Intro: Duration: (01:33)
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Hi everybody, I'm Jeff Hunt, and this is the Human Capital podcast produced by GoalSpan. My quest on this podcast is to uncover the deeply human aspect of work. Today I get to talk to the president and CEO of a 153-year-old family business. How many companies do you know that have successfully maintained family continuity throughout so many generations? I guess is probably none.
Today we'll learn what it's like to run a company with so much history. How do you preserve core values that define a culture of excellence while shedding old behaviors, which don't work anymore? How do you retain the positive aspects of heritage? While creating innovative new products in a company with so much longevity, you don't do these things exceedingly well by accident.
My guest today is Gunlek Ruder. Who's the president and CEO of S. Martinelli and Company. Most people know Martinelli's by their award-winning sparkling ciders and apple juices, which are in my opinion the best in the business.
In addition to president and CEO. Gunn received his bachelor's degree from Georgetown University and his MBA from Stanford. Welcome, Gunn.
Great to be here, Jeff. Thanks for having me.
Topic 1. Who or what inspired you to go into business? (01:34)
Before we get into the family business topic, which is near and dear to my heart because I formerly ran a family business myself.
I would like you to take us back to the beginning of your career. Was there one person or significant event that inspired you to go into business? Ultimately pursuing executive leadership?
Yeah, you know, not necessarily one person, but there was a period in life where I was trying to figure out what I wanted to focus on.
I initially was thinking about a medical career. When I went into undergrad, spent two years in a pre-med program, then switched to a history major, and ultimately wanted to live and experience life overseas. So, I moved to Japan and I was working with a Japanese company and that my first project there was to help figure out how to work with the Japanese industrial group that I was part of, which was associated with Nippon steel, the Japanese government, and the world bank to apply a program to rehabilitate.
Soviet oil and gas industry after they had just emerged out of their communist heritage in the early nineties. And for me, Russian history was actually part of my undergraduate studies. And what was so interesting about that experience, it got me energized about business is I had thought about politics.
I thought about, as I said, the medical field has an impact. But what I saw in that process was how business could impact not only making money for those that are conducting the business, but also having an impact in the world around you and having an impact on politics, having a direct impact on benefiting people's lives in the Russian economy and the Russian people.
So that experience of bringing the background and interest in the culture, but also then the experience of understanding the impact of business in that context of helping to shift the geopolitical focus of Russia. That whole experience really codified for me that you know, I can have a broad impact through the business world as much or more than how I was conceiving of having it in the medical field or going into politics.
It's such a great reference for our listeners, especially when you think back 20 or 30 years ago, it was very different. Today this is really what employees are demanding, isn't it? So they want to join an organization that is truly having a difference on society, the employees, the world. They want to be clear with their purpose and have it be compelling. Wouldn’t you say that is true?
Absolutely. And it is interesting to see that evolution now kind of has to be part of your DNA in terms of having a more holistic view of how you can provide an opportunity for your employees. Not only to go and punch a clock, if you will. But to really understand how they're impacting the local community and the broader community, as well as global issues that we're all facing.
And that's part of what makes a family business so interesting because there are some things that are just intrinsic in terms of how a family looks at a business and what that means versus non-family businesses. We have a few more threads that we can pull on and latch on to, but we have to obviously go well beyond that and build out the value proposition for our employees.
Topic 2. How is it like to work for a family-owned business? (05:01)
Without question. Speaking of a family business, how did you end up coming to work for the Martinelli family?
Well, that's a very long story, Jeff but it started. I've known the family since I was 14 years old. I had been exposed to the products and was a very loyal consumer from, from those days.
But I had great respect for the family over time growing up in the bay area and having met them when I was young and met some of the family members that were running the business at that time. When I was in business I had kind of an eclectic career in Japan and then in consulting and in banking and some other, venture-related activities.
And I wanted to back into managing a business and away from more transactional roles that I had had in venture capital and private equity. And at the time I was approached by the Martinelli family to help them think through their succession planning and how they could evolve their management team.
To bring in somebody from the outside and to help guide the business forward because there was nobody in the family that was ready to take that step. And after a variety of different discussions about how to frame that problem or that opportunity, it was something that I became quite interested in, in terms of not only the challenge of this generational shift in this family to non-family management, but also some of the opportunity as I saw with this great brand, and to continue to grow the business for years to come.
So, I've known the brands for many years and was just intrigued by the nature of the opportunity that I frankly, never considered. I had never been in manufacturing before then or in the consumer product goods industry. So it was a big shift for me, but because of my respect for the family and the opportunity itself, it became really exciting to make that change.
