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The Entrepreneurs Radio Show 090 Lucinda Duncalfe
 

The Entrepreneurs Radio Show 090 Lucinda Duncalfe

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The Entrepreneurs Radio Show

The Entrepreneurs Radio Show
http://www.theentrepreneursradioshow.com

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    The Entrepreneurs Radio Show 090 Lucinda Duncalfe The Entrepreneurs Radio Show 090 Lucinda Duncalfe Document Transcript

    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 1 of 24 Episode #90: Lucinda Duncalfe In this episode, Travis interviews successful entrepreneur Lucinda Duncalfe. Lucinda is the founder and CEO of Real Food Works, which is a company that aims to provide healthy foods for their customers, especially those who want to lose weight and be healthy. Lucinda's entrepreneurial wisdom gained from experiences from past businesses can prove valuable to entrepreneurs and business owners who will listen to this episode. Linda shares various business concepts that she learned throughout the years and has applied to her business. She encourages entrepreneurs not to be afraid of failures but understand and learn from them so they'll be able to handle risks more analytically in the future. She also points out the importance of getting your product out on the market and gauge its success through customer feedback. Another thing is the use of investors, which could help your business quickly but has its major drawbacks as well. These are just some of the things that entrepreneurs can pick up from this episode of the Entrepreneur's Radio Show. Lucinda Duncalfe – Lessons in scaling your business and income TRAVIS: Hey, this is Travis Lane Jenkins, welcome to episode 90 of the Entrepreneur's Radio Show, a production of Rock Star Entrepreneur Network. Today, I'm going to introduce you to Lucinda Duncalfe from Real Food Works. Now, Lucinda has a very interesting business model, something you'll hear more about during the interview. Plus, I want you to pay close attention to how she's created a business model that is in a position to scale very fast. Her way of thinking will challenge you to look at things differently. Now, one of the many reasons why I'm excited to connect you with Lucinda is that she's built multiple businesses to extremely successful levels. Many, many millions of dollars in a short period of time. As you know, I love interviewing people that live what they teach. Also, be sure and stay with us until the very end if you can because I want to share some inspiration with you. Plus, I've got a question for you. And that question is, do you have a company that you compete with and they always seem to be doing well, maybe even better than you? Even though their prices are higher and maybe even what they offer isn't as good as what your company offers, yet they're still super busy. If you want to know how businesses completely annihilate their competition or always seem to do incredibly well, hang out with me until the very end and we'll talk about that more. This is something that we figured out that changed my life.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 2 of 24 Another side note is I want to remind you that I have a section on the website where you can ask me anything about your business, marketing, management, pricing, anything that you feel like's holding you back from the next level of success. All you need to do is click the button on the right side of the screen. Just go to rockstarentrepreneurnetwork.com and on the right hand side of the screen you'll see a little icon that looks like a speaker. Be sure and give me the background of who you are in your business, just briefly, you've got 3 minutes to give that message. It's really no different than leaving a voicemail message. And in the near future, what I'm going to do is I'm going to start releasing short episodes where I answer your questions on the show. I'll keep your full name private. Also, if you have suggestions for the show and maybe you're not the type of person that wants to leave an audio voicemail, you can opt-in and just send me an email. Me and my team read each and every message that comes through. We're always looking for ways to improve your experience with the show here and help you take things to the next level. Before we get started, I want to remind you that there's two ways you can take these interviews with you on the go, through iTunes or Stitcher. Stitcher is a great choice for people that use Android phone, although both of them have clunky search functions. So just go to rockstarentrepreneurnetwork.com, I've placed the links to the show. They take you directly to the show, for either iTunes or Stitcher. And that way you don't have to fumble around and try to search and find the show, which can be hassle. So, not that we've got all that stuff out of the way let's go ahead and get down to business. Without further ado, welcome to the show Lucinda. LINDA: Thank you Travis. TRAVIS: I'm super excited to have you with us. LINDA: I'm thrilled to be here. TRAVIS: So you've got a really cool background and I love introducing rock star entrepreneurs to my people because how you reach that level of success is illustrative for everybody that's building their own little empire, right? And so, would you mind sharing some of that back-story with us and telling us how you got from nowhere to where you are today, or starting out maybe? LINDA: Sure. I have a slightly unusual path, and it may be inspirational for telling people who listen to your show who aren't necessarily the sort of inventor idea type, which I think these are stereotype of an entrepreneur. I grew up in a household of artists who considered business sort of evil. TRAVIS: Right. LINDA: Went to college and fell into a job at a San Francisco based startup, this was 1985. I was on the East Coast, working in Philadelphia but working for this company and did that for 4 years. Now, all
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 3 of 24 kinds of different jobs there. I didn't really have the sense though of how the pieces of the world fit together. It was very different back then, there were no blogs, startups weren't a hot, sexy thing. And so, I ended up going back to business school, where I really discovered a deep understanding of how the business world works and a respect for it. And learn some of the real disciplines involved. And then I worked for a larger company, about a thousand person company for 4 years and then went back to work for a startup that we too public. I was, I don't remember what employee number exactly, somewhere in the late 80’s that we took public very, very early in the internet bubble by '96. And then I went off on my own for the first time. The way that happened was I had a friend who was on the board of a little company. There were two guys in the company, it was a company called Destiny Software, and I joined them as CEO. And that was really the first important step in my career. It's amazing to me that the founder there, wonderful guy name Scripps Shultz took the risk