On Brand No. 12: 🍪 Can't build a business if you don't know what it should taste like
This is an edited version of an email newsletter sent on July 28, 2022. We send out new issues every other Thursday, featuring deep-dive essays and interviews with industry leaders. Sign up below.
As of September 8, 2022, On Brand is on hiatus. We have closed new subscriptions for the time being. Read the backlog right here!
It’s hot out here, folks. I’ve been reading that employers are trying to tempt workers back to the office with the promise of crisp AC. Well, Air doesn’t have an office. I’m going to use this moment to ask leadership to please send us all one of those new DTC-challenger-brand U-shaped window units. Please?
— Francis, Content at Air
This week’s plot:
Improv classes — the key to successfully pitching your business?
What does “lifestyle brand” even mean these days?
Envisioning a world where VC funds flow more fairly to woman and PoC
Erin Patinkin on the art and science of entrepreneurship
This week I sat with Erin Patinkin — serial Co-founder, CEO, and entrepreneur — for a fantastic conversation that ended up running twice as long as nearly every other interview I’ve done for this newsletter. Erin first gained recognition for her work on Ovenly, the beloved Brooklyn bakery she co-founded with Agatha Kulaga in 2010 — since then she’s also co-founded Seemore Meats & Veggies, as well as silently launched a further three companies and consulted dozens of others.
While transcribing our conversation, I kept returning to her history as a theater actor, her revisiting improv classes, her practice of rehearsing for investor calls. Erin combines a sharp business acumen with incredible people skills — the Venn diagram on those two things is pretty overlapped, turns out.
In the hour we spent together, I took the impression that Erin is a very generous person — with her time, with the knowledge she’s willing to share, with the way she conducts business, with the lofty personal and socio-cultural goals she sets.
On Brand: You’ve mentioned your background in the arts has really helped you as an entrepreneur, how improv classes helped you excel in this world. In food, there’s this idea that cooking is an art and baking as a science. What about entrepreneurship? To what degree an art, to what degree a science?
Erin Patinkin: Cooking is an art, baking is a formula, as is business. The formula is artistic in its essence, because you need to know what the end result will be. You need to already know what the muffin is and should taste like — that’s business too. I know the basic proportions, so I can riff on recipes! But I know what I want that muffin to taste like. And that is what business is. Knowing what you want to build, that’s the key. What is the end result? What do you want it to look like or taste like?
In advising, I run into people don’t know what they want their future to look like. So, every client session starts with this: sit down in a locked room, turn off your screens, take out a pen and a journal, set your timer for 15 minutes, and write a journal entry as if you were sitting 5 or 10 years in the future — what are YOU doing? If you don’t know where you’re going, how do you get there? If you don’t know what you want the muffin to taste like, how will you bake it?
I also like to orient founders around a north star, to me that is vision, or the big, hairy, audacious goal you want to achieve. That's what will drive you. Use it for everything you do: aligning your team, giving them something to work towards. Steve Jobs (as Simon Sinek breaks down in his work) had this approach — start with the why, not the what or how.
The art is knowing what the end is, the formula and science is knowing how to get here.
If you know, you know.
OB: What significance do you see in the current trend of CPG-food-as-lifestyle-brand? Brands like Fly by Jing, Fishwife, or Graza. Has this always been a thing? Why is it so prevalent right now?
EP: I’m fuzzy on what “lifestyle brand” really means anymore, especially in my industry. I wonder if a lot of these brands that people associate as more than products would say they’re lifestyle or food companies first. I wonder if we would see them as “lifestyle” if we just found their products on a shelf and didn’t have social media in our pockets at all times.
That said, whatever you’re selling, on the CPG level, needs to turn a profit. I think CPG has been corrupted by VCs in the past 8 years or so (sorry to my VC friends). Food, including CPG, is not truly amenable to the VC model. It takes a year to grow a carrot; we're dealing with commodities, the weather, the future; food businesses are almost impossible to scale in a way VCs would want,
Now that I’ve worked with so many food companies, I really believe slow and steady wins the race in my industry. Slow could be 8-10 years, it could be 20. I’ve seen only a couple CPG brands in the past few years scale in a way they could potentially exit, and even then, they might be in a category that’s hard to exit.
My advice: If you’re a CPG brand, even if you want to go for scale and think you can be the VC unicorn, also have a pro forma or plan in your back pocket that includes 10 years to get to $10 million, not two years. Know what it looks like to be slow versus fast. To focus on cash flow and EBITDA, not just gross revenues.
