Business

How Joann Fabrics went from a cult-favorite retail darling to a bankruptcy disaster

Published

4 days ago

March 29, 2025

Everything is on sale at a Joann’s store just north of New York City.

In the sewing section, some shopping carts have all but disappeared under bolts of cotton, tulle, and fleece. But the mood is hardly festive. The busy atmosphere and steep discounts are signs of a sad ending for a beloved institution. Or, as one dark-haired young shopper puts it: “It’s a bummer.”

Last month, Joann Fabric and Crafts, a fixture of American shopping for generations, announced it would close all of its more than 800 stores in the U.S. and lay off 19,000 workers, including more than 15,000 part-time store associates. The company is in the midst of its second bankruptcy in less than a year.

Joann’s isn’t the only retail chain that has failed lately—Party City and clothing shop Forever 21 have both filed for bankruptcy. But the demise of Joann’s hit a nerve, and an army of devoted staffers and customers have shared their grief in a wave of online tributes.

In heartfelt videos posted on Instagram and Facebook, head office employees choke up recalling the lunch hours spent crocheting with their teams. Customers wax nostalgic about past mother-daughter projects and long Saturday afternoons at Joann, and several fans share intense “last haul” videos, scoring images of empty shelves with melancholy pop songs.

“Joann is f—ing closing,” said one young tear-stained shopper in a TikTok post.

“No shade to Michael’s or Hobby Lobby or anything like that,” she says, referring to the store’s closest competitors. “But Joann feels like home.”

The emotional farewells, however, have been accompanied by murder-mystery-style sleuthing about how the brand reached this point. In the late 1990s, Joann was the largest craft brand in the U.S., and became a Fortune 1000 company for two years during the pandemic, only to lose 99% of its value between 2021 and 2024. “I’m baffled as to how they managed to fail,” says Diana McDonough, a longtime customer and member of the Ohio Valley Quilting Guild.

In a statement published when the company filed for bankruptcy this year, Joann attributed the move to “significant and lasting challenges in the retail environment” and its “financial position and constrained inventory levels.”

Former employees and vendors who spoke to Fortune have theories about what happened. For many, the answer to the question “Who killed Joann?” is simple: Leonard Green. In 2011, the L.A.-based private equity company took Joann private for $1.6 billion in a leveraged buyout that saddled the company with significant debt.

But some say that debt alone doesn’t tell the whole story. They point to long-running cultural headwinds, staffing choices that created a dearth of workers in a customer-service-heavy industry, failure to respond to surprisingly tough competition, a revolving door of CEOs, and overconfidence sparked by a pandemic boom.

Joann Fabrics and Leonard Green & Partners declined to comment for this story.

“They really did this to themselves,” says Alan Porter, a former district manager who worked at Joann for 16 years. “Because the business is there.”

A cultural relic

Joann’s founders—two German immigrant families in Cleveland—likely never imagined their business would become as big as it did.

They launched the specialty store in 1945 as Cleveland Fabric Shop and later renamed it Joann, combining the first names of daughters from both families: Joan and Jacqueline Ann. (For many years, the company went by Jo-Ann Stores.) By 1963, Joann had 18 locations. In 1969, the fabric chain went public.

Virtually everything about our relationship with clothes has changed since Joann’s early days. At one time, sewing machines were a mainstay of American households, and most women learned to sew—but that all changed with the women’s movement, globalization, and the rise of fast fashion. Leaving aside “tradwives” and Etsy shop owners, most people now sew for leisure, not out of necessity. “How many young women are leaving college and their college graduation gift is a sewing machine?” says Lori Kendall, a senior lecturer of management at Ohio State University’s business school.

A larger pivot within the U.S. retail climate to e-commerce and big-box stores has also made it harder for a relatively small company like Joann to compete with behemoths like Amazon and Walmart. Along with the decline in the popularity of sewing, that shift created a “double whammy” for Joann, says Kendall.

