23 Hidden Strategies Behind Tony’s Chocoloney’s £400M Growth - Douglas Lamont, Tony's CEO

46:46but all the buyers are there and it's just like that that nuance between consumer and trade is is delicious yeah you know expo west and sweet and snacks in the u.s are exactly the same right there the the your real work is done between about 10 and 11 30 because all the buyers are walking the floor before any of this kind of what i would call consumers looking for freebies arrive that those first two hours each morning of a trade show is where the real conversations the real stuff happens how another on the other side of this one of my favorite um things is by a guy called paul graham which is called do things that don't scale yeah and so it's these small one-to-one interactions that build i really believe there's a difference between like meek fans and diehard fans and ultimately we want as many as much as we want these big things we also want diehard fans um and i think again i was speaking speaking to nicola like you've got that one shop and i discovered you guys in 2019 um when i was flying to japan and i was like i was going for the world cup with my old man and i was like what the fuck is this it was like some sort of it was like willie wonka like in actualization but it's one store in the in the airport yep and i end up stuffing my face on the plane with a load of tonys it was it was wonderful um but then also nicola was saying there's one store in south bank which has got like a just a whole wall of tony's and she was saying to me that and sorry for context nicola's marketing director um is is uh those two stores the amount of people that she's heard have just said oh my god i discovered it there but how do you guys think about things that don't necessarily scale but build that deep connection with people yeah i think whenever you're doing anything experiential your kind of immediate payback is death there's no there's no there's no excel spreadsheet that will tell you that that's a good thing to do and yet uh you know it is i mean to this day the obviously the going back to the innocent days that the festivals which were kind of almost pre-festival time and giving away fridges i've probably met i don't know 50 million people that told me that they were there at those festivals even even to this day people still talk about those things that was at the end and just so we so we used to do fruit stock uh so we did fruit stock back in the early two so 2003 four five was this basically take over regents park chuck on a free festival and we thought you know 10 000 20 000 people like we had 100 000 people over two days and and so it was just this sort of and we ran that for three or four years until the park kind of shut it down and made us ticket it and once you ticketed it it wasn't the same I mean that from an economics point of view that that made no sense at all it was all free uh you were basically putting bands on and hot dog stores and a Pim's tent and and a few smoothies in the corner but most people were drinking beer so it was kind of like is this but yeah it had the vibe it had exactly what we wanted to say about the brand is it it connected your brand to that experience and it was just one of the most brilliant sort of early things that you could do even though the economics sort of didn't add up on it um you know as you say similarly actually i would say the store in amsterdam whilst it's in the airport and you pay a lot for retail space again the the visibility we get from that one store i mean you know skippel's one of the busiest airports in the world um yeah i mean i'm a big believer in in finding the things that on the face of them don't make sense you know again the big net at innocent should i mean it shouldn't work and yet it works with the little hats on the hats on the bottles it shouldn't work is a stupid idea on the face of it and yet it was a little acorn that's turned into this massive oak tree of a marketing idea so letting these things bring how do you find those things is there a way to do that again uh i i'm a great believer and i talked about it a bit earlier about kind of removing the fear from the conversation where you say let let let ideas breathe let you know those ideas are never going to be top down right there's going to be someone who is going to how does the sort of bottom-up ideas come through also again back to my irons in the fire you're not no one was ever betting the house on the big net or no one was ever betting the house on the skipple but but you you lay 10 bets and then you you've got to be good at diagnosing what's working what's not working let's go into that then so so so the because i i always believe like one of my principles of life is you need a lot of get led to find gold so it's actually the creativity is about giving yourself the permission removal of fear the removal removal to do lazy work so the ability the permission to do sort of lazy work i.e crap ideas because if you do 20 to maybe yeah and you you've got you've got to be you've got to what you where you've got to be smart is the ability to diagnose how do you do that what's working what's not working and then be ready with the money to pile behind the one or two things that are working and and because if you if you do 10 things and you don't have the the second wave of investment then it's like Like even the good idea didn't go anywhere because I didn't have enough money behind it.

52:12So it's laying just enough bets to reduce your, the way I see it is I'm laying, let's say in a year, I'm laying five bets. I know two will fail, whether that's a product thing, whether that's a marketing campaign. And I know something random will also happen outside of my strategy. So have I got enough money in the budget to then go, oh, well, this thing on social media is blowing up. yeah I've got 100 grand to back it with some social media funding to kind of then amplify it or you know this this the uh the the campaign that we've actually done or the product we've just launched is actually working really really well give the the shopper marketing teams you know another 250 grand to really double down on it so that we know that our distribution stocking points will not just sort of double next year they'll triple because we've proven the rate of sale and we've taken it from top of second quartile into the first quartile so you've got to make sure you've got in the bank you're not taking so many bets you've got nothing left in the bank in a year you've got to take three or four bets and then what are some of the bets you took that maybe didn't work or i mean i mean hundred we launched your favorite ones uh so uh tony's one yeah so so with tony's with with um you know probably one in every two flavor we launches doesn't really go anywhere and so you've got to kind of quickly pull it off the shelf innocent in weird way it was easier although short shelf life everyone goes oh that must be hard you could innovate quicker because you only had to sit you had to sit around for 30 days before you realize you have the shelf life whereas it whereas whereas whereas in terms of developing products i've got to wait 12 months to see if i can even start selling into the retailer because i've got to do the shelf life testing on it so weirdly short shelf life i could get things to market quicker because i had less lead time yep and then if it was failing it had to come out quickly because it was you had so much waste in your warehouse that you could economically couldn't afford it the danger of what i would call long shelf life innovation is like well i delivered half a million of sales or a million of sales and i don't want to lose that for next year's kind of you know merry-go-round maybe i won't delist it because i've got long shelf life whereas actually you've got to be ruthless about getting rid of stuff that doesn't work in order to create the space for new stuff to come through and not just hang on to retail sales so you know we had a chocolate milk um product uh at tony's it was a nice food service business did a million quid a year uh we had to i was like we have to get rid of this because somebody in technicals getting distracted about what you know we're making visits to the co-packer we're doing that resource could be way better spent elsewhere back to the innocent examples with when i took over uh what is now bowl but at the time was the the the innocent veg pots that was a eight to ten million business and i closed it yeah jiles talked about this um and go into it from your perspective because jiles sort of said it wasn't moving the needle well the reason the The reason was once we got to scale and we were clearly an international business, and at this point Coca-Cola had already invested in the company, when I took over, VegPots was a nice business.

55:32I think it was maybe$10 million or even$11 million of turnover at the time. Reasonable margin, kind of in-line margin, so it wasn't a dog. But it was just, it didn't fit the model to say, how do you roll this out to all your markets? It was a UK thing with eight days shelf life that constantly was giving us headaches because it was made in a factory where chicken was made, but it was a veg pot. And so occasionally we'd get the right, the Daily Mailer calling you up and saying, Mrs. B from Luton's found chicken in her veg pot. And you're like, so there's a distraction for the PR team. For the technical teams, it's a massive distraction because it's kind of the high risk area.

56:09So they're spending all their energy on there rather than helping on the innovation side of drinks products that we could then roll out to multiple markets. And you couldn't roll it out to other markets. So it kind of was always going to be a nice 8 to 10 to 12 million business in the UK. And I said, OK, if we want to go from 200 to 500 million, I don't need the distraction. So I'd rather go back 12 million in terms of turnover and have the focus on other things. and that's when we were launching super smoothies and other things that can be so much bigger and so sometimes you have to kind of even if it's okay you have to cull it because if it doesn't quite fit your model yes it's a distraction how do you so we came to you know agreement with paul and the rest for him is history and they've done brilliantly with i was so i didn't realize that was like literally i thought he didn't realize he came to an agreement with him from in his i didn't realize that's how it's oh yeah so paul was running veg pots for us and i said i'm stopping it and he said well can i do something with it i said yes but not with the innocent brand and so we reached an agreement where basically he could take on the distribution as long as he rebranded it and and so he basically took the distribution space rebranded it to bowl and and realized that was that that was literally how that happened i'm sorry i thought he sort of was doing it and then quit and then set it up no no no he basically took the business and and rebranded it and then that was his baseline and then obviously he then went into with with the freedom of a different brand you know there was no way i could have done you know the various choices that he made and then i honestly he went into the sort of certain spaces and now has come back out to the kind of vegetarian space so the when when you because i think the diet what we're talking about here is really important is the diagnosis of small bets and actually being able to see have the gumption to look into the future and saying, right, this is where this could go.

57:54That isn't easy. No. That is really not easy. Not easy at all. And I think that's one of the reasons CEOs are rewarded so high because it is such a hard skill to look into the future. What are some sort of questions or ways to diagnose, and this is for listeners who may be launching a new beer on a tap in a boozer in Richmond, maybe launching a new, you know, whatever, fill in the blank. It's not easy. What are some of the ways you've learned through your experience, Douglas, to diagnose these things? It always comes back to the fundamentals. So has this thing got good margin? Has this thing got good rate of sale?

