Selecteer een pagina

The spotlight on female entrepreneurs is growing. (Thank god.) And yet, it still doesn’t quite feel like it has penetrated the cultural fabric of the working world, be it in business or not. Let’s take my last twenty-four hours as a quick case study.

Yesterday over lunch, I found myself amidst a group of men discussing the intricacies of starting a business. One well-meaning gentleman turned to me and said I would be fantastic at running the human resource department. What? Why? Having read Netflix’s HR guru Patty McCord’s book, Powerful: Building A Culture Of Freedom And Responsibiltiy, I’m confident I’m not cut out for HR. I have no particular skill-set in managing talent or culture. But people often assume – wrongly, I might add – that if you’re of a friendly disposition, HR is for you.

The spotlight on female entrepreneurs is growing. (Thank god.) And yet, it still doesn’t quite feel like it has penetrated the cultural fabric of the working world, be it in business or not. Let’s take my last twenty-four hours as a quick case study.

Yesterday over lunch, I found myself amidst a group of men discussing the intricacies of starting a business. One well-meaning gentleman turned to me and said I would be fantastic at running the human resource department. What? Why? Having read Netflix’s HR guru Patty McCord’s book, Powerful: Building A Culture Of Freedom And Responsibiltiy, I’m confident I’m not cut out for HR. I have no particular skill-set in managing talent or culture. But people often assume – wrongly, I might add – that if you’re of a friendly disposition, HR is for you.

If assumptions are the basis for an assessment of someone’s strengths and weaknesses, you might never guess Smith is a hard-charger who thrives on solving problems in tough situations. It’s easy to get paralyzed by obstacles. Katlin Smith is not one of those people. From our discussion, I sensed immediately she is what Reid Hoffman calls the stereotypical “war-time CEO.” She likes to solve problems and exclaims she finds herself far more disengaged when things are going smoothly.

But to label her solely a female entrepreneur would be to do her a disservice. She is the first to steer you away from talking about her own story and instead talk about the company’s products and customers. As a health-nut myself, I have had the pleasure (and regret) of trying many health products on the market, but on the occasions I eat packaged goods, Simple Mills is one of the few brands I return to. At the urging of Smith, I tried the Almond Flour crackers and can attest it is the Cheez-It’s identical twin.

I couldn’t dismiss discussing Smith’s entrepreneurial path entirely, though. Smith is an example for many in our generation who have been interested in pursuing such a path. I wanted to dive into her story a bit to demonstrate what it feels like to move in an entrepreneur’s shoes.

I interviewed Katlin Smith on her story, what compelled her to pursue this path, and how she went about doing it successfully.

Stephanie Denning: I’m curious about your story. It’s becoming increasingly common for people to simultaneously pursue two career paths, with the popularization of the so-called “side hustle.” I get asked all the time how to best manage both. What’s your take?

Katlin Smith: I don’t think people like the answer.

Stephanie Denning: No one wants to hear that you just have to put in the work, that there’s no secret.

Katlin Smith: I started the company about five years ago. I had recently cleaned up my diet. I had had joint pain for years so I figured I’ll give it a try and see what happens. And sure enough, my joint pain went away. It struck me that our food has such a big impact on the way we feel and what we’re able to do on a daily basis. Once I realized this, I couldn’t let it go.

I was working in consulting at the time. And I remember telling my friends, I have to do something with this, I don’t know what it is, but I have to do something with it. I was on a local project and I went home one day and literally just brainstormed maybe ten business ideas about how I could help change what people were eating. The goal for me is if we can have our country eating simple, whole food ingredients, then people’s lives will be fundamentally different. The entire fabric on which you live your life is affected by our food. Anyway, so I went home, brainstormed, and one of the ideas was Simple Mills, this brand that would change what would sit in center aisles of the grocery store.

Stephanie Denning: Why did this idea stick out to you?

Katlin Smith: I was looking for something that would have the most impact and that would be most feasible. Logistically, it was a lot of night and weekend work. And quite honestly in consulting, you’re already working long hours. I would wake up and start working at 4 a.m. so I could get four hours of work in before I went to work. And then on the weekends I would come back and do more. I manufactured all our products in a commercial kitchen in the early days. I had a commercial kitchen outside of Atlanta. On Friday afternoons, I would drive in Atlanta traffic to this suburb an hour away – because I had no money for this – so I chose the cheapest commercial kitchen possible.

