In this episode, we talk about management styles and goal setting, and uncover some gems about granting equity and hiring from our guest, Orazio Buzza, Founder and CEO of Fooda.
Orazio has taken the startup ride from early on through exit twice already, before founding Fooda. Fooda is a food technology platform that connects restaurants to people while at work, has received $45M in funding, and currently has 250 employees in 20 cities.
He has a great take on goal setting that keeps people accountable, brings transparency to the entire organization, and keeps the team moving in the same direction.
Orazio’s milestone approach to managing growth (vs. a calendar-based approach), makes sure that expenses don’t outpace revenue as Fooda scales to new locations.
Who does Orazio see executing? John Bauschard, at Darwin AI.
Transcript:
00:09
Welcome to the execution is King podcast where we talk to successful startup founders, investors and ecosystem builders to uncover insights and best practices for the next generation of great global startups. I’m your host, Joseph Siebert. My co host today is Rob Weber, managing partner at Great North ventures. Hey, Rob, how you doing today?
00:29
I’m doing great. How are you?
00:31
I’m good. I’m good. I just I just read this, like tiny little distillation. It was on this app. I don’t want to name drop the app, but it has like, it’s like the Cliff Notes of Cliff Notes. It’s it’s like one or two sentences distillations and it was talking about OKRs, you know, and it got me thinking about goal setting and everything. And I was wondering if you had any, any goals for the summer, my goal is more about culture setting, right? Like, I just want to have a relaxing summer, you know, hanging out, I’ve got a repaint my deck, I was gonna finish it. But now we’re gonna paint it because that’s a whole bag worms anyway. Yeah, that’s, that’s my big goal, I think my stretch goal would be to actually make all the plants that I planted in my garden grow. Yeah, that’s
01:19
really that’s awesome goals. Maybe I could talk about my personal goals. And we’ll talk about my professional goals this summer, on a personal standpoint. So I have kids ages 1012, and 16. And I’m just such a big believer of entrepreneurship, that I know I only have a few more years with my kids. So I’m trying to help them experience entrepreneurship. So one of my goals, that’s one of my goals this summer, is to really take the real serious plunge of helping my 10 and 12 year old boys are joining us at the nationals the treaty, the biggest trading card conference in the world, which will be in Atlantic City in late June. So I’m bringing my 10 and 12 year old boys, so that they can exhibit with this trading card startup we have and try to sign up users for the app. And you know, it’s supporting this, you know, venture studio company, but the personal goal is really just trying to impress upon my two boys, you know, the value of sort of their efforts and being a part of scaling a startup at a young age. And they can relate to it because they’re kind of into trading cards. So but then, you know, outside of that, that was a little bit work related, but it’s more family related. I’m also I’m doing father daughter dance with my daughter. So I’m hoping to be front and center because we’re the best at dancing of any of the father daughter combos. And then the third one is I this is every summer for me, I want to catch just a little bit bigger or better fish than I’ve ever caught in a previous summer. So, you know, early season is like crappies, but then it’ll turn into like northerns, bass, walleye, maybe some lake trout in there. So those are, those are my three kind of areas of goals.
02:55
So I noticed you didn’t use the you know, like the phrase ology for like stretch goals or anything like that. Do you use OKRs? Do you buy into that framework? I know it’s been really popular. People have written about it way more intelligently than I am talking about it right now. But I mean, what has it come in handy for you? Or do you use some kind of other framework for setting goals when you’re when you’re managing employees?
03:19
I guess what I’ve always found is you don’t have to be so enamored by the process or individual frameworks. There are a lot of leadership frameworks and a lot of management frameworks. It’s just sort of the Do you have one? And then are you able to sort of iterate on it, make sure it works well, for you. I don’t think there’s anything particularly magical about OKRs versus a any other management system. Or same thing with like, you see this sometimes in the startup world with like, the focus on MVPs. And like lean startups. And, you know, I was listening to a podcast the other day with a former executives of Amazon wrote a book about managing and they said, Be careful about the MVP trap. And like the lean startup process, like an Amazon, it took them two years to iterate on AWS before they launched it. And the team wanted to put it out. And basil and other large tech players started launching, you know, cloud services. But Jeff, you know, felt like they he slowed the team down and said, We really need API’s, you know, we need to get these things done. And sometimes, I guess what he said about that, that MVP was, it’s the V part of it that the startups get wrong, the viable, right, like, you know, you can launch something in two weeks, but are really viable and viable for what how big of a market, you know what I mean? So I think that’s really a key is, I love these kinds of frameworks, but just don’t get trapped in the process for the sake of process. Like, you still got to use your brain at the end of the day, right.
