New Year’s Reflections: Sentiment, Satisfaction, and the Power of Frontline Obsession

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The beginning of a new year is traditionally a time for reflection and planning – a moment to assess what worked in the past and to set ambitious goals for the future. Since I spent much of my time last year building and investing in new companies for the first time in quite a long time, I thought I’d share some observations about several nuanced changes I’ve noted, as well as the enduring principles that continue to shape successful ventures.

The Voice of the Customer

What hasn’t changed: Customer feedback is still the lifeblood of any business, and start-ups in particular. It provides valuable insights into user experiences, pain points, and expectations. By actively collecting and analyzing feedback, startups gain a deeper understanding of their audiences. Infuse Hospitality, a Phoenix3 portfolio company that provides corporate, commercial and specialty food and dining services, has leveraged feedback from building managers and end-users who are moving from remote to hybrid and in-office work to create engaging customized monthly promotions that serve each population’s specific dining preferences while maximizing profitability.

Remember that whether B2B, B2C, or B2B2C, it’s critically important that founders and executive teams recognize not all feedback is created equally. Be sure to prioritize feedback based on impact and feasibility. For example, a glitch in your product ordering system takes precedence over aesthetic concerns, such as tweaking the color scheme of an interface.

What has changed: Traditionally, customer satisfaction ratings have been the gold standard for evaluating success. For contract on-site foodservice relationships, that generally meant bi-annual surveys covering food quality, service standards, and a variety of other benchmarks. But satisfaction is retrospective; it measures how someone feels about a past experience. Today, it is imperative that founders leverage advances in AI and technology to capture how people feel in the moment. Real-time sentiment analysis enables founders to identify and address opportunities as they arise, rather than after they’ve become ingrained problems.

Waiting months to assess performance or customer satisfaction is no longer viable for any company – start-up or mega-conglomerate.

That’s why our Restaura team has built an industry-first resident sentiment analysis tool that analyzes comments, ratings, and team member inputs to tailor culinary experiences based on real-time input. Our talented technology team has created digital dashboards for our clients with real-time KPI tracking, including sentiment scores, so day-to-day decisions are guided by the most current insights. It’s game changing!

Ownership Involvement

What hasn’t changed: Since 1990, Bain consulting has analyzed the shareholder returns of public companies and found that companies with a founder still involved in the daily business outperform (by a factor of 3:1) companies that don’t have an engaged founder. This has been one of my core philosophies throughout my career as a founder, from start-up through acquisition, and carries through to my investment thesis at Phoenix3.

But here’s the thing I learned long ago. Being an engaged founder or business leader is really about creating a culture with a frontline obsession. You simply can’t succeed if there’s an ivory tower culture. The book Founder’s Mentality describes frontline obsession as a culture that keeps management laser focused on empowerment and respect for the team members who directly interact with customers. Founders who remain engaged in their business ensure this ethos is maintained by modeling frontline-centric behavior.

What has changed: We have all seen the dramatic shift in today’s workforce loyalty with employees more willing to change jobs in search of better opportunities or work-life balance. For founders this trend poses significant challenges, especially those in customer-facing industries where employee turnover can directly impact service quality and brand reputation.

There is a growing movement toward employee ownership models as a new standard of socially responsible business practice that can also drive company performance. Ownership Works is a nonprofit that partners with companies and investors to champion this approach which provides wealth-building opportunities for all employees, improves business performance and invigorates corporate culture.

I wholeheartedly believe that making frontline employees owners creates a win-win scenario. I have set aside over 30% of the equity shares in Restaura so all of our team members, from kitchen staff and servers to managers, have a personal stake in the company’s success. Providing ownership takes empowerment to new levels and fosters deeper engagement, accountability, and alignment with organizational goals.

Imagine what’s possible when the phrase “ownership involvement” is not just referring to the founder, it’s EVERYONE.

A Continuous Conversation

The future belongs to those who listen, adapt, and act. As we embark on this new year, let’s recognize that reflection and planning are no longer annual exercises but continuous processes. By embracing a frontline obsession and leveraging real-time sentiment analysis we can build organizations that are positioned for long-term success. Phoenix3 is actively looking to expand our portfolio with like-minded businesses. Click here to learn more about our ideal partner profile.

Let’s make it a year to remember!

The Anatomy of a Challenger Brand

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Founders are generally wired to seize opportunities. To build a better mousetrap, invent something new, expand a market. Yet certain new ventures tackle opportunities in a way that completely disrupts the status quo and, as a result, they earn the distinction of being known as a challenger brand. As we continue to build Phoenix3 Holdings through investments and our own start-ups, I have been thinking about the key factors that distinguish challenger brands from other start-ups.

It’s a Mindset

A challenger brand business model is designed to reshape a category and give customers a new way to think about their needs.

It’s about rethinking an accepted mindset based on evolving customer expectations and a sincere desire to change for the good.

