22 minute read
IT’S GROW TIME
Kara Goldin CEO, Hint Water
IT’S GROW TIME!
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Ready for the post-Covid boom? Savvy CEOs share their strategies for making the most of a magic moment.
BY DALE BUSS
KARA GOLDIN SUGGESTS ALL SORTS OF HACKS FOR GROWTH, but the No. 1 imperative for her fast-rising company, Hint, is this: follow the customer. It isn’t rocket science, but heeding that axiom helped Goldin explode sales by roughly 50 percent last year despite the pandemic, propelling her brand of nutritionally enhanced waters and other products into a $225 million enterprise—and positioning it for bigger gains in the months and years ahead.
“We focus on the customer, and luckily, when you have a relationship with them, that actually tells you how to service them,” says Goldin, who helped develop AOL’s e-commerce business, then ventured out on her own to pioneer the new beverage segment of unsweetened waters flavored with fruit oils and other essences before Coca-Cola and other beverage giants could move into it. “You need to figure out where their heads are, and that will tell you the best way to grow your business. We’re going to keep going on this journey with the customer, and that’s why 2021 will be successful for us, too.”
Welcome to the post-pandemic global economy, likely one of the most exciting and explosive eras of expansion since the end of WWII. As vaccines do their job and billions of customers the world over emerge from Covid-induced hibernation, all signs are go for a big year—and beyond—in nearly every industry. How to make the most of this time? Chief Executive reached out to CEOs at companies of every size and shape for ideas.
For Goldin, staying on top of what retailers and consumers want next from her San Francisco-based company is the alpha and omega. She widened the Hint product lineup by branching out into items like lip balm and broadened distribution through big store accounts. Most important, she built a dedicated e-commerce platform for Hint that accounts for about half the company’s sales and keeps it intimately responsive to what its shoppers want.
Building Hint to this point required savvy, boldness, perseverance and more in the 15 years since the company’s start. As a seasoned executive, Goldin knew how to hunt for new opportunities. Like so many food entrepreneurs, her genius came in recognizing she couldn’t satisfy the dietary needs of her young family with existing products. Ditching her daily Diet Coke habit, Goldin began experimenting by sweetening plain waters with fruit juice.
She called a Coca-Cola executive out of the blue who told her that her product couldn’t be
commercialized because it needed preservatives— In 2014, for example, Starbucks began to nudge Hint one thing Goldin wasn’t going to include—to solve out of its coolers in favor of its own branded products. distribution and shelf-life challenges. (He called her Goldin took the snub as an opportunity to ramp “sweetie”—but that’s another story.) “Sweet was all up experimentation on Amazon, and Hint’s quick they knew, and sweet drinks were all they wanted to success—in a product category whose bulkiness sell,” Goldin wrote in her autobiography, Undaunted: had held back online sales—was a revelation. Overcoming Doubts + Doubters. “That was our big and Covid, too, brought a stunning blow to the compavery real advantage over” Coke and other beverage ny, abruptly removing the 15 percent of revenues that titans. “We had the commitment, the understanding came through sales to corporate campuses. Pandemic and the passion for a new approach. If only we could protections also robbed Hint of being able to sponsor solve the technical and business problems.” and sample at events. “We made some really fast bets
Goldin kept iterating, extending shelf life, creating early on by reallocating budgets” to store and online intriguing flavors such as honeydew hibiscus, adding marketing, Goldin says. “We also began sending our a kids’ line, landing endorsements from celebrities event-sales teams into merchandising in stores.” such as Miley Cyrus and inking a co-branding deal with Disney. Talk, talk, talk with customers: Early in Hint’s ex-
Coke and others have muscled into Hint’s catego- pansion into e-commerce, Goldin embraced the idea ry, but Goldin kept growing, to about $150 million in of creating a drinkhint.com site and turning it, not annual revenues before the pandem- Amazon, into the brand’s main sales ic. One big reason is she continues to take Hint personally. For example, “We’re going to keep platform. Creating intensely direct individual relationships has more early on during last year’s pandemic, Goldin headed into a Marin Coungoing on this journey than compensated because it has given Hint access to and control of ty Target one evening and executed with the customer, and customer data and an instant feeda corporate duty she’d left behind a decade ago: merchandising. that’s why 2021 will be back mechanism. “If you don’t have that kind of communication with “I wanted to show my executive team that this is what should be successful for us, too.” your customers, you’re in a tough spot,” Goldin says. “For 2021, we’re done,” says Goldin. “I should lead just staying connected with this