Kat Cole is a true operator with an extraordinary story to tell. Starting as a waitress at Hooters when she was 17, she rose through the ranks to become the company’s Vice President. From there, Kat’s career accelerated. She became the President of Cinnabon in 2010 at the tail end of the recession and the peak of the Atkins craze when no one was eating carbs.
Yet the task didn’t seem daunting to Kat. “The business was in such bad shape, all I needed to do was start shining a light in the dark,” says Kat. “The product was amazing and the brand was beloved. The only thing that was wrong was the unit-level economics. And that’s a fixable problem, right?”
This humble confidence underpins Kat’s track record as a brand builder and company leader. After turning the Cinnabon brand around, she eventually took over the role of Group President and COO for FOCUS Brands. After a 10-year tenure at FOCUS, Kat joined Athletic Greens as President and Chief Operating Officer at the end of 2021 to do what she does best: accelerate business growth, oversee global expansion and deepen the company brand.
Here are Kat’s lessons from building some of the most iconic food brands in the world.
Brand is a nebulous concept, making it difficult for startups to cultivate and build purposefully.
Many equate a brand with the traditional elements like logos, colours and taglines and therefore think it’s complete fluff and a waste of time. But that’s not true.
“At its core, brand is a consistent promise first formed by marketing, but over time is shaped by the experience that people have with a company or product,” says Kat. “And as people who build businesses, we want our promise in marketing to be consistent with what people experience.”
A brand establishes the position of your company, product or service in your customers’ minds. We can break that down into two buckets: brand relevance and brand differentiation. The most successful brands, country to country, product to product, vertical to vertical, are high on relevance and differentiation. While businesses can be successful when they are high on one and low on the other, it’s unlikely they’ll reach their optimal potential in multiple markets.
“Brands high on relevance but low on differentiation are typically commodities. “They mean something in many people’s lives but don’t stand out in any way,” says Kat. “They usually end up competing in a price war for who can be the cheapest.”
On the other side of the coin are brands that are high on differentiation, but low on relevance, typically aren’t accessible and come at a premium price, which lowers the market and volume potential.
Travel with caution
Taking your brand global is the ambition for many startups. But you can’t assume all parts of your brand can travel with you. Kat learned this the hard way when her team brought Auntie Anne’s, the world’s largest warm pretzel bakery franchise, to Turkey.
“Auntie Anne’s was already wildly successful in the Middle East, so we started travelling up the Mediterranean into Turkey,” says Kat. “We launched the franchise in a great location with the same marketing that worked in the Middle East. When we opened, no one came.”
“I travelled to Turkey to figure out what was going on. After talking to customers, we realised our product looks a lot like a Simit, a product sold on the streets of Turkey for centuries for 1 Lira. We were selling Auntie Anne’s pretzels for 100x that cost because we believed the product had permission to travel and the brand’s premium positioning would translate.
“But people thought we were crazy. Eventually, we had to lower the price, reposition the brand – not as a pretzel brand; a Simit, but different.”
The key to success in multiple countries and cultures is to acknowledge that nuances, even if they’re subtle, can be material. In the case of Auntie Anne's, they needed to understand how the customer would receive the product and brand relative to their local and cultural reference set, encompassing everything from shape to packaging, price and the product's name.
A helpful way to approach this is to decode your success, so you know what to duplicate and what your unknowns are, says Kat.
“I’ve often found that leaders, myself included, and founders are good at questioning failure. When something doesn’t work, we iterate, keep going and fix it. But when things are going well, we rarely question it as much as we should.”
That becomes dangerous when brands start jumping across borders and oceans. If you assume the drivers of success in your home market will be true in a new market, you will, in Kat’s words, “fail fabulously and expensively.”
Once you're aware of your unknowns about a new market, you can ask the right questions to fill in the gaps. “Don’t ask leading questions that steer the customer into validating your inclinations and existing beliefs,” says Kat. “Ask open-ended questions like, ‘What does this product make you think of?’. The most important question is if they’d buy the product, so you have a sense of the market potential.”
One of the amazing things about direct-to-consumer brands is the opportunity to build a community and have a lot of touch points with customers. After building an early understanding of their customer, DTC brands can test the market in different channels, whether it’s a physical shop front or working with a wholesaler. So, how do you figure out what channel is right for your brand?
“First of all, founders should know there is no playbook. Anyone who tells you there is one is full of shit,” says Kat. “They’ve clearly not done it, or they’ve only done it once, and they’re telling you what’s worked for them.”
“The reality is, there are many paths to building your brand. The decision of what channels to use and when is individual to the business; the funding you do or don’t have; and how well known your brand is or isn’t.”