And it seems like filling the positions of executive VP and or CFO really gave you sort of paved the way and gave you probably some really critical insight and experience in terms of taking over the role of president and CEO correct?
Yeah, that's right. The path to the succession for John Martinelli at the time, his presidency when I joined, and when he hired me was to come in as.
The VP report to him, but with all the business lines reporting up through me and it gave me a chance to immediately jump into the business with everybody reporting up through me, but also with the transition of him still being involved and grooming me to step into the most senior role.
Having the financial role as part of that, was a critical sort of piece to understand how all the different dynamics in the business interact and ultimately drove earnings, and every business is a little differently and my background was in finance. So seeing and controlling that end of the picture really got me very quickly, I've got up the learning curve, which was steep, but very quickly because of that, that view through finance.
Sure. While we're on this topic of finance, maybe you could share just a little bit about it. Why it's so important for not only CEOs but leaders and executives in any capacity to really have a financial competency. Do you have any thoughts on that?
Yeah, I do. Jeff. I would take one step back and I will answer the question, but I think is very critical in this economy and in this competitive landscape that we have, that there's a lot of cross-functional interaction and engagement. So not only marketing folks understanding finance or sales folks, understanding operations, but everybody needs to be fluent in the challenges and opportunities of other parts of the business because things are so dynamic and interconnected.
And so I think fair to say across the board. At the executive level, there needs to be a lot of tight integration, especially in marketing. I'm sorry, especially in manufacturing, when we're dealing with the supply chain issues that we are currently, that everybody has to be aware of the constraints and opportunities in real-time, as we talk to customers. So we've talked to consumers as we talk to suppliers that cross-functional understanding is critical in the moment.
Topic 3. Is it helpful to maintain family ownership as a business? (09:25)
Gun, give me your take on why you think it's helpful if you do, for companies to maintain family owners through the generations. Do you have any thoughts on that?
Yeah, I have many thoughts given what we're now on our fifth, well, technically our sixth generation, our fifth generation had a baby.
So we've now six generations of Martinelli's, but I think it's critical. There's a different lens that families put on a business and it relates back to meaning. And why are we here? And the family has a very personal connection to what this business means. It certainly is about dollars and cents and making money and making sure that you're competitive and all of the things that every business needs to be, but the business represents something more to the family.
It represents family right there. Their touchstones in the business are about their children or their parents or their grandparents and the stories of generations that precede them, that mindset inevitably impacts. And this translates to the people who are all of us working here as well. We have that connection to past generations through the stories that have been told.
To us by the family members. And then we tell our employees as the management team and how we keep those stories alive, and that sense of purpose and passion around what the company represents is an asset that many companies don't have as a motivator for our employees. That we're part of something more than a business.
And I was about to say just because. All businesses have impact and value, but we've got 153 years to draw on and trace the threads of the business from 1868 to today. And that gives us a lot of power with our employees as a motivator and connecting them to a bigger purpose or a bigger cause than many other companies can offer.
That also translates to how we tell our story externally, you know, for consumers, there's a lot more awareness amongst buyers and consumers, especially because of consumer packaged goods and food products. Where is this product coming from? What’s the story behind what I'm eating or what I'm purchasing?
And the story for us, we have an extremely genuine family business that has put the heart and soul of this family's time and energy into for 153 years. And that is a story that as you, as you said in the introduction, it's very difficult to replicate. There aren't many companies out there like us, and that's a real asset for us that frankly, we need to do a better job communicating because many people don't know that history. But it does have meaning.
We've talked to consumers that story is powerful and that is implied through what many consumers know. But what I know directly from how the family thinks about the business, the care that we put into this business, the legacy that we seek to preserve, and how that's translated into the quality of the products and the types of relationships we build with our employees and our customers and our consumers is there's just a different feeling when you're in a family business and that perspective of being so personal.
And they're having such generational passion that we can rely on and stand on the shoulders of all the Martinelli's that have come before us. So it's a very different feeling than what I've had at other for-profit companies that are non-family run companies that I've worked for. And I've worked for fantastic companies that I've loved, but it just is a different feeling here.
Right. And it's very interesting too because we talk about the consulting work we do. And with clients about how culture is the ultimate differentiator. So, you know, you can always copy pricing models and strategies and go to markets and products even, but you can't easily copy culture and it feels like.
The family business, the culture is one additional dimension. That's kind of a critical differentiator for you that is incredibly difficult for an organization to copy.
That's right. It is an advantage for us. And it's interesting, Jeff when I got here. When a company is relatively small, and the company, even though we've been around 153 years, it was a relatively small company up until about 25 years ago.