on a completely unproven person to join him, but he did. And we built a $25 million, very, very profitable company. But it had sort of an odd ending, which we can go into later if you'd like, where the investors ended up okay but we didn't really make anything when the internet bubble burst and 9/11 happened. And then I was looking around for what to do, I was 6 months pregnant, which is not really an optimal position to be in when you're looking for a job as a CEO. And so I did some consulting and helping some friends, and there's a guy with this company, which had a product called Kid Priority Email, which I thought I really didn't like the idea much. But while they were developing that product, they'd come up with this idea for an anti- spam solution, and this was 2003-2004 when SPAM was at its height and was an enormous problem. TRAVIS: Right. LINDA: And I ended up doing a deal with a guy who had invented the technology and absolute wonderful guy, a dear friend of mine, David Brussin. And I co-founded a company called TurnTide. We bought this technology and the team for stock in a new company. So we started with nothing, we had no money. We bought the technology out, with just stock of the company and then funded that company. We put $700,000 into it from a number of angel investors, and then sold it 6 months later for $20 million in semantics. So it was sort of the big rocket ship success. TRAVIS: That's not too shabby. LINDA: No, that was pretty good. It was an 11 extra investors in 6 months, and pretty good for Dave, and me, and particularly actually for the founder of the company where we got the technology. And then, I co-founded a company again with a guy who had the idea-- until this company I have now, I was always kind of the management expert, I was a person who had to grow something, I was actually the idea person. So I did this company called ClickEquations which was a-- we had a software as a service platform, so we'd be doing platform that large advertisers and agencies use to manage paid search on Google. So you know you get those ad that go up top and down the right, we have to wait for very large
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 4 of 24 vendors to optimize those. And we sold that in 2011. And then it usually takes me a year or two in- between each one of things to figure out what to do and you people know all that. And in that time period this time my mom, 80-year-old mother, suggested that I watch documentary Forks Over Knives, which is about eating what's known as a plant-based diet. Essentially, heavy, heavy vegetables, not animal products, everything real, the whole food, low oil, salt. And the effect of that kind of a diet on our health. TRAVIS: Did you say Forks Over Knives? LINDA: Forks Over Knives. TRAVIS: Yeah, I've seen it. LINDA: It's just terrific. TRAVIS: Right. LINDA: When I saw it at the end of the day I wasn't sure I believed it so I didn't try to research. I started doing it myself and was really transformed. In that process, saw a big opportunity which is I think people are moving more and more towards eating real diets and had really the only in my career, a real "Aha" moment. I was at a business meeting in a suburban restaurant on a Tuesday lunch, and it was empty. And I was driving back to my office, and I've been really thinking about this market of how to help people eat healthy. And it occurred to me that the restaurants have kitchens, have the know-how of how to make delicious food, have staff who are pretty much standing around all day. Why couldn't I leverage that excess capacity to make food? And so, in the same way that Uber uses limousines or that Airbnb uses people's apartments, we use restaurants to cook foods. So I founded this company in May of 2012. We had so much capital for it and we're off to the races. So that's the history. They call it serial entrepreneur, I just do one of these and sell it, and keep going. The one I'm doing now I hope is actually different from that, I could do this one for the rest of my life. But that is the model, I've done this a whole bunch. TRAVIS: Right. So that's kind of the arc of your career. LINDA: Yup. TRAVIS: So, let's go back a little bit. At what point was there a turning point, when did the light turn on for you that all the pieces come together and you saw all the framework? Because I'm hearing that
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 5 of 24 there was a point in time when you finally saw a framework that you didn't see before. When was that shift for you? LINDA: Yeah, completely, it happened in business school, which I actually think it's a sort of rare experience. I went to work and most of the people who are working are just checking the facts. They've already learned how all these works, analyst programs, or wherever they were working. I really don't understand any of it. And for me everything from the recruiting process, big companies send people to recruit those students, I didn't know that point that point that that P&G owned Clorox and all those brands. TRAVIS: Right, a lot of people don't. LINDA: I didn't know what an audit was. TRAVIS: Yeah. LINDA: I didn't know anything. And so, the sort of step back and go to school, and match my personal experience. I had my first P and L at that startup company I worked for when I was 23. So I actually knew how to make money, but that to me was all just common sense. What I didn't know was how that actually happened in a bigger scene---and all these pieces put together. It really was business school. The other element of that filtered the intellectual side of it. The other element was the personal side of it. So, I've been a lifelong athlete. I think that I just have always had natural leadership skills, I was a tomboy and grew up in a neighborhood of all boys. And I think those early experiences helped to hone some of those leadership skills. And in business school it became obvious to me that those were skills that were valuable on business. And for a long time, those were the skills that I could hone and I enjoy honing, and would me serve me well as I moved up the ladder. So I think that was a second point. And then the third was, as soon as realization, I think one of the things that's really important in being successful in life, certainly in business and really certainly knowing yourself. And I described myself always and it's really true, I'm a jack-of-all-trades, master of none. That's actually pretty damn good description of a CEO. You want people, every single one of that people who work for me is way better at what they do than I am. I can understand it; I can sort of do it. I can apply, I understand it well enough to see how the pieces fit together, but I also have some shorts. So, those are really the three pieces that came together for me and certainly that which makes me realize this is what it was. The intellectual, the self-knowledge, and essential leader, how the important the skills. TRAVIS: You know what's interesting about that is I speak with a lot of-- I'm picking up something on you. Do you have a mic on your lapel or something?
