Comment by soneca | Hacker News Reader

Comment by soneca | Hacker News Reader

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"Jorge Paulo Lemann, 3G’s 74-year-old billionaire co-founder, likes to enlist young executives and put them in top positions at the firm’s companies."

Do you remember PG essay about the PR submarine? That's more like it. Make no mistake, Jorge Paulo Lemann and the other two billionaire partners are among the best business men in the world. They got there building huge business after huge business (not like the gambler ex-billionaire Eike Batista).

So there are 3 very smart, wise (and old) guys telling these young smart folks where to go and what to do. Not micro-managing, of course, but the biggest, toughest decisions are theirs. So it is very different in autonomy and leadership from public companies CEOs. And a world of distance of Zuckerberg's owner, founder, CEO, rules-it-all role.

PS: I don't want to minimize the young guys success, I am sure they worked hard and smart and deserve their positions. Just clarifying what exactly means the "CEO role" here - according to my own personal opinion, of course.

Having met Schwartz and his team, I think you'd be surprised by how he describes his role: it's simple. That's why he can do the job at a young age.

Burger King sells a well-known product in a predictable market. They don't invent crazy new things. They operate efficiently and scale operations that work.

Facebook pioneers technology and products that the world hasn't seen before. For Facebook to do so well requires a combination of grand vision, operational effectiveness, recruiting and managing ultra-high caliber talent, and more.

Burger King isn't an "easy" business to run but it's a well-defined business with a simpler playbook than a company like Facebook.

I'm sure BK's investors are great advisors but I suspect the company's success is because of the highly capable team tackling a market with a well defined playbook.

> I'm sure BK's investors are great advisors...

Bill Ackman is the hedge fund investor who played a key role in formulating Burger King's current strategy[1].

Ackman brought former Apple retail chief Ron Johnson in to run J.C. Penney, which turned out to be a huge disaster. Ackman reportedly lost ~$500 million.

Now, don't get me wrong. I'm not saying that Ackman is not a smart man based on one failed investment. In fact, I'd argue that he was 100% correct about the need for J.C. Penney to change, but it's one thing to identify a need for change and another to make the right change. If you execute well the wrong strategy, you're still going to fail.

The problem with Burger King is that what you call "a well defined playbook" is far from a proven playbook. There has been a trend in the restaurant business for chains to reduce the number of stores they own, but as a percentage of all stores, Burger King has basically dumped all of its company stores.

Today, that gives Burger King a financial profile that investors can cheer, but the company's ultimate success depends on what happens tomorrow. There are more reasons than not to believe Burger King's strategy will hinder and not help the company over the long haul.

If I was an investor in such a competitive space, I'd absolutely bet on companies being led by a visionary leader like Steve Ells (founder and CEO of Chipotle) over companies being led by former Wall Street folks with little to no restaurant experience.

[1] http://online.wsj.com/news/articles/SB1000142405297020333550...

> They don't invent crazy new things.

I remember reading something about McDonald's chefs. As in, the people who design new menu items. One of them described it as a really interesting job, because you have to take into account things like 'what is the world supply of this ingredient.' I forget what their example was, but they had built something new, and they had determined though sales projections that McDonald's would have to purchase _the entire world supply_ of this ingredient for it to work out.

Or, consider things like the McRib. If I remember correctly, McDonald's only offers it for limited times because they have to wait until the pork market is cheap enough that they can turn a profit.

I worked at a pizza chain, and our chefs often had to make new foods work with the ingredients we already were stocking, at least, as much as possible.

There is creativity and invention in fast food, it just works under a very peculiar set of constraints.

"They don't invent crazy new things."

In the world of fast food, I see this as a problem. Taco Bell released the Dorito Loco Taco which has now made its way on to the main menu. Subway releases new promotional subs and items like the Flatizza, it seems almost bi-monthly. While the latter may not be as big of a success, it still garners awareness.

I can't think of one "crazy" item Burger King has released in the last few years.

I wouldn't call it a "crazy" item, but I do love me one of BK's Angry Whoppers which is significantly different (read: it actually has a bit of spice to it) to the offerings of most big burger chains.

The thing with products like BK, TB and such is this:

Inventing something is "easy"

Now, after inventing it you have to:

- engage your whole supply chain for the needed ingredients and make sure they reach their destination

- engage marketing, produce all the needed support (packaging, new menus, new billing items, etc)

- create procedures and train staff

- deploy new equipment if needed

I don't remember the name for it off the top of my head, but Yum! brands do their best to 'create' items that use ingredients already in their stores. If I remember correctly Taco Bell has 26 ingredients that everything on their menu is made of.

