Speaker 1:
From the Library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership, and vision in global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years.
Speaker 1:
Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism. Right here, right now at the NYSE and at ICE's exchanges and clearinghouses around the world. Now welcome, Inside the ICE House. Here's your host, Josh King, of Intercontinental Exchange.
Josh King:
Since Henry Hudson first sailed into New York Harbor, the corner of Wall and Broad Street has lured ambitious innovators seeking new opportunity. An early business to sprout up in the new world, not necessarily scalable, was fur trading. The Dutch West India Company, one of the first public companies in history set out to open up the nascent North American Business Park to investors. In 1624, the Dutch began to trade right here on the corner of Wall and Broad. Where the New York Stock Exchange stands today, you could find beaver pelts from the Pacific Northwest piled high, that is until animal populations dipped in the early 1800.
Josh King:
But the Dutch were driven out of Manhattan long before the beavers when the British captured New York in 1664. The area would remain an English colony until the United States declared its independence 112 years later. But fortunately for New York's economy, English rule brought with it a new commodity and a morning ritual, coffee.
Josh King:
The trading and consumption of the bitter bean grew quickly, leading to the creation of a coffee exchange that is today a cornerstone of Intercontinental Exchanges network of markets. The caffeinated beverage and ICE's role in its trade has been a topic we've hit here several times. Just like the fur trade before it, coffee eventually made its way to the Pacific Northwest where it became ingrained in the unique culture of that region.
Josh King:
In September 2021, the Dutch returned to Wall Street in force led by our guest today, Joth Ricci, a very proud Oregon State Beaver. The reason for that visit was to celebrate the listing of Dutch Bros Coffee for one of the largest and most entertaining IPOs in recent history of the New York Stock Exchange. Today, Joth Ricci, CEO of Dutch Bros and author of The System: Powers of Five, makes his return to 11 Wall Street to join us Inside the ICE House. Providing an update on what happened after that memorable IPO, his career journey, and to share some of the lessons codified in his writing. That's coming up right after this.
Speaker 3:
Now, a word from Genpact, NYSE ticker G.
Speaker 4:
We are currently encountering delivery delays.
Speaker 5:
Genpact is transforming supply chains using real-time data to help manufacturers keep goods flowing from the warehouse so cupboards are never bare at their house. We are in the relentless pursuit of a world that works better for people.
Josh King:
Our guest today, Joth Ricci is President and CEO of Dutch Bros Coffee, NYSE ticker symbol B-R-O-S or Bros. Prior to joining running Dutch Bros, he served as president and CEO of Adelsheim Vineyard, president of Stumptown Coffee Roasters, and CEO of Jones Soda Co. Joth serves on the Oregon governor's Racial Justice Council, sits on the board of the Oregon Business Council, and co-founded TASTE for Equity. Welcome Joth, Inside the ICE house.
Joth Ricci:
Thank you for having me. It's great to be back.
Josh King:
It's been six months since the Bro-istas is led by co-founder Travis Boersma took over Wall Street for Dutch Bros Coffee's, highly successful, and for our perspective, enjoyable IPO celebration. What impact did going public have on the company or was it just business as usual once the team made its way back to Grants Pass?
Joth Ricci:
No. I think that the way you captured our memorable celebration here in September, I think that you could say that continued. The whole idea for us going public was to be able to share and share with all of our people and our employees and created an excitement that we kind of made it. I think there's been a general excitement of like, I think there's still people pinching themselves like Dutch Bros is a public company. I mean, we're from Grants Pass, Oregon and we're a public company. We did something pretty special. I think people are excited and proud to share that message as we've done kind of all over the country now.
Josh King:
As the name suggests, Travis and his brother, Dane, are of Dutch descent. For our audience who may not be east of your footprint or may not know the story behind those ubiquitous windmills that got in the landscape of the west. Can you share the company's origin story?
Joth Ricci:
Yeah, so Trav and Dane, two kids that grew up dairy farmer in Grants Pass and Grants Pass is about 250 miles south of Portland. As they were kind of growing up and Dane was about 15 years older than Trav and kind of exploring their way more or less, they landed on this idea of what was called espresso at the time with no Starbucks to be found anywhere in the area. They decided to test their entrepreneur skills and they opened up a pushcart in downtown Grants Pass to sell coffee.