Stephanie Denning: How long did you maintain this pace of life?

Katlin Smith: That went on for about 9 months. It’s kind of like I had these two parallel lives that were independent of each other. I felt so much passion about starting Simple Mills and wanted to do what it takes to make it happen. I don’t think I gave much thought to questions like “where is this going” or “how is this different from what I’ve been doing in the early days,” because it was do, do, do. There wasn’t time to sit to think, Oh do I like this or do I not? Eventually, I also applied to business school, but I knew in my heart that if the company succeeded that business school wasn’t really the end goal.

For the first two years that I was full-time in the business, I was pretty anti-social, because I was working nonstop. I didn’t have time for friends. I didn’t have time to go on trips with friends. I didn’t have time to go out with them on Friday night, because if I did, I wouldn’t feel great on Saturday morning and I needed that time on Saturday morning to get even more done.

Stephanie Denning: When you decided to do this full time, were the products gaining traction?

Katlin Smith: Yeah, but I look back now and see there was so much more risk than I could see at the time even when we were gaining traction in the early days.

Stephanie Denning: I think a lot of people say that they benefited from “Beginner’s Mindset.”

Katlin Smith: You don’t have the experience telling you no. Within three months of selling our product, we became the best-selling muffin mix on Amazon. At the time my office was also my bedroom and I remember jumping up and down in my bedroom I was so excited. Those things are neat but I look back on it now, and I didn’t anticipate how much money it was going to take, even to finance working capital. My parents at some point had to reverse mortgage their house to help the business continue before we raised money.

Stephanie Denning: How much more money did it take? 2x? 10x?

Katlin Smith: I thought that $200,000 was all we would ever need to build the business because my model told me that. And it’s funny because $200,000 is exactly how much we needed to bridge us through to our first round. In the end, we raised about $5 million, although we don’t raise capital anymore. For investors, seeing that you have your parents’ money is in it shows that you’re invested. To them, it makes the investment less risky.

But in retrospect, I can look back and see a million places where things just could have gone wrong. Honestly, we got lucky. And I think there’s a lot to that statement. That it seems the harder I work the luckier I get. A lot of that luck was due to the hard work and the passion of our team, but so many things just have to go right. And you can’t see it in the beginning.

Stephanie Denning: Did you have any moments where you felt like this is it, the business is going to go bust?

Katlin Smith: We did have those moments, but I didn’t feel that way. Your mentality is to keep going no matter what. When we raised our first round, you never know whether a round is going to go through. Up until the last minute you’re negotiating with investors. At that point, my parents had already lent me $200,000, I had maxed out every credit card, I had sold my car, I had put all my $70,000 savings into the business, and working out of my apartment where I had three roommates. We probably couldn’t have gone another week. But at that point you think, who do I ask next for money? Who will lend me $10,000 to get me through this next week?

I blinded myself to the risk. I almost didn’t care because I cared so much about this idea. I wanted so much for the idea to succeed that I didn’t care if I failed, I didn’t care if I lost all my money. I could go back to work. I think if you’re not ok with the thought that you may never making a dime, you shouldn’t start the business.

Stephanie Denning: What did you tell yourself when you got discouraged?

Katlin Smith: It’s all psychology. What makes you successful is manipulating your psychology. For me, the most challenging periods are ones where things feel easy. I’m very motivated by things that are difficult and problems to solve. It’s the reason I went into consulting, I love solving problems. And so when I feel like things are easy then I start getting disengaged. And that’s a point where I have to manage my own psychology.

Stephanie Denning: What were you using as KPIs for success in the early days?

Katlin Smith: One would be store count. And two, profitability, but that wasn’t the right metric to be looking at. Overall business viability (growth, revenue) is important and making sure that you have the sufficient margins to make the business work at scale. In the food industry, typically, you need a threshold level of gross margins. Most food businesses work similarly in terms of the number of people they need, the amount of marketing dollars they need, you need to get to a certain revenue level, a certain growth level, a certain store count level. It’s all an equation and you need gross margin to balance it or the business won’t be functional at scale. within a year of starting the business, store count, revenue growth, and gross margins became the key metrics we were charting day after day.

Stephanie Denning: How do you balance managing both profitability and customer satisfaction. Do you prioritize one over the other?

