Richard Weissman dropped out of college to become a partner in his parents’ childcare business in 1987—a company by the name of Tutor Time. By the time Weissman left Tutor Time as CEO in the late 1990s when the family sold the company, it had become a national brand with locations across the country thanks to its franchisee model.
After a brief stint in private equity, Weissman decided to revive a small daycare company his parents ran in the early 1980s, The Learning Experience. Initially, Weissman was going to keep this regional within the New York metropolitan area. Instead, he’s led the development another national daycare powerhouse, with The Learning Experience having enjoyed double digit growth in its 16 years of existence and currently operating more than 250 locations.
The biggest reason why, Weissman says, is its focus on the brand. “You look at our competitors, most have done an acquisition strategy and bought multiple different brands under one umbrella, but are not utilizing one name. We focus very much on driving brand recognition by green-fielding all our own products. That was our original plan and we’ve stuck with that through today.”
With the backing of Golden Gate Capital, a private equity investment firm that acquired The Learning Experience in July, there are even bigger plans for growth. Weissman and co. are looking to double the locations, not just in the U.S., but internationally as well. They just signed the lease for their first daycare center in the U.K.
Weissman talked with Chief Executive about the success of its franchisee model, determining whether or not you are too old to be the CEO and more. Below are excerpts from this conversation.
When we started the company, we wanted to be both franchise and company-owned. We wanted to be able to mitigate the risk of growing too fast, by putting owner operators and centers in place. This strategy would also help with capital, by having franchisees available to put up working capital for developing locations. Moreover, we also love the business, so we wanted to be in corporate centers. So, we are kind of a very unique model in the industry and if you follow the industry at all, you’re either 100% franchised-driven model or you’re 100% company-owned. We are both.
What’s the split?
We’re at a floating number depending on what moment in time you ask me. Because we could open more company centers at any moment on time, but we’re usually around an 80%/20% split.
When you think about franchisee models, you tend to think of something like McDonald’s or Dunkin’ Donuts. But there is a big difference between getting a bad burger or your child having a bad experience. What control do you have over the franchisees to ensure quality?
Let me put it in perspective for you. If you thought about walking into McDonald’s and it crossed your mind whether it’s franchise or company-owned, there’s no value to knowing the answer to that question. It wouldn’t have a lasting input in your mind. But if you walked into a daycare center and wanted to meet the owner or the owner-operator because you’re dropping off your 1-year-old child, then it has some value. So, when we went in the franchise model, we actually thought it had entirely a great degree of value and perception by the consumer if presented properly.
You want to meet the owner-operator of the daycare your child attends. You can walk into a chain of a thousand childcare centers or you can walk into a chain where large portions are operated by an owner operator. So, we actually think it actually has a great degree of effect to quality control and assurance of delivery of product. So, we actually like the franchise model for childcare.
How do you determine whether or not to open a location?
It’s general business common sense. And it’s about geographical territories that we can administer control on. That we can support. You know, if we wanted to jump all the way to Alaska, one of our closest locations may be California. At the end of the day, that would be a huge jump. So, you want to strategically grow where you can have some value to your brand and recognition to your brand. And have some additional support in the marketplace. So, we’ve grown I think very logically and conservatively over the last 15 or 16 years.
It’s also an economic question, as most questions are. And that is, can we afford the costs? Because we only green-field on our product…can we afford the cost of real estate in comparison to the tuitions we can charge? And there are some markets that are upside-down. And some markets where real estate is very costly and tuitions haven’t caught up to the cost of real estate. So, we may shy away from that market.
What would you say are the big challenges that you face in your day-to-day and long term as well?
I’m getting older. That’s my challenge. You know, we have an exceptional management team here at corporate. So, I think the company’s run exceptionally well. Our business has historically been recession proof and that includes 2008 through 2012. So, as a recession-resistant business, I wouldn’t say that I’m losing sleep on economies floating up and down.
It would be more so probably just what I said, am I going to get in the way of the overall growth of the organization as a CEO? You know, am I going to hold them back? Am I a CEO that should run 500 centers? Am I a CEO who should run 5,000 centers? It’s just always the conversation, for anybody in the organization to make sure that we grow for the strength that we are as an executive. And sometimes, you know, executives don’t look at themselves in the mirror. Or they don’t bring on enough talent within the structure to support the overall growth.
Every day we grow is one additional center I am a new CEO to. I now have hundreds of TLE centers. And 180 centers are in development. So, each day is a new experience for me. How do you grow a company that big? But I have talent around me that have worked for very large brands and I have high respect for like Starbucks, etc. That have run 14,000 units. So if I put ego aside and allow the talent around me to culminate with our culture and allow us to motivate the entire engine… I think that the company will continue to grow, as it has very successfully.
How have you evolved as a leader?
I am 54-years-old. I am a very, very different leader now than when I was in my 20s. I was very, very focused in my earlier generations on numbers, numbers, numbers. Like I didn’t care who you were, your family, or if you were married or had kids. All I cared about is how you contributed the value of the EBITDA growth.
That has changed drastically. I’m a 180-degrees different today. Whereby, I really motivate the quality of life. I motivate your belief in me. I motivate and enforce the value of you as an individual. And I want to listen to you. And then I believe once I gain loyalty, everything else comes. And so, I’m a much more mature leader than I’ve ever been. I’m much more caring as an individual.
That’s been a maturity that I have gone through. I also believe that there are very few entrepreneurial CEOs that can survive high growth mechanism vehicles where private equity comes into play, etc. I believe I’ve been able to accomplish that because now I’m onto my third private equity group. Primarily because I’ve been able to attract top-tier talent and allow top-tier talent [to be creative]. I haven’t suffocated top-tier talent. I’ve allowed them to be creative. I’ve allowed them to perform. I’ve allowed them to feel value to the brand and that they are creative to the overall goals and initiatives of the organization. And many CEOs just can’t get that. Many young CEOs don’t get that either. So, that’s again, all part of the maturity that I’ve experienced over the decades.