Joth Ricci:
While the product was what they had, what they really were selling was service and relationships and bringing people into something that had a lot more to do with relationships and people and treating people well. The coffee just kind of came along with it. From that day in February of 1992, we just celebrated our 30th anniversary and that really has been the origin of what this business is about and has carried through for the last 30 years. I think, even to this day with 15,000 plus employees and now serving as far east as Tennessee, I think you would still find kind of that spirit that Trav and Dane had on day one. I think that spirit is still true today across the 565 locations that we have.
Josh King:
Those 565 locations, Dutch Bros offers a wide selection of beverages, including a colorful assortment of energy and blended drinks with names that could be both an NFT collection and a beverage. How do you take customer feedback and turn that into new products?
Joth Ricci:
Our customers and our baristas are mainly responsible for the naming and the creation of our drinks. We share a pretty limited menu as far as the categories that we sell, but there are thousands of drinks on what we call our secret menu that really have been created by so many different people along the way. We get submissions all the time on new drinks, new ideas because really, we're about customizing what you want every day and we come up with some pretty fun names, as you mentioned.
Josh King:
I mean, thinking about what we're seeing now on the headlines, the way energy prices are spiking. In addition to attracting customers, I imagine, the diversification of the company's offerings has to sort of serve as a hedge against rising coffee costs, but do you see headwinds for your drive through stands from the recent rise in both coffee bean and gas prices?
Joth Ricci:
A third of our business is done in espresso-based drinks. Coffee, technically, makes up a pretty small percentage of our overall cost of goods. We're not concerned about it. I think when you live in the coffee world, you're used to the C price going way up and way down and you just kind have to live in that commodity space.
Joth Ricci:
I think, related to fuel prices, most of our stands are, they are within a kind of a person's daily life, right? It's on the way to school or on the way to work or something that you're not going to stop doing anyway. I think that from the kind of the bubble that people live in, most of our stands to kind of work within that bubble. We'll see a little bit of hit related to kind of road trips. On the west coast, we have a stand that I hear about all the time in Davis, California. That's, if you're driving from the Bay Area to Tahoe, everyone says, "Well, I stop at that Dutch on my way to Tahoe." Well, the road trip may go down a little bit here as gas prices are high but I think for daily living, I wouldn't expect us to see much of a change.
Josh King:
I did that road trip from San Francisco to Tahoe last winter during a driving blizzard, not the kind of thing you want to do without chains on the tires and a good cup of coffee in the coffee holder. For an industry with an average employee turnover of more than a hundred percent, Dutch Bros has not had that issue filling open positions that many of your competitors have not been able to fill. What's your secret for both attracting and more importantly, keeping that talent?
Joth Ricci:
In the fourth quarter this year. I think our stand turnover was around 56%, which as you mentioned, is very low in the industry. I think a lot of it is just like... I think we treat people well. There's no magic sauce here, right? I think that when you treat people well, you create a great work environment. We have a fun spirit inside of our stands where people feel like, I think, they feel like they're part of something.
Joth Ricci:
The music's great, you get free Dutch wear, you get treated very well, you get a great interaction with customers, we pay a good wage. I think our people work off the tips and I think it's kind of the combination of a lot of things. Our whole program at Dutch Bros is we want to make the barista the hero. When they're at the window and they're talking to the customer, for everything that we do every day inside of HQ, our job is to make sure the barista stays the hero and I think that we set up a great environment for them to work in.
Josh King:
I mean, if they are working directly for you, it's a little easier. If they're part of your direct team, it's a little easier. Historically, franchises were only drawn from Dutch Bros employee pool but that's something, I read, you're moving away from, last year. The company opened 98 locations and on your last earnings call, you forecasted an increase of at least 25% this year. What's the outlook for 2022 and can you expand on your decision to keep franchising only a small part of your future growth?
Joth Ricci:
One, the franchising decision was made almost a decade ago where the company would no longer franchise. The great part about our franchise system is that every one of those people grew up at Dutch Bros. They were amazing operators and really, were granted the opportunity to franchise whether that was in Redding, California or Boise or Phoenix or Las Vegas, at the time. Really what the decision, that the flip has been made is just that Trav wanted to have more control. He wanted to have... Felt like that if he put a good team around him, that we could kind of move away from the franchise model and move into the company owned model. That's really where we've been over the last five years, is moving more into company owned and will continue to do that. Of the 125 locations that we laid out for 2022, about a 100 to 105 of those will be company owned and we'll continue to kind of scale that over time.