With lifestyle food companies, at the end of the day, you still have to sell the stuff. Just because people are posting it on Instagram doesn’t mean they’re buying your product. Make sure your product is great, delicious, you have the right co-packers, the right distribution, the right margins...get what you can right before you create the brand itself. People get so excited about lifestyle, they forget to look at the margins and...boom...they run out of cash.
A long time ago, “lifestyle brand” meant you sold a lot of other products, had TV shows, books. Every brand is a lifestyle brand now, and it doesn’t mean much anymore.
OB: Outside of your major commitments, you work as a consultant and strategist — what have you learned serving major corporations vs. budding startups?
EP: The big companies come to me to understand the mindset of a small company. To the small companies: you better believe these corporations are looking at every single one of your moves. It’s a reminder of how powerful small businesses are — they’re the ones who affect how big businesses create and market product.
I think about Omsom in that regard, they are so vocal in their values and beliefs as founders and as a company. You better believe big brands are looking at them. Going back to the lifestyle idea, it used to be brands never talked about politics and such. Now they do, which I like personally. Not every brand can recreate what a company like Omsom does in terms of vocalizing values, but know that larger corporations, are watching and learning from these types of brands,
So how as a small brand do you use the knowledge that big brands are looking? It’s a threat and an opportunity. How can you use your platform to protect against your work being duplicated, while taking advantage of the fact that the major corporations are watching?
OB: What’s next for Erin Patinkin? Do you have plans to take on a Founder/CEO role at a new company?
EP: By the end of this year, I will have launched my 5th company. I’m a founding partner of 3 companies and CEO/Co-founder of two [Ovenly and Seemore]. Ovenly is retail-hospitality, the rest are all CPG.
Now, I’m trying to take time to understand what I’ve learned from the past 12 years as an entrepreneur. The reality is, I’m pretty enraged all the time. It’s gotten really hard for people to raise money, especially women, and I deal with a lot of women-owned businesses who are getting less money. There are plenty of VCs that 50% of the businesses in their portfolios are women-founded companies, but the actual capital distribution is far from 50%.
So, I’m starting to look at what can I do to help change culture — research shows diverse organizations and founders, the more of them the better, but nobody trusts the business case. Nobody cares about the numbers coming out of academia. This amazing woman Ty Heath, she’s a Director at LinkedIn’s B2B Institute, speaks to this issue and how behavioral scientists are studying what it takes for people to not only believe the research, but actually buy into it.
I have taken to calling out investors in my circle for certain investments — for example, why are you investing in this new, male-led brand when there is a similar brand also raising money that is women-led, has a better path to scale, and has generated more profits? Investors will tell me, "I want to do better." But that's not enough and we have to work to make change.
Part of this disconnect between how people behave and the data is we’re missing the myth, the story.
We need the stories of the people in-between starting and exiting. It may change how people view startup founders and how they invest. I'm in my 40s now and would love to retire in the next 10 years. My big question is now: What can I do to change how money flows to people? Specifically women and people of color. To tell the right stories to help their businesses flourish?
Whatever the answers are, that's what I want to work on for the next decade.
Editor's note: The following questions and answers were not included in the original newsletter. Enjoy!
OB: You’ve said when you first started growing Ovenly, you lacked a network or background to help you with the world of investor relations, fundraising, these kinds of business logistics. How has that — your journey overcoming those barriers — shaped your own practice as an advisor to other entrepreneurs?
EP: What’s hard starting a company when you’re young is you have very little network, unless you come from a family that has a background in what you’re doing. As a consultant, I tell people that you should make networking part of your weekly routine.
I find women tend to feel uncomfortable with transactional relationships. People say they feel fine in a social situation but not in a business setting. If that’s the case, if you can speak in-person well but not extemporaneously, I recommend people take an improv class or just watch some comedy.
Investors and potential business colleagues are also people, they want to know who you are and what you want — even if it feels transactional. And hey, even transactional relationships can become real friendships! One of my close friends, I originally met her as a potential investor in Ovenly, and she never even invested in any of my businesses.
You also never know who will show back up in your life. People I haven’t talked to in seven years will pop up again later on, or be able to give you good advice, and they’ll be happy to do so. This happened recently, and my old friend was down. You never know how you’ll leverage your network, but you do need to build it, just do it authentically and with humility.
OB: How do you balance those things about a small business that are so special while scaling? Not necessarily product quality, but the human side — customer relationships and company culture.
EP: I’m a small business consultant. I help people who are building companies that are pre-revenue to companies that have $7-8 million in revenue. There are inflection points in that growth. The first I can think of is when you, as a founder, go from working in the company to working on the company. That inflection point usually results in some people leaving. For example, if you have a tight three-person team, and all of you together are dedicated, and in it every day, and everyone is doing everything...and then suddenly there's a growth spurt, and you have to hire a bunch more folks, you simply can't do everything anymore...you'll never accomplish the real goal, working towards the mission, vision, values if you can't step back like that. And that stepping back can cause tension.
