January 2, 2025 • 45 mins
Maria talks to her friend Henry Rich about how he’s managed to find success in one of the world’s riskiest industries: restaurants. Themes include learning from failure, accounting for ruin, and finding meaning at work.
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Episode Transcript
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Speaker 1 (00:15):
Pushkin. Welcome back to Risky Business, a show about making
better decisions. I'm Maria Kondikova. My regular co host, Nate
Silver is off this week and instead I'm joined by
a dear friend, Henry Rich, whom I've known for too
(00:38):
many years.
Speaker 2 (00:39):
I don't want to age.
Speaker 1 (00:40):
Both of us, but we've known each other since our
college days. We're very excited to have Henry on today.
Henry is a serial entrepreneur. He's the head of the
Oberon Restaurant Group, which has some of my favorite restaurants
in New York City, and I can't wait to ask
him about managing risk in one of the world's riskiest industries,
learning from failure and the motivating force of regret. Henry,
(01:03):
thanks so much for joining us.
Speaker 2 (01:05):
Absolute pleasure. Good to see you.
Speaker 1 (01:06):
Good to see you too. So a little bit of background.
We met at Harvard. I was a freshman and you
were a senior. You are older than I am rsually,
and I'd love to actually start before we get you know,
into everything that you're doing right now. Your background at
Harvard is one of the most unique that that I know,
(01:30):
and it's something that I would not have thought that
you know today you'd be a successful entrepreneur kind of
doing what you're doing right now.
Speaker 2 (01:39):
Because you majored.
Speaker 1 (01:40):
You created your own major, and it was in esthetics,
if I remember correctly.
Speaker 2 (01:45):
Yes, how I got from that to being an entrepreneur
was in part lack of other options, but also I
think I just I left with this really strong kind
of individual almost you know, existential streak that left me
(02:06):
working for myself. And you know, the default for working
for yourself is to create these entities around me that
I could you know, manage and live my life.
Speaker 1 (02:15):
So yeah, so that makes sense. It's a little bit
different from you know, most entrepreneurs who are like, you know,
I majored in economics or I majored in business, and
this is what I want to do. Your first company,
I don't know if it was actually your first company,
but your first company that I'm aware of, was a
mint company called Oral Fixation. And I remember you graduated
and you had come back and you gave you know,
(02:38):
me and and other friends who were still in college
these little boxes of mints. The Mohido flavors were my favorite.
So talk us through how you decided to create a
mint company, how that went, and what that taught you
about risk and about kind of and about the world
of business, because obviously that is also quite different from
the restaurant world, even though we're both both are consumables.
Speaker 2 (03:01):
Yeah, you know, it's funny. I rarely talked about this
this first company. I would say, I learned a lot
about hedging and managing risk in terms of, you know,
what not to do. So I decided to start a
you know, small manufacturing company in a mature industry where
most of our competitors were nineteenth century, multi billion dollar
conglomerates like Wrigley, Mars, you know, Cadbury hershey NeSSI, these
(03:25):
kind of companies, thinking that through I guess, just working
hard and being smart and being you know, tasteful, that
we could somehow dislodge these competitors. It was a terrible
idea because we had to do our own manufacturing. We
were selling into you know, thirty five countries, so I
(03:45):
had to figure out the trade piece of it. All
the regulations, had to do the consumer marketing, you know,
manage multiple territories and channels like gift hotels, coffee shops,
attend you know, hundreds of trade shows. I would say,
what I learned from that experience is not to do
just one thing. Because I really did put all my
(04:08):
eggs in the basket of this company, which even if
it had been you know, in a smarter category like
yogurt or chocolate or somewhere where companies actually get acquired,
it just it was totally susceptible to the Great Recession
in ways that I didn't appreciate because I was, you know,
a hebristic, twenty something year old. Seventy five percent of
(04:31):
our sales dropped from September to October two thousand and eight.
We literally had a leave in Brothers private label Mint
for their office in Japan. We had warehouses ransacked in India,
and a food Riot, our largest British distributor, was acquired.
Their main customers were acquired by Icelandic banks. We were
selling in countries whose currencies dropped twenty thirty percent against
(04:51):
a dollar. So I really realized that I just had
no idea what I was doing at all and sort
of deserved to fail catastrophically, which is which is what
happened with that company. But you know, I did learn
how to do things on my own. I did learn
a little bit about the food and beverage business, and
it sort of you know, set me up for wanting
(05:12):
to do something related but not you know, starting a
manufacturing company with no money, which was just you know,
an insane thing to do, but fun, fun in no way.
Speaker 1 (05:23):
You know, it's it's very rare to talk to someone
and obviously you've had a lot of success since then.
Who who takes responsibility and says, you know, I deserve
to fail? Can you just unpack that a little bit?
Speaker 2 (05:36):
Yeah, there should never have got off It got off
the ground through through sheer willpower that should never have existed.
It should never have survived for whatever six years. I
would say the most critical thing that I failed to
understand is that what I thought I was contributing to
this category, which was creating a product that actually had
more personality, was significantly higher quality. Wasn't cutting every corner
(06:00):
to hit the masses. These weren't things that were actually
important for the success. I thought by creating a better
design and you know, fifty cents instead of like two
cents on the actual ingredients, we could you know, charge
three dollars instead of two fifty and pass all of
this value onto consumers. But this isn't This isn't a
(06:22):
market segment where taste matters at all. What matters is
distribution and power. I had this really interesting experience where,
you know, we were doing the Mohto mint and then
Wriglely would come out with mit Mohido and they would
try to trademark and we did this, you know, fabulous
fruit flavor. They did fibulous for TEENI tried to trademarket
(06:42):
and they were sort of coming after us, and I
didn't really understand. I was like, have they no shame,
no honor? And one of these people came up to
us at a show where they grabbed one of our
tins and they didn't even bother turning their tag around.
And I was like, hey, like, I know what you
guys do. And the guy looked at me and he's like, yeah, well,
who has forty seven thousand registers at Walmart? And he
(07:03):
walked away and I realized I was just I was
in the wrong place where nobody was asking for a
better product in this category and it just simply didn't
matter as opposed to a restaurant, where you know, you
can have a restaurant that's been there for fifty years
if you open a slightly better restaurant right next to it,
(07:24):
your level of taste, your level of execution, your level
of hard work actually does matter, and people will just
gravitate to the thing that is slightly better and it's
much less gated. And I just didn't know that I
was entering a profoundly gated industry without any of the
tools that I would have needed to succeed. And the
(07:45):
world didn't need it, right, And I took a lesson
that I shouldn't do stuff just to because I think
it's funny, or to be independent. If it doesn't have
another reason to be, it's going to fail and it
should fail.
Speaker 1 (07:57):
Right.
Speaker 2 (07:57):
The world doesn't need, didn't need another breath Man company.
And that was a you know, strong lesson. And maybe
people would say, like, hey, the lasting Brooklyn needs is
another wine bar. But these are things that can be done,
you know, on a scale from one to one hundred
and more or less. Well yeah, yeah, well.
Speaker 1 (08:13):
Let's talk about that transition. So you had a business
that failed, right, as you say, like epic failure, something.
Speaker 2 (08:19):
That I was holding debts that I didn't really have
a plan to pay off. So I had a timeline.
You know with like basically within two years that I
had to figure it out. So a lot of pressure.
Two thousand and eight, two thousand and ninety ten, you know,
not not a great environment. Although many amazing companies were
founded then, but.
Speaker 1 (08:37):
Yeah, so not a great environment. You have debt, you
had a failed business, and so you decide, of all things,
to go into the restaurant business. Henry, what is the
rate of failure in the restaurant business?
Speaker 2 (08:49):
You know, I think something like ninety percent, but I
can't remember if it's like ninety percent in the first
year or whatever. But yeah, that's right. Yeah, yeah, which
makes sense because.
Speaker 1 (09:02):
Obviously like the obvious solution, right, you have debt, you
just had a failing business. Let's go into a business
where ninety percent of business is fill.
Speaker 2 (09:09):
Yeah, well, I think this is this is this is
part of a problem. I'm like attracted a little bit
to difficulty in a way that feels kind of like
exciting and glorious, but then you know, the consequences can
be overwhelming if you don't, you know, catch a wave.
But I don't know why, I just I was extremely
attracted to opening restaurants in Brooklyn in that window of time.
(09:33):
You know, around like twenty ten, twenty eleven, where there
was this kind of farm to table thing happening, and
it just felt like an amazing opportunity to try to
make some really nice additions to these to these parts
of the neighborhoods that would otherwise, you know, be chained
or things that are not really serving the community. So
(09:53):
I never envisioned it as like this is what I
do now, I'm a restaurant tour I just I went
into restaurants, you know, to participate in that kind of
Brooklyn moment. But also because as opposed to this manufacturing
company which totally defined me, restaurants are also things where
you can open one and it's sort of just open right,
(10:13):
whether you're actively managing or not, and then you can
open a few. And I didn't want to be kind
of under the weight of one huge crushing thing, so
I opened them all as you know, separate businesses. I
could rise or fall separately and accumulate over time. But
I also really I really liked that about it, that
you could own a restaurant without it being like you're
in there nine to five every day.
Speaker 1 (10:35):
Yeah, well, some free publicity rootless still exists and it's amazing.
