#1270 Ron Shaich | Panera Founder On Building Billion Dollar Companies

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/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  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 Sheik 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

• 0:44Anthony Pompliano?

  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 Sheik.

• 1:17Speaker 01

  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.

• 1:41Anthony Pompliano?

  This episode is brought to you by Aradine. 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 Aradine comes in. They just Launched their first product line called Terra Flux, which is a Bitcoin miner powered by the world's first four nanometer silicon chip technology. These air-cooled, single-phase and dual-phase immersion cooling miners have unrivaled

• 2:23Anthony Pompliano?

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• 2:53Anthony Pompliano?

  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 is for you. They are transforming sophisticated calendar management into an accessible

• 3:34Anthony Pompliano?

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• 4:04Anthony Pompliano?

  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? They're really kind of pushed the industry forward and helped to build these businesses.

• 4:35Speaker 02

  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.

• 5:20Anthony Pompliano?

  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.

• 5:30Speaker 02

  Yes.

• 5:30Anthony Pompliano?

  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 they just don't know, when do I make a change that can unlock that upgrade?

• 5:46Speaker 02

  So Anthony, let's step back. Let's talk about what an entrepreneur is. It's often confused. To me, an entrepreneur is an opportunist.

• 5:57Speaker 02

  In the very best sense of the word, it is an individual who can see and sense 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

• 6:40Speaker 02

  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 demand to change that you change. 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 burn in their brains, I'm the solution to the problem, then you have real opportunity and you follow it.

• 7:21Anthony Pompliano?

  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 in. 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?

• 7:51Speaker 02

  Well, it's real simple and just hard to do. So let's again go backwards. Right? Um, you know, I went to business school and I, 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, 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's your target customer is willing to walk past all those competitors on the strip in a restaurant and choose you for that solution.

• 8:34Speaker 02

  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.

• 9:03Anthony Pompliano?

  In these businesses, um, I don't think it surprises anyone that it's a people business. Uh, restaurants in general typically have high turnover. Uh, there aren't tons of people who go to, uh, you know, huge business schools or have tons and tons of, uh, 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, uh, 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, uh, 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?

• 9:47Anthony Pompliano?

  And they're the right employee for a Panera, a Kava or somebody else?

• 9:50Speaker 02

  Well, first I'm going to disagree with you. I actually think it's a powerful opportunity, um, particularly of, of, of economic advancement for, for.

• 10:00Speaker 02

  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. You know, I went to Harvard Business School and I'd sit in my, my class. This is nearly 50 years ago. Now, I'd sit in my, my classroom and think my friends are all going to work for Exxon or IBM. And the guys that are, that are, 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, more opportunity to actually make a difference.

• 10:40Speaker 02

  So I, 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, to, to really move forward. Having said that, our job as leaders in this industry, and in, in every industry, are, are, 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, I basically have a belief that in most companies, people give leadership 30, 40, 50% of what they're capable of.

• 11:22Speaker 02

  And, and often that's why working for themselves, they do better. The, the question is, as a leader, how do I get people to see it as in their interest? To actually do what, what, 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. You know, that's not what, what, what, what folks are about. They want to know, does it, how it, how it affects them? How it affects their lives? How it affects their, their sense of self? Many of the people on front lines in restaurants, they want meaning.

• 12:05Speaker 02

  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, 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

• 12:48Speaker 02

  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 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.

• 13:27Anthony Pompliano?

  Food is something that is a very intimate experience, right? You're literally, somebody is making something and you're putting it into your body. 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.

• 13:54Speaker 02

  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.

• 14:18Speaker 02

  But lust for that salvation that occurs, that's so good that I so want it. I desire 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, 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 know, you buy your, I see with your Apple AirPods on it. Right? You know, it's, 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.

• 15:01Speaker 02

  And if anything is off putting or out of balance to that total experience, you lose. So I often think of what I do is 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?

• 15:45Speaker 02

  And I think of that in every relationship. It's not different.

• 15:49Anthony Pompliano?

  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.

• 16:35Anthony Pompliano?

  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 and the end environment that you're looking for?

• 16:50Speaker 02

  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.

• 17:03Speaker 02

  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 anymore than 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. And 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.