These starting teams become very tight knit, and then you have to unite people as you grow.
With Ovenly, at first it was Agatha and I doing literally everything — baking, deliveries, finance, everything, then we added four or five people who were with us for the next few years. We became very close. After a couple of years, we had to hire more people and Agatha and I realized we had to get out of the kitchen to grow the business.
Within a year of that moment our start up staff had left because the dynamics changed. But there are ways to make sure those people don’t leave. Putting in the proper leadership is number one. If you read any study of staffing or employment, once people are paid the rate they need to live their lives comfortably, which varies by person, money is not what keeps them at a job. A lot of leaders don’t live that reality.
Recognize that people want a great social life at work, they want a good team, the tools to do a job well, and to be recognized for their work. All these things are what matter most to people — once they have enough money.
I don’t think I focused on those things enough at Ovenly at the start and as we went through these transitions. Have the cultural structures in place at every stage or you might find that people leave.
I can speak to building a team of around 100. The best way to do it is getting in the right leaders, to create the right tools. Create structures for people to be recognized for what they do.
Be slow to hire, quick to fire. Be intentional about how you build these teams. So many times I find well-skilled people who are just wrong for the role. You think they’re great, but there just is not a role on the team that fits their skill set and our needs. That’s when I feel the worst. There are so few fires where the person has done something bad or toxic.
Most good leaders I know hate firing people. This is another place to rehearse. If you need to let someone go, rehearse it. How do you make people feel good about themselves even being let go? There are ways to do it with empathy.
OB: Much of what I’ve read by about you online speaks to the specific difficulties women face in entrepreneurship. Since you started, has that gotten easier — either for you or for the businesses and people you advise?
EP: The first time I ever raised money was in 2011. A very small friends and family round for Ovenly; we spent the entire round on buildout and equipment. Make sure you have some growth capital.
A big part of what I do now is act as an intermediary between entrepreneurs and investors.
Make pitching an area of study. Study how people raise money and what the investors are looking for. As a startup founder, your head is really in the sand. You’re just getting through the day, and yet your job is to be a student. My mentor, Will Rosenzweig, who sold The Republic of Tea, is a role model for me. He considers himself a forever student. You have to be a student of any specific thing that falls into your path.
I like to study languages and think I have a very mathematical mind. Will helped me see that there is always a formula, definitely with pitch decks, in fundraising. I need to be true to my mission, vision, values, but there’s a formula to how these decks should look and how folks look at the numbers.
I would practice pitches in the mirror, physically writing down answers to questions I thought I’d get, because I thought it would help. I was not a finance person at the time, and this all forced me to have the discipline to understand my margins, understand the true value of our market category. Prior to this I wasn’t placing Ovenly in the broader market. I started to look at the trends, the growth models, the categories — this is the one we’re choosing to take. That’s what a pitch deck is.
I was a theater major and am a former actor. I was so used to being criticized in a creative environment. That training, especially in theater, you get ripped apart. You’re really told if your performance is bad, and then you fix it. That really prepared me for this world. I don’t care if people tell me I did a bad job — just fix it.
Key takeaways 🔑
Business, like baking, is a formula. Understand what you want the end result to look like, and adjust or create the formula based on that. If you don’t know what you want the muffin to taste like, how will you bake it?
Have a backup plan, especially in CPG. Figure out a path to scale quickly vs. slowly, with a focus on EBITDA vs. cash flow.
If you’re a small brand making waves…know that the corporations are watching your every move. Figure out how to use your platform to protect against your work being duplicated. What about you and your brand or product is impossible to steal?
Take an improv class. Seriously, if you’re finding it difficult to network, to pitch investors (or colleagues, or your boss, or clients), try improv. Rehearse these scenarios in your mirror. Figure out what can go wrong and learn to correct for it.
In the know
Must-reads, hot takes, and rising trends:
On the topic of rehearsing for tough moments — highly recommend
this profile of Nathan Fielder in the context of his new show, The Rehearsal.
A Brand Singularity: The NYT wrote about how Yeezy x Gap x Balenciaga came to be.
Everyone loves a new take on a tired story. Read about how five challenger brands buck tradition.
Marketing + Creative jobs at our favorite brand-forward companies:
Ovenly needs a Marketing Manager
Saks Fifth Avenue needs a Graphic Designer
HelloFresh needs a Creative Director
Air is also hiring for a variety of roles! Click here to apply.