Crumbl: Jason McGowan

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27:40Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2017, and Jason is still working on the perfect recipe for his new cookie business. And meanwhile, his partner Sawyer is in Logan, Utah, scouting out a place to build the first store. Sawyer called me up one day and said, hey, there's a building here. There used to be another business in there. It was super popular. It's this particular location. And I think we can get it for really cheap because they're going to demolish it soon. I'm like, oh. And now at the time for me, that was actually exciting because if this didn't work, I didn't want a five year lease on my hands.

28:16You know? Yeah. And so this was like part of our like test and learn, you know, culture here was like, oh, this will be fantastic. We'll, you know, we'll rent it. And so I think he was asking something like$1 ,200 a month or something for it. And I was like, sorry, we need to get it to, you know, eight or$900. And I still, to this day, if that landlord had not lowered the price of that building, I'm not sure where we would be today. Wow. I called that the multi-billion dollar decision because I often think about how many decisions are$300 decisions that are life-changing for you, you know? Yeah.

28:52And I mean, it was clearly would have been worth whatever, right? But the landlord ended up saying yes. He's probably like, who else am I going to get to rent this building that I'm going to demolish? It was probably it was a win win for him, too, as well. OK, so you you get this shop that's going to be demolished. And at that point now, what's what I'm curious about is the shop was in Logan, Utah. And I think you were living in Provo, right? Yes. Yes. Which is got to be an hour and a half, two hour drive. It is. So Sawyer lived in Logan, though. And so it was close to Sawyer. and the idea was that I'm going to build the technology, do the marketing, and Sawyer would do the kind of run the store.

29:33But while we were getting up and going, I was traveling there all the time. Right. And you got the lease so you could start to move the equipment into the facility. But before I ask you about like sort of building it out, I mean, it's only going to be around for six months, right, before they can demolish it. But, I mean, this was going to be a small business. It was going to be a small side hustle. Yeah, that was it. This is going to be a side hustle. It'll be fun. It'll be great for learning for Sawyer. And really, if the technology ends up being really successful, then we had something really good that we could use.

30:04And what was the technology side of it going to be? Because it was going to be a shop selling cookies. But tell me about what were you going to focus on? Yeah. So I was focusing on like, okay, how do we get our first product, which was the chocolate chip cookie? Yeah. And then how do we build the technology, meaning like routing it to houses? So this was still going to be a delivery business, even though there was a shop? It was going to be delivery business. Yes. Yes. So you had to hire drivers and things like that. Exactly. So we hired our own drivers, did our own thing. How do we keep these things warm?

30:35All those kinds of things were things that we were working on really early on. But if it was because just to put this in perspective, I mean, Logan, Utah, northern Utah, close to the Idaho border, population, 50 ,000 people. I mean, we're not talking about like even Salt Lake City. This is not a huge number of people there. Right. And so to me, the idea of putting all this time and effort into building out like a delivery network of drivers and how to keep it warm for a population of 50 ,000 people seems nuts. I mean, right? I mean, I don't know. It does. Well, when you put it like that guy, it does seem a little bit more nuts even when you say it.

31:11Yes, it's in my mind, you know, I often listen to, you know, Paul Graham and he talks a lot about, you know, focusing on a few customers and making a product or experience really well for them. And then it will scale eventually. And so my whole thinking was, OK, how do I build something that will make these people extremely happy? and we were going to build it along the way. And I was as much fascinated with scratching that itch of just doing something that could be different and physical and not in the technology world. And it was so like going from like pixels to actual physical things was so like alive.

31:51Like all of a sudden my career, what I was doing was like, all of a sudden there was color to it. You know, I was like, oh, this is so exciting. Like I was as much fascinated by the learning experience of what we were doing as much as like the business or making money or any of those kinds of things. Yeah. But to justify the time and the effort and even the money that you're putting in, you had to have thought that this could maybe lead to something else. Like it sounds to me that like the cookies were interesting, but that maybe the technology that you were building, the distribution network, that's something that you could sell eventually.

32:28Totally. Yes. All right. So you guys had the lease. And what about the store? Did you do a build out? I mean, it was going to be demolished. But you still had to make it look nice enough, right? Because people were going to go into the store. Oh, we totally did. And I was so nervous about it at the time. I mean, I built the first counter just to show you how frugal I was. We went in there and tore things out and started doing things. And even at the time, I didn't even know that you were supposed to get permits and all those kinds of things. to do a lot of these things. So we were doing some of these things without permits.

