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E1C01 02/12/2010 15:33:25 Page 0 I don’t think the American dream is to start a company and sell it. Sometimes you end up selling your dream. There are things that money can’t buy. —DAVID NEELEMAN, FOUNDER AND FORMER CEO OF JETBLUE AIRWAYS CORP., FOUNDER OF AZUL LINHAS AEREAS BRASILEIRAS COPYRIGHTED MATERIAL E1C01 02/12/2010 15:33:25 Page 1 Chapter One DAVID NEELEMAN WHEN IT’S TIME TO MOVE ON very time David Neeleman has faced a career upset or disap- E pointment, he has quickly responded by pursuing the next opportunity. His phoenix-like determination to rise from the proverbial ashes has led Neeleman, now fifty, to establish no less than three airlines thus far. His entrepreneurial drive has been fueled by a creative vision to establish organizations that are as good as, or even better than, their competitors, and in the process to help other people. ‘‘From the time I sold my first company when I was thirty-three, it has always been about creating new things and helping people reach their potential. Money is a way to keep score at times I suppose, but it doesn’t bring happiness. Money is the means, but it’s not the be-all and end-all,’’ Neeleman said. Neeleman’s fondest creation was JetBlue Airways Corp., which from its first flight in 2000 quickly captured both news headlines and customer loyalty for its superior service and commitment to do whatever possible not to cancel a flight. An ice storm in February 2007, however, delivered a black eye to JetBlue’s nearly un- blemished record, an unfortunate event that Neeleman labeled ‘‘the worst operational week in JetBlue’s seven-year history.’’1 Although he may not have been personally at fault for the nightmare of flight cancellations that extended for days, as chair- man and CEO, Neeleman took responsibility for the crisis. His public apologies were followed by an even greater commitment to 1 E1C01 02/12/2010 15:33:25 Page 2 2COMEBACKS customer service to restore JetBlue’s reputation. For Neeleman, however, another storm was brewing, as discussions ensued around who would be best to oversee the day-to-day operations of the airline, which had been his brainchild and fondest creation. Only three months later, in May 2007, Neeleman was asked to step down as CEO and a year later relinquished his chairman’s title as well. Neeleman may have been temporarily without an airline, but he was far from grounded. His latest venture was already taking shape in his mind, an opportunity in Brazil, which is his second home and a market in which he sees untapped potential. This new venture would allow Neeleman once again to build a business embracing the philosophy of servant leadership: putting the needs of others first to inspire them to give of themselves and reach a higher level of achievement. Devoting himself to this new business in Brazil and focusing on the needs of his employees is how Neeleman copes with his departure from JetBlue, a loss over which he had little control. The man who has been called ‘‘a serial entrepreneur’’ relies on his philosophy of servant leadership and generates momentum through new ventures to carry him forward into the future, even though the pain of past setbacks remains. Growing Up in Brazil A seventh generation Mormon, David Neeleman and his family hail from Utah, but his personal roots are in Brazil. His father, Gary, had been a Mormon missionary to Brazil as a young man, spending two-and-a-half years in the southern part of the country and in Sao Paulo. Even after Gary returned to Utah and got married, Brazil was close to his heart and he longed to go back. He became a foreign correspondent for United Press International (UPI) and soon became the Sao Paulo bureau chief during his seven years there as a correspondent. (Several years later he became UPI’s vice E1C01 02/12/2010 15:33:26 Page 3 David Neeleman: When It’s Time to Move On 3 president over Latin America and the Caribbean.) The second oldest of seven children, David Neeleman was born in Brazil and grew up speaking English and Portuguese. When Neeleman was five, his father moved the family back home. Back in Utah, Neeleman faced a difficult transition to elemen- tary school. Born in October, he was younger than many of his classmates, a situation that became compounded when he was moved ahead a grade because he had already attended kindergarten in Brazil. Later he was diagnosed with attention deficit disorder (ADD), which further explained why school was so challenging for him. Neeleman benefited from another type of education: working at his grandfather’s grocery store from about the age of nine until he