by example—not lecture people on consumer and making them feel and what they should ultimately be doing. They appreciat- recognize that our focus, like theirs, is health.” ed that. And then they were like, ‘If Kara is doing that, maybe we should be doing that, too.’” Goldin shared Follow your gut: Viewing the role of Hint holisticalmore of her growth tactics with Chief Executive: ly rather than by category ratified difficult decisions for Goldin, such as jumping into better-forSource for resilience: Goldin built Hint’s supply you lip balm, sunscreens and hand sanitizers. Her chain around a handful of bottling plants sprinkled personal brush with skin cancer added narrative across the U.S., with an emphasis on automation to impetus to such moves. “Does our consumer just restrain costs. That network came in handy during care about water?” she says. “We see a person Covid when a huge new potential customer, Costco who’s yearning to be healthier but finding it really Wholesale, wanted to pick up Hint as a replacement hard. And they ask us literally on a daily basis: for other water brands that suffered from foreign What’s the next product that you’re developing? sourcing entanglements. “We’d had some discus- So, we also educate our retailer customers on what sions over the years as to whether we could save a these consumers might want.” few bucks by sourcing differently, but we thought it might not be worth it,” Goldin says. “Even if it’s a Sweat the details (all of them): In many cases, they little more expensive to source everything in the U.S., move from marginal to salient to decisive. “At points it’s just easier to maintain that. And we wouldn’t I’ve wondered if I really need to pay attention to all have gotten the Costco deal without it.” the details because I’m a little bit paranoid,” Goldin says. “But everything you do is important when you’re Overcompensate for setbacks: Creating a new operating a company. And it’s a lesson for our teams as segment didn’t insulate Hint from big competitors. well, that everything can drive the bottom line.”
Here’s what several CEOs tell Chief Executive about their growth strategies for 2021 and beyond:
ENERGY
GRABBING CHEAP ASSETS
Jordan Jayson, CEO U.S. Energy Development / Arlington, Texas “We’re a privately held oil-and-gas developer that has been adapting to the plunge and subsequent slow recovery in prices. We’re a small-cap player, so there is great potential for acquisitions that are accretive. As the green wave flows through energy, our view is that upstream oil and gas will still be a necessity for at least 10 to 15 years.
“That doesn’t mean we’re not aware of the transition and looking for renewable and ESG-related opportunities. But as some of the larger players are beginning to shed some of their non-core assets in North America, and merging portfolios, the assets that are small in their minds are much different in our minds.
“As we adjust, we’re very mindful of the downside and getting our team to talk about it. We adjust to the rhetoric and the huge price swings by focusing half our discussion on what could go wrong. We still need to protect our base so we can explore and innovate and look for new opportunities.”
MANUFACTURING
SUPPLYING DEMAND
Brian Morrison, CEO Terraboost / Bolingbrook, Illinois “We had a media company that runs a network of wellness kiosks in retailers, which dispense wipes and provide advertising to clients such as Eli Lilly, PayPal, local hospitals and insurance plans. When Covid happened, consumption of wipes went up by 20X. Suddenly, we became a $100 million company by making and selling wipes.
“We had contracted out the manufacture of our wipes in China, but we wanted to capitalize on the demand. So, we’re investing $25 million in a new local plant that will nearly triple our capacity. We are providing 110 different kinds of advertising kiosks that dispense wipes and expanding contract manufacturing. We have the goal of making 90 percent of our wipes in America by the end of this year, from about 60 percent now.
“It’s a little bit crazy, but we’re riding this wave and trying to have a good blend of customers and contracts to sustain growth. Plus, demand for wipes isn’t going away, even after all the vaccines are distributed.” When Dan Springer joined DocuSign as CEO four years ago, the company’s solution for obtaining signatures on legal documents was gaining momentum as businesses of all sizes seized the opportunity to smooth what is often an arduous process. Realizing its potential, he knew, would mean getting the right people in the right roles— both within the company and on its board. “It was a matter of going through area by area and thinking about what the future leadership needed to be, and bringing in the folks that we thought could get us to that next level,” he says.
In recasting the board, Springer started by bringing in Maggie Wilderotter, former CEO of Frontier Communications, as chairman. “Maggie and I pretty much transformed our 12-person, all-white-male board into a nine-person board that is about one-third women and one-third people of color,” he explains. “As with the management team, it wasn’t that we were trying to get rid of people, it was about the leadership capability and experience we needed for the future.”