New pressures and an unsolicited bid

Joann entered the 21st century as a family-run business, but not always a thriving one.

In 2006, the company hired Darrell Webb, who had been president of grocer Fred Meyer, to take over as the brand’s first non-family CEO. At that time, the company was struggling with uneven sales and too much inventory. “We had stores that weren’t clean, and he came in and brought this tremendous discipline, not only to the corporate culture but to the stores’ culture,” says an executive who worked at Joann at the same time as Webb but asked to remain anonymous to protect his privacy. Webb, he says, brought sparkling restrooms and tight inventory control: “That was a very positive shot in the arm.”

Alan Porter, who worked at Joann for 16 years, beginning as a store manager around 2004 and leaving as a Florida district manager in 2020, agrees. He credits Webb with setting Joann on what could have been a sustainable path. Webb and his leadership team did that largely by “getting back to basics,” Porter tells Fortune, and right-sizing the stores’ overgrown retail footprint. The CEO talked to store staff across the country, too, Porter says, learning how to make Joann a mecca for its core audience: sewers.

Fortune could not reach Webb for comment.

But Webb stepped down from his role in 2011 and took a seat on the board after Joann accepted an unsolicited bid from Leonard Green & Partners to take the company private. That $1.6 billion leveraged deal left the company with a mountain of debt—the remnants of which would bog it down for years—and meant Joann would pay steep annual management fees.

In the best-case scenario, private equity firms provide an injection of cash that allows a company to grow and create jobs before the firm finds an exit—like a sale or an IPO—and cashes out with a decent return. But timing, market conditions, and interest rates don’t always cooperate. Making matters worse, buyouts are made with funds borrowed against the company’s assets, meaning a company like Joann—which had no debt in 2010 and hit a record-high stock price that year—can find itself severely overleveraged and forced to raise prices or cut costs, including labor, to survive. If the market turns, or a company is poorly managed, and refinancing becomes harder, paying down debt can prove impossible.

“It may make the individuals rich at the time,” Chad Zipfel, a finance lecturer at Ohio State University’s Fisher School of Business, says of leveraged buyouts. “But it often portends future hurt.”

The Joann experience changes

Leonard Green initially looked like the right answer, according to the former executive who remembers discussions from that time. As private equity firms went, this person says, the PE firm was known for being hands-off, which was appealing.

Joann initially maintained the close-knit culture instilled by the family-run firm even after its PE acquisition, the former executive recalls. However, that eroded with time. One major culture shock came when then-CEO Jill Soltau, who had not previously worked in craft retail, hired consultants from McKinsey to analyze the workforce, which led to layoffs, he recalls. (Soltau did not respond to Fortune’s request for comment.) Between 2011 and 2023, nine executives rotated through the CEO office, including Webb and two sets of interim co-chiefs.

Porter also says that the company began reducing headcount inside stores in the 2010s to save on payroll costs, which led to a cascade of issues.

Unlike cans of soup that get restocked by the caseload, fabric often must be measured by employees at a cutting counter. One customer might need half a yard from six different heavy bolts, and the next person could have an even more complicated sewing project, Porter explains. When his stores didn’t have enough staff on hand, fabric bolts piled up at the cutting counter, and customers faced 45-minute-long wait times.

Elizabeth Caven, an Ohio-based crafts business investor who is also a vendor at Joann, adds that the sewing-obsessed staff were “one of the reasons why originally you would want to go into the store.”

“Usually, while the cutting process is happening, there’s a conversation: ‘What are you making?’ ‘What else do you need to go with this?’” Joann’s associates could make invaluable suggestions, she explains. But finding those helpful employees became “hit or miss,” she says.

Caven noticed staffing issues of another kind as well. In the process of pitching a handheld pattern projector to the company, she was stunned to discover that a head buyer had never seen paper patterns outside of their packaging. “The higher up in the company that you would go, the less there was an understanding of what the customer actually wanted to do,” she says.