25 - 30 years ago. There was a real growth curve that continues, but for a small company, it's easier to maintain that culture. If there are fewer people around without the discipline of codifying, what you care about and what it means to be a family business or whatever, the differentiator that you seek to emphasize is the company's culture.
So we took a lot of time to try to distill. What we felt it meant to be a family business and incorporate that in our cultural statements and our cultural values. But we also wanted to codify there are some elements that we needed to latch onto and to make sure that we were instilling in our team to make sure.
We continued to be vigorous in terms of innovation and driving the business forward, because as much of an asset that family history can be, it can sometimes be a stagnating force and that while we've done it this way forever. So, of course, we should keep doing things this way, because we've been around for so long or, well, my father used to do it's much harder to talk to somebody while my dad did it this way versus, well, the company used to do it this way.
When it's personal. It's harder to break those patterns. So, there's another edge to the sword of being a family business that we had to be very cognizant of as we structured and prioritize the values that we wanted to maintain and build upon.
Topic 4. The real importance of family-owned business in the US. How to manage a family business when you are not part of the family? (15:28)
I'm going to share some statistics for our listeners about family businesses because I think a lot of people don't really understand the magnitude of them in this country. There are 5.5 million family businesses in the US and these companies contribute 57% of the US GDP, which is about, I think $13.5 trillion. They employ 63% of our workforce, which is over a hundred million people, I think. And in addition, they're responsible for 78% of all new job creation.
The average lifespan of the family businesses is 24 years. So, you guys have beat that in spades. About 40% of US family-owned businesses, make it to the second generation, 13%, make it to the third. And 3% make it to the fourth. And so. But my question for you Gunn is when you look at all these stats, especially the employing 98 million people, that means there's a huge amount of non-family members that are working in family businesses.
You already touched a little on this, but what advice do you have specifically for non-family members in management?
Right, and I'll answer that, but did they have any statistics on family businesses that make through the fifth generation, Jeff? Any statistics on that front? I'm curious.
It stops at three, but we need to kind of get cranial over there because it’s probably less than one percent.
So yeah, for non-family managers and I'll say executives, because I think that's where it really becomes different. You have to be cognizant of what the legacy of the business means for the family itself.
If the family remains the majority owners of the business, that's very relevant to setting the priorities of the company is understanding how the family views the business, what the family's goals are, and really understand that framework before you start going down a path that you may see to take the company, whether through a planning process or what have you.
And that requires a lot of conversation with shareholders, family shareholders, the board, and whatever executives of the family may be working in the business. And it's important to have that touchstone and grounding because that is the foundation of what the genuine brand and or culture is, and has stood upon in our case, 153 years. At the same time, that can be a limiting factor.
So, you have to understand it. You have to respect it and you have to really figure it out where you can bolster where there might be areas where you can improve and build upon and potentially grow in different directions. But you have to have that grounding and you have to have the courage to challenge those assumptions of where the business has been to ensure that you're going to be relevant going forward.
And that's where I think a lot of outside managers and executives stumble. Either in viewing their job as just preserving the legacy. There's an element of the job that is the preservation of the legacy because the legacy is meaningful and genuine. But if that's all you're doing that has a limited shelf life and the other end of the spectrum is well, here's what the family did.
Well, this is 2041 now we're going to go in a totally different direction because my view of what the company needs to be is X, Y, or Z. And both those extremes aren't tenable for a family-owned business and it's that middle point of respecting the legacy and understanding what translates to maintain the competitive advantage for the business and maintain that relevancy for the brand.
As you continue to build resiliency in the business and drive innovation going forward, and in a way, again, that's respectful. And consistent with what the brand represents and what the family cares about, but that's relevant for the consumers and insurers that the business continues to grow and flourish as the environment around it changes.
So that's a balance that's very difficult to strike because again, it's so personal to family members, so it's that respect, but also courage to move ahead and to continue to innovate and grow the business.
So you mentioned this a little bit, but pre-pandemic, you took your team through a pretty intensive strategic planning, sort of reevaluating mission, vision, core values. As you are working on your own internal succession. I'm curious about what pivots you had to make in executing that plan when the pandemic hit. There's always so much learning for us in these significant events.
Yeah, we were making and now are still pivoting to being much more externally focused, to get much closer to the consumer, to become much more of a brand-driven company. And not primarily a manufacturing company that we will always be a manufacturing company to a certain extent. That meant different skills that we needed to bring in at the executive level and the management level. It meant that we needed to adopt different practices in terms of how we marketed our products, built our brand, and developed an innovation pipeline.
