Coach’s Longtime CEO Had An Intense Hiring Process

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1:33There's no safe like SimpliSafe. From Entrepreneur Media, this is Problem Solvers, a show that solves entrepreneurs' toughest problems. I'm Jason Pfeiffer, Editor-in-Chief of Entrepreneur Magazine, and each week I take a problem that you're probably dealing with and get tactical solutions from people who have been there and solved that. So let's get solving. Lou Frankfurt is the son of a Bronx policeman. He spent the first 10 years of his career in New York City government. He ultimately became the commissioner of the Agency for Child Development. And then he joined a little leather goods company in 1979.

2:10It was called Coach. Nobody had ever heard of it. He became the CEO in 1985. And by the time he left in 2014, he had built Coach into a$5 billion global accessories and lifestyle brand. You know the name Coach because of Lou. It's that simple. So, impressive guy, impressive accomplishment, and yet, somehow, here is something that was even more impressive to me. When Lou and I first started talking, he began the conversation by telling me about all of these things of mine that he liked because he had spent time researching me. He read my work. He got to know me, even though he didn't have to. And so I said to him, You're a busy guy.

2:51you could do other things with your time aside from Googling me. Due to the access of information instantaneously, it doesn't take more than 15 or 30 minutes of browsing. Yeah, I guess. But like 15 or 30 minutes is still a lot of time. It is time that I admit, I often do not spend getting to know other people before I meet them. Maybe I should. And actually, by the time you're done with this episode, you might rethink your approach too. Because here's what we're here to talk about today. In his time at Coach, Lou didn't just become a master of accessories. He became a master of choosing the right people, identifying talent, interviewing people.

3:33And it's all driven by the kind of curiosity and care that he took in getting to know me. And today, Lou is going to lay out his very meticulous interviewing strategy. because you may want to adopt it for however you interview others. But before we get there, here's some background on why I'm talking to Lou today. It's because he just recently released a memoir called Bag Man, the story behind the improbable rise of Coach. He said he wrote it because, first of all, his kids told him to, but also because he decided... I should tell an authentic story that in addition to talking about values and leadership and building an iconic brand to also talk about my fear of failure, mental health, and the coping mechanisms that I went through.

4:26I've been very open about my depressive episodes, my ups and downs with founders, entrepreneurs, other leaders who I meet with all of the time. Which is to say, Lou isn't just interested in getting to know other people. He's also very open to other people getting to know him. Lou has a name for the way that he interviewed people at Coach. He calls it... My immersive interviewing. Immersive interviewing. And look, he said, it doesn't always work. But usually it did. The results are in the company's exceptional growth. So today on Problem Solvers, we're talking about how Lou interviewed job candidates to find the perfect people to take his company forward.

5:10And we'll also look at a case study of what happened when the process went wrong because it wasn't a real match and how Lou took that problem very seriously. It didn't happen a lot, but when it did, he wanted to deal with it with exceptional humanity. It's all coming up after the break.

5:32All right, we're back. I'm talking with Lou Frankfurt, former CEO of Coach and author of the new memoir, Bag Man. And just before the break, I told you that Lou had an example of someone he genuinely got wrong, someone he hired, but that he shouldn't have because they were a bad fit for the company. So let's start there and hear that story. And then we'll get into his actual interview process. In this case, I'm thinking of an individual who was a person I brought in to run my international business overseer more than 35 years ago. Person was a CEO and chairman of a billion-dollar company. By doing this, I uprooted his family, his kids.

6:16They moved halfway around the world. And there I was feeling that this person wasn't going to make it. In this case, it was not a hardwired narcissist. It was just someone that wasn't a good match. And one of the things I learned is that it's never too early to do what's right for the business. However, you need also to do what's right for the person, particularly if they had good intentions and good motivations. And that obviously depressed me. And I typically, when those situations occurred, if it was around a vacation time, I would ruin my vacation thinking about it, the guilt, the responsibility, so the person could enjoy theirs and let them go afterwards.

7:05So there's many things I can say relative to this. One of the things is pattern recognition. And I've been really working hard in my current life because I invest in the early stage consumer-facing disruptive businesses. And typically, in a subset of them, I play an active role at helping the founder, building out teams, helping out strategies, and the alike. All of the things one would expect. But if the person I'm working with is unconsciously competent, in certain areas where the unconsciousness is there, then there's going to be less of a willingness to find people to complement that person so that the enterprise can be successful.