04:45
Well, I’m really excited for this episode today because we have a fantastic manager. He was recommended for actually from a previous episode, when we interviewed Jonathan treble of print with me, which is now known as with me, which you know, full disclosure and transparency. That is one of the Great North ventures portfolio companies from fund one. Anyway, he recommended this guest and we’re really excited to have him on rasio BUSA is the founder and CEO of Fouda. Welcome to the podcast or Azio.
05:16
Thanks, guys. Great to be here.
05:18
So for our first question today, Orazio, can you walk us through kind of your journey up into the point of starting food? How did you how did you become an entrepreneur?
05:29
Well, you know, I was one of those guys that even as a kid, I was always had a side hustle going on, I had paper routes for those of you that remember what it paper route was, I sold baseball cards, kind of like a physical version of a precursor to NF T’s, right. But I always was doing something on the side. And, and, you know, I started my career at some large companies. You know, one of them was Amoco, you know, before was bought by BP was the largest company in Chicago. But then, you know, over time, I realized that I wanted to be closer to the product. And eventually I became the product that was in the consulting, I was in the consulting space, primarily doing technology implementations of ERP systems in the late 90s. And then all of a sudden, the.com thing hit and a friend of mine that was a former colleague had gotten funding for a company and, and said, Hey, do you want to join the startup and I found my home, I found my people. So starting with around 2000. And you know, for the next 22 years here, I’ve been in various startups over the years, and I’ve been lucky enough to be part of a bunch of exits. And so I keep kind of going back for more punishment. Yeah, that’s
06:39
similar to my own journey. You know, you even if you have a few exits under the belt, it’s, you know, you’re a serial entrepreneur, and you just keep going back to the well, right, so. So tell us more about food. Can you describe kind of the genesis of how you came up with the idea and kind of tell us more about the business today?
07:00
Yeah. So you know, to describe food at first of all, I was at a previous company, I was before food, I was a company called Echo global logistics here in Chicago. And I was part of the founding team, I was a president, that company at the time, and we were looking to provide additional food options for our employees, we were in a little bit of a food desert here in Chicago, where the company was located. And one of our employees had this great idea to start inviting local restaurants and to sell food to our team. And every day, a different restaurant would come. And it was a couple day a week program to start in over the next several years. It was one of the most used perks I would say at that company, the company continued to grow initially, we had, you know, maybe a couple 100 people when the program started. And fast forward about three years, that company had about 800 employees. We had gone public the year before. And I was getting ready to transition out of the company. I loved it at Echo. But I was 38 years old. And I thought if I don’t leave here soon, I’m going to die here. And I thought, you know, maybe I’ve got another startup left than me. And so I started the process of transitioning out of the company. But I had agreed to a long transition. And as part of that transition, I was still going to management meetings and one of those meetings, our head of HR came in and said, Hey, I want to talk about our food program. Because the lines are getting too long other people that work in our building, are walking to our lobby and buying food from from the vendors. And I didn’t think much of it at the time, our high tech solution was to hang a sign that said, if you don’t work for Echo, you’re not allowed to be here. But then, you know, maybe a week or two later, I was laying in bed thinking what I want to do next. And I thought, You know what, this is a b2b marketplace company, where I can, you know, use some kind of technology and build a marketplace where on one end, we have employers that want to provide access to food. And on the other end, we’d have restaurants that want access to that different audience. And so I put two and two together and decided to that was gonna be my next venture. I, you know, started the process of working it out. And then a couple months later, Echo came back and said, hey, you know, the transition is good, you’re free to do whatever you want. And so I decided to launch Fudo right away, and echo became our first client, and then it’s still a client today. So that’s how the idea came about. I had nothing to do with it other than I was a customer and I was at the right place at the right time. But at the end of the day, it’s a b2b, b2c marketplace that specializes in food at work primarily for larger employers. Remember, we don’t cook food instead, we partner with restaurants we cook, transport and sell the food to our clients at their clients sites. Our target market is larger employers and all kinds of industries. We have a vertical software platform that includes a point of sale system that our restaurant network uses To execute the events, and Fouda acts as a financial clearing house and provides a consumer rich experience and includes mobile ordering loyalty and real time feedback to the consumers. We have various product offerings based on the size of location. But a key to our offering is that there’s high quality foods, a wide range of restaurants that provide food at reasonable prices, you know, it’s designed to be used every day, you know, one of the key features is variety, users get a different restaurant each day, a typical site gets 15 to 20 unique restaurants per month. And, you know, regardless of the company, you work at all employers, you know, they care about recruitment and retention engagement of their teams. And, you know, since COVID, now, they’re also thinking about motivating employees that come into the office, you know, more and more, whether it’s, you know, the great resignation that we’re all hearing about, or the, you know, the idea of wanting their teams back and sharing a meal. from a physical standpoint, either way companies care about the food component of their office or workplace. And then food as model allows for companies to subsidize all or part of the food. And but it’s not a requirement to subsidize any at all. In fact, most of our business historically, was 100%, employee paid. So it can be very economical. You know, depending on, you know, the needs of a client,
11:21
for clarification sake, with your business model of Fouda. Are the employers do they pay any kind of a fee or a subscription for this service? Or, and or do they end customers? Were the employees do they pay for their meals? Or what’s the typical business model?
