[00:00:05] Kodiak Cakes: Hey, Mike, can I take a second to clear up a common misconception? Sure, but I think I know what you're gonna say. Nosh Live is not a trade show. Right, and to be clear, we love trade shows. They're high-energy events and often are an instrumental tool for your sales team. But your business is more than just pitching and interacting with retailers and distributors. Most brands come to Nosh Live in grow my business mode and take the time to learn what's next. You'll get to meet with experts from designers to packaging suppliers to co-baggers to ingredients providers and investors. Everyone that a CEO needs to partner with is there.
[00:00:35] For Kodiak: Yeah, and if you're not in this room, you're passing by a lot of opportunities that other brands will be taking advantage of.
[00:00:41] Kodiak Cakes: Early registration is available now through mid-April. Tickets and more information can be found at noshlive.com. And now, Taste Radio.
[00:01:01] Ray Latif: Hey everyone, I'm Ray Latif, and you're listening to the Top Podcast for the food and beverage industry, Taste Radio. This is episode 154, which features an interview with Joel Clark, the CEO For Kodiak Cakes, who chronicles the development of the fast-growing pancake mix brand, which last year pulled in over $100 million in revenue. Tune in on Friday, March 22nd for episode 26 of our Taste Radio Insider Podcast, which includes an interview with Jonathan Eppers, the founder and CEO of CBD-infused beverage brand Vibes. Just a reminder to our listeners, if you like what you hear, please share the podcast with friends and colleagues. Of course, we'd love it if you could rate Taste Radio and Taste Radio Insider on iTunes. There are at least a dozen reasons that Kodiak Cakes shouldn't be where it is today. Actually, that number is probably in the hundreds. CEO Joel Clark has shepherded the pancake mix brand, which is based on a family recipe since 1997, and for years operated it as a part-time job. Joel will readily admit that running a brand as a side business caused more than a few headaches, mistakes, and missed opportunities. He tried more than a few times to leave Kodiak Cakes, only to be pulled back in for one reason or another. In the end, tenacity paid off and what began as a tiny business selling mixes to a handful of mom and pop shops, has become the top selling category brand at Target. In an interview recorded at Natural Products Expo West 2019, Joel spoke about his journey and how perseverance, innovation, and swimming with the sharks played into the evolution For Kodiak Cakes, which crossed $100 million in sales in 2018. Hey, folks, it's Ray with Taste Radio. I'm at Natural Products Expo West 2019. I'm in the belly of the beast downstairs in Hall E. In front of me is Joel Clark, the CEO For Kodiak Cakes. Joel, thanks so much for being with me. Oh, it's great to be here. Thanks for having me. Thanks for not letting me get run over by this pallet mover that we're sitting next to.
[00:02:58] Joel Clark: We don't want to get hit by that.
[00:02:59] Ray Latif: We're literally on the floor here. Well, we're sitting on, well, stumps that you guys took from your booth.
[00:03:05] Joel Clark: Tree stumps from our booth, our campsite.
[00:03:08] Ray Latif: It's a really cool booth. I mean, there's a lot of wood involved. It looks like a campsite, actually. It totally does. Yeah. Yeah. How many expos is this for you?
[00:03:15] Joel Clark: So we did this show about three years back in the late 2000s, it's like 2009, 10, 11. Then we didn't come back for probably, I don't know, five years or so, and then we came back three years ago or so. So, we kind of took a break from the show and then just kind of went and focused on just one-on-one customer meetings, and that was really good knowing that eventually we'll come back to the show and kind of hit it hard, and that's exactly what we've done. So, in the last three years ago, I guess we came back after being gone a while. It's a big booth.
[00:03:46] Ray Latif: You've got a ton of employees working the booth. You got a ton of products. There's just people streaming in and out, eating pancakes, tasting your products. It's got to be a trip. I mean, how long have you been doing this?
[00:03:59] Joel Clark: So, me personally, I took the company over in 1997. Okay. That was a while ago. Well, we'll do the math here. 22 years, yes? Yeah. Okay. I'm 22 years in. So I was a college student when I took it over. I was 23. Do the math, you can figure out my age. But anyway, yeah. So it's a total trip though to see it here, to see us in this type of booth with this many employees. It's actually incredible because there were so many years of just like wondering, are we going to make it? Yeah. So we went through a lot of years of that. So, man, it really is. It's crazy to actually be at this point. So, I really feel lucky. And may I ask you what the revenue of the company is at this point? So, we just finished 2018. We broke $100 million bucks finally. Congratulations. It's barely over $100 million. Hey, anything over $100 million is crazy. So, that was obviously a big milestone for us to hit that. Totally. Super excited about that. Very cool. What are projections for 2019? So we're hoping to get to around 170. Wow. So we still have some big, big growth plans, big goals ahead. So it's going to be a hard year, busy year. Nearly double your business. Yeah. Yeah. Wow.