Josh King:
You quote Ted Lasso in your book saying, "Be curious, not judgmental." I'm not sure how long it took Dutch Bros to make it the 175 miles from Grants Pass to Corvallis but do you remember the first time you were curious and had that coffee, not withstanding Coach Lasso, what was your judgment to the stuff?
Joth Ricci:
My first experience with Dutch Bros was probably 20 years ago. I believe, if I remember right, it was in Coos bay, Oregon, which is on the coast and I was working for a beverage distributor and I was doing store checks along the Oregon coast. I ran into this small coffee shop called Dutch Bros and I don't even think that I had seen it prior to that or experienced it, I had just moved back to Portland and kind of missed the whole 90s growth of Dutch Bros so I didn't even know anything about it. What I loved about Dutch, I remember for that day was the service and what that was about and I think that experience kind of left something with me. Even as I went to Stumptown and was on a very different part of the coffee journey, we loved what Dutch Bros was about and what Dutch Bros was doing as far as bringing people into the coffee in the beverage category. It's been fun, I've been curious about Dutch Bros from a long time and then I got the phone call.
Josh King:
Was the arrival of Coach Lasso to Apple Plus, for you, the manifestation of the modern John Wooden? Let's take a listen.
Speaker 7:
I had three rules, pretty much, that I stuck with, practically all the time. I'd learned these prior to coming to UCLA and I decided they were very important. One was, "Never be late." Never be late. Later on I said certain things that I had, the players, if we're leaving for somewhere, they had to be neat and clean. There was a time when I made them wear jackets and shirts and ties. And then, I saw our chancellor coming to school in denims and turtlenecks and I thought, "It's not be right for me to keep this other," so I let them... They just had to be neat and clean.
Speaker 7:
I had one of my greatest players that you probably heard of, Bill Walton, he came to catch the bus, we were leaving for somewhere to play, and he wasn't clean and neat so I wouldn't let him go. He couldn't get on the bus. He had to go home and get cleaned up to get to the airport. I was a stickler for that. I believed in that. I believe in time, very important.
Josh King:
Time, very important. Bill Walton is off the bus, sort of the way Coach Lasso disciplines Jamie Tart.
Joth Ricci:
I think that the Woodenisms and just, there's so many of them that he had and great lessons and the way that he did things. I really just enjoyed his whole piece on preparation. I think that... What's interesting about the Ted Lasso series is that a lot of the clips or the filming of Ted Lasso is done on the practice field and in the locker room, it's not necessarily so much about the game. I think that the outcome of the games are such a small percentage of what the whole Lasso series was done and I think that the writing in Lasso was spectacular. And so, kind of bringing those together is... I don't think I've ever really bridged the Wooden to Lasso thing, but now that you bring it up, there's a lot there.
Josh King:
Well, don't be late and be neat and clean is what Ted and Beard do on the field. They're not doing the geometry of soccer the way you think about the geometry of basketball. They're talking about human beings and their relationships.
Joth Ricci:
For me, I think the influence from Coach Wooden and just the readings and obviously, I never met him and never got a chance, but really studying kind of what he was about, I think that he taught this people how to put their socks on right because that he knew that would give their feet better performance. I think one of the quotes in the book is, "The coach doesn't play the game," right? As I've translated that into business, for me, it's about teaching the skills of being a great business person. I'll let you execute the way that you need to do it but I'm going to help you figure out and almost practice the things that you need to do to get better.
Josh King:
You never met Coach Wooden but you grew up in the shadow of another great basketball program, Oregon State, where your parents, you, and some of your kids attended. We're recording this on the morning after the civil war was renewed with the University of Oregon knocking Oregon State out of the PAC-12, a good day for your wife, the lone duck in the family, but what does State mean to you?
Joth Ricci:
It's been an awful basketball year for Oregon State and I was getting questions why I wasn't in Las Vegas watching the Beavers play the Ducks. I said, "You know, the last thing I want to do is end my season with a loss to the Ducks. That would ruin me for six months, if that happened." Oregon State, I was actually born on campus and really grew up in that town.