Meanwhile, in the late 2010s, Hobby Lobby began expanding across the country, offering craft supplies and a limited selection of fabric. The chain had started in Oklahoma City in the 1970s and was a regional competitor for decades.

Hobby Lobby’s rise as a national rival was the tipping point for Joann’s decline, according to the former executive. The retailer was family-owned, he notes, so it wasn’t facing the same financial pressures as Joann. It didn’t have hundreds of millions in debt to worry about, or management fees. Meanwhile, it had less emphasis on labor-intensive sewing requests, and its goods were often cheaper. The famously Christian and mission-driven store quickly stole market share from Joann, which responded with more cost-cutting, further impacting the customer experience, which created a self-perpetuating cycle.

Pandemic boom and bust

After a rough few years, Joann’s fortunes changed again.

Entering 2020, the chain was still in debt to the tune of $900 million, which Moody’s flagged as distressed. But in the first nine months of that year, revenue reached $1.9 billion, representing nearly 25% year-over-year growth, according to its subsequent IPO filing. COVID-19 lockdowns that kept people indoors had sparked a crafting renaissance.

It wasn’t just amateurs who had found Joann’s, then-CEO Wade Miquelon told Fortune in 2021. The brand also attracted side-hustle sellers and small businesses. “Fundamentally there has been a shift for people who want to do more do-it-yourself projects,” he said.

With sales soaring, Leonard Green saw an opportunity to exit. The private equity firm put the company back on the market that year in a public offering that raised $131 million, with Leonard Green remaining the majority shareholder.

But just a year later, it was clear that what looked like a new era for the crafting store was in fact more of a “blip,” the executive who asked to remain anonymous said. Joann’s pandemic boom went bust, and the store once again belonged solely to its most dedicated hobbyists. With sales in the now-public company plummeting year over year, Joann’s share price dropped below a dollar in 2024, triggering a Nasdaq delisting and its first bankruptcy last April.

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Miquelon, who resigned in 2023, did not respond to Fortune’s request for comment.

To outsiders, says OSU professor Zipfel, it appears that Joann’s CEO fell victim to a common psychological trap. “When times are good, we think they’ll always be good,” he says. “It’s hard as a finance leader to say: ‘Hey everyone, let’s pull back a little bit. Let’s not go so heavy into hiring and assuming these spending trends will continue.’”

The store also failed to take measures such as adding subscriptions or creative services, for example, that may have helped it to retain its pandemic-rush customers.

Last year, Joann struggled to keep its shelves stocked, which is not uncommon after a bankruptcy. Suppliers often worry about sending more products to a shaky business, unsure whether they will get paid. In November of 2024, news broke that Joann was looking for rebates from vendors.

Two months later, the store declared a second Chapter 11 bankruptcy, and was eventually bought by a liquidator.

“It’s quite sad,” says Caven. “They were clearly the category leader.”

This story was originally featured on Fortune.com

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Business

Australia urges universities to diversify research away from U.S.

Published

12 minutes ago

April 2, 2025

Jace Porter

Australian foreign minister Penny Wong urged universities to seek greater research cooperation with partners outside the US following the Trump administration’s threat of funding cuts to the sector.

At least seven Australian universities are facing a potential reduction in funding after they received lengthy questionnaires from the U.S. government asking how their projects aligned with President Donald Trump’s domestic and foreign policy priorities. Industry group Universities Australia said the change could affect as much as A$600 million ($377 million) in research funding.

Wong said that just as the Australian government was encouraging businesses to broaden their trade markets in response to global disruptions, the education industry needed to follow suit.

“We have to recognize that we live in a different world,” she told Australian Broadcasting Corp. radio on Wednesday. “We will continue to make the case to the U.S. that collaborative research benefits both countries, but I would say making sure we diversify our engagement matters across all our economic sectors.”