7:55Also, very frequently, hardwired narcissists think they're the smartest person in the room. I often tell them, go find another room where you're not, because you need to have better listening skills and have the ability to hold antithetical views in your mind at the same time. I'd love to know how you actually navigated that situation where you felt bad, you had hired this person, they weren't the right fit, you understood what was right for the business, but also this person had uprooted their lives. So that's a lot of human guilt, even though you understood what was clearly correct for the business and how you navigated those two things.

8:32I'm a value-driven person. And when I interview a person, I'm looking to understand their values as well as their skill set and their fit. And when I talk about values, I'm talking about work ethic, collaborative skills, listening skills, the ability to see the greater good and not be so self-involved that they only see what's out for themselves. And I looked to build a culture where we had a community and we actually coined the term performance family way back in the 80s. to be part of the family, you needed to have shared values, but to stay part of the family, you needed to perform. If you didn't perform and you tried, we would treat you the way we would expect to be treated in a similar situation.

9:29Similar philosophy to consumers, to men and women from the very first time I opened the very first coach store back in 1981, when we had lines outside and I knew something was special about the brand I already came to love, Coach. And I said, we're going to treat customers, men and women, as if they're guests in our home. We're going to give them every benefit of the doubt because we're looking to build long-term relationships. And I will say, I'm proud to say that exists in the DNA of Coach around the world today. and coaches reaching new heights in terms of sales, market cap, and the alike in its eighth decade.

10:12When I talk about immersive interviewing, I'm trying to understand the full person. And I'm trying to do this in 60 to 90 minutes, which is limited. And I developed a three-part process. and the first part, which can take anywhere from five to 15 minutes, I'm prepared before I meet with a person. So preparation is important. And I encourage even the most busy executives, take five minutes before the person comes on to look at the resume, look at the feedback, and decide where you want to travel. That way you can have real control over the interview. And so I come as informed as I can. And I go through the person's background.

11:01I might ask them, where were you raised? What were your hobbies? What were your interests? Tell me about what your parents did, siblings, blah, blah, blah, blah, blah. What interests you now? This, by the way, Lou, is just an interesting insight into perhaps why you researched me before this. Because most of my podcast guests do not do that. and it's not just because you're a curious person. It sounds like it's also because you had just built this habit of making sure that you understood the person who you are sitting down to talk to. I would like to be as effective as I can within whatever time we have.

11:39So it didn't take long, but I got a good sense of you, Jason, and I liked you when I listened to you. Your sincerity, your authenticity. So the first part is trying to begin to grok the person. And I read, when I was in college in the 60s, I read Stranger in a Strange Land by Robert Heinlein. And it's an epic cult book through today, and it talks about someone who's half Martian and half earthly. And he was, this particular person, was able to understand the essence of someone inside out. And that whole concept appealed to me while I was in college and forever since. So the first part is trying to get a sense of someone.

12:31The second part of the interview is really focused on trying to get a sense from the person of what they think their strengths are and what their development needs are. And I use an indirect way to do that by asking them to tell me about, I'd like to, if I was, and I say this is hypothetical, if I was to speak to your boss, either your current boss or a recent boss, I would like you to tell me what that person would say were your strengths. And I would like you to be succinct and only use a few words to describe each. And before I would begin, I might say, I would almost invariably say, what do you think this person's EQ is?

13:21Emotional intelligence. Because that would give me some insights. Typically, I read seven, eight, or nine. If someone said there were three or four, that would lead to a whole set of questions that I asked the person in the third part of the interview. So in the second part, I force people to actually, even if they say I don't get a formal interview, I say, well, you must get some feedback. And eventually I get four or five bullets. And sometimes the language is not that precise. And I would paraphrase. If someone says, I'm a good leader, I would say, well, tell me what that means. and they might say, I motivate people, and I might say, they like to work for me, and I feel we're a high-performing group.

14:15That, to me, is a lot more insightful than good leader. Then I ask for development needs, and sometimes it's like pulling teeth, but I get one or two generally. And then I go to a third part, which is what I call a competency screen or an immersive screen. I tell the interviewee, I got about 60 or 70 competencies where I'm going to ask you to rate yourself one to 10. Now, I'm informed by part one of the interview and part two of the interview where I might want to go more deeply. And I say, I'm going to ask you to just use a number, and I'm going to start with a few easy ones. So I go back to what they think their strengths are.

