“Our society is going to have no option but to try to tackle some of the gigantic challenges that we face by relying on the private sector and market forces, because the power of market-based solutions is that they’re scalable and self-sustainable.”
KIND AT A GLANCE
Location: New York, NY
Structure: Privately held
2015 Estimated Retail Sales: $1 billion+
In short: Snack company on a mission to inspire kindness with products ranging from bars to breakfast items, all made with wholesome ingredients
At KIND, the name says it all. Few entrepreneurs have been as successful at integrating their values with their branding as KIND’s founder and CEO, Daniel Lubetzky. Lubetzky started with the belief that kindness should define both his company’s products (which are intended to be kind to your body and your taste buds, as the company’s tagline points out) and its culture (fans are invited to give #kindawesome cards to anyone spotted doing a kind act, which that person can redeem for a free snack and another card). KIND has now become a household name, being sold in more than 150,000 retail locations, from Starbucks to gas stations.
However, contrary to popular belief, the brand was not an overnight success. Lubetzky and KIND struggled for four long years after the company’s inception, growing slowly from 2004 to 2008. But, as one of his team members put it, Lubetzky is the type of leader who “does not see a limited version of reality.” Through grit and determination, Lubetzky persevered and landed an equity infusion from VMG Partners in 2008 that finally provided the company with the resources it needed to scale. And the rest is history; consumers have now purchased more than a billion of its products. We spoke with Lubetzky about building a purpose-driven culture at his company, the primary driver for the rise of purpose-driven companies, and what kindness means to him.
What was your original intention in starting KIND?
Daniel Lubetzky: My father was a Holocaust survivor. He was 9 years old when the war started and 16 when he was liberated by American soldiers from the concentration camp. He always made sure to remind me that the reason he survived was because of the kindness of others and that throughout that very harrowing experience there were people who showed that they honored the humanity of others and who took risks with their own lives to help my father survive. My dad was always very kind to everybody; that was the way he lived.
KIND was launched the year that my dad passed away. In many ways, the brand was inspired by his persona, his values, and his way of inspiring people to be kind to one another. The reason why kindness is so important to me is because when people are kind to one another, not only do they both end up better off, but it’s also one of those forces that can build bridges between people. It’s one of those things that can help us discover each other’s humanity and help us discover that we are part of something bigger than us; we’re part of the human race. Every day I try to prevent what happened to my father from happening again to other human beings — by building bridges.
I have always been very committed to making peace between neighbors and using business as a model for building bridges between neighbors striving to coexist in conflict regions. After 10 years of doing that work , I had figured out the food industry and had made all the mistakes in the world, but I had learned a lot.
I noticed that whenever I traveled or had to skip lunch or dinner, I would very often be hungry but unable to find a healthy snack that I could feel good about eating. One of the motivations for KIND was to create products with nutritionally rich ingredients you could pronounce that would be easy to eat anywhere and travel with — something that would be wholesome, convenient, healthy, and tasty.
Because I had been running Peace-Works for 10 years, I had discovered the beauty of being able to do more than just run a business, but also to do it in a way that advanced the social good. I really wanted KIND to accomplish something more for society, in addition to trying to promote healthy living and healthy eating. It would be about inspiring kindness and about encouraging people not just to be kind to their bodies and their taste buds, but also to the world and each other.
What is the culture at KIND like, and what is the culture like today compared to when you got started?
DL: The challenge that I face today is finding balance between ensuring a kind culture and kind values and ensuring that we still have an ownership mentality and that we’re always driven. Sometimes in modern society, people think that if you are kind you’re also soft, and that if you are driven then you’re also a jerk. We really want to define kindness as including a commitment to excellence.
For example, I’m in the process of writing an email to my team, and the title is “That KIND Killer Instinct.” We’re about maintaining that killer instinct. We aim for the stars. We really, really give it our very best. We don’t give up. But we do it in a kind way, with kind principles and values. But it is a very important balance to strike, because if people are just being nice to one another and they are not driving themselves and each other, then we’ll find ourselves five or ten years from now as the laggard that’s not leading and not growing.
On the other side, we don’t want to grow and lose our heart and our values. We want to make sure that as we are reaching new heights, we never lose sight of what’s important to us. To us, the means is just as important as the end. We do everything with a team spirit and with a family feeling and culture, and our policies are geared on that premise. The way we treat our team, the policies for team evaluation, and the policies for dealing with things that are not working out are all premised on very earnest, open, transparent communication and on the best intentions to do right by the company and to think bigger for the community and not just about ourselves.
Based on those values, we have been able to do some very innovative things in terms of HR policies because people are always thinking about each other. It’s part of our culture that team success is what defines us. It’s never about the particular accomplishments of a department or an individual; it’s always about us.
