Advice Line: Scaling Strategies

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2:40It's everything you need to build lasting customer relationships. Send exclusive email offers to your VIP customers, deliver perfectly timed text to high-intent shoppers, maximize your ad dollars with precision. Join the more than 176 ,000 brands, including Away, Patrick Ta, and Dollar Shave Club, already growing with Klaviyo. Make this holiday season your best yet at klaviyo.com. Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help to try and solve your business challenges and pain points. And each week, I'm joined by a legendary founder, a former guest on the show who will attempt with me to help you.

3:32And this week, we have a bit of a special episode. It's kind of a mashup, three callers and three different former guests, but all tackling some version of the same question, which is, what's the next move to scale my business? And by the way, if you're building something and you need advice, give us a call. You might just be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you would like some help with. You can also send us a voice memo at hibt at id.wondery.com and make sure to tell us how to reach you.

4:12And also, don't forget to sign up for my newsletter. It is full of insights and ideas about running a business and hopefully even some inspiring messages. You can sign up for free at GuyRoz.com and we will put all of this info in the podcast description. All right, let's get to it. My first guest today is Travis Borsma. He's the co-founder of Dutch Bros Coffee. Travis was first on How I Built This back in 2023 to tell the story of taking Dutch Bros from a single push cart in a small town in Oregon, actually in a parking lot of a supermarket, to a national chain now valued at over$9 billion. It is such an amazing story.

4:53And you can find it in the link here in the show notes. And as you'll hear, Travis was the perfect person to help our callers think about how to scale a business. Hi, Guy. Hi, Travis. My name is Andy Atkins from Nashville, Tennessee, and I'm the co-owner and operator of the Bad Luck Burger Club. We're a fast casual smash burger concept operating out of two food trucks, and I'm stoked to be on the show. Thanks for having me on. Awesome. Welcome to the show. All right, so you're doing Bad Luck Burger Club in Nashville. Two trucks, so congrats. When did you start the business? uh we started in the pandemic uh may of 2021 was our first go around and me and my partner cody we started up uh yeah it was a tent and a couple griddles a no business plan uh just a couple dudes kind of like throwing parties in parking lots around town uh with really just trying to get through uh you know we were all wearing masks sitting in our houses you couldn't be out and about And then like once the CDC was like, oh, you can hang with like 10 or less people in parking lots and social distance.

6:01Like the whole vibe was just, yo, let's go through some parties. Let's have a good time. Let's sell a cheeseburger. Try to make the money back that we spent on food at Kroger or whatever. And it really was not a plan to start a business. but it was just a perfect storm of people needing a place to be and needing a community and we happened to make a pretty good cheeseburger and so there were just large lines coming and we were selling out every time and that eventually turned into a food truck that then eventually turned into a second food truck and now it's our full-time thing and were you guys are coming from food you and Cody no uh no not at all Cody and I met uh back in the day when we used to both travel in bands uh I played as a professional musician for about a decade same for Cody so we were just in bands touring around the world we'd see each other at different festivals uh just you know making friends and then uh he moved to Nashville where I lived and you know You just start growing a friendship, seeing each other around town.

7:14Neither one of us have any hospitality or service industry experience before this thing. Did you tour with any bands that we might know? Yes and no. I started my career out as an actual musician playing in a metal band in the underground metal and punk rock hardcore scenes. I wouldn't think that you would know anything about that. That's a really specific niche. You might be surprised. keep going yeah possible but uh then after that uh i went into a 10-year career of touring in the production side of touring and arenas so i've worked with like panic at the disco and pentatonix and zach brown band and a bunch of stuff like that you know and you're just setting up stages and arenas all over the country all right and yeah yeah for sure andy what's your question for us Yeah, so we've grown organically over the past three years.

8:11The tent and the griddles paid for the first food truck. The first food truck paid for the second food truck. We've been cash flow positive since day one, and we've just always operated that way. we're living in a world right now where our decision has to be going into brick and mortar and securing finance for that or do we keep trying to replicate the current model of food trucks in various locations but Travis as you would know it takes a lot of operations to run a food truck at the level of success that we're doing. So it's like, you know, the big goal is brick and mortar now, talk to financial people about giving us some money, or, you know, keep bootstrapping through mobile unit, mobile unit, until it makes sense.