15:05Let's say someone says it's financial analysis or dexterity with numbers or multitasking. So I would try to warm them up by giving them a few easier questions. Along the way, I will also ask them, based on what I learned in the first and second part, specific questions where their answer I would compare to other answers. So if someone says, I'm a tenant financial analysis, but my dexterity with numbers is only a six. That doesn't gel. So I probe to understand. And I might say, okay, if you're a six with numbers, what do you need to do differently to become an eight? And I force them to convince me what's required.

15:58And in that brief exchange, I gain insights. Sometimes it's more practice. Sometimes it's taking a course. Sometimes it's slowing down. Sometimes they say, that's really not an area where I'm proficient, and so I lean into the other areas. And I also ask about EQ. If someone's very talkative in an interview and interrupts me, I might ask them two things. I might say on a 1 to 10, what are your listening skills? And if they say 8 or 9, I think they're pretty unconscious. And then I might even use a scale. And I say, this is a relative scale. On a 1 to 10 scale, someone who is taciturn or doesn't speak, and someone who is loquacious is a 10.

16:50And if they say there are five, that would joke me. And I might say, tell me about Stan or Susie, who they already told me is a partner in their life. What would they rate you? So through all of that process, I'm able to determine whether someone is a culture fit, whether someone has the values and skills to fit the job. And if there are some weaknesses, and there almost always are, I would like to know them. Because if I bring them on a board, I want them to become their best self. And so I want to be able, if they report to me or report to an indirect report, have the new employee and the boss understand they need to be complemented by someone who has complementary skills, either as a peer or to report to.

17:50This is a very interesting strategy, particularly how attentive you're trying to be to self-awareness. How clearly do people understand and see themselves? And are they presenting to you what they actually know to be true of themselves and what they would agree others see of them? And I don't know that I've ever thought to try to assess that in other people. But in asking people to do all this ranking of themselves, you seem to be trying to calibrate not just an understanding of them, but their understanding of themselves. 100 % true. And in fact, it's really the latter. I want to really be able to calibrate their understanding of themselves.

18:39And I connect a lot of dots. And if I'm going to do a reference check directly, and if it's a very senior person, I don't delegate it to a search firm, even if they do a first interview. I want to speak to the person who really is identified as knowing them the best to get a closer version of what the truth is. So, Lou, that is super interesting and rigorous. And so I can understand how most of the people who you hired, you felt like you were making a really good decision about, but you had given me this example of someone who had gotten through that and turned out to not be the right fit. And then you had this very human conflict where you knew what was right for the business, which was not having them in that role, but that you weren't quite sure how to handle it from a human perspective.

19:37And I wondered what you did then. Well, that wasn't the first person. So I already, I had a playbook. And notwithstanding a playbook, my heart was broken to a certain extent, because in this particular case, I got to know the wife, the children. and I took him out of a role where he was extremely successful to take a lower level position from a title perspective. And my company was actually smaller than his company at that time, Coach. I approached it the way I would want to be treated in a like situation. I approached it with compassion, understanding, and had the difficult discussion, recognizing that this person was reasonably conscious.

20:35And even though he had not come to me to say it wasn't fully working, he knew it wasn't working. So it was easy for me to say, I'm so sorry to have this conversation. It's the last conversation in the world I would want to have. But I don't think it's really working for you or for us. let's talk about it. And with a view that at the end of the discussion, the outcome would necessarily need to be, since I had concluded that this was the case, that there would be, we would need to have a plan together where there could be a graceful exit, where he would, from a reputation perspective, from a compensation perspective, there would be an adequate bridge to help them get to next.

21:30And in that context, with this particular person and many, many others, I was able to play a role in helping them find a situation that was better suited to their very strong capabilities. So in other words, you did what was right for the business, but also found a way to do what was right for the person. And I wonder if you have made this connection, but I just did, which was that the reason in part why that conversation was as productive as it was, as you just said, was because that person was aware that it wasn't a fit as much Anyway, which means, Lou, that a part of your immersive interviewing was actually still correct in that you had hired a self-aware person.

22:19Correct. And right there is a testament to the value of making sure that the people that you work with are extremely self-aware. Because it also means that when things go wrong, you don't have to be the one to spring it on them. They're already aware. And therefore, there's a foundation for the conversation about what happens next. That's correct. not only are they aware, but in this instance, and most of them, they have good values and they want to make a contribution. They don't want to be in a situation where they're not being successful or just covering the bases. They want to build for the future.

