340: No Risk It, No Biscuit

Buck: Welcome back to the show, everyone. Today, my guest on Wealth Formula podcast is Frank O’Connell. Frank is known for his unconventional approach for high performance through his strategic thinking. His accomplishments are significant, including serving as president of Reebok Brands, president of HBO Video, CEO of Indian Motorcycles and chairman and CEO of Gibson Greetings, Inc.. And he’s the author of Jump First Think Fast An Unconventional Approach to High Performance. Frank, welcome to the podcast.

Frank: Well, thank you. I appreciate being here.

Buck: Yeah, well, it’s great to have you. And you know, what we’re really trying to discover a little bit about is how you look at risk in general. And maybe what you can do is, if you wouldn’t mind giving us a little bit of background, I talked a little bit about what you’ve already done, but what what are the components in your past that sort of have molded this view of research you’ll present to us?

Frank: Well, it started early. I grew up in a farm in upstate New York. My father died when I was two and a half, and my mother stated ran the farm. And so as soon as my brother, who was a year older and I were about able to walk, we started running parts of the farm. So during high school, I mean, we had quite an operation of machinery and growing crops and 3000 chickens and whatever. So I learned really early on about taking risks. And, you know, at that time, of course, my biggest risk always was nature. And I learned that with nature. Sure. So. Yeah, so. So that early entrepreneurial impact taught me a lot about risk taking, self-confidence, failure, but that got me on the path.

Buck: So, yeah, absolutely. And then so you grew up on a farm then you end up being like, you know, president of these major companies and CEO. Tell us a little bit about that journey. And, you know, maybe some of the lessons you learned along the way.

Frank: Yeah, well, you know, as you can see, I worked really for a number of, you know, a number of companies. And I was very fortunate early on, you know, I went to Cornell undergraduate graduate school and then started with a great company out on the West Coast called Coronation as super training program started to learn about new product development, how to take risks in developing products and mitigating risk, etc. And then on to, you know, running businesses that, you know, hunt Western Foods and then, you know, made some big jump chefs. I spent about eight years in the baking business, developed a product called granola, which is, you know, the first high fiber product that developed a $500 million business. And then a big a big jump ship went to work for Mattel in the early days that the whole video game video game business and then took a big risk cashing my bonus check. I developed a business plan and I went out to raise money to start my own video company. And I raised four and a half million dollars from Marvin Davis at 20th Century Film Corporation. So like in in a weekend, you know, but, you know, a critical element there. But what I learned is particularly the importance of having a strategic plan.

You know, you can be a great entrepreneur of the great idea, but you really got to put together a strategic plan that shows what is your path forward. You know, what your competition, what really is the product, what capital do you need, what human resources, you know, etc.. So that is and in selling, I learned from that point on that one of the major failures of entrepreneurs is the lack of a plan, a really a strategic, you know, a really strategic plan.

But, you know, that that was a that was a big risk. We move to the Silicon Valley, you know, etc.. And then, you know, I went on to HBO video. And one of the biggest risks that I think I’ve taken is there was a company in the trading card business called Skybox. It had lost $80 million. And so you know, there are seldom so they call you and everything is going well, you know. And they took a huge, huge risk. Ken, could I turn that company around? First thing I did was unbelievably risky, which is we destroyed millions of units of trading cards because they had overproduced those trading cards. Ryan Scarcity We had a license from the NBA, the NFL and whatever. And everybody thought, what are you what are you doing? And we publicized it. We had accounting firms come. We brought in all the retailers. We shredded the product and served it to them on silver platters. But boom, that made every product now of ours in the market far more valuable. Then we took a huge risk. I had an NBA license. I was actually in David Stern’s office. The commissioner of the NBA, when he told me, Frank, go to your television. Magic is going to announce his HIV positive Magic Johnson. So I was the first one to contact him after that and to sign him on to an agreement I could have never afforded him in a normal, you know, kind of environment. Everybody else would have outbid me, but everybody else was afraid and scared. I did some quick research, found out the consumer and parents saw him as a hero.

So we signed him on in it. He did a commercial with his son. It just exploded our company through the roof. We ended up getting the license for the dream team, etc..

Buck: I think the moral of the story, you know, for what you’re talking about is, you know, even from the title of your book, Jump First meaning like, I mean, that sounds like a not a very well-planned approach. But really what you’re talking about is, you know, is having a strategic plan that’s that may have an asymmetric risk, you know, associated with it. Is that fair then?