They tried the 'satis-fries' this (last?) year. Basically, trying to make a 'healthier' alternative to normal fries, while trying to avoid making it obvious that their normal fries are actually unhealty.

Why, oh why, does Taco Bell's "breakfast" not have damn salsa!?

I mean, it's mexican food, for breakfast (not!).

So ya, nobody does do "crazy" anymore in Fast Food. Just normal, add some more onions + BBQ Sauce and it will sell.

Wondered the same thing. A waffle taco? How about an egg burrito with some salsa and cheese? That's my idea of a Taco Bell Breakfast (go Del Taco Breakfast!)

Taco Bell is NOT Mexican food by any stretch of imagination. (I'm Mexican, and I can enjoy Taco Bell, it's just not Mexican food, Maybe Tex-Mex)

Chicken fries?

In the UK Burger King has been absolutely destroyed by McD's and Subway on the highstreet. The only time I ever see a busy BK is in their monopolies in motorway service stations and inside railway stations.

Is it different in America? Still relevant?

No, it's the same in America.

BK has lagged way behind McDs and Subway on various fronts. Lack of new product items, old technology, minimal promotion, dirty and outdated dining rooms. The last BK near me that hasn't closed down looks like it hasn't had a coat of paint in 15 years. Meanwhile McDs is tearing down and rebuilding new stores ground-up all over town.

Twenty or thirty years ago, in America, McDonald's and BK were literally in a deadlocked battle of the giants. Burger wars! Those days are long gone.

Well up until just a few years ago BK was in near constant fights with its franchise owners. That and changing ownership a few times isn't going to give you a good base to operate from.

That and McDonald's just owns kids.

I still prefer a BK burger to most MCD's burgers.

There is a BK near the office, and I used to attempt a drive-thru on my lunch -- but, their drive-thru was actually slower than going inside. After a few attempts (and being late back to the office once) I gave up.

To contrast, there are a group of McDonald's stores near my office that are testing a linked drive-thru timing application. There's a scoreboard visible from inside the work area that ranks all the local stores in terms of drive-thru speed and service time. They've gamified the system.

Well, the article kind of summed up BK's history in one line:

"He’s Burger King’s 21st CEO since the company was founded in 1954"

That's literally a new CEO every 36 months since the company was started sixty years ago. That's just boggling.

...and inside UK hospitals - there's a BK inside the entrance to Southampton General; that really is taking the piss.

Nope, the last time I went to one, it was just closer to my house, and more convenient than McD's. Just luck of real estate really. Their claim of 'flame broiled whopper' just doesn't make me want to go there. Who cares if it's flame broiled or cooked on a stove, it's a burger. And if you can't cook the onions before you put them on the burger then you're just lazy.

I did see them in Russia, several places, and the only thing they had going for them was that there was no waiting. Because nobody EVER went there, that I could recall.

While I agree that was the case for a rather long time, I have recently been surprised to see a marked improvement in Burger King's offering (in the UK at least). The stores are clean, the food is better - to the point where it was actually much nicer than McDonalds.

I only noticed maybe seven or eight months ago when it was the only place available for a quick meal, but I've been back once since, at the other end of the country, and it was also good.

I suspect these things are a bit cyclical.

McD and BK seem to be all over the place in Germany. I live in a small-ish city (~50k residents) and we have 2 McD and one BK here. BK has a location advantage though, as they are in the rail station / shopping mall complex (rail is an important mean of travel here). None of the establishments is ever empty, though McD is more frequently choke full.

No. In California, in particular, fast food competition is fierce and very few people seem to choose Burger King.

They're most notable for their advertising campaign featuring the King mascot. It was entertaining in a creepy/surreal way but didn't make me want to eat their hamburgers.

In Thailand, it's the opposite: Burger Kings are most likely to be in upscale restaurants and have far more "classy" dining rooms than McDonalds. Feels very strange, to be honest, and they still don't get much business.

Very much so, yes.

Their challenge is they have to scale via people, as opposed to via technology (like Google) or money (Hedge Funds). This can be very difficult.

That said, if the plan is right, sometimes it is energy that's required to make things happen. If some very wise board members have set the right strategy, I think he can pull it off.