While there isn’t a playbook, there is the truism that every channel strategy choice has consequences. With wholesale, there are compressed margins, but you get distribution that you may not otherwise have access to. Some wholesale partners may be premium, and others may need a discount. Either way, how your brand is positioned relative to that retailer will impact your brand’s overall positioning.
Kat has seen this go awry when founders, partners and investors are misaligned on the brand’s priorities and, therefore, what partners and channels are most likely to drive those outcomes.
“I was working with founders launching a green, healthy and premium snack bar. They got a call from Walmart who saw their product at an independent coffee shop and wanted to stock it,” says Kat.
“They had a serious argument over whether or not they wanted to do business with Walmart. One founder had an issue with the optics of being in Walmart. The other said their brand’s purpose was to democratise access to healthier options, so what better way to do that than get into Walmart?”
Kat believes it’s crucial for teams to have these types of discussions early on so that businesses doesn’t miss timely distribution opportunities.
Picking a partner
Partnerships can unlock massive potential for startups, particularly if the partner is an established brand in the market you’re going after. Startups entering these negotiations need to shake the feeling of being the underdog. Instead, they should approach the conversation by balancing self-belief with respect for what each partner brings to the table.
The tricky thing for both parties is having an objective view of how the customer sees your brand. “All founders and leaders of a company love their baby. It can do no wrong,” says Kat. “But if you’re going to negotiate a partnership, you need to be honest about your value, brand and the customer.”
If you’re looking to licence your product to a partner, they’ll be comparing it to a private label product. To create a compelling proposition, you need to demonstrate how your product can fill the gap between the current demand from their customers and their existing supply. Even better is if you can show them how it will bring them new customers.
“When Cinnabon was looking to partner with Burger King, we had to convince them that their price-sensitive customers would pay for our goods. And the only thing that would suggest that that was possible was our brand. The Cinnabon’s brand had enough power to get people to try something more expensive on the menu of a value-oriented restaurant chain,” says Kat.
“The negotiation was not easy. It was messy. In the end, it tripled the EBITDA of the company in three years. The marketing budget that Burger King had for the Cinnabon brand per year was more than the brand had ever spent in its existence.”
Do you need to find a partner as big as Burger King to have a successful partnership? In Kat’s experience, absolutely not. “I’m such a big fan of collaborations, strategic alliances and partnerships with other startups. Come together and leverage your marketing spend. If you're targeting the same consumer, why on earth would you not come together?” she says.
“I challenge any founder or startup operator to reach out to another brand that you think might be complementary and come up with a cool, inexpensive way to lower your CAC and get in front of new customers.”
Setting the digital table
Some turn to canonical texts like Danny Meyer’s Setting the Table: The Transforming Power of Hospitality in Business to learn the art of hospitality. Others can turn to their lived experience. For Kat, her early days as a hostess and waitress instilled a hospitality mindset that has evolved with her career.
While hospitality looks different to a technology startup than a restaurant, the same tenets apply:
- Accessibility: How easy and convenient is your website, app or platform to use? “Even though that sounds very product-like, it’s an important part of hospitality for a digitally-native brand,” says Kat.
- Attentiveness: Being attentive shows up differently via technology. Proactive hospitality helps people get things done in a hurry, but not at the cost of convenience or service quality.
- Customer Service: “We as humans keep moving down the continuum, and no one ever wants to go back to a poorer service experience. Even if you’re a pure tech platform, you need to ensure anyone who’s involved with customer interactions has an obsession with customer delight.”
If brand is shaped by the experience your customer has with your company or product over time, then how you handle things when they go wrong is largely how they’ll remember you.
“You want to be a good partner in the good times and an even better partner in bad times,” says Kat.
Inevitably, we all mess up. Having a team with an ownership mindset who’ll make a bigger deal about rectifying the mistake than the customer does about the mistake itself can become a differentiator and legacy over time.
As a board member of Milk Bar – a famous New York bakery and brand – Kat has witnessed this care for the customer engrained in employees.
“If someone’s planning their daughter’s birthday and the cake doesn’t come, there are tears,” says Kat. “When your brand is about celebrations, and you miss the occasion, that’s a damaging interaction with your customer.”
“When Milk Bar misses a cake delivery, someone will drive multiple cakes as soon as they can to that person’s house with a courier who sings an ‘I’m Sorry’ song, and gives a full refund of the order.”
This article is an edited summary of Kat Cole’s discussion as part of our Meet Up series with AirTree Partner, Jackie Vullinghs.