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 6 of 24 LINDA: I do. Sorry, is it? TRAVIS: Yeah. LINDA: Oh, it fell down. That's what happened, sorry. TRAVIS: Yeah, that's okay. There you go, much better. Yeah, and I know that you can't hear that from your side. So, what's interesting is I speak with a lot of entrepreneurs and what's interesting about your story is very few successful entrepreneurs come from an intellectual background. They're not so-called intellectuals, and even the people that have the academics or the academic things to hang on the wall normally are not great business people and they normally go into a corporate America and manage things, right? And so, you're very unique from that side. A lot of people, the shift don’t happen in school based on the feedback that I've gotten so far. And also, because what I perceive to be happening is there's something missing when you study models in school versus when you actually get your feet wet, or feet on the ground, your hands dirty, and you're implementing. There's a lack of awareness and connection with how the rubber meets the road. And so, you're really kind of an anomaly, are you aware of that? LINDA: I think that's true. I do think it's becoming less so. So when I was in school there's 750 kids in a class at Wharton, there are only 2 of us who actually did entrepreneurial things my year. Now, it's one of the most popular majors. Many, many students go on to actually do things. So Warby Parker for example, the eyeglass guys who were founded right out of school. TRAVIS: Oh, wow. LINDA: So, I think that's changing. But I do think, if you look at the broad swath, what you say is true. It's unusual. And part of it I think is also just economic. When you come out of Wharton you can make a couple of hundred grand, it's sort of hard to walk away from a couple of hundred grand and go do something that's extremely risky and that you're probably not going to make much for this first few years. TRAVIS: You know, that's a really good point. I think we need as many entrepreneurs as we possibly can get. LINDA: Absolutely, they're the engine in the economy. TRAVIS: Right. And so, to be very candid with you, it took me 15 to 17 years to really get a deep understanding of the framework and the light turned on to where all of a sudden I saw the framework
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 7 of 24 that made most businesses successful. Now, it changes for every business, right, to a certain degree. It needs to be dialed in to a certain extent. But to get a high level of competence in reading P and L’s, understands pricing models, understanding positioning, understanding marketing. All of those things and looking back, I really wish I could've went to four years of school and then just launched that rocket a few years after that. And so, it's encouraging to hear that people like Warby Parker and all of those other guys are coming from that. That's exciting because entrepreneurship is the single best self- improvement program you could ever signup for, right? LINDA: Absolutely. You live in the crucible every day. TRAVIS: Right. And so, there's not a whole lot of room for BS. So, that's interesting that you went-- did you have any failures in between these big successes here? LINDA: Well, I'm not sure I would call it-- I always have this conversation-- TRAVIS: Or dead-ends? LINDA: …we're involved with Destiny, and whether that was a failure or not. I actually count it as a failure because I didn't get anything out of it although most of the other people don't, right? We built a very successful business before Mark really turned on us. We still had a lot of-- we had $7 million in the bank. But, I didn't make any money. So, I count that as a failure. I also had a company that I co- founded called cuts.com, which was an online video editing platform, which I never ran. We hired a guy that we thought it needed to be a West Coast company, hired a guy at Yahoo! to run it. It was ultimately sold but nobody made any money on that one. So that was a definite, really pure failure. So sure, and then I've been on the board and the rest, so I've certainly had involvements and failures as well. I don't think you do what I do-- There's a miniscule population of people who'd do what I do haven't failed. TRAVIS: Right. And so, I think that's the important part of the story that's been left out. So, I think you and I are from the same era because I graduated in '84. And so, for the longest, success has been positioned in a way that most people that are super successful are just genius. They're smarter than everybody else. And I've come to realize, and I've said this several times that geniuses actually accrued, or evolves, or you acquire it over time, or can be acquired rather than being anointed. Sometimes it is anointed to a chosen few, but you get these levels of awareness through making mistakes. And for the first 20 years of my life I saw all of the success and very little of the mistakes that made along the way. And what frustrated me about that is it seemed do disincentives several other people that would think to them self, "Well I'm just an average guy, I can't do that," right?
