Learning From the Best

Good: Learning best business practices by working for a legendary company. Better: Applying that knowledge to a business of your own.
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9 min read

This story appears in the March 2006 issue of Entrepreneur. Subscribe »

In genetics, the apple usually doesn't fall too far from the tree. In the corporate world, the same rings true at times. The names of companies like Starbucks, Lettuce Entertain You Enterprises, Hewlett-Packard and Charles Schwab may instantly conjure up deeply ingrained images of certain products in the minds of consumers, but for Jody Hall, Michael Ryan, Dave Deasy and Stacy Blackman, there's much more to these companies than just the products or services they sell. As former employees, they each gained far more than their paychecks. They learned lessons that proved invaluable when they left their proverbial nests to launch their own businesses--businesses that bear some striking resemblances to those of their mentors.

Coffee 101
Looking to satisfy your caffeine fix for the day? Just walk outside. There's sure to be a Starbucks on the corner, thanks to Howard Schultz, the man behind the ubiquitous brand. Jody Hall, 39, also has reason to give thanks, even though the coffee giant is now her competitor. At Vérité Coffee, the Seattle-based coffeehouse Hall opened in 2003, the brand's a little stronger and business is a little better because of the 12 years Hall worked at Starbucks, during which she watched Schultz brew his company to perfection. Says Hall, who worked her way up to Starbucks' head of promotions and events for new stores, "I learned a lot about the coffeehouse experience through [Schultz] and his vision."

The fact that the Starbucks brand has become synonymous with coffee is far from accidental. From the outset, Schultz pushed the brand with creative and untraditional marketing. To achieve her own creative marketing edge and set herself apart from the crowd, Hall launched a cupcake bakery, Cupcake Royale, inside Vérité Coffee. The cupcakes have attracted the press, tempting the Los Angeles Times and Food & Wine to write articles on the sweet creations. The treats have also inspired some attention-getting marketing strategies. During the 2004 elections, for instance, Hall gave a free cupcake to voters, advertising the offer in a local paper using such catchy phrases as "I'm Pro-Cupcake and I Vote" and "Legalize Frostitution."

Schultz always encouraged community involvement at Starbucks, and Hall has continued that tradition at Vérité Coffee & Cupcake Royale. Whether it's participating in an elementary school auction or donating 1,000 cupcakes to the local zoo for its elephant's birthday, Hall makes sure her business is adding to the fun--and to the community. "It's important to me to be involved," says Hall. "And it's something I learned at Starbucks, for sure."

Hall often heard Schultz stress the importance of under-promising and overdelivering, and to this day, she is careful to do the same. In the beginning, she planned for the worst, hoped for the best and didn't talk openly about the success she believed her business would become. Today, with two thriving locations, 2005 sales over $1 million and gourmet grocery stores asking to carry her brand, Hall continues to speak cautiously about the future.

Something's Cookin'
"Study trends, find something that's successful, and just turn it up 10 percent. If you can turn it up and not overcomplicate it, you'll have a hit." In 2003, Michael Ryan took this key lesson he learned from his former employer, Richard Melman at Lettuce Entertain You Enterprises Inc., and ran with it. Teaming up with friend Spiro Baltas, 36, Ryan launched Starwich Inc., a quick, upscale salad and sandwich lounge in New York City. Serving up a sophisticated menu in an equally sophisticated setting equipped with Wi-Fi connections, cell phone chargers, fax machines and leather couches, the duo turned the standard sandwich restaurant concept up a notch. And just as Melman's advice promised, it has been a hit, with 2006 sales expected to reach $10 million.

Ryan, 39, clearly remembers the knowledge he gained during the four years he worked under Melman. Chicago-based Lettuce Entertain You is home to more than 50 unique restaurant concepts, and dishing out the goods is Melman, who, for more than 30 years, has been able to make American consumers hungry for restaurants including Big Bowl, Maggiano's and Shaw's Crab House.

Key to Melman's success is the trust he fosters among his staff. Ryan recalls the breakfast meetings that were regularly organized to empower employees and give them a chance to voice their opinions without managers present. Guided by the same principles, Ryan gives his own staff the authority to respond to customer concerns or critical situations without the presence of a manager. The employee feels respected, the customer satisfied. Says Ryan, "Trusting your staff to make the right decisions and giving them leeway and a lot of trust goes a long way."