22:58Yeah. All right. Lou, final thing I want to ask you, which is to now wrap right back around to the fear thing. And I want to tell you a little story, a story that has stuck with me a long time, and see what you make of it. The story is this. In the final days of normal life before COVID in 2020, my friend Nicole had a gathering of 10 or so friends for her birthday at a nice restaurant. and uh my wife and i went and you know these were the days where like everyone's still going out and thinking that hand sanitizer is going to just solve the problem and so we're all like hand sanitizing and i'm sitting next to this woman whose name is megan asha who's who's a friend and uh megan had started this company called founder made founder made is a trade show let me jump in to say i know megan also oh you know very well ah yes amazing hilarious okay well that brings us closer.

23:59So you can comment on the story and maybe even unpack whether I've got the read on Megan, right? Though Megan and I have talked about this many times since. That's funny, small world. Okay, so Megan and I are talking and I say to Megan, Megan, like, how are you feeling? Because live events are getting shut down and you've got a live events business, right? Like she's got a trade show business. And Megan said to me, you know, weirdly, I am excited about this. And the reason is because we at FounderMate have had all of these ideas for new lines of revenue, new ways to grow this business. And we have never been able to get to any of them because our energy is always so consumed by putting on the live events.

24:38But if the live events are now going to be on hold, then we finally have an opportunity to try out these other things. And I remember at the time thinking, this is a person without any fear. Like there's just no fear in her. But as I thought about that moment over the course of COVID and then afterwards, I came to realize I don't think that that was it. I think that she did have fear. She just had fear of a different thing than many people do. And I came to a theory. And the theory is what I want to put to you, though. So the theory is that there are two kinds of fear. There is a fear of losing what you had, and there is a fear of not finding the next thing fast enough.

25:17And the fear of losing what you had is the thing that actually holds us back. Because in that case, our instinct is to cling to what came before. And that just anchors us to the past as everything moves us by. But a fear of not finding the next thing fast enough is actually a very optimistic way of thinking about things because inherent in that fear is that there is a next thing, that there is some solution. There is some opportunity. Somebody's going to find it. It should probably be you. And that was what I was really seeing inside of Megan when she talked about that. And that also makes me feel better about the moment in which I fear some kind of failure because I want to recognize in myself that the thing that I shouldn't fear is that this failure just ruins whatever I had before, but rather to try to think, okay, this happened, there is some good opportunity here.

26:20There's some way to turn this to some advantage. And the thing that I should really just be afraid of is not being able to find it fast enough because that pushes me forward instead of holding me back. So number one, what do you think of that? Number two, as you reflect on your own experience with this and the fears that motivated you if you feel like you fell more into one camp or the other and what you have found to make fear a more productive feeling? Okay. What you just shared resonates fully with me. Again, I always was really focused on today and tomorrow. So when I joined Coach illustratively, I knew nothing about fashion.

27:06I knew very little about the marketplace. But I did know about people and what motivated them to shop, not shop, buy the brand, not buy location. And the philosophy that we developed from the very beginning days at Coach is to understand where your consumers are, men and women. First, where were they, where they are now, and where are they traveling so that you can be there when they get there in two or three years. So we were the first American brand to open a coach store, first American manufacturer to open a catalog, and we became a multi-channel business before other domestic brands did. What we're really talking about in Megan's case is she pivoted.

27:59She understood that the world had a lot of opportunities. And certainly the digital world communicating to large numbers of people who might be in their homes alone was a large opportunity, perhaps even larger than the in-person activities that she did. And Megan has always been a forward-minded person. So you need to have belief in possibilities. You need to have imagination. You need to have immersive curiosity. You need to also combine that with instincts and then use magic. So we use magic and logic at Coach. I just told you some of the magic stuff. The logic is rigor and thoroughness to really understand trends.

28:49And we adapted a coach to every situation. We did not put our heads in the sand and wait for it to be over. Yeah. Lou, the book is called Bag Man, the story behind the improbable rise of coach. I really appreciate your time. I hope everyone digs into this great book and great reflection on a great career and journey. And thank you so much for your time and honesty. It was a pleasure speaking with you, Jason. I think in many ways we're made of similar cloth. I agree. And similar friends, as it turns out. That's right. And that's our episode. Now let's keep the conversation going. I write a newsletter called One Thing Better, where each week I offer one new way to be successful and satisfied and build a career or company you love.

29:40You can find it at one thing better dot email. That's a web address. Just plug it into a browser. One thing better dot email. And if you get one of those emails and reply, it goes straight to my inbox and I will get back to you. Problem Solvers comes out every Monday morning. So make sure you're subscribed so you don't miss an episode. The show is produced by Emily Holmes and Money News Network. My name is Jason Pfeiffer. See you next week. Thank you.