KIND bars: Daniel Lubetzky. From peace in the Middle East to a $5 billion snack bar

0:09 Walmart came to us and like the buyer liked our product. And you know one of the most significant dangers is when a buyer loves you because sometimes you're not ready. And you couldn't say no to Walmart and we we didn't have salespeople or systems to check if our product was selling through. And one of the things that I learned in our industry. is you can get reports And look at your sales per store. What do you think it means, guy, if you're selling zero per store?

0:36 It means it's not good. No, no, that's what I thought. If you're selling zero, it could mean it's really not good, but it could also mean that the proc didn't even make it to the shelves. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. they built.

1:06 Guy Raz and on the show today, how Daniel Lubetsky tried to bring peace to the Middle East. And ended up building a five billion dollar snack empire. With kind bars. Starting a business with a mission in mind is great. I meet a lot of entrepreneurs who want to solve a critical social problem with the product they sell.

1:33 Again, awesome. Everyone loves a good cause. The problem is when a founder tries to sell the cause as their product. It may feel good and righteous, but most consumers don't shop to support a cause. They buy things they like.

1:49 Girl Scout cookies are a great example. There's a reason the thinmints and Samoas and Tagalongs sell out first. They're good cookies. And yeah, it's nice to support the Girl Scouts, too. But if they were only selling, say, the lemon ups or the tree foils, Do you really think as many people would buy Girl Scout cookies? I doubt it. My guest today, Daniel Lubetsky, learned that lesson the hard way.

2:16 In the 1990s, Daniel was trying to build a business around one of the most challenging, most intractable issues on the planet. The Middle East conflict. He started a company called Peaceworks. It was built around the idea that if people from different sides of a conflict could build a business together and succeed together, it might create a meaningful path towards peace. So Daniel started producing gourmet foods with partners from Israel and neighboring Arab countries.

2:44 Things like olive topanade and sun dried tomato spreads. The story behind the products was compelling. People loved hearing it, and they admired it. Unfortunately They just didn't buy a whole lot of it.

2:58 But while running Peaceworks, Daniel came across a snack bar at a trade show. And even though it had nothing to do with the business he thought he was building, He had the good sense to say yes when he got the chance to distribute it. That bar became a badly needed source of revenue. And then when that revenue suddenly disappeared for reasons completely outside of his control,

3:19 Daniel found himself at a crossroads. Walk away. or build something of his own. And that something became kind bars. And once Kind Bars hit.

3:30 They really hit. but not without major challenges along the way. Today, Kind Snacks is owned by Mars. They bought the brand in a deal valuing it at around$5 billion in 2020. And Daniel never really backed away from his original passion project, even though he admits peace seems as elusive as ever. Daniel Lebetsky was born in Mexico to a family of Eastern European immigrants.

3:58 His mom was second generation, but his father arrived to Mexico as a Holocaust survivor after the war. And Daniel says his dad's resilience and kindness. were huge influences on him. He was born in Riga Latvia, raised in Lithuania. And when he was Nine years old, the World War Two broke out, he ended up in a concentration camp.

4:23 And after surviving He was for six months in a refugee camp and then ended up in in Mexico. So he was in a concentration camp As a child, as a teenager.

4:36 Yeah, it was very rare guy because only one percent of kids his age survived. And he was a tall kid. So when he was registered in the Dao concentration camp He was twelve and a half years old. But the documents say that he was fifteen and a half, because my grandfather lied.

4:54 And convince the guards to let him work for Uh it was a labor camp. There's a lot of depths but it was designed to make the Іметсь билд маші форди наці операція. And my father ended up being with my grandfather in that camp for three years.

5:13 And so both of them survived? Them and My uncle Larry, who was his older brother, was with him also. Well, I have to imagine you gr I mean, did your dad talk about it'cause there were st there are many people who survived the camps

5:28 That didn't do it. Today m the remaining Survivors do talk about it'cause they're encouraged to do so, but there are very few left. When you were a boy, did he talk about it? He did and guy, you're correct. There were a number of survivors in our community in Mexico City. And there were predominantly two types. One were the people that shut it out. They could not talk about it because this

5:50 too consuming and painful. And then there was the others who were so consumed that they We're embittered and and and uh darkened. And my dad was neither. My dad was very rare in that he talked about it and when he talked about it it consumed them, but then he lived his life with kindness. He didn't let that darkness of that chapter

6:11 Darken him quite the opposite. He saw his new life. as a opportunity for him to bring light to the world, and he always Even today if you come to San Antonio, Texas, where we moved to after when I was sixteen years old. People when they see my last name, they're like, Oh, were you related to Mr. Roman Lubetsky? I'm like, Yeah. It's like oh my God, he was and they'll tell you stories about how kind he was to them. Like everywhere you go, people still talk about him and

6:37 You look back and it really did uh shape almost all of my decisions. Mm-hmm. So your father comes to Mexico as A seventeen, sixteen year old kid probably by the time

6:50 Yeah, after a couple years, in Europe. Presumably doesn't speak Spanish. And had Noah had had no education, but for the previous seven years during the war.

7:02 I'm assuming. And um What did he do? What did he tell you he did when he got there? The way he educates himself is by watching movies and reading the subtitles, and then by borrowing or being gifted used encyclopedias. And devouring them, reading them cover to cover, volume A Volume B, volume C

7:20 garnered enough money with my grandfather to start a little jewelry shop and then that grew and grew in Mexico City. In Mexico City. And then almost like a like a bad Jewish joke, five Holocaust survivors join forces to build a a business

7:41 on the border between Mexico and the United States. where they sold duty free wares. For example, my dad was in charge of watches, one of his partners was in charge of wine and liquors, the other was in charge of cosmetics, the other one electronics was very big. Okay. You're born In nineteen sixty eight, and you spend The first twelve, thirteen years. of your life maybe longer in Mexico and we'll get to you moving to the US, but

8:07 what was life like for you? What do you remember about being a kid? In Mexico City in the seventies. and you know, in in early eighties. I was raised in an immigrant community where there's like a little bit of a bubble of a lot of uh Jewish survivors and immigrants in Mexico. And in my school they taught you ydish.

