by Aaron Lazenby, May 2014
Ten years ago, KIND Healthy Snacks Founder and CEO Daniel Lubetzky began selling healthy snack bars made with real fruits and nuts door to door, and educating retailers about what made his product a good buy. His belief in his product—and his determination—led to US$1 million in sales that first year. And it’s been a decade of big growth: Today, KIND is a more than 300–employee operation (part time and full time) that sells 42 products—including healthy snack bars, whole grain–based bars and clusters, and a new line of savory snacks—through more than 80,000 retailers such as Whole Foods and Safeway. The privately held company boasts a nine-figure revenue business.
What is KIND’s recipe for success? “It’s a healthy snack whose ingredients you can see and pronounce—that is literally our trademark,” says Lubetzky. And customers like what they see: 9 out of 10 consumers who try a KIND bar will purchase a KIND product again and recommend it to others. And KIND has the highest Net Promoter Score among the top 10 brands in the nutritional bar category.
But KIND stands out for another reason. The company has a social mission baked into everything management does—starting with the company’s name. Lubetzky and his team encourage customers to “Do the KIND Thing” in a number of ways, surprising people they spot doing kind acts with #kindawesome cards entitling recipients to free bars—and arming recipients with their own #kindawesome cards so they can pay it forward. Also, each month through KIND Causes, the company’s latest program, KIND invites its community to vote on projects that promote kindness, awarding US$10,000 to the winner. But to vote, participants must pledge to do an act of kindness of their own.
“We know that there’s a lot of people who love KIND products,” Lubetzky says, “but what we love the most is for them to also feel an affinity for the values of the company, and to feel that it belongs to them.”
Here, Lubetzky, Entrepreneur magazine’s 2010 Entrepreneur of the Year, talks to Profit about his unique way of doing business, how technology will help him respond to increasing demand for KIND products, and how he hopes to continue to grow the company—and its mission.
Profit: You define KIND as a “not-ONLY-for-profit” business. What does that mean?
Lubetzky: My passion has always been to build bridges between people. My father was a Holocaust survivor, and I promised myself that I was going to try to prevent what happened to him from happening to others. So in college and law school, I wrote a lot about how to use business as a force for good in the world.
In the US and most of the world, there are two core models for legally organizing your business—you’re either a for-profit or a not-for-profit. And I kept struggling between the need to define myself one way or another. Ultimately, I just chose not to choose, but instead to create my own model and call it a not-ONLY-for-profit. We’re a business that’s very proud to be capitalistic, and we celebrate market forces as a way to make money—and also to do some good. At KIND, this has informed our culture. Instead of saying “or,” we try to say “and.” We challenge false compromises.
With the KIND brand, we want customers to do the kind thing for their bodies, their taste buds, and the world.
This has allowed us to build a business that also has a social mission. At its best, these two objectives actually reinforce one another. With the KIND brand, we want customers to do the KIND thing for their bodies, their taste buds, and the world. Our products are healthful, and they are also delicious. And KIND aims to inspire and celebrate unexpected acts of kindness among all of us.
Profit: How do the strength of the brand and the mission of the company influence the success of the products?
Lubetzky: I don’t think the reason people buy our products is because of our social mission. When we ask consumers, the thing that’s most important to them is that our product is delicious and of the highest quality. You need to win on the merits of your product, first and foremost.
If you do have that, then the social mission can create a lot more loyalty and goodwill. So the social mission can never be a crutch. Certainly for my team and me, it’s what drives us; it’s what gives us meaning, extra energy, and commitment. That said, the social mission does subconsciously, and to a smaller degree, consciously, create more loyalty, more goodwill, more word of mouth, and more passion.
Profit: What sort of pressure does KIND’s growth and success place on operations?
Lubetzky: Demand planning is extraordinarily hard for us. When you have 42 SKUs, how do you decide how much to make of each item, especially when the company is growing so fast? For context, we’ve almost doubled in size every year over the last 10 years. On the one side, you can produce too little inventory—then you miss out on sales and your retailers get very upset with you. Or you can make too much product and tie all your money up in inventory, which might create cash flow problems and challenges paying the bills.
We have a demand planning process right now that is manual to a significant extent, and it just takes so much management time. It takes us days and sometimes weeks to produce information that is critical to our business—and by the time we get the results, we need revised data. Our sales leadership could go out selling, but instead they’re talking to our team about forecasts.
To avoid this, we want to be able to aggregate all of the critical information from our departments so that we can rationalize and analyze our data on a real-time basis, and be able to get information immediately about where to invest our dollars. So there’s a lot of excitement at KIND about what we think we’re going to be able to achieve once we have an ERP [enterprise resource planning] system in place that allows us to develop this data faster and not have to put it together through a lot of disjointed efforts.
Profit: Why did you choose Oracle to help you build that centralized system?
Lubetzky: I had to learn about the space and ask a ton of questions to get a sense of who was going to be the best partner for us. We interviewed a ton of companies, including third parties and people who have implemented ERP systems.
Ultimately, we decided on Oracle, and on Oracle’s JD Edwards solutions, because we thought they provided the most-robust answers with the most flexibility. JD Edwards EnterpriseOne is a really powerful platform that benefits from a lot of Oracle acquisitions—including Demantra for demand planning, which is really best in class.
Also, as proud as we are of KIND, we’re a very small company. Even so, Lyle Ekdahl, senior vice president and general manager of Oracle’s JD Edwards product family, and his team were responsive, took our concerns seriously, and invited us to be a part of a number of processes to really get things right.
The KIND philosophy requires you to have a long-term view of things; taking shortcuts may be the fastest way to get things done, but in the long term that can come back and bite you. Oracle is the type of company—and has the kind of platform—that is here for the long term. It’s not going to go away tomorrow. And Oracle is going to invest all the necessary resources into staying ahead of the game and improving.
Profit: How did you address change management issues as you introduced a more centralized process?
Lubetzky: KIND has always embraced technology as a force to help us grow, and we have a phenomenal IT team, led by our CTO, Khaled Abohalima. Khaled recognized that when you’ve been doing something the same way for a long time, you need everyone to understand why you need to do things differently. We need to get our whole team to embrace that, in the long term, this new ERP system is going to be better for everybody. So Khaled persuaded John Leahy, our president, and me to make this a foremost company priority and invest into communicating this vision.
We chose some of our very best people from every department to join the ERP rollout team. We backfilled every position, so that we could have full-time commitment from each of the people we selected, and we made them a dedicated team. They are leading this change throughout our company. And we’re going to have to continue using them as our ambassadors as we start expanding our ERP effort.
Profit: When you look down the road 5 or 10 years, what do you hope to achieve?
Lubetzky: Of course we want to continue innovating. We want to always bring to society something newer and better. We want to provide healthy snacks that make people’s lives better, whether that’s by helping them fight obesity and diabetes or giving them more fulfillment and enjoyment.
But beyond that—I should say “and” beyond that—we really sincerely want to reinvent the way people see business. For me, it would be Nirvana to have millions of people in our community feeling that they love KIND because it nourishes not just their bodies, but also their souls, and makes all of us feel part of something bigger and greater, and connects us with our shared humanity.
If we achieve that, it helps the business also, of course, because then we become a transcendental brand that our community is emotionally connected to. We can be proud of making great products and profit, and we can also be very proud of our small contribution to making this world a little
Aaron Lazenby is editor in chief of Profit.