[00:05:05] Ray Latif: Let's talk about the foundation For Kodiak Cakes, how this brand got started. Your mom was the person who created the original recipe For Kodiak Cakes. That's right. Yep. How'd that happen?
[00:05:15] Joel Clark: So yeah, back in the 80s when I was growing up and my mom was really a natural foods pioneer, I always say, like she was kind of ahead of her time, really. grinding your own wheat and growing your own sprouts, making green smoothies, you know. You were the popular kid in school, I can tell. Oh, dude, yeah. When I showed up to school with sprouts on my sandwich one day, my friend goes, dude, why do you have grass on your sandwich, man? You know? Oh, man. You don't want to hear that in fourth grade, you know what I'm saying? But later, you know, looking back, it was like the best thing that my mom did was teach us about healthy eating. But she had this pancake recipe that was awesome. And she really had a dream about selling it. You know, she thought it'd be cool to make a product and sell it, and thinking there was a need for more healthy products. So when I was eight, she made homemade pancake mixes out of brown lunch stacks. And then I went around the neighborhood and sold these things out of my red wagon. And so that was like the early foundation For Kodiak Cakes. And then in the mid-90s, my older brother, so we kind of let it die out. We didn't keep selling them when I was eight. That was just for a short time. And then in the mid-90s, my older brother, John, wanted to start a business. And he was talking to my mom one day, and he's like, hey, I want to start a business. My mom's like, hey, why don't you do something with the pancake recipe? Make a product and go sell it. So he loved the idea, so he's the one who created the first product, Pancake and Waffle Mix. Flapjack and Waffle Mix, I should say. Created the brand Kodiak Cakes and went out and started selling it. Asked me to help him out. Where'd the name come from? So it really was kind of a culmination of his vision for the brand, is what it was. So it was him, he wanted something natural, wholesome, rustic, you know, like kind of Western frontiers-y, mountain-y. Those are all things that he loves, you know, like mountains and outdoors and stuff. So after he kind of came up with what he wanted the brand to be about, then he and my other brother were brainstorming one day, and my other brother Tim said, hey, John, why don't you call it Bear Cakes? John's like, hey, I like that idea. So that just kind of evolved into Kodiak Cakes. You know, that stuck. He loved the name, and it sounded cool, and we went with that.
[00:07:22] Ray Latif: The big reason behind the early success For Kodiak Cakes was that the products actually tasted good, right? Yeah. So it was like, at least your mom was way ahead of her time in a lot of ways. What have you learned since that point about the importance of taste when it comes to health foods or better for you foods?
[00:07:39] Joel Clark: Yeah, that's a good question. I mean, it really does need to taste good. because people really only give you one shot, right? And so when my brother John was creating the product, his goal was he wanted to create something that was healthy, tasted good, and was easy to make. So taste, health, and nutrition all in one. And he felt like, man, if he could get that, then he really had something. And especially at the time, there were a few other whole grain pancake mixes out there, but the truth is they didn't taste good. and they were hard to make. You had to add eggs and milk and oil to make them. So he thought he wanted to create add water only. really good taste, and healthy, and he did that. So we've had people, back in the early days when I started running this thing, I took the company over in 97, like I said, I was a college student, and John Craven to me one day, he's like, hey Joel, I'm done with this thing, and I'm gonna shut it down, if you want it, you can take it over. So I took the company over, and I started running it, bootstrapping it along for about seven years, part-time, so that was really hard. But I think one of the things that kept me in there was, We'd get these letters from customers, and they'd write in and then email in and say, hey, I love this pancake mix. Best I've ever had. Oh, by the way, I love that it's so healthy. And so I just got motivated by that. It kept me passionate and it kind of kept me in there. I kept thinking, man, I can't give up on this thing. I've got to keep it going.
[00:08:59] Ray Latif: It's interesting because health came second for most of your customers.
[00:09:02] Joel Clark: Yeah, it was. Yeah.
[00:09:03] Ray Latif: So it's taste good first. Yeah. Oh, and it's great that it's healthy.
[00:09:06] Joel Clark: Yeah. So taste had to be number one. And then you said, you know, what have we learned about that over the years? It's like that is always going to have to be important. It's got to taste good. But you can, I mean, I think if you work on it long enough, you can make products taste really good that are healthy. And, you know, the industry is getting better and better at that.
[00:09:24] Ray Latif: Yeah. For seven years, this was a side business. Some people might today call it a side hustle. Right. What'd you learn about entrepreneurship during that time? I mean, it sounds like from every entrepreneur that I've talked to, investors as well, it's really hard to run a business if it's your side project or a part-time job.
