Asking questions that scale, with AG1’s Kat Cole

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1:19The employees put the uniform on to make sure they fit properly, and they all lock themselves in the restroom they would not come out of. The bathroom. Kat Cole is supposed to be opening a Hooters in Argentina. At just 20 years old, she was recently promoted from her job as a waitress. Hooters, an American restaurant chain, is known for chicken wings served by, well, let's just call it what it is. Women in short shorts and tight shirts. I didn't understand the cultural gap. And with the employees trying on uniforms, the issue was they were concerned about how their family would feel. Kat had a strict deadline to get the staff trained and the restaurant opened.

2:04This was her job. Fly around the world, spin up a new location, rinse, repeat. But not everything about Hooters could scale easily. And she was learning this the hard way. I was getting stressed. I was in tears every night. No one else is on the ground. No one's getting on the nine-hour flight to come down here. This is not going to go well. Kat found a compromise. She convinced the corporate office to let her make more modest uniforms for the women working in the front of the restaurant. And she took extra care to smooth things over with the rest of the staff. We invited their family in for Friends and Family Day first so they could get used to it and offered to let them out of their contract.

2:50if they were not comfortable. So it was all this negotiation, change management, relationship building, culture connection that was happening in that second and third week. And the restaurant opened to be quite successful at the time. But man, it was a brutal leadership mirror. Kat credits her success with being willing to look hard into that leadership mirror and make changes based on what she sees. it has empowered her to play a starring role in more than one remarkable story of scale.

3:44Working out of a three-bedroom apartment. Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it. This is Masters of Scale. I'm Jeff Berman, your host. As an executive, Kat Cole has led teams at household name American brands like Hooters and Cinnabon. Now she's the president of a very different type of company. Athletic Greens, the makers of AG1. It's a direct-to-consumer health supplement powder valued at over a billion dollars. I wanted to hear how she's leveraging her decades of success at Legacy Brands to lead this upstart.

4:28Kat. Hi. Welcome to Masters of Scale. Thank you. Almost all of the entrepreneurs and leaders we have on Masters of Scale started working early. There's some form of hustle in their career. some of us, myself included, started in mall jobs. You as well. I don't know that we've had anyone who's been at Hooters. And so I'm curious. Proud to be the first. Yeah. Awesome. How did that happen? How did you end up at Hooters? I have to go back a little because I grew up a child of a single parent, alcoholic father. We left my dad when I was nine. I helped raise my two sisters. I'm the oldest of three girls.

5:04And all of that and a few other dynamics led me to working early. But one day when I was working in the mall selling clothes, a woman came in with a business card that had an owl on it. And it said, Hooters Recruiter.

5:23And they were going in to find women who were good at sales, comfortable interacting and saying, come apply to be a waitress at Hooters. This was Jacksonville, Florida. At least me, my friends, nothing about it seemed controversial. It seemed kind of cool and interesting. So when they came to me and I was selling clothes at the age of 15, 16, and said, come apply to be a waitress, I was too young. You have to be 18 to serve beer, or did at the time in the state of Florida. But I still went in to apply. And I worked in a clothing store called The Body Shop, and we sold a denim duo of shorts and jean vests.

6:04We happen to have orange and white denim. So I literally bought the orange jean shorts and the white denim vest. This is the Florida Hooters version of the Canadian tuxedo. Exactly. And so I go in to apply and interview to be what I thought was a waitress, but I didn't know I couldn't be one. So they said, oh, you're too young to be a waitress, but you can apply to be a hostess. So I applied to be a hostess and got the job. And so I was opening the door saying, welcome to Hooters, cleaning bathrooms, bussing tables. So that was my first job at Hooters. And you were still in high school? I was still in high school.

6:39Where did this drive, this work ethic come from for you? I think, you know, who knows, really, nature, nurture. But my best assessment, as I reflect, is one, I viewed work as honorable. Like, work was cool. And for me, work, any work, cleaning gym equipment, working in malls, it was both the income part, but also the skills piece felt like a path to independence. And in every company I joined, very quickly, I started at the bottom and worked my way up, as the great poet Drake articulates. And so I did that like over and over. At Hooters, started as a hostess and then a waitress and then a certified trainer, bartender, cook, shift leader, ended up opening franchises by the time I was 19, ultimately ended up being an executive in that company.

