The Exchanges

Q What would you say to a small business owner right now who's listening to this thinking about, oh, what would it mean for me to open my books? And, you know, I'm scared to do that. And I don't know what the next step is.

A Small. You know, you don't necessarily have to start by opening up everything all at once. Maybe you just pick something that you really want people to work on. I would say pick a number that you care about improving that is dynamic and is that employees can make a difference on. Start measuring it and then set a benchmark, you know, like that you'd like to reach and share the success. I mean, that is part of it is if you're going to do this, if you think that improving that number could make a difference to the tune of I don't know, 10,000 dollars that year. Share a thousand dollars of that with the folks who helped make it happen. You'll still be 9000 dollars richer at the end of the day. So you do have to teach it, involve people, but also, you know, share in the success.

AI assessment note: “you don't necessarily have to start by opening up everything all at once.”

Q Is there a particular decision that comes to mind when you think of that, that you're like, oh, this really helped me see or solve this problem in a different light looking through this collective success model?

A One of the huge benefits of running a company that's very employee centric and really empowers its people is that you have all these empowered people, and one of the downsides is like, you have all these empowered people, you know, so you have, um, A lot of folks who have a lot of opinions and, um, are very vocal. One example is we used to have a language on our menus. We had a service charge and they could leave an additional tip. And a number of servers came in and wanted to speak at one of the open book meetings because they wanted to propose a change to that language because they felt if there was different language on the menu, people would leave far bigger tips for them. Good suggestion. But the problem is this group of people, servers within most restaurants are actually the people already making the most amount of money. And so having this language is actually really helpful because we didn't have to say like, oh, no, we don't want to, you know, no one had to be like, no, I don't want to do that. It didn't become a battle. We actually just walked through the analysis. We were like, okay, if we're going to make this change, what is the impact on, uh, the employees? And they were like, well, it'll be great for, you know, servers, uh, Because, um, we'll make more money. And then we're like, okay, well, great. How about the folks in the kitchen who are not going to see a pa…

AI assessment note: “One example is we used to have a language on our menus.”

Q Your employees, you've done well for the community. You've done well for your employees. You've created this system that's now used all over the world for harassment. You've had a huge impact. Why sell?

A Part of it was I had already been thinking to myself. So I guess for one, I had received offers many, many, many times over the years to sell home room, and I never even took a meeting with anyone. Like I was just disinterested. I had been a CEO running it for a decade at that point, and I didn't personally aspire to like turn it into a gigantic chain. I wanted to create this beautiful place for people to work. Where we loved coming there, where it felt special, where it was having an impact on the world, and I think that original vision had, had been achieved, and I was actually itching a little bit to be able to do, like, new, new projects. Like, I had wanted to write this book for a while. I wanted to start getting our ideas into the broader world, um, because my dream wasn't just to keep growing Homeroom into oblivion. It was, I, I, I liked having this sort of single Restaurant. So I think I had been already thinking, you know, what is this next chapter of my life going to look like? Because this company already has leaders that can really run it every day, and systems that I'm proud of that I really want to spread into the world. That was sort of the broader vision and goal. Grow the impact of all the great ideas that we've done. But, you know, there was also really, like, personal parts of it that had nothing to do with all that. You know, I just, I was also getting divor…

AI assessment note: “that original vision had, had been achieved, and I was actually itching a little bit”

Q What are some of the other lessons that you sort of like trial and erred your way through?

A I knew that I wanted us to have a, a really collaborative work culture, which is again, a really fabulous ideal, but can be harder to pull off. In reality, something I ended up learning about, which I thought was really fabulous, was, um, open book management, which is, you know, basically where you, um, open up your financials to your team, and you teach financial literacy, and then you engage people in improving those numbers, and, um, and then you, you know, share the results with the team. And that was really such a game changer, because, you know, Business is really just, just like a sport, but the way that most companies are run is that, like, no one is really sharing with you how you're doing. It's such an odd way to run a team or a company when you think about it, but I think we're always afraid, like, oh, if people know too much, uh, you know, maybe they'll just want more for themselves, but I think it's hard for them to be a part of something bigger than themselves, and I think that's much more important than the risk you take by sharing information.

AI assessment note: “something I ended up learning about, which I thought was really fabulous, was, open book management”

Q Can you give me an example of, like, so it makes it tangible for me?

