cover
story
buildin gs. It”s gray and somewhat drab, the
roughly paved streets dusty with the comings
and goings of delivery vans and exhaust-
belching semis.
Yet from this gritty chaos thousands of
freshly baked goods—delicate, flavorful, sublime; more suited to the front window of a
Paris boulangerie—emerge daily.
The company’s operations have grown
into three plants that produce the company’s
food-service items, shelf-stable products, spe-cial-order cakes, éclairs, pastries, muffins,
Danishes and about 50,000 doughnuts a day.
The business includes about 90 percent of
hospital pastry departments and 60 percent of
hotels in the San Francisco Bay Area, as well as
cafés, national warehouse clubs, major supermarket chains, retailers, restaurants, casinos,
airline catering companies and customers as
far away as Japan, Korea and Mexico.
Sugar Bowl has been named Bakery of
the Year by The Consumer Business Review for
the past 10 years, and has been the fastest-growing private company in the Bay Area for
10 of the past 11 years.
Genealogy of a business
While the company was growing, a family structure developed as well. The company’s growth required clearly defined roles,
accountabilities, goals and structure. Each
brother assumed distinct responsibilities,
based on the skills and strengths that each
demonstrated.
The eldest brother, Tom, took over cash
management. Binh was in charge of retailing.
Sam handled development and international
markets. Paul became treasurer.
In a break from Vietnamese tradition,
where the oldest always has the most say and
power, middle brother Andrew, with his business education and English skills, emerged as
the leader. When Sugar Bowl incorporated in
1993, Andrew became CEO.
“Because we grew up
together, we are
comfortable
working togeth
—”er.
Mark Ly
Regular informal meetings, occasionally
attheoldSugarBowlbakery,allow
Andrew(darkjacket)andhisbrothers
t oassessandofferadvicetotheyounger
g enerationoftheLyfamily.
IRIDIO PHOTOGRAPHY
Sugar Bowl: the next generation
Given the level of family involvement, it
was no surprise that the second generation of
Lys was eager to follow. “We all worked in the
first retail store and all went to the bakery
after school,” Mark, Tom’s son, recalls. “We
would meet there after school and do what
we could.”
“We saw our parents working so hard,”
says Binh’s daughter, Laura. “They were putting in 15-hour days, and they were doing it
for us, for the family. It really instilled a work
ethic in all of us.”
Of the 12 members of the second generation, eight—Steven, Kevin, Michael, Mark,
Laura, Hugh, Joe and Robert—are working in
the business, in addition to Andrew’s four
brothers and four sisters-in-law, preparing for
the day that the company evolves from a partnership of brothers to a company of cousins.
And though being a Ly affords the second
generation more opportunities in the business, it’s no free ride. “You still have to prove
you can do the job, or else you have to leave,”
says Mark, the company’s sales director.
“Andrew is teaching us a lot,” he continues. “He lectures to us and involves us in
meetings and talks to us by e-mail and in
lunches every week. This keeps us all on the
same page.”
“I want to train them early and groom
the ones who are best to be leaders,” says
Andrew. “The ones who care about it the
most, who have the talent and the patience to
take the business ahead.”
Sugar Bowl’s unusual “flat” structure
speeds communication, response time and
innovation. “If a big customer wants a product, we are fast,” says Michael, who has risen
to the position of vice president and general
manager. “We develop it quickly, within weeks
if necessary, including packaging and design.
“We don’t have to go through layers—it is
just one step to the CEO, who is our uncle.”
Team of siblings
Not to say there haven’t been hiccups.
Andrew’s aggressive approach to growth and
innovation made some of the family members nervous. “My philosophy is to diversify,”
Andrew says. “We diversify our products, and
we diversify our customer base. Every single
day when I come in I want to see our salespeople calling on new customers.”
At every step of the way, however, the
family works together to discuss each idea.
The brothers govern themselves through
a “brothers’ council,” a monthly forum for the
siblings to work out their differences and
chart their future.
Any brother must have full support from
the others before proceeding. “Having to
be so clear and transparent forces you to really
think things through,” says Andrew. “My
brothers are there to make me do things more
thoughtfully.”
“We are very open with each other,” says
Tom.
“Because we grew up together, we are
comfortable working together,” says Mark.
Sweet success
Persistence and vision has transformed a
small doughnut shop into a $45 million
company.
As the Lys faced each successive level of
business challenge, they devised new ways to
maintain their unity and focus.
Their story demonstrates how a family
can evolve to overcome challenges of every
stripe—financial, cultural and filial—if they
remain conscious of their larger goals. Rather
than stay at a comfortable level, the Lys chose
to make the extra effort and build for the family’s future.
The Lys envision their company reaching
$100 million in sales. But they make it clear that
whatever direction they go, their family and its
values will continue to play a central role. C