11:38
Yeah, so it’s a mix. So when foodist started, it was 100%, employee paid. Frankly, companies paying for food wasn’t really a thing in Chicago, way back in 2011, as employers have been competing more and more for talent, we saw an opportunity. So we started providing programs that had fully subsidized meals. And so you know, some companies will pay for 100% of the food. And then over time, we build technology that allowed for partial pain. And so now we have a mix, it’s all over the board, you know, we have companies at both ends of the spectrum. Overall, our programs are very economical with the food being representative of what would appeal to a certain site. And so we have an algorithm, we have an AI algorithm that does all the scheduling and the restaurant selection. And so as a site is live, we start to understand more and more the preferences of the people that work there. And so the matching of restaurants and menus to sites is all done by using artificial intelligence and machine learning.
12:45
So it was kind of you kind of answered the type of type of restaurants that engage you know, that you that you that you work with? It almost seems like you don’t need to have a physical restaurants, right? Have you had any ghost kitchens using Fouda?
13:03
Yes, so we partner with all kinds of restaurants, about 50 to 75% of our restaurant partners are local, independent, or local chains, but about 25% are regional or national and size. And a portion of both of those are some ghost kitchen operators. And so whether you’re purely a ghost kitchen, in the new model sense of the word where you’ve got a commissary, and you don’t have any brick and mortars, or you are a brick and mortar operator that operates a commissary, essentially, it goes kitchen and you want to service food as business through that location as opposed to a physical store. We’ve worked with all kinds so so ghost kitchen, operators make great partners for us.
13:46
So Fouda has about 250 employees or so is that right?
13:51
Yeah. So we we’ve raised about $45 million to date, we were founded in 2011. And we have about 250 employees, and we operate in about 20 cities across the US.
14:03
Great. So I’d love to kind of shift gears here a little bit in I had this experience as an entrepreneur turn professional manager, so to say it was like accidental, and I learned a lot, you know, in part by, you know, just reading a lot or you know, trial and error, but then part of it was bringing on other leaders and managers around me, so I could learn from them. But can you talk you know, start maybe we can dive down this rabbit hole a little bit on different leadership and management topics. Given your experience? Can you talk a little bit about goal setting and how how that works at Fouda?
14:38
Yeah, absolutely. So um, you know, as an individual I’m very much someone who sets goals and measures against it in all facets of my life. You know, my friends and family and co workers make fun of me for the way I run my my life. It’s kind of funny, but but food you know, one of our values is we set goals and measure everything. If there’s no data then it didn’t happen. We literally Have that you know, written on our walls and various documents around the office. So we do measure just about everything. But when it comes to goals, I like to keep them very short. And a list of just a handful of, you know, very key items, you know, generally three or four items per year max. And then you know, maybe as you accomplish certain goals, you know, you might replace them. And you don’t, one of the things that probably makes us a little different as a company is we’re very transparent, we literally share our board decks with our entire company every quarter. And as part of that we share our goals, the same goals that we present to the board, we present to our company. And when you think about transparency, you know, there’s a couple things to it. One is, you know, that goal sharing not only holds people accountable, but also it’s an effective way of getting teams to all move in the same direction. And so it just makes our life as a manager much easier, because you know, that information is getting out there. So that’s kind of how I like to think of it one of the things that we added just this year, is that we’ve now started sharing our department goals to the company as well. So not just our, you know, Fouda level, Hey, everyone, this is what we’re aiming towards. But each department shares their key goals in front of the entire company in the beginning of the year. So we really believe in it.