8:26 And Spanish. Well,'cause Yiddish is not spoken by anyone, very few. It's not anymore, but back then we were living a little bit of a Bobble or a cocoon. and we're very proud of being in Mexico and being Mexicans, but we're also very proud of our heritage and Like all sorts of funny things like my grandmother would make you know how people make fun of

8:49 the most disgusting thing in the world. I'm sorry not to offend people, but gefilte fish. Have you ever tried gefilte fish and it's cold and just horrible? We had a Mexicanized version of that called Gefilter Fish ala vera cruzana. So we would meld this red warm sauce with a lot of spice and made uh G filter fish warm and taste good. So we did a bunch of combinations between our Mexican and Jewish cultures. And in the seventies, I mean This was a l I guess a little bit of a

9:19 I would I don't want to say unstable time in Mexico, but I mean there were You know, in the sixties for sure there was a lot of upheaval. There were student demonstrations and I think stories of students who were She fired upon Right in the sixties and maybe even early seventies, can't remember the exact time frame, but Did Mexico City as you remember it as a kid in the seventies, did it feel safe? Did it feel

9:40 Like a pretty normal place to you? It never crossed my mind that I was Unsafe. Uh as a kid. I probably was a little bit naive, but It felt amazing and yes, there was a a lot of horrible periods of instability, including the nineteen sixties that you're describing about when a lot of university students were slaughtered. But when I grew up I was not

10:02 fully aware of that. And around nineteen eighty four There was Um earthquake. I think it was eighty five, if I remember correctly. The big one.

10:13 Maybe it was an Earthcoin to eighty five, but they're There was also one earlier,'cause I remember one building fell. And they started blaming the Jews. For the earthquake. And my dad was like, I'm not taking a risk again. We're gonna move.

10:28 What do you mean? What what how did they say that? the newspapers and people started saying that it was the Jews' fault. You know, you can't really fully explain anti Semitism or all this uh So

10:40 All I remember is that my Father said my grandfather made a mistake to not take the warning signs. I'm not gonna take the risk. And so Something that's very interesting even with epigenetics that there's a lot of studies about children of Holocaust survivors

10:58 We see the world differently. Like I In my mind. Twenty four seven part of my brain that worries is hyperactive about everything and I worry about democracy, about rule of law, about humanity, about how to fight injustice. Like It's just in my DNA and I think it has a lot to do

11:16 with what my parents taught me, but also with what I inferred from learning from his experience. Alright, so you guys moved to the United States in the mid eighties. You're teenager, I'm assuming because your dad was part of this business, this sort of duty free business on the US Mexico border, he just continued to run that business. Yeah, well he and his partners Their headquarters were in Laredo, Texas, which was truly a border town. My parents wanted to be a little bit more, you know, in the cradle of civilization. So we moved to San Antonio, Texas. Is he traveling to Laredo a lot? Is he going back and forth?

11:51 he's traveling to Loretta Lord and he's traveling all over the world because it's uh like all of his clients are Predominantly in Switzerland. 'Cause he had the representate the only duty free representation in the world for for these quality watches. And so that's why so he had like big time watches. I mean I mean today, right, like I don't even think some of those brands sell to third parties, right? Like they only have their own boutiques. They play a fascinating game. They control the inventory. There's more demand than there is ever supply and

12:22 But yeah, it's a very coveted thing to have a a license to sell those watches. And I guess while you're in uh in high school, you also get into the watch business. Like you you start selling uh a certain particular brand of watches. What tell me about that? So I had a bunch of jobs. I I had the right to be in the United States as I was lawfully a resident, but I didn't have the right to work for somebody else. So I had to create my own businesses. So I would go to flear and sell not just watches like

12:54 but also singing cops that you'd lift them up and he would start singing and Christmas lights and uh all the crazy things you can imagine. And my dad helped me out. He connected me to a couple of suppliers that would sell me some of these products and then I would buy them But then I had to wake up at five AM in the morning and set up the booth in the Eisenhower flea market and then finish at six PM and it was It was really fun. And I had

13:20 uh car washing business with uh my cousin and we had uh lawnmower business, but we didn't have a lawnmower, so we had to borrow the owner's lawnmower. I didn't even realize till I told these years later that that was unacceptable you're supposed to have your own loan more. When you um When it's time for you to go to college, you stayed local, you went to Trinity University in San Antonio. And did you I'm assuming you continued to sell watches or I mean was that sort of your main did that become like your main source of income?

13:51 Yes, it was a very good business. The most fun business was that I was a magician and I studied one year abroad and I helped pay f for my studies by traveling and doing shows on the streets of Paris and the streets of all over Europe. Like car tricks or what kind of tricks? Mentalism, cartridges, s sliding a sword through a woman's body, anything you could imagine. How did you learn how to do that? I started from my dad. As a Holocaust survivor who was nine years old when the war started, he didn't have a childhood.

14:18 So he lived his childhood through our childhood. Like he he loved magic, so we would go to magic conventions. But yes, when I was in college, I had a network of um students that would sell Watches. We also have a couple of booths and shopping malls. It was uh

14:37 Fun but challenging. Were you in uh intending to be like your dad go into business and be an entrepreneur, or because this is the late eighties when you go to university and There was a time where people didn't think about starting businesses, like they'd go to law school or medical school or be a consultant, like When you were an undergraduate Did you know that you were gonna probably go to law school? Was that your goal?

15:00 My haz to become partners with my father. I wanted to start a business with my dad. And my dad wanted me to do something with my life, quote unquote for him. who had been deprived on education and him and my mom, they wanted me to get a graduate degree. So I applied to Stanford Law School. I got in

15:18 And when I went to law school Besides starting a business, my passions were resolving the Arab Israeli conflict. I was very passionate about figure out ways to use economics to help Israelis and all of their Arab neighbors recognize each other's humanity, break stereotypes, cement relationships.

15:37 How did that I mean, obviously you grew up in a Jewish home. father's Holocaust survivor, but how did you even when you were in college, this was your sort of obsession? Yes. And I started r learning more about this

15:49 conflict and I started thinking once I went to law school I thought I was gonna become a diplomat and then that idea of building bridges with people kept being around In the back of my mind.

16:01 And I ended up writing a legislative proposal in law school for how to turn my theory into practice You uh I don't think you ever really practiced law, right? You briefly worked for a law firm, but you I practiced for a couple months. I passed the bar, I worked at Sullivan and Cromwell. And I

16:18 That's when the Oslop process happened. This is nineteen ninety three. This is when the famous Rose Garden Bill Clinton, Yasser Arafat, Yitzekrabine, that handshake. That was uh it's hard to imagine today how how much optimism there was in the world around around resolving that conflict, but that

16:36 That was a watershed moment. You are Out of college, out of law school. А на возін Мексико. watching the rose garden ceremony and I'm like, Oh my God, tha I need to Do this. And so I told Solomon and Cromwell.