33:03And of course, we were on social media. We were just sharing on social media behind the scenes what we were building and pictures of the build out. And at the time, that was like, whoa, you can kind of get a live peek into a store, a local store getting built out. And we started building a following that way. All right, I think you opened the shop in the fall of 2017. And did you open with like one or two? Like how many different cookies did you open with? We opened with one. That's it. Just chocolate chip. Just chocolate chip. And the problem was we didn't have time to do more. The building was going to get demolished.

33:35So it's like, if we want to build a full menu, there's no way. We spent so much time building one product because we just were constantly trying to tweak it to make it better that we're like, that's it. We're going to launch with one. We're going to be warm. They're going to be big. We wanted them big because they're meant to be shared. So if you're taking them, you're kind of sharing them and all of a sudden people are trying them and that's how the virality. It grows within the food concept that we were trying to do. And I still remember, because remember, I've been in social media for my whole life.

34:02So it was all about grow, grow, grow, grow. We'll worry about profits and revenues later. And I still remember this man came and he had on a plaid shirt. He had bought this box and this four pack of chocolate chip cookies and he handed me money. And it was like, whoa, wait, people are actually going to pay for this, like all this energy and all this time. And we had them, you know, I had them change. And I remember just thinking, oh my goodness, we created a business and it has revenue on day one. And I remember being so excited. And really you were building up, I mean, the social media presence, presumably it was for a local audience, right?

34:38It was, you were trying to get people in and around Logan to be aware of it. Yeah, we were. And, you know, Sawyer had a, had his personal social media. They had friends and stuff like that we actually leveraged that started off it had like i think 10 000 followers or something like that and i don't remember the exact number but we got in the newspaper too as well and then our competition opened up one week before us wow they saw what we had done and they opened up from their homes and they wanted to do delivery and they launched one week before us and i remember just being devastated like in technology first movers advantage is everything and that's been kind of built into my core.

35:17And we're like, oh, is this going to work? Did they already get the first mover's advantage? Are we going to look like copycatters? It's just like, what's going to happen here? And I remember just looking over at Sawyer. And I think that's why we spent so much time on the product was because we knew that at the end of the day, it all comes down to the product. And I just told Sawyer, let's ignore the competition completely. They're not going to be our customers. They're not going to keep us in business. Let's focus 100 % on our customers. If we build products that our customers love and they have great experiences in the stores, we'll win.

35:51And so when you opened, right, a week after your competitor had opened, how did it do? It did phenomenal. Lines were out the door. Just for chocolate chip cookies. Oh, it was crazy, guy. I was still shocked to this day, all the social media marketing and we did digital spend advertising too so all the stuff that i'd done before in the past so we we were able to market to everyone and everyone saw it it worked tell me a little bit about this or the thinking around the branding or the look like for example i think from the beginning you sold the cookies in these pink boxes yeah you know i think what was interesting is our competition at the time was going after the college market because it was, you know, a college town.

36:38The problem was, is the people that were coming into our building were women. And we thought, wait a second, what if we're focusing on moms and not on college students? And Sawyer's had a core memory growing up where one of his dad's friends had a Cadillac and it was pink and he loved the color from that Cadillac. And we thought, what if we just take that iconic Cadillac color, it'll set us apart and we'll be different. And so I really kind of love that. All right. So now you've got this and you're going back and forth between Logan and Provo, like every couple of days or once a week or. Yeah.

37:13Oh, like, yes. There was times where I was slowly driving all the way around Utah, looking for pink boxes and then delivering them. It was really one of those things behind the scenes where we were everything. I was on the phone with customer service. And at the time, we had a delivery technology that allowed us to do routing for the deliveries. And deliveries was really big early on because people are so excited. You could get something warm delivered to your door and word of mouth started spreading. But I was behind the scenes on the weekends, literally just moving around the routes. I had a big map and I had all the deliveries on a map.

37:48And I was rerouting to try to make sure that the drivers would be optimally driving. And so a new driver would come show up and all of a sudden they'd pop up online. I'm like, okay, I got to reroute all these. So we didn't have any of the technology beginning to route everything perfectly. We were doing it by hand. I mean, you were building a logistics network. It's like a mini UPS. Yes, it was. And it was a lot. But how was that sustainable? I mean, delivering is really expensive, right? From what I understand, it really only works on a large scale. I mean, you had drivers being paid hourly to drive to deliver cookies.