16:21
That’s awesome. I was one of them when I was in my mid 20s. And when we made the company a my brother and I had started off at dorm rooms, we were at around 50 employees. And in my early 20s, some of that we started to get some negative feedback about how we were managing the business. And it was because we kind of kept key information really guarded. And I didn’t really know any better. And then, at this point, we brought on an outside CEO to help us just grow the business. And he had a lot of management experience, one of the first things he did was just like you described, he basically coached us to kind of share all the key information about the business really openly in the organization. And it was absolutely, you know, a complete one at like changing the culture. And we really became more centered around accountability, which was sort of always one of our, I would say our most important value. But it was just like, we didn’t know how to create a structure or a system that would orient around that, you know, that accountability? I think that’s what transparency provides. It’s awesome to hear that I actually haven’t I don’t think we ever distributed our whole board deck. So that’s like, oh, no,
17:25
we don’t distribute it. But I do present it, I go through slide by slide on Zoom and person, you know, depending on, you know, our people in Chicago here, I will tell you the first time we did it, it was pretty scary, you know, from a sharing of the actual deck, but we’ve been doing it now for probably about four years. And so it’s second nature, and if you think about it, public companies do it all the time. Right, yeah, they share, you know, a ton of data and, and still, you know, their businesses are defensible. Their employees are motivated, you know, good news. And bad news is they feel, you know, a deeper connection because there’s a level of trust that’s, that’s gained.
18:03
Oh, it’s awesome idea. I mean, now everyone’s in the room where it happens. So they can’t make excuses, right. It’s all about accountability. And then, I think related to that people, like managers and companies put so much effort into producing good board materials, like this isn’t that much extra work to just present it to your team? Right? Because you already have to produce this quarterly anyway, for your investors, and, and so forth. Right?
18:27
Absolutely. It’s, you know, I think the the whole idea of presenting to a board to begin with, since we’re on that topic, whenever it comes up, right, whatever that quarter is, and the team is preparing, it’s always an effort, right? You have to pause other things that you’re doing to do this step of taking a step back, thinking about the big picture, and then putting board materials together. And as time consuming as it is, as a CEO that, you know, my tendency is to be very involved in the business day to day, it forces me to take up to pause, take a step back and evaluate what’s going on and say, hey, you know, what is the big picture? What’s going on with the business? What’s the tone, what’s the messaging, and I find it really healthy. And you know, as a manager that be forced to do that once a quarter. And then you know, you already have the materials, you might as well double dip, right, you get additional use out of it and take the time to present to your team so so you’re right, it’s it’s getting that second use, and it’s it’s really beneficial for everybody.
19:30
Do you use like the OKR framework? You know, like we’re talking about, like KPIs and stuff, do you use that framework? Or do you just kind of do use your own? Is it similar?
19:39
Yeah, we use our own. I think there’s a couple of things you know, when you think about goals, as well as, you know, whether they’re stretch goals or budgets, etc. And what KPIs do you measure, we do measure a lot. As I mentioned before, we like to have very few goals but they’re, but they’re written out. So we write them out and you know, it’s the The same concept of SMART goals, right? You know, the there’s been books written on making sure they’re measurable and achievable, etc. But I think more importantly, when I think about goals, and and how they differ from budgets, right. And so and I see this a lot, I mean, I’ve made this mistake before. And at some point in my career I was coached. But I think startups, especially earlier stage, you need to separate your budget, from your stretch goals, you know, there’s no reason why you should, you know, miss a budget by a material amount, let’s just say more than 10 or 15%, if that happens, then you might not have a great handle on your business, right? Especially, you know, we’re a later stage company at this point, right. And so we do have, you know, all the mechanisms in place that allow us to do really good forecasting. And so we shouldn’t be missing our budgets by that much on the high end or low on right, either, you know, beating by a lot or missing by a material amount. If that happens, I think, you know, other than maybe COVID, right, and some existential event that happens, you should be able to nail your budget, you know, relatively closely. On the other hand, people shouldn’t use budgets for bonuses and goals, right, for, you know, personal bonuses and goals. That’s where the stretch part, you know, comes in. And so there’s the, you know, the table stakes of achieving the budget. And then there’s, you know, what are the extra goals that we have documented for each department, or each person or the company that allows us to go above and beyond? And so I like to make sure that those are addressed in variable competence?
