I recently interviewed Panera Founder Ron Shaich on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today helped build and take public, three highly successful, fast-casual restaurant chains and helped define the fast-casual restaurant segment. Ron Shaich is the founder of Panera Bread and is the author of the book, Know What Matters. Lessons from a lifetime of transformation. Ron, thank you for joining us.

Ron: Hey, Adam, good to speak to you today. Hope you and your listeners are all well.

Adam: You grew up in Livingston, New Jersey. And from a young age you had a creative itch, an itch that you were able to scratch as an entrepreneur, you scratch that entrepreneurial itch. First as an undergraduate student at Clark University. Can you take listeners back to your early days? What early experiences and lessons shaped your worldview and shaped the trajectory of your success?

Ron: I tell you, it was less a creative itch, and more an itch to make a difference in the world. I probably was going to end up in law school, probably in some kind of social action, social justice kind of activity. I was treasured by the student body up at Clark and tossed out of a local convenience store supposedly for shoplifting. We didn't do it, I walked back and said these guys are ridiculous. The students should just simply create their own nonprofit convenience store. I treasured the student body. So I had the wherewithal to put a tax out there, and the students voted in favor of it. And they ended up with about $60,000 to build the store. There was nobody to build the store. So I said, alright, I'll sign up and spend the summer building it. I then got the store built. And now there needed to be somebody to run it. Again, I volunteered to run it. And I must tell you, Adam, for a kid from New Jersey who can't dance or sing, who really didn't have any creative juice, it was the most creative thing I ever did. To me, I discovered retail was live performance art. I loved it. I love the people in it. I love figuring it out. I love making sense of it. I love making sense of that store. And I never had more fun in my life. And that store really changed my life, I would have gone off and done politics in some way. And I really realized running a business was the last vestiges of really happening in building your own society, I later had the chance to build many companies that I want to work in. And that's really the essence of the entrepreneurial experience. I graduated from college, having spent those years running the store and running another business. And everyone says you can go to the Harvard Business School. So I said they didn't accept me as an undergrad. I might as well go as a grad student. And I applied and they accepted me. I got out of business school and didn't know what an investment banker was. And I would think the guys that were running the local golf station, on the corner in Harvard Square had more control over their lives than my peers at HBS were going off to work for IBM or the equivalent. At any rate, I didn't know which way to go. I have been very involved in political campaign management. I've been involved in entrepreneurial retail businesses. I was pulled in both directions as if there was some right decision. Ultimately, I could not get a job in DC running campaigns. And I got offered a job to work for a chain of cookie stores in the Midwest, a division of a large public company called Coal national*3:56. I took the job, at coal national* running part of their cookie store chain. For me, it was the third year of the MBA, which meant I was going to stay just about as long as I could continue to run the Xerox machine and learn something but then get out. Meanwhile, I'm still pulled to the political stuff. And it was 1980, Dan Quayle was running for the Senate in Indiana. I see a billboard for him while I'm opening a cookie store out there. And I say I really want to do campaign management. I start sending my resumes out. And I ended up fortuitously getting an opportunity to go to work with a guy named Matt Reese, who was the premier democratic organizational consultant. He had seen my background, he had a technology. I won't go into it, but he didn't know what to do with it. I told him to give me three months and I'll figure out how to turn it into a business. I ended up doing that, we ended up running a bunch of the major Senate campaigns that year. And again, now I'm back in politics, I left the business and left the cookie store business and went into politics. All of a sudden, I started saying what I really wanted to do was open an urban cookie store and manage to find a location, where nobody would rent me space, I found a location in 400 square feet in downtown Boston, and I finally rented it. And I thought I'd go back to Boston one day a week, and work on this cookie store. What I discovered was that one day became three days became five days, and the poll was now back into business. And what I discovered is, that whatever I was going to do, was going to lead to the same place. When I did business, I brought a political context. So what I brought a context of humanity, how do you build a society, when I did political consulting, I was the business guy. And frankly, the difference is that a business is a campaign that never ends. A campaign is a business that has an election of one day, but the disciplines are the same. Figuring out what it is that matters to people, listening to them intensely to get there. And once you've figured it out, doing something that actually touches them in a way that is sensitive so it's trying to figure out who you are and what you are, what you love, what you make a difference at, and then looking at any option that's going to move you down that road, all options are probably going to take you to the same place.