38:19And how did that work in terms of not not losing all you well what we did early on is we made sure that all the cookies were warm we had these these cases and we had these warmers these gel packs that we'd microwave well what we learned we could do was is we wouldn't send out drivers with the exact order because remember there's only one flavor we would send them out with way more cookies than they already had current orders for and so as a new order would pop up if it was close to them, I just slotted in. And so all of a sudden, the logistics became a lot lower cost because we were optimizing routes so much.

38:54It worked really, really well for logistics. All right. So you've got this store that's really kind of starting to take off. And I mean, I guess not too long into the business, you decided to open a second store. Like by the end of 2017, and decide to open one in... Yeah, actually our second one we opened up in Orem, Utah. And what's interesting about this is, and so there was another competitor that was in Provo area, and we were like, okay, well, how can we kind of win Utah? And we came up with the idea of using this technology and this delivery network to deliver to all of, basically, a big part of Utah.

39:34So our second location was actually a warehouse. So while the competitors are only opening to a small radius, What if we opened up to all of Utah County and we could start delivering into, you know, 10 different cities? It would be a central kitchen, like a central commissary. Yeah, like a commissary. That's exactly right. So we create this commissary in this warehouse and then we open up to delivery only. So that became a very logistical challenge because we just had tons of deliveries and it kept growing and growing and growing. Demand was outstripping, you know, our ability to produce them.

40:04And so we got some bad reviews and it started being really troublesome for us to figure out how to actually service these customers. And that's when we thought, okay, we also need to have better experiences. And so that's when we decided, okay, we're going to start opening up in other areas. But the reason why we opened up in Bountiful, Utah, first was because Sawyer's mom was going to be originally a third owner in the business. And Bountiful was going to be your third location. Yeah, Bountiful was going to be your third location. It was our first franchise location. And the reason we franchised that first location was Sawyer's mom was going to be a part of the business early on.

40:43And Sawyer's dad was like, you're going to spend a lot of time in this bakery. It's not going to make a lot of money. You're going to be away from the grandkids. I'm not sure is this going to be really worth it to you. So she decided to bow out and not do it. But they came back and Sawyer's dad's like, she's going to kill me. She sees the success of the business. Is there any way she can buy a portion of the business or is there anything that we can do? and so that's when I started kind of you know researching I'm like well franchising that's like we already invested the money the business was self-sustaining it was already making money and paying for itself um so there was no need for capital at the time and we wanted to try to build this without outside capital and so we started franchising so we went to a franchise attorney learned how to about the franchising and so we franchised our first location in Bountiful and I will tell you I have never been more nervous about spending someone else's money in my entire life.

41:33You know, it was one thing to waste my own money if it didn't work out. But to now have somebody else's money in there, I was so stressed out that I was going to lose Sawyer's parents' money. And we get to the store Bountiful. We leased the building. And I remember someone came in and they said, oh, this is going to be so amazing. It's going to be so amazing because every other business that's come here is closed down. And I remember just my gut just dropped. I'm like, oh my goodness. We picked the wrong location. but we powered through it. And the minute we opened it up, the lines were just out the door.

42:09So there was no plan. I mean, again, like it seems like it just kind of happened organically. It was, they wanted to open, they wanted in, you sort of thought, well, let's try franchise model. The beauty of a franchise model is you, I mean, if you do it right, you don't need to bring in a lot of outside money because the franchisee pays the fees to build out. And so with the success of that shop, immediately you thought to yourself, okay, we're a franchise business now. Yeah. And we had friends and family who saw this. So I had friends in my neighborhood and sorry, I had some family members and they all wanted to do a crumble.

42:46And so we opened up a few more crumbles and all of a sudden they started doing really well. And then we had someone come in and they wanted to open up 20 locations in Colorado. Wow. They came to me and they said, well, we have two conditions. Jason, my condition number one is that we own the marketing. We want to own our own customers and be able to do our own marketing. And I said, okay, well, maybe we could work on that. And the second thing they said was, there's no way this is going to work outside Utah if you stay closed on Sundays. Right. You're closed on Sunday. Yeah. The only way if you let them open on Sunday.