Joth Ricci:
I think that being part of that community, being part of that basketball program in the late 70s and 80s, I can tell you the day that we were named number one in the country, I can tell you where I was and what I was doing. A lot of the discipline of Ralph Miller and the work that he did in the 80s with Gary Payton and beyond had a lot of influence in my life. Oregon State means the world to me. I sit on a couple of boards of schools there right now on food science and education and will continue to do whatever I can to advance that work that they do because of what they gave to me.
Josh King:
As you draw a line though from Naismith to Ralph Miller to John wooden, as reflected in The System, how does basketball mirror life?
Joth Ricci:
It's about paying attention to detail. It's about being in the right places. It's about observing the wholeness of the space versus just thinking about yourself. I think that in basketball, if you're an individual and you try to take on everybody else, you won't be successful. If you understand that it's about a team and it's about spacing and it's about everybody has a role and that you have to be aware of different people and the emotional intelligence of everybody, very, very similar to how that plays out.
Josh King:
After graduating from Oregon State, I read that your mother was one of the first employees at the Corvallis HP plant. How did your mom and where you grew up influence the type of leader and business person that you would eventually become?
Joth Ricci:
My mom was, and still is, a very special lady. She would do anything for us growing up. She was an educator by... She had her degree in education and after having my brother, actually lost her job in the early 70s and wasn't able to go back to teaching. And so, she was figuring out which way to go and she landed with this new company in town called Hewlett Packard.
Joth Ricci:
I think that my mom's drive to do things well, her work in community, the way that she advanced at Hewlett Packard to the place that she became in Corvallis, I think was always inspirational to me. We did things right. She was very disciplined with us as far as growing up and how we treated people, how we showed up, the way that we were. And so, she had a lot of influence on what we've done and she had a great career at Hewlett Packard. I was just talking with her the other day, she's finally, at 75, no longer agreeing to lead philanthropic efforts anymore. But that's at 75, she's finally figured out that maybe it's time for her to take a step back. She's a special lady.
Josh King:
One of the first jobs that you had was at a very different NYSE listed company, Johnson & Johnson, that's ticker symbol, JNJ. But initially, you had accepted a job, like your mom, to be a teacher and a coach. How did you end up in business instead?
Joth Ricci:
My degree is in business education. I just wanted to be a basketball coach and a teacher. I was doing some side work in the summer to kind of fill in and get some income. I was just doing any grunt job that would get thrown my way at a food brokerage in Portland, Oregon. I was taking out trash, I was changing light bulbs, I was resetting categories, and I did a project for one of our account managers and she had just come from McNeil consumer products and had taken a job at the broker. She said, "Hey, I can get you an interview with McNeil who I just came from but I think they've got somebody already slated but it'd be great experience for you as you're getting a teaching job."
Joth Ricci:
And so fast forward, one of the questions I got asked that kind of, I think, advanced me was the interviewer had said, "Hey, you've never sold or been in business before, what makes you think you'd be a great salesperson?" and I said, "Well, have you ever stood in front of a classroom of 16 year olds and try to convince them that what you're saying is important?" and I said, "To me, that's selling." The idea of being in a classroom, understanding different learning skills, and having a very advanced learner versus somebody who was slow to pick things up, really, what that's done for me is I've taken that application and been able to apply that to business. I took the job at JNJ, honestly, I was going to get to go to the Yankee stadium and see the Yankees play and I'd never been to New York and that was part of the initial training program. I'm like, "Okay, I'll take it. I can always come back and teach."
Josh King:
I'm curious, from JNJ, how your career developed from there and what eventually brought you, not just to the beverage industry but back west with Columbia Distributing Company, that role that you were driving up and down the coast and suddenly, you've walked into a Stumptown stand.
Joth Ricci:
Nine and a half years with McNeil consumer products, I tell people I grew up in business working for the people that dealt with the Tylenol tamperings of the 80s and what a great education that was and the way I was treated, I got a chance to live all over the country. My daughter was born in LA, my son in Philadelphia, and I came home from work one day, I looked at my wife and I said, "You know what? I'm from the Northwest." I took a chance, I'm 32 at the time, and basically started my career over. I went home and got connected through a couple people to the founder of Columbia Distributing and he looked at me and he said, "You know what? I have no idea what to do with you. I've never hired anybody outside the beverage industry but if you take a chance, I will help you get home and let's see what happens." Two years later, I was the GM of that business and we had 6,000 employees and one of the largest, most dynamic beverage distribution businesses in the country.