• 17:44Speaker 02

  I had, I ran a public company for 20, 27 years, longer than Cal Ripken played baseball. And when we talk about it, you know, people often talk about, you know, 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,

• 18:26Speaker 02

  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 shortlist, 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,

• 18:47Speaker 02

  By the media 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 it's 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,

• 19:29Speaker 02

  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.

• 19:49Speaker 02

  What's an input?

• 19:51Speaker 02

  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 of value creation. It will happen if you really got a better competitive alternative.

• 20:06Anthony Pompliano?

  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 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?

• 20:26Speaker 02

  First, I gotta 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 you're in, but you need people who want that in their lives. Right? You know, everybody can't be the general. And we need people 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, you know,

• 21:12Speaker 02

  I think I don't want gamers. I don't, you know, 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.

• 21:56Speaker 02

  I could have gone into politics. I could have gone 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.

• 22:20Speaker 02

  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 than I ever did in my life, in any other place I worked. And 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 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.

• 23:03Anthony Pompliano?

  When you think about that idea of entrepreneurship, are there certain things in your personal life, 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 I was excited about this." In the book, you talk about at one point, maybe you were more into some of the ideas around socialism and stuff versus now understanding and kind of fully employing incentives and capitalism and these things. Like, how do you think just about what made you you as an entrepreneur?

• 23:39Speaker 02

  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, 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.

• 23:58Anthony Pompliano?

  Explain that.

• 23:59Speaker 02

  The ability to see and feel what potential guests or clients or customers need and want. It's not being, 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

• 24:44Speaker 02

  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?

• 24:56Speaker 02

  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 were, you know, we're often given credit as being at helping found or finding founding Fast Casual, which is today a hundred 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

• 25:38Speaker 02

  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, and, and it was also clear that, but people needed, 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 Mica. They wanted something more. And it was the empathy to see and feel that they, that they, that if you gave them real food, environments that engaged them, people gave a shit.

• 26:23Speaker 02

  We could actually change the currencies from a lot of food for not a lot of money to, to what Fast Casual 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.

• 26:54Speaker 02

  Is about understanding the needs out there, finding the needs out there. And the requirement of that is empathy.

• 27:03Anthony Pompliano?

  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

• 27:48Anthony Pompliano?

  today and then what are they going to want 10 years from now?

• 27:51Speaker 02

  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.

• 28:21Speaker 02

  I've been invested in Kava, I don't know, for a bunch of years. I came to them with an idea in 2018 to actually buy a company five times larger than them. But 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. Kava could go on to be one of the great industry defining 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.

• 29:03Speaker 02

  Right? Every time somebody goes to a doctor, their doctors tell them, eat Mediterranean. You know, it's good for your heart, you know? All right, 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.

• 29:47Speaker 02

  People are gonna 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 to learn how to scale up and, and, and take it and grow. And we were really there Sherpa as they climb Mount Everest. And so that's the way you do it.

• 30:30Speaker 02

  You start with understanding and feeling where are we 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.

• 30:47Anthony Pompliano?

  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?

• 31:05Speaker 02

  Well, I'd say it this way. First, Everything I'm doing with Kava, and I, by the way, I did it first with Obam Pen, 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's the only one. We've got three or four that are every bit as strong or stronger coming down the pipe. 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

• 31:50Speaker 02

  thing I told you about called Tate, which is, again, it's infused with the spices of, 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, it's got authorities and artists and 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, you know, place for breakfast, to gather, for lunch, late in the afternoon, even in the evening. We got a business like

• 32:30Speaker 02

  that. Right? And, and, and I got another one in immersive entertainment. That's even more interesting. It's 40,000 square foot of, of, of mental and physical challenges. Each one, one to three minutes with a farm to table restaurant in a, 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'd love to have you and Paulina up to come visit this section. 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,

• 33:17Speaker 02

  Today, I get great joy at spreading myself over multiple businesses,

• 33:26Speaker 02

  understanding and helping to find what the categories that are 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've 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 Obumpa, when I ran Panera,

• 34:01Speaker 02

  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, they talk about entrepreneurship, and I made these speeches all the time, and everybody glamorizes. There was a time, 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 to the university club or wherever, right, you'd never make it. Because the reality of an entrepreneurial life, Anthony,

• 34:46Speaker 02

  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 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've won like I did, it's really easy. You know, I, 1998, I had a public company, Obon Pen Co, Inc. And I had four divisions, Obon Pen, Obon Pen International, Obon Pen Manufacturing, big manufacturing business, and Panera.

