John Crean: "Ethics is Number One"
The head of Sonoma Creamery discusses on-the-job lessons, big ideas, and the greatest innovation in the past decade.
Entrepreneurs should choose their business partners very carefully, advises CEO of Sonoma Creamery John Crea, MBA ‘92. (Photo by Stacy Geiken)
John Crean is the CEO of Sonoma Creamery, which makes a variety of cheeses and cheese snacks under the Sonoma Jack, Sonoma Creamery, and Mr. Cheese O’s labels. Crean led an investor group that bought the company, which was founded in 1931, two years ago. He also co-founded Winery Exchange, which produces private-label alcoholic beverages. He talked with us about the unintended consequences of nepotism, the advantages of reading historical biographies, and the appeal of talking to strangers in grocery stores. He received his MBA from Stanford Graduate School of Business in 1992.
In 10 words or fewer, what is the big idea behind your business?
Sonoma Creamery: Quality, familiar brand with goodwill. Leverage into new products. Winery Exchange: Leverage corporate brands to sell world-class wine, beer, and spirits.
What is the best advice you’ve ever received?
One of my teachers at Stanford said, “Nowhere is it written that the entrepreneur has to use all of his own money to start his big idea.”
What was the most difficult lesson you have learned on the job?
Choose your business partners very carefully, and be cautious on the front end. You need to get to know people and spend a lot of time with them before going into business together. Those little signs that pop up early on are meaningful. You need to pay close attention to them. When you want something to work out, you tend to smooth things over in your mind. But when find yourself making excuses for the other person, you have gone too far.
What advice would you give other entrepreneurs on how to build a great business?
If you feel like you need an operating partner for strategic reasons, do that. But if you think you can do it without a partner, that’s even better. I always recommend financial partners, unless you are very wealthy. Just because two people have the same idea doesn’t mean you should work together. What are your weaknesses? Can you fill those gaps with employees rather than partners? That is often a better way.
Choose your employees well. I can’t stress that enough. You will make mistakes in hiring. If you get 50% right, you are doing pretty well. It would be nice to get 80% right, but that’s not going to happen. For the ones you get wrong, make the change quickly. Don’t ignore problems. Don’t assume it will get better. It usually gets worse.
Never partner with or hire anyone you consider a friend. If you can’t fire your best friend or your brother, don’t hire them. I make everyone sign an agreement when they are hired to make it clear that they are at-will employees. Entrepreneurs always want to be buddies with everyone. Being a CEO is lonely. Deal with it. Have your family and friends, but keep them separate from your business.
Every time you hire friends or relatives, you create instability in your company. Maybe they are the best in the world at what they do, but the perception will be that they are there because of nepotism. A players will think your friend is a B player but that he is sheltered. They start to think maybe this company is not a meritocracy, so they leave to find a meritocracy. C players, on the other hand, take comfort in that kind of environment.
What inspires you?
I talk to shoppers in grocery stores. I get as nosy as they will let me. I ask them why they are buying certain things. I ask what their kids like to eat, whether they care if something is organic and why, how much they would pay for certain things. Shoppers tend to talk to you because no one ever asks their opinion. Nine out of 10 of them will say yes. I hang around a lot of supermarkets: Safeway, Costco, Trader Joe’s, Whole Foods. I do a lot of in-store surveys with my camera phone. I look at new products on the shelf. The great thing about our market is there is no hiding. Once a new product is launched, you have all the information you need: the ingredients, the pricing.
What is your greatest achievement?
Finding someone willing to marry me and have kids with me.
What do you consider your biggest failure?
I would have spent less time on things that didn’t pan out — get to the back of the book faster. Of course that’s easy to say after the fact. Sometimes you just have to go through it. There are so many mistakes you can learn only by making them yourself. There is no substitute for experience. Still, I like reading history and business biographies because you can see what other people went through and how they got going in their careers.
What values are important to you in business?
Ethics is number one. A lot of people cut corners. They grew up cutting corners and were told it was OK. I don’t agree with that. It’s important to be upfront with people. You don’t need to tell people everything, but whatever you tell them should be true.
Number two is perseverance and hard work. With both of those, you can overcome a lot. I have seen many people who are not intellectually gifted but are hard workers who persevere. They go a lot farther than lazy but intellectually gifted people.
Number three is loyalty in relationships. You need to be loyal to the people who have helped you in the past and gave you a break when you were not a big player. They saw something in you and gave you a chance. It is important not to forget those people. You are building an ecosystem of people who can help you, and you need to be in a position to help them someday, too.
What impact would you like to have on the world?
I would like to have an impact on my family. I want to raise them well and give them a head start. I would also like to come up with tasty, healthy snacks that are good for kids, rather than selling empty calories or sugar/salt/trans fat. My philosophy is healthy indulgence. Possibly 10% of people will eat cardboard if it’s healthy, but the majority of people will only eat things that taste good.
Why are you an entrepreneur?
When I was younger, I worked for big companies. At this point I’m doubtful anyone would hire me. I have been doing it so long for myself that I wouldn’t fit what they want. Things work better when I’m in charge. I don’t mean that in an arrogant way. It’s less stress for me and other people. I operate in a zero-politics environment. The only way to do that is to create your own environment. In large companies, the higher up you go, the more politics you face. At the highest levels they don’t know much about business, but they are extremely skilled politicians. The skills required to get to the top are not necessarily what you need to be at the top.
What was your first paying job?
When I was in 7th grade, I did media design for teachers at school. This was before digital, so everything was done with a photo modifier, pasteups, camera machines and chemicals.
Do you think there is such a thing as balance?
For me there is work, family, and yourself. I have very few needs. I don’t spend a lot of money or need expensive toys. I like physical activity: cycling and swimming. I also have young children, so family time is important. One way to achieve balance is to get your kids involved in what you’re doing. When we host tastings for new products, I have my kids come in and bring their friends and schoolmates. That is something we can do together that is both productive and fun.
What is the best business book you have read?
Winston Churchill’s six-volume history of the second world war. Volume 1 is important for anyone to read. In the 1930s people ignored what was going on, and things spun out of control. Another impactful book is The Road to Serfdom by Friedrich Hayek. It should be a must-read. I spent almost four years in post-socialist Eastern Europe. Read that book if you want to understand what happens when central planning takes over and eliminates the individual impulse to get things done.
What businessperson do you most admire?
A guy I worked for on Wall Street after college. His first name was Gordon. Most bankers are poor managers. The banks pay people into submission, and they pay so well they don’t have to deal with niceties of management. But this guy took management seriously and set a good example about how to treat people.
What is the most valuable thing you took away from your time at Stanford?
I wouldn’t have been an entrepreneur if I hadn’t gone to Stanford. I came away figuring out that you could become an entrepreneur if you wanted to, and it is something you can learn.
What do you think is the greatest innovation in the past decade?
The greatest trend I’m seeing is a movement toward healthy food and getting back to pure ingredients. We need to get stuff we can’t pronounce out of our food. I believe the increased incidence of cancer and diabetes is linked to the over-chemicalization of our foods. There is now a craving and demand for clean ingredients and healthy, organic food with no GMOs. Some people want gluten free; most people want no additives and no preservatives. If we can get back to eating healthy, balanced foods, we can get rid of some diseases. It will be a battle with big companies like DuPont and Monsanto. The democratization of the food industry means the consumer has the power. There are no political steps required. If you can’t pronounce something, don’t buy it. The market is very powerful.
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