43:17If we let them open on Sunday, they'll open the 20 locations. They'll grow it across all of Colorado. And they said, your business will never be successful outside of Utah if you don't. And I thought, we want to be able to give bakers time off. We want them to be able to spend time with their friends and families. And this is just core to who we are. It's spending time with family. And if people want to worship on Sundays or they want to do other things on Sundays, I don't want to work on Sundays. And I remember talking to my wife and talking to Sawyer. And we came to the conclusion that even though it financially didn't make sense, that it was important to us because that's really our mission of bringing people together.

43:53And they said, your business, it's never going to work outside Utah. And I said, well, if it doesn't, it doesn't. And that was a big kind of moment for us. Franchising, the franchising model is complex, right? Because and usually people who do it have experience in franchising. First of all, how did you even start? So once this one in Bountiful becomes successful and you know that people want to start and open them up, did you hire like consultants to help you understand how to do this? Who helped you figure this out? You know, so a lot of it, we just looked up online and a lot of the people were our friends and family.

44:31So it was like, they were very forgiving and patient with us because we would give them recipes. You know, at that time we started having more recipes and we started giving them recipes like two or three days before they're supposed to be made. And there was a lot of scaling pains and problems early on of us trying to just grow it. And so after we got like, you know, six, seven, eight stores open, that's when things actually really changed because everyone kept saying, well, only people in Utah like sugar. It sounds crazy when you just say it like that. But that was kind of the thinking. And it's not going to succeed outside of Utah.

45:03It's hot cookies. They're not going to succeed outside of in warm climates. But then when it started working in Vegas and a couple other places, we really got to this moment that was, okay, sorry, this has been fun side business, but we're now going to take over the nation. We're going to go from a franchise business with our friends and family and trying to do something fun and cool to let's create a real business and let's take over the United States with this concept. When we come back in just a moment, Jason learns that almost all publicity is good publicity, even when it's about flavors that flop.

45:40Stay with us. I'm Guy Raz and you're listening to How I Built This.

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48:09Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2018. a year after launch, and Crumble Cookies is growing into more than just a side hustle. It went from, hey, this is a cool concept. So, you know, we said, okay, we nailed it. Now, how do we scale it? Because it's a whole different skill set and a whole different business, right? And so we went from these cookies and teaching people how to do it to how do we build this big franchise business? And we had one rule, which was we need to fire ourselves. Every single day I wake up, I've got to fire myself from jobs that can be easily done by somebody else.

48:46So customer support, we've got to fire ourselves. We've got to find who's the best customer support person we could find. It's like I can't be doing deliveries anymore. I've got to work on the business, not in the business. How do we fire ourselves from delivery drivers? And one of the things that we often would say to ourselves is we need to quit making 10 store decisions. We need to start making 100 store decisions, 1 ,000 store decisions. you know like for example let me give you a specific example how are we going to train all the bakers on the recipes because at this time we had a rotating menu which basically rotated every single week how are we going to train the entire nation when we have a thousand stores and 30 40 000 bakers and so like that led to like the decision of building technology so we have our own custom app that shows people how to train we we invested in videography and training tools and so and people can see how many people are trained in their store and what their level is and their knowledge skills.

49:42But that would come later, obviously, as you scaled. But I mean, I'm curious. In 2018, this is your first full year in business. By the end of that year, there were 16 locations, right? Which is a really fast growth. I mean, not as fast as it would eventually become, but still like, you know, and you had a brand and you had a quality product and you had to ensure that all those 16 stores were doing the same things, right? That they were making the dough exactly the same way, that they were frosting the cookies. Maybe you weren't frosting them quite yet. And then when you had a new cookie, you had to roll that out to all those stores.

50:19Like in that first year, how did you manage teaching people how to do that? A lot of it was sending over the recipes to them and doing just content videos of just sharing with them like how they should make this, how this should be done, and how the recipe should look. And the second thing that we did is we had everyone send their pictures in. So they'd have to take pictures of the product. And we had people here that would critique and say, that doesn't look right. Let's see what you're doing here. Are you mixing wrong? Or are you over mixing? Or what happened? And so we were constantly gathering data digitally.

