He Sold A Company With A 900% Return To Shareholders And Has Now Created A $100 Million Fund To Support Growth Companies

Richard Schenkel’s story reflects the power of resilience, strong work ethics, and a boundless entrepreneurial spirit. He has been a founder and has now turned into an investor operator. In this exclusive interview, he talks in detail about building, scaling, and financing his companies.

From his early beginnings in West Orange, New Jersey, to building a billion-dollar enterprise, Richard’s journey is a masterclass in business growth, leadership, and the enduring value of culture.

Listen to the full podcast episode and review the transcript here.

The Early Days: A Lesson in Hard Work

Growing up in a middle-class family in Northern New Jersey, Richard was introduced to work at a very young age. His father owned a luncheonette in Newark, and by the age of eight, Richard was already helping out on weekends. He continued working there until he was 15, along with two siblings.

Reflecting on those early years, he acknowledges its impact on shaping his work ethic. “Back then, there was no choice,” Richard recalls. “You were expected to work, and that experience instilled in me a strong sense of responsibility and commitment.”

This early introduction to the working world not only taught Richard the value of hard work but also sparked the entrepreneurial flame that would later define his career.

By age 10, he was already running his own small business out of his basement, printing and selling business cards and stationery to neighbors. At one point, he also started a dry cleaning business.

“Entrepreneurship is in your blood,” he says. “You either have it or you don’t. It’s about being a risk-taker and having the motivation to be your own boss.”

At 15, Richard left the family business and his dad’s employment to work at a skilled nursing facility in West Orange, New Jersey, called Daughters of Israel.

He recalls meeting with the food service director when he applied for the position and asking to learn everything about the senior living facility.

From Corporate Life to Entrepreneurial Success

Despite his early entrepreneurial ventures, Richard initially chose a more traditional path, attending the University of Wisconsin to study food service administration. After graduation, he started a corporate career, spending significant time at Marriott Corporation.

Here, Richard gained invaluable experience in systems operations, financial management, and the importance of a robust organizational culture. This training would be helpful when Richard became an executive and entrepreneur and built a company from 0 to ~$1B with 17,000 people.

With corporate experience and a clear understanding of business operations, Richard eventually decided to plunge into entrepreneurship. “I knew I needed to build an organization and be responsible for it,” he says. “It was a huge risk, both financially and personally, but I was ready.”

In Richard’s experience, many entrepreneurs find their companies outgrow them quickly. He’s witnessed many companies at $25M and $20M valuations needing the services of a professional CEO.

However, Richard has the best academic and corporate experience in the world. He had also been striking out independently and learning the best practices of running a company–whether in the healthcare, senior living, business service or hospitality industries.

Lessons Learned While Working at Marriott Corporation

Working at Marriott Corporation was a valuable experience since the family organization is very committed to its business operations despite being a public company. Richard also experienced a sophistication and culture that was second to none.

In his opinion, culture shapes an organization in how it treats people, its values, the core business, and how it takes care of guests. Richard also believes that operational controls and financial management have to be top priorities; without them, an organization cannot be run.

Finally, Richard learned how to look for marketplaces with a huge amount of white space in which to grow. His entrepreneurial mode had already been activated when working there but less as an investor in certain businesses and providing advice.

Scaling Republic and Experimenting with a Dating App

Richard started out by purchasing Republic, a small company built by a former founder. This company was focused on different operating verticals and wound up being very successful, growing to some extent.

When approached by a larger company, Richard accepted the M&A deal and remembers enjoying his first rodeo on the transaction’s sell side. He recalls reading through legal documents and personally thriving on the education.

Richard next had the idea to create the technology for an online dating app. He anticipated that his app would be very different from some of the options available on the market. However, the app launched in 2000 was ill-timed.

At the time, AOL was prevalent, Facebook had just launched, and Amazon was nothing more than a book company. The overall perception was that technology wouldn’t last, which is the complete opposite today. Launching the app in today’s markets would have attracted a better reception.

Building a Billion-Dollar Enterprise

Richard’s first major entrepreneurial venture was in the onsite food service management industry. He founded Unidine in 2001, a food and dining management services company focused on senior living, corporate dining, and healthcare.

From the outset, Richard emphasized the importance of culture, people, and fresh food—elements that were revolutionary in the senior living sector at the time. Around 24 years ago, only Whole Foods offered organic, fresh food in the market.

Starting with no clients, Unidine quickly grew, securing five clients in its first year, 15 in year two, and up to 150 plus clients in subsequent years.

Despite the challenges, including the aftermath of September 11th, 2001, the company flourished. By 2017, Unidine had grown into a large enterprise with a strong niche in the market, becoming a boutique company, eventually leading to its acquisition by Compass Group, USA.

Explaining Unidine’s business model, Richard reveals they provided food and dining management services using both a management fee and profit/loss approach.

Raising Funding for Unidine

Since part of Unidine’s business model was to scale the business to $500M+, Richard knew they would need external capital. The company was already bringing in revenues when it raised funding worth $75M.

