How Trauma Built KIND to a $5B Exit | Ep. 398 with Daniel Lubetzky Founder of KIND Snacks

0:00If you have a product, 1 out of 10 people like it and you start promoting it, you're actually going to lose money. Whereas if you improve the product and 5 out of 10 like it, it might be good. And if you further improve it and 9 out of 10 people like it, then at that time you've got a goal and you want to start promoting it. All of us entrepreneurs are eager to run and sometimes you need to slow down before you run.

0:22Daniel Robbins:Kindbar is everywhere. Just like my first 10 years were much tougher than I realized, the next 10 years were frictionless. We're growing triple digit growth on average on revenue growth. One of the best trajectories I've ever seen from in any sector of any company. What was your secret sauce that created this rocket? Daniel, I have an insight to share with you that I haven't shared with anybody else.

0:47Daniel Robbins:So Daniel, I was telling my mom today that you were coming on the show and she's like, I love Kind Bar. Like I eat Kind Bar. And then I was like, mom, be kind and rewind. And she's like, did he make that phrase? Like, no, mom. It was like on Blockbuster DVDs. But yeah, but sorry. Go ahead, Daniel. You can tell that your mom has great taste because she likes canvas, but more importantly, she named you Daniel. You are my tocayo. Do you know what that means? I don't even know what that means. I like the sound of it. A tocayo means a namesake where you're named Daniel, I'm named Daniel. But it doesn't fully explain it because tocayo, for Mexicans and I think for all Hispanics, the word tocayo is more than just a namesake.

1:28It's almost like this spiritual connection where you and I are bonded because your name is Daniel and I'm Daniel. So now you have to give me$100 just because... No, I'm just joking. No, but just because your name is Daniel. Huh?

1:40Daniel Robbins:I just zelded it over to you. So it's waiting for you. I like that. Tocano. Tocano? No, tacaño means you're cheap steaks. Oh, wow. Tocayo. Tocayo. You stumbled into another very interesting word. Tocano. Tocano means someone that doesn't... like a cheap steak. Tocayo is very cute. I wouldn't be selling the$100 if I was Tocayo. I know. You're not a Tocayo. You're at my Tocayo. Wow. No one has ever said that to me, Daniel. There is, you know, the funny thing is I did look up people that have my exact name, and I connected them on social media. Daniel Rollins, the whole thing? The whole thing. I thought it'd be funny, like, if there's, like, a bunch of us, and I just send them messages like, hey, hey, Daniel Robbins.

2:28Daniel Robbins:and they're just i think they're like weird they're freaked out they're like what is this guy i want you know what's sad about that is like in society not all of us are scared like i go on airplanes still today and hand out kind bars and a lot of people are like this guy must be a serial killer like what who is this weirdo because people are understandably protective and with all social media it's so i would enter your daniel rollins chat i would change that would be fun you know what why don't we just do daniels i did see there was a group that does like chris's or something like it's like everyone with the first name i think we should do a daniels meetup so it's like anyone with the name daniel because that could be you know the funny thing is when i used to work in an area where it was majority hispanic people and they used a lot of them they thought i was yeah they'd be like oh you speak spanish so i eventually i had to just learn span like i learned the canyon now you learned to call you now i know more but i'm rusty i haven't used this is like 20 some odd years ago since you look back i mean kind was so long ago do you lying or it was just yesterday i mean when you started kind it was it was a bit ago it was a bit a couple days ago and do you think that kindness has changed since then when you started this you said i'm gonna name my brand kind you think kindness has changed well it's a great question.

3:50I think the essence of kindness is transgenerational, and I think the essence of every human being and what we have inside and how we can connect and look at each other's eyes and discover each other's warmth has gone through history and will continue tomorrow. I do think that with the advent of social media and all this online anonymity, it introduces problems for society that we have not yet learned how to conquer. A lot of kids on their devices, I was talking to a principal, I went for the first time in 40 years to my high school, and the principal told me that a lot of the kids have problems, they don't look at each other's eyes, they're just looking at their devices, just that skill is very important, let alone to use those eyes to connect with each other's soul.

4:43And I do think there's a big opportunity for all of us to really re-engage as humans. But I think the essence is still there.

4:51Daniel Robbins:How is it when you think of when you're on Shark Tank and somebody comes on, do you think about this when they try to make that like eye-to-eye connection with you? Is it like in the first few seconds when somebody walks out there before they even really get going? Is there like a connection that has been like a human to human connection? It depends on the entrepreneur. I very much, very consciously want to make that connection because it takes so much guts to walk down that aisle, be prepared to be grilled by five people. And so I do ask tough questions, but I start by trying to connect with them and put them at ease.