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 8 of 24 LINDA: Yeah. One of my favorite examples and this is actually Bill Gates who started Microsoft when he was in college and grew it into one of the world's largest companies, and super successful. And then went off to do the Gates Foundation and has failed miserably by his own admission in education. He came in, said he knew how to fix education and it's been a disaster. TRAVIS: Right. LINDA: So, okay. Bill Gates wasn't perfect, right? Steve Jobs had his list of failed products as well, if not companies. I don't know what do you call next to success or failure. I think that understanding failure is critical on two levels. First of all I'd say the way you're talking about it at sort of the cultural level. I think one of the things that's very different about Silicon Valley where I spend a lot of time and lived for a little of the time than the rest of the country is that failure is really okay. There's no shame in it there. Whereas in Philadelphia, where I live, failure is still really not okay. TRAVIS: Right. LINDA: So, I think that is a really key element of why you see the kind of innovation levels that you do in the valley, is that people can take risk because they know they're not going to shunned for the rest of their life for it. They're going to say “Hey, give it a try, okay let's go.” So I think that's a really important thing. And I actually think that the amount of stuff we have going on in the blogosphere, and even in personal stuff like Facebook. Is it actually, at this point, moving us backwards, right? You read people's Facebook streams and you think everybody has the perfect life and you're the only loser who picked the thing. And that's not true, there's no telling you. So, I think that as we all play-- there's sort of this funny increase in transparency but only about the good stuff that exacerbates the problem that you identified. TRAVIS: Right. LINDA: And the second way I think that maybe is more important even is personally. So how do you feel about failure, what do you do with it? Are you afraid of it, why? What is it really that's so bad. Do you stop yourself because you're afraid to fail. I have a question that I ask myself regularly and I encourage others too, which is what's the worst thing that can happen. And in my experience almost always, with very rare exceptions. The worse thing that can happen isn't nearly as bad as your fear of the worst thing that can happen isn't nearly as bad as your fear of the worst thing that can happen. So, just do it, right? But people don't. They stop themselves. So it's the self-knowledge there. It's the self- awareness to look at failure, not wallowing in it but really look at it coldly. Somebody said to me once and I think it's exactly right. That entrepreneurs actually don't have a higher risk tolerance, they have a realistic risk tolerance. So they' can actually look at risk coldly and unemotionally, and then make a
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 9 of 24 decision about it. Whereas what most people do is get tied up in it. And the tie up of risk, it's really about failure. So, being able to understand your failures, analyze them, look at them, but also just to start not being afraid of them, is I think really key. TRAVIS: Right. So, I think something that we understand is we've come to realize in business is that the wisdom is actually in failure, right? LINDA: Yeah, I think it's both. I think that's overstated a little bit, I think it's in both, right? So you need to look at what was worked and do more of that. And what hasn't worked and do less of that. And that's true whether it's your individual business and the way you're printing labels, or at the very highest level. So I think that they are both really super important. TRAVIS: It's a part of dialing it in, right. So you float something out there. I even think to myself, I've been writing headlines for years so this one's going to work. I float it out there, I test it, it doesn't work. LINDA: Yup. TRAVIS: Okay. So we create a new iteration. And so, I let go of needing to be right and focused on getting it right. LINDA: Yup. TRAVIS: And so, I guess really the wisdom, it comes in doing and perpetually moving away from fear into dialing it in to what is working, or failure. LINDA: Absolutely. I think that's exactly right. In the world I live in, we all now manage with this approach called The Lean Startup, which is a great book incidentally. And one of the core principles is that nothing matters until it's real. You get product out in the market as fast as possible and get real feedback to it. That you sit in a room trying to hone something and figure it out, that ain't going to do it. You have to actually get something in customer's hands, and that principle can be completely generalized, right? You have to actually do things. That's all that matters. TRAVIS: Right. And so, is that one of the ways that you helped rapidly build these businesses that you were involved in? Rather than perfecting the product, you get it out there and dial it in as you go? LINDA: Oh, absolutely. There's a joke in the software business because I'm sure most of your folks don't work in a software business about what we call vaporware, which is we sell software that doesn't exist yet. And it's a time-honored tradition to do that and it makes complete sense. Because what we do
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 10 of 24 is go sell it and if people buy it then you can build it, versus spending all your time and money building something and nobody ends up buying it. Or you build in features, or whatever this thing is. So, I think publicly you saw things like the Google Gmail launch, which was in beta for like in 3 years or something. So that beta label is one of the ways we get away with that, sort of it's not really fully baked and we know that. But we've done that, so with the current company. Food has very slow cycle times compared to software. Now, our whole backend, we're in fact a software company, right? It's all supply chain and all the rest of that. But that first food, which is normally slow, we were out in market in less than 2 months. We'd set up the full supplied chain, delivery packaging, all that, get a website up, billing, everything else, and it was less than 2 months. TRAVIS: So, you're saying that your current business is really a SAS business then? LINDA: Well, we deliver food too. I wouldn't say it's a SAS business because it's a consumer business and we deliver real physical product, but we don't actually produce product. TRAVIS: Okay. LINDA: We don't produce it, we don't deliver it, all that we do is manage all that supply chain. So, we market to consumers and then manage a supply chain. TRAVIS: Alright. And for clarification to everyone is software as a service is SAS. Okay, so, I'm really interested in your current business model but before we get there and how you're doing it, because there's a lot of great stuff going on with that and I completely believe in what you're doing there. LINDA: Well, thank you. TRAVIS: Yeah, you're welcome. So, let's go back a little bit. You peaked my interest and I think there's a lesson here to be learned. So you built a $25 million business, I believe your first business, and ended up losing, tell me that story. LINDA: It's a long story but I'll sort of reel it in, sort of make it as precise as I can. TRAVIS: Okay. LINDA: So, I joined the company in the beginning of '97, and we raised a million dollars in capital, and at that time what we did was, with software and services that helped banks and other financial institutions go online. So this is before online banking. So we did online banking systems and online trading systems, and you could view your account balance, or signup for a credit card, or any of that
