Celestial Seasonings founder Mo Siegel explains why he decided to hire someone else to run the company. He describes his 22 years as a CEO and reveals how he found a worthy successor.
Masters in Business
Celestial Seasonings' Mo Siegel on how he knew it was time to step down
You might think that the guy who concocted such soothing potions as Sleepytime and Grandma's Tummy Mint herbal teas wouldn't have much on-the-job stress. But then again, maybe there's a reason he concocted those soothing potions.
Mo Siegel has had an on-again, off-again love affair with Celestial Seasonings Inc. since 1970, when he first founded the company at the age of 20. After running it for 14 years, he sold it to Kraft Foods in 1984. "I was 34 and I'd done it already for 14 years," he says. "Maybe I just had the 7-year itch twice over. But I also got a huge offer from Kraft. The timing was good and the price was right."
But Siegel would find he was unable to stay away. In 1991 he and the original management team repurchased the company from Kraft, and Siegel returned as CEO and chairman of the board. "There just needed to be some change," he says. "The company needed a little more new-product mix, and they were very heavily in debt."
Siegel took Celestial Seasonings public in 1993 but before long became disenchanted with running a public company. In June 1997 he stepped down as CEO and brought in Stephen Hughes, a food-industry veteran, to run the business. (Siegel has stayed on as chairman of the board.) Inc. senior staff writer Christopher Caggiano interviewed Siegel to find out how he knew it was time to throw in the tea towel.
Inc.: Why did you decide to bring someone else in to run the company you'd founded?
Siegel: I think there's a certain life expectancy for any CEO. In Built to Last, Jim Collins says that the average CEO tenure for "visionary companies" is about 17 years. Well, I was CEO for 22 years. That's a long time.
When you get into your fifties, and you have money, you tend to do what you want to do, not what you have to do. I just didn't want to do the day-to-day stuff my whole life. I had a boredom problem as well. I wanted to do other things.
Inc.: What role did your family play in the decision?
Siegel: A pretty big one. I have five kids, ages 8 to 27. I really don't like the constant traveling and stress. To grow a really good national or international company over $100 million, you're on the road 100,000 miles a year. That's a lot of wear and tear. If I could have as my epitaph that I was a good father, to me that would be the highest human achievement. The 100,000-mile thing kind of puts a crimp in that.
Inc.: How did the company's 1993 initial public offering affect your decision?
Siegel: About a year and a half after we went public, I knew it was time to move on. Honestly, if we had stayed private, I might have stayed on as CEO. The thing about being private is, you can grow at the rate that you want. Now I have to worry about what the analysts want versus what I want. That's a tough adjustment.
As the CEO of a private company, I cared how the year went. Now we have to be extremely focused on quarterly earnings. I understand why it has to be that way. When I put money into a mutual fund for my kids, I don't want to hear that the CEO would like to have a more diversified life and that he's happy with 8% to 10% growth. I want to hear that he's just going for it, all guns blazing.
Inc.: Did you try to find someone from within the organization?
Siegel: We tried a number of inside people, but we didn't have that magic inside person. This has never been a particularly easy company to run. It was all about getting the right person who could connect with our consumers.
Inc.: How did you find your new CEO, Steve Hughes?
Siegel: I had been keeping my eyes open for the right person for a couple of years. I knew Steve from his years at ConAgra, growing the Healthy Choice brand. Steve called me because he was interviewing for a top spot at another company. He knew I was on the board, and wanted to get my sense of the company. I said, "I don't know if that's the right company for you, Steve. I don't want to spoil anything for them, but they're not a branding company and you're a branding guy." Within nine months of that call, he came on as our president and CEO. What I liked about Steve was that he had not only the experience in building a strong brand but also the vision to expand the brand. Which was exactly what the company needed.
Inc.: What effect has the changeover had on the company?