5:35And all sharks do that. Certainly Lori does that. Kevin I think even Kevin but I I want them to feel comfortable because they're in for some tough questions so at the very beginning you let them do their pitch without interruption and when they finish their pitch then you unleash what I call the Mexican inquisition with a lot of questions but uh but yes I do try to connect with them and there was just on the finale that just happened the do you call it finale when the the final episode the season finale I think it's called there was a moment where a woman was really she started shedding some tears and it really hit me and I stood up to give her my handkerchief because I I just felt for her and even though I didn't think that her specific business idea was gonna be investable or or succeed a lot I really admire her courage to try things out because the thing about entrepreneurs is it takes so much courage Daniel to just try it out you already won by trying it out in my opinion I really firmly believe that that somebody has the guts to they have something in their heart they believe it and they take the initiative to actually bring it about that's incredible that that's worthy of respect and And most entrepreneurs in the first venture fail.

7:01It's only in the second or third venture that you start having an increased chance. 90 % of first-time ventures fail. But if it's a second-round entrepreneur, the success rate goes from 10 % to 20%. That's still 80 % failure, but that's double the chances that you're going to win. And if you go through the third one, it's 30%. This is the data. You tripled your chances. So the more you try and get off the saddle from the horse and dust it off, I by the way, I mangle all of my expressions because I was born in Mexico. So I hope I'm not mangling these ones. But the more that you get off the horse and dust it off and get back on the horse, I think the more chances that you have of figuring it out.

7:47it. Of course, you don't want to fail, but you want to be comfortable trying things out and learning from them so you can get stronger.

7:56Daniel Robbins:Don't worry. I wrangle expressions all the time. I just keep on going. So when you first sat down in that chair, on that chair, couch, whatever, I don't know, it's like a couch chair. And you realize like, wow, I'm on Shark Tank. I'm a shark. but all the things that had to get there to that moment did it hit you yes in in in many ways first of all i love shark tank i had discovered it and i enjoyed watching and sharing with my kids so when i was invited to be on it i was super excited super honored and energized i have severe adhd so even right now when you are talking there's a billion ideas going through my mind how do i just like they're all the ideas are fighting with each other it's my turn no and they're speaking spanish shiver english japanese there's like a lot going on in here so for me i need to try to stay focused and and to and to not get the other thing that happens on shark tank and so yes it's bringing back all of my memories you were talking earlier about kines being so long my relationship of who I am is very connected to my early years my peace works years the 10 years before I launched kind where I made a lot of mistakes but they taught me a lot and helped me become who I became and the early years of kind are very very present in my life and in my mind and a lot of times when I'm in shark tank on shark tank I'm channeling a lot of those lessons because it's those early lessons that matter a ton of course I grew the company to billions of dollars And I also have many lessons from that entire journey because I was a one-person operation and I became, I stayed as CEO all the way till I built a five, seven billion dollar company.

9:43But the lessons to grow from one billion to five billion are not as applicable on the tag. The early lessons are ridiculously applicable. So I connect to those a little bit more.

9:55Daniel Robbins:I've had so many failures. So I think I'm on like, I was on like failure eight. So I had an 80 % chance of success. When you look back to kind, where was the moment where you were like, this is a rocket ship. This is destined to be a unicorn. I never thought about the word unicorn, but the way that I relate to Daniel is you're going up little hills. And then as you go those hills or those mountains, then you can look higher. So I thought Kind could become a$10 million company. I thought we had that potential. And remember, 10 years before PeaceWorks, I leave my legal career as a Wall Street lawyer.

10:43Not really Wall Street, but I got a law career. And I have the potential to do so many things. And I decided to start selling sun-dried tomato spreads made by Israelis, Palestinians, Jordanians, Egyptians, and Turks trading with one another with the aptly branded name Moshe Pupik and Ali Mishmumken's world-famous all-natural gourmet foods. I still don't know why it didn't work out. But I'm peddling those products literally door by door, letting people, force-feeding the buyers to try my sun-dried tomato spread with one-day-old baguettes. and I draw so many lessons from that journey. And now when I'm building kind, I have a lot of that perspective of learning from a lot of those experiences.

11:34Daniel Robbins:I heard that you love magic. I love magic. I love magic. I love magic too. Do you think that translated like these things? Because I remember when I love magic, but I also love doing monologues. And I feel like my monologues, when I was like a kid, I would just act in these stupid monologues. I became doing monologues for sales in like an enterprise level later on in my life. Do you feel like magic for you was like that thing that it really translated into the business environment? Without any doubt. And Daniel, I have an insight to share with you that I haven't shared with anybody else. Yes, magic taught me a ton.

12:11And it teaches you how to look at people's eyes, how people think, how to get their attention to command the presence. And what is fascinating to me is that those early experiences really turn into who you become. The common thread with everybody is that those early moments when you were writing your monologues made you into who you became. But what's interesting is it actually matters less what that is, whether it was my magic or your monologues. It just matters that you try things out, that you push yourself, that you get those reps in. And whether you're in the basketball court or whatever your passion is, try things out, go for it, go for it, go for it.