16:51 I'm taking a leave of absence and we'll try this out. Alright, so from what I understand, you you're so inspired by this that you Get a fellowship and move to Israel to work on your idea. Uh, and basically you the idea is that you you believe that economic cooperation, like building businesses between Arabs and Israelis could

17:12 Encourage peace. Yes. Alright, so you decide to start a business to try to prove this out, and I guess it's called Peaceworks. So how did you start? What what what did you do? The way it works is I'm doing my research and I go to a supermarket and I see this obscure looking jar of sun dry tomato spread. And I don't know what is a sun dry tomato. I've never tried a sun dry tomato.

17:35 I try the j spread and it's delicious. It's so good. And I go back to the store to buy some more and there's no more. And I talked to the distribute, uh to the store manager Where's this thing? I wanna buy some more. It's really good. And they're like, sorry, their company went out of business. And I can't get the idea of my joint ventures out of my head. I can't get the idea of this delicious spread out of my head. And all of a sudden they merge, and I'm like, oh my God.

18:00 What if I can restart it? So I asked for the name of the bankrupt guy. and he connects me to Yal Banish. And Julbanish is this beautiful human being who had a number of our friends and I tell'em the idea for Peace Works. And the reason he went bankrupt is he was buying.

18:18 glass jars from Portugal and olive oil from Italy and Sandra tomato he was buying all the stuff in Europe and it was very expensive, so I start mapping up with y'all. We could buy the glassers in Egypt. Through my research I knew that we could buy the sun great tomatoes in Turkey and we could buy the olives Palestinian farmers. And I start showing him why don't we do this together in the Middle East? And he he decides to give it a shot with me. And this could be the beginning or the first product, because Peaceworks was going to be

18:47 Was it gonna be about consumer products or was it just gonna be any joint venture? Back then, guy, I thought he was I was gonna have ventures in all sorts of industry. I I didn't know anything. Okay, so now How do you identify the sourcing? Like how do you find a Turkish sun dried tomato uh producer and Egyptiers and w like how do you start that'cause this is pre internet. I mean there's there's a little bit of internet, but it's Exactly. There's I was gonna say he was not using Google. Yeah.

19:17 So you have to go to trade shows, you have to go to the governments, you have to go through introductions, you have to It was so much harder. Okay. Now, my question is, when you started to approach some of these other

19:33 suppliers and you said, Hey, we're based in Israel, we want to start this company we want to work with you, were they receptive to it? I mean were were they hostile to it? They were super receptive because this was remember the romantic time. This was after Nineteen ninety three after the Oslo Pis Process.

19:53 And it's hard to appreciate and remember how magical that time was, but You would go to our capitals. And you will go to Arab towns. And they wanted to do business with Israelis. Like it was like the new Middle East, it was Shimon Pers's new Middle East. There were a lot of resentments, a lot of suspicions. But I can't recall right now

20:13 A single incident when somebody said no. I don't want to go deal with Israelis. Got it. Okay, so you settled on making Well first I guess this sun dried tomato spread, but I think the idea w is to create a line of spreads right that you could

20:31 Export presumably. Ca you're not gonna sell these in the Middle East, right? Or or were you? Was the idea to sell them in the West, in the US? After a few months in Israel to your point I realized that I need to go to the US because

20:45 We need to develop a market hi. can make the product, we figure out the first part, right, how to make it. But I need a client. And so I go to I move to New York, I go to Zabars, I bring him this jar of this obscure looking product, they look at it and they laugh and they're like You got it all wrong. Your pricing is wrong. You didn't create enough margin for us. You labels all these regulatory problems, the oil is leaking. So Scott Goldshan and uh Sol Zaver Spent by the way, they were really tough on gruff.

21:15 The sweetest people. They a lot of what I learned. What's from them another merchants who love the concept because think about it, this is the Mid ninety's people are rooting. For the Israelis and Arabs to figure this thing out. So they would give me a ton of free time of advice. So I go back to the drawing board, I tell y'all we need to fix it, fix it. I come back six months later, they're like, What, you're still alive? I show them the product improved, they give me a shot, and then

21:40 Multiple iterations till we start figure out something that people wanted and were willing to buy. The idea is to sell these at initially specialty stores like Zaybars. Yeah. It's like a farmer's market brand. I mean you're selling jars of like what, like olive oil or olive spread and sun dried tomato spread and like what like artichokes. I'm just imagining what they we start with sundered tomato spread, basil pestle, and olive spread. Okay. Packaging and the branding. Oye, the brand is called Moshe Pupik and Ali Mich Mumkan's world famous gourmet foods.

22:15 I still don't know why it didn't work out. I mean what did the jar did the jar say W what this was about like hey this is about bringing People together when you buy this product, you're supporting efforts for peace in the Middle East. It was that clear when you when you saw the product? Yes and no. At the top of the lid, there's something that says cooperation never tasted so good. Cooperation never tasted so good. Okay. So thou so we were trying to talk about that.

22:43 And obviously the characters Moshe Pupik and Ali Mish Mumkin You would buy the jar, and there would be a little book, and you had this Thousands of years ago. The impending armies in the Middle East were about to kill each other, and the great chef Mov She Pupik called his magician friend Ali Mish Mumkin, and they quickly concocted the sundry tomato spread.

23:05 Whose aromas was so magical that it spread across the horizon and it put the rival armies in a friendly trance, and they were so re-energized that they used the strength of the sun to melt their weapons into spoons and use the spoons to partake the Sun Dr. Tomer's plate. But what I discovered along the way. Із да і туми форд. Consumers will give you one shot, but then they think they're doing you a favor. And what I discovered is you need to make sure that you're not trying to tell the consumer do this because of the mission. You want them to buy it because it's the most delicious product out there, because it's the right value proposition from them. And that's Earlier on again, one of my other mistakes is I started selling in the street fairs. in New York City and everybody's I'm talking about the social mission. I'm talking about the social mission. They're listening to social mission and they think you're adorable and then they keep walking. And when I start talking about the features of the product

23:57 then people start trying it out and taking it more seriously and they they try and it's actually good. It stands on its own merits. So The mission cannot It can be an added reason to believe, but it cannot be what drives the sale. Right. Okay, so you are you're in New York and you're pounding the pavement trying to get this into stores. And it but it sounds like I mean you had a great story and so

24:18 that kinda gave you a foot in the door with like you would go from store to store and make the case and try to Convince people to carry it on their shelves? I start at seven AM in the morning On Hundred and Twenty Second on Broadway. And I walk down.

