I’m discovering that many of you have your own companies. If you are working for someone else, there’s a good chance you might start your own thing someday.
As I watched people pour into the Yard House in Irvine on a Friday night, I realized founder Steele Platt might have some advice that you could use.
Steele started with one restaurant in Long Beach 11 years ago. He now has 17 across the county. He recently sold a majority share to a private equity firm for upwards of $100 million. When he opened the first one he was in a bad place: he had filed for bankruptcy, and was broke and desperate. But he had an idea, and found a way to make a success out of it.
I asked Steele what advice he had for young entrepreneurs and here’s what I distilled from our conversation.
Pick the right partners
If you mess up here, you’ll pay for it down the line. You can’t have too many alpha dogs. You need a diversity of skills among the partners. If there’s too much overlap it creates problems. Steele’s first few partners didn’t work out but he now has two strong partners who have worked with him for years.
Create options and buyouts in the partnership agreement
You may be starting small, but someday you could be big and buying out a partner will be very expensive. If you don’t have clear buyout options, those partners could take a big chunk of the company later.
Protect your ideas even if you don’t have a lot of money
When Steele started Yard House, he was vulnerable because he was broke. He should have had the original investors invest in a single restaurant instead of the company as a whole. “If you came up the idea, it’s good to protect that idea…Even if you are in a vulnerable position, give yourself more credit and structure it the right way.” If he would have done that, he would have owned more of the company down the line.
Push a little harder than you need to
Be aggressive, and take risks. For example, Steele and his team took a risk opening a Yard House in Kansas City but that proved the concept had legs across the U.S., which helped them get a good price when they sold.
Start over everyday
People can get complacent and think they are successful. That’s when they start missing details and stop taking the pulse of the business. “The minute they do that, that’s when things start going bad,” Steele said. “You’ve got to think, ‘Today’s the fist day of the rest of the business.’ “
Here’s a quick update on the Fashion Island Yard House, which opened in September. It’s the fourth busiest in the chain and hasn’t cannibalized sales at the Irvine or Costa Mesa restaurants. Steele said lots of people are coming in and saying they’ve never been to a Yard House before. “It just legitimizes the Newport Beach bubble,” he said, meaning if you live in Newport, you’re not traveling to neighboring cities to go out.