58:36And is the sort of consumer reaction to the product right in this channel? And generally what you will find...

58:46is don't look at your revenue in total, look at your individual elements through that lens because you'll always sorry say that again so you'll be able to convince yourself that the total picture for your company adds up and you'll say oh yeah well roughly on average and i know food service isn't doing quite so well but that's because but next year will be better and i think you have to be more brutal breaking your underlying revenue down and assessing each bit of it whether it's the grocery channel whether it's the wholesale channel whether you whether you've got a kind of you know a pub channel whatever it may be depending on the on the product and really say are our economics in that space correct is the rate of sale in that channel right and you know and is that showing a an improving trend or a trend that we can sort of see how with investment we can kind of move forward whereas i think we chase the revenue to start with because like we need to be a certain scale and I think you over chase revenue and again when when you go international you kind of do a big deal with a new retailer like I'm now in the Netherlands I'm now in Germany all those deals whether they were innocent or the ones we've had at Tony's come back to bite you five years later because then retailer A gets in a buying group with retailer B in your own home market and you realize that they realize that you've been giving this random retailer over here a better price because the retailers speak of course i didn't realize that yeah because i mean the one of the the huge challenges for european wide fmcg now is buying groups so in for example albert hein and ray um edica in germany are in a buying group so they get to see each other's prices so they can see what tony's realize that so yeah so buying groups it's less so in the uk but in europe in international markets in europe these buying groups and then they all swap with each other So they have a huge, so you've got to be really, really careful.

1:00:43There's a huge amount of information there. Exactly. So you've got to be really careful that you chase a distribution channel. You say, oh, but I can show that we're going to be big in this country or we're going to be big in this channel. You do a, oh, but I'm a small guy. I'll fix it later deal. And those things come back to bite you. So always build everything from day one on good fundamentals. And then the picture becomes quite clear quite quickly to say, well I've got good fundamentals and it's working probably quite smart to put the money behind that bit of it rather than trying to put the money where it's broken and I think people get distracted by saying well I'll put the money there because I might lose something rather than I might gain something by putting it behind the thing that's working so kind of be be really disciplined about stripping out the stuff that isn't working because otherwise you'll spend money on it when you should be pouring fuel on the fire of the things that are working.

1:01:37And that generally comes about because you've chased revenue and scale rather than fundamentals. Wow. Mate, that's so good. And it's like that would just be helping so many people because it's like the revenue is the vanity, isn't it? It's the ego. It's hard to not chase that, you know? Yeah, absolutely. We've all been there, right? And also the clock resets every year, but investors and shareholders and yourself, you want to beat last year's revenue number it's just a kind of natural fmcg instinct everyone says oh well the clock's back to zero but we you know we've got a mountain to climb so every year feels like oh god i've got a mountain to climb i better not stop those things because then the mountain's even bigger i my kind of again contrarian thinking is in the last quarter every year ago what are we going to stop next year and accept that i already start two miles further down the mountain because i think i'll get higher in the mountain if i'm focused on the things that are working rather than just trying to prop up the things that aren't yes what are other things that you've learned that sort of come back to to bite you as you as you scale or common things that people don't think about i think the idea of the retail buying groups speaking is like fucking hell that's going to save a help a lot of people out you know yeah i mean exactly be really thoughtful when you go into new markets and you really understand in europe and it's coming to the uk now you just got to think I've got to have one price, particularly in grocery, across those markets.

1:03:03And they all talk different languages. So you've also got to do the diagnosis on what do I mean by a matching price. There's kind of three tiers to each grocery price. So you've got to be really careful about it. What do you mean by that? Well, so net one, net two, net three. If you're a buyer, do the French talk net two? So it's quite technical, but it's really important because once you start scaling… And that's like where the median and promotional spend goes and where that... Exactly. What's deducted where is really important so that you could basically look... If you do a stupid deal with a retailer in France, and at one point Tesco and Carrefour were in a buying group, if you do a deal because you're like, oh, I want for my information memorandum, I want to show that I'm in France, you do a stupid deal there, two years later, tesco are in a buying group with car four and see the price you did because you wanted a bit of vanity that's going to cost you a hell of a lot of money if your product's really working in tesco because they they just go thank you very much we'll have the lowest price of the two retailers and all of a sudden your core fundamentals are screwed so so that that is a really important kind of commercial lesson talent is my other lesson just don't yeah don't don't scrimp on talent don't do the brits abroad strategy find people who's who have got the local capabilities local credentials but whose then values fit yours and and so you know who can fall in love with who can fall in love with innocent, not the other way around.

1:04:45So that's the, you know, that's a key piece of advice. So I interviewed a guy last week who's weirdly, he went to a big part of the Cambridge tech group. Not actually, his link to food was that he owns, for fun, he owns Boca de Lupo, the restaurant in London. But like incredibly, like I think he's a billionaire, like sort of did it for six billion. Incredibly clever. written a book called serendipity doesn't happen by accident like the guy's brain was like i was like what the fuck i couldn't keep up with him but one of the things he was saying it's kind of links to what you're saying douglas is you can get all those fundamentals right which is like the best product the best economics the best marketing the best packaging but the idea and he said he learned this when trying to sell his um he sold like these like weird antibodies but there was a brand to it sounds a bit weird but it's super interesting because like you can't you can't just force it and shout it onto a market just that's just never going to work and he goes is that other piece of the puzzle that not when we're thinking about it's like is this product um sorry is you have the best product but is this the right market for it and i suppose what you're saying the bridge between those things is the talent and the cultural nuance on the ground i hadn't thought of it like that i i just look at everything we do as like a case study so what's my net what are my next five or six case studies so is it a country case study is it How do I give myself some reassurance that if I pile the money in behind this thing, the chances of it working are much higher?

1:06:17And I'm just not a guy and I'm not, you know, who's the bet the house, you know, because you can get to a billion in five minutes. I just don't think that's how FMCG works. Also, customers, there has to be in food. I think there's discovery in it. and so it's not like a widget that's online that just does this there is just natural discovery you you know again many pitfalls have been described before and on on podcasts is people chasing too much distribution too early and then paying the price for that i'm a great believer in that even if you're our scale i don't want to take a new product you know typically when we launch a new product and we will say right let's the first year let's do it in one retailer let's really prove that it works let's really understand where it's working where it's not working you can concentrate your marketing investment behind one retailer and then year two then you one you've got a read-on rate of sale so your supply chain doesn't buy too much product in advance or you know filling or whatever it may be and then you can really go for it with with some understanding so i'd much rather it be three four five million in tony's case in year one knowing that i can then i can place my bets much more clearly in year two as to what the scale case studies equal case studies almost the diagnosis yeah which is where we're going to put the money because yeah so so so i i instead of doing one big bet a year i do five case studies and back two of them big time for the following year that's kind of in in essence is my genius is my growth strategy and whether that's a product whether that's a country or whether that's doubling down on a marketing campaign that's worked that's how i have scaled the you know the the innocent business and how we're scaling tonys so it is messier it's more complicated you've got more things going on and if people look at business go well shouldn't you do less i'm like i can but i can't actually give you the same risk and growth confidence because the messiness yeah gives me more confidence that you know and you you then got to you're then following the rough rules of average like two out of five are going to work and then you're going to get lucky with something you're not expecting that's just going to work it's the whole explore like the whole barbell strategy of explore versus exploit and again this bloke was telling me like he talked he's talking about bees random right but bees when they're looking for honey they'll like 70 of them will go and focus on getting honey but these other 20 they're called dangle bees will like dance over here saying this could be the new thing and that's essentially like there's a law of nature that's works in business as well which is you've got to explore get your case studies make your small bets but once you know what's working is fucking exploit and triple down and throw money at it yeah absolutely and you've got to kill the stuff that hasn't worked because also the danger is kill your babies yeah the danger is that you let them hang on and that that's the space you need to do the next which was it was an example where you where you did cling on to you like stephen keen the writer calls it you've got to kill your babies as in the bits that you absolutely love that don't add to the story not

1:09:26uh i think innocent as i said the shelf life just helped us because it was just like it was so it was so sort of clear that you kind of had to stop so in a way it was a kind of self-built in discipline you know the cfo would be exploding if you kind of held on to the failures too long I think at Tony's, I don't think there's one where I've said, oh, we've hung on to that. There are products that you've got to decide, are we backing it or are we going? And yeah, I don't think there's one that springs to mind from Tony's right now, but let's see. I think that's my job to sort of make sure that we do create the space.