24:32 Stor by store, store by store, а найтелмайсев. I shall not go to the next store till I get a purchase order from that store. I think it's all about grit and I think about I need to get this product in every store. And in my mind, that means that product belongs in Whole Foods. But it also belongs to in the convenience store in the corner and it also belong belongs in Bloomingdale's and Macy's

24:55 And so the best example I can tell you about This is I go to a Korean grocery store there was Mr Lee on eighty fourth on Broadway. And I tell him about my product and I tell him all the social mission and he says, I'm sorry, like This is a bodega. We only sell, you know

25:11 toilet paper, ketchup, just essentials. We don't sell fancy Sonder spreads and I said, Yeah, but you don't understand. This is about peace in the Middle East and you have a a community that's gonna appreciate it and try this. And I open the jar and I forcefeit the poor gentleman with a piece of baguette and like let him try the product. After two hours it's he gives up and He gives me a purchase or he s offers to buy twelve jars for thirty three dollars. And I leave the store and I tell myself, Daniel. You're a winner because you didn't give up, you're gonna win. But then the next week

25:42 I go by the by that store and the shelves he hasn't moved one jar. And then a month goes by, he hasn't moved one jar, and the jars now are full of dust and they look bad and they look bad for him and they look bad for me. And that's when I start learning to think more long term and to think about where should this product fit and only be there for them. the Israel Arab and Israel Palestinian conflict. uh you started to look f source products from other conflict zones. I guess you did like uh product from Indonesia or like or East Timor or the idea here would be

26:20 Conflict zones around the world and people working across the conflict zones to build and sell products. And but what I was getting wrong then, Guy, is I was so enamored with the social mission that I was my own worst enemy because instead of focusing on one product line and winning I was starting ventures wherever I could. So I was working like a horse. Right. And it's taking so much time to figure out these partnerships instead of focusing on one and getting that one right. So consequently, this whole Peaceworks business. You know, I was very proud, but The first year we sold if memory service in Wheel thirty three thousand dollars, second year Two hundred twenty six thousand dollars

26:59 Then I get to about a million and then it's just like Plateaus. And were you profitable at a million? I was preferable Every year in our journey except one where we lost a tiny like a few thousand dollars, I was profitable every year, but profitable because I wasn't paying myself a twenty four thousand dollar salary.

27:15 And so to get to let's just say a million, I mean you had to be in a lot of retailers'cause this is not like toothpaste or shaving cream, it's not moving off the shelf. Did you eventually work with a distributor? Yeah, so the way you do it, at least during my time. is distributors are not gonna open markets. No. They're gonna continue your stuff. So I open New York City, I develop New York City, once I have

27:39 fifty accounts or a hundred accounts and I find a distributor to continue supplying and distributing for them. So then now I can go up in Philadelphia. Presumably you had a couple of employees, right? Did you have at least people who were dealing with warehousing and logistics and maybe even sales, like how many people did you have working for you? Five team members and we're right a

27:59 paid twenty f twenty four thousand dollars or something like that. I call them victims. Because they're poor guys, like none of us know what we're doing. Like most of'em are kids that just graduate from college and They don't have a better option. So okay. So you are kind of humming along, and I guess at a certain point you are because you're going to trade shows. And you find a product that is like a yogurt.

28:24 Apricot almond like a granola bar, but coated in yogurt, I guess. And you like it and you asked if you could distribute it. No. What's the story? At the natural provocation As I'm walking and looking at the products, I try this product, which is a Apricot yogurt.

28:42 Almond bar. And it is delicious. And I'm like, wow, this is really good. And it was called the Bee Natural bar? The product was called Be Natural, yeah. And Peter Sudarma who owns that company asks me for advice. And then like six months later or a year later, he says, Daniel, my product's really good. Why don't you start

29:02 distributing it and I'm like Peter, I can't. I have a Peace Rox mission. Your product's not made through Peace Rooks. Doesn't matter, Daniel. Company distribute it for us. Long story short, he convinces me to start a separate division of Peaceworks. But you had a business that was focused on building Peace between

29:23 So didn't this I mean In your mind, why would you do this? Why would you sell this primition unless uh you could make money off of it, right? I'm Eight years into this direction. And you guys are not doing well. We're barely making ends meet. It's very, very hard, and this product is a good product. You start distributing it, and did it do well in the US?

29:44 Everything is relative for us і was Nirvana. At that point. We're selling half a million dollars of this product, one million dollars of this product. It's incredible. It's Very quickly Become something.

29:56 And then something bad happens. Peter tells me that there's a company that wants to buy the product. the company decides that they still want to keep me as their distributor. But they start adding a number of ingredients that were not approved by Whole Foods. Uh-huh. Whole foods at the time

30:15 And still their list is like the Magna Carta for natural. Right. And they start adding two or three ingredients that are not approved in the whole foods list. And we plead to them to not do so, but they don't care because in Australia they sell predominantly to convenience stores. They don't have a highly developed natural marketplace. We explained to them that in the United States it's gonna kill our market.

30:38 They said sorry, Daniel, but But we have to do this. So We lose all of our sales from one dick to the other. So all of our hard work goes to nothing.

30:49 When we come back in just a moment. How Daniel Turns Disaster into opportunity and gets back into Whole Foods in an even Bigger way. Stay with us, I'm Guy Raj and you're listening to how I built this.

31:23 Hey, welcome back to How I Built This. I'm Guy Raz. So it's two thousand three, and Daniel's in trouble. His Cash Cow, an apricot almond yogurt bar that he's been distributing, has been reformulated and kicked out of Whole Foods. And that's a huge chunk of his revenue gone. And it's not the only struggle he's facing.

31:44 This actually was one of the Darkest Periods of my life because along the way. My dad passes away. And I'm doing a lot of civic work in the Middle East, and as you know.