21:45
That’s really interesting, because I mean, I don’t know a lot about OKRs. But it seems like, what you do is you you set all of these goals, and you’re supposed to set ambitious ones, right? Where you set I think, what is it three or four goals a quarter, and then they’re supposed to be pretty ambitious, so that you’re not hitting 100%, that you’re hitting like 60%. Otherwise, if you’re consistently hitting your goals, quarter after quarter, then you’re not like reaching, right? You’re not stretching your capabilities and stuff. But what you’ve outlined, is is fantastic, because you’re hitting what you need to hit. But then at the same time rewarding, you know, everything beyond, which is the whole idea of you know, OKRs, the whole idea of setting these kind of longer goals is to have people reach to, to exceed just hitting the budget, right to actually reach and get these greater achievements. This is a really interesting framework. I think you actually I heard you on a podcast, where you talked about your milestone approach to growth and scaling. Can you tell us a little bit about that?
22:55
Yeah, so we’ve adopted a concept that we call the milestone driven plan versus a calendar driven plan. And so for example, and how this became a more mature process here is, food is a market based business, right. So we have certain operations that exist in each city that we operate in. And so there’s a process of launching a city or launching a market. And so before we started that process of adding markets at a regular clip, we talked to some third parties, other market based companies like Uber at the time, that you know, was launching cities, you know, once a week or so. And we had some feedback from them and some other companies in regards to how they did it. And what we heard time and time again, was, you know, in the first two weeks, you do this, and the second two weeks you do this, and the second month, etc, right? You know, it was it was calendar based and time based. So that’s what we did, we built a plan based on some of the learnings that was driven by that. And so what you find is, what we found, is that, that works really well, if you have a highly predictable process, but ours was not. Once you introduced, you know, a b2b sales component of building of a restaurant network, launch calendars at you know, large enterprise sites, things were a little squishy. And so the other thing that you find is when you have a calendar based plan, is that the team tends to always hit the timeline of the things that are fully within their control, like hiring, but they tend to, you know, be behind if anything, and things they don’t control, like sales and client launches. And so all of a sudden, you get, you know, expenses are going up faster than the revenues catching up. And so over time, which we try to, you know, think about how we can do a better job of matching those two. Now, the key is that these the steps are not linear, but there are dependencies and so For example, we put together a revised plan, maybe a, you know, a year after we were doing this, which was more milestone based. In other words, you first had to sign 10 contracts with clients. And then after that, you started to onboard restaurants, and then after a certain number of restaurants are on boarded, then we’re actually launching the sites. And so, you know, you can, you know, obviously, those steps are not happening independent of one another. But there’s these milestones, and you don’t hire the replacement team, until you get 10 sites launched. Right. And so all of a sudden, then, you know, the market becomes more profitable earlier, there’s more attention given to those, those dependencies. And so, you know, overall, we found that the process is working much better. And so we continue to use that, you know, what it really says is the milestone plan is more, you know, is a plan that has guardrails. And so as we were coming out of COVID, and there were a lot of unknowns on like, you know, maybe our business was know, leading up to COVID, which was, you know, very predictable, we started to adopt the same model from a budgeting standpoint. And so now, we not only use it from a market launch perspective, but we also use it in budgeting. And so, you know, a simple example would be that, you know, you know, a certain role doesn’t get unlocked, to be hired, until that department reaches a milestone. So, you know, it could be revenue driven, it could be based on some other metric that, you know, once something happens, then it unlocks dollars, to hire a role. And so if something’s ahead of plan, then the roles open up faster. And if something’s behind plan, then you know, just takes longer for that role to be to open up and so it kind of, you know, is the checks and balances or guardrails?
26:48
That’s so great, it sounds almost gamified, like, as you’re describing it, in my head, I’m imagining, like, video game, progressing as you like, build your Sim City, or build up your character or something like that, I can imagine it’s pretty attractive for the employees, you know, once they get a little bit competitive, to start reaching these milestones start pounding them out.