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Richard talks about the challenges of scaling the company to this level without oxygen. Like most entrepreneurs, he assumed that sales, general, and administrative costs would decrease as revenues grew–which did not happen. Although revenues did increase, so did their SG&A.

Richard observes the learning curve he got out of the experience. He noted that the inflection point, depending on the industry, is when the revenue exceeds SG&A in terms of percentages. That’s when the company starts profitable growth.

Richard also learned that not all business verticals initially have profitable growth, which is a reality. He advises entrepreneurs to raise funding in different rounds to ensure they retain equity.

They should start with a seed round, friends and family, then in a series A, B, and C because they should focus on driving valuation. Raising money is very tough, and few concepts come to fruition. Entrepreneurs should overestimate their capital needs but do it in phases.

Looking back at the exit, Richard talks about approaching the deal strategically. They had a strong marketplace, both in private equity and in strategic, and he was confident it was the right inflection point and time. In late 2017, Unidine was acquired by Compass in a nine-figure deal.

The Importance of Culture

Throughout his journey, Richard has consistently emphasized the importance of culture in building a successful business. “Defining your culture correctly is crucial,” he says.

At Unidine, Richard personally wrote the company’s cultural values and ensured that they were not just words on a page but principles that permeated every aspect of the organization. He analogizes it to a Pledge of Allegiance that doesn’t go away.

For Richard, culture is about creating an environment where employees feel valued and motivated to contribute to the company’s success. This focus on culture was critical in Unidine’s growth and its ability to attract and retain top talent.

A New Chapter: Phoenix3 Holdings

After the successful sale of Unidine, Richard continued his entrepreneurial journey, joining Compass Group to help grow the businesses further. Under his leadership, the companies expanded significantly, reaching $1.3B in revenue.

At the time of the acquisition, Unidine had 5,000 to 6,000 employees. However, the companies under his leadership grew to over 15,000 by 2022. Richard explains that it is a distributed employee type of operation and is essentially a restaurant company with 200 or 300 locations.

True to his entrepreneurial nature, Richard wasn’t content to stop there. He eventually left Compass to start Phoenix3 Holdings, a new venture that aims to invest in and grow companies with strong potential.

“Once an entrepreneur, always an entrepreneur,” he says. “I love watching things grow—whether it’s a company or the people within it.” Phoenix3 has around 15 to 18 people working in it.

Phoenix3 Investments and Criteria

The firm has invested in Infuse Hospitality in Chicago, an onsite food and dining service company focused on the commercial market. In addition, it has backed Fairgrounds Coffee & Tea, which Phoenix3 is helping to grow in the markets it is in.

Richard reveals how Phoenix3 is looking at investments in sectors like senior living, healthcare, business services, distributed service companies, and lifestyle companies where they feel they can make a difference by offering the expertise of operating people and capital.

Phoenix3 also focuses on founders or family-based organizations to help them grow and avoid pitfalls other entrepreneurs go through. Its Assets Under Management (AUM) is around $100M.

Richard outlines their approval criteria, which include revenues worth $10M and above, approaching positive EBITDA, having a plan, and having strong retention in the marketplace. Candidates should be family or founder-based with a robust culture fit–their primary priority.

Richard reveals that the company they have invested in has started its acceleration and has demonstrated a high growth of 30% to 40% annually with the retention of the founder. It has become a boutique company and is the best in class in its industry.

In Richard’s opinion, to achieve this growth, companies should have enough capital to hire the best people who are overqualified to begin the company’s journey.

Conclusion: Lessons from Richard Schenkel’s Journey

Richard Schenkel’s story is a powerful reminder of the importance of resilience, strategic thinking, and the ability to adapt and grow.

From his early days working in his father’s luncheonette to building a billion-dollar enterprise, Richard has consistently demonstrated the qualities that define a successful entrepreneur. His journey also highlights the importance of culture in creating a sustainable business.

For Richard, culture is not just a buzzword; it’s the foundation upon which everything else is built. As he continues to grow Phoenix3 Holdings, there’s no doubt that Richard will carry these lessons forward, inspiring the next generation of entrepreneurs to do the same.

Listen to the full podcast episode to know more, including:

• Richard Schenkel developed a strong work ethic from a young age, working in his father’s luncheonette from the age of eight.
• His entrepreneurial spirit was evident early on, with ventures like selling printed business cards door-to-door as a child.
• His corporate experience at Marriott gave him invaluable lessons in culture, operational control, and financial management, which he later applied to his ventures.
• Schenkel took significant calculated risks in his 30s to transition from corporate roles to entrepreneurship, leading to the founding of multiple successful companies.
• He emphasized the importance of resilience, particularly during the challenging early years of building a business when resources are scarce.
• Schenkel believes defining and permeating a robust organizational culture is crucial to a company’s success.
• Timing and market conditions were key factors in Schenkel’s decision to sell his company, leading to a nine-figure exit and subsequent ventures.

 

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