9:07So bootstrap, bootstrap, bootstrap, and then build through cash flow or raise money and go right into brick and mortar. It doesn't seem like those are the only two options here, But Travis, love to hear your thoughts on that. I mean, there's something super fun and cool and sexy about a food truck. You know, it's trendy. You have some flexibility with where you go and what you do and your hours and where you're going to invest time and money. When you look at brick and mortar, are you completely aware of all the costs that you're going to incur that you don't today with overhead? And I mean, you know, like from rent to, you know, maintenance on the buildings to investment in the kitchen with the equipment, the cleanliness that has to occur with bathrooms and people that may have, you know, kids that make a mess out of everything in the kitchen.

10:04And now you got an order. There's a lot of dynamics that are much different than your food truck. so i you know i if if that's your overall objective and and if if it is then you got to figure out well if i'm going to incur costs how am i going to offset that i would think you got to do a lot more volume you know and volume is probably the name of the game for you guys if you go into more you know brick and mortar sites with overhead for sure um yeah i mean we're pretty aware of it will be quite a bit more expensive to run, you know, monthly compared to what our overhead is now. We have a pretty decent amount of revenue.

10:45Our margins are pretty good. And with being able to open up a brick and mortar and add alcohol to our program of having a bar, that's going to be able to open up a revenue stream that we don't even have access to being in a food truck, you know? Because right now, like, we have one standalone food truck that stays outside of a bar that's seven days a week, open every single day. And, you know, like, we have a great relationship with them, love working with them, but also understand that, like, based off of the numbers that we look at between our two companies, we would have twice the revenue in a day just out of how much alcohol is being served in their building that we don't have access to sell in a food truck.

11:32Right. So you're saying that part of the brick and mortar, the big part is that you have the access to sell alcohol. For sure. Yeah, absolutely. Got it. And you know what? I mean, honestly, that's something that I think you got to consciously think about is how do you offset those costs? Volume, yes, but if you're able to bring in product line or a revenue stream that you don't capture today and you've got a model of somebody who already does, it's pretty easy to look at that and try to figure out how you could replicate it or take it to another level. Yeah, for sure. What's the vision? Like you're looking five, 10 years down the road, Andy.

12:07I mean, do you want to be the, you know, the Smashburger joint in Nashville or do you have visions of like beyond that area? I think we have a model that could be replicated in other locations, at least throughout the southeast. Yeah, I mean, I think we've already got a good footprint in Nashville. We are like we're voted best burger in town, the best food truck in town. We got some pretty good eyes and acclimations going on around town or whatever. I think being able to have a brick and mortar would for sure solidify us as a brand that's here to stay. How long do you think it would take you to save enough cash from the food trucks to finance it yourself, a brick and mortar shop?

12:56Gosh, I'd have to say probably another two years. I mean, it's something to consider, right? Because the minute you bring in an outside investor, especially with, can you give us a kind of ballpark of what your revenue is, your annual revenue? For sure. We'll just get over 8 ,000K this year, by the end of the year. $8 ,000 total in sales. $800 ,000, sorry. $800 ,000. $800 ,000, yeah, yeah, yeah. So it's pretty good. But you're going to bring an investor and they're going to say, look, you're going to need a million dollars to do this and I want 55 % of your business. And so the question is, and maybe you can talk them down to 30 or 40, but then at that point, you've got an investor with access to your books, which is fine, but they're a shareholder.

13:41So you now have a boss and you're your own boss. And so it's a big question as to whether, if you want to kind of speed this up, there are advantages to it. If you could find the right partner, but it's a risk, right? If you're willing to try and make a go of it on your own for another year, year and a half to see if you can fund it yourself, you retain the control. It's as simple as that. Yeah. Andy, are you married? Yeah, I'm married. Yeah. Yeah. You got compromise in the relationship sometimes? Oh, for sure. I feel like my strongest suit with both my life partner and my business partner is I'm the one that compromises, dude.