27:09
Absolutely. And, you know, with any growth organization, you know, things are always kind of up into the right, you know, when whether it’s revenue, or other kinds of sales metrics or operating metrics. But you know, when you have a manager come in and say, hey, you know, I want to hire this role, and it’s the middle of June, right? Well, you say, Well, let’s take a look at the plan, you know, because, you know, we, that role gets unlocked when you hit this metric, and you haven’t hit it yet. And so it allows the decision makers to be disciplined, as opposed to living in the moment and feeling pressure to do something, obviously, you know, we break our own rules periodically, and you have to have a feel for the business, right? Like any good manager would, but we try to stick to the plan. And so it’s an easy way to think about those decisions in the middle of the year, which is, you know, could be 567 months removed from when you put your plan together.
28:05
As both entrepreneur and investor in a lot of companies kind of in the middle of the US, one of the cultural things that is really kind of bothered me after spending time in other markets, like San Francisco, is just the value that equity based compensation can have in supporting growth companies. Have you had much experience, both in the early stages? And then in more of the growth stages? How do you feel equity compensation is? Is it properly utilized? Are there any tips on how to manage equity? Referring to
28:37
stock options? Yeah, stock or whatever else? Yeah, yeah, of course. So it’s actually a really good question, because I dealt with it personally. So when I was, you know, at a previous company, and the way a lot of companies do it is for executives is you join a company, you get a big option grant that vests over three to five years, depending on the company. And as you get towards the tail end of that, you might get some refreshing of shares here and there. But relatively speaking, it’s a it’s a small component in comparison to that original grant. And so as you get on the tail end of that, it’s all about cash comp. And because you’re fully vested, right. And so, I believe that if you’re going to use equity effectively, you have to have two components to it. One is it needs to be widespread. And so we give options to everyone from an hourly person that works at one of our locations all the way obviously to the executive team. The other thing that we do is we do annual granting. And so we have a process where every summer in July, we do we you know we do a big grant where everyone in the company gets a new stock, right and they’re pretty material and so it doesn’t mean that we don’t that we have really small grants when someone starts But relative to that traditional ratio, our initial grant is probably a little smaller, but we communicate to the team that we hire that, hey, you can expect roughly this based on, you know, each year, you’re here, you’re gonna get more of a grant. And so what that creates is a ladder in effect, where every year, you have a bunch of shares, vesting, and so, you know, one of the keys as an executive, and I’m a large shareholder, I was, you know, not only the founder, but I put a lot of my own money in to start as a shareholder, I want to retain our team. And so there is a big incentive to stay at FIU to because at any given time, you are giving up lots of equity, right, and you’re giving up more equity in the future. And so it’s a tough decision, right? You don’t have that scenario that I might have had earlier in my career, where, hey, I’m pretty much fully vested, this next new shiny object, that is another startup is going to recruit me away. So that’s pretty important here at Fouda.
31:02
And one of our prior episodes, we spoke with Joe Stryver, who was the first UX hire at Google. And Joe told us after moving from Minnesota to San Francisco to be the first UX designer at Google, that he observed how talent would move in packs around San Francisco and Silicon Valley. And, you know, I think part of this might have been due to stock options, right? Like, if you have a group of people who all work together and they invest their shares, there’s, you know, that incentive to stay retained at a company kind of starts to go away, and why not go build yourself a nice venture portfolio and go from company to company. So this is really interesting approach. I, I can’t think of too many companies, if ever that I’ve seen this approach, but it really solves a big problem of retention, that the standard kind of, you know, four or five year vesting plan with, you know, all parent, you know, that, that, that kind of that really just encourages people to leave after that period. Right?
31:56
Absolutely. And, you know, I will say that we didn’t make that decision lightly, a lot of work went into designing the plan, and what the amounts would be, and we, you know, the way we looked at it is, if someone’s here, you know, seven to 10 years, you know, let’s say on the longer end, what does that exit look like, and bait, you know, based on each role, or each level, we have a target of what we want to see each person get over time. And so we have a system where they build up to that over time. The other thing is, is took a lot of work with our board, to you know, to agree to put this in place, because we’re we’re giving out a lot of options. And so I think if you were to compare the size of our option pool, in comparison to maybe some other comparable companies, you probably find that it’s bigger.
