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Success Story with Scott D. Clary
Lessons - Why I Left $140M Corporate Job | Thomas Vozzo - Former ARAMARK CEO
00:14:38
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A
In this lessons episode, explore how mission driven leadership and disciplined business strategy combine to create lasting impact. Discover how nonprofits apply for profit fundamentals to build sustainable revenue. Understand how social enterprises balance financial discipline with human centered purpose. And uncover why principled leadership decisions drive culture growth and long term results. You know, there's a lesson there too, and I'm not sure, I can't remember the exact framework, but when you, when you're giving somebody an opportunity, a good leader knows how to put that opportunity just right outside their comfort zone of their skill set so that they can level up and upskill to that. That's right, to that, to that job or that, that the responsibility. That seems like, that's basically like the management ethos that you've implemented across the whole organization. And that seems to be like it's working. It is working.
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It is working.
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A
Now there's other things that you've done which I think are interesting with Homeboy. So speak to me about you. You have three revenue streams. You also have done acquisitions of for profit to, to subsidize or to add on to those revenue streams. And I want this as more just of a, a creative business lesson for maybe founders or entrepreneurs or CEOs or executives that are in nonprofits that have not thought of all the different ways that you've thought of to bring in revenue into the company. So you have your donations, you have your, your direct revenue and then you have government subsidies. But you've done other stuff. So walk me through that.
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B
Yeah, one good example is we have Homeboy electronic recycling in the state of California. There's all sorts of rules around how do you dispose of electronic equipment in a proper way. And there was this business that started up called Isador Electronics a number of years ago and it was, you know, any oftentimes small businesses struggle to, to take that first step up, they need a capital infusion. The woman who started up Isador Electronics had wanted, set it up as a for profit social enterprise. And we had similar values. She wanted to hire incarcerated people, she wanted to sort of lean into and giving them a good job. Well, what we do at Homeboy still did and still do is not only do we have a business where we have jobs, but we provide a lot of wraparound services to help that person thrive in their life. Right at that time, that business is needed. Not just money, capital, but also wraparound services. So we acquired that business first, you know, acquired that business, about $400,000 in top line revenue. But we're now at past $3 million in top line revenue along the way and we still believe it can keep on growing. But we kept that a little bit set aside and we kept the management team in place and we wanted to run it with all the hallmarks of a for profit business, all the things you got to work on, the income statement, the cost of goods, the efficiency of labor, all that. And, but we believe that has enough growth and enough margins in it that we can provide the level of pay, the market based wages that we want and have it keep, keep growing. And it's a good business for folks who graduate from our program. We call them graduates and we land them into that business as, as a very, for profit oriented business. Right. And so oftentimes we at Homeboy, we have a lot of visitors come, come to us, they ask us how we do the work we do. A lot of other organizations come through and you know, they always stop in my office and ask about the business side of what we do. And one of the first things I say is that think about the business model you want, make sure your, no, you know how to do that business model in a for profit way and then be really clear about what of that then makes it a social enterprise. Organizations. Now for some companies it's because they're in the green economy and they're, you know, recycling a product. Other organizations like Homeboy, it's about we're going to have more jobs than a for profit business would have. And so the way I think about our businesses is while they break even, don't make money, the difference between our, the profit, the profit margin that we don't have is we spend that profit margin extra labor. Right? But every other part of the income statement, we, we are as good as a for profit business. Our cost of goods sold, our shrinkage or how we buy and all that is just as good. But we have more people employed and as we think about growing businesses, it's about how many jobs can we produce and how many quality jobs are there and can people have, do people have upward mobility in that business model?
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A
I'm curious what your opinion is on nonprofits as an entity being extremely focused on their mission, but less focused on the business fundamentals. And it seems like that was almost even the case before you stepped in. There's a stress on the business. I think that I'm sure some nonprofits have definitely figured it out. But if you think about the traditional nonprofit, I've never heard of a strategy like you've deployed and even the nuances of what you're focused on in terms of like sound business fundamentals and core business fundamentals. It's not like you're ignoring the mission, obviously actually to if, if anything, you're creating a healthier environment to fulfill the mission. But do you find that the average nonprofit needs to focus on their mission but also look at some of these other strategies that you've deployed. Is that an issue with non profits, why they can't have a bigger impact or.
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B
Yes, it's definitely an issue with nonprofits. And also one more issue that gets into that mix is that many nonprofits in the human service space helping people have majority of their funding coming from government contracts, which sort of has the tail wagging the dog at that point. And it's. You get pushed into doing things that sometimes doesn't make sense. It becomes very inefficient. So it's this combination of, you know, being in contract compliance and then I mean, do you have a skill to run businesses and do contracts? It's kind of hard to do both at the same time. And then all of a sudden you've kind of, you're lost. You have mission creep and you've lost like the true essence of, of what you're about. And, and so what is important is sort of again, to have a good board in place that kind of keeps you true to your mission. And we luckily have a good board and a founder who sort of. It's so clear. Everybody at Homeboy is so clear. We know what our mission is and just the ways of how we implement it.
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B
Yeah. If they want to start a non profit that's a social enterprise is how I took your question. Yeah. Go find somebody who's run that business in the for profit world. And there are plenty folks out there and so many folks kind of like myself who's realized yet at some point you've made it in business, you've made the money you wanted to make. But how do you kind of shift this to help other people out? And so maybe it's like an older person who sort of wants to help the next generation. As one one way of thinking about could be younger people who've made it and want to help the next generation. But it's. I'm so clear you have to get somebody who's running in a for profit way and just clearly know for us it's the labor line that is different. And Matt. And is how we treat our employees that is different. That we have the labor line means we have more people on in place to do the work because we know we have to give time off for the guy who goes into jail for three days to reduce his debt. We know we got to give time off for the woman who has to go see the probation officer along the way. And that's how you have to provide that type of support, service and understanding around it.