Adam: I love that.  Follow your passion, follow what's pulling you what's calling you follow what matters.

Ron: I mean, listen, and learn. But being obsessive as if there's some right path is really what's fool's gold, I can't tell you how many people have come through what's the right path to do what you did, what's the right path to building a business, what's the right path to be an entrepreneur? There isn't a right path. If you keep listening and keep moving forward, you're gonna get there. And just keep taking the right fork in the road, when you have a fork. This is a big thing, you can't make success. Success is a byproduct of something else, let me tell you by way of a story I have a friend who is a type one diabetic. His objective in life is to stay alive as long as you and me, Adam. But he can make it happen. It's a byproduct, what's his end, to deliver on that byproduct? If he wants to stay healthy, his end is to keep his blood sugar between 80 and 180. When he does that, the byproduct is health. And businesses are very similar. The byproduct may be a successful value creation, or whatever you want to say it is. But I can't make that happen. That's a byproduct and that's really quite powerful, which is being a better competitive alternative. That is to say, being a place that understands why it exists in the world and what its job is, and then doing a job at that better than anybody else. The means, in the case of my friend, the type one diabetic is diet, exercise, and insulin control. And then in the case of me as a business person, it's the key initiatives and key projects that I bet on. And so what I'm really trying to say is success or value creation is not an end, in and of itself. It's a byproduct of doing a better job for the guests. And for the customer do that and you live the success. Focus on success, you'll never get there. Focus on the end. And the means to that end, not the byproduct. So we have to keep thinking about means ends and byproducts byproduct is what comes out the other end. Another metaphor for it is happiness, I can't make you happy. You can't even make yourself happy. It's a byproduct of doing some things with love with passion, that engage you that throw you that's the end, that the means are what you do to get there.

Adam: And a lot of it fundamentally comes down to a key theme of what we've been talking about so far, a key theme of your book, the title of your book, Know What Matters. What matters when it comes to building a business, what matters when it comes to taking that next step in your career?

Ron: Well, to me, it starts with knowing what you're going to respect. I beginning a lot of this with a process called pre-mortem or future back. And that is to say, I step back and say what is it I'm going to respect in five years and in 10 years? What is the Wall Street Journal article that's going to get written about your business in five years or 10 years? And then from there, I write, what is it that caused that what were the means that led to that outcome? What is the means that leads to that success? And when I'm able to do that I can imagine getting somewhere and I can imagine the path to getting there. Ultimately, what I'm arguing is, that there are two or three or four things that are going to really matter in your ultimate success, to understand those as power. In order to understand those, you have to really tell yourself the truth and take the time and energy to speak and listen with empathy. If you don't do that, you're not going to actually get into a place where you know what matters. And then once you know what matters, you got to get the job done. So in the most simple terms, what I believe in what I write about in the book, is telling yourself the truth, telling your organization, the truth, knowing what matters, putting it on a piece of paper, doing those few things that you really know are going to be key to the success of your business, or in your personal life, you're going to respect those are the things that matter. And then based on that, get it done. The reality is that 80% of corporate America doesn't do what they say they're going to do. You've got to be an individual or organization that actually gets it done.

Adam: And Ron, a lot of what you shared really speaks to many of the key themes that are essential to successful leadership, vision, the importance of listening, great leaders are great listeners and empathy. What do you believe are the most important characteristics of the most successful leaders? And what can anyone do to become a better leader?

