Full transcript of an interview with KIND Healthy Snacks CEO Daniel Lubetzky: Building your Business: Get your Product Right
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KIND Healthy Snacks has gone from small to big very fast. Started in 2004, the company went from making $1 million in revenues to making over $120 million in revenue in 2012. And there is no sign that growth will slow anytime soon as KIND becomes one of the snack brands leading the effort to get Americans eating healthier and more simply.
Daniel Lubetzky, the founder of Kind Healthy Snacks, is in studio with me today to talk about his company and how he was able to create such a trusted brand so fast.
So when we first spoke in 2010, you had recently partnered with Starbucks. Your yearly revenues were around $30 million. Now they are over $120 million. Talk to me about how you've you grown this company so quickly?
I think it’s an obsession with quality. I think its consumers trusting your brand, us being obsessed with maintaining that brand promise, attracting a phenomenal team that can teach me how to do things better and that together as partners everybody is an owner in our company. And even the way in which we define how we see our business: We don’t see it as a traditional business but as a movement, and [we are] really trying to listen to our customers and really make them partners in our efforts, both in the consumption but also in the social mission of ours, which is to foster kindness and inspire acts of kindness. So we are really trying to empower our team and our consumers to help us lead the way.
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Again, when we last spoke, you had 30 employees. Now it's over 180 people. Do you manage your business differently now?
Completely. I mean, I have people now that teach me how to do what I do. I have a phenomenal team from our president down to my assistant and everywhere above, beyond and between. They all are better than me at what they do, and it’s just such a pleasure to learn from the best of the best and to be able to attract an incredible team that are very committed and very energized, so it’s very different.
How do you try to change your management strategy though?
Well, when you start as a small company, you need to be a generalist and you need to do a little bit of everything and you just need to be very versatile and attract team members that are very versatile. And as you’re growing, you need to be a little bit more specialized and attract team members that are phenomenal at what they do and then empower them and stand back – and on one side make sure you are maintaining the values of integrity and humility that have brought us to where we are and quality and commitment to excellence. But on the other side, you need to stay true to your brand, so you need to protect your brand as things grow. Other than that, you need to stay out of the way and get your team to lead the way.
The healthy snacks industry is huge. It’s estimated at over $3 billion. How do you continue to be a leader in that industry?
We really love looking at categories that are really not providing ingredients you can see and pronounce, which is what [distinguishes us]…. And innovating in those categories in the same way as the nutritional bar category where we invented whole nut and fruit bars whose ingredients you can see and pronounce. Similarly, we have done that in granola, and we…have in our pipelines other product lines in different categories [which] we really want to take it to the next level and provide people with something so they don’t have to sacrifice taste or health.
So the segment is about growing your business. What would be your advice to entrepreneurs who are looking to get larger?
I think you need to separate your phases. First, you need to get it right and just obsess with getting the product right. Getting the quality of your product right, whether it’s a product or a service, and really becoming the best at what you do and obsessing over that. Don’t obsess over market growth or getting people to try it. Obsess over getting the product right. Once you have that magic sauce, that special product, then you have to switch gears and start obsessing over letting other people try it. Fortunately, my partners helped me do that because at the beginning, when you start a small company with $10,000, you are really watching every penny, as you should.
But then at a certain point you need to start investing and letting people try your product – and you need to be able to make that shift at the right time. If you go too early, people are going to be trying the product and not converting into becoming fans because you really haven’t gotten it right. But once you have got it right, you need to switch gears to make sure as many people as possible can try it.
But you said in the beginning you need to be general in starting the business. How do you also, at the same time, obsess over the product? Where do you find the balance?
So what I meant by general is when I started my company in the early days, I literally did everything. I would go to the stores myself. I would go, store by store and the next day, in my broken, beat- up car with the trunk having to be sealed with a piece of tape, deliver the product. Then I would invoice the product at night and then I would work on the product development on the weekends.
So that is an extreme example of what a generalist means, right? Hopefully you are not being that insane and you have a couple of team members to help you. But even when you have 10, 20, 30 people, you need to be able to be versatile and wear multiple hats. Our marketing team back then was one or two people. Now we have 60 or 70 people on our marketing team.
Now, you've said even from the beginning you always wanted to be different from the competitors. How were you different?
