Small Giants: Companies That Choose to Be Great Instead of Big

The Rabbit Hole is written by Blas Moros. To support, sign up for the newsletter, become a patron, and/or join The Latticework. Original Design by Thilo Konzok.


  1. Burlingham studies 14 companies which have chosen to be the best in their field, rather than growing for growth’s sake. They have all decided to remain privately held, with the majority of the stock in the hands of one person or a few like-minded people. These companies are all committed to being the best at what they do. More important than profits or growth. They understood that bigger does not necessarily equal better. They had a firm understanding of what they wanted and didn’t let the allure of scale get in their way

Key Takeaways

  1. The 14 companies studied include: Anchor Brewing, CitiStorage, Clif Bar, ECCO, Hammerhead Productions, Righteous Babe Records, Union Square Hospitality Group, Zingerman’s Community of Businesses, OC Tanner, Reell Precision Manufacturing, Rhythm & Hues Studios, The Goltz Group, WL Butler Construction,
  2. Danny Meyer, USHG
    1. I’ve made much more money by choosing the right things to say no to than by choosing things to say yes to. I measure it by the money I haven’t lost and the quality I haven’t sacrificed.
    2. Meyer’s 3 criteria to start a new restaurant
      1. It would have to be capable of becoming as extraordinary a restaurant as Union Square
      2. It would have to enhance the value of Union Square Café
      3. It would have to bring more balance to my life, not less
    3. One goal of our strategy was to provide opportunities for employees to move around, which served two purposes. First, it gave people room to grow and find new challenges without leaving USHG. That, in turn, allowed me not only to retain talent I didn’t want to lose but also to use that talent to get some of the mother yeast into any new project. Blue Smoke opened with a chef who had eight years at US Café, a GM who’d done the same, a service director with 5 years at Gramercy, a pastry chef with 3 years at Tabla and 11 Madison, and on and on. We just believe that if we can start out having a high comfort level with the culture, the thing can become whatever it’s going to become and it will be good.
    4. Enlightened Hospitality
      1. Neurotic desire for others to have a good time, to show that you care about them personally. You don’t just want them to be satisfied, you want them to be happy. It’s a step beyond service, and it requires the company to develop an emotional connection with customers through individual, one-on-one, person-to-person contact
      2. It’s an emotional skill – letting customers know you’re on their side
      3. Commitment to 5 core values
        1. Caring for each other
        2. Caring for guests
        3. Caring for the community
        4. Caring for suppliers
        5. Caring for investors and profitability
        6. (in descending order of importance)
    5. 3 pillars
      1. Integrity – the company is what it appears, and claims, to be. It does not project a false image to the world
      2. Professionalism – the company does what it says it’s going to do. It can be counted on to make good on its commitments
      3. Direct, human connection – the effect of which is to create an emotional bond, based on mutual caring
        1. It’s generally not the people at the top of the organization who create the intimate bonds. It’s the managers and the employees who do the work of the business day in and day out. They are the ones who convey the spirit of the company to the outside world. Accordingly, they are the company’s first priority – which, from one perspective, is ironic. For all the extraordinary service and enlightened hospitality that the small giants offer, what really sets them apart is their belief that the customer comes second.
      4. Must have the right context – community, culture, time. The “terroir”, like in wine, shapes the company. The company must be deeply rooted in their communities, exhibiting symbiotic relationships with the communities in which they’ve grown up, and the vitality of those connections is part of their mojo
  1. Mojo
    1. Mojo = relationship with employees. Indeed, the relationship between the employees and the company is the entire basis for the mojo they exude. You can’t have the second without the first. Unless a significant majority of a company’s people love the place where they work; unless they feel valued, appreciated, supported, and empowered; unless they see a future full of opportunities for them to learn and grow – unless, that is, they feel great about what they do, whom they do it with, ad where they’re going – mojo is simply not in the cards. Why? Because everything else that makes a company extraordinary – a great brand, terrific products or services, fabulous relationships with customers and suppliers, a vital role in the community – depends on those who do the work of the business, day in and day out
    2. Person in charge must have deep and intimate relations with the employees – who they are and what they do
    3. Spontaneity / Magic is the key for mojo
    4. Leaders have a very clear idea for what the good things in life are all about – exciting challenges, camaraderie, compassion, hope, intimacy, community, a sense of purpose, feelings of accomplishment, and so on – and they have organized their businesses so that they and the people they work with can get it. When outsiders come in contact with such a business, they can’t help but feel the attraction. The company is cool because of what’s going on inside it is good, it’s fun, it’s interesting, it’s something you want to be associated with. From that perspective, mojo is more or less the business equivalent of charisma. Leaders with charisma have a quality that makes people want to follow them. Companies with mojo have a quality that makes people want to be part of them.
    5. No greater challenge than making mojo last – succession planning is vital