• 35:29Speaker 02

  And for lots of different reasons, we 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 it, one ever makes it. And I was really bumming. 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, no, and looked at me and said, Ron, what would you do if Panera owned Obon Pen? Obon Pen International, Obon Pen Manufacturing? And I looked at my friend and said, if I had any strength, I would, I would sell everything. All, I monetize every other business, take that capital and put it against Panera.

• 36:11Speaker 02

  And, and, 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, that's the reality of what the entrepreneurial life is really like. It's hard. And there are 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 is up, was up from, from that time in 1999. If you'd bought my stock,

• 36:51Speaker 02

  you could have sold it for a hundred dollars for every dollar, you know? 10,000 for every hundred dollars. 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 this 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 gonna go. And as Vince Lombardi once put it, he never lost a game. He just ran out of time.

• 37:35Speaker 02

  There's only so much time. And so this is really, um, 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, 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's excites you, then it's gonna be a worthy life. But if it doesn't, it's gonna be tough. And let me talk about one other thing. Sorry if I'm running for a second, but everything is about trade offs.

• 38:10Speaker 02

  Right? Everything.

• 38:14Speaker 02

  You know, you know, I can remember having to get on a plane. 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.

• 38:25Speaker 02

  That sucks.

• 38:28Speaker 02

  You know, I mean, there is no such thing as balance. They're just choices. And you gotta make clear what choices you're making and what you really feel good about.

• 38:39Speaker 02

  And how you're gonna 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.

• 39:22Speaker 02

  I think going into it with your eyes open is the right way.

• 39:26Anthony Pompliano?

  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?

• 39:58Speaker 02

  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, 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 Panera, the average shareholder was down to, I think, four weeks. Huge changes. There's lots of reasons for it. 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

• 40:43Speaker 02

  much, 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, and take that money and buy stock. And you know what? We'll 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,

• 41:27Speaker 02

  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. You, if we invest with you, we almost never sell. We're in it for effort. We're in it for the long term, for building something of quality. You're going to have to push us out, right? You know, 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. Because, you know, and, and the great strength we had, and the reason I actually sold it, take it private,

• 42:06Speaker 02

  was the great strength I had is 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? Well, pop the stock. Everybody wants the stock to go up.

• 42:35Speaker 02

  But what you lose is the, 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.

• 42:52Anthony Pompliano?

  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 the industry should care about? You mentioned the word empathy earlier. Is that the answer or is there something?

• 43:09Speaker 02

  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.

• 43:52Speaker 02

  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.

• 44:06Anthony Pompliano?

  Know What Matters: Lessons From A Lifetime Of Transformations. Ron, when you look back at your career, this book 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, go through kind of the ups and downs of building businesses is what is the most fun moment you remember in your career?

• 44:28Speaker 02

  Probably we would do these, what we'd 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'd bring the whole team together, four or 5,000 people. And usually we brought out the Grand Ole Opry 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.

• 45:09Speaker 02

  And I, 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 the talk and I helped them understand where we're coming from, where we are, where we're going. And to feel that, 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.

• 45:54Speaker 02

  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 it was Stratford Square Mall in Illinois. And the guys that were working on it, a bunch of people, Scott Davis, Tony Coleman.

• 46:23Speaker 02

  Do I juice in? I, I, they, they didn't want me to come and see this. 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. We, 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 have, when I feel like we have figured it out and the whole world hasn't yet.

• 47:07Speaker 02

  That's really what it is. You got it. You can feel it.

• 47:11Anthony Pompliano?

  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, like a lot of people will ask me whenever an executive or an entrepreneur writes a book, hey, is it a real book? Like, 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, if they like this and want to figure out what?

• 47:50Speaker 02

  RonShake.com, R O N S H A I C H dot 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.

• 48:14Anthony Pompliano?

  Ron, thank you so much. We'll definitely do it again in the future.

• 48:17Speaker 02

  Thank you, Anthony. This is fun. You ask great questions.