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Editor’s Note: In the new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business -- and at Entrepreneur.com, entrepreneurs are responding with their own ideas and experiences on our hub. This week, we’re discussing Hoffman’s theory: If you're not embarrassed by your first product release, you released it too late. Listen to this week's episode here.
I thought I was ready to open my first brick-and-mortar business. I’d been selling gourmet cookie dough online for two years, and although I knew retail would be an adjustment, I was excited to learn on the job. I believed that we all must go after what we want without hesitation -- because if we wait for that “perfect” moment, we’ll be waiting forever. And yet, when I opened my shop, Do, in Manhattan in January 2017, I was still stunned by just how thoroughly unprepared I was. It was a mess. A disaster. An embarrassment, on occasion -- and exciting, scary, wonderful and terrible at the same time.
And yet, I’ll be honest: I wouldn’t have it any other way.
It all started with a Facebook video from Insider Food that went viral (with 63 million views). And that led to big crowds -- way bigger than we expected. We were grateful for them, but unable to serve them the way we’d have wanted to. We ran out of product, we worked overtime to make up for our shortage and then we ran out of ingredients. Meanwhile, customers were stuck waiting up to five hours for their cookie dough. We didn’t have the equipment we needed to produce the quantity of product we needed. Our online orders were pinging in at one order per minute, so we had to shut down online ordering just to keep our heads above the water.
There were only 10 of us -- five full-time employees and five part-time employees -- and we were all beyond exhausted, forcing smiles just to get through the day. When, or rather if, we finally got to go home at night, we found that we were just far too stressed to get any degree of rest. At one point I even called in my family, begging them to fly out from the Midwest as reinforcements. I was desperate.
But, of course, my family couldn’t save me from this madness. I could only save myself. So once the initial shock wore off, I began fixing the problem and, for the first time, truly building a business that could achieve what I wanted it to achieve. Here were three big steps I took:
1. I hired a lot more staff.
When we ran out of product the first weekend and had to close for two days to get caught up, I used every possible moment I could to post job listings, look at resumes, conduct interviews and hire all positions -- front of house, back of house and a far larger management team that would include a marketing and social media manager, a dedicated ecommerce team, a director of events, a production manager, a strategic partnership manager, a special project coordinator and a general manager for the shop.
When evaluating potential new hires, I didn’t care as much about prior experience as I did about personality. Scooping cookie dough is teach-able. An outgoing, spunky, upbeat personality is not. It was important that I chose like-minded individuals that immediately understood -- and bought into -- what we had going on here. In a matter of a month, I hired 60 additional employees.
Not every new employee was a winner, and we lost a few of the existing team that couldn’t handle the craziness. But, that was all just part of the process. We also put necessary policies and procedures in place, got new HR, payroll and scheduling software to keep it all straight, and re-organized our storage area to accommodate a few desks.
2. I quickly increased production.
When I was just selling online, I operated out of a tiny old kitchen. When we signed a 10-year lease on our retail space, we would be able “grow into” it over the years. Ha! After two weeks, we were already out of space. Our kitchen is only 375 square feet, and our product is perishable. Where would we store it all? How could we keep up?
With the new people I hired, we began running three shifts in the kitchen and in the front of house. Production was running 5 a.m. to midnight, with a cleaning crew from midnight to 3 a.m. We bought bigger mixers, quadrupled both our refrigerated and our frozen storage capacity (which included dropping enormously heavy refrigerators 10 feet down through a hole in the sidewalk that led to our basement), and delegated certain portions of production to specific individuals, so each person had a distinct task and a distinct responsibility.
But that still wasn’t enough. So, we quickly identified potential production partners and larger commissary space in the Bronx. We scaled up our ingredients, trained another new team, and got new containers and new ingredients delivered as quickly as possible. Five weeks after we opened the shop, our new facility was up and running in the Bronx.
3. I successfully tracked inventory management.
The first weekend, when we ran out of ingredients, I ordered double for the following weekend. And we still ran out. So I doubled it again, and we still went through it all -- leading me to schlep to the store to purchase more butter and vanilla myself. It was a joke. Ordering, lead times and minimums were all a learning curve.
So we sat down and analyzed our sales. How many containers and what sizes of containers were we using? If we sold X number of scoops, that was how much dough? How many batches? What was the flavor breakdown, so we could figure out how much of each ingredient we needed each week? What about the spoons and the napkins and the lids and the trash bags? There were so many things we were ordering and from so many vendors, and things got missed.
Then, our suppliers ran out. We were purchasing their entire warehouse stock faster than they could replenish. So we identified new suppliers and backup vendors and begged people to waive minimums -- even sometimes going to random far-off warehouses to pick items up to avoid the delivery time. We ordered more of everything -- our heat-treated flour that is only produced once a month, our containers that take 12 weeks from China. We ordered it all, and this time, more than we thought we would ever need.
Should I have figured out some of these things before launching the business? Sure. And if I’d launched a business before, maybe I’d have known to do them. But, I still agree with Reid Hoffman that it’s good to be embarrassed by your first product. It means that you put something out into the world that people could react to -- and then could change to their liking. I’ve learned what a wonderful resource of inspiration and information our customers make, and we really try to take their requests and suggestions into account. We relaunched our online sales because of customer demand, and now we ship across the country. We launch two new flavors every month and have the capacity to make specialty items and custom treats. That’s all stuff that I might not have done if I hadn’t let the public into our process.
Today, Do continues to grow. We’re partnering with Citi Field, Dylan’s Candy Bar and the Governor’s Ball Music Festival, just to name a few. And yet I’m sure that, in five or 10 years’ time, I’ll look back at what I’m doing today, smack my forehead, and be embarrassed about some other part of the business. But that’s fine. I know now that, in business, you just have to take the leap, try your hardest, roll with the punches, and most importantly, figure it out along the way.