A Something really common in restaurants, in fact, probably many workplaces, people showing up late. If you work at a desk job, maybe it doesn't matter so much. If you work in a restaurant, if someone's late, again, you need people to actually physically be present. There's just less people to help customers to cook food. It makes the experience for the guests, right? Worse. And, you know, we have like a hundred people, so it's a lot of people who could be running late at any given time. Traditionally, if someone was running late, you probably write them up. If they do it a few times, maybe they lose their job, right? I had found it was not effective at all. With a restorative discipline approach, what you do is you sit down for a conversation. You basically are like, hey, you know, what happened? Someone says, I was late. And then you talk about who is affected. Well, turns out You know, you sort of walk them through, like, who was affected. It's the, you know, servers that have to cover more tables. It's the cooks that have to cook more stuff. It's the customer that has, you know, worse service. It is the manager that is now wasting their time having this conversation with you. It affects lots of people in a lot of ways. And then you ask them the question, well, what are you going to do to make it right? And I think that's, like, the most interesting part of it, because it's no…

AI assessment note: “Something really common in restaurants, in fact, probably many workplaces, people showing up late.”

Q How do we nip it in the bud?

A Totally. Yeah, because it just changes the power dynamic at, you know, a really low level. And it was great, because, like, customers don't know we're using it. They don't know we think that person's creepy. You know, like, they just know they just got a new server. And staff member, you know, everyone's going to have a different definition of what feels threatening or bad to them, and they don't have to justify it They can just get help. I wrote about it, and it got picked up by the Washington Post, and it became this, like, viral article. I testified about it in front of the United States EEOC in Washington, and it became adopted as a best practice by them. So it is now currently used in, like, restaurants and bars literally all over the world, and, you know, started in our little restaurant.

AI assessment note: “customers don't know we're using it... they just got a new server”

Q At what point did you start this, and what, what happened in the, like, following sort of like, 60 or 90 days?

A Um, you know, started using it a few years into, um, the business. I think first I had to figure out some foundational things, you know, to my point about, like, creating some really basic rules and structures, and I really wanted a way to engage people with, um, growth, not just in the financial sense, but of all the things that we cared about, finding ways to measure it and improve on them. I studied up Took my team to take a lot of classes on how you do open book management, and we just started using it. Sort of roughly the way you do it is, like, we would have a meeting every week where managers were required to attend, but they were open to all staff members, so any staff member would be paid to come and just sit there and eat snacks and, you know, learn about numbers, and what you have is, it's basically a P&L meeting, but different people Within the company or watching those numbers. So instead of me as the CEO or a CFO running through those numbers, different people are responsible for tracking them. So, you know, we would watch things like our food costs, but we would also measure, um, things that normally people only measure maybe once a year, like our employee happiness. We measured literally daily and weekly, and we'd report on those numbers too, and have people tracking them and talking about Uh, not just the number, but what's behind it? Why were those sales up th…

AI assessment note: “started using it a few years into, um, the business.”

Q Was there a moment with Homeroom when you wanted to give up or, you know, when you're sitting on your kitchen floor at home after the end of a long day and you're crying and you're just like, I can't do this?

A I think that's the beauty of, like, having Been quite unhappy in my work before doing Homeroom is I think I knew what the alternative looked like. My worst days at Homeroom were still better than my best days as a lawyer. I think it helped give me perspective that, like, everything is hard, you know, and what kind of hard do you want? And I'll pick meaningful hard any day over meaningless hard. Most things in life worth doing are hard. You know, I know you have kids as well. Like, that's Hard. It is really hard to be a parent. Studies on human happiness, like, show that people who choose not to have children are on average happier because they can just, like, do whatever they want all the time, you know. For me, my kids are also one of the most meaningful parts of my life. So I think things that are hard often accompany things that are meaningful, and if something's hard and meaningless, like, that was the worst thing, and I think for many people, unfortunately, work Falls into that category.

AI assessment note: “My worst days at Homeroom were still better than my best days as a lawyer.”

Q Did your law background ever help you in business, aside from, like, reading contracts and stuff, but, like, was there an element of, like, oh, I approach this different because I have a legal background?

A I'll give you one way that my legal background helped and one way that it hurt, and I guess we'll start with the hurt one, um, because I had to overcome it first. Think something we're thinking about, whatever your job is, is You know, what is the worldview of this profession? The legal worldview is, at least in America, it's an adversarial system. Two people take very extreme positions. Um, you're, in fact, duty bound to take only that side, and they duke it out, and someone wins at the end. So there's no gray, there's no meeting in the middle. It's very destructive, honestly. You're literally fighting. I found that quite demoralizing to, to do over time. It's certainly not a good way to run a company. I think that's something I love about business is that it's, like, literally and figuratively creative. Like, you make something, but you also, to make something, you can't be fighting with people. You have to be generative. You have to create something with them. Moving from this destructive mindset to this creative mindset was a big shift. So I think in that way, my legal background gave me something to, to overcome. But a way that it really helped me was I was really struggling To understand how to do punishment, for like, lack of a better word. Every company or organization has the issue of people misbehaving. I've been the person misbehaving at various jobs. I mean, that's,…

AI assessment note: “I'll give you one way that my legal background helped and one way that it hurt”

Q The restaurant industry is known for, uh, a lot of sexual harassment happens. You came up with a novel system to deal with that. Can you walk us through when you recognized you needed to, to what the system is, to the impact that it's had outside of Homeroom?