[00:09:40] Joel Clark: It was incredibly hard. I think the wake-up call for me was, so when John first came to me, I'm 23 years old, I always wanted to be an entrepreneur. I always did entrepreneurial things. I washed windows for people, I bought and sold cars. I was pretty scrappy trying to make extra money and stuff. So I was pretty stoked about this idea to take this little pancake company on. But what I learned pretty quickly was that it was going to be pretty hard. And I thought, man, I think I can get this thing going pretty quick. Well, that's not what happened. I mean, it ended up taking a long time, and it was hard to break in and get with one product and no money behind it. And so I learned that entrepreneurship was really hard, and that it was going to require me to just figure out how to hang in there and persevere through the obstacles. And so that was hard, and it was also humbling, to be honest. It really was. It was like I learned that, man, I'm not all that. I'm just going to have to keep going and hope I can drive through and get people to help as I go. And so I think that experience really helped me to learn some humility through the process and that there's no entitlement. You just got to roll up your sleeves and get after it to make it work.
[00:10:49] Ray Latif: So what was the inflection point? When did you realize you had to be all in?
[00:10:53] Joel Clark: Yeah, so what happened was I ran this thing on the side for seven years and eventually I came to the realization like, man, I have to go full time with this thing or I gotta stop. I gotta quit, shut it down. So after I graduated from school, I took a job for this consulting firm and I worked there for almost two years. But it was hard because I had one foot in there and one foot out.
[00:11:12] Ray Latif: And you were basically just selling to sort of mom and pop shops?
[00:11:14] Joel Clark: Yeah, doing some mom and pop.
[00:11:16] Ray Latif: Small retailers?
[00:11:16] Joel Clark: Yep, we had a few grocery stores in the Salt Lake area. And so I was kind of working at night trying to get into grocery stores. I realized I've got to get into mass market where I'm never going to make money on these little mom and poppers, you know, that are UPS in a case here and there. I got Safeway stores to carry the product in nationally. What year was that? That was in 2004. So I got this commitment. We had one SKU, by the way. So Safeway comes to me and they're like, all right, we're going to bring it on. And I'm like, awesome. You didn't pitch them. They pitched you? No, I had sent samples out. But the thing is, I never went to a meeting. It was so funny. Like, I tried to get a meeting. It's like an entrepreneur's dream. Yeah. I kept trying. I'm like, and this lady, her name was Donna Sullivan. I'm like, Donna, can I come out and meet with you? She's like, no, just send me samples. So she looked at the samples. I called her back. She's like, yeah, we're going to bring it on. And I'm like, well, do you want me to come out and meet with you? She's like, no, we're good. We're past that. I'm just going to bring it on. Let's go. So I'm like, crap, OK, great. I thought that would give me enough to quit my job and jump in. And that's exactly what I did. I mean, it was tight. I was barely making money, but it gave me enough to just dive in full time and start getting For Kodiak kicks in 2004. It sounds like you're kind of hedging your bets. Did you have a family at the time as well? Yeah, I did. I mean, even at that time, I had two kids, and that was really hard. And I think what I did was, I did kind of hedge my bets a little bit. I think that was one of the reasons I went and got a graduate degree and did an MBA, because I just thought, look, I want to do this. I want to be an entrepreneur. But what if it doesn't work? What am I going to do? And I think what's really hard and something that I underappreciated at the time was, as I jumped into this Kodiak Cakes to do full-time, well, the opportunity cost was career growth in another realm, like maybe working for a company where you do get developed and the career path might be a little bit more laid out for you. That was really hard because I did sort of look at my friends who were maybe doing that, and they were making progress. And I look at myself going, crap, what am I doing, man? Maybe I'm just running this little pancake thing that may never pan out. And so, I mean, although I believed in it, I always, in the back of my mind, was like, OK, what's my backup plan? What am I going to do? if this thing doesn't pan out. I had worked in consulting for enough time where I could go back to it. I didn't work there long enough to be like a real pro and that I could really make great money there, but I had worked there long enough that I could go back in and maybe start from the bottom and get back into that. So that did feel like a safety net to me. So I felt like, man, if this doesn't work, I do have that option. But over time, that option started to diminish as I got older and got further away from my early, you know, entry-level career days. So that got a little tougher. So I think that's something that entrepreneurs don't think a lot about, is like, that gets a little scary at times.
[00:13:57] Ray Latif: You said you used to buy and sell cars. You're flipping cars also as a side hustle. What was that like?
[00:14:04] Joel Clark: I've never sold a car, so I don't know. So I started doing that in college. I always had a love for cars, and I still do. I just love old cars, like old four-wheel drives. Land Rovers, Land Cruisers. So in college, it was great because I always felt like I could go find a car, if I needed some money, could go find an old truck, fix it up a little bit, sell it, make a thousand bucks. So this was like a little bit of a safety net too. And I think it gave my wife a little bit of comfort because she's like, all right, look, I know we're not making much money out of this little pancake thing, but Yeah, I know that you can go flip a car here and there and make a few extra grand when we really need it. And so that was this great little side hustle. Like you said, a side hustle for a side hustle. I love that. This is exactly what it was. So I'd go out and flip a car here and there. But it was hard because I was trying to focus on the pancake thing. Yet, I needed more money. So it was like, I'd get distracted sometimes. Like, I need to go and, you know, buy and sell a car and make some extra money. So it was hard, but it really helped keep me in Kodiak Cakes, because I had this way to make some extra cash.
