After 19 years at the helm of 11-time Inc. 5000 honoree Big Ass Fans, founder Carey Smith sold the company for $500 million in 2017. But he didn't separate from the Lexington, Kentucky-based fan maker altogether: He held on to a cherished part of the business to spin into his next venture, called the Kitchen. Today, what started as Big Ass Fans' R&D department is a part venture firm, part incubator that handpicks startups exhibiting innovative ideas and promising leaders.
Smith will be speaking at the Inc. Founders House--part of the Founders Project, an initiative pairing prominent mentors with early-stage entrepreneurs--on March 11 in Austin. During his time at BAF, he gained a wealth of experience cultivating Millennials and other young talent. He's further honed his abilities managing some of the Kitchen's seven employees, all of whom are in their 20s, as well as those of its portfolio companies. Here is his best advice for empowering your team members by "handing them the keys."
1. Offer a real financial incentive.
To truly incentivize workers to build the business and make it more sucessful, Smith says, you need to give them a stake in it. Case in point: All employees that Smith brought over to the Kitchen own a piece of the business, and by extension, a piece of the businesses that the Kitchen partners with.
The Kitchen takes 20 percent of the profits of the companies it invests in, and the employees get a cut of the proceeds when those companies are sold. If they're instrumental in finding or operating a business, they get an additional piece. Smith says offering employees this kind of incentive is an effective way of both giving back and empowering them. First, it provides them with an investment vehicle that they'd otherwise not be able to afford. And second, operating the partner startups enables them to apply their skills and knowledge in a concrete way.
Smith also urges leaders to be aware of how financial rewards are distributed across levels in the company. It's distasteful, he says, when a boss owns a vacation house and a boat, while his or her workers are just scraping by. That creates a climate in which employees believe it's normal to be "in the trenches" until they're in charge--and then they in turn inflict the same hierarchy on their subordinates.
Smith says that when he sold BAF, he wrote checks for up to $50 million to workers who'd participated in his stock appreciation program. He guesses that the program created 13 or 14 multimillionaires. Many of the recipients went on to start their own companies. "That's the coolest thing I've ever done," he says. "It was probably a bigger deal to me than it was to the people who got the money."
2. Throw them into the deep end.
Smith says an old-fashioned mentality still pervades many workplaces: that young people are less capable than their older counterparts. He admits it's a mindset he often had at BAF, to the company's detriment. His business would have been in even better shape if he'd hired more young people, he says, specifically as managers. "Not because they know anything--because they don't. But because they learn very, very quickly." Millennials tend to be more aggressive and take more initiative, he adds.
To illustrate, he cites two of his under-30 Big Ass Fans employees, Anderson Smith and Adam Kahn, who came with him to the Kitchen. Smith helped run BAF's Australian market, with little prior experience. Kahn ran the residential fan business, growing it from a bare-bones operation to a division with $60 million in annual revenue.
Relegating young people to grunt work is a waste of your company's resources, Smith says. Employers should challenge them: "You're going to Australia, because we need somebody to run that office. You can do it. Get off the plane and figure it out."
Of course, they don't always succeed. But Smith is adamant that everyone he threw in the deep end benefited from it. "Their confidence grew incredibly," he says. If it didn't work out, he'd simply move them to a different area where he thought they'd thrive. If anything, he says, "I should have put people on the spot more than I did."
3. Let them problem-solve.
Giving significant responsibilities to young employees will empower them, while also helping the company by bringing new approaches to solving problems. While older workers may revisit the same methods they have taken in the past, younger ones will be forced to think an idea through for the very first time.
Smith likens the concept to studying an object in your hand. You don't just examine it one-dimensionally; you twist it around and look at it from various angles. Again, sometimes it works and other times it doesn't. But the lateral thinking is refreshing. "It turns the problem on its side," Smith says. "You come up with answers that aren't going to be standard."