31:57 the second intifada breaks out and there's a lot of violence and stuff and it's it's a very difficult time. And so I'm exhausted. I've been ten years at this. And I remember very well the meeting that happened where we had about sixteen members around the table and every one of us has to vote whether we give this another shot or we Just give up.

32:19 And We unanimously say let's give this one last shot. A few months later we design it and we launched what became kind and in the Company just takes off. So you decide that you're gonna build, you're gonna make your own bar. And let's talk about this for a minute. So tell me how you get to the name kind.

32:36 А вині то в три пill сфорт. Kind to your body, meaning healthful ingredients. kind to your taste buds has to be tasty and kind to your world that the way you do things matters. And my dad just passed away, so I think he's front of mind

32:52 And I told you earlier about how in spite of all of The darkness, he just was a very, very kind human being. So we named Kind of.

33:02 In honor of my dad. Mm. And Initially the motto was all natural always because we're so freaked out by i the incident that we had and we wanted to control

33:13 our destiny. This is a very very important moment up until that moment I don't have control of the manufacturing ever. I work with my manufacturing partners, they have control of the manufacturing. After I get my ass kicked here, I said all right. I have to control

33:28 The manufacturing. I control the formulas, I control the recipes. And I identify a manufacturing partner that can do it for us, but where we control the rights and control our destiny. Tell me about

33:43 The concept because the concept we know It's basically. nuts and fruit, depending on the bar, kind of stuck together. Was that the concept from the beginning? Yeah, the w I would just add a little bit more broad.

33:57 I am trying to solve a problem for my needs, which is A healthy snack on the go. And so What are some of the implications of a design process? It cannot melt too easily in your hands. Right.

34:10 It has to be portable, it has to be compact, it has to be nutritionally dense. I think initially it's just like Almonds and different nuts bound together. In a bar, right, maybe some fruit too. That was the original Yes. And

34:25 So let's talk about this for a sec, because this is gonna be a bar, right? And it had to be Cut. and it was gonna have whole nuts in it and it had to be bound together. And uh you know, I I think a lot of people listening might think, Okay, what's the big deal? But i I think this is a gonna be a challenge to actually produce It's really, really hard because in our industry.

34:48 Most bars, I think ninety Five percent of bars are what's called an emulsion or a paste. And it flows really easily to the manufacturing line. If you take a product, you macerate it and make a mix. it flows very well through the line. It's very easy to cut. It's very easy to low

35:06 When you're not doing that, when you're trying to preserve the wholeness of the almond because the almonds are better preserved, they're not. pulverized. If if you cut them, they can oxidize, they can go rancid. They they lose some of their integrity. So you want to try to preserve the whole almond. And it's very hard To do that

35:25 And do that at scale. And do that through a manufacturing line. a very long time to develop the Technology to Protect nature.

35:34 And who was going to manufacture these for you initially? So initially we try to find somebody to do it in the United States and nobody wants to. And so we went with relationships of Peter that were willing to do it for us. that creates some challenges'cause you've got to export them.

35:55 to the US. And then How did you finance even the Early production in Australia. How did you pay for that? Remember we don't have that big a sales. One of the most interesting challenges for

36:08 Consumer Pogus Entrepreneur is that the more you succeed The harder it is for your cash flow. But ironically when you're starting You don't have that much sales. So you're only like if you're selling Ten or twenty thousand dollars a month.

36:21 You just need those twenty thousand dollars. for your working capital. Once you're selling A million dollars a month then you need a million dollars in working capital. So the problem starts getting harder As you grow up, but the first year I can pull it off from what I've saved over those last ten years. Right.

36:36 And did you also work through the branding and the look of the packaging Or would that come later? I mean it's evolved somewhat, but it really the the essence was worked up from the day one, like I was

36:52 the thought of the four blocks and the word kind and the lock up and the colours and and also very importantly, we wanted very, very Clean Everybody out there used a lot of photography and allegorical stuff and designs to

37:10 Офіскайте Форас. the hero was the product. We had a transparent window which we introduced which was very, very Revolutionary From the beginning you had a you had the transparent packaging? The transparent wrapper was It was very hard to achieve because About I don't know

37:27 Fifty percent of the product is just you're seeing the product itself. And so it's very hard, how do you communicate everything you need to communicate in only fifty percent of the space or even maybe forty percent of the space. Exactly. We wanted people to look at the product themselves and know, Oh, this is real. This is not like everything else. This is clearly high quality. I'm seeing the whole nuts and fruits. That was a big insight. So but the challenge is how do you then explain the brand kind and your value proposition in the real estate that you have left. So there was a lot of work that went into it and with the Peace Works years I cut so many corners to save myself some dollars and it ended up costing me more. With kind we really work hard on the design to get it right. And this is a also a challenge because a clear wrapper, like one of the reasons why so many products are in opaque packaging, is because it preserves

38:21 The product for longer and a clear packaging a clear wrapper is different that's harder to do. There's proprietary knowledge that goes into design designing a product packaging that's both transparent And good quality.

38:35 Okay, so You're still trying to sell spreads and other products. They're not really uh it's not enough revenue to sustain your team. Your team decides let's go all in on this new bar.

38:55 But you're not gonna be able to launch it, I think, until Two thousand four. So w first of all, were you able to get it into a lot of whole foods or do they give you like one region initially? At the beginning. It started slow.

39:08 But it's How? How did you sample it? But it was on a shelf with like fifty other Energy bars and Oh, oh, oh, oh that's great. D you just remind me something. They didn't know where to merchandise a product. The whole foods didn't. Because they had what they called a nutritional bar set. Right. And the nutritional bar set I remember being at a Whole Foods and and they're like, Daniel, the problem is we don't know where to put it. And I'm like, What do you mean, put it in the nutritional bars? It's like, No, because nutritional bars look like this. But so what happened is that they gave us the chance

39:49 to put POP display. So what was a really big problem turned into a huge opportunity because we had racks. On the check out counters in a lot of the stores. Because they didn't know where else to put it. Oh so instead of being next to all the energy bars or with candy or with nuts or dry fruit by themselves. By the register. In by the registers, yes. It was a huge Huge, huge advantage. So people could see him as and that's a massive I mean, that's like five hour energy in slim gyms. Like that's where you want to be. And we had a very

40:21 We designed a display that was not occupying too much real estate. The boxes were small The product was compact. Because retailers what they sell really is real estate. So the more you can turn product into less space, the more they like you. And our product was a two dollar bar. You could put in a little rack, you know.