[00:15:07] Shark Tank: Why feel good when you can feel oh so good? Makers of ridiculously good superfoods, Oh So Good, just opened its first cafe in West Hollywood. Try their bone broth soups and bone broth waffles to see what all the rage is about. And let me tell you, they really are oh so good. Visit ohsogoodbones.com to learn more.
[00:15:28] Ray Latif: You mentioned your wife. It feels like it's so important to have your family behind you when you're an entrepreneur and you're doing things that are very scary, frustrating, will make you angry. How'd you get your family on board?
[00:15:41] Joel Clark: Well, yeah, I feel very lucky on that front because that is really hard. I mean, there are a lot of people that would just be like, just go get a job, man. You got to stop beating this dead horse or just you don't want to find yourself 30 years into your career and you've been like, hey, honey, it's just around the corner. I used to say that to her all the time. I joke with her. I'd be like, hey, honey, it's just around the corner. Give me another six months. But the reality was she was really, really supportive. And she somehow just like kind of kept believing in it, kept believing it could work, kept believing in me and supported it. Because I think had she at one time ever, if she would have come to me and said, Joel, you got to bail out on this thing. Just go get a job. We need more security. I would have done that. I mean, I would have dropped it all in a heartbeat because she would have been right. I mean, I would have said, I would have agreed with her. But she never did, and she kept kind of believing in me, and so I just kept going, you know? And little by little, so what I would do is I would set these little six-month goals, and I'd say, all right, look, if these things don't happen in the next six months, I gotta quit. I gotta bail, you know? I can't just, you gotta have a plan, you know? You don't wanna chase something that really isn't gonna work, so you have to be careful about that. The tension is you've gotta also give it enough time to work. That's what's really hard, because if you don't, give it enough time, then you might bail out too early when it maybe could have worked. So I think that's a tough call and all entrepreneurs struggle with that. But little things would happen and so I'd stay in and we'd keep going. What did some of those goals look like?
[00:17:07] Ray Latif: Was it just getting more retailers? Was it innovating? What were some of those goals? What do they look like?
[00:17:13] Joel Clark: Early on, it really was distribution. So, more and more distribution retailers and that was the name of the game because we had one product. I could look back and go, well, I should have innovated with more products because having three or four products on the skews on the shelf could have helped us have a brand block and maybe we could have grown it quicker. But, you know, I didn't do that. I just had the one product, didn't have any money, so I kept focusing on more and more sales and more and more distribution. And so those things would happen little by little, and I would kind of hang in there. I'd be like, okay, we got this, I'm gonna keep going.
[00:17:44] Ray Latif: Let's go back to the Safeway deal, because that was a huge distribution win for you.
[00:17:47] Joel Clark: How many stores were you in?
[00:17:48] Ray Latif: There's like 1,200 stores. So with 1,200 stores that you had to put product on shelf for, how did you fill those orders, especially when you weren't out raising capital? I mean, I'm sure that was a very capital intensive thing to do to create all that product.
[00:18:03] Joel Clark: We got lucky. There was one thing that we had going for us back then, which was we had a co-packer or contract manufacturer that would scale with us. So what they did is they owned the inventory, And so when I told them, hey, we've got this order coming up for this big distribution, they just ordered the product and built the inventory. So that was like incredible. So I think, you know, that was something we didn't realize earlier on is that, hey, there are people out there, they'll own the inventory for you. That can happen. They can help you scale and almost provide your capital to scale your inventory costs. So what are the details of that contract look like? Yeah, this is funny, Ray, because we didn't even have a contract.
[00:18:46] Ray Latif: Man, handshakes, you know what?
[00:18:50] Joel Clark: If you can do a handshake agreement and make it work, God bless, right? Exactly. So, you know, the details of the handshake, right? So, it's like, it was really more like, hey, yeah, we'll own your inventory for you and help you scale and grow. So, they did that for quite a long time.
[00:19:05] Ray Latif: So, owning the inventory, they basically produce the product, they owned it. When you sold it, they got paid.
[00:19:12] Joel Clark: That's exactly right. Okay. It was like as we sold it, they'd bill us. So that was like the most incredible thing that happened to us. It was great. But there, you know, there was a time though where we left that manufacturer for a little while and went to a different manufacturer who was where, you know, where we had to own the inventory. And that got really hard. And there was a time where we got into Target stores nationwide. with two SKUs, and we did not have the money to build that order. And so this was in like 2012, and we had this big orders, like a two to $250,000 order. And I really didn't have the capital to do it. And so I went to my dad, and my dad is not like this rich guy. I mean, he was retired, and he had a home equity line on his house. And I was like really scared, I'm like, but I need capital. So I went to my dad, I'm like, hey dad, Can you sport us 200 grand? I was really scared to do this because here's my dad, he's in his retirement years. Doesn't have a lot of extra money, but he had his house paid for in a home equity line. He lent us the money to cover the order. We paid him back within a few months, but that was kind of hard. That was one of those times where we needed some money.