It's one of my favorite restaurants. And I think, I
think you did a wonderful job. How do you get
someone to believe in you and finance help you finance
a restaurant, help that get off the ground after you know,
(10:55):
when you say you know I've had that, you know
I've had a failed business. How do you actually how
did you convince people to come on board? How did
you craft that vision? And what are the pieces that
kind of have to come together in order to open restaurant? One? Right,
globe was successful, so I think that probably helped kind
of restaurant two, three, four, et cetera. But that first
that first step had us at work.
Speaker 2 (11:17):
It was hard.
Speaker 1 (11:17):
It's a big risk for everyone, right, for you and
for your investors.
Speaker 2 (11:20):
Yeah, no, obviously in our restaurant, Like the first thing
you say is like, you can lose all of this money,
and statistically speaking, you will, and if it works, there's
no like IPO, there's there's no acquisition. It's just that
you'll receive dividends over time. So on balance, the risk
reward profile in the restaurant industry is poor, right, It
(11:41):
just so happens that you know, almost all of our
restaurants have paid back and people have made quite a
bit of money off them, and they're going to stay
open for a long time. But at the time of
the first one, yeah, I mean it was friends and
family and you know, we really script by. It was
we raised two hundred and fifty thousand dollars, and we
(12:02):
did a lot of work ourselves. We you know, gave
out sweat equity for people working for free. I wasn't
that asking for favors, because I do think that people
saw me and saw the location. I basically had one
twenty five thousand dollars line of credit left that I
had gotten, you know, in two thousand and six or something,
(12:23):
and I took eighteen thousand dollars out of it and
put the down payment on the lease without any money raised.
And so I could be like, hey, here's a space,
look at this corner, look at this neighborhood. We're in Brooklyn.
This is happening. And I think it's sort of it's
difficult to raise money for because most of these things
(12:44):
are not good investment. But to have an investment that
you can actually kind of have breakfast, lunch and dinner
in and like bring your friends and have that I
own this restaurant moment is actually an extraordinary social benefit
as opposed to the most kind of random, high risk
investments that you would take, which are impersonal and likely
(13:05):
you'll never visit the business, let alone experience it and
have it add to your life. So in a way,
it's it's not the best financially, but I think I
was able to truthfully explain all of these intangible social
emotional benefits of being a part of something that I
(13:25):
think was very cool.
Speaker 1 (13:28):
Yeah, that's really interesting because you know, Nate and I
talk a lot about kind of expected value of decisions
on the show, right, and how how you think about
taking risks right, positive expected value, negative expected value, And
usually you're thinking about it in monetary terms, but there
are situations where there are these intangibles that might you know,
(13:49):
kind of add to the expected value, right, even though
it's not even though the kind of monetary payout may
not be as big. So I think what you're saying
here is that in the restaurant business, like you're actually
trying to appeal to those other things you're not going
to It's not like you're going to pitch a meme coin.
Speaker 2 (14:07):
Or something like that.
Speaker 1 (14:09):
You're like, Okay, you'll double your money really quickly. You're saying, yeah,
you know, this is a risk, but the rewards are
actually much more personal, much more meaningful. It's much more
of an investment kind of in in these I want
to say intangibles, even though they're very tangible, right, but
it is.
Speaker 2 (14:27):
Just non financial. They're just they're just non financial values.
And I mean, you've just actually nailed a through line
on all of the work I do, including the climate stuff,
which is like, there's a risk. There's a risk that
you don't do everything that you can in the moments
that you knew that you should, and that you might
look back on that and feel a certain type of
way about your entire life. That's a risk, it's not
(14:48):
a financial risk. I think this kind of talk made
a lot more sense when people believe that they had
souls and things. But I think this is one area
where maybe like the kind of the philosophical like existentialist,
you know, esthetic training is in all of the work,
which is I get scared about like not taking opportunities
and not doing things and not bringing things into the
(15:10):
world that I believe should exist, and kind of carrying
that emotional weight for the rest of my life. And
you know, when it comes to people making decisions, people
make decisions for non financial reasons, you know, mostly right
like in their day to day life. But when you
talk about it in a business, it kind of gets
written out for some strange reason, and people wonder why they,
(15:33):
you know, are dissociated and unhappy. There's this whole ledger
that we should be thinking a lot more about. So
that's sort of I mean, it's that's why I think
these are cool investments, is because the idea that you
could you know, walk into one and you know, experience
it and let alone if it's like a climate positive
or mission aligned in some other way. Nobody invests in
(15:53):
a restaurant for financial reasons. It's cause like you live there,
or you believe in the chef, or you want to
you know, flex to some group of people that you're
like a restaurant owner independent alas raise money as well. Yeah,
I am the owner, right, Yeah, it's I mean, it's
kind of a nice thing, which is why people like
a lot of whom have like unlimited me and it's
like some of them are like randomly investing in restaurants.
Speaker 1 (16:16):
Yeah, yeah, I know, I think that that's really interesting.
And there's one more thing that you actually just mentioned,
which we don't talk a lot about, but I think
it's an important kind of decision heuristic, if you will,
that people don't think enough about, which is the risk
of regret, right, the risk of kind of the path
not taken? And how much are you going to regret
(16:38):
what you didn't do versus what you did do? And
it seems like in your case, when you weigh those two,
what you didn't do, you know is weighed on you
much more heavily, and so you are probably programmed kind
of against the status quo bias.
Speaker 2 (16:52):
Right.
Speaker 1 (16:52):
So many people they just have inertia and they're like
it's fine, Like I just I don't want to I
don't want to act because I don't want to rock
the boat. And it seems like for you, what you're
saying is no, like the risk that I run by
not rocking the boat is actually much higher.
Speaker 2 (17:06):
Yeah. I mean this is described in a lot of
different ways. Is like you know, writers that don't write things.
It goes from you know, being this like heavenly gift
to this like hellish burden. I certainly, you know, like
wake up and fall asleep every day with the dread
and not of like whatever I'm working on emails they
haven't received, but things that I haven't finished or started
one hundred percent. And I think, you know, probably good
(17:30):
that not everybody is programmed that way. But I think
I also I also have to control myself because you know,
I make really bad investment decisions as well, just because
I like these kind of heroic yellow kind of bets.
I tend to invest in, like, you know, pro social things.
(17:50):
I apply non financial criteria to things that should be
strictly financial, and I know that that's you know, kind
of dumb, and I'm trying to get better at it,
and you know, outsource the decisions that I continue to
make poorly. But all of the work on effective forecasting,
the research says that no matter how how many times
we receive the information, we always get it wrong how
(18:14):
happy or sad we're going to be about a particular thing.
Like if you ask somebody like, how happy will you
be on a scale from one to ten if your
team wins a Super Bowl? Somebody says ten. Then you
ask them afterwards and they're like, it's a seven, and
then you ask them again next year and they say
it's a ten. Like there's certain things like this that
we that we don't learn, right, So kind of trying
to work within my own you know, cognitive biases when
(18:36):
it comes to investment decisions and or managing my business.
Risk is something that I try to create rules around.
But you know, with mixed success, which is why I
try to start a lot of different things because I
know I'm going to screw one of them up, just
like out of boredom one day.
Speaker 1 (18:53):
So well, that's that's a high level of self awareness
and I applaug you for that. But you know, having
rules is actually a really good way around these effective
forecasting errors, and that is a really that is a
really interesting that's an interesting bias as well. Yeah, we
are very bad at knowing what our future self is
going to feel like will want you know, just we're
(19:16):
bad at making decisions for our future self and very
we just we take our current self and we project
ourselves into the future, not realizing you're going to be
a different person. It's a different time. It's incredibly difficult. Yeah,
it's incredibly difficult to learn we're going to take a
quick break and when we return Henry's take on regret. So,
(19:48):
after Rugolo was a success, you opened a number of
other restaurants that are still open to this day. You
did have some Actually, one of the things that I
find really interesting is you're not afraid to pivot. So
I remember when you open Meta, which is now Rodora, right,
and so the initial concept, you know, you were very
(20:08):
good at say this isn't working and we're going to
We're going to pivot to this, And as far as
I could tell, that was also the moment where you
pivoted to kind of a more environmentally conscious approach to
the restaurant business. Can you talk us through kind of
that that process of changing Meta into what it is
today and kind of your general approach now to actually
(20:30):
marrying some of these goals of climate activism and kind
of knowing what's happening to our world with a consumption
business like the restaurant business.
Speaker 2 (20:39):
Yeah, I mean the initial twist was I was visited
by this guy, Anthony Mian who started Mission Chinese with
Danny Boyen, and he was getting into his nonprofit called
Zero Foodprint, and he said to me, you know, Henry,
(20:59):
did you know that food is responsible for twenty five
to thirty percent of global emissions. I was like, now,
I did not realize I was running a coal power
plant for fun, you know, because I, you know, like
to hang out with friends and eat and drink. That's
that's not great news. And he was like, yeah, and
did you know that like five of the top ten
most impactful policy changes that can be made to a
(21:21):
climate catastrophe have to do with food and beverage. Like,
isn't that awesome that we get to work on this?
And it really appealed to my sense of, you know
whatever agency individualism, the reason that I would assume everybody
becomes an entrepreneur, right because you it's not like the
most straightforward way to make money, so you have to
(21:41):
kind of again have these like non financial reasons for
doing it, whether you know, running toward or running from.
