How to Grow Your Small Startup Into a $5 Billion Cult Favorite, According to the Founder of KIND Snacks Daniel Lubetzky shares his insights on what is it about our favorite brands, from Apple to Disney, that make them so magical.
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Every entrepreneur wants to build the next big iconic brand. But how do you put yourself on that trajectory?
I spoke to Daniel Lubetzky, who is returning to Shark Tank for his second season. Having founded and built KIND from one out-of-the-box idea into an international brand valued at more than $5 billion—and now as an investor in small businesses—he has learned a thing or two about what makes a brand magical and why.
I sat down to ask him about this—and his answer may surprise you. While many think of great marketing, top-notch distribution, or outstanding design as differentiators that put up-and-coming brands on the map, Daniel says a brand's magic lies elsewhere—in its authenticity.
Here's what I learned from Daniel about the three major ways authenticity wins over hearts and drives enduring brand equity.
1. Copycats don't stand out from the crowd
When evaluating a deal, Daniel is deterred by any product that appears to be a copycat of an existing concept. If a product fails to differentiate itself in its category—or, even worse, clearly rips off a competitor—he's out. In a highly saturated marketplace, products have a distinct competitive advantage when no one else has thought of them.
These novel and innovative ideas shake up the status quo, create new categories, and disrupt the broader industry. When KIND launched its first whole nut and fruit bar in 2004, the category was dominated by slab bars made from emulsified pastes. KIND's proposition to use ingredients you can see and pronounce stood out and helped reinvent the "snack bar" idea completely.
As Daniel likes to say, "A brand is a promise and a great brand is a promise well kept." A brand needs to stay authentic and true to its value proposition. He adds, "If a brand cuts corners in its production process, it risks betraying consumer trust and sacrificing authenticity." In other words, while reducing costs at the expense of quality could benefit your bottom line in the short run, it will ultimately diminish long-term brand equity.
2. Investors want to hear what's wrong, not just what's right
Daniel is wary of entrepreneurs who enter Shark Tank and deliver a seemingly over-rehearsed story that lacks authenticity. In his experience, entrepreneurs who are more focused on saying what they think the sharks want to hear than delivering an earnest pitch are rarely the ones who walk away with a deal.
More importantly, seasoned private equity investors want to hear what their money will go towards (i.e., opportunities for improvement, gaps that need to be filled, etc.) rather than just what's going well.
One of the telltale qualities of an authentic leader is a willingness to admit their faults. This type of leader sets the tone for a company culture in which team members feel comfortable taking risks because they aren't paralyzed by fear of failure. By celebrating people for being themselves, we allow good ideas to come to the surface and build an environment in which creativity can thrive.
A leader's actions speak volumes about a brand. If you are an entrepreneur building a brand with a mission to make the world a better place but not practicing kindness and empathy in your own daily life, your mission will be undermined.
3. Customers can sniff out gimmicks
Daniel is passionate about using business forces to scale social impact sustainably. However, he holds that the most important qualifier for a social enterprise is a social mission. Companies producing goods that aren't necessarily going to change the world, but that are delivering products and services people want, are still great.
As long as these businesses aren't doing harm to the world, Daniel believes they have a positive impact on society because they generate jobs, stimulate local economies, and improve millions of people's lives. Daniel says, "Net-net, if you are doing no other harm through your business, I think you are already doing great. When you can elevate it is when you can channel your business model to drive change. But don't do it if it's not authentic."
Consumers are sophisticated when it comes to sniffing out a gimmick. When consumers feel that a social mission is superficial or lacks real depth, it hurts the business because modern consumers are already cynical towards capitalism without conscience. And according to Daniel, "If your brand is hurt, your social mission is also damaged, as you will not have the capital to achieve your societal objectives."
Authenticity isn't just marketing—it's good business
At the end of the day, being true to yourself and your brand will not only make you feel better as an entrepreneur—it will also radiate outwards and influence every aspect of your business, from motivating your employees to attracting genuinely interested customers.
While it may be tempting to take shortcuts along the way, putting in the extra effort never to sacrifice what you stand for truly sets you apart from the competition. In the long run, it should always pay off.