Josh King:
I'm a bit of a beverage nerd myself. I've been to a couple BevNETs and I remember clearly this product, Jones Soda and the very striking bottles and the photographs that were on those labels. One of your big opportunities is CEO of Jones Soda Company, really a trial by fire experience with the founder being ousted on your first day. That left you in charge of a public company with a stock price, really, that was unsustainable. Were you able to take anything from that experience as you led Dutch Bros through its IPO?
Joth Ricci:
Without a doubt. I think that as everyone will point out, I mean, the biggest lessons you learn is from the hardest times. Going from a very successful run at Columbia to a very challenging time at Jones Soda, I think I went into that job having no idea what I was walking into. But you know what? You wake up every day, you figure things out, and I learned a lot about public company. We had a shareholder lawsuit, the founder had misrepresented a lot of things that we were doing, but inside all of that, the brand was still pretty special. So how do you save a brand despite all the noise around it and keep your team focused on the things that we need to do every day and try to shield them from maybe some of the challenges that were happening? I think as I went to Dutch and we started to prepare this idea of going public, there were a lot of lessons that I learned from the Jones Soda days to bring in.
Joth Ricci:
I think that one is, Dutch Bros is a special company. I've said from the beginning, we weren't going to get drugged to the mean by going public. We got to make sure that specialness of even who we were the day that we came here to celebrate the IPO, we wanted to make sure that we were special, we maintained who we were, and kind of what got us here. We were going to be very disciplined and very honest about who we were and who we weren't and why we were going to do things and I think people have respected that along the way.
Josh King:
You and I have been talking so much about being a teacher. You take lessons to First Beverage, you take lessons to Jones, and all these things feed in your next gig at Stumptown where you helped launch the cold brew frenzy and then met the Dutch Bros team. What was you your first impression when you met them?
Joth Ricci:
Trav and I would tell you the story that we both weren't real crazy about that meeting because he thought he was bringing his team up to a very pretentious third wave coffee company. I thought we were bringing up this group that's like, I don't even know what those guys do every day. No one even knows who they are. They live in Grants Pass like, "What are we doing here?" and what Trav and I figured out very quickly is that we were very much the same people. He was shocked by just how hospitable and actually nice we were and we were shocked actually about how much they knew and how good they were. We shared a lot of insights related to the category and cold brew and Trav and I both remember that day very much.
Josh King:
As we head into the break, Joth, you see a pattern somewhat in your career as you went to Jones, Adelsheim Winery, and now, Dutch Bros. Succeeding the founders as the leader, one of the hardest jobs to do, we've seen it a lot, why have you been so adept at doing that and why do you think so many have trust you with their life's work?
Joth Ricci:
I think that somehow my approach feels good to a founder. I try not to be a dominant personality. I come in and I'm very much about figuring things out. I'm very respectful of the founder's body of work. I take an approach to teaching. What I try to do, I've actually never terminated anybody that I've inherited from a founder. If they choose to leave and they don't like where we're going, that's a different story. My approach, really, with the founders has been, "Hey, I can come in and actually elevate your team," because most of the founders and one of the commonalities is that, I don't know what I don't know and I feel like I need somebody else to come in to help me elevate the business. That's been very common across all those companies and this is my sixth go around.
Josh King:
Sixth go around, here we are at Dutch Bros. After the break, Joth Ricci, CEO of Dutch Bros coffee and I talk about The System for that sixth go around and the Power of Five and how it can help anyone live their best life. That's right after this.
Speaker 3:
Now, a word from Fiverr, NYSE ticker, FVRR.
Speaker 8:
Hi, we're Fiverr, a global marketplace connecting individuals and businesses with freelancers offering thousands of digital services. Graphic design, web development, video editing, e-commerce marketing, you name it, there's a professional freelancer ready to make it happen.
Speaker 8:
Filter your search by the service needed, budget timeline, and boom! Fiverr provides a list of talented freelancers to meet your specific needs. Always know what you'll pay upfront, no hourly rates, just project-based pricing. And because payment isn't released until you approve the work, you can rest assured that you'll be satisfied with the quality and get exactly what you want.
Speaker 8:
Our support team is always available to answer questions or offer assistance when you need it. With a whole world of freelance talent at your fingertips, what might you achieve? Join today and find out. Fiverr, it starts here.