7:29So there was something about getting in and moving up, taking on more responsibility. Not that you get to just take it. It's earned and given. That was just my ticket. My ticket to I didn't know where, but it turned into much more. So there's this inflection point where all of a sudden you are moving into more of a management leadership role. And I mean, getting a passport for the first time and traveling. So what happens where you make that jump? So when I was an hourly employee, some of the cooks quit one shift and I went back and helped. And so I learned how to cook. And so that would happen over and over.

8:08The bartender needed to go home. So I learned how to bartend. Very quickly, I knew how to run a restaurant. I did. That was not my aim. It was the outcome of my efforts, my desire to be helpful and my desire to make more money. And as a result, a phone call came one day when I was 19 years old from the corporate office to my general manager of the store. Her name was Bonnie Reinhardt, and she herself had been a Hooters girl many, many years prior. God bless Bonnie Reinhardt. Bless Bonnie. Yep. So she came to me and said, they're opening a franchise in Australia. They're looking for a training team to be assembled to go train the new employees there.

8:44They asked for a recommendation. I recommended you. I'd never been on a plane. I did not have a passport. So I bought a plane ticket, flew to Miami, brought my paperwork, stood in line at the Miami Passport Agency, which is one of the few places in the U.S. you can personally get a passport expedited, and got my passport in two days and flew back home. And then a few weeks later, left for Sydney, Australia to go open the franchise. And this wasn't daunting. This wasn't like, I mean, so many people would have imposter syndrome or like, I don't know what I'm doing. How do I even manage this? You just said yes, and you went and you did?

9:22Yeah, I mean, the idea of saying no or hesitating or someone else stepping into that opportunity was a far greater risk than the work to figure out what I didn't know. And it was truly, I mean, for a girl of my background, it was life-changing. It is not hyperbole to say that. It felt like it then. And I can look back and see that, you know, the trajectory was materially different after. And so much happened in the opening that was transformative and educational from a business perspective. And then the phone calls continued to come to start being a part of the training teams to launch the first of the franchise on other continents, Central America, South America.

10:03And by the third international opening, I was asked to start leading the teams. I was still 19. Kat learned an important lesson at this early stage of her career. The same approach doesn't work in every situation or location. Part of scaling a business is constantly evaluating and being prepared to adjust your game plan as new data becomes available. I needed to sit down with the franchisee and navigate all of these missteps of the corporation that really were many months in the making. It wasn't just a bunch of bad decisions on site. It was the plans, the lack of training and context. And he was an incredible mentor.

10:44He and the manager there, they sat me down and they're like, a lot's going wrong. and you're getting a lot of criticism, they could tell I was getting stressed. I was in tears every night. And he sat me down and he said some version of, look, whenever you're criticized, assume first it's correct. Just allow yourself the opportunity to assume that something in how you're being judged or being given negative feedback is correct. That's a great note for an entire career. And one of two things will occur as a result. Either A, you will realize there is some portion of that feedback that is valid, and you will act with the humility necessary to both preserve the relationship and improve on the thing.

11:30Or B, you reflect and cannot see anything that is valid. But in how you approach that criticism, it's focused on the why instead of debating the what. The corollary to this, assume the criticism is right, just off the bat, is to ask for the criticism, ask up front. Where does ask come in for you in your career in a really meaningful way? Because it feels like it's a through line of your career. It's a piece of what might be my most meta framework. I have a lot of techniques and principles and frameworks, but they're all a version of ask, answer, act. And so this idea of just asking, curiosity and humility, but then having the courage and confidence to either answer the question honestly or create a culture where others will give you honest answers, and then the bias for action to act on it and just rinse, wash, repeat.

12:29As I've led different teams and open businesses in different countries, you realize the thing that worked a couple countries ago or a couple of months or years ago, especially as fast as the world moves, those things don't scale. Answers don't scale. questions to. And finding the right questions allows me to make better decisions and have more fruitful actions, regardless of the dynamics, the situation, if it's boom times or bust times. And I've certainly led all of those in between at scale. So the ability to, the comfort to, the muscle for asking really strong questions is a superpower. So how do you build a culture where when you're asking, you might actually be asking for criticism of a decision that you've made or of you personally, creating a culture where people feel comfortable saying, gosh, I mean, actually, I think this isn't working or we're missing what works in Argentina is not the same as in Australia.

13:30What do you do culturally to build that? There's so many things that I've learned to do. One is I practice something called the hotshot rule. So the hotshot rule, something I've practiced for, I don't know how many years exactly, 17-ish years. It used to be a monthly exercise, and it's so powerful. It became weekly, still is weekly for me today. So I envision myself, and I just think for a second about how are things going? You know, my team, my business, the market, the environment. And then the next step is I envision someone I admire. Anyone. It doesn't have to be more sophisticated than that.