50:53And we were really relentless. And so a lot of it was manual. The processes were manual. But that couldn't last forever. I mean, sorry, I couldn't even open every store physically. But for the first 100 locations, for example, I did the real estate. So I went out and I met with the entrepreneurs and the franchisees and I'd go tour the locations and we'd look at them and we would talk about them. And eventually I couldn't do that anymore. But I was there. We were boots on the ground. We were in it. Yeah. Well, I mean, you had to because if the more stores you're opening, the more risk there is that one of them isn't going to be up to scratch, right?

51:29And you could start getting negative reviews by people who are like, oh, this crumble cookie place sucks, right? Totally. One of those franchises. So it's like you really had to make sure that their standards were what you needed them to be. I'm curious, like by the end of 2018, I mentioned you had 16 locations and I read that your revenue was about under a million dollars, but you were growing, obviously. And by the end of 2019, so your second full year, you had 55 locations and you'd earned about four and a half million dollars in revenue. Do you think being in Utah at the beginning is a major reason why it was able to scale?

52:08That because culturally it was the right fit and there was a fan base and it's baking and it's your clothes on Sunday and all these things. Like, do you think had you started it, I don't know, in Los Angeles, maybe it wouldn't have worked? I think you're probably right. I remember reading the book about Sam Walton in Made in America and how he went to the outskirts of Walmart. It's almost like the Walmart strategy and where you go to all these smaller towns and, you know, populations of 60 ,000, 100 ,000. So, yeah, I do think that it also created this energy excitement. You know, when you go to North Dakota and there haven't been a lot of other brands that have gone to North Dakota, man, you should see sales go crazy in North Dakota, right?

52:49Because people are talking about it. Like there's a thousand other concepts in, let's say, LA or New York, and you're just one of many. But when you're in these towns and you're taking care of these customers that maybe don't have a lot of options, it's also really exciting for them. Yeah. Tell me about social media now. I mean, you came from this background, like you had all of this experience with social media. Tell me a little bit about how you started to think about leveraging social media to turn what was basically a cookie, a good cookie, but there are lots of good cookies available in America.

53:24But how do you then use social media to really differentiate it? How did you start to think about that? Well, you know, I think one thing that we had done really early on, which sounds very simple, but lots of brands don't do it, is we actually engage with our customers. It surprises me today that so many brands and businesses spend so many dollars trying to attract new customers. And then when they come talk to them on social media, they're just like, ignore them. They don't answer their DMs and they just are constantly trying to grind and find new audiences or create new splashes. And so for us, we carefully over long periods of time have built relationships with our customers.

54:03And people are like, well, you have a cult-like following. We have a, we call them cult-like relationships here, which we respond back to our customers. We respond to their feedback. If they have ideas for cookies, guess what? We actually implement them. When they have complaints or frustrations about a product, if it tasted a certain way, they didn't like, we take that feedback. We actually fix our products and it gets harder and harder over time. But even today, we have over 30 people that are just dedicated to responding to people. So I think as you build a social presence, you cannot underestimate the compounding effects of constantly talking to your customers that compounds exponentially over time.

54:40How did you land on what I think a lot of people think of crumble cookies as sort of like a frosted cookie? It's almost like, you know, I think there was a cupcake craze. It's still still around, right people still go eat cupcakes but you know a lot of your cookies have a you know layer of frosting on top which is different unusual how did that come about because i think again that when i think of crumble cookies i think of that sort of really sort of lavishly decorated cookie you know one of the things that uh you know sawyer and i think about a lot so we constantly ask ourselves how are cookies different unique and special and it allows us to just try crazy things And because our menu rotates every week, if something doesn't land, guess what?

55:24Who cares? At least we were trying something fun and it was different and unique. That's kind of been our mantra. We started doing things like adding a frosting. And I remember when we added the frosting for the first time, operationally, it was extremely challenging. Customers love it, which created demand, which created more customers. Some people hate it, right? Oh, yes. Which also works to your advantage because it's controversial. There are people who do see this and they're like, that's disgusting. That's too much sugar. You're right. It does create this controversy and this conversation online.

55:53But at the end of the day, we look at the data and say, what do customers want? And we say this a lot here at Crumble is our critics don't pay for our business. Our fans do. I think that's a really important point because I think a lot of brands and folks do pay attention to their haters and that's not who's buying your product. I wonder about how did you start to think about really getting this idea of Crumble as a brand, like when people think of cookies? For example, who were you targeting particularly? Because initially it was women, it was moms coming into the store in Logan. But I imagine eventually it was like, well, it's actually kids, teenagers.