14:27I'm down to just say, okay, I'm not going to die in this hill, you know? Well, you know what? You bring a partner in, and that's a whole other dynamic, and you can count on a lot more compromise. I think what you're doing is amazing. And, man, what Guy just said I think is spot on. If you can just keep that snowball building, maybe take a little bit less to live on, keep that money rolling into the business and let it do its thing and have some fun with it. But I could see Bad Luck Burger and Brew is really easy. Oh, yeah. For sure. I could see that. Yep. Heck yeah, guys. And I mean, that's pretty good.

15:08That's pretty – I mean, 800 grand for two food trucks is pretty great. I mean, I would imagine you guys are doing a nice profit there. And to be voted the best burger in Nashville? Yeah, best burger, best food truck. We're about 30 % profitable. Wow. And that's with one of those food trucks. So the second truck that we have outside that bar, that started in January of this year. And so we pretty much shifted all of our focus on to getting that running seven days a week, like nonstop. So like the other truck kind of sat around for a while for us to be able to get that operational. So there's a whole nother revenue stream in that truck that didn't really get utilized that well this year.

15:52Yeah, I feel like you guys are doing something right here. Yeah, I mean, the model sounds perfect. You know, you maybe want to make minor tweaks to make a major impact. The brick and mortar scene and bringing on alcohol and the liability and everything that goes with it, Just be mindful of everything that comes with that that's new and different than what you do now. For sure. Yeah, it's definitely a big learning curve. Like I said, we're learning something new every single day, making it up as we go. But we know a lot more now than we knew May 2021, you know? Yeah. Burgers look awesome. They look delicious.

16:27Congrats, man. Heck yeah. Thanks, guys. I really appreciate you all. Andy Atkins of the Bad Luck Burger Club. Thanks for calling in. Good luck, Andy. Thanks, guys. Yeah. Yeah, looks like a good burger, man. I have recently, very sadly, Travis, given up mostly. I'm not going to say entirely, but I would say 99 % of the time given up burgers. It's just because I'm on like a low, low-carb diet. So I take my kids in and out, and I just sit there wistfully watching them eat. Well, I have not done that. Yes, you go. You're a lucky man. Go to a bad luck burger club. Yeah, I'm ready to go, man. I know.

17:12They look delicious. We're going to take a quick break, but when we come back, another caller with another question for another former guest. Stay with us. You're listening to a special mashup episode of The Advice Line right here on How I Built This Lab.

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20:57Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz. And our next return guest, Michael Praseman, started the online clothing retailer Everlane. And Michael shared that story on the show back in 2023. And we'll put a link to it in the show notes below. Michael caused quite a stir in the fashion world when he publicized his company's production costs at every step along the chain. Over time, Michael ended up building a multi-million dollar business with a focus on sustainability and social responsibility. And when Michael joined me on the advice line, he offered some really great advice about growing a fashion brand through retail partnerships.

21:37Hi, guys. I'm Tiffany Narbonne, the founder of T. Giselle. And first, I just have to say, Guy and Michael, I'm so excited. I feel very grateful for this opportunity. Guy, I've been listening to you for so long, especially when I be on the road heading to appointments with my brand, and it was always just a fuel to me. So I can't believe I even have this chance. So thank you. Amazing. Well, okay. Tell us a little bit about your brand. So our brand, it's an inspirational jewelry brand, and it's all about spreading positivity, being able to wear your story through timeless jewelry. We use all precious gemstones, sterling silver, lifetime guarantee, and all handmade right here on Cape Cod by women.

22:17And our brand is just really, I say, to wear your story. Yeah. Tiffany, I may have missed it. What's the name of the brand? T. Giselle. I get all excited. I don't even say the name. T. Giselle. What is T. Giselle? So my first name is Tiffany and my middle name is Giselle. And when coming up with the name of my brand, I made I started creating jewelry and something came over me. I never felt I never had, you know, a vision of being a jewelry designer. Just something brought so much joy to my heart when I made a bracelet. And so everything's always had a meaning. And my middle name is with my mom also shares it with me.

22:58And so she's such an inspiration to me. She's such my rock. And yeah, so it's just another piece of me. And tell me a little bit about the products. I mean, mainly bracelets, right? And they're like made from, they're spherical. They're made from like a stone and they've got a charm on them. Okay. Yeah. Yep. So they're all, we use all precious gemstones. So all different semi-precious stones from like amethysts to rose quartz, blue aquamarine. And with that, I really created like a dual message. So not only do stones hold meanings and energies, which I've always been into, but charms all have a meaning.