[00:20:15] Ray Latif: Going back to your co-pack, your co-manufacturer owning the product, I had a conversation with Pete Lesko who's the founder of a snack brand called Food Should Taste Good, and he talked a lot about the importance of cash flow. And he had an arrangement where his co-packer would be paid within about 30 days, yet his retailers would pay him within 10 days. So he always had positive cash flow. Now, I don't know if that was the same arrangement that you had, was it?
[00:20:42] Joel Clark: Yeah. It's so funny you mentioned that. It's exactly what we did. It's funny to hear that he was getting 10 days. Like, man, we got 14 days. And even still, that's good. And we were stoked about that. So somebody beat us on that. That's awesome to hear that.
[00:20:55] Ray Latif: Well, I think part of it was that they kept 2% of the sales.
[00:20:59] Joel Clark: OK, yeah, 2%, 10%. Yeah. So what we were able to get for quite a long time was just net 14. No discount. And so it was incredible. People would push back, and the bigger we go, the harder it is to really do that. But when you're small, you can kind of do that. You kind of push back and say, look, I really need tighter terms. So we were getting paid in 14 days and paying our co-man in either 15 or 45 days. And so that really helped our cash flow big time.
[00:21:24] Ray Latif: So Joel, 2004, big year for the company. You and your dad were working together. I think you said four years. Yeah, that's right.
[00:21:32] Joel Clark: What happened after that? Okay, so after those four years, we started to make some really great momentum, or get some really great momentum. We built the company from about $150,000 in total revenue to about $800,000 in total revenue. So, you know, over those four years. And so, $800,000 is still a really small business. but we had taken it from even smaller. At the end of 2007, this became a pretty hard time because wheat prices went through the roof, they were at all-time highs, diesel fuel prices had gone nuts, and so our margins were just getting squeezed and I just was not making enough money. There was no capital out there that was going to jump into an $800,000 business at the time. It might be easier now to find that, but then it really wasn't that easy. I was kind of at a crossroads, and I'm like, OK, what am I going to do? So I actually left Kodiak Cakes. January of 2008, I took a job. Left again. I left again. Yeah. And so what I did is I didn't sell Kodiak Cakes, the whole company, but I found another company, and I licensed the whole thing over to them. So what they did is they kind of took it over. They were selling the product and then paying me a royalty while I was able to go take this job. But what happened was the company started to not do as well, and we lost some sales during that time. And I watched this, and I'm like, man, I've already spent 11 years on this myself. I can't watch this thing die. And so I quit my job again. So this is now the third time I've done this. This is August of 2008. I quit my job, I jumped back into Kodiak Cakes, and I was able to take the brand back from these guys. And I basically said to myself, I'm like, look, I'm going to stay in Kodiak Cakes, and I'm going to see it through to the end. whether it makes it or whether it dies, I don't care. And that was hard because I was 34 and I'm walking away from, you know, yet again, kind of some really prime career building years and walking into like almost nothing. So I had like barely any income. I had to rebuild my income and try to figure out how to salvage this little pancake business. It was in such bad shape that you weren't seeing any income? No, I was able to start paying myself again, but it was really, really tight. I mean, I wasn't paying myself very much. Were there any other employees with the company at that time? No, it was just me. So by then, my dad needed to retire. So that's when I found Cameron Smith, and he's our president now. I found him in early 2009, and he became a co-founder to me. So he was just getting out of school at the University of Utah, and I needed help, and I couldn't afford somebody with a ton of experience. I'm like, man, I really just need to find somebody young, with a ton of drive, a ton of passion who can really just come in here and help me build this little business. Did he go to business school? Yeah, he had done an undergrad degree at University of Utah in business management. super passionate guy, and my hope was that he could come in and really become a partner to me. I didn't know because we didn't really work together and I didn't know him before, but that's exactly what happened. I mean, I got really lucky and we worked together incredibly well. He's just like incredibly passionate, incredibly proactive, just a really driven guy. We worked together really well. I mean, he brought new energy to me which I needed and new energy to the brand. and we started to pick up some great momentum For Kodiak Cakes.
[00:24:51] Ray Latif: Did he come on as like an intern or a sales professional, sales executive? Like what was his first job?