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 11 of 24 stuff, which at the time was really hard to do. So, we had Bank of America as a first customer, first USA, which was one of the largest credit card guys, is the customer. We raise a million bucks, and we get to a year later, and we're growing well, not the numbers that we had put out there but doing okay. Raised the second round of-- I think we raised two and a half at the second round, and really started to take off after that. We were probably about 15 million revenue and still losing some money. When we did a 3rd round with just existing investors and they put another 3 and a half in, or 3, something like that. And we're zooming along, we were probably about 22 million in revenue and at that point profitable. We had a couple of acquisition offers at that point, which we did not take, and we just pushed along. First thing that happened was the internet bubble burst, and it was really clear to me that companies like ours we're going to be in trouble. That big financial institutions, we're going to look at what was happening in the internet, and after the bubble burst, sort of say, "Oh, we don't have to move as fast as we thought we had to move." TRAVIS: Right. LINDA: I went to the board and board felt that I was being too conservative. I was young, I was 31 or 32 or something. And the direct quote was "You're young, you have never lived through a business cycle." And I just knew we were going to be in trouble. So, we started dialing down, laying people off, it was terrible, it was absolutely horrible. And we moved into a mode of really pretty extreme profitability well we continued to grow. So we built our cash balance back to the point of having more than we had ever taken in, in an outside investment in the bank. Business did then, we actually did gang busters for about 6 months, and then business started to turn as exactly as we thought. Really, it was 9/11 that did us in. 9/11 really hurt the country financially, it made the IT systems within financial institutions-- all of a sudden those groups got very focused on security which was appropriate but painful for us. So, the whole thing turned and the revenue line started coming down, it hovered between about 15 and 12 million. We were still profitable at that level because of the cuts I just kept making, and we still had that cash in the bank. And mostly investors were very supportive of the company. So, they were looking at it and thinking, well, they loved the management team, we had the cash. The challenge was in the midst of that, that not only was revenue shrinking because we could have grown revenue back again. We had the cash to do it, we had the expertise to do it. But valuation had been killed. So, whereas at 20 million we'd been worth a 100 million, now at 15 million we're worth 15 million, or 12 million or something. And so, the amount we would have had to grow to get to any valuation, it made the company exciting for us or for the investors just was a lie. And so we decided to instead buy something. So we went out and found some deals for product companies where the evaluations were better, where they needed the management and the money. We found a couple of those, and one of our investors, our very first investor blocked the deals. And the reasons that they blocked the deals are hard to pull apart. In all probability what was happening was for them with where they were in their fund life, they just wanted their money back.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 12 of 24 TRAVIS: Right. LINDA: And so, we ended up literally liquidating a company with more than 10 million in revenue and 7 million in cash, and distributing those funds to investors. Some of the investors did well. The ones who were earlier got more than their money back, the ones who are later didn't, so it was not a good outcome for them. It was just sort of a sad story at the end of the day. TRAVIS: And you were left with just equity that-- LINDA: With nothing that's right. Because what happens if you don’t know, when you take in these outside investors their money sits in front of yours. TRAVIS: Right. LINDA: So they get their money back and more before you get anything. TRAVIS: So, that's one of the reasons why I'm not crazy about taking on investors is trying to get a group of people to agree on anything is murder. LINDA: Yeah, that's hard. But I think one of the things that is most disappointing to me about what's happening in general in this arena we play in is that raising money is perceived as a victory, as some positive thing, which is just beyond me. All you've done is sell part of your company, right? And you've given up control to a greater, lesser degree. The whole thing people think 50% matters, it means absolutely nothing. You can own 5% of your company and have control, or you can have 95% of your company and have no control. They're just not correlated. What matters is what's in those deal structures, and there's no VC around that's doing deal structures where they don't have control. TRAVIS: Right. LINDA: So, you're taking that money. TRAVIS: They are the shark. LINDA: They are. And it's the most expensive money there is. People think it's cool and sexy, way cheaper to finance on credit cards if you can. TRAVIS: Yeah.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 13 of 24 LINDA: A million times better. Now, unfortunately, the kind of companies I run you can't do that because if I'm up-- and we had ClickEquations, our two biggest competitors, we'd raised about 15 million, and our two biggest competitors had raised 55 each. So how do you play? It's like bringing a knife to a gunfight. TRAVIS: Yeah. LINDA: So, I think finding strategies is all market driven but I just want to be on the record saying I think venture capital is outrageously expensive both financially, and as you say in terms of control and operating and all the rest of that. TRAVIS: Right. Even one person on a board can bring things to a screeching halt. LINDA: Yup, that's given. TRAVIS: I've got experience dealing with lots of those, and now I run, I don't walk when I see those. LINDA: Yup. TRAVIS: So I prefer to stay on the other side. But I completely understand where you're coming from. Okay, so let's bring it back to what you're doing right now because I believe that it's really important. I think the timing is right for it, I've been going through things like this to where I've moved towards more of a plant-based diet. LINDA: That's great. TRAVIS: And it's actually hard to carry excess weight when you eat that away. LINDA: Absolutely. TRAVIS: There's something about it that it curtails your appetite. I can't put my finger on it. LINDA: Well, because you're actually satisfying your appetite, your body wants nutrition and you're actually giving it to them. TRAVIS: Yeah.