It has been a constant evolution. In the beginning, it was about survival. We didn’t have the luxury of giving people the policies that we give them now because we could barely meet payroll. We didn’t have the great maternity policies that we just implemented, or the type of progressive hardship policies to help people who get stuck in a bad situation, or even our current vacation policies. Now we can afford to build a set of values and policies and benefits that we could not have when we were still a small company.
When you’re a five- or ten-person organization, you know everybody and everybody knows you, and you also know what everybody is doing, so there is no room for people to be jerks. We’ve always had a kind environment. In the early days it was a lot less structured and a lot less polished, but I think we have developed it more as we’ve grown.
Today, we have 600 team members, and it is just completely different. I have grown up a lot. I’ve learned from incredible people who have been doing these types of practices for a lot longer. I bring to the company the kind values that I want, but other people have really helped bring a structure and professionalism into the company.
“It is crucial to make your values a part of your culture so that when you’’re no longer interacting with all of your team members on a daily basis, they will be your ambassadors and continue to behave in accordance with the values and standards that you’ve set.”
Speaking of team members, what do you look for when you’re hiring new team members? How do you ensure that you’re hiring a team that can facilitate your company’s culture?
DL: One of the most important things that I look for in hiring is introspection: the ability to analyze oneself and to be self-critical and to be comfortable receiving feedback. That includes receiving feedback from yourself, being able to evaluate what you’re doing right and what you’re doing wrong, and constantly asking yourself how you can be better. In my opinion, introspection is one of the biggest determinants of personal and professional growth because a person may or may not have a particular skill or experience, but if they are self-critical, they’re going to stretch and grow. If they’re not introspective, they’re eventually going to get stuck.
I was in a board meeting a few months ago, and I told the board that one of the things I really like is that there are no jerks at KIND. It’s not like we’ve created a screening process or spoken to the HR team and said, “Don’t hire jerks; make sure you hire good people.” It just happens because it’s part of our culture. Our team finds and hires people who are just good human beings.
Being kind is not synonymous with mediocrity. Some people think if you’re kind, you’re soft and you’re a pushover, but for us nothing could be further from the truth. It is very important to us that the people we hire are hungry and have a commitment to excellence and hard work, but that everything they do is done with kind values.
As you’ve grown from just a handful of team members to 600, what challenges have been involved with maintaining your mission? Have you had to compromise anything as a result of this tremendous growth?
DL: It is crucial to make your values a part of your culture so that when you’re no longer interacting with all of your team members on a daily basis, they will be your ambassadors and continue to behave in accordance with the values and standards that you’ve set.
It’s a constant calibration to balance all of the things that are important to us. For example, some other values that have gotten us to where we are today are an ownership mentality, a sense of resourcefulness, and a sense of being hungry and tenacious. As you grow, there is a danger that you will become complacent. When we were a five-person organization, if I didn’t meet my quota, if I could not sell that last $100 order, there was a possibility that I would not meet payroll. It was about survival, and guess what? Survival is a big motivator.
Today, if a team member sells another $100 or even $100,000 of product, it might be harder to notice it on our top line or bottom line. However, it is imperative that the team never thinks that way — to never think about the totality of our accomplishments being so overwhelming that there is no need to focus on individual accomplishments. It is crucial to honor the individual team member who brings in a $100 order and treat them as if they are the world and they mean everything to you, because it is their passion and their fervor that, in the aggregate, is going to define your company five years from now. If you lose that, if you just start saying, “All right, it’s just another $100 order, I don’t need to take it too seriously,” that is the moment where mediocrity starts slipping into your culture and is what is going to get you in trouble in five to ten years.
“We want to make sure that as we are reaching new heights, we never lose sight of what’s important to us.”
If one of your children came to you and said they wanted to be an entrepreneur, what advice would you have for them?
DL: My kids are very young, so I wonder if they even know what the word entrepreneur means, but if one of them came to me and said that they want to be an entrepreneur, I would say, “That’s awesome! You can be whatever you want to be, just give it the very best you can.”
What I don’t want to do is force them to go into business, or to be doctors, or to be artists, or to be soccer players, or push them in a particular direction. I want them to just discover what gives them meaning. I certainly want them to be good human beings who care about leaving this world better than the way they found it, both because I think it is our responsibility as human beings but also because I think that is the way you find meaning in life.
People who are purposeful tend to be more satisfied with their journeys than people who are just focused on making money, because that is an empty pursuit that eventually makes you question why you are doing what you are doing. But if you find a purpose — whatever that purpose may be — as long as you are pursuing that purpose, then you’re finding purpose.
What advice do you have for mission-driven entrepreneurs on how to scale a mission-driven company?