And I think the big one for me was this
was an opportunity for me to you know, when you
get the call in the middle of the night and
then the pipe breaks and you call the plumber and
you're just like, I hate my life, it's sort of
(22:03):
a reason to actually tap into something deeper and just
like like what you see in the mirror and put
up with the petty and dignities of running a restaurant
and being an entrepreneur. Which is why it's so shocking
to me that so few restauranteurs have have taken on
this sustainability mantles. It's because it's it's an opportunity to
give your work meaning in a much broader kind of
(22:25):
local community or global context. It's an opportunity to give
you know, all the people that work for you, like
an exciting extra reason to to come to work. And
then there are all these kind of narrow business reasons
for doing it, like retaining people. But yeah, he sort
of once you told me that, I couldn't look away
from the fact that you know, basically, if you're working
(22:48):
in food, you either need to be for me. It
was like, we either need to work on this actively
or we need to close because what we're doing is harmful,
and it's harmful in a way that is that weighed
on me because you know, we all have carbon footprints,
but restaurants carbon footprints are significant, right and and if
you if you kind of of look at the data
(23:11):
of you know, the social cost of that into the future,
and you think about the harm that you can cause
by doing nothing other than business as usual. It was
it was too much for me to kind of bear
psychologically flip side, you know, actually kind of pivoting to
being a bit more proactive about you know, creating a
(23:32):
trash free restaurant, pivoting toward you know, scope through carbon
neutral operations. Suddenly, this is something that gave me energy
and made me feel like, yeah, obviously we're a small
restaurant group, but in our sphere of influence, we can
show a way of doing something, not just like you know,
lying there helpless and saying like, oh, it's so difficult
(23:52):
to be a restaurant owner and doing nothing. So that
felt really good to me. And you know, I'm not
saying it was exclusively for selfish reasons, but I do
think participating in this broader conversation has given me a
lot of just like personal joy and satisfaction in the
(24:13):
work that I do, which can be really annoying. And
I hope it would be a template for more people
kind of jumping on board. But you know, sustainability in
restaurants is not really a thing unfortunately for them.
Speaker 1 (24:23):
Yeah, so so talk us through a little bit about
what that decision process looks like, right when you're opening
a new restaurant, or when when you kind of pivoted
to Redore for that first trial. What does it look
like when you're making those decisions, Because obviously you're still
looking to run a profitable business, so you have so
(24:43):
many you now have so many different needs, right, you
need to you need to make a profit, right for
for you and for your investors. You need people to
enjoy the food and to enjoy the restaurant, and you
need to kind of have that beyond point. And now
you're also saying, Okay, we're not going to have a
carbon footprint, we're going to be zero waste, we're going
to have all of these other things going on. How
does that decision calculus look like? How do you how
(25:05):
do you go through that process? How do you make
it a reality? And how people have everyone be happy?
Speaker 2 (25:12):
Well, it's very challenging because a restaurant is already a
massive compromise between like the front of house, the back
of house, you know, the operations, the guest experience, the
you know, return to investors. How easy or difficult it
is to work there. You know, very few people get
into the restaurant world in order to like work on sustainability. Right,
(25:32):
So now we're saying, okay, whereas you know, fifteen years ago,
anybody who knows the LIB was living in New York
knows like you were just outside of restaurants, you see
like hundreds of like black trash bags just like filled
with mostly recycling and compass. Because if you think about
when a restaurant buys, it is like mostly comes in cardboard,
comes in, you know, plastic or whatever, and it's mostly food.
(25:55):
It's not actually non recyclable trash that people were putting
in the trash. So all these people that are kind
of used to just having a trash bin, it's like,
all right, now you're going to have three. You know,
there's like trash and I don't really know what you
need to put in there in most of our ust
restaurants because it is mostly recycling and composts recycling and compost.
And they look at me as this kind of like
out of touch, you know, business owner who's not like
(26:18):
worked you know, in a restaurant alongside them, and they're like,
all right, so you're going to take our jobs, which
are extremely difficult, and you're going to make them more difficult.
And also in the world of restaurants, what's seen as
quality is basically speed, right, So if you order an
espresso and it comes out in like thirty seconds, you're like, Wow,
(26:39):
the spaces has this incredible service and sustainable practices within
the restaurant do slow things down. You're washing recycling, you know,
you're like, which bind do I put this in? And
so you are operating, you know, either with more staff
or staff who are more committed and operating more efficiently.
So it does it does hurt profits and or you
pass it on to the guests. The problem is people
(27:02):
don't really care on the consumer side. They don't put
a value on us being like scope through a carbon
neutral They're like, what does that even mean? And then
you explain it to them and they really don't know
what it means. And Redora being you know, trash free
is so extreme. There are there are only a few
like trash free restaurants in the world. And we learned
(27:25):
about how to do this from a few you know,
dear friends chef Doug McMaster who runs Silo in London
and Lauren Singer who's many things, but when I met her,
she was kind of a zero waste sustainability influencer and
running this company of trash is for Tosters and then
package Free, and they sort of showed us how to
operate without a trash bin. But it's almost like it
really is almost like a performative level of sustainability that
(27:48):
I think can be off putting for people. So we
do all these things, but I think people come to
Redora because it's cool and the wine is good, and
it's a nice design and it's like an amazing location
in four Green, two blocks from the park. You know,
it's not because it's sustainable.
Speaker 1 (28:04):
Yeah. I think you're very you know, every single restaurant
that you open, you're very good at trying to figure
out what's the identity of this restaurant is. You know,
like on a E. S which is one of your
more recent restaurants, you have it as like a book
bar right in a book space and an event space.
So I think it's very interesting to see how you're
you're trying to marry these things and how you are
(28:25):
looking at risk and you are in a way you're
mitigating the risk right by kind of loading the loading
the dice on the other side, and saying, yes, I'm
taking all these risks with the climate stuff. Yes, it's
not going to be as profitable for those reasons, but
I'm going to ensure that people like it more because
there is a unique identifier that's going to kind of
make people come here, even though it might be a
(28:46):
little slower, even though we might have to jump through
a few more hurdles.
Speaker 2 (28:50):
Is that fair? Yeah, I think I think that's fair.
You know, we always try to have a concept for
a particular community or a particular reason. Meta was kind
of bringing the style of you know, open fire cooking
and Redora. It was like, okay, like first like trash
free restaurant in New York, and then June was the
first natural wine bar in Brooklyn, you know, quickly followed
(29:14):
by the Four Horsemen, and now there's like again like
five thousand, you know, a nice wine bar with candles
and bookshelves of you know, vintage feminist erotica for sale.
Is like another vibe that I just like wanted to
have somewhere, you know, nearby that the one could visit
and you know, lo and behold, we're having all of
(29:36):
these amazing poetry readings where people are like matching like
Catullus to like a particular wine and like Lorca, and
people are kind.
Speaker 1 (29:45):
Of having that your aesthetics is coming back.
Speaker 2 (29:49):
Yeah, it's squeezed in you know, here and there. But
I think, like from a management perspective also, I would
say the way that I managed Risks by kind of
trying to constantly improve quality and make sure that we're
being competitive as I focus on like the very very
macro like okay, like this does this location makes sense?
Is a lease owner a do people actually care about
(30:11):
the screen concept at all? And then the very very
micro like you know what is like the fonts on
the menu, the thousand little details that actually create the
guest experience because you know, and people kind of sometimes
don't understand. They're like I thought you were kind of
like the finance like big picture guy, and you're kind
of going in and you know you want to like
(30:33):
switch the candles out. Why are you so annoying? But
I think like focusing like as an owner, focusing on
because I'm a guest in my own restaurants, right and
I want to kind of like relentlessly bring the guest
experience back to the center of what our priorities are
and what we're trying to achieve, because there's a lot
of other things that people are trying to achieve, Like
(30:54):
bartenders are trying to try out new exciting things, you know,
brought in by like liquor apps that they're friends with.
Chefs are trying to make their name. There's a lot
of incentives that kind of pull people away from guests
experience in restaurants, which is why sometimes you'll go to
a restaurant it just won't be as good as like
a home cooked meal, right, which which is just it's
(31:17):
actually quite straightforward to do, but you constantly have to
be refocusing on the guests and their enjoyment and their
enjoyment with like again themselves, friends, family, versus the things
that will happen when you take your eye off the
ball that make a place increasingly not guest friendly when
it comes to reservation policies or hours or like not
(31:39):
seating partial parties. These are things that kind of I
have to regularly correct.
Speaker 1 (31:46):
Yeah, no, that makes sense. I do want to ask
about kind of one other broader question when it comes
to risks. So obviously things can happen that no one
could have foreseen, like COVID and I'm very curious none
of your restaurants closed during COVID and you actually kind
of continue you were successful, right, and this was a
(32:06):
time where like restaurants were decimated. How did you approach
something which was a new kind of risk environment, new challenge?
How did you think about it? And you know, ultimately,
how did you survive and thrive during a time that
was so difficult for so many for so many businesses.
Speaker 2 (32:24):
Yeah, that's well, I think this is where my failure
maybe came in handy. I think a lot of people
thought that, you know, the cavalry was coming and you know,
people just stop paying run And a lot of restaurant
(32:46):
owners were like, well, they have to bail us out.