23:34You know, you never know what something could symbolize to someone. So with the bracelets, I really kind of combine both those messages. And we have an array of styles. So, you know, for instance, like maybe your mom loves rose quartz and you want to get her our family tree. But you could get your sister, you know, maybe she's a blue girl, something for serenity. You can get her that option with the heart. So I say, like, you create the story, you know, and there's lots of options. So it's definitely turned into a stackable, um, our returning customer. They want to create, you know, their stack, you know?

24:07Yeah. And you make, and you basically make it on Cape Cod. Yeah. Yep. I have a whole team of women, which is amazing. I love my crew. I couldn't do it without them. And they put so much love into every piece. And I believe that's a piece of it that comes out when you're wearing it. And you, and you have a shop too, right? We do. Yes. We have a store right on the Cape. It was when we first opened, we thought it could be like a showroom for our retailers we work with to come like check out the brand. But then we were like, you know what? We're right on Cape Cod. We're in a popular location, destination for the summer.

24:39And it's been great. And so we have just one location on the Cape. And then we work with retailers across the country that carry our brand. I love Cape Cod. It's so fun. I haven't been there a couple of years. I love it. It's the best. So, all right. A couple of questions. First of all, this is self-funded, right? This business. Yes. And are you guys, have you guys broken half a million dollars in sales yet? Yeah, we actually have hit over 5 million. Wow. Yeah. Congratulations. How many years have you been around? Thank you. I founded it in 2012. So I literally was a baby. Yeah. So it's been a minute.

25:14It's been a little bit. And so now I'm a mom. So I say I'm a mompreneur. And, you know, our during COVID, our brand, literally, we were so blessed, it like took off. Yeah, you know, we I built the brand through doing trade shows and wholesale. But it was so special, because I started going live on Facebook and our website. And then I ended up getting reached out to from QVC. So it's been just word of mouth has really built our brand. Yeah. All right. So you're doing about 5 million revenue. That's great. Congratulations. And your question, what was your question for us? So my question is, you know, really, I want to be able to share more of our room with like bigger retailers.

25:59Like we have a few big independents that we work with in like QVC, but kind of how to get in the face of some of these bigger retailers or partnerships. Just out of curiosity, before we get to your question, roughly what are you spending on marketing every year? On marketing, we're spending about, I think, 10%. Okay, great. Very reasonable. Very reasonable. Yeah, very reasonable. Okay. So, Michael, she's got a great brand and got some momentum, got a store in Cape Cod. Clearly, it's resonating, but on QVC. So a lot going for her, but she wants to take it to the next level from$5 million to$25 million or beyond.

26:48I mean, at this point, this is now a mature business, small business. So now what? So what I'm thinking about in my head as I see this is like you've done such an amazing job telling your story. And even when I go onto the site, a little video pops up of you and I get to hear your story. And then what you said is, when the pandemic happened, I went live and started telling the story. QVC, you're telling your story and it's live. What is it about that story that's resonating with people when you tell the story that gets them to go, I want to buy T. Giselle? Because it's so personal, right? It's your name.

27:28So clearly there's something there that's happening. I think it's just, you know, I'm a very believer in, you know, being kind, what goes around comes around. We all have a story. And when I started my business, it's so crazy. My dad passed about a year in and I wanted to quit. I wanted to stop. And it was like a piece of then Megan Trainor ended up tweeting my bracelets. And this was when one of her big hits came out. And it was such a pivotal moment. From Nantucket. Megan Trainor from Nantucket. I've interviewed her before. She's a lovely, lovely person. Oh my God. I've never met her, but it literally was, I felt like it was a sign from my dad and Barry and his signs where he was like, you're not quitting.

28:07And so I then threw myself into my business. I began doing a lot of events, pop-ups, just cold calling, whatever it took. And it ended up becoming an outlet for me. And now it's more than jewelry. And I think that's really where we strive, you know, and I do it because I love it. And I feel grateful for my consumers. And, you know, just being able to connect to the story, if that makes sense. No, it does. And I guess what I'm trying to figure out is how do you take the story you're telling and start to make it into words that make it very clear for people because you can't show up everywhere. You know, QVC is one place where you can show up.