then figure out how do i get to people and burning their brains, I'm the solution to the problem, then you have real opportunity and you follow it. One of the ways that you've done this is you've always found something that's unique, right? That you can kind of dominate a category. And obviously with Panera, Kava, we can kind of go down the line of all these different businesses. How do you measure and understand that something not only people want, but it is unique, right? It's not like you're going and creating another burger joint that competes head on with McDonald's right next door. You're specifically going after these businesses that seem to be niche in the beginning and get very large. How do you know,

hey, I got something that no one else has? Well, it's real simple and just hard to do. So let's again, go backwards, right? You know, I went to business school and I can tell you, you want value creation, value creation is a byproduct. What matters? Being a better competitive alternative. That's our mantra. That's what we talk about over and over and over. But for your listeners, I want to simplify it. What does being a better competitive alternative mean? What are we really talking about here? It's having something that's so interesting and powerful that your target customer is willing to walk past all those competitors on the strip in a restaurant and choose you for that solution.

That's when you know you got something, when they're choosing you for something. what is you know it's it's it's like so many metaphors like dating what what what is it when we're kids what is it that that makes you who you are who is your target customer and how why do they choose you and walk past all those other folk what is it about you that makes you different and distinctive where's your authority and and ultimately it's about going with that and having that guest choose you in these businesses um i don't think it surprises anyone that it's a people business. Restaurants in general typically have high turnover. There aren't tons of people who go to huge business schools or have tons and tons of degrees that are saying, hey, I want to go

and I want to work at an entry-level job inside one of these restaurants. But those people tend to be the ones who are doing the work. They're also the ones that are interacting with the customers. They also tend to be the ones that essentially the business's success is built alongside because if they execute correctly, then the business does well. If they don't, the business suffers. How do you find those people and make sure that maybe they don't check boxes that would work for somebody who's going to go work at Facebook, but they actually check the boxes of what you need and they're the right employee for a Panera, a Kava, or somebody else? Well, first, I'm going to disagree with you. I actually think it's a powerful opportunity,

particularly of economic advancement for people that are willing to join, affiliate, make a difference. The potential income levels are often much higher than they might be in corporate America. I went to Harvard Business School and I'd sit in my class. This is nearly 50 years ago. Now, I'd sit in my classroom and think my friends are all going to work for Exxon or IBM. And the guys that are running the golf station on the corner in the middle of Harvard Square, those guys have more control over their lives than most of my friends. More stability, more opportunity

to actually make a difference. So I frankly believe the food industry, one of the most dynamic industries in the world with tremendous opportunity for those that want to bring something to bear to really move forward. Having said that, our job as leaders in this industry in every industry, are really to figure out how to touch people so they choose to see it

in their interest. Let me explain to you what I mean. I basically have a belief that in most companies, people give leadership 30, 40, 50% of what they're capable of. And often that's why working for themselves, they do better. The question is, as a leader, how do I get people to see it as in their interest to actually do what serves the organization because it ultimately serves them? You know, here's what I mean by that. I've yet to ever see an employee, Anthony, wake up and say, I'm so excited. I made another penny a share for Kava today. I made another penny a share for Panera. Nobody cares. That's not what folks are about. They want to know how it affects them, how it affects their lives, how it affects their sense of self. Many of the people on front

lines in restaurants, they want meaning. They want to know that they're part of something and they want to know that they're part of something that touches people. And often I think that's our responsibility. One more story and then we can go on. But I often think about Chick-fil-A and KFC. And I can remember decades ago, but KFC used to be worth significantly more than Chick-fil-A. Today, Chick-fil-A is worth magnitudes of KFC. What is one of the key pieces to that? The humanity, the folks that work there. And that isn't simply because it's commanded from on top from the CEO's office. That's been based on the family processes, the hiring, the way Chick-fil-A has built their systems over the long term to bring in people who are willing to put their