    6. I don’t believe it’s possible to for a company to have mojo without leaders who feel so enthusiastic about what their companies do. If they don’t love the business, if they don’t feel that what the business does is vitally important, if they don’t care deeply about being both great and unique in providing whatever product or service they offer, nobody else will either. You can’t measure mojo by how big a company is and how much profit it generates. A company’s growth and the consistency of its financial returns may tell you something about the management team but they say little about whether or not the business is contributing anything great and unique to the world. Instead, small giants focus on the relationships that the company has with its various constituencies. The relationships are rewarding in and of themselves but also because their strength reveals the degree to which people are inspired by the company and its ability to inspire them is the best measure of how they perceive the value of what the company does. If they are as passionate about it as the founders and leaders, the financial results are likely to follow. But they also know those relationships are fragile. They depend on a level of trust and intimacy and that’s easily lost. All it takes is a little neglect. That usually happens when the leaders focus on growth, not as by-products of a well-run business but as goals to pursue for their own sake
  2. The Goltz Group
    1. Goltz – major lesson learned is to let people off the hook in ‘out of their control’ situations. There is a difference between mistakes (forgive immediately) and hazardous conduct
    2. Business can be summed up in 2 words: leverage and control
    3. An entrepreneur is an artist whose medium is business
    4. One of the least recognized hazards of business is boredom
    5. Business, for me, is a sort of puzzle. We believe there’s a solution to every problem and we think we can figure it out if we can just visualize what needs to be done. That usually means coming up with a different way of looking at the situation. You need a kind of peripheral vision. You try this angle and that angle, searching for what everybody else is missing. You don’t always find it, but when you do, the experience is tremendously satisfying
  3. Anchor Brewing
    1. Fritz Maytag of Anchor Brewing was always the Brewmaster. Must know key processes inside out. His role is to make sure that everybody at anchor gets the idea that we have a theme and to remind people what they’re up to and to set standards.
  4. UNBT
    1. UNBT was founded on the heretical notion that a company’s growth has organic, almost preordained, limitations, and if you exceed those limitations and grew too fast, you would undermine your ability to provide excellent customer service, create a great workplace for your employees, and maximize shareholder returns. “We could grow faster, but it would cost us everything. In the bureaucracy of growth, you lose your distinctiveness. Banks that maintain their discipline and maintain their focus could go on delivering superior returns indefinitely.
      1. JBS Haldane On Being the Right Size
      2. What will kill this company is a bunch of people running around with their noses stuck in rule books and manuals
      3. It was Schmitt’s responsibility to create an enjoyable work environment. He was simply unwilling to grow for its own sake. He believed that as long as he kept his eye on the ball, growth would take care of itself. It was a matter of logic and principle, and he said he would apply the same approach even if he were in an altogether different business. It’s like you’re sailing down a river on with many tributaries running off. Yes, you pause to consider each tributary and whether it is part of your voyage, but keeping you on course is the knowledge of where you want to be at the end of the trip
  5. Clif Bar
    1. I’m sure my enthusiasm is contagious
    2. 5 aspirations
    3. Sustaining the brands
    4. Sustaining the business
    5. Sustaining the people
    6. Sustaining the community
    7. Sustaining the planet
    8. Other
      1. Control + Time = Freedom
      2. Aim to be the employer of choice wherever you have facilities
      3. Must articulate, demonstrate, and imbue company with a higher purpose. Remind people in unexpected ways how much the company cares about them: mutual trust, respect, and collegiality between employees
      4. The power of having no hidden agenda is massive
      5. Leaders acutely aware of the little worlds they create internally – the small ecosystems which emerge at their companies
      6. Empower people to own/feel the pain from their job. Teach – Equip – Trust. This unleashes full potential and builds trust
      7. Question everything, chart your own course, have a deep passion for what you’re doing, intimately connect with your community/suppliers/customers/employees/own management, 
    9. Growth is a decision, not a necessity, but you will face enormous pressures to grow from customers, employees, investors, suppliers, competitors
    10. Success means you’re going to have better problems
    11. Keep control and don’t bring on outside investors who will interfere
    12. Avoid acquisitions – merging cultures is too hard
    13. Continuous pressure to keep best employees engaged and challenged. Creating opportunities for employees and opening up new possibilities for the business are the goals, not growth. Growth is a natural by-product of the company’s success in pursuing its central purpose and reason for being, whatever that may be
    14. Be picky about who you do business with – fire bad clients and only partner with good (win/win) clients
    15. They all sought to have a deep impact, which leads to an intimacy with all their stakeholders – one of the great rewards and great generators of mojo they exude
      1. No conscious effort to sell. Simply present what you do, who you are, and you’ll get the right customers

What I got out of it

  1. Enjoyed the book – especially Danny Meyer’s portions and the idea that mojo comes from trusting relationships with all constituencies, especially employees.

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