Frank: That’s fair. I mean yeah there definitely the plan it helps you mitigate the risk, but still the risks are high in a lot of the coaching. I do a lot of coaching with entrepreneurs and and young people and startups get to do my own studies from Ground Zero, etc. And I’ve invested in a lot of them. But often it is trying to, you know, even if they’ve got a plan is to get them to really make that to really make that move and then say, you know, there’s a lot of it. You’re just going to have to air correct and sort out as you go. And there are going to be things you’re going to want to stop doing and other things you’re going to want to do. But, you know, the the key is you can’t grow personally. You can’t grow professionally. And you can’t grow a company without taking risks.

Buck: So now, you know, it’s one one thing that I think is probably the case, I’m sure you you would agree, is that a lot of these principles that you’re talking about, you really could extrapolate them to your personal life, your personal finances, etc.. I mean, if you’re looking right now, you know, we live in really uncertain economic times. And so, you know, you’ve got businesses that are making decisions that have to make decisions. But but so so do people who are managing their own estate and their own their own wealth and trying to survive. So, you know, so how do you you know, what’s what’s some advice you have for for dealing with these economic conditions and uncertainty and what to do? And maybe you can address, you know, both business and personal.

Frank: Yeah. Okay. You know what I’ve done like this is on the personal side. Fortunately, from day one, I got a financial advisor who has been with me and my entire family through my entire career here. So I have always gone out and tried to search out some personal or, you know, some kind of really professional advice to help me try to sort out and manage my portfolio and particularly the risk in my portfolio.

And of course, they always kid me. I’ve always been on the higher end of the risk because that’s where I got my, you know, got my higher, you know, my higher returns. But so it is very helpful to have somebody who’s got a very broad picture to help you and I work between you know, I’ve obviously done the best personally over time in this in the stock market and and with the help of a financial advisor. Then in my own personal investments, of course, is I invest in things I know which are consumer products and consumer products, start ups, where I’ve got an absolute feel for the product and the risk and the market and the consumer. And the probably, I’ll tell you, the toughest thing which you everybody can understand, you got to be in this environment. You’ve got to keep making projections on trends. And that’s the most that’s the most difficult, you know, part. We get a massive I’ve got a massive food company. And the key there is what really is going to happen to all this, the commodity pricing and the consumer behavior moving at the and at the same time, I try to get the best information there I possibly can.

Buck: Yeah. I mean, I think will you talk a little bit about, you know, data driven strategies. Right. And and like if you look at like the economy right now, it’s so volatile and unpredictable. I mean, what how do you even interpret that data?

Frank: Yeah, you know, I do say agility, you know.

Buck: Yeah.

Frank: So you got to be willing to stop things that are working and move in the direction and things that are, you know, that are on trend. I’m not saying there’s still things that require having a good time. All right. I’m going to say one thing and you know a lot about this. We personally and my wife, in addition to all my investments in company, I’ve made most of my money in equity, investing myself in the companies that run in it.

Right, turn right quick. Other one has been phenomenal through us for us has been real estate, right. You know so we have made substantial investments in real estate and I suppose taking, you know, some pretty big risks there. But that has been throughout time a just a phenomenal return. And again, that’s on that’s on the smaller side. You know, I’m making it I’m I’m buying and we’re buying houses at, you know, 3 million and selling them for five or, you know, spinning, etc. But that has worked out. Extreme real estate has worked out extremely well.

Buck: Yeah, absolutely. And but again, I guess in terms of like not just what you’re investing in, but like how do these times like let’s just say right now you’re you’re say you’re thinking about doing one of these real estate projects. How are you looking at the market right now? You have rising interest rates. We might be on the precipice of a recession. I mean, I’m not saying specific. I’m not asking you specifically for advice on what to do, but more rather so the analytical, you know, platform that you’re using when you when you start looking at these things.

Frank: Yeah, let me say this is I can’t it’s hard. I’m big on data informed. I know that we don’t use data driven because that implies you’re just for Yeah, you’re using a formula you use so you, you know, I try to get the best data in forecasting that I, that I can get, you know now in the particular in the real estate market, now in the personal market, you know, which is now sorry, of course, is is weakening the we stay in the high end segment of that of that market. You know and that has been absolutely the best and going forward I still think, you know, where, you know, the interest rates aren’t such a big factor as an example but that’s part of all of the Yeah. The data analysis. Now what I’m doing consumer product stuff and I don’t want to bore you with a much more sophisticated research that we use their segmentation studies and forecasting.

And what we’re doing is talking to consumers today about what’s going on in the future, millennials and Zs, and their change in their behavior. That’s where we tried to get, you know, a lead and being informed. Sure.