Warby Parker is a great example of a successful challenger brand because the business redefined the rules of the eyewear industry with a direct-to-consumer model offering quality eyewear at a fraction of the traditional retail prices. The free home try-on program leveraged technology to innovate the customer experience. They grew quickly but continued to iterate with retail store fronts to further grow their brand presence. Warby Parker addressed customer pain points and focused on inefficiencies.

Technology as a Differentiator

In the food and dining space, Sweetgreen used its app to simplify ordering and emphasize sustainability when it launched in 2007. The company connected with an evolving tech-savvy audience and used customer data to refine their offerings and personalize experiences in a new way. This approach challenged industry norms and drove Sweetgreen’s early success as a challenger brand. In my opinion, challenger brands today must use technology as a differentiator. Whether through automation, AI or a predictive analytics, digital-first models are the only way to effectively respond to performance trends and succeed.

It’s Not Always a Challenge

Building a challenger brand is certainly not the only path to being a successful founder. If we stick with the fast casual segment, Five Guys and Raising Cains didn’t redefine their segment, but they successfully introduced higher quality options compared to industry stalwarts like McDonald’s and KFC. Similarly, when I founded Unidine in 2001, we adopted a fresh food approach to foodservice management, offering a higher quality solution for outsourced dining. We created a very unique corporate culture and built a successful business. We built a better mousetrap, but we were not a challenger brand.

Culture as the Lifeblood

When you take time to think about commonalities among challenger brands, you will find they all seem to cultivate an infectious culture. As the saying goes, “Culture eats strategy for breakfast.” Anyone who has worked with me knows how passionately I believe in a consistent culture – top to bottom, from year one to 100.

Challenger brands must hire employees who are mission-driven, ask provocative questions, take risks and solve problems.

This is a very different type of employee than someone who thrives in a large organization where being a maverick can be considered a flaw. One radical approach to culture came from Netflix founder Reed Hastings who decided to run the company like a sports team, only keeping the very best.  Performance expectations were unapologetically high but paired with radical freedom like unlimited vacation and no expense policies.  The result was a company that was constantly adapting to market changes – successfully growing from DVDs to streaming and now a global content studio.

A Founder’s Checklist

Modern challenger brands are not focused on slaying a dragon; rather they take on an industry based on market gaps and embrace the underdog mentality. This is the approach we’ve taken with the recent launch of Restaura. We took a fresh look at a stale industry that is no longer meeting customer expectations, and we have woven our fearless approach into the fabric of our business processes and culture. From first-ever technology solutions and powerful branding to an employee ownership model that is game changing, we’ve purposely designed Restaura to fit into the Challenger column below:

Take a look at this short video to better understand my vision for the future of Restaura as a challenger brand. We are up for this challenge!

When You Find a Market Opportunity on a Silver Platter. Introducing Restaura

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Today is a great day for Phoenix3 Holdings. I am proud to announce the debut of Restaura, a dining management services company exclusively serving senior living and active adult communities. We named Phoenix3 after the mythical phoenix, symbolizing renewal, hope, and better things to come, which is precisely my vision for Restaura.

Restaura represents everything that dining services must become to meet the high expectations of today’s aging Baby Boomers as they consider their retirement living choices. Our rapidly growing aging population today spends $7.6 trillion (with a “t”) annually and considers food and nutrition the number one factor affecting their overall health and well-being. Yet somehow, the $45.1 billion foodservice contracting industry has failed to evolve to capitalize on this “silver platter” business opportunity.

From where I sit, with a founder’s mindset and decades of industry experience, I believe the time is right to fill a void in the marketplace. Restaura is built to serve a new generation that expects the same variety, choice, and access in an active aging or senior living community that they have grown accustomed to in their home community. We are on a mission to establish new standards of excellence that are measured every step of the way and, importantly, will not be compromised.

Grounded and Co-Founded

One thing I’ve learned over the years is that no matter how brilliant your idea is, the complexity of scaling a business requires expertise, teamwork, and shared commitment. And so, for the first time in my career, I made the decision to select a co-founder for Restaura and feel incredibly fortunate to announce Joe Cuticelli as co-founder and Chief Executive Officer. Joe and I met many years ago when he was CEO of Sodexo Senior Living at Sodexo, and we developed a mutual respect grounded in our aligned leadership philosophy. In addition to his incredible industry expertise, Joe is driven to give back, both as a mentor to past and current colleagues and as Board Chair for a wonderful organization called Generations United.

Joe and I spent the last year reimagining what dining services should be and building a new industry solution from scratch that specifically addresses the market needs from the client and resident perspective. Given our shared passion for the value of a people-first culture, we started by inviting some of the best and brightest functional experts to join us. Quite frankly, I have been humbled by the talent level and character of the individuals who now comprise the Restaura executive team. You won’t find a better corporate team anywhere in our industry. They are passionate, driven, bright, and have found a way to make this hard work fun!

To Make a Difference, You’ve Got to Own It

We all knew that regardless of a solid business plan, groundbreaking culinary offering, or great marketing, only the front-line associates could truly bring the Restaura experience we envision to life.  In this business, it’s the sous chefs and servers, the nutritionists and dining room managers who have always been the key ingredient to success. We thought long and hard about the employee retention issues that senior living community operators face — often as much as 65 percent turnover annually. And we boldly decided to become an employee-owned company that grants each and every Restaura employee an ownership stake in the company.