The staff at Lettuce Entertain You Enterprises doesn't have the opportunity to interact with Melman on a regular basis, but the relationships he fosters among his staff--and ex-employees--are solid. For example, Melman made it a point to attend Starwich's grand opening, where he continued to serve up crucial advice. Focus on one thing at a time, he advised Ryan. Since then, that's all Ryan has been doing. "You get overwhelmed with so many of the details. You have to realize that you can only do so much--just one thing at a time."

Taking a Cyber Leap

In 1939, two men started out with $538 in working capital and a garage as their work space. They were intent on establishing their business and, before long, had introduced their first invention: an electronic instrument used to test sound equipment. William Hewlett and David Packard have both passed away, but the company they left behind is widely known for its spirit of innovation. Hewlett-Packard invests $3.5 billion annually in R&D and is best recognized by its more recent inventions, including a full range of computers and a line of inkjet and LaserJet printers. The founders also proved innovative in their management style, which contrasted with the top-down management style widely practiced at the time. An open-door policy was put in place, employees were treated with respect and given a voice, and the "HP Way" was born.

Dave Deasy, 44, never had the chance to meet the founders, but he was able to study their code to success during his 12 years as an HP employee. In 2003, when he was ready to launch MyFavoriteCity.com--a San Mateo, California, online gift basket company specializing in city-themed merchandise--from his basement, he had the HP Way to guide him.

Treating people right and trusting that they will do a good job if given the opportunity is a fundamental aspect of the HP Way, and Deasy continues to practice it at

MyFavoriteCity.com. At HP, open cubicles and executive offices without doors create an atmosphere of trust and respect. At MyFavoriteCity.com, although Deasy has fewer than 10 employees, the work space is also open, and employees are encouraged to share ideas. Says Deasy, "You can't wait until you're big to start having the right philosophies on how to deal with people and employees."

Hewlett and Packard constantly worked on the next big invention to stay ahead of the pack, and now the company produces an average of 11 patents a day worldwide. Deasy's not inventing products, but he has learned the importance of actively watching for new ways to grow his business. He initially targeted individual consumers, but when he realized he had a product that would appeal to corporations wanting gifts for sales events and conferences, he was quick to re-evaluate, shift his focus, and change price points and gift configurations accordingly. Keeping his eyes open has certainly paid off: Sales are expected to reach $1 million to $2 million by year-end.

Banking on Marketing
Stacy Blackman, 34, remembers well the lessons she learned as an online marketing manager at The Charles Schwab Corp. She launched her Los Angeles-based MBA consulting firm in 2001 to help applicants gain acceptance into the MBA programs of their choice, but after working at the well-known financial services firm for a year in 2002, she realized that marketing financial services was not so different from marketing people.

Blackman's time at Charles Schwab coincided with the company going through a period of re-evaluation. Although entrepreneur Charles Schwab founded the company on the premise that the stock market should be accessible to all and that prices should be fair and ethical, this core value of the company was coming into question 30 years after its establishment. When held up against glitzier and more glamorous firms serving high-end clients, Charles Schwab, with its relatively low profile, was struggling to keep up. The company decided to stay true to its philosophy, however, and ultimately succeeded in positioning itself as the firm that was affordable and accessible to the common man.

"[Charles Schwab] turned what might be a weakness into [its] key strength," says Blackman. Using the same philosophy, Blackman turns her clients' weaknesses into strengths. If a client has been laid off, she puts a positive spin on it by showing his or her resilience, and she paints a bigger picture to artfully explain low grade-point averages. "It's all in the perspective," she says.

One key reason for Charles Schwab's success: its awareness of the prices, promotions and services offered by its competitors. To grow her business and help her clients become successful, Blackman likewise keeps a careful eye on the countless number of applicants vying for acceptance letters. To help her clients differentiate themselves, she pushes them to dig a little deeper--to uncover an experience or skill that hasn't been repeated by other applicants.

While at Charles Schwab, Blackman witnessed the extensive efforts that were made to get to know customers--to study what they expected from the call center and what types of ads they responded to best. Taking this to heart, Blackman stays informed by networking with admissions officers, students and alumni; researching programs; and maintaining an information database, all of which help her advise clients on how to best present themselves to schools.

"Schools are always looking to diversify their student populations," says Blackman. "So [the key is] understanding [each] school's needs and showing that you can be a solution."

Marketing people has become Blackman's forte, with 97 percent of her clients gaining acceptance into at least one of their top four business-school choices, and 2006 sales expected to approach $1 million. And while many would rather not know that people can be marketed like financial services, Blackman has identified this truth as a lesson best not forgotten.


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