1:10:05What I find really interesting about your journey, Douglas, is that you came from like a marketing director background. um what would you say your one to three sort of principles about marketing uh these these big big big brands so again they can be contrarian they can be obvious it's a it's a i'm not a marketeer by background so right so i mean i started in corporate finance right so i was i was a sort of doing m &a of all things to start with i then went to free serve and did kind of corporate development innovation i i spent a year at marketing director innocent that's right that's more as a rite of passage to then the ceo job than than because i'm a marketeer at heart however when i was at free serve we serve war oh you're too young my goodness so it was the the big challenger brand in in in internet so it was basically we it was owned by dixons we did the free dial-up cds that basically it was the aol of the time wow uh that completely disrupted the market because instead of paying for a subscription it was dialed up and we got revenue from the telephone anyway so we've it was a it was the kind of hot.com float of 1999 believe it or not that the yeah I mean it was and got into the FTSE 100 with 100 employees I mean it was one of those kind of mad stories so I'd been through that entrepreneurial journey with them and during that time I whilst I was kind of the finance guides and we were looking to do kind of M &A deals and I'd come into that company to do that I at a workshop met Adam Morgan who was coming in to make we were a challenger brand and we were doing challenger brand workshops with with Adam and Hugh Derek from Eat Big Fish and they turned on a light bulb in my head about what marketing is and what isn't and so I've kind of been a disciple of Eat Big Fish and challenger brand marketing ever since and so sort of through my career I guess I've drawn the sort of marketing world towards me but very much through that lens of being a challenge brand having a very clear point of difference having you know everything they talked about resonated with why I then went to Innocent why I've gone to Tony's because you know having that proving that things can be done differently and better is I think part of my sort of DNA and then so yeah I guess a lot of my marketing philosophy if you like comes from you know that thinking of of you know being a challenger creating that point of difference i guess where again where i'm maybe contrarian in terms of you know how i how i see it i i don't see this kind of you know take the big bet strategy with marketing as as the as as the right approach i think i think finding your path through multiple avenues being a challenger thinking differently about why consumers think why they think you know thinking about you know why does something like the big knit work thinking about why does tony's a brand that's very uh you know focused around changing a supply chain talks a lot about child labor is very transparent about you know all the things going on in its supply chain why does that resonate with a consumer you know what's the point of differences that come about from that that that's that's that's sort of what that's what excites me from a marketing point yeah doing you know big tv campaigns and putting up lots of posters it's kind of just not sometimes it's needed and we did a fair amount of that innocent and it was always the stuff that i kind of went so what yeah so what are those so so again sorry i didn't excuse my research no no no but i actually think it's because i've never sat opposite anyone with this you've got such unique perspective douglas and i've never honestly the ability to almost hold the tension of these big big macro pillars and principles of different things but then also like the the text and the nuance of being on the ground what would you say are some of those as you said you sort of soaked in from from adam the one that he's really stuck stuck with me when i interviewed him was you it's not about being different and or better it's about doing both you gotta do both what are some of those other ones i know you said thinking why do consumers think what so so two things uh another one of his sort of favorite phrase of his is intelligent naivety uh and i think innocent was built on intelligent naivety where you kind of ask that question of well why not but just because it's an industry norm why can't our cocoa supply chain be run differently why can't you find a model where you actually pay farmers a reasonable living income yes and make a business model out of it why not that's exactly what the journalists who founded Tony's you know back in 2005 they asked that question as journalists and they actually accidentally stumbled into a business um and and everybody at Tony's has been asking ever since like why can't you do that iteration after iteration because it's bloody hard yeah we've discovered that but but we still believe that we're trying to prove that premise so that's sort of part of it of of being a bit naive because otherwise everyone just tells you well it can't be done like otherwise the big companies would have already done it it's like well that's not the case so kind of pushing against the the sort of the the wisdom of the crowd i think is really important from i guess the second big one is i do believe in in marketing investment where you can't measure stuff i'm i am a i am a believer in kind of the, I've never been a CEO who says, show me the return on investment spreadsheet, this kind of performance marketing outside of a kind of direct transaction in e-commerce.

1:15:49In FMCG, you can prove very, very little. You can convince yourself you know why things are working. And so I think as a CEO and where I've, by falling in love with marketing, it's enabled me to be a better CEO because I'm not constantly on their tail saying, prove it works, prove it work, prove that that money you put on those posters did something for the company. I'm looking at the richness of what those teams are doing and saying, yeah, I think that's good enough over multiple years. And if you don't, then you hold people to sort of a standard and you have to agree what you're trying to achieve, but trying to measure the pound return.

1:16:28I think if you're a CEO who's like that it's really hard for a marketing team to kind of again have that fear of not remove the fear the sort of fear of failure or the fear of accountability not that the marketer shouldn't be accountable for good work but you've kind of got to agree the parameters of what good looks like which often isn't in the numbers or proving that it moved a rate of sale thing so so you know innocent we invested heavily behind the brand there was never a direct path back to did it work or didn't it work but but i'm a believer that marketing does work done well over multiple years i think that's that's a if if you're in this role trying to make everybody justify everything which maybe i would have been if i hadn't seen their perspective because i came from a kind of financial background yes i prove it in the spreadsheet and prove it afterwards in the spreadsheet i i think i think you hit a brick wall and and so i i've always i guess bought a blend of sort of intuition and financial background you know i always talk about one of the best things i ever did you know because i whilst i did sort of corporate finance mna i was like all the people at kpmg put on the balance sheet cash flow pnl course that you basically get all this stuff drilled into you and i see that as one of my superpowers because understanding the financial interplay between cash flow balance sheets and profit and loss it amazes me today how many very senior people don't understand that like again that's not my skill set at all like i'm really bad at numbers i'm just like fuck it but but like what are some of the first principle knowledges about um first principle basics about that that as you said even some big donnies right now don't necessarily understand it like and it's surprising well because people well if they don't understand you know ultimately particularly a lot of your listeners in that kind of founder world it's all about cash not about what your p &l says because cash cash is the real game uh in terms of you know people can have a p &l you know profit loss where the revenue looks good but if your cost of capital your kind of, in our case, in Tony's, we buy our beans about a year ahead of when we sell them.

1:18:48So we're financing those beans 12 months out. I don't actually get paid for those. I sell them 12 months later, then Sainsbury's or Tesco's will pay me 60 days after that. So that's a year and a half where if I'm scaling really, really fast, I've paid a lot of cash and I'm not getting paid for a year and a half for that. You've got to understand that that's a really important dynamic. My P &L looks good because i've bought it for this and i'm going to sell it for that and i'm making a profit but i could be bankrupt because i haven't got them actually the cash to sort of keep buying the beans ahead of when i'm being paid so those kind of dynamics are really important and also they for me understanding the numbers also helps you diagnose risk because when you play around with those numbers it sees well if i move that parameter on the cost of the uh let's call it the caramel that really hurts profitability if that moves a lot whereas the you know the paper packaging can move by 50 and it doesn't really change the economics so what am i going to do when i actually get to implement something i'm going to pay damn close attention to the fact that we have to get the caramel at the price it says in the assumptions because if we don't this thing won't stack up so again for me diagnosing risk managing you know managing risk managing seeing the risk before you actually start executing stuff by playing around with the numbers and then me as CEO or the senior team paying damn close attention to the top three things that really move the numbers around to make sure they're executed really well.

1:20:15And if the paper costs 20 % more, I'm not lying away worrying about that. And in these small things really are the differences between a business that really works and it really doesn't. Because you've talked to so many founders, right? that said we were so nearly it so nearly worked it just didn't quite work on the unit economics where it didn't so we had you know in the end we battled it and battled it so that the margins are so fine that you if you're not and see it not everyone's expected you know i i came with that experience and i'm not a founder you know i and we can talk about that maybe differently as to why i've sort of chose to do the path i chose but um if if that's not your game you need someone right alongside you who you know that finance you know i don't know if you've had paul on the show but paul at bowl will tell you that's not his game but he's got ed right alongside him who's absolutely game and it's the it's the it's a blended skill set that's why rich adam and john were so amazing because they they just had this incredible complementary skill sets they were kind of the perfect fmcg human but there were three of them and you know they were friends and they made it worked but they they had that perfect blend and so if you're a founder understand what your strengths are but don't think then well i'll build the business around my strengths fmc just doesn't build itself around you you've got to build your company around fmcg so goddamn make sure you've got the complementary talent around you otherwise those fine margins when you say these little fine things like is this is it just is it kind of just the the i don't know again i'm just acting sort of dumb here but to say as you're saying the price of the caramel could could be the it could be the shift in your business that takes but it could that that could be the numbers so have some good numbers but it could also be in in oh i didn't realize social media i i don't know anything about social media i didn't realize social media were like that and i've i've spent the last year thinking that google adwords were the place to spend my money and i've and we just spent you know all that money that those shareholders gave us and we said we're going to given fast growth on google adwords and actually we should have spent it over over here so what whatever it is you know across the how does the supply chain work how does the finance work how does the brand work typically a founder will come with one of those skill sets make sure you complement with with the other skill sets because because if you're missing those though those are holes in your business that might be the difference between you succeeding and you failing and and so people i think people underestimate i think some of the best founders have complemented themselves with the right talent at a very early stage even if that you know has come at a price of equity or high cash cost in the business i think it's the best place you can spend your money well i love this it's the barbell strategy of intense sort of small small bets case studies and then diagnosis but then from that that bigger picture you were talking about earlier mate of like the brand marketing uh innovation rollout geography like it's just it's just how do you deal like with all this information like because i interviewed i don't even know the again really interesting brands kind of slightly different category but gosney pizza ovens i don't know if you've seen them like they've just gone massive in the states and he's tom gosney is a founder and they've built a huge business like i think the 200 million pound business started just hustling making pizza ovens um but he said like every day as a ceo and a sort of ceo founders you feel business is basically you've got a thousand um missiles coming towards your head your game plan is just to try and stay calm like buddha but like but i how do you deal with like those a thousand missiles coming towards your head and that could be people coming to your problems the cocoa prices something that the retailers are speaking to each other there's a panoply of different problems right how do you sort of stay calm and zen within within that i i think um two things one again with the approach that i take i've never bet the house on one individual thing so i kind of like if i've got a problem somewhere i've have i got a little path out with with with the other things are they working well enough to kind of make up for the failure over there i think the second part of it is who who are your shareholders and what what lens do they have on the business because i've always been fortunate enough to be in scenarios where my shareholders think long term and so i think if if you're if if you're a ceo and not so much as if if you're not a founder, if you're like me, you're a CEO, you're effectively delivering for employees, delivering for the mission, delivering for shareholders is kind of how I see it.