I have set aside more than 30 percent of the equity shares in Restaura for our employees so that every team member has a personal interest in the company’s success. We are confident that this employee ownership model will empower our team to exceed expectations and will make them feel valued in a way that most of them likely have never experienced before in their career. This is a first for our industry and something our competitors cannot easily replicate.

To bring this transformative culture to life, we enlisted the help of Ownership Works, a nonprofit founded by Peter Stavros, co-head of Global Private Equity at KKR, to advance the employee ownership movement in corporate America. Peter is world renowned for his decades of work on the ROI of an ownership culture, which creates a different level of accountability, where employees are more engaged and less likely to quit. By 2030, Ownership Works aims to generate at least $20 billion in wealth for workers and create hundreds of thousands of new employee-owners. I am proud that Restaura is the first contract food and dining management services organization to join Stravros’ movement.

Technology on the Front Burner

The benefit of being an agile start-up is the opportunity to reimagine all the “what ifs.” It’s been more than two decades since I started a venture from scratch, and there are infinitely more tools available to embed technology into every facet of dining services. We spent the last year challenging the status quo to optimize client success, resident experiences, and operational efficiencies.

The result is truly game-changing. We’ve developed tools that automate highly personalized meal plans based on preferences and resident health profiles. Our sourcing solutions deliver a new level of predictive demand planning to minimize waste and maximize freshness.  We’ve leveraged the power of AI to create sentiment analysis tools that provide real-time insights by analyzing resident comments, ratings, and team member inputs to identify opportunities for improvement and respond to trends in real time.

One of the outcomes of all this work that I am most excited to share is how we’ve brought it all together for our clients. Restaura i-Cubed is a performance dashboard that integrates traditionally disparate KPIs for our clients to streamline operations, view real-time resident sentiment, and provide important financial updates. With dining representing up to 20 percent of an active adult or senior living community’s operating budget, this is a game-changing solution whose time has come. We’ll be at Leading Age in Nashville later this month, demonstrating our technology solutions, so please spread the word and stop by our booth to learn more.

Our Name Says It All

The Restaura name evokes a sense of culinary excellence and high-end service that is desperately missing from active aging and senior living dining today. It’s well known in the industry that food and dining are often the deciding factors in attracting and retaining residents. The incoming wave of seniors has higher expectations, more eclectic tastes, and a genuine appreciation for the impact of food on their health and well-being.

We took the time to study and reimagine culinary, so it replicates the lifestyle residents enjoy at home. Our research found that variety in meal options that cater to individual tastes and preferences is the single most important factor when older adults are choosing how they dine today (68%), yet only 17% of the 1,500 seniors we surveyed were confident variety would be accommodated in a senior living community. Again, my founder’s mindset saw huge opportunity here.

So, we brought in a distinguished culinary team to deconstruct the norms of senior living dining and deliver a level of choice and personalization previously unavailable. With Restaura, mealtimes will encompass curated menus, in-room dining options, flexible scheduling, and concierge-style personalized service.  Our culinary philosophy revolves around four core tenants:

Unapologetically delicious

Responsibly sourced

Scratch made

Nutritionally balanced

Make no mistake, my commitment to quality, scratch cooking has been at the core of my approach to this industry for decades. The Restaura difference is the ability to couple scratch cooking with technology and operations systems also built from scratch and a transformative employee ownership culture.

It is said that great moments are born from great opportunity. I see tremendous opportunity for Restaura with the 85% of the market currently not outsourcing as well as those building the future of senior living. They know how important dining is to resident acquisition and retention, yet they have not found a compelling outsourced solution—until now. Like the phoenix, Restaura is renewal, hope, and a symbol of better things to come.

If you’d like to take this journey with us, I invite you to reach out to me or visit www.restaura.com to learn more and explore our career opportunities.

Warm Regards,

Richard B. Schenkel

Founder & Executive Chairman

Tipping the Scale: The SG&A Inflection Point 

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I was recently invited to be a guest on a podcast called “DealMakers” which features weekly interviews with entrepreneurs that have been successful at raising capital and securing acquisition transactions. One of the topics host Alejandro Cremedes and I covered was the roller coaster of capital needs at different phases of a start-up and the importance of a 360-degree view on the impact of growth. 

I have found that while many founders believe (perhaps hope) that when revenue hits certain target levels, SG&A will decrease, the opposite is actually true. As revenue grows, SG&A also goes up. Think about that first big client acquisition. Suddenly there’s a cash infusion but, in almost all cases, the systems and resources required to deliver the services or products cannot absorb the increased load without additional investment.   

There is a learning curve and over time founders adjust the P&L to reflect this reality. The inflection point comes when the revenue growth percentage exceeds the SG&A percentage increase. That’s when you can take a deep breath and start to build profitable growth. Until that point it’s important to recognize that you’re building a business, not leading a business.  