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 14 of 24 LINDA: Yeah. So as I mentioned earlier the story-- I sort of saw this movie and started this company. So what we do is we have subscription plans, primarily for weight loss but also for just people who want to eat healthily. There's subscription plan, so you get food every week, sometimes twice a week, delivered to your home. We started in Philadelphia, and right now we're working on East Coast expansions. We have some test customers up and down the East Coast, and expect within a couple of weeks actually to release the product more fully in a beta mode, as I was talking about earlier. You sign for either a program where you get all your meals and your snacks, or you can get just 10 meals a week, or just 5 meals a week. The magic of it is really two-fold. First of all, as you said, it's what we call plant-based food. So that means it's all whole foods, lots of vegetables, whole grains, beans, fruits, nuts, seeds, all super healthy, but also absolutely delicious. So the second piece of the magic is our supply chain. All of our food is made by local independent restaurants. So within their own businesses they come up with the recipes. So they have their own flavor profile and all the rest but they have to meet our very stringent nutritional requirements. So we tell them what ingredients they can use and not use, they put them together. They go through a very rigorous testing both nutritional and culinary testing with us. And then they get slotted in to our menu. So as a customer, you get these amazing healthy meals, restaurant quality, and lots of restaurant. So each week in your box, you might get meals from 7 or 8 different restaurants. So everything taste different, it's super interesting-- TRAVIS: That's brilliant. LINDA: But also 100% good for you. TRAVIS: That's brilliant. So there's a lesson here for other entrepreneurs. I come from an era where all the resources come from within our own company. LINDA: Oh, and this is exactly the opposite. TRAVIS: Right. LINDA: Great point Travis. Commercial kitchens are remarkably expensive, right? They're probably $250,000 or something. And I'm not a culinary person-- TRAVIS: And they're hamstrung by their own creativity, by their own menus. LINDA: That's right. Whereas here I don't have any of the capital cost, I don't have any of the constraints on talents, on capacity. So as the business grows we just add restaurants. TRAVIS: You're not managing their people.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 15 of 24 LINDA: You're not managing their people. The biggest one actually which I wouldn't have known before I was in the food business is the provisioning. Provisioning is a huge issue, like getting your great lettuce every day, and all the rest of that. So there's just this whole massive piece of complexity we don't have to deal with. TRAVIS: You're not dealing with shrinkage. LINDA: Nope, that's exactly right. TRAVIS: You're not dealing with any of that stuff. So the lesson here for everybody, regardless of what industry you're in is I view this as a kind of growth hacking type trick, right? LINDA: Yeah, it is. TRAVIS: A way to use other people's resources and create a partnership, and everybody wins, right? LINDA: That's right. In this case, that's really critical point Travis, is the restaurants win big, right? So you don't try to drill them down on price until they're not making money. You instead offer them an opportunity to make a money at a time when they absolutely could not otherwise, because no customers are walking into their place. It's recurring revenue. So we've got the snowstorm in the East Coast right now and nobody's walking into restaurants, but our orders still in yesterday. TRAVIS: Right. LINDA: So, it's recurring revenue, they can depend on it, and they're getting it where other time they can't otherwise. So there's a real win, win, win there. TRAVIS: Right. LINDA: The customer wins, we win, the restaurant wins. TRAVIS: So it's a additional stream of income. LINDA: That's right. TRAVIS: And very few businesses understand or have implemented anything that's continuity income and so recurring income is gigantic. What really hamstrings or prevents a business from doing a lot of
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 16 of 24 things is they don't know what they have coming next. They don't know how much-- we can guess what, you know-- LINDA: They can't depend on it, yeah. TRAVIS: Yeah, last year in April we did this so we're hoping to grow that by 10. Whereas a continuity, type situation that you're explaining here, they can plan on this income coming in and constantly growing their business. There's just so many different things to look at here from this model. So, who is your competition? LINDA: Well, we don't really see that we have any direct competition. One of the things we're working on right now is figuring out how dead on we want to go towards weight loss, right? It's not really the mission of the company. The mission of the company, we're completely purpose driven, is to improve people's health and the health of the planet by getting people to eat more real food. And what we're seeing is a big motivating factor for that is weight loss. And so that's an easier market to go after. So, probably if I was talking about it today, I would say that our biggest competitors are somebody called Fresh Diet is the biggest there out of Florida. So they deliver fresh weight loss food. There's one called Freshology out in California. So those are probably the biggest direct competitors. The reality for each customer though is mostly our competition is takeout food from restaurants. TRAVIS: Right. LINDA: That's really the decision the consumer is making. Am I going to call for pizza, or Chinese, or am I gonna get this service and eat healthily. TRAVIS: Yeah, which is all crap? LINDA: Yup. Oh, it's terrible for you. TRAVIS: So, you know who I think your competition is. LINDA: Who do you think the competition is? TRAVIS: My Fit Food. LINDA: Oh yeah, well you know them well because of where you live. Most of the country wouldn't be as familiar with them.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 17 of 24 TRAVIS: Yeah, I don't know how big they are. LINDA: They're still small but they're in that same crowd. They're short of more of a pick-up model but very similar. TRAVIS: And so, I love the fact that I can get a wide selection of healthy food and it's not loaded with a bunch of ingredients that I can't pronounce. But one of their problems is diversity. They try to carry a broad range of stuff but-- LINDA: But the reality is what they call, centralized kitchens are called commissaries and there are commissary model. So the reality is that foods all coming out of the same kitchen, and I can tell you from deep experience now, food coming out of the same kitchen taste the same. It's like I say, if you go to a Marriott and have dinner, the stir-fried tastes the same as the lasagna, tastes the same as the enchilada. It's just the nature of the way food is produced. So, what we do and I would also say that what those kind of places are doing, commissaries do as they manufacture food. It's not as bad as sort of a plant that's making Kraft Macaroni and Cheese, but they're manufacturing food. They talk about, for example, they don't call them recipes they call them formulas. Literally, that's the language that they use. We cook, when you get our food it's cooked and it tastes like somebody cooked it. A person cooked that meal for you, it's artisanally produced. And then food, that's different. Now, the reality is the cost is higher, right? But I actually have a very strongly held philosophy that food really has 4 critical aspects. First is nutrition that we've been talking about, the second is aesthetic, the third is emotion, food can make us feel loved, food can make us feel guilty, and the fourth is social. We hope the people will eat the food around the table with somebody else. And those pieces all need to come together to help somebody have a really healthy relationship with food. Food that is mass-produced feels mass produced. There's no way you're getting those emotions into that food. And it just taste different. You know when your mom makes you something, it tastes different. I don't know how that is true chemically but I can tell you experientially and I think we all have that experience, we know it's true. And so I think that's really part of the magic of the model, it's that some human being who cared about your food, cooked it and put it in that box for you. TRAVIS: So, I agree with you. So, in a market, typically, how many different restaurants are you sourcing? LINDA: We have 20 in the Philadelphia market to give you a sense. TRAVIS: Wow. The versatility there. That blows my mind.