Ron: We talk about leaders or building a business, if it's leadership, it's actually integrity in the respect that the folks you're leading, send you. Leading means I'm going to take you down a road, you have to choose to join me on, leading means I'm going to take you to a place that's unproven. And every success is unproven till it's done. For me, leadership is about helping people understand where an organization or where their lives or any group is coming from, where they are today, you can see the trajectory. And then where are you trying to get to, and what are the choices on the table at this very moment, this fork in the road as to what it's going to lead to in it? So oftentimes, I'm trying to tell people to share with people a sense of where we've been. And then, most importantly, challenge them personally, to choose what they want to have this organization or their lives become. I'll give you a good example of it. So often, we talk about running big public companies, and I've done it. Earnings per share, I've yet to ever run into a team member, employee as you would call it, that ever gave one look about the earnings per share of Panera or Cava, any company that I'm involved with. They don't care. What do they care about? That's my job to listen to understand. And then to help them understand how accomplishing what we want with the business links to and serves what they want to accomplish. That's what I mean, by setting it up. I often think that a CEO, at least a large public company CEO, and I had 100,000 employees, more than 100,000. The key is the job is more akin to being a rabbi or a parish priest, it's helping my flock, my group, and my organization, understand where they're at, where they need to get to, and allow them then to make the choices to do the right thing.

Adam: And when you lead an organization, as large as the organizations that you've led over the course of your career, 100,000 people, so much of it comes down to the ability to surround yourself with the right people, the ability to bring in people who reflect your values reflect what matters to you most. How do you do that? What are your best tips on the topic of hiring? And what do you look for in the people who you surround yourself with?

Ron: Well, first, I look at what you've done, not what you say. Everybody can talk, what I care about is what is the trajectory of your life. Just like there's a trajectory of a business. There's a trajectory of what your life is, and where you're coming from. And it's our bus, our company, or the right bus for you to get on. And do we have a couple of stops that we can share together? And I make a difference in your life. And you make a difference in the life of this organization? And does it fit? And does it help? It's more than just values. It is valued. But it's camaraderie, it's shared perspective. It's a shared understanding of what's needed and wanted. And ultimately, it's the ability to feel confident with that person. I mean, ultimately, when I'm working with a team, I can't get a lot done myself, but I'm accountable for it all. I have to be able to fall backward and know that these guys around me are gonna get the job done. They're gonna catch me. And I have to believe that they're gonna get done 80% of what they sign up and I mean, really done and done the way we imagined it. And if they're not getting it done at an 80% rate, I either got to re-examine them, or I got to re-examine what we're asking of them. But there's a problem. The dirty little secret of corporate America is that oftentimes most companies don't get done, but they sign up the dip. So if I bring my philosophy in a nutshell, it starts with telling the truth to myself and everybody else, and it follows with knowing what matters, knowing what few things are gonna really matter three years, five years, and 10 years from now, for self-respect, and for the success of your organization, and then no bullshit, it's about getting it done.

Adam: Great leaders have the ability to simplify. And a lot of what you're sharing really speaks to that. Get to the truth, understand what matters, and get it done.

Ron: I am sharing with you another skill of great leaders, and it comes from a Wall Street Journal article I read 10 or 15 years ago, one of the best and most important skills of the leader, communication is metaphors. People don't learn through the brain. They learn through stories in their stomach, and then they put in an intellectual framework around it. So when I'm describing anything, I'm usually turning it into a metaphor trying to search for what's the appropriate metaphor, like I described means ends and byproducts. As my friend the type one diabetic, it's a metaphor for what are the key drivers of success in business, not focusing on value creation, but focusing on being a better competitive alternative, as the end.

Adam: How did the idea for Panera come together? And how did you actualize it?