natural humanity out there and to be validated and supported for that. There's a big difference between different retail concepts. And you know it when you walk in. Sometimes I walk in and I think, you know, the choice is between hunger and this place. And I'm going to choose hunger because the people behind the counter are so, you know, distressing. And then you go into some places where you feel you you they're real human beings and you're touched that's what we're trying to create but we can't make it we can create the environment for it food is something that uh is a very intimate experience right you're literally somebody is making something and you're putting it into your body um you all have done a great job of focusing on not only the environment as

you just described but also what the product is and kind of what people are actually putting into their body. How much of that is all related under a single philosophy versus you could see a business be really good at the environment and horrible at the product or vice versa? Maybe they're great at the product and horrible at the environment. Well, I'd make two comments to you. First, more broadly, food is sensual. I mean, I have a sensual reaction to it. My senses react to it. I can salivate at the thought of certain foods when I'm in the mood for it. And we all have that reaction. So to me, I want to create lust in a sort of primal kind of way. But lust for that salvation that occurs, that's so good that I so want it. I desire it. It's on my brain at 11 o'clock

in the morning. I want that thing in noon. And we all know that kind of experience. That's what we're trying to create with food. Now, more broadly, you speak to, is it food? Is it the environment. Anthony, I'm going to tell you something. It's all of it. It's called a total experience. You know, you buy your, I see with your Apple AirPods on, right? You know, it's not just the AirPods, the box that comes in it. It's the package. It's the totality of the whole. And so we're often defined by our weakest element, not our strongest element. And if anything is off-putting or out of balance to that total experience, you lose. So I often think of what I do as live performance art. I'm creating a show, a script. I'm trying to engage in that script

in having a way in which you feel when you're in relationship with our experience. And to do that, one of the key pieces of it is where's our authority come from? We better have some authority. Not because we claim it in advertising, because we really own it. But where's our authority? And then what are we authentically real about? Because it's not enough to say today, I make pizza and tomorrow I make chicken sandwiches. What am I really got staying power? What am I committed to? And I think of that in every relationship. It's not different. We've talked about the environment kind of inside the four walls of the actual restaurant itself and the product, but there's a lot that goes into that product and that environment that happens

outside of the restaurant. And so things like the supply chain, things like ingredients, things like even inflation and macroeconomic can all impact your ability to get the right things on time, at the right cost, and kind of make one of these concepts work on a national or international scale. How do you handle not having control of some of those things outside of the restaurant? And I'll give you a good example. In the technology world, Tesla has said, hey, look, you know what we're going to do? We're going to go manufacture as many of these parts as we can so we can vertically integrate our manufacturing and our facilities so that we can hold control. Are there restaurants that do that? How do you think about what goes on before the ingredients and the supplies get

to the restaurant? And what have you guys done over the years to kind of optimize that to give yourselves kind of the best shot at producing the end result in the end environment that you're looking for. Right. Okay. So let's go higher level and then we're going to go narrow to your question. So I touched on this before. We got to separate means ends and byproducts. That's how I think. The way I tell it is through the story of a friend of mine, type one diabetic. This guy's goal in life is to stay alive as long as you and me, Anthony. But that's a byproduct. He can't make life for himself, anywhere we can make happiness. What's it a byproduct of? In his case, keeping his blood sugar between 80 and 180. When he does that, he has longevity. When he doesn't do that,

he's got medical problems. That's the end that drives the byproduct. What are the means? In his case, diet, exercise, insulin control. That drives to the end, which creates the byproduct. I think the restaurant business is the same thing, all right? Many people talk about the value creation. I ran a public company for 27 years, longer than Cal Ripken played baseball. And when we talk about it, people often talk about our last two decades of public company. We delivered the strongest returns of any public restaurant company, twice Starbucks, four times Chipotle.