Josh King:
Welcome back. Before the break, Joth Ricci, CEO of Dutch Bros coffee and I took a caffeinated tour of his career and examined how Dutch Bros went from a cart to the largest IPO in Oregon history. Over the course of our conversation so far, it's clear that your career has been focused on teaching others but why was now the right time to codify those ideas in this book?
Joth Ricci:
You do this enough times and there were enough changes that I've been through and I actually was with another CEO in Portland and we had been meeting and he said, "Hey, you know someday, I'd love to have you walk me through your system." I looked at him and I said, "That's a really good question. I don't even know how I would answer that." He said, "Whatever you've been doing seems to be working pretty well. I think it'd be great to learn how you do it and what you do." So that got me thinking about actually at this stage of my career and I've got kids now that are young adults and maybe I should put down on paper what it is that I do and how I think and hopefully, if I can just help a few people think differently about what they do or really how they organize.
Joth Ricci:
I think what it came to was that, I think every leader should have a system. They should understand what their system is. They should understand why it is that they do what they do and I think it helps them be pretty clear with their people. For me, this was a gift to my team and to our extended team to basically be very clear on, "Hey, this is how I run things. This is how I do things. If you're going to be really successful in my system, these are my expectations for you," and that's how we got started with it.
Josh King:
For listeners, obviously, who can't see The System, this work that Joth has put together, you can refer to it as a book for lack of some kind of a better descriptor but the pages, pull outs, activities, doodle pages certainly don't look like the typical CEO manuscript. We've had a lot of them in this room talking about their traditional written words on many chapters. How did you come up with the format?
Joth Ricci:
I did not want a book. So when I took the idea to the team that helped me put this together, I told them, I said, "The last thing we're going to do is a traditional business book," because I think the world doesn't need another one of those. I said, "What I wanted is, I wanted the design thinking to be incorporated into a business book. I wanted short lines, quick reading," because I really felt like, especially for younger leaders, that's the world that a lot of our younger leaders are working in.
Joth Ricci:
So in 200 character texts or less and things of that nature and then I want a lot of color and inspiration. And so, every piece of art that is in the book, we spend a lot of time on the art and the creation of that. It's really with design thinking in mind. I believe that when you're looking at art or when you're looking at some sort of design, your brain is actually working in a way that unlocks things for you that you don't even know is happening. We wanted to have things that were inspiring, interesting, and hopefully would get you thinking a little bit about what you do.
Josh King:
This is what you can read in that period between 5:30 AM and 5:55 AM, personal recreational reading book, right?
Joth Ricci:
Correct. It's been fun. They said, "Let's do a day in the life and show kind of how you operate." I think it's one question that's really good, especially for a lot of younger leaders in the audience is like, "What's your day like?" What we wanted to do is kind of get personal and show like, "Well, this is how I live my day as a CEO of a public company. This is how I have to be organized and I spend a lot of time in the morning actually preparing for my day." I don't get up and go to work. I actually get up and prepare, kind of get my brain ready and my body ready and be ready for the day that's ahead of me.
Josh King:
Another beverage entrepreneur that I know, Seth Goldman, codified his hard lessons learned in a book that he called, Mission in a Bottle which is really essentially a graphic novel about the founding of Honest Tea. I often think about this, Joth, is there something about the brain wiring of an entrepreneur that needs to communicate in a different way?
Joth Ricci:
I think the short answer to that is yes. Seth is an amazing person with incredible energy and has built an incredible brand and actually probably done things even way beyond that. He gets the credit for Honest Tea but I think the work that he's done outside of that is probably even more special.
Josh King:
On page 37 of The System you say, "A letter to my future self, I commit to the following changes over the next year." You help the writer out by saying, "Dear future me," and the rest of the page is blank and it says, "Please take a photograph of this page with your phone and email it to me at [email protected] and we'll be in touch in a year's time." Any feedback yet?
Joth Ricci:
We've had some great letters come in. Again, we've distributed 200, 300 of these books and it's up to you. I think that none of this is required. It's really more about how do the thoughts in here inspire you and I think that the letter in there comes out of the idea, the personal values grid and some of the balance pyramid and how you think about leading your life. What we've found is, we've had some very thoughtful emails come in with some perspective on, "This opened up my idea about this," or, "This is a great time in my life that I want to do this." That was the whole idea, is that, "Can you hold yourself accountable to the changes or are you just going to read a book and put it up on the shelf and decide not to do anything with it?" We wanted to create some accountability with that.