DL: Read my book! Seriously, that’s the best advice I can give, because I wrote my book primarily for that audience. But the number one thing is to make sure that you understand yourself and your mission really well, and that you can define your purpose and your enterprise’s purpose. Whether it’s for-profit or not-only-for-profit or nonprofit, understand what your unique value proposition is and why you’re going to win, and make sure that you focus on delivering that and only that. Don’t try to be too many things to too many people. Don’t try to expand too quickly and do too many things, because most likely you will fail if you don’t focus.
Do you believe that in the future all businesses will have a social or environmental mission built in? Will conscious business practices become the new normal for capitalism?
DL: I think social enterprises will continue their ascendance, but it’s not going to be because consumers are clamoring for it but because employees are clamoring for it. The younger generations, especially, are beginning to demand that the work they do improves the state of our world. It’s fascinating for me to see how young people graduating today don’t purely care about making money, but search for meaningful work environments. I think that there will be more and more enterprises that are going to provide that type of environment.
But I also think it’s been somewhat overplayed. I don’t think people primarily choose products or services based on a company’s social mission. They choose a product or service because it provides the best fit for their needs. In the case of a product like ours, people care about quality and taste and nutrition before they care about our social commitment to make the world better.
The other reason why I think this transition is going to happen is because our society is going to have no option but to try to tackle some of the gigantic challenges that we face by relying on the private sector and market forces, because the power of market-based solutions is that they’re scalable and self-sustainable. Not every social ill can be tackled by relying on market forces, but when you can authentically address a social challenge by relying to some degree on market mechanisms, the solution is bound to scale faster and sustain itself longer.
On the other hand, there are going to be lots of companies like ours that are obsessed with the quality of their products. There are a lot of companies whose mission is to make a best-in-class gadget, and they are not going to solve malaria or inspire kindness or fight extremism, but they are excellent at doing what they do. I don’t think that every company needs to have a social mission for it to be a great company.
That said, no company should be a jerk — there should be basic standards — but I don’t think it’s necessary for every company to be pushing the envelope to redefine capitalism. It’s not for everybody, and I think that’s OK as long as people are authentic.
Of course, what gives me meaning is to try to have fun creating these new models for business, but I have a lot of friends who work at amazing companies that don’t have a stated social mission and are doing great things. I think that’s completely fine.
Did you seek out mission-aligned investors for KIND? What advice do you have for other entrepreneurs thinking about bringing on investors?
DL: I think my situation is a little different from the advice that I would give. When I was just getting started, I was just surviving, so nobody wanted to give me any money. The people who did give me money were a couple of friends who believed in me. Their $25,000 investment became many, many millions of dollars. They were not professional investors or socially conscious investors — they were just my friends.
We gained some momentum and I ended up building KIND by myself for many, many years because I didn’t know any better. By the time KIND took off and I brought in investors, KIND was already on a very strong trajectory and our values were very clear, and I was a controlling shareholder.
When I decided to seek outside investment, I just looked for the best-in-class investor — I didn’t want jerks. I actually walked away from a negotiation with a prospective investor who was supposed to be best-in-class, but I found their values and their ethics to be questionable. I thought they were renegotiating the deal with me at the last minute and that I would not be able to trust them, so I walked away.
When I brought in my first investor, VMG Partners, they were not particularly socially conscious. They were good people, they have good ethics, and they were respectful, but they didn’t have any experience with socially conscious investments. But they are very good at what they do. I told them about our values and that they were non-negotiable; this is what I do and this is what the company is about. I explained that there is a value to the business in the loyalty we create through our values but, to be clear, we practice kindness because we care about it and because it’s a part of who we are, and they were fine with it.
Because we grew so much, there was never any tension. The investors didn’t care that they were investing in this extra stuff because they couldn’t deconstruct the business and say that the socially conscious stuff that we do is not adding economic value. They would have been silly to make such an argument because they were getting incredible returns. We will never know if they would have been such an awesome and understanding group if we had struggled and performed badly.
I think, all in all, if I were advising somebody, I would encourage them to search for someone who is a best-in-class investor who can help them with the business more effectively than anybody else, and who also cares about the social mission and supports the company’s purpose. You need to clarify up front what is not negotiable and find investors who understand that, but you also need people who know what they are doing. I’m a big believer that the type of money you bring in should be strategically smart money and include people who are going to help you run your business better.
“I think social enterprises will continue their ascendance, but it’s not going to be because consumers are clamoring for it but because employees are clamoring for it.”
When you’re looking at companies to invest in yourself, what criteria or filters do you use?
DL: The number one criterion is that the company is comprised of good people who I enjoy working with, who are hungry and driven, who work really hard, and who know how to listen and take feedback so they can grow personally and professionally.
A very close second is that the product or service has proven itself to really be something new. I don’t invest in copycat brands that are just trying to copy the leader and do something that’s already been done. Too often there is a lack of creative thinking, where people just jump on the bandwagon and say, “Somebody did well with coconut water, so now let’s do the 20th coconut water brand!” I just don’t understand why people do that. The likelihood of those brands succeeding is so low because the leaders have already been established for that particular category and the consumers know that.