Australia, one of Washington’s oldest allies which also runs a trade deficit with the U.S., is bracing for the next round of tariffs due to be unveiled by the Trump administration within 24 hours. Prime Minister Anthony Albanese has said he will not negotiate on a range of concerns raised by the US Trade Representative in a report released this week.

Universities Australia chief executive officer Luke Sheehy told the ABC last week that Monash University and the University of Technology Sydney were among those exposed to potential US funding cuts.

“This is really alarming that Australia’s closest ally, someone who funds more than half a billion dollars of research in the Australian system seeking Australian expertise to benefit both countries, is putting all of that at risk,” he said.

This story was originally featured on Fortune.com

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AI and Trump 2.0 propel SoftBank CEO Masayoshi Son back into the spotlight

Published

3 hours ago

April 1, 2025

Jace Porter

The first days of the second Trump administration offered the newly elected president a chance to share the spotlight with some of his most important allies. While some of the featured leaders were ones you’d expect—cabinet nominees, congressional leaders, megadonor Elon Musk—at least one was a surprise: Masayoshi Son, the Japanese billionaire tech investor.

The occasion for Son’s star turn in the White House Roosevelt Room on Jan. 21 was an announcement that SoftBank Group, Son’s Tokyo-based conglomerate, would put up most of the funding for Stargate, an ambitious partnership with OpenAI and Oracle that aims to turbocharge American leadership in artificial intelligence. Flanked by Oracle chairman Larry Ellison and OpenAI CEO Sam Altman, and standing on a box to be seen above the lectern, Son promised Trump that Stargate would invest a staggering $500 billion to build a nationwide network of data centers, power plants, and research centers. Trump lavished praise on “my friend Masa” for bankrolling “the largest AI infrastructure by far in history.”

“This the beginning of a golden age for America,” Son told Trump. “We wouldn’t have decided [to invest] unless you won.”

It’s also a golden age for gambling on AI, and Son seems determined to be the table’s highest roller. SoftBank is leading a funding round of $40 billion for OpenAI, valuing it at $260 billion, in what could be a record single round for a private company. If finalized, that investment would position SoftBank as OpenAI’s largest shareholder. Meanwhile, SoftBank and OpenAI are launching a joint venture to develop and market AI in Japan.

(On March 31, after this story was originally published, SoftBank said it had agreed to lead a funding round of up to $40 billion in OpenAI Global, a for-profit subsidiary of the ChatGPT maker, valuing the company at $300 billion, in what could be a record single round for a private company. SoftBank plans to invest up to $30 billion in the subsidiary, with a syndicate of co-investors providing the remaining $10 billion.)

The surge is all the more striking because in some circles Son is best know for his failures. Indeed, the last time Son loomed so large in global headlines was in 2022, when his Vision Fund posted a $27 billion loss and teetered on the brink of collapse. Among its most spectacular debacles: office-sharing startup WeWork, for which the fund was forced to write down $14 billion.

But the comeback is vintage Son. Over the years, he has made and lost larger fortunes than perhaps any investor in the history of capitalism. From his early days as a scrappy software distributor, Son has demonstrated a flair for grand gestures, an unshakable faith in charismatic young founders with big ideas—and the capacity to bounce back from failed bets. It’s not far fetched to compare him to a daruma, a traditional Japanese doll that’s a symbol of perseverance. Daruma dolls have heavy, weighted bases; like America’s Weebles, they wobble but don’t fall down.

The wobble-and-rebound pattern has recurred throughout Son’s career—and each boom-and-bust cycle has seemed to leave his financial base more solid. SoftBank’s first big success was a bet on Yahoo, darling of the dotcom boom, which cemented Son’s reputation as a venture visionary and made him, briefly, the world’s richest man. Then Yahoo made a string of strategic errors, the boom went bust, and SoftBank’s market capitalization plummeted from more than $180 billion to $2.5 billion, a decline of 98%.