1:25:16If your shareholders are misaligned with my lens on how I like to build businesses, which is over a kind of three to five year kind of plan and window to say, look, these are the things we're going to do. We may be here in six months time, or we might be a bit further behind, but then we might shoot forward if, you know, the first bets don't work, but the second two don't. if you've got shareholders who are prepared to kind of be patient with you that also helps because then they're not on you going well you promised this in three months time i think i can solve most problems over 18 24 months i can't solve everything over six months so you take the shareholder situation the coco situation we've got right now that's a 50 million cost tsunami on our business on a business that's only turnover of 240 million that's just extraordinary so the sort of profit growth that i deliver my shareholders has been eaten up by this cocoa price change and yet i'm calm because i know i've got a shareholder who understands that in the long term we're building a properly robust scaled business and therefore their return will come so be really again in the same way that i've said be really thoughtful about who you've got around you to compliment you the other piece of advice is be really really thoughtful about who you choose as shareholders if you know as a founder selling a chunk or uh even if you come into a business like me what are your shareholder motivations over what time to scale are you going to hold you to account and almost i look at and go if if things are going a bit pear-shaped for 12 months are they the kind of people that will understand that and understand the logic of that or will they just be like we don't care we're finance guys we need to you promise this by this day it's not here that creates a very different pressure ultimately have you got people on your team have you got people that will live and breathe with you and then back to the employee part of this also have you got employees that will stick with you because if the minute if you've kind of been very transactional with your employees the minute things get a little bit sticky watch them fly out the door whereas if you're much more what I would say sort of values and mission-led and kind of create an environment of this is a fun place to work as well as you know we're doing amazing work when things are a bit sticky they stick with you too so I think the way I stay calm and my god I've faced a million different challenges is by making sure the context around you is right because then it feels like you're on the team and it's not like this is all about me and whether I'm going to fail is like we're all in the shit here guys how are we all going to get out of this shareholders being a bit reasonable about the the expected timeline employees saying yeah we'll roll up our sleeves not just from up to our elbow to our shoulder now to get through this and you being calm and directional and and also making decisions you know where things need to be dealt with whether it's a an employee that's not delivering and therefore polluting the barrel you know you have to deal with that whether it's a bit of the business that you've hung on too long and you need to stop you need to stop it you know so you you're all contributing to solving the problem and i've always felt both at innocent and at tony's it's not all on me like but i've been quite thoughtful about the context to create that environment i would say it i think what i loved the the delicious piece of nuance there is when you extend the the time horizons it allows you to stay much calmer yeah i've never even thought of it like that because it's like when you're like oh god we're hemorrhaging or getting as you said a cash cost tsunami was 50 million yeah right like if you if that time frame of where you're looking the sort of the telescope into the future is short you're thinking fuck me this this tsunami is going to wipe out this pirate ship right if you extend it almost takes away the the the height of the wave and it's like well actually it's much smaller we can override it i love that because i think the amount of people both my mates just in this industry and you look so short term of like if we don't get into saying these by this year or if this goes wrong now then it's it's like if you just extend that also it means you can be a bit more careful then they think you're saying about how you deploy your cash how you put these small bets like the time extending the time rising makes you calmer when you said like what has been the hardest problem you've had you've you've faced i mean i've as i said i just did the speech and but it's this it's this cocoa stuff yeah the comment what's going on with that sorry so so yeah two two bad harvests in a row yeah and as we've been saying for years and trying to prove otherwise underinvestment in the farmers means that when there were two two bad harvests as a result of kind of you know uh dry seasons a crop that hadn't been looked after properly at a macro scale and lack of use of fertiliser and all the rest of it because the farmers are living in absolute poverty because in general cocoa is they're not getting a good return for their cocoa it meant the crop yields were down 30 for broadly two years in a row which spiked the price from kind of 2 000 to 10 000 on the world market so all of a sudden if you're in my shoes i'm investing in all these programs to support the farmers but my i have to still buy on the world market the pricing and suddenly i'm paying four or five times for my cocoa i can't just put my chocolate bar up on shelf by four times, or the cocoa portion of it, so say two times.

1:30:38So you have to put some price into the market, and all the chocolate companies put a lot of price into the market. That, as a one-off, you go, okay, we can manage it, we can put price through to consumers, but the combination effect of that, plus tariffs, plus currency movements, has just been a triple whammy for our business now i'm growing a lot so again i can i can almost i can cope if my shareholders in a place to say yeah look we understand that instead of the growth delivering more profit through to the shareholders it's effectively allowing you to stand still so it's not like i'm going backwards from a profitability point forward i'm just not going forward so again with a reasonable set of shareholders who see the big picture over five years that's that's a situation you can all cope with not ideal not doesn't mean there's not difficult conversations to be had about okay but where are you trimming your sales to make sure that if this carries on if this is the new normal how do you cope what are the things but but those are manageable conversations so again as i said i think it's every year something's going to be thrown at you an employee issue a financial issue who's the team around you how do you draw advice I never see myself as the kind of, I have to solve this.

1:31:57It's like, who have I got around me who can help solve this? And I think, everyone says, oh, CEO's a really lonely place. I've never really found that to be the case because I always go, well, I've got these three people I'm going to ask over here and I've got these three people, contacts I would ask. You've got to be able to make a decision. you've got to be able to kind of take in for information in take advice in and then make a decision but if you're if you're sitting there thinking oh i can't asking somebody for advice is a sign of weakness that then you're screwed i think then then then you're really low then you're in a really lonely place i always just go who are the eight people i can ask quickly for smart advice and then and then let's make a decision the the extending the time horizon equals calm and the realizing you're not lonely equals calm i've never sort of thought of it like that there's a there's great podcast called founders and he one of the questions he always says founders ask them up themselves more often is which resource am i currently not using enough of and basically the reason he asked that is because you've always got someone to ask or you've always there's always a resource you're not currently using enough to solve x problem and i think what you've said their douglas is a beautiful way of putting it what are like i think i think it's about vulnerability yeah you've you've one you've got to kind of admit yourself you don't know all the answers to you've got to not be afraid to say shit like i don't think i actually know what the right thing to do is here um and and sometimes like it's actually asking some of your more junior your employees so let me give you a give you an example the the kind of 2020 kind of you know lockdown everything that was going on we we got i got quite a lot of criticism internally that we were kind of stuck in our own you know bubble the george floyd thing had just happened so at this point this is this was innocent so so i was in the job we were we were all locked up at home but the George Floyd event in the US had happened and basically they were like you're being tone deaf to the impact that that's having on employees so when Brexit had happened, yes we were in the office but we'd walked the floors, there were a lot of people in our London office who were very upset, I'd been very visible about leadership when the George Floyd thing happened I honestly, I just completely missed that it was a thing for our employees in the UK but I had a lot of employees who felt very personal about what was going on and I completely missed it and at that point I had to sort of go I sort of I'm feeling all this criticism coming towards me and the leadership team for not kind of responding and showing empathy whatever but I just don't understand what what I've missed and therefore at that point I was sitting down with sort of employees in our sort of D &I team saying just explain this to me and then and going forward what I commit to you is that one you can flag this stuff to me if this if the stuff i've got blind spots on i need to have a network inside the business not just of the people around me like oh douglas you're wonderful because you're the ceo who are saying don't be aware of this be conscious of that be who are waving little flags warning signs at you to say there's a bit of unhappiness or you're not showing the right sort of sense of understanding and obviously as i get older as well my kind of understanding of what is important to 20 year olds inside my business gets further and further away from probably the reality so again not just shareholders and team around you have you got your feelers in the business where i can vulnerably go to someone in quite junior and saying i'm like what should i do what's the right thing to do here that that you you have to you have to think about who you pull on and and that's where building affinity groups inside your business around whatever topics they're really good for sort of raising awareness inside the company they're brilliant for a ceo because a safe space for me to go to that affinity group and say shit i i need i need some education on this topic and and if you're sitting in my shoes what decision would you make here in this context so there's a great quote which i love which is in will gadara's book unreasonable hospitality he was like people at the top or high up in the organization often have um all the authority but not much of the information people at the juniors at the bottom of the organizations have all the information but none of the authority and it's like that's the kind of attention because the people on the ground yeah they are the people there who understand what's the cultural relevance of x y z um but and i suppose you're creating this tether between you know you pull someone's over what's going on with this and that sort of poses the gap between authority and more importantly yeah their elbow they feel even though they're probably relatively true they feel like they can L by me and say have you spotted this more than because if if it if it's down to me asking the questions how did you how did you create that environment well so I so I think that's why I say well when I've worked in companies where there is that huge gap where affinity groups came about you know in inside innocent and we're building them inside Tony's so what is an affinity group so uh kind of uh whether it's about culture whether it's LGBTQ you know so groups of people that basically we give some resources to effectively educate the business and also be a kind of two-way dialogue with us about LGBTQ issues or whatever it may be.