40:41 Five hundred dollars turn around quickly. So It was a really, really good deal for the retailer. They liked it and then they started just growing. Uh, I read that in the first year. You sold about a million dollars worth of bars, which is great,'cause that's what you were selling with the previous Bar but now it's your own brand and

40:59 Do you remember um having I mean you probably had no budget to spend on marketing. At all. Do you remember anything you did in that first year to get the word out about this this product? It was worse than that. I had trained myself over ten years

41:16 to not waste money because I didn't have money to waste. But I had made the mistake to then turn the culture of my company into a scarcity mentality rather than a resourceful mentality. So you don't want a glutinous, wasteful mentality. But you if you have a scarcity mentality, then you're not investing. So the first few years we're lucky that the product had The success of our packaging, our product and those.

41:42 But that was basically it. We didn't even have a sampling budget. Because But really, but we saw sampling as a cost center rather than as an opportunity for people to score a product. Our budget

41:54 As late as two thousand and eight. For sampling. eight hundred dollars. And that was eight hundred dollars including samples to the retailers.

42:05 'Cause you didn't also didn't want to be unprofitable, you wanted to have a profit at the end of the year. I think after ten years of Barely surviving. I was very good. Uh

42:17 driving the bottom line. Up to the point that I was actually shooting myself in the foot. by not investing in my future right like we doubled for ten years in a row But the first few years, certainly two. Four to two thousand and eight.

42:33 I mean we did advert uh creative promotional things, but it was really the product that was just selling itself. I guess in two thousand seven, so you know, three years in you get an opportunity to sell at Walmart. But that

42:48 That didn't work out. What happened? I mean, Walmart amazing opportunity. Uh you get into Walmart and then I guess you get dropped. What What what's the story? Walmart came to us and like the buyer liked our product. And you know one of the most significant dangers is when a buyer loves you. because sometimes

43:05 You're not ready. And if you couldn't say no to Walmart and we we didn't have salespeople or systems to check if our product was selling through. And one of the things that I learned in our industry. is you can get reports And look at your sales per store. What do you think it means, guy, if you're selling zero per store?

43:24 It means it's not good. No, no, that's what I thought. If you're selling zero It could be it's really not good. But it could also mean that the product didn't even make it to the shelves. Right. So the system at least back when I was starting.

43:39 at Walmart was so Complex. that the distributor would drop off the product in the back of the store and nobody had thought to put it in the front of the store. And so it was My job to identify that, I didn't know that. And so after we

43:55 Failed miserably at Walmart. because we didn't know what we were doing. We leaked our wounds. And A year and a half later, John Leahy, who's got the great hurt to prove it and the experience.

44:07 And then he taught us how to ride and how to get to Walmart. I'm like John, let's get back into Walmart. Like slow down, buddy, slow down. We need to be ready. Up until this point, you're still I mean Up until two thousand eight, I think. You had not taken on any outside investors at all. It was entirely funded by you or

44:29 I had Three friends. Two friends and a friend of a friend who had In the Peace Rock's years. Invested a hundred thousand dollars in peace works.

44:39 But when I start a kind, it starts within Peace Works because I wanted to find a way to thank them and my investor and my board for that. So eventually In two thousand eight, we start getting a lot of interest. You were getting investors coming to you saying, Hey

44:55 We're interested in it in the 2008, it's very interesting how the industry works. Nobody wants to touch you till everybody wants to touch you. It's fascinating. Like we were like persona non grata in the investment community. We didn't even try anymore because we couldn't raise a cent. Which turned out to be really good for me because then I didn't dilute myself. But then all of a sudden 2008 people are seeing the data and the company's big enough we're reaching now. Like all these private equity companies that they're looking for the formus, it needs to have more than ten million dollars in revenues, this, this, this, and they see it and all of a sudden everybody's calling us and now we're ignoring them because we're cash flow positive and profitable. So we don't We don't need the money.

45:35 But then we wanted to have a partner that could Be a partner to help us. So in two thousand and nine We Allowed an investor to come in.

45:44 And They wanted to spin out the Peaceworks business because they didn't care about the Peace Works business. So we separated Peaceworks. From kind and then they both Lived separate lives. Got it. So and this is VM G the private equity firm, I believe. that uh bought um a share I mean at that point in two thousand nine they valued it at forty five million

46:04 dollars the business and Does Peaceworks then die? Do you continue like were you selling Uh tomato spread and olive oil tapanade like. Or was that done? So I didn't wanna give up on the Peace Ruck's dream. Kinda was growing like crazy, but I didn't wanna give up on the Peace Ruck mission, so

46:21 My friend Joshua Scherz, uh, who's an amazing entrepreneur. agreed to take it on and he had his other lines that he was selling and then he started selling Peaceworks. Peaceworks lived for 25 years. So from ninety three till Two thousand eighteen I think. Uh when we decided to close it.

46:41 I wonder, I mean your you know, kinda is doing really well, obviously really successful product. But it's completely different from what you originally intended to do, right? Which was like source the nuts from here and or and the and the sun dried tomatoes from there and bring people together and was any part of you like You know, I just

47:01 I I don't know what to think. Um First of all, kind was such an amazing journey and it brought so much happiness so many people that it never was Am I doing the wrong thing? I was always delighted about the kind journeys. I'm so grateful for it. But yes, there was a piece of me that

47:19 Mrs. The opportunity to get pieces right now. Along the ways I helped build something with a Israeli Arab co-founder Mohammed Daraj called the one voice movement. And we require close to a million Israelis and Palestinians to stand up against extremism and hate and terrorism on all sides. And uh

47:37 That gave me a lot of meaning and helpful my need for purpose. Kind also has its own work purpose, but obviously not as deep as Peace Works or or One Voice, but The one voice mission kept me very busy and between two thousand three and two thousand seven I was spending more time on one voice than I was on kind. And it was interesting that kind did so well.

47:59 When I was distracted also building the one voice movement, I Part of the way I explained it is that I am a very creative guy. But sometimes I can drown my team with creativity. And I kind of divided myself.

48:12 Between what I was doing with one voice and I was doing with kind, where we managed to stay focused and kind and do a good job. That's the explanation I give myself. But I'm in the process of ideating additional things to do in the context of Israeli Arab and Israeli Palestinian relationships to try to help Develop a better future for the people of that region.