If you’d like to hear more about this topic and others relating to the roller coaster ride of a founder, please click here to listen to the DealMakers podcast.  

CONFESSIONS OF A THIRD ACT FOUNDER

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I’m often asked about what drove me to become an entrepreneur and, lately, people are asking why I’ve decided to do it again.  So, I thought I’d share 10 words of wisdom and confessions on the topic of founder DNA….

Confidence

To be an effective founder, you’ve got to be comfortable in your own skin. Having confidence in yourself and your vision fuels the ability to make tough decisions and take risks.

Love it

You’ve got to love (not like) what you do. I can honestly say that I have never been in a situation where I hated what I was doing for work.

Bad days

There will be bad days – I’ve had more than I probably remember.  Don’t take out your bad day frustrations on your team. It’s a sign of inexperience and immaturity.

Input

Taking advice is helpful when starting a business but I find that too much input dilutes my direction and focus. You can’t have 10 different visions for success.

Time

I think I speak for most entrepreneurs when I say we tend to underestimate the time it takes to bring our vision to life. We seem to forget that you can’t change the world overnight.

Highs & Lows

When I think about the highs and lows, many seem to center around people. When you find great people who embrace the start-up culture, thrive with limited structure, and bring your vision to life, it’s incredibly gratifying. But it’s tough when you realize someone is not a fit and you have to make a change for the greater good, especially when the team is still small.

Instincts

I read the balance sheets, study the trends, and listen closely but I have to admit that I rely heavily on gut instinct. When it’s the right place, right time, right thing, it seems intuitive to me.

Ego

While confidence is key, you can’t let your ego get in the way of reality. If the plan is sputtering and the vision is not playing out, know when to pivot or end it.

The Third Act

We named the company Phoenix3 to symbolize my confidence that there were unique opportunities in the market that I could address. Now that I’m older, I can put all my experience and resources to use to help a defined segment of growth companies succeed and avoid some of the pitfalls inherent in starting a new business.

Retiring

I don’t have any plans to retire. Why would I stop when I love what I do and am confident of the path we are on? That’s what it’s all about!

Culture Killers: The Hidden Threats to Your Company’s Success

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In the start-up world, where quarterly profit and operating expenses often dominate conversations, there lies an elusive yet powerful force that can make or break a company: culture. Often dismissed as corporate jargon, I firmly believe that culture is, in fact, the very lifeblood of an organization. It’s the invisible hand that shapes behavior, drives innovation, and ultimately fuels long-term growth. Yet, too many companies fall into the trap of viewing culture as a checkbox on a “to do” list.

If you think culture is just fluff, think again. It’s the difference between a thriving, dynamic organization and a house of cards.

Here are four common culture killers and how to steer clear of them.

1. Lip Service Over Genuine Action

I have seen what happens when culture is reduced to empty rhetoric—words on a career page or kitchen poster, a feel-good orientation message from the CEO. This lip service does nothing but breed cynicism and distrust. Culture must be a priority woven into every business decision, meeting, and customer interaction. It starts by clearly stating the company’s vision in ways that are very specifically relatable to the business. This month’s Harvard Business Review has a great article entitled, “Build a Corporate Culture That Works” that introduces “dilemma testing” to determine if your corporate values are actionable. For instance, to promote a culture of transparency and collaboration, Pixar’s values articulate “Regularly share unfinished work.” This type of framing provides leadership guideposts that bring the company’s values to life in corporate culture.

2. The Ivory Tower Trap

In distributed services businesses, the ivory tower mentality is a silent killer of culture. When corporate offices act as if they are superior, it demotivates frontline employees, creating a toxic divide. In my opinion, a corporate office should function as a support center with everyone, regardless of rank, committed to empowering customer-facing teams. The Four Seasons Hotels’ enviable culture is rooted in a philosophy called “Lead with Care” that directs the focus to the front line and empowers them to exceed service expectations. Remember, if the team on the ground interacting with customers isn’t delivering, no one will have a job! Bridging this gap can transform the entire organizational culture, fostering unity and shared purpose.

3. Toxic Talent

Nothing spreads faster and more destructively than a toxic hire. These individuals—the eye rollers, the naysayers, those who publicly conform but privately sabotage—can infect an organization with negativity, destroying collaboration and morale. I believe you can mitigate this issue by starting with rigorous hiring practices that prioritize cultural fit. I encourage founders to personally interview all hires until the company gets too big for you to do so (and then be sure your hiring managers understand your expectations for culture fit).

Author David Brooks has a thesis that, in any collection of humans, there are diminishers and there are illuminators. In his recent book, “How to Know a Person,” Brooks stresses the importance of hiring “illuminators” who uplift others with persistent curiosity and the ability to see things from someone else’s point of view. Of course, it’s not always possible to predict every hire’s true colors, so I believe it’s also critically important for leaders to act quickly and purge toxicity to safeguard the integrity of your culture.  