Son clawed his way back thanks to a $20 million investment, made just a month before the dotcom crash, that gave SoftBank a 34% stake in a then obscure Chinese e-commerce startup, Alibaba. Son famously claims to have decided to invest based on pure gut instinct after a six-minute meeting with founder Jack Ma. “It was the look in his eye, it was ‘animal smell,’” he recalled years later.

At its peak in 2020, SoftBank’s Alibaba stake was worth more than $200 billion, enabling SoftBank to borrow money for investments in hundreds of other ventures. In Japan, the company pioneered the expansion of high-speed internet and broadband, just in time to serve one of the world’s most tech-savvy younger generations. In 2006 SoftBank acquired Vodafone Japan, later rebranding it as SoftBank Mobile, a game-changing move that effectively put Son in control of one of Japan’s top telecom providers. That success paved the way for SoftBank to buy a majority stake in Sprint, which Son later merged with T-Mobile, creating the third-largest U.S. mobile carrier.

Son’s luck seemed to run out after 2017 when he launched the $100 billion Vision Fund, the world’s largest tech investment fund, with major backing from Saudi Arabia and the United Arab Emirates. The fund’s myriad wipeout losses eventually forced Son to unload many of SoftBank’s assets, including the bulk of its stake in Alibaba.

But if Son is unnerved by these gyrations, he has rarely shown it. He lives in a lavish mansion in Tokyo’s pricey Azabu Juban neighborhood, and in 2019, even as SoftBank’s fortunes were straining under the weight of WeWork’s failed IPO, he took out a personal loan from SoftBank to pay $117 million—then the most ever paid for a U.S. residential property—to acquire a sprawling European-style villa in Woodside, in the hills above Silicon Valley.

When it suits him, Son, who displays samurai swords and armor from his personal collection in his office atop SoftBank’s Tokyo headquarters, can be as intimidating as any feudal warlord. Anthony Tan, cofounder of Southeast Asian super app Grab, remembers being summoned to Tokyo for a meeting with Son in 2014. After an hour, Son cut to the chase: He was making Tan an offer he shouldn’t refuse. “You take my money, good for me, good for you,” Tan recalls Son saying. “You don’t take my money, not so good for you.” (Tan took the money.)

Uber CEO Dara Khosrowshahi has offered a succinct explanation for why tech CEOs have made countless 11-hour flights from San Francisco to Tokyo to meet with Son: “Rather than having their capital cannon facing me, I’d rather have their capital cannon facing behind me.”

Son’s cannon may have misfired at Vision Fund. But what enabled him to reload is the success of another singular investment: British chip designer Arm Holdings, which SoftBank took private in 2016. Since September 2023, when SoftBank listed Arm on the Nasdaq, its market cap has soared to nearly $120 billion, enabling SoftBank to pledge some of its 90% stake as collateral to take on debt.

SoftBank will need that new ammunition. For Stargate, SoftBank has pledged to provide $19 billion of the initial $52 billion in funding commitments for the venture in exchange for a 40% stake. In mid-March, it splashed out $6.5 billion to buy Ampere Computing, a U.S. chip designer focused on AI compute. Softbank’s overall AI spending commitments far exceed the $31 billion in cash it had on its balance sheet at the end of last year. The Information reports that SoftBank is in talks with bankers to borrow $16 billion to invest, in addition to $18.5 billion it recently arranged to borrow, secured by its Arm stake.

The larger question looming over the Stargate bet is whether it will be worth the returns. On Jan. 27, only six days after the White House ceremony, global investors woke up to reports that DeepSeek, a little-known startup based in Hangzhou, China, had developed an AI model that performs as well as or better than OpenAI’s leading model but requires far less memory and guzzles far less electricity. DeepSeek said it developed the model for less than $6 million, a fraction of the billions Big Tech companies say they are spending on their models.