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One thing that I want to speak about some lessons that you've learned over your career and and you said you've had many pivotal moments in your life because of homeboy and what you. But also some of the leadership lessons that you deploy as well. So let's just focus on. On you a little bit just to sort of tie this up. One of the things that you don't do is you don't take a salary. I thought that was very interesting. Speak to me about why you don't and maybe just commentary on if that's a, if it's a good strategy. If it's more of a marketing gimmick. Is it something like see we talk, we see billionaires that don't take salaries as well. So what is the benefit of. Of not taking a salary to the organization, to the company, to even the executive team when they, when they look at you, do they want to model you in some aspect? Speak to me about that decision.
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B
Yeah. And let me just get out of the way. It's not A marketing gimmick. Because I kept it quiet for nine of my 10 years. I never told.
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A
I didn't mean to insinuate you. It was a marketing gimmick, but that
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was in my brain, right? Because, you know, all the way back to Lee Iacocca, only male getting paid $1 to produce cake cards. Right? Right. Tells you how old I am. I knew that story.
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You dated yourself, right?
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B
I read books. Right. But listen, so let me tell you how I got to that point, right? So I come to Homeboy. Look, I. I feel blessed, but the work, I'm proud of the work we did at Aramark. It was a very, very interesting success story where it's 93% owned by employees. And so there was a liquidity event, went public, then we're in private, and then we got cash anyway, made a lot of money. And so I didn't come to Homeboy to make money. And this is actually if I can talk more about around this question, because it's illustrative of why I think Homeboy is successful. It's just I was there, who worked for the right time for me and for the home, for this organization. I just wanted to come help people, right? And that's a lot of people want to just go help other people. And so I didn't come, the homeboy with any ego to say, I gotta. I gotta brandish myself and make myself into a nonprofit warrior. My job was, I was going to go make. I want to make Father Greg job easier. I saw the stress. I saw I knew how to run an organization. I saw all the stress he was under. And yet I see the magic of when he's ministering to the homies and how that changes their life around. And so I wouldn't think, okay, I'll just. I'll just do this. And so the board said, okay. They wanted to hire me. I said, fine. We had to put a salary in place. Thinking that's. That's what you do, Right? Right. Three weeks into me taking on the role. Well, me being the smart CEO, I didn't ask the question before I said yes, is how much money do you have in the bank? Can you. Can you. Can you make payroll? Three weeks into me taking the role, we have a cash crunch and we won't not going to make payroll. And so. And this is like that now this, like beginning of January, I'm thinking, oh, my gosh, how this. Anyway, long story, how it happened, but what do you do? So. So you're in scramble mode from that moment on. So I did. I did a workforce reduction. We trimmed back expenses, didn't take in as many clients. I stopped taking a salary. And so it was like. And then also we had to borrow money to make payroll, which is. Oh, boy. Any. Any business that has to start borrowing money, make payroll, you know, you're in big trouble, right? Yeah. But I thought we had the right plan in place. I knew how to move this forward, and it was sort of like betting on ourselves that we're going to make this happen. And so we made it through the year. We, you know, finally made it through the end of the year. Fundraising is big in the. In the Christmas time area. So finally, 11 months later, we get enough money paid off the loan, and then we had a little bit of money in the bank. And so from there, though, I realized I fell in love with the organization. And so I could have taken a salary, but I was like, why not? For that same money, I knew we could help three or four more people. And that may not be the right way of thinking about it. You know, I think, you know, organizations like Doctors Without Borders, you know, they go off and help people in other countries, and they do. They take money. They don't take money. But. And you sort of get into this, this whole concept of being guilty and having this. You have resources, they don't have resources type of thing. And a little bit it was in that place, but it was to me, my wife and I just made a decision. We don't need. Thankfully, we don't need the money. There are more people who need more people who need more money. More. All right, so that's our personal decision that we made. But the interesting thing is Foundation World looked at us and say, whoa, wait a minute. You can't afford to pay your CEO, but what's wrong with you as an organization?
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A
So it was actually interpreted as a negative.
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B
It was a negative. Right. Right along the way. And so then, you know, one thing leads to another. And. But. But where I stand on this, the other thing that. That where HELP though, is. And this is. It's a very unusual situation. I can't imagine it's gonna be many people in this situation, but as I'm kind of working hard trying to make change happen in the organization from a. Not changing the mission. The mission was always strong. It was like, but are we organized correctly? Are we spending too much money and doing all those things? As I'm trying to make change happen internally, it kind of gave a credibility. Hey, Tom's not here to sort of just cash a paycheck and making these nutty things. He's here to try to. We're part of this team. We're all in this together to get the organization to a thriving perspective. And that's, I think that's gone a long way to help me sort of get the team to move along and get there faster. And so, you know, you get used to it. And then it's like, well, then why start taking a salary at that point after becoming more successful? And, and so I, We. We made it more knowledgeable because, you know, I wrote this book, the Homeboy Way, and I kind of. I wanted to put it out there because, listen, I'm not just. Again, it's not just some guy sort of cashing in on Homeboy. It's like, no, no, no, no. All the royalties go to Homeboy. All the. Everything we get helps the organization out. It's like, here's a message I really believe in in a way of helping poor people in our society. If more organizations and more people get there, the better off.
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A
Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.