I recently had the pleasure of speaking with Wade Eyerly, CEO of private airline Beacon, which offers unlimited flights between Boston and New York for $2,000 per month. He had some fascinating and prescient things to say about his unique subscription-based business model, the role of the CEO, and how he manages his culture. I have outlined a few of my questions and his most interesting responses below, but it’s worth listening to the entire 30-minute interview above.
How do you describe yourself to people when they ask what you do?
I’m a builder.
When did you first realize that’s what you wanted to do?
“As a kid I always thought I would start businesses because I wanted to employ people. My Dad did some of that and I thought that was admirable. I watched the way he cared for people who worked for him and I just thought that was the thing I wanted to do. As I got older, I craved more stability than that, so I worked for the government for a long time. I would say I rediscovered that what I really wanted to be was a builder…I want to build things and create things and grow things. That’s been a guiding effort ever since.”
Beacon obviously isn’t your first business. How many have there been?
“I’ve been involved with four businesses: An airline out in California, a technology company in San Diego, an investment bank in New York; and Beacon now on the East Coast.”
What’s the biggest thing you took away from the others that you are trying to change/do differently at Beacon?
“There are a lot of learnings every time you do this, but the single most important thing is to do it, act faster, make decisions quicker. It’s okay to make bad decisions as long as you have the confidence to know it’s a) okay to be wrong, and b) to acknowledge that you are wrong. Then you are fine making fast decisions and moving quickly, and I think that’s a strength. That can be hard for people. It’s easy to say ‘fail fast and move forward’ but it’s much harder once you’ve committed to something and decide that this is your plan, to acknowledge it’s a failure and shift.”
I often say knowing what to do is fairly easy, actually doing it is the hard part, would you agree?
“Absolutely. That’s where the value is. I have yet to have had an idea that someone subsequently didn’t come to me and say ‘I had this idea once too!’ The difference is that you are doing it. Ideas are common but the execution is very rare and very valuable.”
With Beacon, this is an industry where there haven’t been a lot of easy wins. What have you uncovered with Beacon that’s going to make all the difference?
“From a business model standpoint, because we’re a subscription service, our revenues are known and consistent. Relative to other commercial carriers or airlines that you might compare us to, that’s a big difference. Our consistent revenues I think is a superior model to the variable revenue models that everyone else uses. On the flip side, critically important is consistent cost structures. So when you fly planes you tend to have a very variable cost structure. What we’ve done is we married what we did when we first launched the all-you-can-fly service out in California with the business model that is common in aviation.
If you fly on Delta from Salt Lake to Denver, you go to Delta.com and book the ticket, there’s a Delta gate agent, you’re at Delta all the way through right up until you get on the plane, and then it’s probably Sky West or somebody else who owns, operates, and maintains the plane. We’ve married those business models and that gives us a very consistent cost model as well because we contract for the flights. So essentially with fixed costs and fixed revenues, we’re bringing something to the industry that’s never been seen before, where a) we’ve got much better margins than the industry, and b) it’s very consistent and repeatable and that’s a huge win.”
What would you advise in terms of actively managing the culture? What would you advise new CEOs to think about?
“One, it’s more important than you think it is. Two, nobody should be miserable at work. It doesn’t mean that we do hard things or monotonous things or things that aren’t our favorite. But people don’t change jobs because they aren’t paid enough, most often. The largest driver for why someone moves from one job to another is they don’t feel respected or validated in the work they are doing. They don’t feel like their work product is valued. So, spend a lot of time building a culture where you express gratitude…That’s often hard in companies.
Example: People outside of a technology development team have no idea what it takes for that dev team to build something. They just need a new feature and they need it now. We often look at the work of others like a menu offering with no prices. We think other people’s work is just a buffet we’ve already paid for. That’s not a good dynamic and causes a lot of companies to struggle from a culture standpoint. Instead, we try to be very good at saying ‘I can help you with that but this is what it costs.’ And by cost I mean, ‘it’s going to take four days and this is the current priority. We can do this now but we’re going to bump these things until later.’ And that level of communication helps everybody respect the work that everyone else is doing.”
So other than your experience, how have you learned about the role of CEO?
“CEO is an interesting role. It carries with it what I call institutional loneliness. As in any job, you are going to have doubts. Will it work out, etc.? If you have doubts as a CEO, whom do you share that with? You don’t want to tell the board or employees. What you find is you tell other CEOs, because they can truly understand. CEOs have a de facto network or support group. They understand what you are going through, have been there, and listen. If you listen in those discussions, you learn a ton…You have to be very aware as a CEO that you do not have all the answers.”
Obviously there are two parts to the role, the internal focus on employees and an external role. How do you consciously balance those two?
“As the CEO your job is to keep your eyes on the horizon. If your eyes are down at your feet putting out fires on a daily basis you are going to get off track fast. You surround yourself with a team that can put out fires themselves so you can focus more externally.”