56:31Yeah, it's a combination of both. Those are our two strong demographics. It's both moms is kind of our primary and then teenagers are secondary. So how do we think about brand? Being in the tech world and being around Steve Jobs and a lot of people call us the apple of cookies sometimes, and especially early on with our stores and they're white. And unlike other cookie concepts, you can actually see them making the ingredients. You can smell the store when you get in there. But a big part of the brand is the rotating menu was born after Bountiful. After the first week in Bountiful, by that time we had something like 11 flavors.

57:06We couldn't keep them all in stock. People were frustrated to come get their favorite flavor, but they couldn't get them. And we sat down at the end of the week in that Bountiful location and we said, what if we rotate the menu? We drop it on a Sunday when no one can get it. People will freak out. They'll want the product. They'll be talking about the product. But then everyone across all of our locations can experience the same flavor at the same time and have conversations around them. You know, people are not going to remember the exact flavor that they had that week, or they're not going to remember the exact taste, although those things are really important.

57:38They're going to remember how they felt, what the experience was like, you know? And so, and sometimes it even works even on product that is completely, people don't like. One good example was Everything But Bagel. We launched this Everything But Bagel and all of a sudden people are like, what the heck are you even doing, Crumble? But the amount of conversation and the amount of people coming to try it and then telling us why it was horrible, it actually facilitated our mission. When you make an everything but the bagel cookie that's going to generate a lot of conversation. I mean, it's totally from a marketing perspective, like it makes a lot of sense.

58:13Totally. It makes a ton of sense. You know, and sometimes they may not even be the biggest sellers, but the earned media behind them becomes a really big deal. When you're like a year or two in, right? I mean, from the outside, it looks like, wow, you're just crushing it at 55 locations. You're a year and a half in,$4.5 million in revenue. But actually, that's when you're extremely vulnerable. I mean, there are tons of examples, not tons, lots of examples of franchise models that failed, that went under after expanding or selling tons of franchises. So in a sense, you're actually still very vulnerable at that point.

58:49Yeah, no, definitely. And I think people see it on social media and all of a sudden they're like, oh, I could do this. This is just cookies. It's simple. So of course you have people, competition others wanting to open up stores. And so for us though, that became, how do we become really nimble and really quick, even as a larger company? And how do we grow the store footprint to cover across the United States as fast as possible? That was the realization that you had to do this very fast. Scale, scale and speed. So scale and speed, you know, it creates this moat and it creates this experience that, you know, discourages competition if you become the first movers.

59:30And you see this with, you know, In-N-Out or Whataburger, how one has the East Coast, one has the West Coast, and they're kind of, you know, several brands. And for us, our belief was how do we go across the nation as fast as possible so that that doesn't happen? Yeah. Yeah. Let's talk about TikTok because you really figured out how to get virality, like massive. I think you've got 10 million TikTok followers in your channel, more than Starbucks, right? Starbucks and Nucky combined. I think we have more than both of those combined. Yeah. So what did you do on TikTok that worked and that was able, like, was it just images of cookies breaking?

1:00:06Was it just crazy cookies with wild frosting, like weird flavors? What were you putting out there that caught fire? Well, I think it's first and foremost, one of the most important decisions we made was to go on the platform early on. And you see the engagement numbers, you see everything else. And you're like, this is going to be huge. Go all in on TikTok. So we had a first early movers advantage over a lot of brands. And the second thing that we did is I think a lot of brands and companies, they try to take their content and they try to just disperse it across all the social networks. And just like it's all the same, right?

1:00:41It's like the same video. Let's drop it on all five platforms. Well, the problem is, is the customers on X are different than the customers on TikTok and are different than the customers on Instagram. and what they're going for and their motives and their desires are different. So how our photos look in the photography and Instagram, really big deal. TikTok, nobody cares, right? So the second thing that we did, other than just the early movers advantage, is we tried to find out what the customers were already doing and leverage that. So one thing that we did was the customers were really excited about sharing their reviews.

1:01:18This is kind of where reviews started really taking off on TikTok. And so a couple of things started happening. Like, wow, how do we champion these reviewers? And so we started, you know, putting their videos in the stores. People physically would walk in like, oh, my goodness, there's TikTok videos of like. In the stores. In the stores. On a screen. Just on like replay. Yeah, replay. Doing it, right? We started kind of highlighting the TikTok, you know, customers. We started reposting them. And then we started just doing reviews. And I remember I did a review and I did a positive review. And I did a negative review on a cookie.