12:57Those things are teaching you far more than you realize. And you will see the world through that prism. So it really does matter. But those early formative influences stay with you and give you a sense of the world and of your skills. And so what's important is that whoever's watching your thing, just try shit out. Just give it a shot. Just try it out.

13:15Daniel Robbins:I love that. And I'm like obsessed with mentalists because I don't get like I can't understand how they do it, Daniel. I'm like, I don't get it. Like it's so mind blowing to me. I think I've heard that you're like a mentalist too. When we had a closing dinner, we sold a controlling stake. I only sold kind fully my final shares a year ago, a year and a half ago, less than that. But when I sold the first stake, we had a closing dinner where the bankers and the lawyers invite us for dinner to celebrate the transaction. And I held a dinner where I did a 30-minute mentalism show. and Byron Trott, who's a very good friend of mine who was our banker, freaked out.

14:08He was convinced that I actually got into his brain and he was like, how the hell, now I understand why he was such a good negotiator because he was inside my brain. He got so freaked out, I'm like, Byron, chill. But now every year at his annual conference, he brings a mentalist to, because it is, it's fun. It's interesting.

14:26Daniel Robbins:I love that. I know that you're obsessed with the product and we had other founders on like the founder of Preda Mangere and he said the same thing that he was obsessed maniacally obsessed with the product so I could tell that you're obsessed with the product I do you feel though that nowadays people's obsession is more about virality than the actual product because I hear this a lot like I'm obsessed with the marketing and I make like a basic product. It depends on who you're talking to and whether they know what they're doing. Because I was talking to my son who's starting his own business and you don't want to start promoting your product and distributing until you've perfected that mouse job.

15:14All of us entrepreneurs are eager to run and sometimes you need to slow down before you run. Like you need to just really figure out the product. Because think about it, Daniel. If you have a product and one out of 10 people like it and you start promoting it, you're actually going to lose money. Whereas if you improve the product and five out of 10 like it, it might be good. And if you further improve it and nine out of 10 people like it, then at that time you've got a goal and you want to start promoting it then. So focusing on virality instead of focusing on perfecting the product is a sure way to lose unless virality is your product.

15:54And then, of course, but but in most cases, you have a product or service that you need to really, really improve before you try to promote.

16:03Daniel Robbins:You said in the beginning about the failure rate is so high, like 90 percent failure rate on the first time. And and it slightly goes up from there. And I'm not sure if everyone is cut out for the grit that is needed, like you said, to be knocking down doors and doing every anything that was possible. what moment during kind for you was that moment where you were like this is it i'm done with this company wait i thought i was giving up and not i'm not trying yeah well you it was just like everything was collapsing or something happened where you're just like this i'm like i'm i'm gonna go i did not have that my 10 years before i had that where i kept with moshe public and Museums World Famers all matter with my foods.

16:48I'm making that mistake and thousands of mistakes and thousands of things I tried. Every time, I'm like, oh my God. I also tried this. When I'm on Shark Tank, I'm like, oh my God. I remember I also tried this skincare product and I also tried to be a consultant on Middle East trade. There's so many things I tried that didn't work out. And during the piece research, it was two steps forward, two steps back. But I learned those lessons. And by the time we launched Kind, we almost didn't try. We almost gave up because I I was exhausted and we had one big setback and we almost closed the shop. I'm not making this up.

17:22We had a meeting with six people where we said, do we try this one last time? But once we tried it, it just took off and kind just grew. Just like my first 10 years were much tougher than I realized. The next 10 years were almost like, you know, frictionless. we were growing at triple digit growth on average on revenue growth, cash flow positively and profitably. We were a juggler. It's one of the best trajectories I've ever seen in any sector of any company. And we just benefited from all of those mistakes. So once kind of launched, it was more like hold on to your seats. And we made mistakes and we learned lessons and they were difficult.

18:05But there was no quitting. Why would you quit? That thing is like growing, growing and growing.

18:10Daniel Robbins:What was the secret sauce? What was your secret sauce? Do you think that created this rocket? Well, first of all, luck is very important. If any entrepreneur starts getting so cocky to think that they're invincible, let them do it twice. Because if it's hard to do it once, the amount of people that are starting de novo from scratch and done more than two highly successful businesses in different sectors, very hard to accomplish. It's very, very hard. So there's an element of good fortune that we need to acknowledge. I think first and foremost, the product was the right product at the right time because there was no healthy snacking sector when I came up with Kind.