Ron: Well, I mean, my career has been defined by five different transformations, each one informed by powerful learning. The first was when I had Au Bon Pain and I realized that people didn't want the bread or croissant for themselves, they really wanted platform sandwiches, I used that to turn into action and created the first bakery cafe that took off it was a company to the public. Secondly, I was at the core of really the ideological definition of what they call fast casual today. Again, it was very clear to me that certain consumers held their noses when they went into fast food they wanted to feel special and a world in which they weren't. And I began to imagine what I used to call specialty food. I used to imagine we could create an environment that engaged people an environment in which the food was real, and people cared, and that I felt uplifted by it, I began to understand that I could change the currencies from what fast food currencies were, a lot of food for not a lot of money, to something that really represented. A more aspirational experience is something that elevated my self-esteem for a bit more money. And based on that learning, which took me two years to learn and to see that meat out there, I created Panera as really the poster child for that kind of vision. That was a powerful transformation that occurred in a business that we had owned notice called a stainless brake company third, again, in the late 90s faced a decision point. I had this amazing company Panera, which was one of four divisions. But it wasn't the largest. It was the third largest out of four divisions. I had Au Bon Pain Manufacturing, an international business, and Panera. I was struggling I realized we were going to take this business Panera, which had the potential to be nationally dominant. And if I didn't get it right, we would screw it up. And I was with a friend down in the Caribbean. His friend looked at him and said, "Ron, what would you do if Panera owned Au Bon Pain and Au Bon Pain International, and the manufacturing business and it wasn't Au Bon Pain's name on the door?" I said, "Oh my god, I never thought that way." But if I did, I would monetize every other asset. I would go down to St. Louis myself, and make this thing happen. This is a powerful business with national growth potential. I said we're going to screw it up if we don't get the right resources in place. And I'm the kind of person who says, I'm going to do it, I'm going to do it. And I began to think from that paradigm that the most valuable thing in the company was that one division, not the other four, even if the other four were larger. And I decided that I would actually do it. And it led me to one of the most consequential decisions in my life. I made the decision to sell every one of our businesses and monetize them all. I'll take that capital and put it against Panera, and then go down and do it. Now today it sounds brilliant because the stock is up a hundredfold since then, and it was the best performing stock of Panera. It lasted 20 years as a public company twice Starbucks and four times Chipotle and delivered 25% of IRR over those two decades. But the truth of the matter is that that was unproven at that time, and nothing's proven till it's done. And people say to me all the time, Ron, why didn't you tell me about this? I was laughing though, we all was*20:35 gonna blow up my stock by the wheelbarrow loads more for a year until the water at three bucks a share. The point I'm trying to make is I understood something about the power of that brand and how to protect it by selling everything else. So I made the decision to bet everything on that brand. I did. Third transit. Fourth one, in 2009, and 2010, I stepped down to do political work, still focused on that. One weekend, I wrote a vision for how I compete with Panera if I weren't part of Panera. It calls for digital loyalty on the channel and clean food. I handed it to the guy who had taken over from a CEO, Bill Morton, he looked at me and said, "Wow, this makes a lot of sense. You want to try it?" I ended up a year later, as the executive chairman working 80 hours a week building a new prototype. They walked into me and said, Ron *21:21 I, or II himself couldn't do it, some family stuff going on. And he said, "Would you want to swap jobs and come back as CEO again?" We danced around it for about a year but I eventually came back as CEO and I put in place that plan and it transformed the company. By 2017, the numbers were rocking, EBITDA was up strongly, and comps were up very strongly. We were pushing 2000+ stores. And folks at JB, a European consumer fund, fell in love with it and bought it ultimately in the largest US restaurant deal ever done at some of the highest multiples. Great deal for us. That was the fourth transformation. I did it. I lived through that transformation. The fifth was after I sold Panera. I was doing a bunch of public speaking about the pervasive short-termism in our capital markets and quite frankly, our society, I have a view that our politics has become increasingly short-term. I mean, we compete with the Chinese with 20-year plans and can't agree on a budget for 20 months. Tell me how that story ends. At any rate, I was speaking about pervasive short-termism in the capital markets. One thing led to another and I decided that if I had any guts, I take my own money and put it where my mouth is, I took about a quarter billion dollars of my own money built into an investment, fund our own money with my partners. And we've taken that money and invested in, we basically have three principles to how we invest, versus we only invest where we have a competitive advantage that is in especially retail and entertainment. Second, we practice founder-friendly capital, which means that when we invest, will take off follow-on rounds of capital at a pre-agreed to multiple so that any of the investments we make never have to worry about raising money again, up until an IPO. The truth of the matter is the most valuable destructive experience that occurs for most companies is believing that fundraising is an annual event like a birthday. It's crazy, isn't the only thing that matters is when you buy a new cell, we want to make sure you have enough capital. And then secondly, when we're in the boardroom, we're not worrying about the next liquidity event. Well, it was never sold. Were here for the long term. And our view is the best thing we can do is help that management team grow and become who they want to be. We practice what we call Sherpa management, as compared to private equity. What does that mean? I put it this way building a nationally dominant company is harder than climbing Mount Everest. Nobody climbs Mount Everest without a Sherpa to make sure they avoid mistakes and falling in the wrong places. My role in the boardroom is 25 people my partner's role in the boardroom is helping them with the many things they need to scale strategy, research, and real estate growth, we have a big technology function, and we're able to help them with those needs, and we provide it to them on a cost plus basis. Pull push. And the understanding again here is we're able to make a difference for these guys so they can make a difference for their guests building a better competitive alternative. As I said, when I began we only invest where we have knowledge, we invest in fundamental niches were invested in. As I think you know, in the story of Kava, I made an investment was two restaurants. I left Panera, they asked me to join their board and another public company called Zoe's. Wanted my help in helping figure out how to help them evolve with some of the issues they had. They said wait a second, Kava, which had at that time, I think 50 or 60 restaurants I said, they have the skills that we need to fix Zoe's. And I thought to myself, My God if Cava could purchase Zoe's, we could have a powerfully dominant company in that category. Before I went to my first board meeting, I had to convince the board to essentially buy a company five times larger, it helped that I had some credibility. And it probably helped even more than I put up a bunch of the capital, to allow it to do it. But I did. And I, again, helped the CEO Brett Schulman was wonderful. Through that acquisition, I basically led it, and they got the job done. And they were almost instantly hyperphased, they had to unfit the restaurants, and a ton of work to convert them. All of them were converted, the volumes popped, and the profits popped. Cobham*25:46 went public, probably the most successful public company IPO, in the restaurant industry in the last 3, 4, or 5 years, one of the most successful IPOs. It's up threefold since the IPO in July, and Cava, which again, I say I invested in when it was two stores, is now a $8 billion or $9 billion company. It's amazing. Again, what are we betting on? We're betting on the niche, Mediterranean, number one diet in America. And what are we doing, we're helping build the dominant brand, in a winner-take-all all industry like restaurants within that category. At any rate, what I'm really trying to say to you is, that all of these are about learning, and then acting and transforming. And that seems to me to be what I would say, is the central to how one makes progress.