$19 billion
SoftBank’s initial funding commitment for the Stargate AI infrastructure project

The “DeepSeek shock” challenged prevailing assumptions about the correlation between how AI models perform and how much they cost. But much of the tech community sees those doubts as a distraction from a bigger truth—that growing demand for AI will create a voracious need for power and hardware, even if AI models themselves become more efficient. Altman has argued in a paper on the OpenAI website that “infrastructure is destiny.”

Clearly, the huge estimates of what it will cost to build that infrastructure don’t scare Son. “Some people say, after the DeepSeek syndrome, ‘Oh, you are overspending,’” he said shrugging at a February appearance with Altman at a SoftBank conference in Tokyo. “‘You know, you can save so much more by spending less.’ But I think you are looking at it the wrong way…How much of global GDP will be replaced by something a billion times smarter?”

Son estimates that within a decade, AI-driven solutions will replace at least 5% of global GDP, and potentially as much as 10%: “You shouldn’t be scared of spending a few trillion dollars if it returns $9 to $18 trillion per year. Why should you try to be efficient? For what? I don’t get it.”

At the same event, Son reminisced about past meetings with Altman. In 2017, Altman came to Tokyo looking for funding, but Son sent him away empty-handed. Two years later, as OpenAI developed one of the world’s most sophisticated AI models, Son offered to invest $1 billion in the venture. This time Altman refused.

Onstage, Son had a rosier recollection of the 2019 encounter: “You said that you’re going to go for AGI [artificial general intelligence]. I immediately said, ‘I believe you. I want to invest.’ From there I was a believer. I never doubted. Most people at that time thought you were crazy, right?”

“Some people think you’re crazy too,” Altman replied. “It all works out.”

This article appears in the April/May 2025 issue of Fortune with the headline “The nine lives of Masayoshi Son.”

A gambler at tech’s highest-stakes tables

Microsoft Corp. chairman Bill Gates, left, and Masayoski Son, chairman of Softbank Corp., enjoy themselves as they attend the Comdex address by Eckhard Pfeiffer, president of Compaq Computer, Monday, Nov. 17, 1997, in Las Vegas. (AP Photo/Lennox McLendon)

Japan’s Internet giant Softbank President Masayoshi Son (C) and Yahoo Japan President Masahiro Inoue (L) clinch their fists with Japanese actress Aya Ueto (R) at a press conference in Tokyo 19 December 2005. The two companies announced they will form a joint venture TV Bank for a video service portal site. AFP PHOTO / Yoshikazu TSUNO (Photo by AFP) (Photo by -/AFP via Getty Images)

HANGZHOU, CHINA – MAY 10: (CHINA OUT) Ma Yun (L), chairman of the Alibaba Group and Masayoshi Son, Chairman and CEO of the Softbank Corportation pose for photos during the press conference on May 10, 2010 in Hangzhou, Zhejiang province of China. Taobao, a subsidiary of Alibaba Group, and Yahoo! JAPAN (TSE/JASDAQ: 4689) will launch on June 1 a complementary cooperative e-commerce initiative aimed at broadening consumer choice while at the same time helping small businesses around the world to recover more rapidly from the recent global financial crisis. (Photo by Visual China Group via Getty Images)

Steve Jobs, chief executive officer of Apple Inc., right, speaks with Masayoshi Son, chief executive officer of Softbank Corp., and Mitz Kurobe at the Apple Worldwide Developers Conference (WWDC) in San Francisco, California, U.S., on Monday, June 7, 2010. Jobs introduced the redesigned iPhone 4 today, delivering a 24 percent thinner body and 100 new features as mobile competitors including Google Inc. work to usurp the smartphone’s popularity. Photographer: David Paul Morris/Bloomberg via Getty Images

Japan’s SoftBank Group CEO Masayoshi Son delivers a speech during a press briefing on the company’s financial results in Tokyo on November 6, 2019. – Japanese giant SoftBank Group said Wednesday it suffered an operating loss of $6.4 billion in the second quarter, the worst in its history, taking a hit from investments in start-ups including WeWork and Uber. (Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)