48:34 When we come back in just a moment. Why Daniel goes on a years long quest to get kind associated with a very specific brand. Stay with us, I'm Guy Roz, and you're listening to How I Built This. Hey, welcome back to how I built this. I'm Guy Raz.

49:17 So it's 2008, 2009 ish, and Daniel has taken a private equity investment and separated Peaceworks from kind. He's now focused entirely on kind and on the verge of realizing a personal obsession. One of the things that is interesting to me is you were from what I read Like just obsessed with getting these in Starbucks. Which makes sense because Starbucks has

49:43 Not that many products available to buy, but they're right there as you're at the register. What was it about Starbucks'cause I think you worked on this for like three or four years to try and get the Kind Bar into Starbucks. Tell me about about that obsession. Why did you think that that was gonna be a breakthrough? Formi the insight was This is an incredible iconic chain as

50:05 Back then he had I think 11,000 stores and they didn't at that time sell any healthy snacks. They didn't have a single healthy snack. I'm like this makes so much sense for you to carry a kind bar on the go. And uh unbeknownst to me They liked us too much. They were trying to make their own versions. Unfortunately that did not pan out for them and they they after years of years of

50:31 develop relationships, things aligned and they gave us a shot. You got into Starbucks in two thousand nine, I think, and you land a deal with them. And was that did it prove to be I mean, I imagine did prove out to be just massive because I mean At that point, two thousand nine.

50:46 Probably not everybody in America knew what a kine bar was. A lot of people discovered us well, they discover us through ways, right? Word of mouth, they saw for. at Starbucks or through our sampling because our sampling went from eight hundred dollars in twenty eight to eight hundred thousand dollars in two z nine

51:04 And within a couple years we're sampling twenty million dollars. It's like Maybe forty million bars or thirty million bars. Just giving'em away. giving because what we found that guy is that Any time somebody tried a kind bar. Nine out of ten

51:19 Would fall in love with the brand, would tell others about it, and within a month it would pay for itself because they would start buying the product. It was a great ROI. So sampling was a Biggest thing. getting and checkout counters at Starbucks and other places was another really, really important one. And uh those things were probably the the reason why we You mentioned this guy, was it John Leahy? Yeah.

51:42 Who joined in two thousand eight, I think, right? John, join either two thousand nine or two thousand ten. And he became the president of the company? John became the president of kind. And you re you remained a CEO, but tell me a little bit about I mean

51:55 You know, this brand is just growing and growing, and so I imagine you know, you are also hiring more people, and then there's also people coming to you or you to to sort of really as you're scaling you want to bring in people with like deep experience. How are you? sort of thinking about the team that you were building as you could see this thing scaling.

52:19 Well, it's an amazing question. John Leahy without any doubt was one of the most Pivo to Forces to help kind become what he became. So John had a lot of experience. He had worked at Platex, he had worked at uh

52:33 Nutritional company that sold vitamins. Experience, but he had experience in huge CPG companies. And the rest is history. Like John was one of my best friends, partners very different from me. Yin yang like His personality and my personality complimentary, but we knew We have each other's back, like completely different temperaments and personalities, very operational. I was very creative and marketing, whatever. And together.

53:01 We created the magic. So did you have a C uh a C O O as well, or or basically was John as president the COO? He was a CO and president, and also to be fair. These titles are silly. Like he was a co CEO, he was a co president, like we were running the show together.

53:19 Yeah. One of the things that I learned І заeпли інсекую. And It certainly happened to me along the way in my early years.

53:30 Where I wanted to find somebody that was like me. And that was not better than me. Subconsciously, I don't think I consciously said that, but When you win

53:40 is when you find people that are different from you and they're better than you. somebody that was better than me at sales. Somebody that was better than me at finance, somebody that's better than me at new product development and marketing. You're bringing super smart people and they're teaching you how to do better and you're growing your brain and you're creating a culture You know, every single team member had a stake from the beginning. If you were in the company six months or longer, you got stock options, everybody was an owner.

54:10 How are you like coming up with different innovations and different products because I mean eventually you'd have chocolate dipped bars and then oat bars and all kinds of different bars, but how are you developing those ideas because you can't just have one product and hope that that's gonna, you know, build a business. I think one of the things that made us succeed the most is to initially

54:34 Stay focused on disciplined because what happened in my Pzeroc years is I was taught that you just grow by extending your shelf presence. Yeah. And so I have three spreads, then six spreads, then nine spreads, and 15 spreads. And eventually some of our products really did not live up to the quality of the original products, and that hurt the brand. And I learned a hard lesson that if you disappoint a consumer once, they're not just gonna not try that 15th product, they'll stop buying your brand all together. So it was very protective of our brand and I was very focused. And I remember when we have I think eight flavors at the beginning everywhere selling us look at the success, you need to launch more, you need to launch more lines, you need to watch And I was like, no, we're gonna stay focused with these eight flavors. So I think for several years we just executed the hell out of what we had. Now eventually you're right, eventually you Want to innovate. And the way we did it we developed a set of

55:26 guardrails to understand what does a brand stand for and what our brand is not. A brand. І за промес. And a great brand is a promise well kept. A brand is just a shorthand for knowing what you're gonna get. And if you're giving people different promises each day, then they don't know what to get, then the brand is worthless. So we really need to understand what we are and what we're not. Healthful, tasty.

55:50 Socially impactful. And also Guardrails up behind the scenes were like a product should not contain more than this ratio of sugar. And then within those guardrails, we were just playing and thinking. And if memory serves me well, our second line were the Kind Healthy Green uh squares

56:09 And then we created the granola kindher clusters. and then we created a kind breakfast bars and also many times guy having the humility to not launch something that doesn't exceed expectations like we spent Two or three years designing a product where We were gonna have yogurt with granola on top, and when we tried in the marketplace.

56:32 It w it did fine. but it didn't do great. And that's by the way the hardest thing. If if the product sucks, it's easy to kill it. And if it does great, then of course you launch it, but what if it's a six out of ten? Mm. Do you have the discipline to say that's not good enough?

56:47 You know kind bars. By twenty twelve already, he was doing a hundred and twenty million dollars in sales and it was just growing and eventually you attracted interest from Mars, who Purchase minority stake in twenty seventin, eventually. Would buy it out for billions of dollars in twenty twenty. Well they bought a controlling stake in twenty twenty and then they bought the rest of it in December twenty twenty four.