1:01:49I didn't like because everyone has different taste buds. And they're like, the CEO is doing a negative comment on a cookie. And like, it just, we were authentic. We were just who we were. It wasn't like we were trying to do something or we were just trying to be authentic to the audience that was there. So this is the other kind of, I think, differentiator, which is you change all of the cookies every week, except for the chocolate chip cookie that stays right. And everything else is changed every week, every single week. And you drop that, those flavors. It's like a drop, like a new purse or a new sneakers.

1:02:23Like you have a flavor drop every Sunday. And literally, I mean, even if you could have a week, right, where only the chocolate chip cookie is selling well, but the other ones are not like, I'm looking at it this week here in my area, like blueberry cheesecake is a flavor. And that might not be popular. Or it might be super popular, but it's gone in a week. Exactly. You know, and you have people that they don't want to miss it that week. And so there's FOMO that plays involved in it. All those things come into play. But yeah, people will freeze them. People will buy them in droves. If it's their favorite flavor, they'll buy them and they'll freeze them so that they can have them later.

1:02:58But this is interesting to me because I have spoken to a lot of conferences of franchise owners. And, you know, they always have some criticisms of the parent company. And I'm thinking if I'm a franchise owner and I'm paying, you know, you 8 % or 9 % and, you know, you're telling me I've got to make the almost everything bagel cookie that week. and no one's buying it. And I'm like, well, last week we had the butterscotch crisp cookie and that was crushing it. Like I'm annoyed because I'm making less money that week. Yes. Well, and I think that's the part of the business. And so, yes, you have some franchise partners who probably are frustrated and wish we had this flavor versus that flavor.

1:03:37One thing that we've done recently is we've brought our franchise, we bring a council together of franchisees. So we have several franchisees who've run extremely well-run stores and they come together and they help us pick the flavors together. We do it as a team. I mean, sometimes like what is the criteria for like, you've had like pineapple Dole Whip cookie, right? Or cornbread cookie, which doesn't to me, or strawberry limeade with nerds candies. That just sounds really gross to me. How do you... Have you tried it? I haven't, no. Yeah, so you're going to try it. You're going to try it. I can tell you haven't tried that one because you probably would like that one.

1:04:13um you know like how weird are you willing to go yeah i think we can go pretty weird why not it's fun so we will our brand will always do that i mean the flip side of i mean innovating obviously but the flip side is is that you do too many things right is that you're pushing too many things out but i guess that you're what you're saying is you experiment and if it doesn't work you just move on you just kill it yeah i think that's why our franchise partners are willing to work with us and willing to try new things. Because they know you're going to kill stuff if they don't work. They know equally that we're trying new things that will kill something.

1:04:48When it's a bad idea, that's culturally like just part of who we are. Yeah. I know COVID was a huge, you know, like actually was a huge sort of boost for the brand because a lot of people were on social media. They were noticing the brand and in many states, the stores could stay open. And that also inspired and continues to inspire copycatters, right? Which I think is a form of flattery, but also can be threatening to the business. And you did file lawsuits against competitors that you felt were copying your brand or your look or the boxes and things like that. And this was dubbed the Utah Cookie War by the newspapers at the time because these were both Utah-based companies, both of which are still around.

1:05:33in your view like is it worth it to go after somebody who's copying your because we've had founders in the company who's just say at the end of the day it's not worth the time and the effort to do that you just focus on your brand and others say no you've got to go after every single one because they can threaten your business yeah you know i think that's a great question i think my answer before and after all this experience is probably different there the biggest struggle we actually had was what's my fiduciary responsibility as CEO, because it was not like people were just copying us. We had, we had somebody that came and worked for our company and stole our recipes.

1:06:12Your trade secrets. Yeah. The solar trade secrets and then started. So for us, we of course felt like we had a very strong case and the, the, the judge felt like we did too as well. And, but the court of public opinion is different. It's in sound bites. And, you know, by this time we got larger, so they They tried to create it to be a David versus Goliath experience. I think even one of your competitors that you sued took out billboards or considered doing it that would say things like, cookies so good we're being sued. Yes. And that was the company that actually had an employee that worked for us that took the recipes.