Josh King:
Wooden talks as much about being an English teacher as he does being a basketball coach. As a guy who's been in corporate communications for a long time, I have been in the midst of a lot of exercises designed to write company values. Sometimes they are one word and sometimes they're a long paragraph. I love the construction of the personal values grid, personal characteristics, organizational mindset, personal skills, organizational expectations. Got that one word and then a pretty brief descriptor phrase. Was this your own mental exercise to come up with?
Joth Ricci:
Yeah, it was. And really, the cross section of that is communication and listening. I think that when you go back to personal values and what I wanted to do was take the top half of that grid and talk about you. And then, I wanted to take the on half of that grid and talk about teams and people. You need to understand and keep it to five because I think beyond that, you just lose... You don't remember those things. You want to keep it very simple and really, "What are the things that you can do? How are the things that you need to be able to do in order to contribute to a great organization?" The top half is about you, the bottom half is about the team, and making sure that you understand that communication and listening are the two things that can make you great and also break it down.
Josh King:
Is there a particular quartile or any of these particular 20 single words that you'd love to see your employees excel in?
Joth Ricci:
I grew up in business, really, with the idea and the concept of emotional intelligence. It stuck with me from the beginning and it stuck with me... I talk a lot about emotional intelligence and awareness. For my employees and especially for my leaders, I think the awareness of situation, the awareness of how people are doing, the awareness of what's going on around you, "Do you see things? Do you understand when you walk into a room?" I think a leader can destroy a room and a leader can elevate a room. But if a leader isn't aware or understand the people dynamics of what's happening, I don't think you can be a great leader. Probably those things, for me, of those 20 things, those would be the two things I would point to.
Josh King:
One of the most interesting parts of the book is about capacity. Do you think, as a society, we have maybe an over capacity epidemic?
Joth Ricci:
Counter to that. I think we are an under capacity society. I think that most people don't realize their capacity. I think that we're consumed with noise and I think we've allowed the noise to become what in our minds is capacity and overload. I think that we haven't done a really good job of really exploring what the true capacity of ourselves are. I see it all the time. I really believe that there's a lot more that people can do if you find the right things in them to kind of unlock and get them thinking a little bit differently.
Josh King:
Talking about unlocking, getting people to think a little bit differently, the book is sort of playful but it's pretty complex. I've been part of organizations where the leader and the human resources department talks and provides materials about how this is going to be a matrix organization but it sounds okay as it comes off those lips, but it's a little hard to get your arms around. You've proven yourself with this book and your system to kind of be a master of that, but for an everyday listener, how do you get people excited about what often goes over their heads, as they hear from human resource is, "We're going to be a successful matrix organization."
Joth Ricci:
The interesting thing about using the word matrix is all you're really doing is identifying what we're doing every day anyway. Some of the biggest failures of working in a matrix and working on teams is actually just the fundamentals of people because you have to live in a matrix organization to run a great a company, at least I personally believe that. But in order to live in a matrix, you have to think about others more than you think about yourself. You have to think about what you do and how you affect things and how you change things. I think as the book was coming together, it became very clear to me that the person who was going to teach this and live this for our organization was me.
Joth Ricci:
If I didn't live it, if I didn't own it, if I wasn't that person and... I put it on paper. Every meeting I walk into, every piece of communication I have, now if I've established the expectation that you should hold me accountable to what I'm asking you to do, and I'm just going to, and I will teach you the things that you don't know, or even some of the characteristics that I don't see in you that I think will make you a great teammate in a matrix.
Joth Ricci:
Yeah, and it never stops. You can't... I think one of the mistakes people make, and to your point, is the HR team or the leader, you run a workshop and this is how you do it, "Okay. Now go do it," right? That's the biggest mistake you can make because no one's going to change behavior to do that. I think great leaders have to live it every day and hold their people accountable.
Josh King:
Talking about the way we work every day, Zoom fatigue is something that's become part of the corporate nomenclature. But whether you're working in person or remote, I find most of my day spent in meetings online, in person, can you explain to our listeners what you mean by meeting DNA and how it's helped your company use time efficiently?