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 18 of 24 LINDA: And then from a business standpoint that's capacity, right? TRAVIS: Right. LINDA: So we can put those restaurants on a menu this week or not so we don't ever get order numbers that are too low to make sense for them. But then, if we get the kind of business that we hope to get you can just lay them on top of each other and you get really significant capacity. TRAVIS: So, the one thing that I think would be tough for you to get is the very specific macronutrient stuff. And that may not even be the right word. But one of the things that My Fit Food has down pad is I can look on the back and see what's in it, and how much fat and all that other stuff, can you all do that? LINDA: Yeah, we do all that. We actually do it to a ridiculous degree. We'll tell you how much chromium is in your food. TRAVIS: Oh, okay. LINDA: Because we controlled ingredients so carefully. TRAVIS: Oh, okay. LINDA: So the two things that result in nutritional quality or in the ingredients and then the prep. And the quality of the kitchen defines the quality of the prep, and along with the ingredients, right? And so, we know the ingredients, we know it comes out. So every single dish has full nutritional information. To move over to the science for one brief second, one part of the magic of eating a plant-based diet is you actually just don't have to worry about that stuff, you really don't. We worry about it for you and we watch it largely because we don't want to get in trouble with any government regulatory agency. But from an actual way the diet works, because it's how humans are supposed to eat, you just don't even have to worry about it. It all works out just fine. TRAVIS: Yeah, if you've been chewing some spinach it's not that big of a deal. LINDA: No, that's probably a good thing. TRAVIS: So, where you're at in the growth cycle here and are you at a place to where you openly share any numbers, or-- I don't want to cross any lines with you.
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 19 of 24 LINDA: --for a number of years but I can tell where we are in the growth cycle because it is interesting probably to your crowd is we have proven the concept, it works. We've proven it in terms of the logistics and in terms of economics. And so now we're focused on expansion. And so, as I mentioned we're testing the East Coast right now, we hope to roll out the East Coast and test the rest of the country very, very soon within the next 2 months. And then, once you got that you go on to the next thing and roll out the country is the goal. So, we have our feet underneath us and we're not running yet I guess is how I describe it. TRAVIS: You're taking on any investors right now? LINDA: We have. So we've taken in, we have a first round in of about a million dollars. A piece of that comes from first round capital which is an early stage investment fund I worked with on pretty much every one of my companies. And then the rest is from angels. It's a very different company to fund because it's mission-driven. Then the others, which is sort of pure economics. There's obviously economics here as well. But we tend to have more people now involved who also really care about what we do, not only that we make money doing it. TRAVIS: Right. Can you guys pander to the gluten-free crowd? LINDA: We actually had a gluten-free program, which we stopped. So people don't know the whole gluten-free craze is there's really 3 groups there. The first is people with celiac disease who actually really can't eat any gluten. It's literally fatal for them over time. The second is people who have genuine gluten intolerance. They feel bad, then they get bloated, they have really bad reactions. Then the third is everybody else is eating gluten because they somehow think it's not good for you. I've seen no signs that says that gluten is bad for most people. And for celiac folks, the challenge for us is that we don't control the supply chain tightly enough. So a celiac person literally shouldn't eat something that was prepared in a kitchen that has had gluten in it. TRAVIS: Yeah, it's too much of a liability for you. LINDA: Yeah. And it was actually more of a-- we got around it with the lawyers when we launched it that I think we're okay on the liability side but we just didn't feel safe. It was sort of like, we have people here who have celiac disease so we're really sensitive to it. And it turned out that I think the market was big enough. So what happened was we signed, it's good example of what we're talking earlier with lean startup. We launched a product, and we had a bunch of sign-ups, and then what was happening is all the people who signed up-- first of all the celiac people didn't, understandably the they were too nervous. And the other people all would call and say, "I see these other menu items that have gluten in them, can I have those in my gluten-free plan?" And so what we have now is gluten-free items, and so
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 20 of 24 you can buy a regular plan and then select as many of the gluten-free items in the menu as you'd like to have. TRAVIS: Oh, that's good. LINDA: It's a very interesting kind of experience. TRAVIS: Okay, so before I transition you hear due to time to the lightning round where I ask you three questions, I want to kind of come at this from a different angle. So with your model we've discussed how you're using other people's capacity, and I want to explain it. I want to try to get everybody listening to think of it. Maybe, right now what's going on with growing businesses very quickly is you don't need to hire people full-time to come in and work in every capacity of your business. Right now this is an excellent era to find key people that are really incredible at what they do and bring them in just to do a piece of your puzzle, and nothing else. And that's the fastest way to get you over the hump and to the next level from whatever level you're at right now. And so, that's one of the things I completely love about what Lucinda's doing with her business model here. So just think about it from that angle guys. So, let's transition over to those three questions because I don't want to run along and of course I know you're really busy. So, let me ask you, you'd mentioned one book. What book or program made an impact on you related to business that you'd recommend and why, and you can mention a couple if you'd like. LINDA: I guess I would just reiterate the two that I mentioned while we were talking. One is Lean Startup if you haven't read that for sure. And the other is, although it might not seem like a business book is to watch the DVD Forks Over Knives, because if you eat right you actually have better mental acuity and more energy, and those are things you need as an entrepreneur. TRAVIS: Yeah, great advise. So, what's one of your favorite tools or pieces of technology that you've recently discovered, if any, that you'd recommend to other business owners and why? LINDA: So there's a great iPhone app that I've been using for past week called Headspace. One of my 2014 goals was to learn to meditate and it is a great way to do it. TRAVIS: Headspace, I'll write that down real quick. What quote would best summarize your belief or your attitude in business? LINDA: So I pulled one from Steve Jobs. People have worked with me for a long time will tell you that I'm persistent to a fault. And Steve once said, "I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance."