[00:24:57] Joel Clark: I put an ad up at the University of Utah in career services department there, and I think I called it a marketing manager or something like that. So, my initial goal was to have him come in and start doing marketing, like start doing, help us rebuild our website, and reach out to bloggers, and try to help with PR efforts and stuff like that. And after he got in, he's like, hey, do you think I could help with cells? I really like cells. And so I gave him a couple, I gave him some like small accounts, like gift shop type things to kind of get his feet wet, start making calls. And like within a week, he's like, hey Joel, how about some grocery stuff? He's like, I don't think I'm gonna get anywhere with this stuff. And he just wanted more, right? He's like, I think I can do it. You know, really believed in himself. And so I started putting him on grocery and it worked. I mean, he started doing really well. So his first business trip was like maybe, I don't know, a few months later after I started putting him on sales, he landed an appointment at Target. And I couldn't go. And I'm like, well, you're just going to have to go out by yourself. He and I had gone out on a few trips together, but he had never gone on his own. So I'm like, dude, just go for it. You can handle it. So he went out to Target. And he did awesome. He landed a deal. I mean, he told me, he's like, I was nervous. I went in there, and I was cooking pancakes for this lady. She probably saw that I was shaking a little bit. But she told him, she's like, hey, I love this stuff. Let's give it a shot. So it worked. And then Target, over time, has become a really, really great partner for us.
[00:26:18] Ray Latif: So the loan that your dad gave you was to fuel your growth in Target. That's exactly right, yeah. Wow. It sounds like your experience with Cameron might have paved the way for how you hire today, right? I mean, talk about an ambitious, driven person with little experience, but look where he is and look where the brand is today.
[00:26:39] Joel Clark: Yeah. We've empowered people. I think what we've done, we have hired a lot of really young people. and empowered them. And I've just said, hey, here, we believe in you, you can do this. And I think what we've learned is what really matters is people that are passionate, that are driven, that are proactive, that, you know, they can figure stuff out. And that has actually become a big part of our culture, you know, is just empowering people and believing in people and giving them the tools to succeed. And I think that's just how you build an innovative company across the board because, you know, innovation is not just What new products are you coming out with? But it really needs to be part of your overall culture and how are you innovating your job or your role? And so innovation really becomes strategy and then everybody in the company owns strategy. You know, an entrepreneurial company, you're blazing trail in so many areas, right? That has to become part of your culture because if it's just top-down leadership, are the only ones blazing trail and figuring everything out and then telling everybody what to do, that just isn't sustainable. And I think, and it's not that fun for people, you know, for the right people. For high-performing people, they wanna get in and be part of that creative process, that creating their work and blazing trail, you know, kind of being a pioneer about what they do. And so, yeah, it's hard and yeah, we've made mistakes here and there, but I mean, I think we've done a really good job and our team is really incredible. And that has just become part of our fabric, is empowering, innovating, and then helping people think above their role.
[00:28:16] For Kodiak: The industry is listening to Taste Radio. Advertising with BevNET gives you control over the message coming through our platform. Visit mediakit.BevNET.com to learn more.
[00:28:29] Ray Latif: The company's growing. You're hiring some of the right people. The big turning point, though, it seems, was when you introduced the protein line. Where did you come up with that idea? Why was it the right time for that type of product? And, you know, what has it done for the company since?
[00:28:48] Joel Clark: Yeah, we really did hit the timing right on protein. And so the way that happened was back in 2011, 12, you know, 2011, 12, I started putting protein into my pancakes. So I would take our original, you know, Frontier flapjack and waffle mix, and I started adding protein to it. just at home. And I remember thinking, man, they're really good. Like, it doesn't affect the texture. You can make it awesome, you know? And so one day I went to work, and I was talking to Cameron about this. And I'm like, do you think we could make this, like, mainstream? And so we started thinking about it, and Cameron started, like, researching this and watching Google search trends and seeing people start to search for protein pancakes more and more, and just general protein was going up on searches. And so we trademarked the name Power Cakes in 2012. But we didn't launch for another couple of years, because we just weren't sure if it was mainstream yet. So we wanted more info. We wanted to study it more and watch it more. So finally, at the end of 2013, one of our Costco buyers, his name's Marty. He actually works for us now. He's awesome. So Marty comes to us and goes, hey, I'm looking for a protein pancake mix. So he had been watching these search trends too, and the protein trends.
[00:29:57] Ray Latif: And there weren't other brands on the market with protein pancakes at the time?