Buck: So, sure. You know, you obviously have this background in a number of businesses. You got a pretty good idea of, you know, how to look at calculated risk. Tell me what you think. You know, if you’re if you’re to a certain degree, you have to try to predict the future. Right? Like, I mean, you can’t really make decisions if you’re not, you know, projecting something. So look at the economy right now. And what are your projections if you’re you know, and right now, I don’t know if you’re running a company necessarily on a day to day basis, but like, what are you seeing and what and what do you think the economy is, is is going to do?

Frank: Well, you know, I think, you know, there’s kind of I think a one hand, you know, for I have to say, I suffer from being extremely optimistic and positive.

Buck: Yeah, well, that’s a good day.

Frank: And it’s just so you can’t get through all of this stuff, so. Sure, I’m yeah, but I definitely see and let me, you know, you speak we’ve got you know, I’ve been the chairman of the board for six years of a huge $5 billion food company. We’re in every imaginable category and we’ve got access to every consultant imaginable piece of research, you know, etc..

And we’re still figuring out, yes, I do think we are definitely going to go you know, we are going in with the high interest rates and whether we are going in to a recession. There’s no question. And if you’re on the food side of the business. Yes. Because of the green issues, you know, we’re definitely going to see for some time, we’re going to see increasing, you know, increasing costs of a you know, in the in the whole, you know, supply chain issue.

But I will say from someone who is deeply involved in a bunch of businesses that are also we are going to toy business is going through the roof. Yeah yeah we can talk about that. That’s very interesting. We’ll talk about that. But you know, my view is actually business. The business is very, very healthy. And, you know, I think a lot of it is of course the consumer a bit worrying drives the recession. They start to cut back because they’re worrying about what’s going to happen in the future. So they kind of start creating the perception which which I don’t see. I mean, our businesses are very profitable and our businesses, you know, generally are growing. Yes, we do have some blips in the curve, but nothing strategically that I see in a wide range of businesses that I’m involved in that says, boy, on the long term, this thing that we’re going to continue to you know, that we’re going to continue to decline. So I’m yes, we’re going to go through a tough year. There’s no question about it for a lot of reasons, politically and whatever. But I do not see any kind of prolonged here recession.

Buck: So were you were you active in various businesses during the eighties, during the hyperinflation era?

Frank: Yeah. Are certainly I was in business during that time. Yes.

Buck: I’m curious, what do if you would, you know, just give me give us a little bit of a comparison of those times versus what we’re seeing right now. Well, from a business perspective.

Frank: That, you know, I’m probably not the best person to be able to do this. When I I’ll just say when the in the eighties, that was the time when actually I was running Reebok and we and we developed the pump and, you know, I brought out a shoe I was selling for $180 and did $1,000,000,000 worth of sales in the first 12 months. I said, okay, you know what’s going on in the world, there’s nothing wrong with the economy. Looks great. People are not needing to buy, you know, needing to buy sneakers. So, you know, I’m you know, but, you know, I do say I think we’re going to come out of this pretty, pretty quickly and pretty, you know, pretty healthy. So, you know, I don’t see this being prolonged and I can’t do a great comparison to that time period. Sure.

Buck: Let’s talk a little bit more about your book, Jim. First, think fast. An unconventional approach to high performance. Give us some of the main. I mean, obviously, we’ve talked about some of those themes, but what are some of the themes that we’ve not covered?

Frank: Okay. Let me just kind of mention that, you know, we why did I write this book? You know, I’ve been fortunate. I’ve had a great, fun career or, you know, I moved 20 times back across the country. I run, you know, ten companies from a CEO standpoint, etc.. And when I decided to write the book is my throughout my career, I am really my give back has always been mentoring and it is very much today. My door was always open to my office. My first concern was about you and your your personal you know, your personal development. So so I so, you know, I really got started on using the example, my examples of being in the trenches as a, as a teaching tool instead of writing a book that said here the six things you need to do, which are most business books.

I wrote it from all of the inner getting stories of my career, and then you read those stories and basically you, you know, you, you know, you pull from them what’s relevant to you. So, you know, here is some of the central themes in here is, you know, we talked we talked a lot about planning, but I’m going to start back one more and that is know yourself.

When any time anybody comes to me in particular, a young person comes to me, I say to them, and a young entrepreneur is, I start with who are you? What’s unique and different about you? And a lot of people that initially come to me are kind of following the flock. They’re following their peers and their values of their peers.