1:06:44But looking back on it, I think I don't think it was worth the time and the energy. Our whole career has been built on not focusing on competitors. And then all of a sudden this happened and it caused us to lose focus for a little bit, to be honest, too. So I would probably lean more into the camp with not being worth it. By the end of 2022, you reached a billion dollars in sales. So less than roughly five years after launch, which is absolutely incredible. I mean, the growth was just astounding and entirely self-funded, right? I mean, there were no investors at that point? No investors, yeah.

1:07:20We had no investors. Still to this day, right? Well, we actually took on a minority partner just a few weeks ago, and that's the first time we've had a minority partner. Congrats. Thanks. It was a pretty exciting thing, and we're not really announcing any of the details of the deal, but the company value is amazing. And we had just a few of us in the cap table, and that was it. So I'm curious about something, and I don't want to rain on the parade, but part of my job is to ask questions that might sound like that. But, you know, when I was growing up, the big cookie brand was Mrs. Fields. And it was started in Palo Alto by Mrs.

1:07:59Fields, Debbie Fields. And it was everywhere. It was in every shopping mall. It was everywhere. And they were good cookies. I remember. And I can't remember the last time I saw Mrs. Fields. I'm sure they're around somewhere, but I don't know where. It can't be as big as it once was. I mean, there is always a risk that, you know, the sort of the virality or the excitement or the novelty of it wears off. And so how do you – I mean, I know, for example, you slowed expansion, which, again, doesn't suggest that that's happening. But you've got over 1 ,000 locations and you were growing very rapidly and now you're going to slow down expansion a little bit.

1:08:38But how do you protect the future of the business? Like, how do you make sure that in 20 years this isn't Mrs. Fields, if you care at all about that? Well, how I look at it, no, of course we care about that. We care deeply about that. We want Crumble to be a brand that's around forever. We're really excited about it, and we're very optimistic. Even just now, we took a minority investment. Could we have taken the whole company off the table? That could have been a possibility. But it doesn't matter what business you are. If you stop innovating, you stop growing, you start dying. So, for example, today, a lot of times people don't even know it yet, but we're not just cookies anymore.

1:09:14You have cakes, too. You have cakes. Yeah, we've got pies. One of our slowest times of the year used to be Thanksgiving week. Well, guess what we did last year? We just sold pies for Thanksgiving week. They loved the pies. The sales were off the charts, right? And so we did slow the growth, but some of the growth had to be slowed because we were opening 200, 300 units a year, right? It doesn't matter what brand you are or how big you are. There comes a point where you've got to open the right amount. And so we still plan on growing. We still plan on growing 100 units or so a year. But we want to be a little bit more strategic in how we do it and where we place them and all those kinds of things.

1:09:54That's how we stay ahead. Jason, when you think about the journey you took and where you got to now, how much of this do you attribute to the work you put in and the grind? And how much do you think has to do with just getting lucky in the right timing? Yeah, I think for me, it's been the combination of three things. One, it is just tenacity and hard work can get you through a lot of stuff. And second is the timing. There is luck involved in there. And what would happen if I would have started BYU.com before Facebook? And I mean, but then I think the other thing too is the learnings from my faith and having that be a part of my focus.

1:10:33And those are the three things that I think about. But if we just had luck and not all the other things, it wouldn't have worked. If we had all the tenacity in the world and all the faith in the world, and we didn't have a little luck along the way, that wouldn't have happened. So I think it's a combination of all those things. And any successful entrepreneur, they may or may not admit it. They have those things in their life, you know, and I think that's what helps make them successful. That's Jason McGowan, co-founder, along with Sawyer Hemsley, of Crumble. By the way, remember how Crumble's pink packaging was inspired by that 1959 Cadillac owned by a family friend of Sawyer's?

1:11:15Well, in 2021, Sawyer actually had the chance to buy that very same Cadillac, pale pink with those classic tail fins over the wheels. And it's now become kind of a mascot for Crumble. They call it the Pink Caddy. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons, particularly for small business, sign up for my newsletter at GuyRoz.com or on Substack. This episode was produced by Alex Chung with music composed by Ramtin Arablui.

1:11:51It was edited by Neva Grant with research help from Carla Estevez. Our engineers are Patrick Murray and Jimmy Keely. Our production staff also includes Casey Herman, Sam Paulson, Carrie Thompson, Catherine Seifer, Noor Gill, Ramel Wood, Andrea Bruce, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

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