1:37:32So there's a sense of, you know, and their job is to, you know, effectively help educate the business around these topics. But they're also, as I said, brilliant for me because then I know the two or three people who have actively joined that, want to lead it. They want to make a difference, and therefore I feel like I can go to them and say, like, I don't know much about this topic. And as CEO, you're expected in some ways to be this all-encompassing person that knows everything and should do and has perfect intuition on what to do and every, it's bullshit, right? You're a human that has limited capacity.

1:38:05So it's back to, again, who the hell do you talk to? Or who do you have around that says, I think Douglas is missing this, I'm going to go and tell him. And create this environment that they know that that's safe to do with me and I'm not going to dismiss them or I'm not going to make them feel small and say, well, that's not really important because I've got shareholders to deal with and they're really important. It's like, no, that stuff's really important. So part of the reason I loved Innocent, and we've got it at Tosu, that nobody has offices, I've never had a desk for the last 15 years. I've not had a desk because every opportunity when I'm not in a meeting and that's sadly not enough time, I am sitting pretty close to the coffee machine with my laptop working um and making sure that i'm somewhere where the people are flowing past me so when i'm doing work so that the most valuable thing i can do is have conversation with people not finesse my powerpoint slide and so just making sure that i'm visible and i'm actively going oh what's you know what's going on tell me because you say the more senior you get the less truth actually comes to you this this i mean this this david podcast was was the guy last David Cleavey talked all about serendipity doesn't happen by accident right yeah this happens on a micro level happens on a macro level like that you know the the lunar society which was you know in Birmingham back in all those days which was basically the cross-section of all the innovation and basically forged the industrial revolution he was basically saying you know you want you know there'll be an artist speaking to a to a to a merchant speaking to like a an industrialist but all this this cross-pollination of ideas and as you say conversations is is really important you know the sort of and what he's basically arguing the book is you need to you can create this serendipity and these this be really purposeful about it you know you see it everywhere it's like why is London fashionable one for example why does um why is Ibiza so big for house music it's like you're basically it's these networks and this um it does you see it doesn't happen by accident and it's this putting people in these lanes where they where they the all the ideas come and even in the book he says don't have a desk and it's by you know put yourself by the coffee machine allow the serendipity to happen because you're going to get access to all these conversations and you're you're only one thread of that and so some i guess two very practical tips yes uh when we designed the office at tony's we moved office a couple of years ago uh the dutch love their coffee and i I saw the first designs and it was like, coffee machine in this corner, coffee machine in that corner.

1:40:46Like, I'll make sure that no one has to go very far for a coffee and that's good. And I just joined the company and I said, we're having one coffee machine and it's going to be here in the business. And there was kind of like, everyone looked at me like, you're insane. There's going to be a riot. Like one coffee machine for the whole company. Why? Why? Because then everybody has to get off their backsides and walk up through the office to the coffee machine. And then they've taken the time to work with the coffee machine. So they're going to kind of decompress. Then they're going to meet someone from a different team.

1:41:18Then they're going to have a conversation. So think about the design of your office. I'm a great believer in inefficiency inside an office space. Because if you have inefficiency inside your office space, people are up and talking to each other and bumping into each other. say oh Bob I've been meaning to talk to you but I've never got around to send you an email funny enough but now I've seen you and we're sat chatting by the coffee I've got this can you help me so inefficiency in your office design is so important to create kind of movement inside the space and again I stole quite a few of those things from the way that Fruit Towers was was designed the second thing we give everyone a really nice lunch and you know it's and so guess what everyone's having lunch together and you go oh my god that's very generous like so kind of what's your lunch but as in is salads and you know so you get we get it in from the room or like no no so in in the absence of us where we've got 200 people we've got someone making it every day so you've got a nice kind of what i would call salad and bits lunch yeah that's free that people and and here it's it's yeah it's a combination of people bringing in stuff and an outside caterer sort of bringing some stuff that's then left on the side and guess what everyone has lunch together and guess what you end up sitting next to someone from a different team uh and you're creating that kind of bonds that are more than your department again at innocent and again now at tony's sports clubs we we say right you pay half and we'll pay half so if the climbing club costs 200 quid you put you get 10 off everyone that's 200 and we'll put 200 quid and then you kind of got a club going and that means you can sort of have slightly subsidized climbing but that means the bloke in finance that likes climbing with the person in marketing that likes climbing they're coming together to do activities together so you're you're building this kind of strength inside an organization by by breaking out silos that's again key to kind of culture and and all of those things they're just and they're really really cheap from a if you don't know how do you build culture it's not pay consultants a million pounds to write some nice words or it's like find the things that people like doing and facilitate them and you know fun can never come from the top down it has to come you know fun and engagement like give them the conditions to come up with the things that they want to do bung them 50 quid to go and work out what they want to do and stuff stuff happens much more organically than the you know the ceo deciding what fun looks like no it's uh and it this this again linking it's kind of weird how i did that interview last week but his whole book is how you create networks where it could be on a micro ie like this office in richmond so david was very instrumental in the cambridge network which is basically the uk's equivalent of silicon valley right yeah so what he basically says is it goes get out of silos so he goes he'll have cambridge university professors speaking to health tech people speaking to artists and he details a story how he was again serendipity doesn't happen to accident he doesn't happen by accident he was at a party a tech guy met was next to stephen fry stephen fry recommended him to read a book which changes trajectory and it's like that and then he's written this book and it's and he but that happens on micro levels and that's weirdly the fact you've brought this up as one of the things i um was i was going to ask you about was office design and actually how i think it's one of the most underrated and unthought about things completely and i think it is where you basically want to build a theme park of purpose and a theme park of brand for your employees.

