SIB Founder Interview Sunday New York Times Business Section
Published: October 15, 2011
This interview with Dan Schneider, founder and C.E.O. of SIB Development and Consulting, which helps companies find cost reductions, was conducted and condensed by Adam Bryant.
Every Sunday, Adam Bryant talks with top executives about the challenges of leading and managing. In his new book, "The Corner Office" (Times Books), he analyzes the broader lessons that emerge from his interviews with more than 70 leaders.
Q. Do you remember the first time you were somebody’s boss?
A. Yes. I was 16 and I started at this restaurant in the summer even before it opened. I was digging holes for the fence out front and picking up restaurant supplies. I was just the gofer. Once the restaurant opened, I became a daytime prep cook. And three weeks into it, they fired the executive chef and put me in charge of the line cooks, who were probably 10, 15 years older than me. So that was my first experience with management.
Q. And so was that an easy transition for you?
A. It kind of just felt normal and natural. I think that being an only child, it’s easier to manage people because you’re used to being the only one — you’re top of the food chain because there is no chain. So to manage people, it’s just a natural progression.
Q. What about after that?
A. I started making balloon animals at T.G.I. Friday’s. A company would pay the restaurant to have me go there, and then I’d make balloon animals and entertain the kids and I’d work for tips. Then I realized that the lady who runs the company that hired me lives in Arizona. So I teamed up with somebody and approached all the T.G.I. Friday’s in the area and said: “Why don’t you pay us to do it? We’ll control it locally.” So then I managed 10 people who were going around to all these different restaurants — and I was 17 years old. Then somebody kept offering me a job to work in selling mobile phones — this was when digital phones were first coming out.
Q. Who was doing that?
A. It was the people in this store I went into to buy something for my cellphone because they were so surprised that — this was before 10-year-olds had cellphones — there was this 17-year-old kid who had a cellphone. They asked me why I needed it. “Well, I have to schedule my employees,” I told them. And they said, “Oh, we want this guy to work for us.” They just kept calling, “Come work for us. Come work for us.” So finally, I said, “All right, I’ll try this.” So I got into B2B [business to business] sales at 17.
Q. All while you’re going to school?
A. No, I dropped out of school when I was 16. I have a ninth-grade education. But I was getting pretty big customers. I would pay one of my friends to cut school and come with me to the city and we’d go into a hospital, and we’d sneak up to the top floor and we’d put fliers in the interoffice mailboxes from the top floor to the bottom floor about a special deal for hospital employees. And my phone was ringing for orders before we were even walking out of the building, because this was when there weren’t cellphone stores on every single corner. Then I started to get sick of going out and getting customers. So, I figured, why don’t I open up a store and just sit there and have people come to me? So I opened a store right when I turned 18, and I grew that to about 12 stores before I was 20.
Q. You were obviously making a lot of money at a young age.
A. I bought a 3,600-square-foot house when I was 19. My friends who would come over would wonder when my parents were coming home. “No, they’re never coming home,” I said to them. “This is mine.”
Q. Then what?
A. I built up the network of stores, then sold them off individually. After that, I started a company that wholesaled mobile phones. I did that for about two years and the company did really well, with more than $35 million in revenue. But then I realized that the more money that you make, it doesn’t necessarily mean that you’re happy. I said to myself: “I don’t do anything. I don’t have any hobbies. All I do is work. This is stressful. Yeah, I have this company, but I want to be a kid.” So I called up some people in the industry that I knew and told them, I want to them take over the company and just pay me royalties.
I decided I was really going to try to relax and get out of work mode, so I sold my house and got into shape. I took up cycling. I rode 30 miles a day, six days a week. I got into kiteboarding and traveled all over for two and a half years. All I did was have fun. I took not working like a job. I’d wake up, I’d ride my bike. I’d go on vacation every two weeks. It was the best two and a half years of my life.
I ended up in Charleston, S.C. I had some childhood friends who lived there. I bought a condo in the Dominican Republic, but the condo construction was delayed and I started to get bored in Charleston. So I went and got some Class A office space.
People in the building said, “What do you do?”
“I don’t know yet,” I said. I just figured that I want to start coming to work and by coming to work every day, I’ll come up with something.
I always had different ideas in the back of my head, including this idea for contingency-based cost savings, where we look for overcharges in all the contracts a company has, and share in the savings we find.
Q. How big is your company now?
A. We have 25 employees, and we’re hoping to hit $6 million in revenue this year.
Q. So how did your leadership and management style change in the new business, compared with when you were younger?
A. In the beginning, with the cellphone stores, I would scream and yell and throw things. I was hot-headed and it was stressful, and it was the same thing with my next company, because that’s what worked before. I was your stereotypical lunatic C.E.O., and it wasn’t like I was trying to be that way. That was natural.
So when I started this company, I didn’t know if I was going to have that many employees or whatever. But I’d become more laid back and relaxed over these two and a half years of taking a sabbatical. I just handled things differently. I don’t get upset. I don’t really yell anymore because it accomplishes nothing.