THE BOARD ADVANTAGE When Covid-19 sent demand skyrocketing as lockdowns began sweeping the globe, Wilderotter and a strong board aligned behind the company’s strategy were just the edge Springer needed to avoid the stumbles that rapid growth often brings. “One of the most important things she’s done for me as a partner here was helping me to see the company not as we are today, or even in the coming year, but multiple years out,” Springer says. “We’re growing so fast that it’s easy to focus on just next year versus really thinking through the challenge of having people with the leadership experience for the company we were becoming—a very large public software company.”
Springer credits annual strategy sessions with the board and management for laying the groundwork to build up to 40 percent annual growth rate and sustain it during a pandemic. “When something like Covid hit, we were ready because we understood what our long-term plan was,” he explains. “That made it easy because we just accelerated our playbook. It’s the preparation and the alignment of the board in advance that sets you up to be successful when good things, bad things or challenging things arise.” —Jennifer Pellet
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ONLINE SERVICES
MAXIMIZING TECHNOLOGY OPPORTUNITIES
Guru Gowrappan, CEO Verizon Media Group / New York City “Digitization of transactions during Covid accelerated our transformation as the company that runs many Internet platforms including Yahoo. We’re a mission-led company building on three pillars: trusted content, connections built one-on-one with consumers and transactions through e-commerce, such as sports betting and other things that close the loop. “One thing that changed is that, in the Covid world, people haven’t been gathering for sports and events, so we launched Watch Together with the NFL, a co-viewing experience designed to innovate live events and give fans the ability to interact. On the ad side, we’ve grown connected TV and digital out-of-home a lot.
“We think 5G connectivity will introduce another industrial revolution, and we’re already scaling up a lot of experiences in advertising and content. For example, we’ve got a Super Stadium app that gives iPhone users multiple camera angles for an NFL game, with no image latency.
“We are also conscious that our content needs to be trusted. We don’t have any consumer-network ecosystem like Twitter, and we have strong policies that make sure none of our content providers are putting out fake news or fake ads.”
RECREATIONAL VEHICLES
BROADENING THE BRAND
Bob Wheeler, CEO Airstream / Jackson Center, Ohio “We’ve seen a dramatic spike in our retail sales and wholesale orders, and we just continue to pile backlog on top of backlog. It stands at about a year now versus typically about 12 weeks.
“But we want to grow our output in an intentional and controlled manner no faster than we can maintain and improve product quality. We also want to make sure that the new buyers who’ve come to us out of convenience then fall in love with the Airstream lifestyle, so they’ll become lifetime customers. We’re building the business for the next 10 or 20 years.
“A key part of that is extending the brand to things that people have to go out and purchase for the RV experience, like outdoor furniture and grills and things for inside the Airstream. We’re curating great products for them to help them get through the process of buying what they need or what they don’t know they need yet. We’re also incubating other small brands that work with us. It’s all a brand-building tool we’re having great success with.” MEDICAL RECORDS
HIRING AT HOME
Ray Berry, CEO Health Business Solutions / Fort Lauderdale, Florida “We help hospitals fix denied insurance claims and leave behind tools for them to do better. For a typical client, we would bring in 80 people and leave 20 behind. But Covid stopped that. “Fortunately, 10 years ago we had begun piloting a work-from-home solution. Hospitals did hate that because you don’t want people messing with medical records at home. But we’ve been able to lock all of that down so all of that processing occurs in a closely monitored central office.
“And as costs came down from remote work, we passed those savings primarily on to clients. That was even after we voluntarily took a 25 percent fee reduction as hospital patient volumes went down. That wasn’t an unwise thing to do.
“Work-from-home has opened the world to us in terms of hiring the best people to do their specialty from wherever. Now hospitals are giving us expanded duties. We’ve signed some new contracts and will likely double our revenues this year.”
RECREATION SERVICES
FRANCHISING TO ACCELERATE EXPANSION
Chris McCuiston, Co-Founder and CEO, Goldfish Swim School / Troy, Michigan “We teach a life skill that practically every parent wants their kids to learn, so we didn’t have a lot of chinks in our armor outside a global pandemic. That was evident. Plus, the virus sent everyone outdoors, and bodies of water became more regular in everyone’s life.
“We started franchising in 2018, allowing us to grow our brand through others and not tied to debt. Building one of our pool facilities requires as much as $2.5 million, so we can expand much faster this way. We also benefit as an organization from a bunch of different minds and personalities and experiences, making sure decisions are right for all of us.
“After Covid, we created a less-expensive franchise that is suitable for the many smaller urban markets where we have interest from potential franchisees. But with the change of administration in Washington, we are wary of potential litigation from any changes to the joint-employer rule that would hold franchisors more liable for franchisees’ employees.” If the pandemic made one thing clear for Cars.com CEO Alex Vetter, it was the power of empowerment.