I focus on differentiated propositions where people are creating something new and innovative. If it’s not really elevating the category and doing something differentiated, I stay away from them.
Of course, social purpose is a very big plus, but it’s not a requirement for an investment. Ethical behavior is important. I wouldn’t invest in a tobacco company, but I also wouldn’t invest in a candy company, because those things don’t interest me. For me, it’s about health and wellness. So in that sense, I guess I do have filters, but only because they lead me to good business opportunities and I just don’t connect to those other things. I only invest in companies with products that I would consume and that I would care about.
I would be very hesitant about any company that tries to inject a social mission into what they do. I find those types of things to be quite disingenuous. A social mission has to be something that gives the entrepreneur a purpose and is the reason why the entrepreneur is creating the venture. The mission needs to be really authentic in order for it to be additive to the experience and to the enterprise. Otherwise, it is just a gimmick.
What are your thoughts about your legacy and the future of KIND?
DL: What I’m most excited about doing is transforming KIND from a company that people are very passionate about and a brand with products that they love into a movement that people feel they are a part of. I want to transform KIND into a community that makes all of us better, where people feel emotionally connected to us. We’re not just creating great products that fit with people’s lifestyles of health and wellness. We’re not becoming a daily part of people’s lives just because we’re nourishing their bodies. We’re also doing so many interesting things on how to nourish our souls and our minds by discovering how kindness can be more of a state of mind and can be more front-of-mind in all our communities. We’re helping those who truly need it most and building an unprecedented community. By triggering so much impact, we will redefine social enterprises and show that you really can meld the social and the business. My team and I control the overwhelming majority of shares in the company, so we can do whatever we want. We can prioritize social change as we continue growing.
But, in pursuing this mission, I don’t forget that the reason people are buying our products is because they taste delicious and they’re healthful. As we continue growing, we need to remember that. Even though what excites me is the social aspect, it does not mean that we’ll only focus on that, because then we will fail. We need to continue delivering high-quality, nutritionally rich, delicious products that people want to make part of their daily lives, and that they want to eat in the morning, afternoon, and evening.
2x KIND has roughly doubled sales every year since inception
111% KIND’s compounded annual growth rate over the last five years
1 Billion Since inception, KIND has sold more than 1 billion bars and clusters; in 2014 alone, the company sold more than 455 million units
150,000+ The number of retail locations that sell KIND products
CONTROVERSY WITH THE FDA
On March 17, 2015, the Food and Drug Administration (FDA) sent a letter to KIND saying the company had violated labeling rules for using the word “healthy” on packaging.
According to FDA guidelines, the term “healthy” cannot be used on products that have more than 1 gram of saturated fat. Foods such as salmon and avocados are not considered “healthy” under these guidelines.
Despite mounting research pointing toward an association between increased nut consumption and reduced risk of major diseases, nuts are not considered “healthy” by the FDA due to the dietary guidelines for fat content.
On December 1, 2015, KIND officially filed a citizen petition to urge the FDA to update its regulations regarding the use of the word “healthy,” which were developed more than 20 years ago.
4 KEY LEADERSHIP INSIGHTS
1 BE SELF-CRITICAL
I am naturally self-critical, and after every talk I give, after big events happen or big decisions are made, I consult with my team members and ask, “What could I have done better? What did I do wrong?” I really push them for feedback on everything because I am just wired that way after so many years of doing it.
2 WORK WITH A COACH
I started working with a coach. I’ve had many mentors in my life who have taught me so much on so many different topics, but this person is helping me with leadership skills and learning how to manage and lead a team of people who have far more experience than I do.
3 EXPAND AND CONTRACT LEADERSHIP STYLES
I’ve learned how to expand and contract my leadership and presence to the needs of the moment. When things are going really well, I demand more from my team. I don’t let us rest on our laurels. When we have a setback, I’m more understanding and more supportive. You can’t always have the same approach. If you’re winning, you should push your team to go harder, to go even higher, and to challenge themselves more. If you’re having a setback, that’s when you say, “Hey, you did your best, don’t worry about it, let’s just keep going.” Sometimes you need to really insert yourself, and sometimes you need to step out, bite your tongue, and even let people make mistakes.
4 STAY FOCUSED
Stay focused. If you’re great at being creative, you need to be aware that that strength can also be your Achilles’ heel. If you overwhelm the system with your ideas and creativity, you might paralyze your entire team and end up pursuing way too many initiatives and achieving nothing of real substance. Grit without strategy may end up wasting a lot of time and energy and resources. You may have all the energy in the world, but if you don’t have discipline to stay focused and a strategy on how to win, you may end up wasting a lot of energy.