And you know, having lived through the Great Recession, having
like my business destroyed and kind of like my livelihood destroyed,
I was just like, no, they don't, like we're you know,
we're entrepreneurs. Like we're like out here swinging for the
fences for like a great riches in glory. Like we
don't deserve a bailout, guys. And like so I behaved
(33:08):
as though no one was coming. So like you know, Rukula,
there was you know, the mandate to close on Monday
or whatever, and by Monday night we were, you know,
doing takeout, which was allowed. Redora, we pivoted to being
you know, a general goods store selling like paper, towels,
toilet paper, wine, you know whatever, all of these things,
(33:31):
trying to be like a local shop for the community.
We did the same thing at June. I pivoted very
very quickly. I guess is I I'm used to slash
operate well in a quickly changing environment. I get excited
by things, by by challenges, and I think that, you know,
(33:54):
it's just like, okay, what is what needs to be
done in these situations? And so then when the money
came right like the two rounds of p PAP, the
IDL Loans, Restaurant Revitalization Fund, I was just like what
the I was so unexpected, And so it was just
kind of on top of businesses that were operating at
(34:19):
break even or better. I Meanridora, we weren't eligible for
our F because we made more money of the pandemic
than we made the year before. So I was sort
of I saw a lot of like very close friends
of mine be pretty overwhelmed by by the extent of
the change extent of the risk, and you know, to
(34:40):
another degree, I realized that I was I had also
my thesis of like don't put your all year eggs
in one basket, had sort of once again been challenged
by putting all of my eggs in one industry, which
was you know, highly susceptible. And I just I just
didn't want to fail again. I was too old and just,
and so we we came out a lot stronger. And
(35:02):
I think that I think a lot of people did.
I do think there's a massive debt overhang. I think
that a lot of a lot of things happened in
the pandemic where if you if you fired your entire stuff,
if you didn't pivot to figure out another thing for
people to do, a lot of these people left New
York and you had to rehire everybody at on the
same day that like thousands of other restaurants were rehiring.
(35:24):
And I don't think people realize how much debt was
actually handed out that kind of fueled this resurgence. That
debt is still there, right like, these loans are still
out there for a lot of these businesses, and I
don't know, maybe some people think it's going to be forgiven,
but I don't. So just because you don't expect anything,
(35:46):
I don't know, I know, I know, no one's uh
you know, and you know, it just seems like a
little bit of attachment theory. I'm definitely the kind of uh,
do you know this experiment where there's like the kid
and the parent leaves and like the stranger comes back,
and like you can tell you if you're like anxious,
avoidant whatever. Like I'm definitely like the kid that just
was like, Okay, I guess this is what we're doing now,
(36:08):
you know.
Speaker 1 (36:09):
And.
Speaker 2 (36:11):
That, just I guess is a superpower in times where
you know, a lot is changing, and I think it's
it's a massive liability in times where things are smooth
and boring, because you know, I have a tendency, certainly
in my own personal investments to try to make things
interesting and like just just doing dumb stuff like buying
(36:35):
options in like renewable companies when I should be buying
stocks and whatever. Just I have, I know this about myself,
and so I've tried to try to make the restaurants
interesting enough so that I can do like really really
boring investments.
Speaker 1 (36:56):
After the break, Henry talks about managing risk in his
personal life.
Speaker 2 (37:12):
I also wanted to tell you, like when it comes
to personal things, I'm incredibly risk averse. Like I just
had another child, you know, five thank you, five days ago,
and so a little a little bit underslept. But you know,
my partner was on like antibiotics and this sleeping medication
unism throughout it, and everything was everything was saying like
(37:36):
this is totally fine, there's nothing wrong. But I did
like more research and I was like, okay, it's this
hermiasin Like there actually are these recent Naah papers where
if you like have a boy, there is like this
number of potential genetic defects, and I'm like, great, I
have a girl, and there are these other things that
(37:56):
could you know, could potentially happen that like if you
took it in the first or the third trimester, but
she took it in the second. And so I'm asking
these the nurses these questions and they're just like you
are psychotic, Like your baby is completely fine. I'm like, look,
I'm just trying to gather information so that if like X,
Y or Z happens in two weeks, as it said
(38:16):
it might in the study, you know, like if something
went from a point one percent chance to a one
percent chance. I want to know, because, like anything happening
in the first month of life is existential, and I
think I can't remember if this is anything that we've
ever talked about, but just like on a personal level,
I lost my mom to an accident at a very
(38:37):
young age, and so these kind of lowering existential risk
from like five percent to one percent two point five percent.
I also am constantly circling around my restaurants and people
in my life trying to do this for like early screenings,
like anything to remove like the worst outcomes of like
(39:01):
total failure. And so that's also why I think my
businesses sort of tend to survive, is I don't let
them die like even when they should. Yeah, if that
makes sense, I.
Speaker 1 (39:14):
Think that that's incredibly smart and something that has probably
allowed you to survive in a very risky and very
risky area because a lot of people and a lot
of entrepreneurs don't have enough appreciation for the risk of ruin, right,
the risk of going to zero, the risk of not
being able to continue. And it seems like that's something
that you are thinking about in just globally right in
(39:36):
every element of your life.
Speaker 2 (39:37):
Certain, yeah, in connection to my to my children, in
connection of my businesses, in connection to the climate, and yeah, no,
I mean definitely, like the fat tail on all these
things is problematic, and I just try to, you know,
winnow it down. And I do that, you know, in
any situation by just gathering information. So if I see
(39:58):
something like my great grandmother was a worse nurse in
World War One, and my grandmother was dying of a
fever and being read her last rights and they thought
she had I don't know the flu, and my great
grandmother was like, is diphtheria? I know the smell of
(40:21):
diphtheria from just you know, being like in the trenches.
You need to treat her for diphtheria or she's going
to die in ten minutes. And they did and it
saved her life. So it's just like information like that
that I find that it's very helpful to have in
terms of you know, risk mitigation, but also like from
a business point of view, in terms of like team management.
(40:44):
I'm also very early. I try to be very early
to catch things like I'm not going to wait for
some like major accident like somebody falling down the stairs,
some like horrific like harassment situation. I try to look
at like general conditions that could lead to a catastrophic
outcome and eliminate the risk. That's the other thing I do.
Speaker 1 (41:09):
So, So what's next for you, Henry.
Speaker 2 (41:11):
I'm working on a cool museum project in the city
that I'll be able to talk about in a couple
of months. I am working on a little kind of hotel,
bike shop, restaurant project in the Catskills where I live
most of the time. A lot of the things I
do are just like things that kind of I want.
(41:31):
I opened a little like grow grocery store in my
town as well, just just to have more access to
local produce. And then I'm kind of pivoting to more
focus on just this book on you know, individual action
and kind of building climate identity as a consumer in
the ways in which you know, being of this generation,
(41:54):
whether we like it or not. I think a lot
of the meaning of one's life as you look back
in it will be you know, what individual parts that
I play in this like massive success or you know,
catastrophic failure and being able to look back at your
whole life and you know, one won't be able to
hide from yourself what you know when and just again
(42:18):
the risk of looking back and not liking what I
see is haunting for me. And I also think that
there's a lot of like low grade anxiety that people
feel about not the threat, but the paralysis. So trying
to create tools and you know, heuristics for people to
(42:39):
actually tap into someone to feel good about and not
just feel you know, low key sleepwalking toward armageddon Like
that's that's an odd Like there's a lot of issues
in the world that I can name, like nuclear proliferation.
I mean, there's many many things where there's literally nothing
you can do if you're just a normal person who's
(43:00):
not like in the top tier of government or think tank.
But climate you know that that's one where we all
have an actual role. I think people just need a
bit of guidance and some tools to help them get there.
So opening these, you know whatever, climate positive restaurants, I've
had thousands of interactions on a consumer level with people
being like what is this, Like I don't I feel
(43:21):
like you're lying to me, Like I don't feel better
after coming here because like now the rest of my
life feels like it's problematic and just the ways in
which trying to create this climate positive experience it just
didn't have anywhere to land for people emotionally, and just
trying to work on that larger background issue of not
(43:44):
having a way to account for non financial values like
doing you know, the right thing, and to actually feel
good about that, to feel joy right and to have
it like help cut down on that low grade anxiety.
It's a rationally selfish thing to do if people only
had a place to put that good feeling. So kind
of working on that.
Speaker 1 (44:04):
I love that and I think that's a really beautiful
place to end. This was incredibly interesting and very inspiring.
So I hope that your I hope that your approach
to risk and kind of your example will indeed help people.
So thank you so much for sharing, thank you for
joining us, and I, as a personal selfish consumer, can't
(44:26):
wait for your next restaurant to open.
Speaker 2 (44:28):
Thanks Maria, really great to see you.
Speaker 1 (44:30):
Good to see you too. Let us know what you
think of the show. Reach out to us at Risky
Business at pushkin dot fm. Risky Business is hosted by me,
Maria Kandikova and Nate Silver, who will be back next week.
The show is a co production of Pushkin Industries and iHeartMedia.
This episode was produced by Isabel Carter. Our associate producer
(44:53):
is Gabriel Hunter Chang. Our executive producer is Jacob Goldstein.
Sarah Bruguer is our engineer. If you like the show,
please rate and review us so other people can find
us too. And if you want to listen to an
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Thanks for tuning in.