14:06So I'll think of you, right? I envision you taking over in my seat. So I'm gone tomorrow. You're in it. You inherit my Slack, my team, my emails, my partners, my problems, my wins. So I envision you there, like in front of the computer. You can do so much better, but thank you. And then I ask myself, what's one thing, only one, and the first thing that you would do to make the business better? And for whatever reason, with incredible clarity, an answer comes to mind. And so now I have the thing that I really know deep down I should be doing better or differently. I take action on it in 24 hours.

14:48Now, in my role, most of the things I would take action on involve other people. So I don't unilaterally like mow over my team. I just put the thing in motion. But that's not the last step of the hotshot role. The last step is I tell my team. And so my answer to your question of one of the ways that you can build a culture where people give you honest answers is to practice something like the hotshot rule regularly. Because what I'm doing every week is going to my team saying, now they know it's the hotshot rule and my team practices the hotshot rule, but you can just say I was thinking. I was thinking, there's this thing I should have taken action on.

15:23I didn't. I have now. I sent the email. We're going to the meeting. I'd like your feedback. We're going to take care of it. I love that. And every time I tell my team, this is what we're now going to do, they have some reaction that is either verbal or simply body language that is, finally, or what took you so long? Yeah. Or it's about time. Yeah. the interesting connection to my very early childhood in this moment and realization that now happens every Monday, because every Monday I'm taking my Sunday hotshot role and communicating to a team there's something I should have done, could have done, and now am doing.

16:03Every Monday still to this day, when my mom came to me at the age of nine and said we were leaving my dad, I looked at her and said, what took you so long? At the age of nine. And I wasn't upset, and I didn't cry. And that wasn't me judging her. It was simply articulating that I've known it's bad, but I didn't know what to do about it. And there are two things that people in the trenches don't have that leaders have as it relates to driving change. And that is articulating the problem or solution at scale and doing something about it. The leader can do that, but the people have the answers. So back to the point of getting candid feedback, getting people to speak the truth.

16:49One of the most important things you can do is lead by example with self-reflection, critique, and action. And then people go, oh, she's acknowledging on a regular basis that there's something she could have and should have done differently and better and is doing it. And it does two things. It creates a culture of openness, vulnerability. I welcome it from them, But they also know I walk the talk. I'm going to come to them. Who are your favorite hotshots to imagine on that Sunday before you head into your Monday with your team? There are some regular visitors to the hotshot role. One is my mom, for sure.

17:24I mean, you know, she came from nothing. She's the youngest of seven kids. Her dad died when she was three. She navigated this relationship with my dad. She left not knowing how to afford the life of raising three girls on her own. She had an entry-level job. She worked three jobs for many years, fed us on a food budget of$10 a week for three years. So there's so much there. There's so much leadership that I admire, even though she came by it quite organically. There were no examples or she wasn't reading books telling her what to do. Masters of Scale wasn't around, right? And so I think of her often.

18:04That scrappiness, that resourcefulness, that deep, deep clarity of prioritization. And for her, the most important thing was the safety of her girls and the independence of her girls. And that colored everything she did, possibly even to a fault. And so she's a regular character. There are leaders that I've had in my past that I deeply admire. A man named Russ Umfenauer, Steve Romanello, Phil Hickey, Bonnie Reinhart, some of the people all along my journey. So it's often someone who I've worked with and I have a deeper understanding of their standards. And you can almost channel them because you know them so well.

18:45But every once in a while, I'll envision, you know, a well-known figure that I don't know personally, but who's done something important in the world or in society based on whatever the situation is that I'm navigating. It just brings this perspective that I allow to color my heart and my mind and to drive action. Yeah. The hotshot rule helped Kat keep climbing in the Hooters organization, and eventually she caught the attention of executives at Focus Brands, a holding company that owned Cinnabon. They asked her to take on the role of president. Under her leadership, the beloved but then stagnated cinnamon roll retail shops expanded into an omni-channel brand worth more than a billion dollars.

19:32A giant pastry can only be, as Cookie Monster would now say, a sometimes food. But Katz saw an opportunity to bring a little Cinnabon flavor into countless CPGs, consumer packaged goods. Now, their Cinnabon brand flavored coffee, popcorn, protein powder. I learned a lot about launching innovation businesses. So the brick and mortar franchise was a legacy business. I ended up expanding what at the time was a fledgling CPG alternate channels business that became the playbook for turning around the brand and became the operating model for how we would not only manage our existing portfolio, but how we would evaluate future investments.