Joth Ricci:
I think from a meeting DNA, I think that, one of the things I talk to my team about and I talk to other leaders about, is that, to your point, we spend a lot of time in meetings. I mean, honestly. Meeting efficiency, from a leadership standpoint, it actually should be a top three things that you should focus on. How do I get more time? How do I use my time more efficiently? How do I make sure that I'm not wasting my time in meetings? I think it's about like, "Did you invite the right people? Do people understand why they're there? Can you do this in 30 minutes or less? Could all of this been done via email and you actually didn't need to meet in the first place?
Joth Ricci:
I think that if we all figured out a way to just run meetings better, we would free up so much time in our day, in our week, in our year to run better companies and to give better kind of quality of life to people because I think we're all... Listen, even pre-COVID, we're all tired of sitting in meetings, especially bad ones. Nothing can drag down the culture or the development of an organization by just, honestly, having bad meetings.
Josh King:
The System, your work here that we're talking about based mostly on fives and geometry, except for the introduction of trimesters. Now that you're managing a public company, you are changing how your system works in your day to day to match a quarterly cadence. How do you sort of chip away at fives to allow for trimesters and for quarters?
Joth Ricci:
Our planning system and the way that we do things is on trimesters. A lot of that is just based on is that quarters are too short from a planning system and from an execution system. If you don't have to plan four, then plan three. The way that our business works and the seasonality of our business, it works better in a trimester system.
Joth Ricci:
From a quarterly standpoint, that's really just reporting to the outside. I don't run my business on quarters. Unfortunately, we have to report quarterly which puts our accounting and finance team in a different cadence but it actually doesn't affect the way our marketing and operations team runs the business. Some of that, you just have to kind of play out and say, "We're going to do one thing like this over here. We're going to do another thing that's best for the business over here," and manage it.
Joth Ricci:
The geometric shape side of The System is really more about spacing and really more about balance because every geometric shape, whether it's a triangle or a dodecahedron, in order for it to be a geometric shape, it has to have appropriate spacing. I think that the lesson there is making sure that you keep things appropriately spaced and balanced so that if you get overweighted in one way, that shape will lose its presence and not be able to function.
Josh King:
As we wrap up here and still cling to that idea of meeting DNA, I've been asking all the questions, but are there second questions that I've been missing?
Joth Ricci:
I think in every topic, there are second questions. I think that the curiosity of people and as I've stated, you learn a lot more from the second question than you do the first. It was a lesson I was given in interviewing 30 years ago and I believe that holds true today in any conversation. I think that if you find that people aren't asking second questions, then one, they may not be paying attention. Two, is that this is a transactional relationship versus a relationship of curiosity. I really look for my people to be curious and be paying attention if they're asking more questions and they want to learn more, they want to understand more. It makes for better conversation and much deeper conversation, a much deeper learning in an organization.
Josh King:
Well, I have one more second question. The book ends with a selected reading list. Most of which are not surprising like John Wooden's How to Play the Game the Right Way, but one suggestion stood out. Let's play a little clip.
Speaker 9:
Not in a house, not with a mouse, I would not eat them here or there. I would not eat them anywhere. I would not eat green eggs and ham. I do not like them, Sam-I-Am.
Josh King:
Joth, why is Dr. Seuss's Green Eggs and Ham a must read for you?
Joth Ricci:
Green Eggs and Ham is the best business book ever written. When you break it all down about how to be successful in business, it is about understanding why you're customer doesn't like what you do and how you position yourself to a point until you convince that customer that what you have is what they want. If you just boil it all down and you think about Green Eggs and Ham and you think about the motivation, the curiosity, the questioning, the positioning, the way that he does as things, at the end of the day, it's really all you need to know.
Josh King:
It may be all that you need to know but we've been talking at length about a very interesting piece of work called The System: Power of Five, not available at your local bookstore. For listeners interested in The System, sign up for early access at www.thesystem.co, the masterclass digital experience and book will be released in the coming months and net proceeds will benefit the Dutch Bros Foundation education fund. It's been a great conversation, great visit. Great to have you back here after your IPO and good luck with the rest of your investor meetings here in New York.
Joth Ricci:
Thank you. This is a special place and thanks for having me.
Josh King:
That's our conversation for this week. Our guest was Joth Ricci, president and CEO of Dutch Bros coffee, NYSE ticker symbol, BROS, B-R-O-S. If you like what you heard, please rate on iTunes so other folks can know where to find us and if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us, @ICEHousePodcast.
Josh King:
Our show is produced by Pete Ash with production assistance from Stephan Capriles, Ken Abel, and Ian Wolfe. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 10:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