32:41
So you’ve been a part of two companies before Fouda, where you were one of the first 15 employees and the startup scaled through IPO. How does this inform the way you hire and develop leaders.
32:54
So, specifically, you know, regarding hiring, there are a ton of great books out there on hiring, but I like to address you know, one tangible a call it a tactic that I believe moves the needle for us. So it involves addressing the fit for the first role in the company, relative to other characteristics like long term potential culture, fit, intelligence, you know, work ethic, etc, that concept evolves, addressing if, you know, your company can easily promote or move people around the organization, the more flexible you are as a company, then the lower priority you can place on that first role. But if you have flexibility that is limited, then high likelihood of success for the first role is a much bigger priority. So as an example, you know, we we don’t do well, we don’t do it food is hire someone based on what we think we might need later on. So it’s, what do we need now. And so not only does the current role matter, but those other characteristics I mentioned earlier, and so we don’t create jobs for great people. So you know, so I meet great people a time I love networking. But just because I meet a great person, we’re not going to go back and create a job, you know, based on we think we might need later we focused on the now. And the reason is, is that at both those two companies that you mentioned that IPO they were centralized were fruit as a market based business model. And so at companies that are centralized, you can have a general hiring strategy, that you just hire, you know, the best and brightest. And they tend to get promoted or rotate through other functional areas over time, you know, based on their skill, set their goals and the company’s needs, the fit for their first job within a company where it wasn’t as important at those, you know, the places not saying that you don’t evaluate that and you just bring in miscellaneous people, but there’s more flexibility to bring in people that you believe have a high ceiling and you’re like, Hey, I’m going to start them here. And I’ll eventually move them on. What we found here is that it did not work very well. because we didn’t have that flexibility or as much flexibility, it turns out that, that people really don’t want to move, like maybe they used to years ago. And so if you hire someone into a certain market, whether it’s a city we operate in or centralized here in Chicago, moving isn’t really a thing. Now, obviously, this doesn’t pertain to remote work and jobs that are remote, that’s more of a recent phenomenon. And that’s, that can be helpful, that’s more like a centralized where you could work anywhere, but in a lot of jobs, that food there depend on the market you’re in. So a lot of our sales and operations jobs, and even some of our managerial jobs, you know, if you’re managing a market or region, you need to be in that city or region. And so we find that that first job, and the role is really important. And so we make it a requirement that you have to be a great fit for that first job.
35:55
I love this approach, I think this is one of the areas, if you’re going to create a growth company, you want to create a culture centered around your people growing, right. And I remember in my prior business, I used to draw a few goalposts. I’m a big football fan, so and I would kind of rank entry level talent, you know, everyone had a develop into the first two or three rolls of skills, they’re sort of slotted, but then you sort of have this field goalposts. And you could grow into two different tracks, there’s the management track, and then there’s technical proficiency. And you’ll notice, it wasn’t just one track of management, we did not want a company that the only way to grow your career was to become a manager, and then an executive. You know, for example, when you’re in a technology startup, you want you also want to value the chief data scientist and the, you know, chief architect of your platform, that’s a technical track, they don’t necessarily need to have a lot of managerial responsibility. And so I think it’s super important to clarify, you know, the growth opportunities, and then you can kind of, in your one on ones with employees, I found, it was just really honest, I’d say, you know, what do you want to do, and a lot of people, they, you know, if you don’t communicate that, and I found in this field goalpost that everyone thinks, the way they grow their career is to become a manager. And there’s there is like, a significant amount of talented people who are just never meant are not going to be great managers. But you know, what, they might be freaking awesome engineers, so why not provide growth opportunity for them to right, and I don’t know, I just found like, once we it was almost like a relief. Sometimes we’re like, great example would even be sales. It’s not just technical skills, like, you can have a really, I’ve seen a lot of people try to promote really awesome salespeople into sales managers. And a lot of times the best sales managers are not the best individual sales contributors. Right. So I found this like analogy, I don’t know, to steal from football, you know, to just kind of like this to try to be really direct with people about what what their future can look like.