4. Cultural Atrophy

Culture is like fitness; it requires consistent effort to build and maintain. Leaders must stay vigilant, reinforcing cultural values in small daily interactions and major company decisions. I have seen what happens to organizations that come out of the gate with a strong emphasis on culture and then lose focus. Like muscle, it takes time to see the results but if neglected, culture deteriorates rapidly and can be incredibly difficult to rebuild. Trust me, ignoring this intangible yet critical business driver will lead to declining employee morale, lost clients, and reduced productivity.

Investing in culture is investing in growth. By embedding your mission and vision into the very fabric of your company, you create a roadmap that guides behavior and execution, fostering an environment where everyone feels part of a unified team. This is what sets great companies apart and paves the way for sustained growth and success.

Outsourcing: A Strategic Advantage to Drive Success

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When I’m meeting with founders and other executives, I am often asked for my thoughts on outsourcing various aspects of a growth company. I always start by asking what is fueling the interest in outsourcing. If the answer is predicated on the theory that outsourcing saves money, then I let them know it’s probably not the right choice.

Why? Because I believe outsourcing must focus on value creation versus cost savings. It’s fundamentally about finding strategic partners with specialized skills and knowledge that align with your goals and ethos. You might outsource a corporate function such as legal or accounting, or a portion of your business operations like delivery or customer service.

Think about painting a room in your house. You could do it yourself, but that will take time away from other things you might do better, and it may or may not result in the highest quality work. You could also outsource to a professional painter. If your primary criterion for choosing a painter is cost…well, you know the saying, you get what you pay for. If you choose a painting company based on expertise, reviews, and prior work, the experience will likely be better, and you’ll create more long-term value for your home.

Kate Vitasek, a well-known authority on supply chain management and outsourcing introduced the concept of “vested outsourcing” to describe the theory that outsourcing should focus on creating mutual value rather than merely cutting costs.  She teaches and writes about The Vested Way which shifts outsourcing relationships to a “What’s in it for we?” approach. What a fantastic mantra!

In my years as Founder and CEO of Unidine and Compass Community Living, I regularly had conversations with potential clients who were considering outsourcing aspects of their business that had been managed in-house. During these meetings, I always made it clear that we would not cut corners to save money or compromise our standards and emphasized our commitment to creating long-term value. This approach sometimes required me to flex my willpower and walk away from business opportunities that were not consistent with our brand, operating standards, and culture.

To be successful, founders must look at outsourcing as a strategic tool that can enhance operational efficiency, provide access to specialized expertise, and drive innovation.

Think about companies like Coca-Cola that outsource bottling operations or Amazon outsourcing third-party logistics for deliveries and fulfillment. These are core functions that drive the business and yet they are outsourcing and creating value for the customer, their shareholders, and the outsourced providers as well.

If you’re a founder considering areas of your company that may make sense to outsource, I suggest the following process:

  1. Conduct a needs assessment by listing all functions and performing a SWOT analysis on in-house and outsourced options.
  2. Evaluate potential outsourcing partners based on expertise, client retention rates, and alignment with your culture and values. Consider each outsource service’s ability to access talent, their speed-to-market capabilities, commitment to innovation in their business area, and quality ratings.
  3. Establish clear service level agreements with measurable goals that are focused on desired outcomes versus processes.
  4. Be sure real-time feedback mechanisms are in place to maintain alignment and address issues promptly.
  5. Test, review and adapt based on performance and feedback. Commit to continuous improvement.

Let’s think beyond the balance sheet and recognize outsourcing for what it is – a strategic advantage that can drive growth, innovation, and superior service delivery. To truly harness the power of outsourcing, it is essential to establish a strong, strategic relationship with culturally aligned partners. At Phoenix3, we are committed to helping our portfolio companies achieve their goals through smart, effective outsourcing solutions.

Partnering with Phoenix3 Holdings

Partnering with Phoenix3 Holdings

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We want to work with leaders who have a founder’s mindset – who live and breathe their company mission and values. These leaders are dissatisfied with doing things the way they’ve always been done, and have a vision for their company that encompasses changing a fundamental part of how we live our lives or do business. They are ready to make big strides to take their company to the next level. 

Our approach is hands-on, providing not only growth capital and insight but access to networks of industry leaders, partners, and our portfolio company community. Our goal is to gift the leaders of our portfolio companies the type of foresight you can derive from inveterate, deep knowledge of an industry. As partners, we provide tailored support and rich guidance that can help an organization expand rapidly, sustain their growth, and experience long-term success. 

Portfolio Companies 

Our partners are smart, forward-thinking leaders who lead by example, grounding their vision in a desire to make a game-changing difference in the lives of their clients and employees. We invest in like-minded leaders who believe in the power of their people and the value of culture and innovation. 

Our portfolio companies are growing rapidly and ready to expand further into untapped white space in lifestyle or distributive services with a focus in Senior Living, Healthcare and Corporate services.