And all of that, we were initiating in early 2020 when the pandemic hit. That we were 180 degrees now, inwardly focused again. My priority in the pandemic was to make sure our people were safe and to make sure that we could continue making the products that we were selling into the marketplace.
There was so much uncertainty around just how do you operate a manufacturing business, where we don't have the flexibility to be fully remote when we've got a production line. That's physically heckled to the floor and apples running in that need to be pressed. We've got proximity, we've got issues and limitations to how we can manage through in a pandemic when physical proximity is a risk.
So, it was completely, everything was put on hold. To be quite honest, Jeff, in terms of how we were thinking about pivoting the business and growing the business, and we just needed to figure out how we can keep the lights on and how we can keep our people safe as we've emerged out of that. And we were very fortunate in how we protected our folks. In that nobody in our plant ever contracted COVID from exposure at our company, which we were very proud about. We also had the fortune of experiencing some of the revenue booms that resulted in a lot of our food and beverage companies with people shopping, eating at home more, shopping in the grocery store.
So that was great. From how we manage the safety of our folks, how our business grew during that period of time. The other issue that we continue to deal with is a supply chain issues that have resulted as in part of the pandemic and the constraints on other folks to scale upstream, but also just the overwhelming demand that is still in the system for food and beverage that has completely disrupted our supply chain.
So we're still trying to rebuild our supply chain and we're managing through these issues that are making it very difficult to run the plant consistently and to meet the demand of our consumers and our customers. So we are still pivoting, even though we're now a year and a half after the beginning of the pandemic.
And obviously, we're dealing with the Delta variant in this latest surge and somewhat uncertain as to where that's going to go. But. We've had to really focus on the core business, make sure that we were operating in a way that was safe, and that we're constructing a supply chain that's been decimated given the impact upstream of us that the pandemic had.
Yeah, the events were so dramatic and I appreciate you sharing about how it, wasn't just a reshaping of your approach back then. It's continuing all the way through today and the momentum is probably going to continue.
Topic 5. Philanthropy, the Andre Agassi and Steffi Graf Foundation (24:18)
I know you have a special place in your heart for philanthropy. Tell me a little bit about your experience with the Andre Agassi and Steffi Graf foundation and why that was an important part of your career.
I love to talk about it because it remains an important part of who I am and what I value. When I started working with Andre and staff on the business side, as we saw to manage their for-profit endeavors around their brands and investment and other aspects of theirs. I became aware of what Andre was doing on his philanthropic side and what he and staff were prioritizing in terms of education and charter schools. It fascinated me. Education was something that it's been very important to me and how I raised my kids. But this was actually an opportunity to see.
The impact of education on communities that didn't have all the advantages that I had growing up that don't have the resources to send their kids to private schools. And as I volunteered time at the foundation, as we all did, and I got became more aware of this kind of impact, the more excited I became about the cause.
And, we ultimately grew that focus into a business where we raised a fund. To build campuses for high-performing charter schools across the country. And I did that for about three years and we put about $250 million to work, to support public charter schools that were building schools and campuses serving inner-city kids across the country. It was hard work, um, but it was filled with passion and commitment and something that I got a lot of Joel had and felt not only it was a for-profit fund that we were utilizing to make this impact. So it kind of continued that thread of my career of having an impact through business.
But we were providing opportunities for thousands of kids whose surrounding public schools were underperforming and giving them an option where they can have a pathway to a college education and to a different trajectory to their lives. And that stayed with me. When I took this job with Martin Ellis, I immediately looked for local schools on which I could serve, became a board member, and helped local charter schools in Santa Cruz county to fund facilities and grow their footprint, and to serve their communities more effectively.
And right now I'm starting up a charter school in Las Vegas that will target east Las Vegas. So a different part of Las Vegas from where Andre school is. But it continues that mission to serve, in this case, it will be junior high and high school girls. Cause it will be an all-girls public school.
In communities where they don't have the resources and potentially the role models have given that a lot of the families, both parents are working. Haven't gone through college, had gotten college educations themselves in some cases, not high school educations. And for me, that ability or that focus on giving the opportunity to those kids, it's something that remains a passion of mine. And really is something that I intend to continue focusing on for the rest of my life.
Sure. Well, it's incredibly meaningful work that you've done, and I appreciate you sharing how it's really shaped, who you are today and how you lead today, and your competencies today. So thank you for sharing that. I heard Andre say in an interview, I love this quote. He said, if you lose and don't take something from it, it's just a loss. And he also said, if you say something regretful and you don't learn from it, then all you did was hurt.
