UNSENT: A Plan to Revitalize Boloco
The following was never sent – it was about half way through my 2-year hiatus away from Boloco.
September 4, 2014
To the Boloco Board,
In a few days it will have been 11 months since I left Winona’s offices on that chilly October night in Chicago. It’s been an incredibly difficult 11 months on many obvious levels, but simultaneously this period has been a gift of such high magnitude that I have never felt more fortunate. The gift has been one of time and space to get to know myself again, to be present with Maggie, the girls, and our now 13-month old boy, to be there for friends and loved ones, to be happy.
I’ve had to journey deep inside of my head and heart to find peace with what happened last year. And while many unanswered questions remain, for the most part I have found that peace and moved forward enthusiastically, rarely looking back. Had you and your investment committee not made the decision to stall the engines of Boloco, none of this could have been possible. The writing, the surfing, the saying good night to my kids every night, being present with Maggie, finally learning to be a good husband, dad, partner, the kite surfing, the Ubering, the countless meetings with entrepreneurs around the country about things other than burritos, the month in Costa Rica, the life experiences… the dots connecting. It was a gift that you and the board gave to me, most likely unknowingly, but a gift nonetheless. Thank you. I don’t think I’ve said that yet, but I mean it. Thank you. It may have saved my life in the sense that I was missing out on the life that I wanted because I was unaware it was passing me by. Today I am more aware than ever before.
Of course, there remains the business of Boloco – what remains of the business of Boloco. And, to be totally honest, I too often find myself wondering about the Board decisions that have been made since my departure and how it is that a group of men who at one time I held in such high regard could be so seemingly thoughtless with a company and a brand and a culture that really was special during much of its 17 year history.
Leaving Boloco may have been a gift, but the challenging moments still present themselves, typically on or around board meetings. A founder’s dream – I’ve always believed – is to be replaced by individuals and team members who have a high likelihood of improving things (dramatically) from where they were prior to the founder’s departure. I was no different in this aspiration. And I felt reasonably confident that a board with standards as high as yours would do everything in its power to see to it that the business continued to improve, get back on track where it was going in the wrong direction, and rebuild any parts of the foundation that were crumbling. I may have disagreed with the decision to change your mind on the D-Cubed $15,000,000 investment, but I at least knew you wouldn’t compromise on operational and leadership quality.
Further, when I chose Winona over TopSpin and two others back in 2007, I did so because I was choosing the partners at Winona personally. Your terms were harsher, your valuation lower, but I believed in you, your values, and your commitment to building something successful as well as meaningful. I knew that I, personally, might not have what it took to carry the ball all the way, but I was so damn confident that you would be relentless in your quest for bringing on the best people in the business. Even when I started questioning my own position as CEO (out loud) to you a couple of years into your investment, I believed that your convincing me that I was still right for the position was a carefully considered stance. I remember well driving with you from ICR to the airport in that uber painful recession year of 2009 and having this exact conversation. My confidence was low, and I think looking back I was probably correct to be wondering aloud whether I was the right person, but you restored it during a single car ride.
Today, I am constantly bewildered by the decisions being made by the Board. To me, they go against everything you all believe in. Let me try to explain.
First, I couldn’t have been more clear, both verbally and in formal writing prior to the 11/2013 Board Meeting, that our COO was the wrong man to be running operations. He could have delivered a helpful consulting project – but that would have been it. Not only did we hire him at that meeting, we hired him at the highest cost of any operations head in the history of the company, with no consideration of the many more qualified candidates who could have joined us while already living in our back yard.
Second, our CEO, is a good person, a good friend, and was a good – but not great – CFO. He was struggling often in the last year of my time at Boloco, not only on the bigger initiatives related to strategy and fundraising, but also on small accounting-related details that surprised me. I always worked hard to help him see the gaps and he did his best to fill them. One thing we all knew, however, was that he lacked decisiveness, and frankly the boldness required to make big stuff happen when necessary. He wasn’t ready to be CEO at this stage of his career. Interim CEO was “ok”, but in the end, despite falling sales, failing restaurants in DC, highest turnover ever seen, losing crew and junior management to competitors for the first time in history, the Board promoted him to permanent CEO. I don’t think I could ever have imagined being more disappointed in the choice of successor than I was in this case. I love the guy, and he will be very successful over time, but it wasn’t the right move at this stage. It felt like a giant step… backwards.
You know what’s missing from Boloco? Among other things, which sadly include everything we were missing a year and two ago, Boloco is missing what I call “irrational passion”. It’s the stuff that few people have that keep a business growing and living and breathing and building and constantly striving to improve, be different, be meaningful, despite setbacks that have most rational business people running for the hills. If I had one thing, it was irrational passion, and I was able to overcome a million obstacles because of it. Not only that, I attracted others with that same irrational zeal to matter, to succeed, and to travel a riskier but more interesting and maybe more rewarding path. With the current team we have people who value their paychecks and who want to dot I’s and cross T’s more than build a special company. It wasn’t always that way, but today they seem happy with where they are, and the paycheck validates to him and to their families that the business, and therefore they, are “successful”. They will stay with the ship while it sails or while it sinks, and as long as they earn that paycheck, they will know that they did a good job. That was the one red flag we noted when we hired some of the team… they too happily oversaw mediocrity and even failure when called upon to do so. That is what is happening now.
Where does this lead?
To a proposal, as always. I still hope, in my heart of hearts, that Boloco can be more than just the also-ran business that it is today. Why the Winona investment committee let “control” get in the way of the D-Cubed deal at the last minute, in a company that you said was the worst or second worst of the fund, is beyond me. I don’t know if it was optics related to Winona’s own fund raising or something else, but the incredible destruction of corporate and shareholder value since that decision was made is irretrievable at this point. How Winona is better off today with respect to this investment than it was a year ago is an puzzle I will never solve. You must have had your reasons… but they weren’t in anyone’s best interest in the long-run I don’t believe, not even yours.
But what’s done is done, so I propose the following:
- Remove the COO.
- Remove our CEO/CFO. He’s a very good man, well-respected in the industry, and he has a good future in any of the hundreds of chains out there. He’s a master networker and will land on his feet quickly. The finance function can be carried on by the current team and will be fortified with better technology that is available today that we are not currently taking advantage of.
- Close the fancy expensive offices at Park Plaza and consolidate to an office attached to one of the restaurants (like we did in the early days… with no growth this will be far more effective on many levels and save huge $$)
- I take the Chairman of the Board role, with a starting salary of $75,000. We reduce the Board to 5 people, to include myself, Laird, John E., the new CEO/Pres, and a Winona chosen outsider. We keep it simple.
- We begin a search ASAP, which I will lead, for an operating CEO or President. Someone who has the charisma, presence, and experience to effectively lead a small group of Regional Managers and support team and bring the company to responsible profitability.
- I am offering to pay $1,000,000 to Boloco to purchase the Hanover, NH location. I will have the option but not the requirement to open more locations in NH and VT.
- The former Common shareholders will have the right to convert their shares to a note in the amount of $315,000 in aggregate.
With this letter, I’ve shared my most honest thoughts and concerns and put forth a simple plan that will reset the tone of the company and begin the process of finding real profitability on $20-25M in sales. I have been here before, and although I never want to lead the day-to-day operations of Boloco again, it would give me deep satisfaction to oversee from a Chairman role a reversal of the trends of the past couple of years. It can be done. And needs to be done.