Katlin Smith: The product itself has to work. It has to be something that’s a good value for the consumer. It has to deliver value relative to the market. For us that’s the ingredients that are in it, the nutrition, the price point, it means we are making enough money to recover our end of the business while also delighting our consumers and solving their problems. When it comes to choosing which products we create, we are the consumers ourselves. We understand the pain points and what our consumers are looking for. A lot of our products start with our own needs.

Stephanie Denning: What’s the relationship between pushing products out to customers and getting their feedback on what to create?

Katlin Smith: I think hearing and understanding what your customer wants is so important. And it’s easier said than done. We do collect information from our consumer from so many different methods. When you call our customer service, it calls our office and one of our team members answers the phone. Everyone in the office can hear the conversation. Everybody who joins our company answers customer service for one week. The other is social media and Amazon reviews that reveals information about what consumers want and what they value.

Stephanie Denning: Would you say that’s your competitive advantage?

Katlin Smith: I think it’s deceptively simple. We create products that our consumer wants, which sounds so simple, but it’s more than just focus groups and customer surveys. Think about Amazon, their whole thing is to offer a consumer experience that is so much better than anything else in the market. I would say we’re similar in a lot of ways. It’s easy to say, but the execution of it and what it entails on a day to day basis, that’s where it gets tricky.

Stephanie Denning: What do you do differently to prioritize the consumer?

Katlin Smith: Part of it starts with the recruiting process. It is a requirement to get a job with us – which isn’t true of every food company – to have a base understanding of holistic nutrition. We have books that are required reading. We don’t condone any one diet, but we encourage our team members to try a diet for a week, so you can empathize with many of our consumers. We have our team members answer customer service for a week. We have them do a demo in the store. We have each of our new hires go and staff a trade show. Everyone’s required to do a day on the production line. Everyone’s required to work a day in quality control. That’s in addition to formal consumer research. All to build a base understanding of the consumer.

Stephanie Denning: What companies do you think excel at building customer relationships?

Katlin Smith: Delta would be one. They’re constantly thinking about how to make things better for their consumer. Delta and Amazon both make something that’s so clearly better than the other options out there, that there’s a mile in between.

The other one is Steve Jobs. I love the way he talked about innovation. One of my favorite stories he tells is about a guy who lived down the street who had a rock tumbler. He visits the guy one day and they pick up these normal, jagged rocks off the ground. And he puts the rocks in the rock tumbler and they’re shaking and making all this noise hitting each other. And after going through this process for a day, the rocks become perfectly smooth. And Jobs compares that to product development and innovation.

There are only so many things you can make silicon do and so many things you can make glass do, but you have to recombine them in a unique way. And at the same time your team is bumping together a bit. They have conflicting interests. You’ve got manufacturing saying they’re going to have trouble manufacturing that; you’ve got finance saying that’s not meeting the margin requirements; you’ve got marketing saying I think the consumer is going to care about this particular trait. And I think those moments are really important for innovation. It’s a different culture where we say how can we recombine these ingredients to solve that problem?

Stephanie Denning: How do you think about scaling that innovation?

Katlin Smith: One way I think is making sure the power doesn’t rest with any one individual. Ensuring that humility is a value for the organization and preventing hierarchy. Anybody can solve any problem, anyone can challenge an assumption, and anyone can suggest an idea. One of the biggest changes recently has been adding a level of middle managers and being mindful that they have decision power. Leadership has to constantly push decisions down and saying this isn’t my decision this is your decision, I’m happy to provide input but I want you to be the one that decides. We also internally catalog decisions and who owns it. Very few decisions fall under my column, probably 10-15 things, such as a growth goal for the year.

Stephanie Denning: You mentioned humility as a value. What are your company values?

Katlin Smith: We have cultural tenets. I don’t want them to get too corporate and say “humility”. I can just picture the poster now that no one ever reads. One is certainly the holistic health element. Another is humility. And a third is we’re driven. We’re passionate and ambitious about what we’re doing. We like to say we’re internally collaborative and externally competitive.

Stephanie Denning: Do you have any good book recommendations?

Katlin Smith: My favorite is The Art of Possibility: Transforming Professional And Personal Life by Rosamund Zander and Benjamin Zander and my second favorite is Rising Strong: How The Ability To Reset Transforms The Way We Live, Love, Parent, And Lead by Brene Brown.