1:44:54And that's really how you, and it is all the small details. So like I went to innocent. I'll be did like when I was at money life, did a something there. So even the fact that it's called the fruit towers, it's like, that could be so superfluous to so many people, but like that allows the missions to, to, to soak in. Yep. Even walking in here today, and I've been a bit, maybe a bit of a stalker, but I was just taking pictures. Cause I was like, fuck, like the all the employees on that back wall and it's like it's got it's got that five you know someone who's been here for five years there the notebooks are all brand like the missions like kind of plastered everywhere what you said about sitting having one coffee machine like what have you learned about office design other than just the coffee machines i think there's probably loads of lessons and how do you think that's kind of an unfair unseen advantage in building purpose-led brands uh a couple of things one instead of giving a powerpoint presentation when when when somebody knew would come and and same at sort of in tony's and amsterdam but certainly at fruit towers my i made sure that the one and rich and and and others before me the stories that you wanted to tell whether it was about the foundation whether it was about the mission whether it was about what what on what on the walls so what i would do is whoever they were whether they were bankers in suits or sainsbury's whatever i'd meet them at the door and then i'd spend an hour and a half with them walking around the building talking saying look at this look like and and then you've got a story or an important point you want to make about the business weirdly what that also does is uh people are proud that you're proud that you're telling all these stories and you're doing it for yes people are sitting at their desks while i do this so they're seeing me prior my pride in telling the story about the company i think that does something the second the timeline up the wall at fruit towers and again we have it at tony's i always thought that was great for that storytelling what i really realized it's really great for accelerating people who join the company because it's got the story of like all the different things you know the kind of key moments of the history of the business what i realized was that then they see that every day when they hear me or somebody else oh do you remember that event we had or when we did fruit stock or where we and after about six months they kind of know all the stories they've also got the visual pictures of it and they kind of almost think that they were there so the kind of the speed at which you kind of make them drink the kool-aid so to speak i think accelerates by having a very visual space that's linked not just to here's the latest brand message but is the kind of history of the company i think it inducts employees much deeper way than your induction is booked at four till six o 'clock yeah you're going to be where you're going to be told about the it network i think it's a really good accelerant for people feeling part of the company as much as anything the visual piece and then yeah the as i said the inefficiency of design is what i love it's like how do people crash into each other on the stairs the inefficiency of design ironically makes them efficient when it comes to coming up with ideas because the serendipity yeah because creativity is ultimately everything and and conversations that you sort of half want to have but can't be bother to write an email about your your curiosity part of your brain doesn't allow you to go well i'm going to send bob an email and i know he's got to respond whereas your curiosity point where you met him at coffee she said oh i'd be meaning to ask you and if he gives you an interesting answer your thought process then goes on to that oh now i really have got an idea because bob's confirmed my little pet theory but you're not going to write bob an email about that because it's kind of like it's sort of a bit of a theory going on in my brain so again how do people and then you know as you grow as you grow globally how do you then stop the countries becoming okay okay let's get on and this is what david says is he goes the learnings from silicon valley to cambridge again that's his example of applying the the tech into the into the macro how do you do that on a country level because that's where it gets really juicy okay i mean every every year were innocent we had a big party where we brought all the global teams together and everyone goes you did what it was like it was the best thousand pounds per head that i spent every single year why because if i put a thousand pounds on everyone's paycheck they'd still moan that they were underpaid and you know and work too hard and all the rest of it you put a thousand pounds and say we're going to mallorca for the nature weekend this time you know and you announce it at the beginning of the year in January.

1:49:45In June, the whole company from all over the world, we're all going to meet in Mallorca. We're going to have two days of very important meetings while the taxman checks that it's a meeting. And then we're going to have a big party. Everyone spends six months getting excited about that. You have an amazing few days. And then everyone spends another three months talking about it. And then two months off that, you're announcing the next one. That's a thousand pounds worth of gold you've just spent. Whereas if you put it in their paycheck and go there that's what creates loyalty it's the anticipation of where i read somewhere it was like if you want to be happy um book a long um last minute holidays don't make you as happy as as like a holiday three months out because the anticipation of an event which increases our dopamine happiness it's going to fucking you know to sell for just to buy a new pair of sunnies a new pair of board shorts whatever maybe not board shorts but you know i mean but but it's the anticipation i suppose again another piece of nuance of this is it's like do things that don't scale for consumers i innocent you know uh nudge not nudge stock um fruit stock but also do it for your employees because as you say an extra bag on someone's paycheck is not going to really move the needle but the happiness they're going to do if you take them to mallorca for a week yeah and so and so and again so in january this year it's called the carnival at tony's we're again bringing everybody together.

1:51:04But again, particularly, I think if you're, there is, you know, again, as you scale, the empathy that comes from having time together and making sure that those teams mix rather than the US teams saying, well, this is what works for the US and those guys over Europe that are supposed to be different. Put people in a room face to face together, get them to talk to each other and all the nuance that gets lost on teams calls and email kind of amazingly how quickly that dissipates. So yes, it's good from a kind of, this is a cool company to work for. But then from my point of view, my kind of more important mission is it raises empathy about how hard it is to build a business like that.

1:51:42So the US guys over a beer are talking to, you know, about why innovation's, you know, hard or why it takes 12 months. Oh, because of the, oh, I hadn't thought of that. Whereas you're never going to have that exchange on email. And so you buy, guess what, communities that know each other have much more empathy and much more forgiveness than communities that don't talk to each other and don't work it's the same principle inside a business so do everything you can to afford to basically strategies to drive empathy the best one i've found is bring them all together and give them a big party whilst subtly giving them opportunities to mix on topics around the mission or the purpose or whatever it may be that that all of those things I didn't realise I'd never drawn the link between strategies to build empathy for like I always saw as kind of and there's probably two layers to this is one in terms of employees being happier in the workplace but also strategies to build empathy because the more the more people know how hard problems are in different countries the more actually it's actually a growth strategy as much as anything I never thought of it like that I never put the link between empathy and growth yeah it's not I mean is that it works on many levels because it is a reward of thanks for the hard work yeah it is fun and what a cool company but it yeah has a real purpose to it which where i go yeah that's where i get my return a thousand pounds per head incredibly quickly when so i feel like with with specifically the bar i feel like sometimes ceos have to wear like this this wrapper around them and i know your bar is kind of like broken and fragmented how are you broken fragmented and how do you have to use the CEO as a wrapper around that?

1:53:25Not sure I fully get the question. But for me, again, I think, you know, our bar is unequally divided, kind of raise the point about the inequality in the chocolate supply chain. So it's a very visual cue for consumers and all the rest of it. I think what it if you want to use it into inside the business, you know, we're by far from perfect and we spent yeah even today we sit on a model that we think is scaling is proving that it can work but it's taken us 20 years to get there there'd be many full starts there's been many learning so we're constantly trying things seeing that they don't work starting again building scale so again you know in the uk tony's people think of tony's as kind of a five six seven year old brand we're just about to celebrate our 20th anniversary this year so you know there's and through the kind supply chain build the bit that we sort of deeply care about we've gone from not having a clue that you know how you sort of begin this thing this was three journalists that did a documentary about inequalities in the supply chain as part of that documentary they created some bars to demonstrate it could be done as a as a gimmick as a as a as a sort of thing for the documentary and realized they started to selling they could actually sell them and then this business was formed but the mission came first and then the business came later so then you're like god we've told everybody why aren't they doing it we've now created this company shit we've got to do it and and and so then that's 20 years of incredibly hard work and and now you know backed by we've been very data led to show that everything we did what was working what was not working we've now got a scale model called tony's open chain yeah that works but we've still got much more to prove will it work at the next level of scale what are the things within it that could be better our productivity program's good but it's probably not best in class so how do you you know the child labor stuff is probably best in class the traceability is best in class so talk to me about the edit and improve these things the yeah talk to me about the the something the problem in the supply chain that these these journalists discovered.

1:55:35so and then almost so like i want to i want to get into the open chain because i think that's a really interesting idea of like coop coopetition which is like competition and cooperation at the same time because isn't like i swear waitrose's chocolate bar is part of your absolutely which on shelves a competitor okay sick so go into the just the context so so the context is that they in 2000 there was a recognition from the industry uh through a I think, called the Harkin-England Protocol, that child labour was rife in the cocoa supply chain. One and a half million, well, that's 0.3 million children working in child labour.

1:56:12Totally unacceptable against the laws of the local countries, not just kind of by Western standards. Kids, you know, as young as four or five using big machetes to cut cocoa, carrying big heavy loads. Why? Not because the farmers think that's fun. The farmers want to send their kids to school, let's be really, really clear. but they can't they're not getting sufficient value payment for their cocoa so they can't afford to employ workers on the farms to do the pruning to do the harvesting so they then they have no choice if they want to get cash from their crop but to get their kids to do that so their kids aren't going to school they're working on the farm so you've got this subsistence farming that drives child labor why because a negative reinforcement because they're not getting a living income price so what countries is this so 60 of the world's cocoa comes out of ghana and the ivory coast so this is a this is typically a west africa focused crop i mean incredibly concentrated in west africa as a crop so there is other parts of the world but this issue is a west africa where 60 65 of the world's cocoa comes from so these journalists said it must be possible to do this a different way to pay the farmers a living income that allows their children to go to school that allows you to kind of then improve productivity and yield as well as paying a higher price that's then a positively reinforcing circle so how do you go from the negative cycle that you know we were just touching on to a positively reinforcing cycle sounds easy in practice where there's no traceability of beans these beans just kind of come out of the bush and abort other trait so the thought of then saying well how do you trace that back to every single farm how do you introduce traceability these are these were sort of huge questions what we've shown is that you can implement full traceability for every single bean and once you know your farmer you can start having a relationship with them you know we know that you have to build and support co-ops so where a bunch of farmers come together and sell to you you have to give those farmers you know five-year contracts to say we're going to pay this premium this living income premium to you over five years in return you know we want to do child remediation programs we want to go and measure the child labor in your supply chain and and help you bring it down if you do all of those things and as i said it's taken us 15 15 17 years to kind of get to a model where we go wow this this is working like living incomes are going up child labor rates in our supply chain now you know as i said typical child labor rate is about 50 even today one and a half million children so it one in two farms you visit you'll find a case of child labor going on on our farms it's less than four percent and we measure it every year we visit how does you get the traceability how do they get the traceability going like because again it's like that's so again you you you implement a system and we've got a thing called bean tracker where every single lot that arrives at every single co-op in return for this premium they're logging and tagging these bags and and they're and also it's an open system so we give them they own that data so again it's giving them the power you're giving farmers the power to run their own little businesses so we've built the system but they then use the system to track the data for themselves we then have full traceability of those beans and then obviously the bags are tagged those bags are bought to port checked and all the rest of it so once once you've got that and then you and then you can trace every single bag back to each farmer we then go visit each of those farms we do household visits we understand the living income of those farms we understand what's going on from a child labor perspective we don't shy away from the fact that there's still child labor in our supply chain we talk about it you know the times were a headline of tony's finds child labor and it's we're like where did you remember in that yeah but yeah yeah yeah but the irony that was sort of missed was where did they get it from our annual report so it was like that's not journalism that's clickbait um so you know you're we were we every single year put all these facts and figures in a very detailed report about everything that's going on what works what doesn't work so again we're showing and removing the objections removing the fear of change we're showing that you can scale a brand with this model we're showing you've got a supply chain that can work at scale and then we're showing that you know that you can build an economically successful company what we hope that does and now we've brought other players on which we'll talk about in a minute uh is that it encourages the big guys to go well there's there's nothing to fear from this model and now that legislation's also coming about traceability we think that could just be an accelerant for change the one one of my sort of just by proxy of guests is is this sort of obsession with or learning about systems thinking so obviously i've interviewed henry dimblebee who's done ravenous yeah he what he the way he describes in that book systems thinking is really important because it makes you realize that there can be positive reinforcement suits and negative and And actually, when you, again, kind of like what you've done here, you see the whole system, how it interacts together between your, you know, your pillars in business.