57:12 Twenty twenty four, okay. And um You know, it's just an amazing outcome and I I can't imagine that you even hesitated, right? Because I I imagine from your perspective the things you could do.

57:26 with billions of dollars. Were You know Much bigger than what you could do. Without it.

57:32 Yeah, but I hesitated a ton till the very last minute. Вот дров ус ту старт он дизджурні. was the fear that we were gonna lose control of our brand. Internationally. We were at a trade show in at the Natural Prox Expo in Anaheim.

57:49 Mm-hmm. A Chinese gentleman came and said, I'd like to buy your product. We told the gentleman. Thank you, sir, but we're not ready to go into China. Into the Chinese market, right. We're not ready to start selling in China. He said, Well

58:02 I already sell your product in China. Okay, I assume he buys a few uh Thank you. So it was like No, let me explain it to you and he Apparently. There's something called cross docking.

58:17 We're Costco would sell to this guy Container loads of kind bars. And he would take them to China and he would sell them in China. And he was selling.

58:27 millions of dollars of kind bars. And we had no control over it. And at the same time every large brand was trying to recreate what kind did in the United States in other countries. And we were afraid that if we didn't move fast enough, we're gonna lose control of the brand globally and somebody else would be the first comer. So We felt that we need a partner to help us globally, and our goal was to sell them the rights to sell

58:52 internationally, not in the United States. And Unfortunately None of these big companies wanna do that. They want to help you build internationally, if you're willing to sell on the Holland Chilada eventually. And to this day, I mean, to your point, thanks to the resources, I'm we're doing a lot of good things in the world and I'm very grateful and I'm but I do sometimes it it's very hard for an entrepreneur that imbues their personality and their character and their

59:20 story in a brand like we did with Kind and it's very hard to give up your baby and but Obviously it's not my baby anymore and you need to acknowledge that and it's it's very hard. You are a I mean, you're completely out of the company, right? I mean maybe even divest it from. Entirely divested from I sold a hundred percent of my financial stake as of December twenty twenty four. and the relationship is predominantly very informal. I think I consult with them three times a year.

59:50 But I'm emotionally I'm really, really incentivise for them to win because it's my reputation too. Yeah.

59:59 Yeah, I wanna I wanna just kinda shift for a moment because you know Kind is certainly what you will be known for, right? That's gonna be on your Maybe not your gravestone, but I mean you know, one day we all die, when you die, that's probably gonna be in the first paragraph, Kindbars. But your passion, your personal Passion is this idea of

1:00:20 Middle East peace, and it started with Peace Works and Uh here we are today in twenty twenty six. And it seems things are worse than ever. I mean, I don't think it seems. I think they are. I think most people would agree. Like I mean this is a long conversation, but I wonder What you think? I mean you you poured Decades and millions of dollars into trying to build bridges.

1:00:44 And yet. This is where the world is today. Yeah. First of all, everything you said is to some degree correct. It's also the case that

1:00:56 out of the Come slight. And it's not just a poetic thing, it's a reality, right? When there's so much hate and despair, and people realize that that's not gonna get us lead us anywhere, that's when people get mobilized and activated to find a different way.

1:01:12 And of course I I wanna be clear. I'm not an optimist. I'm also not a pessimist. I'm a I I worry all the time, but then I catalyze my worries into action. I'm what I call an actionist. You may recall you and I met many years ago and w I talked to you about the one voice movement and how was Moderates against extremists. And it was a very incomplete way of thing seeing the world because

1:01:34 The better framework is builders. Versus destroyers. An extremist that wakes up in the morning think, how can I deny somebody else's humanity? How can I divide demolish and diminish That's a destroyer.

1:01:48 A person that wakes up in the morning say How can I build? How can I unite? That's a builder. And the overwhelming majority of us want to be builders, want to put positive things to make this a better world for our children. We're not doing it for somebody else's sake, for our own sake.

1:02:06 I mean, here you are now, right? You are Probably getting close to sixty, I think, right? Fifty seven, yeah. Which means you're you know, you've got a lot of life ahead of you. And I know you're on Shark Tank now and you've got uh you invest and you're doing other things, but how much of the rest of your life do you imagine you're gonna try and commit to

1:02:27 this project of trying to see if you can make a contribution to bring about what seems totally elusive and uh unimaginable which is peace among Israelis and Palestinians and their neighbors. Um You said earlier that if I thy would I the story of kind would be at the top of my paragraph, whatever. I hope that what I build with builders globally

1:02:54 Will be my Primary contribution. What I'm working on now, which is not just in the Middle East but globally in the US It's a big, big mission, so it is gonna take years, but we're making headway. We're and and I I'm very confident that it'll be a greater contribution than than kind. Um, Daniel, before I let you go, how much of of the success of kind

1:03:18 do you attribute to the work and the grind you put in and how much do you think had to do with just luck and timing, like the right product, the right time, the right place. What do you think? It's both. It's very hard to separate them, but there's no question That Loc played a

1:03:33 Gigantic role because If I were wrong, if it was predominantly me that was a genius And all the other entrepreneurs that you interview. You'd have many more entrepreneurs that have built many multibillion dollar companies. The fact is that you can count them with your hand.

1:03:51 The vast majority of us get blessed if we do that once. It's very hard to replicate that. So that means that, yes, you also need to be. Work her hard and and be weedy and greedy and everything. But without an element of fortune and rock uh unlock. I don't think there's that many.

1:04:09 Do that more than once. That's Daniel Lebetsky, founder of Kind. By the way, in 2024, Daniel joined Shark Tank as the first new regular investor added to the series in 10 years. In his time on the show, he's invested in everything from handhoven hammocks to fitness equipment made out of fire hoses. to a wearable hummingbird feeder.

1:04:34 Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyros.com or on Substack. This episode was produced by Alex Chung with music composed by Rontine Arabui. It was edited by Andrea Bruce with research help from Nor Gill. Our engineers were Maggie Luthar and Robert Rodriguez. Our production staff also includes Casey Herman, Chris Massini, John Isabella, Sam Paulson, Carrie Thomson, Catherine Cypher, Ramel Wood, Neva Grant, and Elaine Coates.

1:05:13 I'm Guy Roz and you've been listening to How I Built This.

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