[00:30:01] Joel Clark: There were, like, I remember as we started to look into this, we found, like, two niche brands, two other niche brands that had made a protein pancake mix. And there was one at GNC, but nobody had gone mainstream with it yet. And we're like, we could go mainstream with this, you know? So Marty said, hey, I think I could sell a protein pancake mix at Costco. What do you guys think? And we're like, well, yeah. In fact, we've already formulated one. We've already got the name Power Cakes. We just haven't launched it yet. So we worked with Marty to kind of get this thing ready to go. So in January 2014, we launched Power Cakes at Costco, and it just takes off. We did really well in those buildings, like right out of the gate. were your Safeway and Target buyers upset that you launched in Costco? You know what? We got lucky because nobody said anything to us about it. And we had talked to a few people, and some of the other buyers were like, yeah, I don't know if this is going to work yet. So actually, no backlash on that. So we kind of got lucky. And then what happened was in April of 2014, we went on Shark Tank. That's when that episode aired. It was April 2014. And that just became an incredible exposure boost For Kodiak Cakes. People heard about it, people started going to the store and buying Kodiak Cakes. And although we didn't do a deal on the show, we still got the publicity, which was awesome. So people went to Target, and it started to blow up.
[00:31:22] Ray Latif: So it's funny, because when we were talking before, you said that before you went on Shark Tank, you weren't necessarily looking for money, right?
[00:31:29] Joel Clark: No, but we had been thinking about When do we raise money? We weren't actively looking, but we knew at some point we needed to raise money. Part of that was, man, my house was still on the line. Like, my house was collateral for the line of credit. And I started to really feel like I got to share the risk. I got to pull my house off this. I need help. And so we finally raised capital in the summer of 2016, and it was a really good thing for us.
[00:31:57] Ray Latif: Once again, I'm going to try to do some math here. 2014, you were right about 40 at that point?
[00:32:03] Joel Clark: In revenue?
[00:32:04] Ray Latif: No, at your age.
[00:32:05] Joel Clark: Oh, in age, yeah. So, no, yeah, I was just about 40, right about 40, 2014.
[00:32:11] Ray Latif: I can imagine that might be kind of scary being like, look, I can't have my house on the lawn anymore. I'm 40 years old. Yeah, I mean, dude, you got to stop doing that at some point, right? Getting back to Shark Tank, I mean, that's just a dream for so many entrepreneurs. Again, you mentioned you didn't take the money. What was it like, you know, swimming with the sharks? Were they asking too much for you to do a deal? And, you know, how did you stand your ground in terms of what you wanted?
[00:32:35] Joel Clark: So we went on the show and we were asking for $500,000 for 10% of the business. So, we were valuing the company at $5 million, okay? And that year, we were projecting to do around $5 million in revenue. We didn't quite hit that. I think we hit like three and a half million in 2014. So, we kind of felt like, hey, you know, a 1X, roughly 1X revenue valuation seemed reasonable. So, Kevin offered us the $500,000, but he wanted half the company. And we're like, dude, we're not going to give you half. So, he's valuing it at a million dollars. And we're like, no way, that's just, we're not even close. And then Robert wanted to do it, he wanted to give us the $500,000 for 35% of the company. So again, giving us a slightly better valuation, but we just weren't close. And so when those offers came in, it was funny, in my mind, I started checking out. I'm like, okay, this kind of makes it easy. Let's get out of here. We won't do a deal, but hopefully we can still get the show to air and get some publicity out of it. And so I was like, ready to walk off. I'm like, hey, thanks, guys. It's not going to work. And Cameron turns to me, and they edited this out. But he turns to me and he goes, hey, Joel, should we counter? I'm like, oh, yeah, yeah, we should probably do that. Yeah, I got to play this out a little bit, you know? And so, you know, I countered. I'm like, well, how about 15%? And, you know, we just weren't even close, you know. They said no, and we said, all right, well, thanks, and we walked off.
[00:33:57] Ray Latif: What was the financial impact from 2014 to 2015?
[00:34:02] Joel Clark: Yeah, it worked out really well because Power Cakes goes into Target and it, you know, I said it rose to the top and it started to do really well. So that year, 2014, we did I told you we did $3.5 million. That was in 2013. That's the year we actually filmed the show. So 2014, we did $6.7 million. We have more than doubled the business from 2014 to 2013. And so that just kind of put us on this growth trend, and we had this momentum that was incredible. So in 2015, we went all the way up to $16.7 million. And then in 2017, we went up to $34.5 million. That was 2016, sorry. It went $34.5 million, then it went $54.5 million, and then $100 million last year.
[00:34:51] Ray Latif: Was distribution behind the growth? Was it new products? What was really driving... you know, the revenues of the company. What was doubling the revenues of the company year to year?
[00:35:01] Joel Clark: It was a lot of both. So, we were getting a lot of distribution, but I think what really helped us is all those years where we didn't really have a lot of momentum, we were getting distribution. So, we did have a pretty good distribution platform going into 2014. So, we were probably in, I don't know, 5,000 stores, you know. with a few products. But then we really started to innovate. We started to add products. And so I think that that's what really helped us too. And that's what's helped us to maintain the growth is innovation behind it. And so we started to get into more products. We got into baking mixes. We launched Minute Muffins. That's a microwavable muffin in a cup. So we really created that category, you know, back in 2012, 2013. And those started to really pick up traction in the last few years. And then we went into frozen waffles in 2017. that's become a big business for us. One thing that we haven't really done yet, we haven't really gone after super busy, high growth categories. We just haven't really gone after that yet. And the reason why is there's a lot of noise in those categories. A lot of people are going after those categories. And for us, we felt like it might be harder to stand out of the crowd. So we've really gone after quieter center store categories that need innovation. And I think if you can build center store, You know, you really got something.