I'm told we beat Warren Buffett's Berkshire Hathaway. Our annualized returns were 25%. But that is all a byproduct. Of what? What I'm trying to say to your listeners is it's a byproduct of staying focused on what really matters, which is not the supply chain in and of itself or not the macroeconomics, but are we better at something for some of our target customers and if we really are better at that and they get it and they know it and we're on their short list they're going to walk past those other folks and come to us that's where our energy needs to be so i'm often asked on on by the media by of all kinds you know how am i reacting to wage inflation how am i reacting to macroeconomics how am i reacting to you know

the political environment and you know what i say certainly what i think is you know what none of us know what's going to happen and i'm not your pundit i'm not the right guy to see if you want a pundit on the economy what i'm good at and what i know is that our team whatever the conditions we face they will be faced by all of our competitors we will figure out better ways to adjust and adopt to that than our competitors so i stay focused on being a better competitive alternative, understanding that if any of my inputs adjust or change, we'll need to adjust and change and figure out how to get through that. Same with COVID, another piece that's very similar. But in the end, it still comes down to being a better competitive alternative. So what I'd say

to your listeners is separate out what's an input, what's your end, and you better understand what your end is because that's the need you're meeting for your guests. That's what really matters to them. And then worry less about the byproduct or value creation. It will happen if you really got a better competitive alternative. I mean, to me, it's just, there's this thought process of like, you want gamers, right? You want people who want to go out and play the game for playing the game. They're competitive. They're true entrepreneurs, whether it's the business they're in or it was another business, they want to compete. And that sounds a lot like what you were doing and describing. Where does that come from for you? Why are you like that? Well, first, I got to argue

with you buddy i'm not sure we want people that are gamers all the time right i mean we want people that want to be part of the army because you know that we need that in our army you were in the army i believe right i don't know what what what you're in but but you need people who want that in their lives right you know everybody can't be the general and we need people that that that want to come to work, make a difference, touch the lives of their guests, touch the lives of their employees, their team members. We want all of that. And so I think I don't want gamers. Here's what I don't want when I hire people. I don't want somebody who's going to give me 110% for 90 days. I want people who can give me 95% of what they're capable of for the next five years.

Because learning our businesses, understanding our businesses, staying present with it, taking care of our people, taking care of our customers, that's stuff that we need consistency and stability for. Now, I also want to have people that bring a certain level of energy to it. I will tell you, you know, you asked me about me. For me, it was always rooted in this being the means to making a difference in the world. I could have gone into politics. I could have got into a lot of social justice work. I ended up going into business because for me, business is the last vestige of organizations in our society where one person can have dramatic impact. To me, you know, compensation is like tax policy, you know, in a government, you know,

we impact people. And I love the role of impacting and touching people. I love getting up and helping people make sense of it all. I love when people learn. I get, I've gotten from this book, thousands of letters from people who work for me 20 years ago 30 years ago and said you know i learned more working for you um than i ever did in my life in any other place i worked and i i i understood it all over again even though you fired me ron i understood it all over again but i read your book and i think that's the part you know that that leadership needs to bring we need to help people make sense of it all and help make sense of it so that they win and so that the organization wins when you think about that idea of entrepreneurship um are there certain things in your personal life

um kind of through your journey whether it was at work or personally that you point back to and you say that's how i became a great entrepreneur that's when you know i was excited about this and in the book you talk about at one point uh maybe you were more into some of the ideas around you know socialism and stuff versus now understanding and kind of uh fully um you know, employing incentives and capitalism and these things. Like, how do you think just about what made you you as an entrepreneur? At its core, none of those. I don't think it's socialism or capitalism. I've always sort of been a capitalist, but I want systems that work for people, right? I guess what I would tell you is the most important virtue of an entrepreneur

is empathy. Explain that. The ability to see and feel what potential guests or clients or customers need and want. It's not talking faster, leading harder, being more driven. It's actually that ability to see that need. If you buy my hypothesis, my view, that what an entrepreneur does is sees needs that other people don't see, and sees ways of putting it together that other people don't, so it actually makes a difference for customers, and then has the ability to therefore figure out how to amplify that and burn that into the brains of the potential people could use that need. If you buy my view, then you understand that the greatest skill is the empathy to see and feel what it is that is going on in the marketplace. You know, to me, I have a mantra in the book,