For a company that relies on online sales, there’s nothing quite like seeing your user volume drop to “virtually zero” overnight, says Alex Vetter, CEO of Cars.com, which operates front-end websites for 5,000 car dealers. That’s what the company saw happening with the announcement of shelter-at-home orders a year ago. “By the third city, we were staring at a situation where all of our user growth would potentially go to zero,” he recounts.
But it wasn’t long before the company started to see user growth start to tick back up. Within a month, cities like Seattle were higher in traffic than they had been pre-pandemic. While the national picture was dire, it turned out people still needed to go places—and they didn’t want to do it by plane or mass transit.
When states forbade local dealerships from staying open, Cars.com swung into action with an aggressive customer petition campaign for the sale and service of cars by technology. With its entire workforce shunted from their offices into working remotely, the company still managed to rally, says Vetter, who credits these traits for Cars.com’s resiliency: A SPIRIT OF PERPETUAL LEARNING. “If you’re not keeping your company sharp in trying and testing new things, you’re actually going to get old. We don’t ask everybody to justify every trial or every test. You’ve got to give people permission to know that they’re going to go down some roads that aren’t going to lead you anywhere—that will enable you to find some on-ramps that will accelerate your growth.” INTERVIEWING FOR COLLABORATORS. “In addition to growth-minded people willing to try new things, we interview for collaborators, people who had demonstrated teamwork. That’s the new organizational workforce mentality. I don’t want soloists. I need team players because that’s how share points are won.” EMPOWERMENT. “We encourage people to decide and do rather than seek approval, [especially during Covid]. We really wanted to unlock even our most junior front-line people to talk to customers and make split-second decisions about what to do. We wanted them to know that we had their backs.” INFORMATION FLOW. “In a crisis you just need to break down the formality. We didn’t want the standard cadence of getting together weekly, so we shortened everybody’s expectations by doing quick huddle check-ins and then letting people get back to work.” EMPATHY. “We were all dealing with a lot of personal challenges and uncertainty with our families. Being empathetic as a company about what our employees and our customers were going through was the prevailing characteristic that I think we demonstrated in customer actions and the way that we took care of our employees that kept us linked together as a team.” —Jennifer Pellet
CUSTOMER EXPERIENCE
SCALING FOR CUSTOMERS
Chuck Sykes, CEO Sykes Enterprises / Tampa “We help our clients deliver good customer experiences to consumers, in centers for phone calls and email and chat and social media, with 55,000 employees operating out of 80 facilities in 21 countries.
“We’d been preparing for the work-at-home revolution, and the pandemic accelerated that to where 72 percent of our employees were working from home at one point. No less than half of our employees will continue to work from home.
“But we’re looking at growth also through creating microsites in smaller locations that might have 100 or even 50 seats instead of the 400 seats, with a training center and a cafeteria that are typical of today. We also are growing beyond our Fortune 1000 clientele by working with digitally enabled, hyper-growth startups where quality service is important to them.”
TRAINING
CATERING TO THE LIVES OF DIGITAL NATIVES
Doug Donovan, CEO Interplay Learning / Austin “We provide online and virtual-reality training for essential skilled trades. Manufacturing kept going during the pandemic, but companies saw the need for effective remote learning even of advanced skills. We had a 300 percent year-over-year sales increase. They’ve jumped over a fence, and they’re not going backward.
“Companies have gone from complaining about the manufacturing-skills gap to fixing it themselves. We help them build that foundational workforce with tools that look and feel the way they’re working and living. They can try a VR or augmented-reality device that allows them to actually experience what it might be like to work on a cooling tower on a roof.
“We’re going after this market now by marketing a value proposition in true digital transformation in areas where they haven’t done it. We publish white papers and case studies. And on the technical side, there have been some breakthroughs in VR hardware and distribution so that we’re going to start dropping $300 headsets as a marketing tool. We don’t need to explain the IT to them anymore— we just send customers these headsets for HVAC or electrical training.”
AUTONOMOUS VEHICLES
MAKING DELIVERY CHEAPER
Matt Johnson-Roberson, CEO Refraction AI / Ann Arbor, Michigan “Development in our space and in our town is expanding so much that there are humorously awkward moments where we pull up at an intersection and there are a couple of other companies’ experimental AVs there. But key to our growth is the fact that there are usually two to three people in those vehicles; ours are human-less.