2:01:16One or two little changes can have hugely beneficial or hugely negative effects. Again, another guy, Franco Fabini, he's been on, who did, he does Notora, all about the food system in like fruit and veg, how to get the best quality of product. This David Cleavy guy last week. What were some of the things they did? so i understand the traceability bit they built they built the kind of the technology to make it lucidly clear where the where the beans are coming from what were some of the things that actually happened to jerk the system which then meant the kids didn't have to cut the cocoa beans and could actually go to school like what were some of those big things that happened well i think the the fact that we were giving those long-term contracts to people to say you can sell your beans so it wasn't a two-way thing it was a one-way thing you can sell your beans to the highest bidder but we will commit to pay this premium to the market price you know a living income price that's independently set every year so we'll be here with this level of but and of course because we were constantly the highest you know effectively payer that they would sell their beans to us but in return for that you know we want to one have the traceability two we will be visiting households and supporting farmers and there's no resistance to that because farmers don't want their kids in sure in child labor so then so then you're facilitating once you discover a child labor case how do you remediate it what's the you're getting into what is the barrier to that child is it that they don't have a their schools x miles away is it the fact the hours on the thing that then explaining like labor labor brigades where effectively instead of the kids doing the work you would then get young men who were then in their early 20s who didn't have many prospects together to then go farm by farm to do the work that the kids were doing on pruning the trees or how at harvest do they then be able to afford to hire someone instead of the kids so it's it's just and it's also partly telling the parents that's not right that is against the law and they go you know encouraging them to understand that you know that part of it as well so it just it's just there's no one and that's why this is so hard and why it takes so long because there's a thousand learnings every single season and it's taking those learnings and saying right how do we take those thousand learnings and of those thousand let's push these five things really hard well it's kind of i think it's like nudging theory so it's trying loads of different things and then seeing what works and then placing your bets why i didn't think we're gonna link this is that's how you run the business as well but it's the same they work across both both things absolutely and and not being afraid of failure again back to you're gonna we're gonna try some stuff that's worked we're going to try some stuff that people say oh but you've done that and it was wrong yeah okay but we're con we're you know we're constantly learning how to sort of get better and then i guess the big systems change moment and i give my predecessor hengian a huge amount of credit for this in 2017-18 they realized that the model was working and the evidence and the data support it but they realized we weren't scaling fast enough as a brand to sort of get it to a point where the big guys could look at it and say yeah but it worked it doesn't really work at scale it will never work at scale so the sort of skepticism of you know yes you can do it but only at a micro scale and so what he said was i'm confident enough that if i scale this faster the model will continue to work and so what they did was effectively say right we're going to create tony's open chain where anybody our competitors or private label or people who use cocoa outside of sort of chocolate industry can source their beans through us and as a result we've got you know ben and jerry's on board sourcing all their cocoa through us we have many private labels so albert heine in the netherlands in the uk waitrose source their cocoa for some of their bars through us uh and as you said on this on the shelf you've got tony's selling with its supposedly unique proposition of of ethical cocoa right next to a private label at about, you know, X cheaper with a Tony's open chain stamp.

2:05:22Why am I okay with that? Because I'm CEO of the mission. I'm not CEO of growing Tony's chocolate only FMCG brand as big as possible. I'm CEO of the mission. And that serves the mission far better because as a mission led CEO, proving that I can scale my supply chain model and therefore convincing some of the big guys to adopt that model for themselves will drive, you know, my mission to end exploitation in Coco faster. So I'll live with the, you know, when I say people equally unhappy, yeah, I've got some of the sales guys going, well, it's really hard to sell Tony's when Waitrose private labels next door with the Tony's open chain logo on it saying with the same ethical proposition.

2:06:02I said, well, if we're only relying on our ethical proposition to sell, we ain't got a business anyway. So, you know, Tony's is a different thing it's chunky it's delicious it's kind of everything that it is so so is waitrose private label its thing if we're both ethical i think that then drives a really interesting question how come waitrose private label can afford it and yet that's not fully implemented through the big supply chains what are some of those other bits of making people equally unhappy because i think it's so when you say it's so true it's like you're a sales like how many how am i going to compete with own label but when you the way you're we're now sort of coming to this where where where i wanted to get to is how you how this does link to the purpose and the bigger mission is one of those things but it makes total sense you know the way you're doing what are some of those other like equally unhappiness but like it builds for the builds for the mission yeah uh i'm just struggling to think of a specific thing now but um yeah i think as you said the the kind of the tensions that I was sort of faced day to day are, are we investing enough in the brand?

2:07:05Are we investing enough in, in, in Tony's open chain? And, you know, there's every year there's a thousand ideas how we could make it better. And I have to pick the five that I think will make the biggest difference. There's a thousand ideas on how we can grow the brand in the U S and I can't afford all of them. So you have to pick the five. So you're because otherwise, you know, I'm not short of ideas. I've got millions and millions of ideas and I would be bankrupt if I went after all of them. So it's just, you know, the biggest tensions, the, you know, that biggest, the most starkest is that one where we've got private label with Tony's open chain on it and selling right next door to a bar of Tony's chocolate.

2:07:43We've effectively given away our USP, which in branding terms or FMCG kind of building a brand terms would seem to be madness. But I don't. What's it done for sales? But I don't, I don't care about that. My sales haven't been affected. So, I mean, I know the sales guys say, oh, well, when they launch this, you can see it in the data. You know, I'm growing in the UK massively. I'm growing in the Netherlands. You know, we're growing the company hugely. So I can look past the micro data to say this is good. From a waitress point of view, we have them on, you know, when we do open day things. I have the waitress guys say, this has been brilliant.

2:08:18Our rate of sales got up by 20 % since we've put this logo on it. This is really good for us. And we believe in this. So guess what? it also creates a really tight bond between us and waitrose or us and albert hine so when it comes to range reviews and whatever yes they're different sides of the business but but there's a kind of understanding that we're in partnership and so so whilst they continue to be brutal because they are that's the way that's the sales guys the the buyers there are supposed to be like that i'm convinced that that gives me positive unintended consequences i suppose and also i I suppose there's more brand visibility in some respects.