Adam: Ron, you shared a lot there to unpack, you shared a number of different moments, bet the farm moments, when you trusted your gut, had this deep sense of conviction, and went all in. How can anyone get to that place?

Ron: Here's what I'd say to your listeners. And I think this is a mistake that's made about entrepreneurs, entrepreneurs are not risk-takers. I'm the most risk-averse guy you ever met. I don't take risks. What I do see and feel is I can see market niches and opportunities, I could feel the power Mediterranean seven and eight years ago, it was the number one diet that doctors recommended these the number one diet in the United States. It's both flavors, you can see it and feel the need. My objective always as an entrepreneur and a risk-averse one is to see those opportunities and then protect my ability to seize and dominate that opportunity better than anybody else. So in Cava, when I proposed the hyper phase by buying Zoe's and increasing its size fivefold, I was helping them build the dominant player in the category. And so really, the greatest risk to me is not the risk of failure, the greatest risk to me, is not taking advantage of that powerful opportunity that I feel like I figured out and identified when nobody else says that, to me is risk. The longer I've been at this, the longer I really know, you've got to trust yourself. All these things that I obsessed about. Is it right or wrong? Can I ever make the right decision, you're going to learn it as you take a step forward. And you've got to take that step. And you've got to recognize that you take a step, and then you learn and you take another step and you'll learn. And that you don't have to have the full journey figured out. Let me give you a metaphor, I need to know when I'm going on vacation. I don't go into Florida or Wisconsin, but I don't have to know every night where I'm going to stop. I don't have to know what hotel room I'm gonna be in. When I get to the hotel. It will work out as I get there. And so I think the important question is, what's the next step? What am I going to do? And then what am I going to do in a way that I respect myself down the road?

Adam: The key driver of your success, a key driver of your ability to lead transformation has been your ability to foster innovation. How can leaders foster innovation?