I'm not sure if it's any harder or easier than Facebook, but in today's economy, the right skills and intensity are more important than the longest resume.

why can't a burger place invent a 'crazy new thing'?

seems like new food inventions drive alot of the marketing behind their competetors

trying out new menu items is just 1 thing that pops to mind, and I'm probably completely missing 100 other things that a burger place could inovate on

Delivery would be an obvious one. I could be wrong, but except for pizza, I don't believe any of the major American fast food chains deliver.

Maybe they've all done the math and it doesn't make financial sense, I don't know. But there's certainly nothing inherent about the type of food that makes it impossible; I've had great burgers and fries delivered by a few independent restaurants.

Funny you should mention that on this story...

https://bkdelivers.com/

Just so you know, it's a 3rd party doing that delivery.

In Malaysia and Thailand some BK and McDonald's deliver. But then again, I don't know if it's up to them to decide or if it's being done because of the competitive environment. You can basically find great food at almost any given time within walking distance.

There's the competitive aspect in economies where street-food is the norm but then keep in mind that it's dirt cheap to deliver there. In Thailand a delivery worker earns 220 USD a month.

In northern California there are a few BK's that deliver. Pretty awesome.

I'm waiting on Subway and Togo's to get drive-thru windows. Finally, a more-healthyish drive-through choice.

Part of me tires of these ivy league automatically gets CEO crap. How does success on Wall Street translate to operating burger company, other than knowing how to keep shareholders happy?

Why can't Jorge just find a badass manager somewhere who knows how to operate the restaurants to a T and put her in charge?

Getting into an Ivy League school means you had the foresight and intelligence in high school to create a truly outstanding college application -- you're smart, but also willing to play the game and jump through hoops. That's an immediate qualifier for employers.

Or you're well connected. And even if you weren't well connected going in to an Ivy League school, you will be by the time you leave. You're now friends with people who will hold financial, political, or managerial power in 10-20 years.

This networking effect is compounded because the top consulting firms and investment banks (CEO/CFO factories) target Ivy League grads. As a management consultant, you learn how to give a convincing and engaging Power Point presentation despite the fact that you're 22 years old and know nothing. This is an extremely useful skill.

It's a path. If you're on it, it's risky to step off; once you're off, it's nearly impossible to get back on.

But, in all fairness, entry-level IB or management consulting is probably much better preparation for the skills required of a CEO than sitting at a computer all day writing code.

This kid's parents knew the right people and had the right amount of cash to get him the expensive, needs-connections education and tutelage required to "create a truly outstanding college application."

Clearly it happens that non-wealthy, non-connected people get into Ivy League schools. It is, however, not the norm.

Some might argue that the ones who are not legacy or come from preferred families(wealthy and prestigious), are only there to increase the worth of those legacy and preferred family students.

Essentially, ivy league schools let in a certain amount of highly talented people by offering them an incredible education, often with financial incentives, on order to increase the value of the "real" students. The legacy and preferred family students who the school is really there to serve and are the majority of graduates.

Those companies that have a hiring preference for ivy league students are often just falling for the scheme as opposed to getting truly exceptional candidates.

> by offering them an incredible education

Even this is debatable. [1]

>The legacy students ... are the majority of graduates.

Well, the legacy students are probably closer to 10% to 15% of the student body. Certainly not the majority. [2]

> Those companies that have a hiring preference for ivy league students are often just falling for the scheme as opposed to getting truly exceptional candidates.

Another theory is that these companies target Ivy League students because they're (generally intelligent) people who have been conditioned since a young age to jump through the hoops of an elaborate application process. Top IBs and management consultancies model their hiring processes after the Ivy League application process. An excerpt from the Washington Post:

It begins by mimicking the application process that Harvard students have already grown comfortable with. “It’s doing a process that you’ve done a billion times before,” says Dylan Matthews, a senior at Harvard who was previously a researcher at the Washington Post.

“Everyone who goes to Harvard went hard on the college application process,” he said. “Applying to Wall Street is much closer to that than applying anywhere else is. There are a handful of firms you really care about; they all have formal application processes that they walk you through; there’s a season when it all happens; all of them come to you and interview you where you live, etc. Harvard students are really good at formal processes like that."

[1] http://www.newrepublic.com/article/118747/ivy-league-schools...

[2] http://www.nytimes.com/2011/11/06/education/edlife/being-a-l...

[3] http://www.washingtonpost.com/business/economy/wall-street-s...

Or you're a legacy.

Which means you're well connected

Do you have a link to said essay?

Edit: Here's the link, I believe. http://paulgraham.com/submarine.html

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