was nineteen. Watching his grandfather interact with people who came into his store, Neeleman learned quite a bit about customer service. Then came his first real taste of success, which molded him as a leader. At the age of nineteen, Neeleman was sent to Brazil as a missionary, thanks to his dual citizenship and the fact that his father had previously served the church there. During his two-year mission, Neeleman rose through the ranks of district leadership and served as district president for the last seven months of his assign- ment. ‘‘For the first time in my life, I succeeded at something,’’ he reflected. His time in Brazil, spent mostly in the northern part of the country, also exposed Neeleman to a different side of life among people who were largely poor and very humble. The contrast between haves and have-nots created an indelible impression. On one hand were the wealthy who enjoyed a sense of entitlement; on the other were the poor who had next to nothing and yet were often happier and more willing to share what little they had. His experience in Brazil would later affect his leadership in the airline business in many powerful ways. But as a young man returning to Utah from Brazil, airlines were not on his horizon. Soon, however, he would have his first E1C01 02/12/2010 15:33:26 Page 4 4COMEBACKS experience in the travel industry, which would quickly immerse him and, despite an early failure, would never get out of his blood. Entering the Travel Business After returning home from his mission to Brazil, Neeleman married his girlfriend, Vicki, and entered the University of Utah. While still a student, he started a travel business in the early 1980s, renting timeshares in Hawaii. ‘‘Because of the recession at the time, companies couldn’t sell time shares, so I said, ‘I’ll rent them for you.’ That’s how I got started,’’ Neeleman recalled. When an airline agreed to sell him tickets wholesale, Neeleman was able to offer airfare and accommodation packages to his customers. By the time his company reached twenty employees and $8 million in sales, Neeleman had to drop out of college as a junior to run the operation full-time. Then the airline that had sold him tickets went bankrupt, and Neeleman had to make restitution to his customers. It was a considerable financial loss that nearly wiped him out. ‘‘I was done with the travel business,’’ Neeleman remembered thinking at the time. Married with two children, Neeleman had no choice but to join his in-law’s window-covering business and went back to work for his grandfather’s grocery store to make ends meet. It didn’t take long for the next opportunity to come along—and, once again, it was in the travel business. In 1984, June Morris, founder of corporate travel agency Morris Travel, whom Neeleman described as ‘‘a very wise lady,’’ invited the then twenty-four-year-old Neele- man to join her company and develop a leisure travel business. Neeleman accepted her offer and set up a charter air service which later became Morris Air, the first airline he helped to establish and of which he became a part owner. With Morris Air, Neeleman realized his destiny as an entrepreneur in one of the most difficult, cost-inefficient, and otherwise challenging industries. ‘‘This was my first airline—my first hit,’’ he recalled proudly. E1C01 02/12/2010 15:33:26 Page 5 David Neeleman: When It’s Time to Move On 5 Based in Salt Lake City, Morris Air was among several low-cost airlines that challenged larger carriers on shorter, regional routes. In 1992, while at Morris Air, Neeleman developed a ticketless technology that was a breakthrough innovation in the industry. (Although Southwest Airlines is often credited for having invented ticketless travel, Neeleman says it all started with Morris Air.) The success of Morris Air attracted the attention of Southwest Airlines, which in December 1993 agreed to buy the smaller airline in a stock swap worth about $129 million. Neeleman, then presi- dent of Morris Air, told the New York Times that a buyout by Southwest had not been a stated goal, but ‘‘was definitely some- thing we had in the back of our mind.’’2 Being acquired by Southwest was a victory for Morris Air, enabling it not only to become part of a larger airline, but also to join forces with a company that was revolutionizing air travel with affordable fares and an expanding system of routes. ‘‘South- west was a beacon that was out there,’’ Neeleman observed in a speech he gave at Stanford University in 2003.3 The Southwest deal gave thirty-three-year-old Neeleman some $25 million from the sale of Morris Air and a new boss and mentor: Southwest CEO Herb Kelleher.