Ron: First off, I want to say something, I believe deeply in a principle called discovery versus delivery. And it's understanding the longer trends. So what happens in most companies, is when somebody creates something like Zuri, door created Tatay*29:28. When somebody creates something, they discover a better way to meet the needs of guests. Starting a business is unbelievably difficult. You have no scale, no credibility, and generally no capital, you get to work doubly hard and be better to get people to walk across the street to come visit you. That's when you discover something better. But what ends up happening is as it starts to work, you start to attract capital. And generally capital wants to bring the delivery people with it. They want to bring the purchasing people, accounting people, financial planning people. And by the way, those delivery people actually make the business stronger. They're like shock absorbers, the business gets stronger, it gets tighter, and the margins get better. But what ends up happening over time, over decades, over 10 years, and 20 years in business after business, as they get larger and larger, discovery is driven out by delivery. The reality is that the languages are different, the language of delivery is the language of Excel spreadsheets. It's the language of prove it to me, it's prose. And the language of discovery is imagined if only we could do this if only we took a shot at it, it's poetry. And what ends up happening is they feel uncomfortable together. And the strength of delivery pushes out discovery. And it's no wonder that we end up with many billion-dollar companies that are really, really good at delivering whatever they set up as their mission years ago, and not very good at adjusting to the marketplace in discovery. So the answer to your question is the most central role a leader plays to drive innovation is to recognize if they don't protect innovation, it isn't going to happen. The CEO needs to be the innovator and chief, most of your functional leaders or vice presidents are going to be very good at saying no, we can't do that it's going to be a problem. Almost nobody can say yes, other than the CEO with all the trade-offs. And almost nobody can commit an organization to go left and not right, other than the CEO. And so I believe that the CEO, of a large company, needs to be the innovator and chief to discover and truth. It isn't something that gets delegated. It's something that's protected by the CEO.

Adam: Ron, what can anyone listening to this conversation do to become more successful personally and professionally?

Ron: Focus on what success means to you. I mean, what are the principles in my book, you know, what matters I start the book with the death of my parents. And I watched them both die. And I came to realize there's a judgment day, I can promise you, it's up there. That's a personal spiritual decision. But I watched each of them go through a self-judgment as they were going through their own passing. And I began to conclude that the time to have that judgment day, as my parents did in the ninth inning with two outs, the time to do it is in the seventh inning, the fifth inning, the third inning. From there, I began this concept of premorbid, of trying to decide what was going to matter to me personally, in terms of the quality of my relationships, my marriage, and my kids, the quality of my relationship with my body and my health, the quality of my work and how proud I felt about it, and on my own spirituality. And I began to say, what do I want to have accomplished in each of those areas in five years? And what are the projects I need to do to get me there? What are the initiatives to lead me down that path? And then I began to examine it every quarter and ask myself, am I actually doing what I said? And the truth is, I took that principle to business, and I challenged your listeners on the same principle, what is it you are going to respect in your work? What is it you're going to respect in your relationships with the people that matter most? What is it going to matter to you and your relationship with yourself? Ask yourself that question to answer it for five years out, 10 years out, write that position statement about your business or about yourself, and then figure out how to get there. Too often, we spend our time looking at our competitors, looking at our friends, and looking sidewards when I'm arguing the most powerful thing you can do is look forward and decide and determine where you're trying to get there. And then actually deliver that.

Adam: Ron, thank you for all the great advice, and thank you for being a part of Thirty Minute Mentors.

Ron: Thank you, Adam.

Adam Mendler is an entrepreneur, writer, speaker, educator, and nationally recognized authority on leadership. Adam is the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one-on-one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal-winning athletes, political and military leaders - for intimate half-hour conversations each week. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities, and non-profit organizations. Adam has written extensively on leadership and related topics, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one-on-one interviews with America’s top leaders through his collective media projects. Adam teaches graduate-level courses on leadership at UCLA and is an advisor to numerous companies and leaders. A Los Angeles native, Adam is a lifelong Angels fan and an avid backgammon player.

Follow Adam on Instagram and Twitter at @adammendler and on LinkedIn and listen and subscribe to Thirty Minute Mentors on your favorite podcasting app.