The reason KIND got started is that I was very frustrated with my own healthy snacking eating options when I was working long hours in my office or I was traveling to far-away places because I also have a company called PeaceWorks that goes to all these conflict regions to promote peace through business or when I was traveling through the U.S. to all these different cities, I would find products that felt artificial to me or too indulgent or not real food. And we created KIND to really stand by our principles which is to make products which you can see and pronounce. So when you look at the product, the transparency of the wrapper, the transparency of the ingredients is trying to be very direct
And we created KIND to really stand by our principles, which is to make products which you can see and pronounce. So when you look at the product, the transparency of the wrapper, the transparency of the ingredients is trying to be very direct and earnest and honest with our consumers and not overhype the product.
Just being very straight forward and doing the kind thing for your body, for your taste buds -- and for your world because we have a movement that doesn’t think it’s enough to do well but also thinks it’s important to do good. So what we do is try to inspire others to go do an unexpected act of kindness. The way it works is every month we have a quarter- million KIND-aholics that love KIND and love inspiring kindness. Every month we send them a mission, and if enough complete that KIND-ing mission, that might just be a small kind act, then it triggers a big, kind act from us for those who need it most. So, one month we supported Wounded Warriors by reuniting them with their families, and other month we helped homeless kids with school supplies. So every month we come up with a different mission to challenge our community to also be part of it. We all need to take that responsibility to help make this a kinder world.
Do you think your social mission has helped you in your success, though?
To some degree, I mean I started from a very socially conscious company called PeaceWorks. I learned people buy your product because it’s delicious, because it’s healthful, because it meets their lifestyle needs. And I think the social mission is very important because it gives us meaning, because it attracts a team and generates extra loyalty. But first and foremost, when we ask consumers why they are buying the products, it’s because it’s delicious and healthful. And probably the vast majority of them don’t know about our social mission but once they find out about it, hopefully it gives them an added reason to get behind it and also to share it with others--and to join us in what we are trying to reinvent, which is capitalism that uses the forces of the market, which are the most powerful forces, to also do good by your own community.
Yes, they like you even more.... Other advice for entrepreneurs? Would you then tell them to make sure to differentiate themselves from the competitors, or do you think that was situational with you?
I think the most important thing is for you to try to find what truly gives you meaning, that’s true to yourself and to stick with it. The most important thing is (someone else came up with this): a brand is a promise, and a great brand is a promise well kept. And I have really learned to stick by this. You don’t need to be everything to everyone. You just need to be what you feel you are and make sure that you maintain that consistently. So for us, what was attractive to me was coming up with ingredients you can see and pronounce. For somebody else, they will have to discover what’s important to them and stay consistent and honor that so your consumers know exactly what they are getting and not try to satisfy everyone with every fad and trend.
So the last time we spoke you were making $30 million. Now it's $125 million. In three years, what will [your company] be making?
We obsess about doing the right thing and growing, and I’m sure the numbers follow, that’s how it’s happened. I could not tell you where we will be in two or three years, but what I can tell you is that we are going to really work on maintaining our values and working really hard on trying to stay down to earth and maintaining our culture because when you grow at this pace, you need to make sure every one of your team members... we give stock options to everybody… we want them to be owners, we want them to feel that ownership and as we grow bigger, that $1 transaction, that $100 account might seem less important, but it’s all the more important that you define yourself by that particular moment, by that interaction and it’s very important not to lose sight of that.
Every employee has stock options?
Yes, after they stay in the company one to three months, everyone gets granted stock options, and they vest over three to four years.
So what is the future for KIND? Are you going to continue to focus on the bars and the cereal? Are you going to expand into different areas of food?
Our vision is that KIND is a lifestyle brand that could even play outside of food but right now we are going to be focused on food and we really want to continue to be the fastest-growing product line in our categories, which is what we are right now. We want to honor our core and not expand too fast, which is what I did in my earlier companies, and [I] have learned not to do that. But we do have a commitment to grow in other categories as long as we are not betraying the quality and standards. So we had an idea for a product that we were going to do a year ago. We couldn’t make it be the best in the category we were thinking, so we decided to get out, and it takes so much discipline because you work long to launch something new but you have to look in the mirror and ask if this is going to be the best in the category and if not, let someone else lead that category. We are only going to enter categories where we can deliver the best product.
Well, congratulations on all the success. It’s great to see you, Daniel, thank you so much for coming in.
Thank you so much, Christina