Introducing-the-Phoenix3-Holdings-Team

These companies generally have: 

  • $10M+ in revenue 
  • 25% YOY Growth 
  • Durable Margins EBITDA 
  • Clear path to EBITDA breakeven/positive 
  • Diverse customer base 
  • Strong Retention 
  • Capital Efficient

Equally important to us are shared values. We partner with leaders who are committed to improving the quality of life for their employees, shareholders, clients and communities. We value respect, equality, innovation, and collaboration, and our partners helm companies that are steered by these same principles. 

“You want your folks and your team to always be thinking about what’s interesting, unique, and getting excited about what the company’s doing. 

I think that’s what differentiates Infuse in many ways. The success stories for us have come out of a shift and pivot back to a focus on and a culture driving innovation of entrepreneurs who are looking to create authentic experiences for our customers and clients.” 

Michael Klong

Q&A with Michael Klong Board

Tell us about your background – how you got started and how you met Richard.

My background is in coffee and tea – I built a company that we eventually sold and exited to Compass Group called Tradecraft Outfitters. Tradecraft was the first of its kind craft coffee and tea distribution and service company. We partnered with all of the best, up-and-coming specialty coffee and tea brands and helped them scale their businesses to distribute and sell into the offices, restaurants, hotels, cafes, contract food service operators of the world.

I also ran other companies in the cafe & restaurant space; one of those is Infuse Hospitality. About three years ago, we asked Richard to join the board of Infuse. It has been great having him as part of the leadership group to help grow and scale the business.

“He’s a good friend and also obviously a partner.”

Michael Klong Board

I first met Richard at Compass Group. We both sold our companies to Compass and stayed on as the CEOs of the respective businesses that we ran.

We hit it off right off the bat. His entrepreneurial spirit, how he thought about his business and grew it, and how I did with mine – we had a whole lot in common from the onset.

There’s a lot there to unpack in terms of what Richard brings to the table in particular to Infuse Hospitality.

You can’t ignore the success, you can’t ignore the experience that he brings to the table. And his background in food service is broad and vast. In particular, at Infuse hospitality, it’s that entrepreneurial spirit and understanding of what it takes to bring a company from startup to the small and mid-size business, to scale up to a hundred million dollar plus business. So I think it really is that, and whether it’s finance, whether it’s HR, whether it’s marketing, whether it’s business development, Richard has intimately played a role in all of those facets within the business that he has grown.

What is it like partnering with Phoenix3?

I love what Richard’s doing with Phoenix3 Holdings. There aren’t enough successful operator-led family office venture capital companies that are focused on what made the company successful in the first place. The concept of being focused on delivering and growing results for companies with the expertise of an operator like Richard and the financial wherewithal and dollars behind it is a unique combination. I think Phoenix3 has an advantage in the marketplace for sure. Many entrepreneurs and CEOs can get a little over their skis and they bring in a bunch of capital to the business and just spend and spend, even though it’s not the right spending for the right size that they are. The fiscal responsibility that he brings is key. You have to know how to successfully scale and bring in the right resources at the right time.

Would you say that’s something that you can only get from years of experience – to be able to pick up on those inflection points and make smart decisions?

I think so. I’m an investor, and also operated my own company and ran it for a number of years. You’re on the phone frequently with financial folks in the private equity venture capital space that are talking about the numbers, going through hypotheticals. But having the ability to look at some of the numbers and say, “This makes all the sense in the world”, or “This is a little aggressive” only comes with experience. When you’ve been through it you have a wealth of knowledge of how to operate these kinds of businesses. That’s why someone like Richard is so valuable and in high demand. He possesses that knowledge that everyone wants to unlock.

Next Time

We are accelerating fast!
There has been a lot of movement and growth over the past few weeks. In the next newsletter, we plan to make some big announcements, introduce new team members and share some of the latest developments. Stay tuned.

Entrepreneurship Is DNA

Entrepreneurship Is DNA

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What makes an entrepreneur successful? The multi million dollar question. In a marketplace where so many businesses fail, what traits drive success? And why do companies with solo founders do so much better – surviving longer, and generating more revenue, than their counterparts? Underneath the simple answers – vision, ambition, perseverance – lies the nuance that articulates how success is truly born. 

“It’s a personality trait. It’s either there or not.  It is a combination of work ethic and self motivation.”

Richard Schenkel

There are four key traits that make an entrepreneur – four essential pieces to entrepreneurial DNA and spirit. 

Perseverance 

The first is perseverance – they keep going when others give up. In every success story, there’s a moment when the founder could have quit. They could have said, this is too hard, or too complex, and walked away. Every business runs into snags, into situations you didn’t necessarily plan for. 

Entrepreneurs are compelled to solve those tough problems. They’re 100% committed because it’s not just a job to them, it’s a mission. When you have that conviction, it drives you to persevere.

Gut Instinct 

The second key trait is relying on gut instinct. It is imperative that entrepreneurs are not easily swayed by other people’s negativity. Because when you’re doing something no one has done before, disrupting a market or designing something new, you’re going to have naysayers. People who say “That can’t be done, because no one has ever done it.” 

Risk Tolerant 

Entrepreneurs have to be able to tolerate risk. If you’re a risk averse person, entrepreneurship is not the right fit for you. Nothing is going to be easy. You’re investing everything you have into your business, especially your first business. 