Pushkin. Welcome back to Risky Business, a show about making
better decisions. I'm Maria Kondikova. My regular co host, Nate
Silver is off this week and instead I'm joined by
a dear friend, Henry Rich, whom I've known for too
(00:38):
many years.
Speaker 2 (00:39):
I don't want to age.
Speaker 1 (00:40):
Both of us, but we've known each other since our
college days. We're very excited to have Henry on today.
Henry is a serial entrepreneur. He's the head of the
Oberon Restaurant Group, which has some of my favorite restaurants
in New York City, and I can't wait to ask
him about managing risk in one of the world's riskiest industries,
learning from failure and the motivating force of regret. Henry,
(01:03):
thanks so much for joining us.
Speaker 2 (01:05):
Absolute pleasure. Good to see you.
Speaker 1 (01:06):
Good to see you too. So a little bit of background.
We met at Harvard. I was a freshman and you
were a senior. You are older than I am rsually,
and I'd love to actually start before we get you know,
into everything that you're doing right now. Your background at
Harvard is one of the most unique that that I know,
(01:30):
and it's something that I would not have thought that
you know today you'd be a successful entrepreneur kind of
doing what you're doing right now.
Speaker 2 (01:39):
Because you majored.
Speaker 1 (01:40):
You created your own major, and it was in esthetics,
if I remember correctly.
Speaker 2 (01:45):
Yes, how I got from that to being an entrepreneur
was in part lack of other options, but also I
think I just I left with this really strong kind
of individual almost you know, existential streak that left me
(02:06):
working for myself. And you know, the default for working
for yourself is to create these entities around me that
I could you know, manage and live my life.
Speaker 1 (02:15):
So yeah, so that makes sense. It's a little bit
different from you know, most entrepreneurs who are like, you know,
I majored in economics or I majored in business, and
this is what I want to do. Your first company,
I don't know if it was actually your first company,
but your first company that I'm aware of, was a
mint company called Oral Fixation. And I remember you graduated
and you had come back and you gave you know,
(02:38):
me and and other friends who were still in college
these little boxes of mints. The Mohido flavors were my favorite.
So talk us through how you decided to create a
mint company, how that went, and what that taught you
about risk and about kind of and about the world
of business, because obviously that is also quite different from
the restaurant world, even though we're both both are consumables.
Speaker 2 (03:01):
Yeah, you know, it's funny. I rarely talked about this
this first company. I would say, I learned a lot
about hedging and managing risk in terms of, you know,
what not to do. So I decided to start a
you know, small manufacturing company in a mature industry where
most of our competitors were nineteenth century, multi billion dollar
conglomerates like Wrigley, Mars, you know, Cadbury hershey NeSSI, these
(03:25):
kind of companies, thinking that through I guess, just working
hard and being smart and being you know, tasteful, that
we could somehow dislodge these competitors. It was a terrible
idea because we had to do our own manufacturing. We
were selling into you know, thirty five countries, so I
(03:45):
had to figure out the trade piece of it. All
the regulations, had to do the consumer marketing, you know,
manage multiple territories and channels like gift hotels, coffee shops,
attend you know, hundreds of trade shows. I would say,
what I learned from that experience is not to do
just one thing. Because I really did put all my
(04:08):
eggs in the basket of this company, which even if
it had been you know, in a smarter category like
yogurt or chocolate or somewhere where companies actually get acquired,
it just it was totally susceptible to the Great Recession
in ways that I didn't appreciate because I was, you know,
a hebristic, twenty something year old. Seventy five percent of
(04:31):
our sales dropped from September to October two thousand and eight.
We literally had a leave in Brothers private label Mint
for their office in Japan. We had warehouses ransacked in India,
and a food Riot, our largest British distributor, was acquired.
Their main customers were acquired by Icelandic banks. We were
selling in countries whose currencies dropped twenty thirty percent against
(04:51):
a dollar. So I really realized that I just had
no idea what I was doing at all and sort
of deserved to fail catastrophically, which is which is what
happened with that company. But you know, I did learn
how to do things on my own. I did learn
a little bit about the food and beverage business, and
it sort of you know, set me up for wanting
(05:12):
to do something related but not you know, starting a
manufacturing company with no money, which was just you know,
an insane thing to do, but fun, fun in no way.
Speaker 1 (05:23):
You know, it's it's very rare to talk to someone
and obviously you've had a lot of success since then.
Who who takes responsibility and says, you know, I deserve
to fail? Can you just unpack that a little bit?
Speaker 2 (05:36):
Yeah, there should never have got off It got off
the ground through through sheer willpower that should never have existed.
It should never have survived for whatever six years. I
would say the most critical thing that I failed to
understand is that what I thought I was contributing to
this category, which was creating a product that actually had
more personality, was significantly higher quality. Wasn't cutting every corner
(06:00):
to hit the masses. These weren't things that were actually
important for the success. I thought by creating a better
design and you know, fifty cents instead of like two
cents on the actual ingredients, we could you know, charge
three dollars instead of two fifty and pass all of
this value onto consumers. But this isn't This isn't a
(06:22):
market segment where taste matters at all. What matters is
distribution and power. I had this really interesting experience where,
you know, we were doing the Mohto mint and then
Wriglely would come out with mit Mohido and they would
try to trademark and we did this, you know, fabulous
fruit flavor. They did fibulous for TEENI tried to trademarket
(06:42):
and they were sort of coming after us, and I
didn't really understand. I was like, have they no shame,
no honor? And one of these people came up to
us at a show where they grabbed one of our
tins and they didn't even bother turning their tag around.
And I was like, hey, like, I know what you
guys do. And the guy looked at me and he's like, yeah, well,
who has forty seven thousand registers at Walmart? And he
(07:03):
walked away and I realized I was just I was
in the wrong place where nobody was asking for a
better product in this category and it just simply didn't
matter as opposed to a restaurant, where you know, you
can have a restaurant that's been there for fifty years
if you open a slightly better restaurant right next to it,
(07:24):
your level of taste, your level of execution, your level
of hard work actually does matter, and people will just
gravitate to the thing that is slightly better and it's
much less gated. And I just didn't know that I
was entering a profoundly gated industry without any of the
tools that I would have needed to succeed. And the
(07:45):
world didn't need it, right, And I took a lesson
that I shouldn't do stuff just to because I think
it's funny, or to be independent. If it doesn't have
another reason to be, it's going to fail and it
should fail.
Speaker 1 (07:57):
Right.
Speaker 2 (07:57):
The world doesn't need, didn't need another breath Man company.
And that was a you know, strong lesson. And maybe
people would say, like, hey, the lasting Brooklyn needs is
another wine bar. But these are things that can be done,
you know, on a scale from one to one hundred
and more or less. Well yeah, yeah, well.
Speaker 1 (08:13):
Let's talk about that transition. So you had a business
that failed, right, as you say, like epic failure, something.
Speaker 2 (08:19):
That I was holding debts that I didn't really have
a plan to pay off. So I had a timeline.
You know with like basically within two years that I
had to figure it out. So a lot of pressure.
Two thousand and eight, two thousand and ninety ten, you know,
not not a great environment. Although many amazing companies were
founded then, but.
Speaker 1 (08:37):
Yeah, so not a great environment. You have debt, you
had a failed business, and so you decide, of all things,
to go into the restaurant business. Henry, what is the
rate of failure in the restaurant business?
Speaker 2 (08:49):
You know, I think something like ninety percent, but I
can't remember if it's like ninety percent in the first
year or whatever. But yeah, that's right. Yeah, yeah, which
makes sense because.
Speaker 1 (09:02):
Obviously like the obvious solution, right, you have debt, you
just had a failing business. Let's go into a business
where ninety percent of business is fill.
Speaker 2 (09:09):
Yeah, well, I think this is this is this is
part of a problem. I'm like attracted a little bit
to difficulty in a way that feels kind of like
exciting and glorious, but then you know, the consequences can
be overwhelming if you don't, you know, catch a wave.
But I don't know why, I just I was extremely
attracted to opening restaurants in Brooklyn in that window of time.
(09:33):
You know, around like twenty ten, twenty eleven, where there
was this kind of farm to table thing happening, and
it just felt like an amazing opportunity to try to
make some really nice additions to these to these parts
of the neighborhoods that would otherwise, you know, be chained
or things that are not really serving the community. So
(09:53):
I never envisioned it as like this is what I
do now, I'm a restaurant tour I just I went
into restaurants, you know, to participate in that kind of
Brooklyn moment. But also because as opposed to this manufacturing
company which totally defined me, restaurants are also things where
you can open one and it's sort of just open right,
(10:13):
whether you're actively managing or not, and then you can
open a few. And I didn't want to be kind
of under the weight of one huge crushing thing, so
I opened them all as you know, separate businesses. I
could rise or fall separately and accumulate over time. But
I also really I really liked that about it, that
you could own a restaurant without it being like you're
in there nine to five every day.
Speaker 1 (10:35):
Yeah, well, some free publicity rootless still exists and it's amazing.