[00:36:19] Ray Latif: So after Shark Tank, when you did decide to raise money, you work with a firm called Sunrise Strategic Partners. How did you vet them and how did you decide that they were the right partner for the company versus another venture capital firm?
[00:36:31] Joel Clark: So we spent about a year interviewing different private equity groups, and we went into it pretty slowly, which I think was a good thing. I mean, I think the good thing was we didn't have to have capital. We knew that it would help us, though. But that allowed us to go about it methodically and a little slower so we could talk to people and look for fit. So I think our approach really was about fit. It wasn't about deal terms. And I think that's what I would say was helpful. Because deal terms, you'll get there. I think it's really more about finding the right fit because you're working with people. It's like a partner now, you know? And you've got to find someone that you can really work with. A co-owner. Co-owners, yeah. I mean, you can't really undo that very easily, right? When we started interviewing people, we just, after we'd interviewed probably 12 different people before we found Sunrise, and we had talked to many, and there's a lot of great firms out there, but when we met Sunrise, man, they just believed in us, they believed in our brand, and I think their approach just resonated with us, because they were, you know, really a growth equity firm. You know, I didn't realize this, but, you know, even in private equity, you've got value investors and growth investors. And I think when I met them, I realized, man, these guys are really aggressive. They want to really fuel this business up and help us. And they brought vision to us for where we could take Kodiak Cakes well beyond where we thought we could take Kodiak Cakes. And so, you know, it was a great fit from the beginning and it's been a great partnership since.
[00:37:56] Ray Latif: So I often ask investors, what are some of the things that an entrepreneur should not say in a pitch meeting? But what is something that investors should not say to an entrepreneur?
[00:38:08] Joel Clark: That's a good question. I think one thing that entrepreneurs are scared of a little bit is, all right, is this investment firm going to keep me or are they going to replace me? Right? And I think that's scary. And I remember thinking about that. And I remember thinking to myself, like, well, you know, I'm kind of an untested CEO, right? Like, I've been a decent entrepreneur, but can I personally scale with this company to keep it alive and build it to a hundred million bucks? Can I do that? or does it need to be somebody else? And I think that is just a scary conversation. You could argue, well, the private equity group probably shouldn't say anything about that or bring it up. But on the other hand, you should. And I think that needs to be a real solid conversation, and it needs to be open and honest. And I think the entrepreneur should ask, hey, do you think I can do it? Do you guys believe in me? Or are you guys thinking about bringing in a CEO? Where is your head on that? And I don't know that we ever really had that. detailed or that in-depth of a conversation about it, but I felt like they believed in me and that they wanted me to do it. So we just went for it and we wanted to do it. So we didn't really talk too much about it. but one thing that helped us was that we were able to, it was a control, a minority investment, rather, and so we were able to retain control, which helped. But even in situations where the investor goes in and takes control, I think that's okay. I think as long as everyone is aligned really well and there is the understanding that, hey, you, the entrepreneur, you're doing this, and we're backing you, but if you can't make it, then hey, we'll talk about it. We'll have an open conversation and we'll figure out together how do we get in a CEO that could help if you can't do it. So where does it all go from here? What do you see as the future For Kodiak Cakes?
[00:39:54] Ray Latif: What do you see as the future for you?
[00:39:57] Joel Clark: So For Kodiak Cakes, it's more and more new categories. I get incredibly excited about that, where this brand can go. There's just a lot of places we can go. And so that we're going to continue to hit innovation hard and run and try to lead innovation. So a lot of places we can go there. I mean, for me personally, I mean, this has just been an incredibly fun ride and it gets more and more fun the more that we do. And so, you know, I've just been trying to scale with the business and stay with it. You know, I've got more runway. I'm going to hang in there for a while and see what happens.
[00:40:28] Ray Latif: Joel, this has been fantastic. Thank you so much for sharing your story with me and for our audience. You bet. Really appreciate the time. I'm rooting for you for that $170 million in 2019. Hey, thanks. Judging by the buzz around your booth, I think you're going to get there.
[00:40:41] Joel Clark: No, that's awesome. Thanks, Ray. Appreciate it. All right.
[00:40:46] Ray Latif: That brings us to the end of episode 154. Thank you for listening, and thanks to our guest, Joel Clark. You can catch both Taste Radio and Taste Radio Insider on Taste Radio.com, iTunes, Stitcher, Google Play, SoundCloud, and Spotify. As always, for questions, comments, ideas for future podcasts, please send us an email to askattasteradio.com. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