18:50And I was looking for something that would solve a problem that I had, which is I was walking around the streets of Manhattan and traveling all over the world selling my earlier products, my Peacerox products. And I was looking for a healthy snack that I could feel good about that was wholesome and convenient. So Kind was the right product. You just saw it and you telegraphed and you tried it. And it was both delicious and healthful. So the product was amazing. I think the brand really, really captured something very special. And the culture that we created, the more that I look back and my team members look back, the more we realize we created an incredible culture.

19:29Everybody was an owner. Everybody had a stake. Everybody was, we had a lot of transparency. We're a high-performing culture where there was no hallway politics. Everybody was focused on together pursuing the mission. And we worked towards each other. We had each other's back. We had a lot of fun. We worked really hard. We were committed to excellence. And, I mean, it's just an incredible team that we brought together to do that.

19:57Daniel Robbins:Man, you are a pioneer. I was just at Expo West recently, which is, you know, all the CPG brands. And I asked so many people, what problem are they solving? And they all told me that they're creating a bar that solved the exact problem that you solved, you know, a bit ago. I think you talked about creating this whole industry. It's incredible. Do you think, though, that like, is it you think it'd be hard to replicate that now just based on the massive amount of competition that's going into CPG? Well, you'd need to do something else because trying to do what others did is a recipe to just be a meat to at best mediocrity.

20:41You have to rethink the world and say what doesn't exist. What's a problem that hasn't been solved? So it's kind of already solved that problem by definition. And since kind to your point, there's so many other healthy snacks with all the different functions. So if I was trying to launch a new product in that space, I would try to identify what truly doesn't exist that the consumer really needs. It's very hard. It's very hard to identify what doesn't exist, let alone people actually want. Because sometimes you come up with something doesn't exist, but nobody wants it. So you need to really make sure.

21:17Daniel Robbins:Only we want it, but nobody else wants it. Yeah. So you have to figure that out. You have to think outside the box and really will yourself into coming to something new. You know, AI is amazing. But if you ask it to design a product for you, it's just going to look at everything and come with pattern. What's amazing about our brains is our ability to think outside the box and go boundlessly. And that's what we need to train ourselves to do. That's what I want to train my kids to do. That's where the real value comes, to think about something that hasn't existed. And that means challenging conventional wisdoms, isolating.

21:57What are the assumptions that lead me to think that you can't do it differently? Very oftentimes, people think with or. It needs to be this or that. Identify an assumption that proves to be a false assumption where people think it has to be this or that and introduce and into your mind. OK, this is a problem looking for. This is how it is right now. What is the or underlying it? And the or says, oh, it has to be this or that. Can I think with that? Can I introduce a way to make it healthy and tasty by using nutritionally dense ingredients? Can I make it wholesome and convenient, socially impactful and economically sustainable?

22:42What is your and and how do you tackle the and? How do you creatively think and start thinking, what is the and? How do I do it with the and? And it might take you days, weeks, months or years. But if you unlock how to go from or to and and come up with a product or service that people want that does things better, that's where the real opportunity lies.

23:05Daniel Robbins:So I know that you grew up in Mexico City. You're the son of a Holocaust survivor who only had a third grade education, as far as I've heard. Do you think this made you destined to succeed or did it create a fear that you might fail? Amazing question, Daniel. I think, first of all, watching my dad definitely taught me so much about entrepreneurship without me realizing it. Like I wasn't, oh, let me become an entrepreneur. I was just observing him. And I learned a lot from him, a lot through osmosis, maybe through epigenetics. I don't know. being the child of a Holocaust survivor gives you an existentialist fear that is very, very real.

23:54And if you're able to channel those fears to constructive things, you can do a lot of good things with it. So I couldn't put myself to sleep when I was 12 years old. My dad started talking to me about what he went through when I was nine. And by 12, I was fearful about what he went through and about it happening again. And initially, through questions about magic, I started dreaming that I was going to be a magician with actual magical powers to force people to get along. That was how I, that's where I dreamt. And part of why I love magic is I imagined a world where magic was going to help me bring people together.

24:33But then eventually entrepreneurship became my tool. but more broadly as a child of a Holocaust survivor, I wanted to develop skills so that in the case of a war, in the case of a difficult circumstance, I would be not expendable. They wouldn't kill me. Because only 1 % of people my dad's age survived the Holocaust. You know, he was taken to a Dajau concentration camp and my grandfather lied about my dad's age. And he said, even though he was 12 and a half, he said he was 15 and a half. so they would let them work in the labor camp rather than kill them. They didn't have use for weak kids, and they just killed them.

25:13And so I learned languages and magic and entrepreneurship and all sorts of skills that reconnecting the dots, I think, was partly a survival instinct. I also enjoy it. I enjoy people. I enjoy languages. I enjoy magic. but I think there was something there also connected to my quest to survive so in that sense I think it helped me I don't think anybody's asked me that question that way Daniel so I was