If that makes you too nervous, you’re not going to be able to keep up with the ups and downs that make or break a company’s success.

Ready to Ride the Rollercoaster 

Which brings me to the last point – you’re prepared to ride the roller coaster. Success in business is never a straight line. It just isn’t linear. In reality, you’re going to have gaps. You’re going to have challenges that come up that you didn’t anticipate, or never could have fully planned for. 

Entrepreneurs thrive on the roller coaster – they are in the moment, responding to the needs of the company. It’s an exciting and rewarding process. 

Q&A with Richard on Vision: “Seeing the White Space”

Like a lot of natural entrepreneurs, you started  pretty young. What was your first business like?

I sold business cards and printing door to door. It was a pretty humbling experience, and I learned a lot. 

We had a printing press, typesetting, and all, in my home where I lived with my parents

when I was younger. 

At that time I might have been 12 to 14 years old. I learned how you’re paying for the goods before you even have an order and that teaches you about financials – you have to have some dollars potentially to start a company, otherwise it’s pretty rocky. 

What is your advice for someone starting out on their first venture – what do they need to focus on to overcome those first hurdles? 

I think as an entrepreneur, when you’re starting organizations and funding them initially by yourself and potentially then looking to raise capital, you have to have tenacity, perseverance, and resilience. You never know who will say yes and who will say no. 

You may meet with a hundred people, financing organizations, private equity, venture capital, etc – and all it takes is the right one. I think you just have to have that in your DNA. If you are an individual who can’t deal with rejection, it is a real tough thing as an entrepreneur to raise capital when you’re not used to anybody saying no. 

How do you approach knowing when to pivot? When do you know you should keep pushing as an entrepreneur and when is it time to try something new?

You have to set certain expectations of where you’ll be as an organization or anything you do as an entrepreneur. Then constantly look at those and see are we making and hitting those expectations or goals? Are we off? Why are we off? 

An example – let’s assume we were going to launch a business-to-business type of organization and we needed companies, clients, and we were going to put resources into business development, sales, marketing. 

So we do all those things and we have people calling on prospects, but we don’t have anybody ever really making any buying decisions. It’s not moving forward. In that case, you either have to figure out where you’re off in the market, and why and retool. Or are you in a business model that in your opinion, is really a wonderful opportunity, but nobody wants it? 

There’s no guarantee that even a competitive business out there will hit the mark. If it was that easy, you’d have hundreds of competitors in every business scaling. It really takes a lot of grit to say, “Hey, this may have been the best concept in the world, but after three years of tying up cash, people, and capital, is it time to let it go?”

The other thing is I always say, you better go into opportunities that have what I call white space. White space is nothing more than a space that hasn’t been 100% developed at this point. You look at those niches out there that can allow you to succeed. 

What was the white space when you built Unidine into one of the fastest growing companies in the country? 

Client intimacy. That was one of the success opportunities that Unidine provided, through a strong leadership team that was in touch with clients and very hands-on. When an organization gets very large, they can lose touch with the majority of their clients, that’s just the reality. As an insurgent force in the dining services industry, we were ambitious in our approach to client intimacy and service excellence. 

When calls came in on the weekend, we answered them. Our first Thanksgiving with a new client, I got a call that the sewers had backed up into the kitchen. We had people out there with mop buckets making sure we could get out the meal. Sometimes you’re faced with an unpredictable situation, and you just better figure it out. 

I think you can be an insurgent in a lot of different industries because frankly, there is a lot of mediocrity out there in larger organizations and they take success for granted. But when you have a founder-based culture, an agile team aligned to that vision, firing on all 

eight cylinders, you respond much more quickly and efficiently. Clients know they’re going to get that high-touch service experience. And employees know they’re a part of something game-changing, redefining the business model. 

An Inspiring Entrepreneur: John Willard Marriott Sr.

Richard began his early career at Marriott Corporation. This experience shaped his future success. In particular, when asked about any entrepreneurs that inspired him without hesitation, he mentioned JW Marriottt. Sr and his son.  

John Willard Marriott Sr.

Here is their story: 

Marriott Corp. began as a nine-seat root beer stand.  JW Marriott started the stand in Washington DC  after getting a taste of the hot, muggy weather – perfect for selling cold drinks to thirsty travelers.  To be profitable year round, he added food services. And then a drive-in service. And then airline catering. 

By the early 1950’s, he was operating 56 restaurants. He easily could have stopped there, but he saw a new opportunity with the expansion of air travel – the “white space” in hospitality at the time.

America was traveling more and more, and it needed a place to stay while on the road. In 1953, he opened his first hotel, Twin Bridges Motor Hotel in Arlington, Virginia. By 1969, he’s opening his 11th hotel, now in Mexico. In 1970’s, he’s building hotels in Europe. And he never stops. Today, Marriott International operates on over 8,000 properties worldwide and is the world’s largest hotel chain. 