Q. What made you realize that?
A. I don’t know. I couldn’t say the one turning point that made me realize it. But there were moments. We had an employee who was working on a project for a Fortune 5 company, a major project. He’d been working on it for a month, compiling data, and he didn’t back up his hard drive. So it’s a month’s worth of work, tons of data. We were able to get the hard drive recovered but it cost about $1,500 to have the people recover it. Everybody looked at me like they thought I was just going to fire him or kill him.And I don’t know where I got the idea, but I just said: “You’ve got to go buy everybody ice cream. We’re having an ice cream party.” Because I realized that if I yell at everybody, they’re just going to figure I’m a jerk. But if we’re all sitting around eating ice cream, everybody knows why we’re eating ice cream — it’s because this guy screwed up. That will set in and they’ll remember it and then just maybe they’ll think, “Oh, yeah. We had ice cream last week. Maybe we should back up our work.” Knock on wood, we haven’t had to recover any more hard drives.
Q. So how did everybody react when you said, “Go get some ice cream.”
A. They were shocked and they were laughing. They still talk about it, and it works. The guy who made the mistake paid for the ice cream. And we made sure to make topping requests, too.
Q. And how many ice cream parties have you had?
A. Three, four. But the other mistakes weren’t as bad. It’s funny to associate ice cream with bad things. But then again, when a Little League team loses, they still get ice cream.
Q. What else is unusual about your culture?
A. I have a rule that I don’t want to hear bad news after 3 o’clock.
A. With what we do, there’s nothing that’s really time-sensitive, so unless it’s a major fire that needs to be put out, I don’t want to hear about it until the next morning. Because in the last two or three hours of the day, we’re not going to be able to fix it, and then you’re going to go home with that, and you’re not going to enjoy the rest of your night. Within the different teams they can discuss it, but I don’t want that in my life unless it’s something that really is an issue that needs to be fixed. If not, just bring it up to me tomorrow morning. And it’s been working. Business is running fine. I’m fairly happy with my life.
Q. Where did you get the idea to do that?
A. It just came up out of a casual joke I made, but it stuck. And now I’ll get instant messages that say, “I’ve waited till 3:05 to tell you this.” And it’s almost like I look forward to any I.M., e-mail or anything from my employees after 3 p.m. because I know it’s going to be good news, because they’re not allowed to send it to me if it’s not. So it’s kind of fun. It’s like, “Oh, these next two hours are going to be good or I can actually get stuff done because no one’s going to interrupt me with anything else unless it’s something positive.”
Q. What else?
A. Because we’ve only been around for three years, I can kind of make adjustments on the fly and do whatever I want. We don’t have investors, so I don’t have to report to anybody. I don’t have a board, so that makes things a lot easier. And a couple of weeks ago, I realized that employees, no matter how happy they are, are always looking for that next job that pays a little bit more money. I don’t want employee turnover. We have to train people. So I thought, you know what I’m going to do? I’m going to tell everybody, “I don’t care what level you’re on in the company, but from this point out or anybody new who starts, if you stay for five years, you get a check for $50,000.”
First of all, it has the carrot effect. They’re going to do a better job when they have something to look forward to. They still get raises and everything, but they don’t have to look for this new job with a new company to try to get to this next level in salary.
Q. And then the clock resets again if they stay another five?
A. Yeah, because it’s worth $10,000 a year for employee retention. It’s a cost-savings measure for me but it makes everybody happy.
Q. How do you hire? If you were interviewing me for a job, what questions would you ask?
A. My first question is, what do you know about the company? Our Web site has a decent amount of information. We have a company overview video that in two and a half minutes explains exactly what we do and someone’s grandmother would get it. And if they haven’t gone through that process, I’ve already written them off. But if somebody can start telling me stuff or quoting stuff from the Web site, all right, now I’m interested, just because I know you’re capable of doing research. So now you’ve sparked my interest. Then I’ll go through their résumé and ask them about different things that they’ve listed, and on a scale of one to five where they put themselves. And anybody who says a “five” on certain things, I question that, and ask if they think there’s nothing else that they could learn about this particular software application or whatever it is I’ve asked them about. And they say, “Oh, no, no. There is.” Then I’ll ask, “Well, then why did you tell me five?” Anyone who’s ever said five, I’ve never hired. Most of the time, people say three and then I find out that they’re really like a four and a half, which is better. I appreciate the humbleness, plus it shows that they understand that they don’t know everything. I also tell people at the outset that this isn’t a standard interview and I’m not looking for the answer they might think that I want them to give me. What’s happened with some people is they’ve lightened up. They’re sitting here with me and I’m relaxed and I’m leaning back in my chair and making them lighten up so much that I find out more than they’d ever tell anybody in a regular interview. Sometimes it helps them and sometimes it hurts them.