The Boss: ‘You idiot, call it Wetzel’s Pretzels’
“Sure, you can make mistakes. You can’t make fatal mistakes.” — Bill Phelps, co-founder and former CEO, Wetzel’s Pretzels
What was your upbringing like?
I was brought up very middle class, and I was a big basketball player and tennis player and tennis teacher. My family was always very competitive, but the biggest influence was my dad was also an entrepreneur. He worked for a leather company, and the fun story was that the dogs were coming around and eating the scraps from the leather company. He’s the guy who invented the rawhide dog treats.
Describe your early leadership experiences.
I actually worked in my dad’s business for about eight years, and I had some big leadership roles and opened up Europe for us, which was a big home run. And I actually orchestrated the sale of the business to Nestle. It was a killer deal for my dad and a good deal for the whole family.
You introduced new products at your father’s company. What’s the process?
It takes a lot of creativity and it takes a lot of rigorous analysis and then it takes a lot of hard work to get it right. We were able to do it both in my dad’s business and then Rick Wetzel and I were able to bring that to Wetzel’s Pretzels. We were the innovator in the category.
How did you and Rick Wetzel get into pretzels?
Rick Wetzel and I were working together at Nestle, we heard about pretzel stores, and we walked into a pretzel store. He and I went into the bar, and we grabbed a napkin and wrote a business plan on a napkin, and that was March of 1994. We had a store opened in eight months.
So which came first, the name Wetzel or the idea to go into pretzels?
That was like our 10th choice of our name.
What? You’ve got to be kidding me.
We wanted to be like California Pizza Kitchen, and we were going to be, like, California Pretzels, but you couldn’t trademark that. One of my wife’s friends, who was with P&G, said, ‘You idiot, call it Wetzel’s Pretzels.’ We thought it was corny so we thought we’ll just call it Wetzel’s, and people walked up and said, what is it? So we added Pretzels.
What was the growth rate like?
It was fairly slow early on, we got to four stores in the first 12 months, and then we got to about 15 stores over the next three years, and then we took on angel investors and that was a big thing for us. Then we loaded up the headquarters with a bunch of high-paid executives and we started losing our butts.
The worst day, the chairman of then-Northwest Airlines was one of our angel investors, and he looked at our cash flow plans, and he said, I know where this one is going, which meant it was going bankrupt. We met at Rick Wetzel’s house, and we made the decision to right-size the overhead of the company and we did that in the next 60 days, and the margins have been phenomenal ever since.
Beth Ewen, editor-in-chief, learns if it’s lonely at the top and other lessons from franchise leaders, and presents their edited answers here in each issue. To suggest a candid C-level subject, e-mail email@example.com.
What are your top values as a leader?
We truly respect all of our employees at a deep level, and what it means is, you make them make decisions. They’re not doing the job as someone would do at Starbucks. They have incredible power to make decisions, to influence the success of the business every day. It’s the thing about respect at a very deep level. This is a place where you’re expected to have an impact every day in what you do. The other part of it is you’re allowed to have an impact, and you’re allowed to make the decision.
Does that include making a wrong decision?
Sure, you can make mistakes. You can’t make fatal mistakes. Rick and I made mistakes for years. The first five years we made all kinds of mistakes, and then we figured it out through trial and error.
I know that now you’re stepping away from Wetzel’s and are starting a new venture. How do you hire?
We interview everybody here very collaboratively. The first person I ask about any new person is my executive assistant, who is also the receptionist, and if she gives the person a thumbs down they don’t get a job. The other thing I’ve learned from my private equity firms is, you don’t settle. We were working on a hire for a CFO, and we thought a person was pretty good, and the private equity firm said, don’t settle. And I think that’s very, very great advice. If you don’t think the person is a great person, and a great fit for the job, you must go on.