It's one of my favorite restaurants. And I think, I
think you did a wonderful job. How do you get
someone to believe in you and finance help you finance
a restaurant, help that get off the ground after you know,
(10:55):
when you say you know I've had that, you know
I've had a failed business. How do you actually how
did you convince people to come on board? How did
you craft that vision? And what are the pieces that
kind of have to come together in order to open restaurant? One? Right,
globe was successful, so I think that probably helped kind
of restaurant two, three, four, et cetera. But that first
that first step had us at work.
Speaker 2 (11:17):
It was hard.
Speaker 1 (11:17):
It's a big risk for everyone, right, for you and
for your investors.
Speaker 2 (11:20):
Yeah, no, obviously in our restaurant, Like the first thing
you say is like, you can lose all of this money,
and statistically speaking, you will, and if it works, there's
no like IPO, there's there's no acquisition. It's just that
you'll receive dividends over time. So on balance, the risk
reward profile in the restaurant industry is poor, right, It
(11:41):
just so happens that you know, almost all of our
restaurants have paid back and people have made quite a
bit of money off them, and they're going to stay
open for a long time. But at the time of
the first one, yeah, I mean it was friends and
family and you know, we really script by. It was
we raised two hundred and fifty thousand dollars, and we
(12:02):
did a lot of work ourselves. We you know, gave
out sweat equity for people working for free. I wasn't
that asking for favors, because I do think that people
saw me and saw the location. I basically had one
twenty five thousand dollars line of credit left that I
had gotten, you know, in two thousand and six or something,
(12:23):
and I took eighteen thousand dollars out of it and
put the down payment on the lease without any money raised.
And so I could be like, hey, here's a space,
look at this corner, look at this neighborhood. We're in Brooklyn.
This is happening. And I think it's sort of it's
difficult to raise money for because most of these things
(12:44):
are not good investment. But to have an investment that
you can actually kind of have breakfast, lunch and dinner
in and like bring your friends and have that I
own this restaurant moment is actually an extraordinary social benefit
as opposed to the most kind of random, high risk
investments that you would take, which are impersonal and likely
(13:05):
you'll never visit the business, let alone experience it and
have it add to your life. So in a way,
it's it's not the best financially, but I think I
was able to truthfully explain all of these intangible social
emotional benefits of being a part of something that I
(13:25):
think was very cool.
Speaker 1 (13:28):
Yeah, that's really interesting because you know, Nate and I
talk a lot about kind of expected value of decisions
on the show, right, and how how you think about
taking risks right, positive expected value, negative expected value, And
usually you're thinking about it in monetary terms, but there
are situations where there are these intangibles that might you know,
(13:49):
kind of add to the expected value, right, even though
it's not even though the kind of monetary payout may
not be as big. So I think what you're saying
here is that in the restaurant business, like you're actually
trying to appeal to those other things you're not going
to It's not like you're going to pitch a meme coin.
Speaker 2 (14:07):
Or something like that.
Speaker 1 (14:09):
You're like, Okay, you'll double your money really quickly. You're saying, yeah,
you know, this is a risk, but the rewards are
actually much more personal, much more meaningful. It's much more
of an investment kind of in in these I want
to say intangibles, even though they're very tangible, right, but
it is.
Speaker 2 (14:27):
Just non financial. They're just they're just non financial values.
And I mean, you've just actually nailed a through line
on all of the work I do, including the climate stuff,
which is like, there's a risk. There's a risk that
you don't do everything that you can in the moments
that you knew that you should, and that you might
look back on that and feel a certain type of
way about your entire life. That's a risk, it's not
(14:48):
a financial risk. I think this kind of talk made
a lot more sense when people believe that they had
souls and things. But I think this is one area
where maybe like the kind of the philosophical like existentialist,
you know, esthetic training is in all of the work,
which is I get scared about like not taking opportunities
and not doing things and not bringing things into the
(15:10):
world that I believe should exist, and kind of carrying
that emotional weight for the rest of my life. And
you know, when it comes to people making decisions, people
make decisions for non financial reasons, you know, mostly right
like in their day to day life. But when you
talk about it in a business, it kind of gets
written out for some strange reason, and people wonder why they,
(15:33):
you know, are dissociated and unhappy. There's this whole ledger
that we should be thinking a lot more about. So
that's sort of I mean, it's that's why I think
these are cool investments, is because the idea that you
could you know, walk into one and you know, experience
it and let alone if it's like a climate positive
or mission aligned in some other way. Nobody invests in
(15:53):
a restaurant for financial reasons. It's cause like you live there,
or you believe in the chef, or you want to
you know, flex to some group of people that you're
like a restaurant owner independent alas raise money as well. Yeah,
I am the owner, right, Yeah, it's I mean, it's
kind of a nice thing, which is why people like
a lot of whom have like unlimited me and it's
like some of them are like randomly investing in restaurants.
Speaker 1 (16:16):
Yeah, yeah, I know, I think that that's really interesting.
And there's one more thing that you actually just mentioned,
which we don't talk a lot about, but I think
it's an important kind of decision heuristic, if you will,
that people don't think enough about, which is the risk
of regret, right, the risk of kind of the path
not taken? And how much are you going to regret
(16:38):
what you didn't do versus what you did do? And
it seems like in your case, when you weigh those two,
what you didn't do, you know is weighed on you
much more heavily, and so you are probably programmed kind
of against the status quo bias.
Speaker 2 (16:52):
Right.
Speaker 1 (16:52):
So many people they just have inertia and they're like
it's fine, Like I just I don't want to I
don't want to act because I don't want to rock
the boat. And it seems like for you, what you're
saying is no, like the risk that I run by
not rocking the boat is actually much higher.
Speaker 2 (17:06):
Yeah. I mean this is described in a lot of
different ways. Is like you know, writers that don't write things.
It goes from you know, being this like heavenly gift
to this like hellish burden. I certainly, you know, like
wake up and fall asleep every day with the dread
and not of like whatever I'm working on emails they
haven't received, but things that I haven't finished or started
one hundred percent. And I think, you know, probably good
(17:30):
that not everybody is programmed that way. But I think
I also I also have to control myself because you know,
I make really bad investment decisions as well, just because
I like these kind of heroic yellow kind of bets.
I tend to invest in, like, you know, pro social things.
(17:50):
I apply non financial criteria to things that should be
strictly financial, and I know that that's you know, kind
of dumb, and I'm trying to get better at it,
and you know, outsource the decisions that I continue to
make poorly. But all of the work on effective forecasting,
the research says that no matter how how many times
we receive the information, we always get it wrong how
(18:14):
happy or sad we're going to be about a particular thing.
Like if you ask somebody like, how happy will you
be on a scale from one to ten if your
team wins a Super Bowl? Somebody says ten. Then you
ask them afterwards and they're like, it's a seven, and
then you ask them again next year and they say
it's a ten. Like there's certain things like this that
we that we don't learn, right, So kind of trying
to work within my own you know, cognitive biases when
(18:36):
it comes to investment decisions and or managing my business.
Risk is something that I try to create rules around.
But you know, with mixed success, which is why I
try to start a lot of different things because I
know I'm going to screw one of them up, just
like out of boredom one day.
Speaker 1 (18:53):
So well, that's that's a high level of self awareness
and I applaug you for that. But you know, having
rules is actually a really good way around these effective
forecasting errors, and that is a really that is a
really interesting that's an interesting bias as well. Yeah, we
are very bad at knowing what our future self is
going to feel like will want you know, just we're
(19:16):
bad at making decisions for our future self and very
we just we take our current self and we project
ourselves into the future, not realizing you're going to be
a different person. It's a different time. It's incredibly difficult. Yeah,
it's incredibly difficult to learn we're going to take a
quick break and when we return Henry's take on regret. So,
(19:48):
after Rugolo was a success, you opened a number of
other restaurants that are still open to this day. You
did have some Actually, one of the things that I
find really interesting is you're not afraid to pivot. So
I remember when you open Meta, which is now Rodora, right,
and so the initial concept, you know, you were very
(20:08):
good at say this isn't working and we're going to
We're going to pivot to this, And as far as
I could tell, that was also the moment where you
pivoted to kind of a more environmentally conscious approach to
the restaurant business. Can you talk us through kind of
that that process of changing Meta into what it is
today and kind of your general approach now to actually
(20:30):
marrying some of these goals of climate activism and kind
of knowing what's happening to our world with a consumption
business like the restaurant business.
Speaker 2 (20:39):
Yeah, I mean the initial twist was I was visited
by this guy, Anthony Mian who started Mission Chinese with
Danny Boyen, and he was getting into his nonprofit called
Zero Foodprint, and he said to me, you know, Henry,
(20:59):
did you know that food is responsible for twenty five
to thirty percent of global emissions. I was like, now,
I did not realize I was running a coal power
plant for fun, you know, because I, you know, like
to hang out with friends and eat and drink. That's
that's not great news. And he was like, yeah, and
did you know that like five of the top ten
most impactful policy changes that can be made to a
(21:21):
climate catastrophe have to do with food and beverage. Like,
isn't that awesome that we get to work on this?
And it really appealed to my sense of, you know
whatever agency individualism, the reason that I would assume everybody
becomes an entrepreneur, right because you it's not like the
most straightforward way to make money, so you have to
(21:41):
kind of again have these like non financial reasons for
doing it, whether you know, running toward or running from.
