Leaders of fast-growing companies face an enviable, but difficult challenge – trying to feed the hungry demands of rapid growth, without letting the growth eat their culture for breakfast.
Last week we sat down with a CEO who is bucking the norm and managing extraordinary growth with their culture, not at the expense of their culture. Joel Clark is a cofounder and CEO of Kodiak Cakes, one of the hottest young growth companies in the food sector. They have nearly doubled revenues each year for the past few years and are on track to surpass $100 million this year. Kodiak Cakes has disrupted the sluggish pancake mix segment by marketing whole grain, high-protein pancake mixes to millennials through Target, Costco, Kroger, and grocery stores everywhere.
Clark took over the once fledgling pancake business from his brother in 1997 and ran it as a part-time gig until 2004 when he decided to get serious and make a full-time commitment. For the next five years, growth seemed elusive and profits were barely enough to feed his family.
In 2009 Clark hired Cameron, his first employee. At that point sales were just south of $1 million. Cameron thrived in the freedom he was given to find new ways to grow. Without even showing Clark, Cameron sent a “random” email to the casting team at Shark Tank. This subsequently set up Kodiak Cakes’ first real opportunity for national exposure. On the show, while Clark did not accept what he felt was a “low-ball” investment offer from the Sharks, he did not walk away empty-handed. That brief media exposure spiked demand so much that they sold out of their product again and again at Target stores over the next several months. Things took off from there.
Since then Clark and his team discovered a sweet spot – Millennials who want to eat the food they like (pancakes), with healthy ingredients (100% whole grain), that have higher levels of protein (for active lifestyles.) Their lead product, Power Cakes, is – pardon the unavoidable pun – selling like hot cakes. Their brand is also benefiting from another key market trend – consumers are losing trust in big traditional food brands, and seeking out more authentic, specialized food products they can count on for healthy ingredients, from relevant, like-minded brands they can trust.
After talking to members of their team, it became clear – their growth story is a product of their company culture.
“There were no reigns on me.”
This direct quote came from Cameron, employee number one. He was referring to how he felt when he joined the company, and how much freedom Clark gave him to try new things to grow the company. Encouraging freedom was the catalyst that caused him to reach out to Shark Tank, and the beginning of the growth that followed.
Clark and his leadership team talk about empowerment like it’s the single most important thing they can do as leaders. They live it, breathe it, foster it, and protect it. Of course, it’s one thing to talk about empowering people, but to actually give people freedom? When your whole livelihood, reputation, and viability as a company is at stake, would you be willing to let people, who have little domain experience, have that much power to make decisions and do things that could wreck you? How does a leader arrive at such a seemingly risky position of trust, and why?
Clark’s response was surprisingly practical when we asked him that very question. He said that every single one of the reasons he became an entrepreneur had been beaten out of him. His dream of making a fortune was shattered by the fact that he had nothing to show for his first 12 years of blood, sweat and tears. Working for himself, calling the shots, and doing things his way, were also aspects that died when he realized that he had failed to deliver real results. Joel was working way more than he ever wanted to – on a business that wasn’t working for him.
So how did Clark finally come to a place where he could genuinely empower his people? He came to it out of pure necessity. He told us, “I just wanted it to work. I came to realize that my way was not always the right way. I needed the right people around me to make it work.” Coming to the realization that others would make the business much more successful than he could, “was one of the best things that ever happened to me.”
“Performing beyond their resumes”
The leadership team at Kodiak Cakes has bet the company on a young, and for the most part, inexperienced team. Their average age is 31 – they are their target market. For most employees this is their first or second job out of college. Virtually everyone, he said, “is performing above their resumes.” And that breeds opportunity, speed, and the hunger to “forge fresh trails.”
We spoke with Jake, a 27-year-old, five-year veteran of Kodiak Cakes. Bearded and wearing a flannel shirt, he explained that he had applied for an office manager job after getting bored as a bank teller. Over a short time he “took all the things that no one else wanted to do.” The workplace culture literally empowered him to figure things out, to make some mistakes, and to personally grow. He’s now a growth leader on the sales team and recently won a massive new account. We asked Clark, “Seriously, he will be the account manager for one of the largest retailers in the world, and he’s never really done that kind of job before? Don’t you worry about your people messing up?” “Yes,” Clark said, “but we don’t have a punishment culture. People have a lot of responsibility. But, with that responsibility, comes open and frequent feedback. When someone messes up, we go into a private room and talk about what worked and what didn’t, and how to learn and move forward. Once people take that kind of responsibility, they rise to it.”
Feed your Culture, Feed your Growth
Kodiak Cakes’ growth is not coming at the expense of their culture of empowerment, but because of it. Not only do they talk about it all the time in weekly company meetings, they also have the guts to fire people who can’t or won’t empower others. If they can continue to feed and protect their culture of empowerment, their culture will help them outrun the bear.