“From day one we decided we weren’t going to be carrying people but goods and that we were going to focus on the last mile for delivery, because our AVs were going to go slower than a full-size car and be lighter and smaller. The most frequently transported good in our 25 vehicles in Ann Arbor is food.
“With a flat-fee delivery of $7.50 for as many as a half-dozen bags of groceries, we’re challenging the dynamics of what third-party deliverers like DoorDash do, where their chunk of the order can be fairly expensive for a small merchant. We’re looking forward to expanding our model to another city over the next year.” HEALTHCARE TECHNOLOGY
REMOVING FRICTION EVERYWHERE
Brent Lang, CEO Vocera / San Jose, California “Our systems allow voice communications among healthcare workers and with patients. With Covid, they’ve allowed people to communicate without any risk of infection. So, we’ve leaned into this situation and are investing for growth. The phrase inside our company is, ‘Accelerating out of the turn.’
“We see an opportunity to grow market share by investing in new products, such as one that allows patients to communicate with family members from the hospital, which was invented for the operating-room environment for kids’ surgeries. In Covid times, it’s become even more relevant because of limitations on visitors.
“Meanwhile, many hospital IT departments won’t even be on the hospital campus, so our ability to work with them virtually becomes a competitive advantage going forward.”
“Some companies have retreated, but we want to invest in this transition. So, we have poured resources into new-product development and into a virtualization of our marketing organization. We’ve built a virtual ‘trade show’ that potential customers can visit online instead of at a convention center.”
MARKETING
BUILDING MUSCLE UNDER OUR ROOF
Terry Kroeger, CEO Smith Kroeger / Omaha “We’ve spent a couple of years building the tools that a marketing agency can use to help companies grow their own businesses. Covid put the brakes on some of the pitching, but the infrastructure we’ve built—with digital, strategic and video capabilities—makes us a little different than our competitors.
“For instance, we’ve taken all of our digital production in-house, making us cheaper and faster for clients. We built a state-of-the-art video studio that includes 4K cameras, sound baffling and a lot of other stuff. We’ve probably invested $100,000 in the last 12 months on capital items and have added five positions to a staff that was 20 people.”
THE $100 MILLION COSTCO TRIP
Eyes—and hands—on every aspect of the business let California startup CalChef Foods execute on a very big idea they got in the aisles of a big-box store.
A few years ago, Kevin McCray and Dan Costa decided to build a manufacturing plant for their fledgling meal-kit business in Stockton, jettisoning a copacker and taking more control over production of their Chef’s Menu line of products for foodservice and supermarket retailers. Good thing, because today the co-founders of CalChef Foods are already stressing their 45,000-square-foot factory to its seams after pivoting to a new product line whose growth is exploding exponentially. The new line is Kevin’s Natural Foods, a collection of premium, sliced, vacuum-packed and refrigerated meat entrees. Sales of the brand boomed—going from $4.5 million in 2019 to $48 million last year—and are projected to reach $100 million this year.
McCray, a serial food-marketing executive, and Costa, a serial entrepreneur, gained the pivotal consumer insight that led them to become stalwarts of affordable premium products while scouting refrigerators at Costco stores. McCray noticed how the chain overall was “elevating refrigerated offerings” but that “there wasn’t a lot of innovation in that category.” Looking specifically at sliced-meat offerings in pouches, he saw commercial possibilities for meats prepared using the French cooking method, sous-vide, in which meats, vegetables and sauces are vacuum-packed and then cooked at home.
Quickly, the two developed their concept for Kevin’s Natural Foods, and Costco buyers leapt on the opportunity in 2019, placing an order for lemongrass chicken for one of the chain’s eight regions. CalChef priced the first Kevin’s Natural Foods entrée at $13.99 for a 32-ounce pouch, essentially slapping a huge affordable price point on a product packaged as premium. Soon, Whole Foods and major regional supermarket retailers were signing on for Kevin’s Naturals, which expanded its product line with 16-ounce packages that the stores could retail for a reasonable $9.99.
“We found out later that a lot of [store] buyers had been asking for something new in the refrigerated space, and they were willing to take a chance on a young brand,” McCray says.
Just as key to the company’s success building a nine-figure brand within a year was investment in sous-vide machinery to handle expansion of demand and a relentless focus on sourcing, both to maintain the company’s pledge to use only highly vetted ingredients as well as to keep costs in check to maintain “democratic” pricing at retail.
“A lot of companies couldn’t make these products profitably,” McCray says. “We couldn’t either if we didn’t take every penny of costs out of the system.” CE