And I think the big one for me was this
was an opportunity for me to you know, when you
get the call in the middle of the night and
then the pipe breaks and you call the plumber and
you're just like, I hate my life, it's sort of
(22:03):
a reason to actually tap into something deeper and just
like like what you see in the mirror and put
up with the petty and dignities of running a restaurant
and being an entrepreneur. Which is why it's so shocking
to me that so few restauranteurs have have taken on
this sustainability mantles. It's because it's it's an opportunity to
give your work meaning in a much broader kind of
(22:25):
local community or global context. It's an opportunity to give
you know, all the people that work for you, like
an exciting extra reason to to come to work. And
then there are all these kind of narrow business reasons
for doing it, like retaining people. But yeah, he sort
of once you told me that, I couldn't look away
from the fact that you know, basically, if you're working
(22:48):
in food, you either need to be for me. It
was like, we either need to work on this actively
or we need to close because what we're doing is harmful,
and it's harmful in a way that is that weighed
on me because you know, we all have carbon footprints,
but restaurants carbon footprints are significant, right and and if
you if you kind of of look at the data
(23:11):
of you know, the social cost of that into the future,
and you think about the harm that you can cause
by doing nothing other than business as usual. It was
it was too much for me to kind of bear
psychologically flip side, you know, actually kind of pivoting to
being a bit more proactive about you know, creating a
(23:32):
trash free restaurant, pivoting toward you know, scope through carbon
neutral operations. Suddenly, this is something that gave me energy
and made me feel like, yeah, obviously we're a small
restaurant group, but in our sphere of influence, we can
show a way of doing something, not just like you know,
lying there helpless and saying like, oh, it's so difficult
(23:52):
to be a restaurant owner and doing nothing. So that
felt really good to me. And you know, I'm not
saying it was exclusively for selfish reasons, but I do
think participating in this broader conversation has given me a
lot of just like personal joy and satisfaction in the
(24:13):
work that I do, which can be really annoying. And
I hope it would be a template for more people
kind of jumping on board. But you know, sustainability in
restaurants is not really a thing unfortunately for them.
Speaker 1 (24:23):
Yeah, so so talk us through a little bit about
what that decision process looks like, right when you're opening
a new restaurant, or when when you kind of pivoted
to Redore for that first trial. What does it look
like when you're making those decisions, Because obviously you're still
looking to run a profitable business, so you have so
(24:43):
many you now have so many different needs, right, you
need to you need to make a profit, right for
for you and for your investors. You need people to
enjoy the food and to enjoy the restaurant, and you
need to kind of have that beyond point. And now
you're also saying, Okay, we're not going to have a
carbon footprint, we're going to be zero waste, we're going
to have all of these other things going on. How
does that decision calculus look like? How do you how
(25:05):
do you go through that process? How do you make
it a reality? And how people have everyone be happy?
Speaker 2 (25:12):
Well, it's very challenging because a restaurant is already a
massive compromise between like the front of house, the back
of house, you know, the operations, the guest experience, the
you know, return to investors. How easy or difficult it
is to work there. You know, very few people get
into the restaurant world in order to like work on sustainability. Right,
(25:32):
So now we're saying, okay, whereas you know, fifteen years ago,
anybody who knows the LIB was living in New York
knows like you were just outside of restaurants, you see
like hundreds of like black trash bags just like filled
with mostly recycling and compass. Because if you think about
when a restaurant buys, it is like mostly comes in cardboard,
comes in, you know, plastic or whatever, and it's mostly food.
(25:55):
It's not actually non recyclable trash that people were putting
in the trash. So all these people that are kind
of used to just having a trash bin, it's like,
all right, now you're going to have three. You know,
there's like trash and I don't really know what you
need to put in there in most of our ust
restaurants because it is mostly recycling and composts recycling and compost.
And they look at me as this kind of like
out of touch, you know, business owner who's not like
(26:18):
worked you know, in a restaurant alongside them, and they're like,
all right, so you're going to take our jobs, which
are extremely difficult, and you're going to make them more difficult.
And also in the world of restaurants, what's seen as
quality is basically speed, right, So if you order an
espresso and it comes out in like thirty seconds, you're like, Wow,
(26:39):
the spaces has this incredible service and sustainable practices within
the restaurant do slow things down. You're washing recycling, you know,
you're like, which bind do I put this in? And
so you are operating, you know, either with more staff
or staff who are more committed and operating more efficiently.
So it does it does hurt profits and or you
pass it on to the guests. The problem is people
(27:02):
don't really care on the consumer side. They don't put
a value on us being like scope through a carbon
neutral They're like, what does that even mean? And then
you explain it to them and they really don't know
what it means. And Redora being you know, trash free
is so extreme. There are there are only a few
like trash free restaurants in the world. And we learned
(27:25):
about how to do this from a few you know,
dear friends chef Doug McMaster who runs Silo in London
and Lauren Singer who's many things, but when I met her,
she was kind of a zero waste sustainability influencer and
running this company of trash is for Tosters and then
package Free, and they sort of showed us how to
operate without a trash bin. But it's almost like it
really is almost like a performative level of sustainability that
(27:48):
I think can be off putting for people. So we
do all these things, but I think people come to
Redora because it's cool and the wine is good, and
it's a nice design and it's like an amazing location
in four Green, two blocks from the park. You know,
it's not because it's sustainable.
Speaker 1 (28:04):
Yeah. I think you're very you know, every single restaurant
that you open, you're very good at trying to figure
out what's the identity of this restaurant is. You know,
like on a E. S which is one of your
more recent restaurants, you have it as like a book
bar right in a book space and an event space.
So I think it's very interesting to see how you're
you're trying to marry these things and how you are
(28:25):
looking at risk and you are in a way you're
mitigating the risk right by kind of loading the loading
the dice on the other side, and saying, yes, I'm
taking all these risks with the climate stuff. Yes, it's
not going to be as profitable for those reasons, but
I'm going to ensure that people like it more because
there is a unique identifier that's going to kind of
make people come here, even though it might be a
(28:46):
little slower, even though we might have to jump through
a few more hurdles.
Speaker 2 (28:50):
Is that fair? Yeah, I think I think that's fair.
You know, we always try to have a concept for
a particular community or a particular reason. Meta was kind
of bringing the style of you know, open fire cooking
and Redora. It was like, okay, like first like trash
free restaurant in New York, and then June was the
first natural wine bar in Brooklyn, you know, quickly followed
(29:14):
by the Four Horsemen, and now there's like again like
five thousand, you know, a nice wine bar with candles
and bookshelves of you know, vintage feminist erotica for sale.
Is like another vibe that I just like wanted to
have somewhere, you know, nearby that the one could visit
and you know, lo and behold, we're having all of
(29:36):
these amazing poetry readings where people are like matching like
Catullus to like a particular wine and like Lorca, and
people are kind.
Speaker 1 (29:45):
Of having that your aesthetics is coming back.
Speaker 2 (29:49):
Yeah, it's squeezed in you know, here and there. But
I think, like from a management perspective also, I would
say the way that I managed Risks by kind of
trying to constantly improve quality and make sure that we're
being competitive as I focus on like the very very
macro like okay, like this does this location makes sense?
Is a lease owner a do people actually care about
(30:11):
the screen concept at all? And then the very very
micro like you know what is like the fonts on
the menu, the thousand little details that actually create the
guest experience because you know, and people kind of sometimes
don't understand. They're like I thought you were kind of
like the finance like big picture guy, and you're kind
of going in and you know you want to like
(30:33):
switch the candles out. Why are you so annoying? But
I think like focusing like as an owner, focusing on
because I'm a guest in my own restaurants, right and
I want to kind of like relentlessly bring the guest
experience back to the center of what our priorities are
and what we're trying to achieve, because there's a lot
of other things that people are trying to achieve, Like
(30:54):
bartenders are trying to try out new exciting things, you know,
brought in by like liquor apps that they're friends with.
Chefs are trying to make their name. There's a lot
of incentives that kind of pull people away from guests
experience in restaurants, which is why sometimes you'll go to
a restaurant it just won't be as good as like
a home cooked meal, right, which which is just it's
(31:17):
actually quite straightforward to do, but you constantly have to
be refocusing on the guests and their enjoyment and their
enjoyment with like again themselves, friends, family, versus the things
that will happen when you take your eye off the
ball that make a place increasingly not guest friendly when
it comes to reservation policies or hours or like not
(31:39):
seating partial parties. These are things that kind of I
have to regularly correct.
Speaker 1 (31:46):
Yeah, no, that makes sense. I do want to ask
about kind of one other broader question when it comes
to risks. So obviously things can happen that no one
could have foreseen, like COVID and I'm very curious none
of your restaurants closed during COVID and you actually kind
of continue you were successful, right, and this was a
(32:06):
time where like restaurants were decimated. How did you approach
something which was a new kind of risk environment, new challenge?
How did you think about it? And you know, ultimately,
how did you survive and thrive during a time that
was so difficult for so many for so many businesses.
Speaker 2 (32:24):
Yeah, that's well, I think this is where my failure
maybe came in handy. I think a lot of people
thought that, you know, the cavalry was coming and you know,
people just stop paying run And a lot of restaurant
(32:46):
owners were like, well, they have to bail us out.