20:11Did you have a model for that? Did you create that? Yeah, it was built over time. When I got to Cinnabon, there was already a CPG business with Pillsbury. But that was it. But it was so obvious to me that expressing a restaurant concept in a completely different channel in a way that made sense for the channel, but that honored the brand, not diluted the brand was the way to grow a brand in the modern world. But that was not easy in a franchise business. Franchisees don't want you selling that branded product anywhere except their stores. And so there was a lot of feelings, emotions, not necessarily logic to manage.

20:51And then there was building the real business case capabilities and learning the hard way of launching innovation businesses in a mature business environment where you have very few resources. It makes people uncomfortable. It distracts from the core. Yet it might be the very thing that is the secret to the future. Like the irony of what honors the past is often something new in the future. But you have to do it in a way that does not conflict with what the core business was built to do. So at Cinnabon, I built my turnaround muscle. I built my global brand building muscle. I built the CPG omni-channel playbook that would scale.

21:30Were there D2C elements, direct consumer elements of that? At the very end. Yeah. At the very end. So this is where I got the CPG bug. Yeah. This is where I got the e-commerce D2C bug. Then I moved on to be group president of the parent company to bring this alt channels model to the whole company. Yeah. And it was a very interesting moment for my ego because I went from managing a brand that everyone knew, Cinnabon, with tens of thousands of employees and this beautifully expressed brand, now well over a billion. in annual sales that we had grown in just a few years out of the recession, both the core business and the innovation business.

22:07But it was largely the innovation business driving that. And now I'm going to this company, Focus Brands, that no one's heard of with two team members to launch innovation. And because it was an asset-light model, we were leveraging the brands that the teams were running, working with partners like General Mills and Kellogg's and others to bring these brands to market to commercialize. And so I thought, man, how do I feel about this? What is my sense of self, my feeling of importance? I now have a small team for a company that's actually much bigger, but that no one's heard of. Right. Well, then it's not meant to be consumer brand.

22:40Focus is a holding company, right? So yeah. That's right. And so that was a moment of where I had to think what matters to me. And I had a pick. I could go run a big group of multiple franchises. So do more of the same, more sweet treats, more snacks, more franchises, or go into this innovation division. And that newness, that learning, this is obviously the right next step. So being able to isolate what really matters for you personally and to block out the noise of the other stuff that might matter to other people feels like a really important part of this. It is. You've nailed it. And I think it started because I was working for Hooters.

23:19When you're an executive in a suit at a networking event and you hand someone a business card with an owl on it, you know, you get reactions. So I got trained at a young age to get really clear on about whose opinion do I care? Really clear. And that changes over time for various reasons. But I learned to ask myself that. That core question helped Kat realize when it was time to move on from focus brands and head into new territory, even if she didn't know what that would be at first. More on how she landed as president of AG1 and the impressive scale story underway there after the break.

24:05Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more. Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25. If you're ready to take your startup from idea to impact, then AWS is your launchpad. From data storage to machine learning to secure app hosting, AWS gives you the tech trusted by the world's fastest scaling startups.

24:55And here's the best part. Join AWS Activate today and you could score up to$100 ,000 in AWS credits tailored to your stage and network. Go to aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one.

25:38So if you're scaling, make it simple with Deal. Go to deel.com slash mos and get up to three months free. Welcome back to Masters of Scale. You can find this interview and more on our YouTube channel.

25:59you were working at focus where there were a lot of fun for you brands that's right and full of that's right good ish at least free brands if not good for you brands um you find yourself now at a really good for you brand that's right i mean there's so many different places you could go on things you could have done why ag1 so many reasons the first of which is i was a customer That helps. That helps. It made such a difference for me after my second child. Energy, digestion, immunity, hair, skin, and nail support. Like, I just had an incredible experience. But I had heard about it from my husband, who's an ultra-endurance athlete.

26:38And I was an occasional user. I wasn't a daily AG1 drinker. So set that aside. Then add to the equation that I'm an angel investor in over 60 early-stage businesses, over half of which are healthy, good for you, better for you, or having something to do with the wellness ecosystem industries. So I'd been putting my personal capital into early stage businesses, which helped me work with founders and understanding that journey and deeply respecting that journey, but also getting clear. I'm a scale girl. I have no desire to go from zero to one. You don't want to do dirt road. You've done paved road.