And, of course, what I’m very much into is looking at a unique path for you to follow, where you’re just not following everybody else’s values. And you have various techniques where I make them said, okay, you got to come back to me, and in five lines tell me, you know, what’s different about you. And then, well, then what I do is try to work with them from that point forward if they want to do, you know, if they’re, you know, entrepreneurial. And I get a lot of people coming out of corporate life that are going into entrepreneurial, then start saying, you know, what are your passions? And what from your analysis, what are your skills? And then what are the business opportunities or entrepreneurial opportunities that you’re you know, that you should be you know, you should be considering. So I try to start very much from understanding the individual.

And then, of course, it’s into a much more disciplined, you know, approach of evaluating options and opportunities and how to go about that. And the capital required. And and then, you know, one of my key things, and I’m sure you know this so well is talent. Even if you’ve got a startup, you know, ground zero and there’s only going to be two of you or three of you, it is choosing the right talent is so critical. And people that can you know, that can work together to tear us apart, more entrepreneurship, even they start to become very successful. So I say, you know, just really spend time and to finding the talent. And then from then, as you know, the normal stuff, accountability usually at creating the right culture. I’m very big on the right culture, particularly in startup companies, etc..

Buck: You involved in a lot in startups right now.

Frank: Funding startups. And we’re I get into a lot of them is working with private equity companies where we’re investing in startups. And then I go in and I frequently go in is kind of the chairman of the board, as is basically the coach.

Buck: Yeah, right. That makes sense. So what’s I mean, you’re busy obviously writing books, being chairman. What else on the horizon for you?

Frank: Well, yeah, we have a I’m the toy company we’ve had for six years. It’s called Schylling. And, you know, I had worked for Mattel, so I had a background in toys, etc. We bought this company six years ago. Interesting. I’m normally on the leading edge of everything. New technology, etc. In this case, no batteries, no electronics. And it’s all the standard, you know, play patterns and, you know, some of the very classic toys, millions of, you know, going back and yeah. Retro train jack in the boxes, etc.. Now, when the pandemic hit, those products went to the roof. And because all those kids are home, I mean, our volume is unbelievable. And its key to us is understand, you know, what business are you? That’s one of the key things I entrepreneurs and they always tell me the wrong business when I take a look when I take a look at know in trading cards we were not in the trading card business. We we’re in the business of connecting kids and their heroes. So you know. Right. That’s extremely important in the times. We’re really in the educational business.

So well-educated millennial moms, as an example, are critical, understanding them. And of course, what they want is to keep their kids away from electronics as long as they possible, long as they possibly can. So he is. So the thing that’s happened there is also a very big an innovation. We were very fortunate we created about a year and a half ago a product called NeeDoh. It’s a compression ball. We we blown it into a brand. We’re selling millions. It’s a unit. It’s in any toy store. You go into any mass market you go into now you find, you know, NeeDoh. Now you always hope that that’s something that will happen to you who, you know, in the toy business and then Aquis issues. So we bought we reinvent toy we bought a year ago the lava lamp company, the old company, we’re reinventing the lava lamp.

And two weeks ago we bought the big wheel, you know, the big the right hand big wheel, the old big plastic thing. You wrote it. So we bought that. And we will reinvent that. So, you know, I’m, you know, I’m still deeply involved with the yeah. And and a lot with now dealing with China I can tell you a lot I’m good. I’m going to give you one other scenario now. But dealing with China, all of the shipment problems of plant problems, everything there. Yeah, I spent hours on the phone dealing. What does this one of the other things about I say about entrepreneurs or young people travel. Do everything you can to understand the world and in particular go to India and go to China, where I’ve spent a lot of time. You can’t understand the world. And of course, if you’re ever I producer I’m in a hundred plants in China. Yeah you know you got to understand what’s going on from a very personal standpoint very much. Yes.

Buck: Sounds great. You know, this really interesting stuff. The book, again, is Jump First, Think Fast. An unconventional approach to high performance. I assume we can get that everywhere, right? Amazon and the usual.

Frank: It releases on October 24th. But you can go up on the website, which is just jump for think fast dot com and then there’s a lot of stuff handling a lot of stuff on LinkedIn.

Buck: So Frank O’Connell, everyone of Frank, thanks so much for being Wealth Formula Podcast. We’d love to have you back again some time.

Frank: I enjoyed it. Thank you. I enjoyed watching all of your other podcasts.

Buck: I appreciate that too.

Frank: Yeah, you actually you actually had you know, I went to Cornell College of Agriculture you actually had a guy that Mark Bellamare and I just listened to this whole podcast he was right. So he was saying things so familiar to me you know.

Buck: Yeah. Well, good. I’m glad you glad we got you. Enjoy some of those episodes as well. Thanks again. We’ll be right back.