And you know, having lived through the Great Recession, having
like my business destroyed and kind of like my livelihood destroyed,
I was just like, no, they don't, like we're you know,
we're entrepreneurs. Like we're like out here swinging for the
fences for like a great riches in glory. Like we
don't deserve a bailout, guys. And like so I behaved
(33:08):
as though no one was coming. So like you know, Rukula,
there was you know, the mandate to close on Monday
or whatever, and by Monday night we were, you know,
doing takeout, which was allowed. Redora, we pivoted to being
you know, a general goods store selling like paper, towels,
toilet paper, wine, you know whatever, all of these things,
(33:31):
trying to be like a local shop for the community.
We did the same thing at June. I pivoted very
very quickly. I guess is I I'm used to slash
operate well in a quickly changing environment. I get excited
by things, by by challenges, and I think that, you know,
(33:54):
it's just like, okay, what is what needs to be
done in these situations? And so then when the money
came right like the two rounds of p PAP, the
IDL Loans, Restaurant Revitalization Fund, I was just like what
the I was so unexpected, And so it was just
kind of on top of businesses that were operating at
(34:19):
break even or better. I Meanridora, we weren't eligible for
our F because we made more money of the pandemic
than we made the year before. So I was sort
of I saw a lot of like very close friends
of mine be pretty overwhelmed by by the extent of
the change extent of the risk, and you know, to
(34:40):
another degree, I realized that I was I had also
my thesis of like don't put your all year eggs
in one basket, had sort of once again been challenged
by putting all of my eggs in one industry, which
was you know, highly susceptible. And I just I just
didn't want to fail again. I was too old and just,
and so we we came out a lot stronger. And
(35:02):
I think that I think a lot of people did.
I do think there's a massive debt overhang. I think
that a lot of a lot of things happened in
the pandemic where if you if you fired your entire stuff,
if you didn't pivot to figure out another thing for
people to do, a lot of these people left New
York and you had to rehire everybody at on the
same day that like thousands of other restaurants were rehiring.
(35:24):
And I don't think people realize how much debt was
actually handed out that kind of fueled this resurgence. That
debt is still there, right like, these loans are still
out there for a lot of these businesses, and I
don't know, maybe some people think it's going to be forgiven,
but I don't. So just because you don't expect anything,
(35:46):
I don't know, I know, I know, no one's uh
you know, and you know, it just seems like a
little bit of attachment theory. I'm definitely the kind of uh,
do you know this experiment where there's like the kid
and the parent leaves and like the stranger comes back,
and like you can tell you if you're like anxious,
avoidant whatever. Like I'm definitely like the kid that just
was like, Okay, I guess this is what we're doing now,
(36:08):
you know.
Speaker 1 (36:09):
And.
Speaker 2 (36:11):
That, just I guess is a superpower in times where
you know, a lot is changing, and I think it's
it's a massive liability in times where things are smooth
and boring, because you know, I have a tendency, certainly
in my own personal investments to try to make things
interesting and like just just doing dumb stuff like buying
(36:35):
options in like renewable companies when I should be buying
stocks and whatever. Just I have, I know this about myself,
and so I've tried to try to make the restaurants
interesting enough so that I can do like really really
boring investments.
Speaker 1 (36:56):
After the break, Henry talks about managing risk in his
personal life.
Speaker 2 (37:12):
I also wanted to tell you, like when it comes
to personal things, I'm incredibly risk averse. Like I just
had another child, you know, five thank you, five days ago,
and so a little a little bit underslept. But you know,
my partner was on like antibiotics and this sleeping medication
unism throughout it, and everything was everything was saying like
(37:36):
this is totally fine, there's nothing wrong. But I did
like more research and I was like, okay, it's this
hermiasin Like there actually are these recent Naah papers where
if you like have a boy, there is like this
number of potential genetic defects, and I'm like, great, I
have a girl, and there are these other things that
(37:56):
could you know, could potentially happen that like if you
took it in the first or the third trimester, but
she took it in the second. And so I'm asking
these the nurses these questions and they're just like you
are psychotic, Like your baby is completely fine. I'm like, look,
I'm just trying to gather information so that if like X,
Y or Z happens in two weeks, as it said
(38:16):
it might in the study, you know, like if something
went from a point one percent chance to a one
percent chance. I want to know, because, like anything happening
in the first month of life is existential, and I
think I can't remember if this is anything that we've
ever talked about, but just like on a personal level,
I lost my mom to an accident at a very
(38:37):
young age, and so these kind of lowering existential risk
from like five percent to one percent two point five percent.
I also am constantly circling around my restaurants and people
in my life trying to do this for like early screenings,
like anything to remove like the worst outcomes of like
(39:01):
total failure. And so that's also why I think my
businesses sort of tend to survive, is I don't let
them die like even when they should. Yeah, if that
makes sense, I.
Speaker 1 (39:14):
Think that that's incredibly smart and something that has probably
allowed you to survive in a very risky and very
risky area because a lot of people and a lot
of entrepreneurs don't have enough appreciation for the risk of ruin, right,
the risk of going to zero, the risk of not
being able to continue. And it seems like that's something
that you are thinking about in just globally right in
(39:36):
every element of your life.
Speaker 2 (39:37):
Certain, yeah, in connection to my to my children, in
connection of my businesses, in connection to the climate, and yeah, no,
I mean definitely, like the fat tail on all these
things is problematic, and I just try to, you know,
winnow it down. And I do that, you know, in
any situation by just gathering information. So if I see
(39:58):
something like my great grandmother was a worse nurse in
World War One, and my grandmother was dying of a
fever and being read her last rights and they thought
she had I don't know the flu, and my great
grandmother was like, is diphtheria? I know the smell of
(40:21):
diphtheria from just you know, being like in the trenches.
You need to treat her for diphtheria or she's going
to die in ten minutes. And they did and it
saved her life. So it's just like information like that
that I find that it's very helpful to have in
terms of you know, risk mitigation, but also like from
a business point of view, in terms of like team management.
(40:44):
I'm also very early. I try to be very early
to catch things like I'm not going to wait for
some like major accident like somebody falling down the stairs,
some like horrific like harassment situation. I try to look
at like general conditions that could lead to a catastrophic
outcome and eliminate the risk. That's the other thing I do.
Speaker 1 (41:09):
So, So what's next for you, Henry.
Speaker 2 (41:11):
I'm working on a cool museum project in the city
that I'll be able to talk about in a couple
of months. I am working on a little kind of hotel,
bike shop, restaurant project in the Catskills where I live
most of the time. A lot of the things I
do are just like things that kind of I want.
(41:31):
I opened a little like grow grocery store in my
town as well, just just to have more access to
local produce. And then I'm kind of pivoting to more
focus on just this book on you know, individual action
and kind of building climate identity as a consumer in
the ways in which you know, being of this generation,
(41:54):
whether we like it or not. I think a lot
of the meaning of one's life as you look back
in it will be you know, what individual parts that
I play in this like massive success or you know,
catastrophic failure and being able to look back at your
whole life and you know, one won't be able to
hide from yourself what you know when and just again
(42:18):
the risk of looking back and not liking what I
see is haunting for me. And I also think that
there's a lot of like low grade anxiety that people
feel about not the threat, but the paralysis. So trying
to create tools and you know, heuristics for people to
(42:39):
actually tap into someone to feel good about and not
just feel you know, low key sleepwalking toward armageddon Like
that's that's an odd Like there's a lot of issues
in the world that I can name, like nuclear proliferation.
I mean, there's many many things where there's literally nothing
you can do if you're just a normal person who's
(43:00):
not like in the top tier of government or think tank.
But climate you know that that's one where we all
have an actual role. I think people just need a
bit of guidance and some tools to help them get there.
So opening these, you know whatever, climate positive restaurants, I've
had thousands of interactions on a consumer level with people
being like what is this, Like I don't I feel
(43:21):
like you're lying to me, Like I don't feel better
after coming here because like now the rest of my
life feels like it's problematic and just the ways in
which trying to create this climate positive experience it just
didn't have anywhere to land for people emotionally, and just
trying to work on that larger background issue of not
(43:44):
having a way to account for non financial values like
doing you know, the right thing, and to actually feel
good about that, to feel joy right and to have
it like help cut down on that low grade anxiety.
It's a rationally selfish thing to do if people only
had a place to put that good feeling. So kind
of working on that.
Speaker 1 (44:04):
I love that and I think that's a really beautiful
place to end. This was incredibly interesting and very inspiring.
So I hope that your I hope that your approach
to risk and kind of your example will indeed help people.
So thank you so much for sharing, thank you for
joining us, and I, as a personal selfish consumer, can't
(44:26):
wait for your next restaurant to open.
Speaker 2 (44:28):
Thanks Maria, really great to see you.
Speaker 1 (44:30):
Good to see you too. Let us know what you
think of the show. Reach out to us at Risky
Business at pushkin dot fm. Risky Business is hosted by me,
Maria Kandikova and Nate Silver, who will be back next week.
The show is a co production of Pushkin Industries and iHeartMedia.
This episode was produced by Isabel Carter. Our associate producer
(44:53):
is Gabriel Hunter Chang. Our executive producer is Jacob Goldstein.
Sarah Bruguer is our engineer. If you like the show,
please rate and review us so other people can find
us too. And if you want to listen to an
ad free version, sign up for Pushkin Plus. For six,
nine nine a month, you get access to ad free listening.
Thanks for tuning in.
Hosts And Creators
Maria Konnikova
Nate Silver
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