discover today what's going to matter tomorrow how do you do that right from empathy and from understanding what the generalizations are from one industry to another what's happened one place may very well happen in the next place why you know empathy to me is actually feeling what somebody really want what do they need when we we were you know we're often given credit as being at the uh happening found or finding founding fast casual which is today a 100 billion dollar segment of the restaurant maybe more i heard a number this week bloomberg said it was 180 billion i don't know but it's a lot it's a lot of money right and where did that come from it came from the early mid 90s two years of running around listening to customers

and seeing people who were struck with a choice, fast food or fine dining. And fast food by that point had become, you know, basically self-service gasoline stations for the human body. And it was also clear that, but people needed speed. They needed to get in and out.

And you can watch people walk into fast food and hold their noses. They didn't want, you know, processed food. They didn't want it served by people who could care less, you know, in paper caps. They didn't want to sit in tables bolted to the floor for Micah. They wanted something more. And it was the empathy to see and feel that if you gave them real food, environments that

engaged them, people gave a shit, we could actually change the currencies from a lot of food for not a lot of money to what fast cash was rooted on, a better experience, a higher self-esteem experience that actually elevated me as opposed to diminish me as fast food did. And that was a powerful need. And Panera was actually built to be a poster child for that. It was built with that vision or paradigm. So what I keep trying to say to you is to be an entrepreneur is about understanding the needs out there, finding the needs out there. And the requirement of that is empathy. So Will Danoff gave a quote to describe the book. And as you were talking, it reminded me, he said, Ron was obsessed with delighting his customers and coworkers at Panera

long before it was fashionable to do so. And then Brian Zazi, who was the executive editor at Yahoo Finance said, in a decade covering Ron's career at Panera Bread, I found him to be thinking 10 years in advance of everyone else and usually proven right. Now, both of those quotes make you sound amazing. So I know why you would use them. But they also, to some degree, have a complexity to them, which is if you talk to your customers today and you understand what they want, how do you also look 10 years in the future? And so how do you balance short-term versus long-term and understand what do people want today and then what are they going to want 10 years from now? Because you're looking for the deeper trend. I would say the signal,

not the noise, the wheat, not the chaff. Let's talk about a very specific example. I think your listeners will find that more helpful. So let's think about Kava. Kava has been one of them. It's been a powerfully successful IPO, trading well over its IPO price. We took it public, I think, in June. I'm their chairman and one of their lead investors. I've been invested in Kava, i don't know for a bunch of years i came to them with an idea in 2018 um to actually buy a company five times larger than them but i why did i do that what was i seeing i saw the mediterranean category as a powerful powerful category so now that's what's turned out to be true it kava could go on to be one of the great industry defining uh concepts in the restaurant

industry. But why is that? Because first, their category is so strong. How did I know that? Well, it doesn't take too much to note that Mediterranean is the number one diet in America. Every time somebody goes to a doctor, their doctor's telling them, eat Mediterranean. It's good for your heart. You see that. Then you start to see the way people relate to the food, the spices, they're, they're, they're both different and they are also enticing. They're familiar and enticing. And you begin to say it's safe, but challenging. And you begin to make sense of that all. And it doesn't, you know, and then you start to look at the momentum and it doesn't require too much knowledge five, 10 years ago to say, wow, this Mediterranean thing is real.

it's happening at a craveable wellness level, diet, it's happening at a level of flavor and taste. People are going to tire of Italian and Mexican. Where's the next places coming from? And you can see it and feel it. And then the question came, okay, we got the number, we got a great category. How do we go out and build an industry dominant brand in that category? And that's a different set of disciplines. I've been doing it for 40 years. My partners are part of it. We know how to build and support industry dominant companies. And so we went and helped Kava become what it could be. Now they had phenomenal food. They had a great system, but we helped them learn how to scale up and take it and grow. And we were really their Sherpa as they climbed Mount