JW Marriott is a classic entrepreneurial success story, and in his story you can see the four traits of the entrepreneur. He was willing to trust his instincts, to take risks, and respond to a constantly changing market. He persevered through challenges and turned obstacles into opportunities. 

Importantly, he understood the value of company culture, telling his managers, “Take care of associates and they’ll take care of your customers.” 

Richard learned a lot during his time at Marriott and was impressed by JW Marriott Sr. and his son. He admired his tenacity and the company that he built. Marriott had a strong work ethic and even in his later years he was very involved in the company. He was hands-on even after his son took over. He lived and breathed that company, and that’s what it’s like as a founder to build something from the ground up. 

Next Time: Company Culture 

In the next newsletter we’ll deep dive into company culture – the importance of hiring and mentoring the right people, and what successful company culture looks like when it comes to scalability. 

Introducing-the-Phoenix3-Holdings-Team

Introducing the Phoenix3 Holdings Team

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I have been fortunate in assembling a team of top in class executives and experts with a wide range of skill sets. I plan to introduce you to each of our team members and talk more about our portfolio in the coming weeks here in the Founder’s Mindset. Our first introduction this week is a big one… 

It brings me great pleasure to announce Joe Cuticelli as Partner and Chief Operating Officer of Phoenix3 Holdings. Joe is an incisive decision-maker with rich leadership experience from helming one of the world’s largest employers through multiple phases of rapid growth. 

Joe’s skillset is broad and his knowledge pool is incredibly deep. He is as committed and passionate as I am to building successful businesses that operate with integrity and that transform the lives of individuals and the communities they serve.

“We met as rivals and competitors years ago – he’ll tell you a little more about that in his own words below – and today, I’m gratified to have him join us as a leader at Phoenix3 Holdings.”

Joe Cuticelli, Partner and Chief Operating Officer 

Officer

Joe Cuticelli is a highly accomplished executive, with a dynamic history of leadership at Sodexo North America where he held progressively demanding leadership roles, ultimately serving as its CEO of senior living. He is a navigator of complex organizational structures and global markets with an incisive intuition for how to scale strategically and successfully. 

During his tenure at Sodexo, Joe exceeded sales and financial targets at every level, developing a wide-ranging and sharp skill set across business development, sales, and operations management. After stepping down from Sodexo, Joe founded Marleon Capital, leveraging his deep industry knowledge to provide invaluable business expertise to companies within the insurance restoration industries. 

Joe is intensely passionate about making a positive impact in people’s lives. Aside from his advisory role in the corporate world, he also serves as the Board Chairman for Generations United, an organization that enhances the lives of children, youth, and elders through intergenerational collaboration and public policy. 

Joe, Phoenix3 Team

Q&A: Get to Know Joe 

How did you and Richard meet? 

We were competitors. In the span of my career, Unidine and later CCL was always a competitor. What’s interesting is I didn’t know much about Richard, but I had a great admiration for Unidine, the way they presented themselves along with the platform and values that they put forward in the marketplace.

As a competitor, they were successful, and they were growing fast. It was a startup that was taking a segment of the market that we were all interested in, but they seemed to do it with a lot more rigor and discipline than we were. 

I remember going to a sales meeting and we presented first. Afterwards we thought, “We did a great job.” Then we walked outside and there’s a giant box truck parked against the building – and out comes Unidine, off-loading their sales presentation. We were shoving our stuff in cars. We were nowhere near what they were doing to present their business case, and I thought to myself, they always seem one step ahead. 

Later on in my career when I became CEO, Richard and I would collaborate with each other at different industry events. And while we were competitors, we were very respectful of one another and always found time to speak with one another. Doing so we developed a mutual recognition and admiration for the other’s skills. 

How did you approach your role as a CEO and leader managing expansion at a global company with such a huge array of service offerings? 

I had to approach it with an open-mind that I was going to learn a lot. At one point we would tell people we had 100 different services that we could provide. We had some core things that we did – food, facilities, management – but within that, we were doing transportation, energy, infrastructure management, to name a few. As a large company, we thought we could do it all. 

There were times when my team came to me and said, “Can we do this?”, and while it might have been in the scope of services that we provided, I knew we couldn’t do it well, and we had to be very disciplined about the delivery of our services – we want to be the best at the things that we can do. 

Ultimately, we may not be able to do all things because we don’t have the resources, or it may be geographically challenged. One of the things about being a good leader is also knowing when to say no. 

As a leader I needed to assess how quickly I could learn about those things that I didn’t know about within the business, measure the risks in how we deployed our services, and decide if it was appropriate for the business at that time.

What excites you about partnering at Phoenix3 Holdings?

I think there’s an opportunity to help companies grow in a space that we understand very well, whether that’s pure hospitality, senior living, healthcare, or corporate. 

We understand this space really well and are looking for businesses that have a lot of white space and can scale very quickly. With Phoenix3 as a partner they can do that using the multiple years of expertise that we have in managing businesses. 

It’s exciting to help others, to be successful and grow their business. I’m excited about the lives that we can impact by our mentorship, our knowledge and our association with these types of businesses. I think it’s a great opportunity.