37:55
Absolutely. So it’s funny, I haven’t heard that analogy used before, but I am going to borrow it in the future. I totally agree with it. And I think there’s a sentiment that management is sexy, and it’s easy to get sucked into that. But a lot of organizations and including a lot of roles here now and historically, the highest paid people within a certain function, we’re generally not the managers, right, from a cash comp standpoint, I you know, we’ve had engineers that were not in management make more than, you know, the leaders of the department, we’ve had sales people that, you know, make more than the people running that region or that product. And historically, I’ve seen the same thing. And so, you know, getting back to that topic earlier of equity, I think equity is a bigger driver for management tracks, but cash should be a bigger driver for, you know, individual contributor tracks, whether they’re technical skills or sales or operations, etc. hitting certain stretch goals, you know, could could provide more cash comp than maybe equity.
39:05
So, when your book on management comes out, I’ve got a couple of titles for you, either Busan business, or make management unsexy.
39:17
I like to make management unsexy now
39:23
wow, that was awesome. You can tell that Joseph went to journalism school although you wouldn’t maybe pick it up off of this episode so far, but before he went to journalism school he was actually in the food industry so he’s probably he if you ever need help with naming or branding and, and different products for food, or you could give Joseph a call.
39:44
Nice, nice. I didn’t have any food experience before food, but I always tell my friends I could run the best hotdog stand ever. And now I believe I’ve done it.
39:55
One of my board members from my my last startup, we kind of had the odd shouldn’t pick a board member is working with a we had a private equity fund by a third of our business early on. And and the first guy they brought in, was I forget, I don’t remember the name, but he had this background of from some mega conglomerate holding company from, you know, the internet 1.0. And he had raised billions of dollars and flowing through it all in the.com bus. And I was like, he was talking about all these high profile stories of like, whatever he was doing blowing all this money. And I was like, Nope, he’s not our board member. The second guy, they introduced us to this private equity firm was actually he he was an immigrant political refugee from like, I think it was I rack. And he ended up in New York. And he was basically like, pulled himself up by the bootstraps, as literally his first business was a bagel, like a bagel street vendor. And I have so much respect for him. It was like, right away is like, You are our board member. I mean, I just love stories like that, like, and he was the only board member who would curse in a board meeting. And but it was awesome. It was just like something about that, you know, that kind of progression. Like, you can have humble beginnings, right? Like as an entrepreneur, I think most entrepreneurs have humble beginnings. It’s not, you know, I don’t know, I’ve always could relate to add a little bit more. So.
41:14
Yeah, I agree. I agree. And I think the whether that’s the workout that goes along with the that profile that you mentioned, you know, the grid resiliency, that’s that’s where the value is, and whether it’s co founders or board members, investors that just really understand that.
41:33
Yeah, I’m really excited to ask you this question, or ossia. We ask everybody who comes on the podcast? This question, actually, we asked Jonathan treble. And unsurprisingly, after listening to how you develop frameworks and how you manage your team, Jonathan said that, what’s the quote from Jonathan, you, you are the best operator he has ever seen. So I’m excited to turn around and ask you, Who do you see executing right now? A startup or an individual? Maybe it’s someone flying under the radar? Or maybe it’s someone we’ve all heard of? Maybe it’s, you know, Elon Musk? But who do you really see performing?
42:17
So I’m gonna give you one Elon Musk story first, since you brought that up. So valor Equity Partners is our largest investor and, and I remember early on, I would be sitting in board meetings, and they were the, I believe the first institutional money into Tesla and later SpaceX. And and I would get, you know, comments such as, you know, Elon wouldn’t do it that way arise. Or not, I’ve had to live up to you know, Elon, as a competent in a weird way, right? I am not Elon. And actually, my example of someone who I believe is executing is not arouse do so just, you know, different styles, different ways of doing things. And so the person I, you know, that came to mind was, I’d like to give a shout out to John Bouchard at Darwin AI. And so they’re an ad tech company based here in Chicago. They’re about 70 people, you know, John and his team, they’ve been heads down executing for about four years and bootstrapped a company from the beginning. So John is an accomplished founder with several exits under his belt, and gets calls from VCs all the time. He easily could have taken an early investor, but he stayed true to his plan is and they’ve self funded the business. And, you know, they kind of keep putting one foot in front of the other each quarter and have built a great business and have a lot of runway. So that’s why I’d like to give a shout out to
43:38
can you give us his phone number? I’m just kidding. Thanks so much for joining us a rasio. I’ll make sure to link to John Rashard and Darwin AI in the episode description for everybody. Thanks so much. It’s been great having you on.
43:55
Sounds good. Thanks, guys.
43:57
Thanks a lot Roz.