Everest. And so that's the way you do it. You start with understanding and feeling where are coming from? Where are we? And therefore, where is the world going? And again, from that context, it didn't take too much to understand that this was powerful. Look for the need with empathy. When you did Panera, you're the founder and CEO. When you did Kava, you were lead investor, chairman, and as you described Sherpa, what are the biggest similarities and the biggest differences of having a seat on the ride but maybe not the exact same one well i'd say it this way first everything i'm doing with kava and i by the way i did it first with old bonpam which i took public so this is my you know and i've got a half a dozen other businesses so it's not like like

kava is the only one we've got three or four that are every bit as strong or stronger coming down the pike. Something called Life Alive, which is in positive eating, which is vegetarian. It's where people are going. Doesn't take too much good sense. I'm telling you, 3% of America's eating vegetarian, but 40% want to eat plant forward. Tell me where that's going. Okay. And they don't want, if I may say so, faux food. They want real food. Who can make that in a way that's really great? We've got something there. We've got another thing I told you about called Tate, which is, again, it's infused with the spices of the Middle East. It's Israeli, it's Lebanese, it's Turkish.

It's got authority as a bakery, a powerful bakery that's really worth your nutritional wallet. We've got the same thing. You know, it's got authority as an artisan coffee roaster, brewer. It's amazing. And then we have chefs in every one of our units. It's got food from the Middle East that you really want to eat. And it's really fascinating how it all works.

It's a place for breakfast, to gather, for lunch, late in the afternoon, even in the evening. We've got a business like that, right? And I've got another one in immersive entertainment that's even more interesting. It's 40,000 square foot of mental and physical challenges, each one one to three minutes, with a farm-to-table restaurant in a craft brewery in the middle of it. And it's just amazing to watch the people pour in, you know, the people that want to get away from their screens and want to do something and have some energy, you know, and we're, you know, it's, it's, that's where I think the world is going. But I love to have you and Paulina up to come visit this actually. It's really cool stuff. I mean, I'm not kidding you. But, but, but so I'm not sure where we started with this thing, but I would say to you, for me, oh, I know where it was. So for me, today, I get great joy out of spreading myself over multiple businesses, understanding and helping define what the categories they're going to win are, and then using what I've come to learn over 40 years to help people fulfill their wishes and dreams to build dominant businesses. and often to provide the capital to do so because we tend to be the guys that say invest the money if you got something good let's grow it make sure we have the organization the capabilities to do

this thing right and to understand what you need to do to get there i would say to you when i was doing it when i ran au bon pain when i ran panera um you know that was a different experience it absorbed every moment every ounce of me and one of the things that i tried to talk about in this book, Anthony, is the truth of what it really takes to do this. You know, I'm going to go off on a tangent with you for a second, but people often, when they talk about entrepreneurship and I made these speeches all the time and everybody glamorizes it, there was a time it was, you know, and you make money and it seems like it's so wonderful. Let me tell you something. If you don't love that business, in my case, if I didn't love spending time with my bakers more than going

into the university club or wherever, you never make it. Because the reality of an entrepreneurial life, Anthony, is the business owns you. You don't own the business. And one of the things I really wanted to talk about in this book, unlike a lot of the books in this genre, is what the pain of it all was. How do you manage that? How do you manage when you're going through massive transformation? i went through four transformations in this business and and each one every seven or eight years were huge and the truth is nothing's proven until it's done when you're in the middle of it you know when you when you've won like i did it's really easy you know i i 1990 98 i had a public company obon penco inc and i had four divisions obon pen obon pen international obon pen

manufacturing big manufacturing business and panera and for lots of different reasons we can can talk about i had a learning that panera had the potential to be nationally dominant and for every thousand brands that talk about it one of the one ever makes it and i was really bumming and and i was away on christmas vacation and i was bumming because i was looking at this thing panera i said it's got the potential and we're going to screw it up as a public company and this friend of mine looked at me said ron what would you do if panera owned old Bon Pain, International Bon Pain Manufacturing. I looked at my friend and said, if I had any strength, I would sell everything. I monetize every other business, take that capital and put