2:08:55Exactly. And there's more brand visibility that that must be a good thing. Yeah. Right. So, and I'm not building the Tony's Open Chain brand per se, but yeah, there's a belief that it's a good thing. So for me, it's all massively positive reinforcement. And I, again, look to what am I making my decisions about? And it starts, you know, we talked right at the beginning about that single page that I show. That is my decision-making page. Am I making - just quickly what's in that and how mission vision values and and literally what's the difference in mission and vision so mission is what do i want to achieve so i want to end exploitation in coco and and the sort of mission is how i go about it so it's my sort of five-year plan and then my kind of three sort of key pillars that we've sort of consistently have of you know create awareness of the problem lead by example inspire others to act so it's kind of like how you go about it's kind of you know why what and then how is the values so you kind of have those three things it's all on one page that's my ceo decision making sheet do i think though it's not hit 400 million of turnover it's not hit 27 margin it's like am i delivering against those does this individual decision ladder up to that in the right way so when i've got a sales guy going we'd be mad to put that logo give that logo to waitress i go if i want to end exploitation in coco i need to convince the big guys to come with me i'm only going to do that at scale i won't do that enough just with the brand itself let's bring others in wow a couple more things then we'll wrap this up i've just got some questions i've been burning to ask but what's so do you know what the genesis story is of the uneven chocolate like how that came as in yeah so again to my predecessor heng yan when he came into the business in kind of 2010 2011 again challenge a brand thinking of how do we articulate uh how do we articulate the unevenness the inequality in the supply chain and one of the ideas was well let's let's make the bar uneven to exactly that to very clearly articulate that point and so they did that and again again it was one of those sort of tipping point moments now the great thing about it is it's a bit of a marmite thing people either love it or they hate it and they're like oh it breaks unevenly you're doing it to make me eat more chocolate you're doing it and it's like brilliant whether you hate it really you're you're we're gonna have a conversation about this what why do you do that Tony like I hate it's so annoying I love Tony's but this is really annoying and you know you might look at that consumer day say oh well we've got to solve that problem I'm like over my dead body we solve that problem because that creates the conversation as to why we do it because of the inequality people go oh right I didn't know that oh wow that's cool yes so so again it's it's points of disruption points of inefficiency what creates people getting out of their one second decision making well this is what i do every day my brain's too busy to think about other things when you have devices like that that's why with the advent calendars likewise when we took uh when we took one of the chocolates out of the advent calendar it caused such a storm it's like you're taking the children you're taking the chocolate away from the children and it was like yeah but we're now having a conversation about why we did that and when you explain that to angry mothers that johnny didn't get a chocolate they go oh well that's a really good lesson for my child to learn actually and i'll talk to them about that and anyway what we learned with the first year we did it we didn't put an extra the next year we learned we put two chocolates the next day to kind of quell the interesting so it's like when almost like problems become like or bugs become features when you talk about just that conversation bit so how do you think brands should enter the conversation like what i know that you've almost said like the uneven bar like i think because conversation is is culture on a micro level right but it's like how do you think brands should enter that or i think my view is if you're really clear on your your your mission your purpose be very kind of thoughtful and vocal about how you enter the conversation around those spaces i think the danger that's happened over the last 10 years is companies are expected to comment on everything and and then there's traps sort of everywhere because one you start speaking from a lack of experience or a lack of knowledge you make a decision on something so so i think i think be thoughtful about what you want to talk about principally hopefully in line with your kind of purpose mission what you stand for as a company and then and then yeah how how do all the devices in the company kind of put the hand out say provoke a conversation not not in a you know that that's a very uh simple way to provoke a conversation why why do you do that now i'm in a conversation with you that's that's annoying well it's annoying but it's not nearly as annoying as one and a half million children working in child labor it allows you to kind of have a have a thought provoking conversation with people about what is the what is the you know one one less chocolate in your advent calendar really isn't the end of the world compared to what some children going through to bring that cocoa to your doorstep every christmas again and i always pick up one like key principle from every guest i'm not with you you douglas this is all this contrarian thinking which is you know problems the unevenness of chocolate actually becoming a or bugs i should say becoming features actually this is the point and then it allows you to enter the conversation uh the advent calendar thing um just quite exactly you know these um all the behind us for people listening there's like a whole wall of different um branded gifted um almost like corporate gifting chocolate bars like you've got the brat summer you've got monzo you've got like tons of brands what did that do for the business because that almost feels like one of those small bets that it seems to i looked on your website is i would have again probably thought like would that take off but it's like i'd love to know like how because it's on your website it's quite center isn't it like yeah so yeah i mean obviously on the website again because it's more of the sort of direct to Okay, okay.

2:15:02But at the same time, so e-com in general is about a 30 million turnover part of our business. So it's big. It's a big chunk of the business. And it's, yeah, effectively, principally personalized bars. So whether as an individual, you can go on the website and do it for your wedding or for your friend's birthday. And you can personalize with their name and all the rest of it. Again, we managed to get that right. and because our brand is something that people feel good about gifting. So it's the combination of being able to enable it in an interesting way so you can do your own designs and upload your designs or get AI to do it for you or whatever, as well as that's more than just a chocolate bar because Tony says something.

2:15:41That's so true. That's one of your competitors couldn't do that. Exactly. So it's the blend of it's sort of quite a cool design tool plus it's Tony's. so it sort of has an elevated value in terms of it's an expensive chocolate bar on the face of it similarly for for for companies what we do is they can design for an event for for a launch whatever it may be we you know obviously there's a certain amount of tony's branding on it for us it's fantastic paid sampling right so i get a good margin and probably 5 000 people that of which three and a half thousand have never tasted Tony's before go this is damn good chocolate and also the first interaction with the brands you're being gifted which is like yeah they've been gifted and on the inside is then the story about the mission and so so so so from again when you're a challenger brand and you haven't got a lot of marketing budget getting other people to pay your chocolate for your chocolate and give it away is a pretty powerful marketing tool so you make money to do marketing wow so so again any other examples of that of no no i'm not i mean no i mean that's obviously the the sort of like that sort of thinking of yeah i i just um i think we've probably touched on a lot of them in terms of where you show up and all the rest of it i think i think the thing to remember though is this in any of these stories there's just a huge amount of luck as well so you go back to the founding story the the the design and you know we haven't talked about it but that our design on shelf is fundamental to our success it cuts through it that happened that design brief wasn't for a shelf it was for a tv show it was like give me something interesting it was written to say given to a guy and said you've got three days because we're filming next week and so the kind of core tony's red bar design that we have today that stood the test of time wasn't wasn't like thought through from a million angles for does it you know can you see it from left or right it was thought through to say you've got two days and i know so it was just going to be for for for a tv program it was it was for it was for a gimmick launch as part of this documentary they were doing a sort of effectively a gimmick launch alongside the launch of the um willie wonka film back into that with johnny depp back in 2005 when nestle were launching their bar they were launching as a stunt to sell it at a market stall alongside that and and then the thick bars came about because they were literally ringing up and you can see it on the documentary ringing up like we need a thousand bars made by this time next week and the 50th person called they said well all i've got is this chunky thick mold uh um how and they were like yeah done like as long as you make them by friday so then you get this design that was knocked up in two minutes tony's choco lonely came about because they went as part of the documentary to go see ben and jerry's and they said well the guy in front of the camera was called tone and they said well you if you want to be an international brand if you do it probably because it should be tonies not toned because that's very dutch and then chocolate lonely is the you know chocolate industry but the lonely journey to solve inequality so all of these things were thought up in the first seven days to make it look cool for a tv show and yet it's turned out to be absolute incredible for an fmcg brand on shelf where the branding's very unapologetic it completely breaks every category code how so does it look so because because if you look at our colors like having rainbows like you go cabri everything's purple everything's the same our colors are all over the place so in the same in every single market we have a rainbow on shelf that completely stands out and it's worked so hard where we've had no marketing money and all of those things weren't necessarily weren't thought through so sometimes take the luck as well you know except that there's gonna be a huge amount of luck in this as well the chunky bar wasn't uh i didn't realize the chunky bar was wasn't how do we differentiate it was like what can we make by friday that then became a feature it wasn't through some intellectual yeah thought through now that this this is really important because i think there's uh again especially set opposite opposite global ceo is the fact that the the appreciation of luck but i think luck come you create your own luck as well so like the card graft i really believe like it does come yes but i believe in that sort of stuff as well absolutely so do i yeah but when when you get them one don't try and post rationalize that was all your brilliant thinking just say that was good yeah And then freaking double down on it, big time.

2:20:18You know, the fact that we sell incredibly well in Australia, where none of us have actually even been to Australia. It's through a distributor. We've spent no marketing money there yet. And yet we've got national listings in Coles and Woolworths. Why? Because the packaging's working so hard on shelf to kind of stand out and create a point of difference. So it's, and then it's a great product. So back to, you know, good branding, luck or otherwise, this great product clear mission clear decision making that's you know what brings all of this together and allows you to it you know this is iteration everyone thinks bold strategy we made this one big choice you're making a thousand choices every year and filtering out the noise to then say right these are the things that we're backing because those are the ones that are working that's what this is about we've got to wrap this up you've got a train final question i ask this to all guests and i think with our contrarian thinking today it'll be interesting but it's what's one truth you believe that most people would disagree with you on?

2:21:22That I don't believe in simplify to amplify. Okay. I believe that by adding a certain amount of complexity in your business, you will ultimately move faster and choosing how you filter complexity is a better strategy than simplifying to amplify. Absolute joy. Thank you so much. that was unbelievable thank you so so much for listening to the podcast I really really do appreciate it if you liked that episode only if you liked it please do give it 5 stars subscribe tell all your friends families foes next door but one cat dog whatever please tell everyone about this podcast it means the world to me and I really want to understand what your pain points are as the new wave of of challenger food and drink brands please do hit me up on LinkedIn search Dan Pope and hopefully we can together create a more meaningful and powerful podcast for the next wave of challenger food and drink brands thank you so much