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 21 of 24 TRAVIS: I completely agree. Are you excessive also? LINDA: Excuse me? TRAVIS: Do you have a tendency to be excessive at times? LINDA: Excessive. TRAVIS: Taking things too far. LINDA: Less than most entrepreneurs I think. Probably some but much less-- I think that's a very typical entrepreneurial trait. TRAVIS: Okay. LINDA: I just don't stop. Once I get a bone in my mouth I am not stopping. TRAVIS: Well, I'm the same way. I can work late into the night, everybody's sleeping. I'm still focused on that target. LINDA: Yup, absolutely. TRAVIS: Right. LINDA: And enjoying it right? Enjoying the whole thing. People think there's some bad about that, I think it's great. TRAVIS: Exactly. I just come back from a mastermind and they ask me what your hobby, and I'm like, hmm... Business? LINDA: Exactly. Yeah, right, exactly. TRAVIS: So, do you have-- now this is coming out from left field here so I'm going to surprise you with this one. LINDA: That's good. TRAVIS: What special super powers do you have that you could share with us?
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 22 of 24 LINDA: Oh man, that is out of left field. TRAVIS: Do you have one? LINDA: Well, I think I'm really good with people. I really believe in people, I love people, and I don't mean in that salesman kind of way, really deeply. TRAVIS: Authentically, yeah. LINDA: Respect people and I think that's probably my magic power. I think people know that they're important and they know they're respected. And one of the other quotes I consider giving you was Colin Powell, "Optimism is a force multiplier." And that's not this exactly but that's a force multiplier. Confidence in people, trust in people, being able to pick right people, get people aligned, bring them along with you. That's a force a multiplier for sure. TRAVIS: Right. Great point. How do people connect with you? LINDA: You can just email me, lucinda@realfoodworks.com or anything at realfoodworks.com and it'll end up with me somewhere. TRAVIS: Cool, are you on all of the other interwebs? LINDA: We're in all of everything. We've been making a big content marketing push, so if you're interested in any of that stuff, follow us on Twitter, realfoodworks, on facebook/realfoodworks, the whole nine yards, pretty much everywhere, real food works. TRAVIS: Yeah, I'll find those and put those links up. LINDA: Oh, that'd be great. End of Interview
    • THE ENTREPRENEUR’S RADIO SHOW Conversations with Self-made Millionaires and High-level Entrepreneurs that Grow Your Business Copyright © 2012, 2013 The Entrepreneur’s Radio Show Page 23 of 24 TRAVIS: Remember that you can find all the links to the books and resources mentioned in the show in the show notes. Just go to rockstarentrepreneurnetwork.com, it's a new site that we've been building out for you. Now, before I close the show today, I want to bring your attention back to a question that I asked you earlier. Do you remember in the beginning I asked do you have a company that you compete with and they'll always seem to do extremely well, even though they're more expensive than you? Or maybe they don't even provide as good of a service or whatever offerings you have, they're just not up to par with what you offer, yet they're still super busy. Now, the secret to their success is what I call the iceberg effect. When companies have that type of power, they have a system that's going on behind the scene that happens on autopilot in most cases. Once I figured this out, because I had someone that I dealt with for several years that I was just completely confused how they were able to do it. Once we figure this out I was able to increase our prizes, and this shifted our profit margins and increase them by 800% beyond what we were previously making. This is what I've used to build several tiny local companies to multi-million dollar businesses. If you want to learn to do the iceberg effect and lots more, then join the sweepstakes, you'll have a chance to win $73,000 in cash and prizes, where I'll personally mentor you and your business. Plus, you'll have a chance to win my personal Lamborghini. There's several other prizes that come along with that, although we really don't have time to cover all of that stuff right now. So, as always, go to rockstarentrepreneurnetwork.com and click on the sweepstakes promotion, there's an orange bar that runs right across the top of the website on every page. Click on it, they'll take you directly there. My quote for today comes from Tony Dorsett, and the quote reads, "To succeed, you need to find something to hold on to, something to motivate you, something to inspire you." This is Travis Lane Jenkins signing off for now. To your incredible success, take care my friend.
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