it against Panera. And quite honestly, take the best human capital and go down there myself and make it happen. And that's what I did. And that's the reality of what the entrepreneurial life is really like. It's hard. And these bets. And when I was going through that, the point of my story was when you're in the middle of that, you never know for sure it's going to work. You know, you believe in it, but you never know if you have enough time and enough resources. And people say to me all the time, you know, the stock was up from that time in 1999. if you'd bought my stock, you could have sold it for $100 for every dollar, you know, $10,000 for every $100, for a hundred to one return between 1999 and when we sold the

company in 2017. People used to say to me all the time, Ron, why didn't you tell me? You know, why didn't you tell me to buy the stock? I look and go, yo, asshole, I was telling you. nobody wanted to hear it you could have bought it by the wheelbarrow my point of this story is when you're in the middle of it it's really really hard when you're in the fog of war when you're in the middle of the battle it's not so sure how it's going to go and as vince lombardi once put it he never lost the game he just ran out of time there's only so much time and so this is really the doing of an entrepreneurial life is not for the weak of heart. And it's not for somebody who's focused on the byproduct of all the riches and the glamour. You better love the

doing. You better love your idea. You better love your people. You better love fulfilling that need. And if that excites you, then it's going to be a worthy life. But if it doesn't, it's going to be tough. And let me talk about one other thing. Sorry if I'm running for a second, but everything Everything is about trade-offs, right? Everything, you know, you know, I can remember having to get on a plane and it was my, they, it was a snowstorm. So the meeting got transferred and that meant I had a, you know, it was my son's birthday. That sucks.

You know, I mean, there is no such thing as balance. They're just choices. and you got to make clear what choices you're making and what you really feel good about and how you're going to manage that in the end i came back that weekend and tried to do something special for him but i i i for me and everybody every one of your listeners has to make their own choice i had really two priorities in my life my work and my kids what i didn't do i didn't exercise for years. I didn't, I didn't, I didn't go hang out at the golf club. I didn't watch a lot of TV. That was the choices I made. It worked out beautifully in my life. And I couldn't be more

pleased. I got divorced along the way that took a price out of me, you know, but, but, but I think going into it with your eyes open is the right way. It prepares you. You had incredible performance. You built these amazing businesses, as you mentioned, multiple ones of them. So it would shock people to know that I believe on multiple occasions, activists, investors showed up and basically thought they knew better than you did. And they wanted you to do all kinds of different stuff. for the entrepreneurs that are here that aspire to take their companies public and run public companies and do all of that how did you approach the activist investors or what would you maybe have done differently you know kind of knowing everything you know now in hindsight let's just talk about what i had two activist investors attack me in 2008 and then 2000 i think it was 14 and look at it's it's the nature of our capital markets our capital markets have become

pervasively short term for lots of different reasons i can remember when i first went public the average company shareholders held for four months by the time i sold you know in in in panera the average shareholder was down to i think four weeks huge changes there's lots of reasons for we can go into it in a different conversation but it's true and what that allows for is for somebody to buy the stock at any point Doesn't take very much to say whatever you're investing in, whatever you're transforming, cut it off, cut it off. You know, in fact, take that capital, put it into a stock buyback that will drive up the stock, take on some more financial risk that will drive, uh, and take

that money and buy stock. And you know what will pop the stock I'll sell and you can be left with the carcass. I don't need to worry about it. Right. Because you know, when everybody's short term, that's what happens. That's what happened in our public markets, unfortunately. And you better be prepared for that and understand that you have the wherewithal, that you have long-term shareholders with you, because you'll live to regret it if you don't, and in a public, because, you know, again, when I went public, you know, in the early 90s, long-term capital was thought to be in the public markets and short-term capital in the private market. To me, it's the other way around. If we invest with you, we almost never sell. We're in it forever. We're in it for the

long term, for building something of quality. You're going to have to push us out. Most of my shareholders, even the best of them, are going to be in and out in a quarter. They're trading on the next inflection point. And that's what created the opportunity for activists always. And the great strength we had, and the reason I actually sold it, take it private, was the great strength I had as I voted disproportionately. I was the largest shareholder and I had a dual class of stock. And so I was able to have some degree of control. And then I had this credibility of this success over decades and decades. The institutional investors believed in me and stood with me every time. But 80% of the time, the activists win. Everybody goes, why not? We'll