Topic 6. Lightning-round questions (28:14)
Let’s shift into some lightning-round questions. The first one I have for you is what are you most grateful for?
Well for sure my wife and kids, just so much joy that I get from being a husband and a father. And they keep me grounded. If I'm ever in any danger of not being grounded. I just need to spend some time with my kids and they know exactly how it gives me a great frame of reference and in context for what really matters. And they keep me in my place
What's the most difficult leadership lesson you've learned over your career?
Understanding what you can't do. And both for me personally, for a team, and in a strategic planning process. It's as important as finding out and focusing on what you can do saying no to things you can't is critical.
And when often in a young career or as a young manager, you think you need to do everything, and your team needs to do everything, and you can do everything if you just work hard enough. And you can't, you need balance in your life. And there are limits to what you can do individually, what a team can do collectively, and what a company can do with the resources at hand.
And that ability to focus and understand what you can't do and be happy, not doing something while focusing on what you can, was hard for me. And it's hard in a strategic planning process to this day saying no to opportunities that are there, but that if you try to go after too much, you're going to fail at everything versus focusing on what matters and doing it really, really well.
Yeah. Who's the one person you would interview if you could living or not?
Okay, well I love history. As I mentioned earlier, that was my major and I love American revolutionary history. And I think I would interview George Washington. In part because he's one of the least well-documented of the founding fathers. And in part, because he had the confidence of ultimately every faction that came out of the group and understanding what really was in the hearts and minds of the founders would be interesting because we tend to project on them, what we feel and what we believe wherever our political views are, or whatever era in history we're looking back towards, but really understanding.
What he and they were prioritizing and focusing on and the tough decisions they made and some decisions they didn't make. I'd love to understand that more clearly because it's, as much as it's studied, I think much remains unclear.
Coincidentally, I just interviewed, Dr. Michael Useem on the podcast and he just wrote. He runs the leader program at the Wharton School and runs their executive MBA and is a professor there. And he just wrote a book called the edge. And the last chapter in the book Gun is all about George Washington and the leadership lessons that we've learned from him. So your choice is incredibly timely. Appreciate that. So, and speaking of, do you have any top book recommendations for our listeners?
Well, I will try to go back a little further than just what I'm reading right now. The one book that always sticks with me, and I think it was partly also the era of time is Guns, Germs, and Steel by Jared Diamond.
I read that after I had recently come back from living in Japan for many years and having experienced through them a business context, many different cultures that I worked in different products in the world. And that book to me was all about challenging assumptions and not accepting.
Common beliefs or truisms, but really trying to dive down. And one is the underlying dynamic that might explain in the context of his book. Large cultural differences across continents and differences in economic, current economic status across continents. And that was fascinating to understand again, from it with a historical perspective, but it also, as I was embarking on my career was embedded.
You know, whatever what's at the surface is not always and often isn't the truth, and that you really have to think and dig to understand and get to the core of an issue, before you're making any kind of a decision or to avoid making the danger of making assumptions, instead of really understanding what is going on truly as the foundation of an opportunity and issue a problem to solve.
And that book really still stays with me in terms of capstone to a period of life, but also a catalyst for a way of thinking throughout my business career. Sounds like a great read.
So what's the single most important thing you would want our Human Capital listeners to take away from our talk today if you had to kind of distill it down.
Ah, that's interesting. Yeah, you mentioned I've got Andre in my head. So, Andre and I have been friends for many years and it's not his quote, but it's one that really was meaningful to him. And he set off on in his career that that really sticks with me. And it's. And I'll paraphrase it in the context of this podcast, but that is our professional journey. Professions and careers are not about the goal or the finish line.
It's about the journey. And what I've enjoyed about my professional career is not necessarily where I am in this particular moment, or getting a particular role, or getting a particular salary, or making a particular dealer transaction. But it is that, where those relationships you build and the process of working with people that you care about and helping other people grow their career while you grow your own and you have your own success, it's the journey along the way.
And all the people you meet and who you are working with. That sticks with you and it's true in life, but it's certainly true in your professional career. And that to me is what I'd like to leave folks with. Especially younger folks embarking on their career worrying about, well, geez, that when am I going to be president, or when am I going to be making.
X million or whatever it's. Those aren't the goals, right? It's finding the people you love to work with and do something you want to do. And just maximize those relationships and don't look at jobs or opportunities as transactions. It is about that journey that you're on and that we're all on. And focusing on that journey together.
A very sage piece of wisdom right there. So thank you for that. And also thank you Gunn so much for coming on the show today. It was a great conversation.
Thanks, Jeff. It's been a pleasure.
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