WASHINGTON, DC – JANUARY 21: U.S. President Donald Trump speaks in the Roosevelt Room of the White House while SoftBank CEO Masayoshi Son, Oracle co-founder, CTO and Executive Chairman Larry Ellison, and OpenAI CEO Sam Altman look on on January 21, 2025 in Washington, DC. Trump is expected to announce investment in artificial intelligence (AI) infrastructure. (Photo by Andrew Harnik/Getty Images)

This story was originally featured on Fortune.com

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Shake Shack founder shares the green flags he looks for in new hires: ‘I really don’t give a damn what your IQ is’

Published

3 hours ago

April 1, 2025

Jace Porter

Shake Shack founder Danny Meyer has high standards for new hires: Even if they are highly capable, a lack of hospitality skills like integrity and work ethic can still cost them the job.

As the founder of the now 510-location-strong Shake Shack, Danny Meyer has helped hire thousands of the best burger flippers and milkshake creators. However, he scrutinizes talent much more intently than you may expect.

Even if someone appears highly capable, they may not be cut out for the job at one of Meyer’s restaurants if they lack what Meyer calls “hospitality quotient,” or HQ.

“I really don’t give a damn what your IQ is,” Meyer told Fortune’s Jason Del Rey at the Qualtrics X4 Summit.

“What an IQ basically says is one’s aptitude for learning. What HQ is, is the degree to which someone is happier themselves when they provide happiness for someone else.”

The top 6 emotional skills that will get you hired, according to Meyer

Meyer, who has spent 40 years in the restaurant business and currently serves as executive chairman of Union Square Hospitality Group, added there are six green flags that he looks for above all else:

Integrity
Optimism
Intellectual curiosity
Work ethic
Empathy
Self-awareness

Having these skills will not only help an employee stand out in the hiring process but also equip them to climb the ladder even faster with a “learn-it-all” attitude, he said.

While Meyer’s list of skills may seem like an obvious goal of any aspiring business leader, the restaurant industry has long struggled to find and retain top talent. Plus, Gen Z isn’t making it any easier as questions around their work ethic remain.

They would do well to remember that attitude is often more important than skills. Amazon’s CEO Andy Jassy has gone so far as to say attitude can be the true make-or-break in business—and contribute an “embarrassing” amount to one’s success, especially early in your career.

“I think people would be surprised how infrequently people have great attitudes,” he said. “I think it makes a big difference,” Jassy said in an interview with LinkedIn’s CEO Ryan Roslansky.

Other hospitality business leaders have also shared similar sentiments that surface-level skills won’t always cut it. Chris Kempczinski, the CEO of McDonald’s, wrote last year that while characteristics like expertise, experience, and professionalism are important, demonstrating company values and culture—especially in difficult situations—may be even greater.

“I want to see real examples of a leader living our values: serve, inclusion, integrity, community, and family,” he said.

Hospitality skills may even outweigh a college degree

Meyer is so serious about the importance of hospitality skills in any successful business that he has said that on-the-job passion is even more important than a candidate’s college degree.

Last year, Meyer said that graduates should consider tuning out their college major in favor of what they actually want to do.

“You learned a lot; there’s no question about that, and nobody can ever take that away from you. But there may be something else inside of you that really wants to express itself,” he said.

The 67-year-old knows this works because he did it himself. After graduating from Trinity College with a degree in political science, he nearly went to law school. Instead, he listened to his gut and learned to become “his own boss”—and grew Shake Shack from a temporary hot dog cart in Madison Square Park in Manhattan into the $3.8 billion chain it is today.

“As you make big choices, while it may be tempting to do the thing others expect you to do, I challenge you to listen carefully to your gut, to follow your passion and heart, and to pursue what you really love,” he said.

This story was originally featured on Fortune.com

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