pop the stock. Everybody wants the stock to go up. But what you lose is the, quite frankly, the innovation that comes from transformation. And, you know, things of value are not built overnight. They take investment, they take commitment, they take energy, and they take time. You wrote the book and you titled it, Know What Matters. When you think about what matters in a business setting, is there one thing that you can point to and say, this is the thing that every business across industry should care about? You mentioned the word empathy earlier. Is that the answer or is there something else? No, that's a means, Anthony. The answer to it is building a better alternative. If you don't have a better product or experience or podcast for some target

customers, you have no reason to exist. And in fact, if you're entrepreneurial, you're growing from nothing, you got to be that much better to break through because it's really hard without scale. You have really got to break out of it. Doing what everybody else does isn't good enough. You got to be better. And so if there's one word I think is at the core of what matters is being a better competitive alternative. And then because as you get larger and larger, scale matters. It's being able and things take even more time. It's being able to predict today what's going to matter tomorrow by looking again that's where empathy comes in that's where generalization comes in to look out three years and five and seven and know what's going to matter

know what matters lessons from a lifetime of transformations ron when you look back at your career this book uh is fantastic i highly suggest everyone go and get it but the one thing i always enjoy asking people who have seen multiple things succeed uh go through kind of the ups and downs of building businesses is what is the most fun moment you remember in your career probably we would do these what we call annual family reunions i got a lot but i'm thinking about couples two right one we do these annual these family reunions where we bring the whole team together four or five thousand people and usually we brought out the grand to operate in in nashville which is if you're a speaker it's an amazing room to speak in because

you're everybody is right in front of you and they're not deeper they go up and you know and and i wanted to give my my team something of value and i i and and i'd work on these speeches and i will never forget these moments usually i started with a video something that connected my family to the business my kids and i use them usually as a metaphor in some way and i just loved being on that stage with thousands of people having them with me get it i could watch their eyes as as i started to talk and i helped them understand where we're coming from where we are where we're going and to feel the that love and that connection with them and that that sense of oneness and that sense of oneness with my family and and that that all these parts of my life were

coming together in this moment that really brought great joy that's one i'd say second when you know we we converted this business from what used to be called st louis bread company to what became panera and we built a new prototype we'd worked on this ideology and spent years on it and then we we built one in in i think was stratford square mall in illinois and the guys that were working on it a bunch of people scott davis tony coleman um do i juice him i i they didn't want me to come and see it as they were building it we met monthly but i couldn't come and i'll never forget when i walked in and i'd have this experience when i ate food you know at different times and i went my god it's like we found god here this was like i walked in

and it was everything i ever dreamed about as we talked about it and imagined it and conceptualized it and this was it we had done it and that was the story that panera built for 20 years you know and and you could just feel it and there's something like when you figure it out i guess in a nutshell, the greatest joy of my career has been when I feel like we have figured it out and the whole world hasn't yet. That's really what it is. You got it. You can feel it. That's an incredible feeling, I'm sure. I appreciate you taking the time to do this today. You are a wealth of knowledge. I must say also, a lot of people will ask me whenever an executive or an entrepreneur writes a book, hey, is it a real book? There's a lot of super

real moments in this book, a lot of truths. And I think that you actually accomplished the goal of explaining to people just how hard it is and how difficult it is to do this stuff. And so I know it took you a while to put it together and with a lot of effort. So I appreciate you doing that because I learned from it. And I think a lot of other people will learn from it as well. Where can we send people to find you on the internet if they like this and want to figure out ronshake.com r-o-n-s-h-a-i-c-h.com you can order the book in any bookseller your independence we would recommend but any bookseller has it and you know um you can reach me again through the messaging app at ronshake.com and certainly my google or gmail is available on the internet

ron thank you so much we'll definitely do it again in the future thank you anthony this is fun. You ask great questions.