A I would love to. I think that's actually something I'm really, really proud of that our team has done, and I think honestly is a culmination of a lot of the systems and values that we've talked about. Here today. What happened is a number of years ago, I started getting this barrage of emails, um, from female employees saying like, emergency, need to talk to you. And I was terrified. I was like, what's happening? But to my point, we had a lot of systems of, uh, that allowed people to be more open and more transparent and not as hierarchical, right? We held a meeting and it turned out that, uh, what they wanted to talk about is that one of them had been Um, sexually harassed in this really egregious way where a customer had stuck his hand up her shirt and, like, while she was serving the table. It was just crazy. But it had sparked all the women, um, to start sharing stories of, like, oh, I have something like that. I have something like that. I have something like that.

AI assessment note: “What happened is a number of years ago, I started getting this barrage of emails”

Q Is there another example that comes to mind where this has been, like, really practical and meaningful at changing behavior?

A I can say certainly, like, on a personal level, it's even, like, changed the way I am with, like, friends or, or family, and I think people would say that a lot. Like, this is a technique that they would bring not just into problems that we had within the company, but that they'd bring home. Because, I mean, think about how many times, like, we've Fight with, you know, friends or partners over, you know, how big of a deal was this thing, but when you take it out of, like, right and wrong, and should be punished, or how do you make it, like, but when it's just like, oh, shoot, like, how do we do this better? How do I help right a wrong? It builds, you know, closeness and intimacy and accountability, and I think that's something you can bring everywhere.

AI assessment note: “changed the way I am with, like, friends or, or family”

Q Why do you think same store sales or, you know, restaurant location sales are down for most restaurant changes? Most restaurant brands, whether small or large, I mean, they're all suffering through this. You're not. What do you think is the cause of this?

A This is honestly one of the hardest times that I've seen in the restaurant industry in all the years I've been in it. I think we're sort of in a moment of Of reckoning and change. Costs have gone up. I think people are rethinking the meaning of work and what's worth their time. And most restaurants, like I said, are not inspiring places to work. And so I think a lot of people have said, I don't need to do this with my life. So restaurants, you know, nationally are having really hard time staffing, really hard time making money. Like the face of cities have changed in the face of like, um, You know, a lot of work going remote. So I think it's just a moment of, like, reconfiguration and change, and I think all industries go through it, and I think it's just being particularly heartfelt in the restaurant industry right now. There's a lot to be learned from the people who are, like, creative and trying new things and experimenting with new things. I think, like, the hardest moments are usually what give rise to sort of, like, lasting positive change because only the best ideas sort of make it in the long run.

AI assessment note: “Costs have gone up... people rethinking the meaning of work... work going remote”

Q Did cooking start when you were a kid?

A My family really loved food. Actually, me and both of my siblings, we all own restaurants or bars, like, which is so funny, because I think to, like, my parents grew Deep disappointment. That's true, but it was, we're all so different, but the one thread that, like, really held my family together. My parents were very obsessed. They both actually were entrepreneurs and had their own businesses, but every single night we would have dinner together as a family, and so I think cooking and food was a very, like, central part of my youth and certainly is something I still do with my kids today. So, yeah, I'd learn how to make things, uh, mostly from my dad, who actually would only cook, like, five things. One of those things was macaroni and cheese, so it ended up serving me Very well later in life. I've always felt like a deep connection to food as a source of, you know, not just like nourishment from a physical perspective, but also from an emotional perspective as like a way to bring like diverse family members together or a community together. I think it's really just a much deeper thing than, than just physical nourishment.

AI assessment note: “cooking and food was a very, like, central part of my youth”

Q Do you tend to go all in to whatever you're doing? Like, it sounds like you, like, tried it once, you liked it, and then you're like, boom.

A I'm in food. I'm in restaurants. So I think I'm really motivated by things that my body responds to really positively. That could be a delicious taste. That could be a beautiful, you know, space that you're sitting in. The ocean was really something that just engaged all my senses. We're taught to do so much In our minds, and I'm a pretty, like, thoughtful person that can get lost there, so I tend to try to pay attention to my body and see, you know, what feels good, and I think we know on some primal level the things that feel right and the things that don't, and learning to follow the things that feel right has been pretty valuable for me.

AI assessment note: “learning to follow the things that feel right has been pretty valuable for me”