Tuesday, April 18, 2017
The Win-Win Of Healthy Snacks and Brand Discovery: Sean Kelly of SnackNation
Story by Benjamin F. Kuo
How to you take the recurring revenue model--which has been popular with software and other online services--an apply that to physical products and services? This morning's interview is with Sean Kelly, CEO of SnackNation (www.snacknation.com), which has created a membership-based service which delivers snacks to offices, who tells us about his company's business, its focus on both expanding its business and keeping existing companies happy, and why he thinks not everyone should be an entrepeneur (at least, not immediately). Ahead of the Recurring Revenue Conference (https://rrc2017.eventbrite.com), which we are helping to sponsor next week, we are chatting with a few companies in the recurring revenue area space.
What's the idea behind SnackNation?
Sean Kelly: We think of ourselves as Snacking-as-a-Service. We are a snacking membership service, primarily for businesses, across the country. One component of our business, is we provide the most phenomenal, most exciting, and enjoyable snacking experience to all of our office members we service. What that means, is those offices are provided with a constantly curated mix of snacks, that either arrive daily, weekly, or monthly at their office, and which continually gets better based on the feedback they provide. Employees love it, because not only are they getting better tasking, healthier products, but also because they are continually discovering new snacks. Typically, each of of our boxes has 80 percent brands, flavors, or SKUs that are unknown in a large segment of the population, other than with other employees at the office. The office manager doesn't have to order snacks, employees feel like they are cared for and are getting great products, and the office becomes a place for discovery and learning about brands, which they might also want to bring into their homes. We are also launching beverages and coffee, two new categories, next month.
On the other side of the business, for brands, they look at us as a marketplace for people to discover their emerging brands. With brands today, as you probably know, every consumer category is being massively disrupted by the long tail. The big CPG companies dominate shelf space, and there are hundreds of different consumer categories, emerging brands, and products, the problem is not more, healthy treats, or any need for authentic, story-based products. The problem is that there's no access. There's no access, for two reasons. One, is shelf space. There's only so much shelf space in stores, which is still dominated by the big boys. Two, Millennials and Generation X are spending less and less time in brick-and-mortar grocery stores. There are so many more brands and competition. They love our service, because we actually give them direct access to who their exact target customer is, which is affluent Millennials, which Nelson refers to as Upscale Millennials, who have good jobs, and don't live in their parents' basement. We help companies provide those employees with free snacks products and drinks, show innovative companies that they care about their talent, helps with recruiting and talent development, and keeps people happy. And, we give brands access to the exact target customer they are looking for, provide a marketing service to those brands in offices, and on social media. We're also able to collect consumer insight and data analytics, as we survey our members around their likelihood to purchase those brands, changes consumers would like to see, and drive redemption on the back end.
We notice the list of companies using your service here reads almost like a Who's Who of Southern California startups – how did that come about?
Sean Kelly: I think it's because we have been very, very focused in the last two and a half years on doing one thing well. We could have branched out to other categories sooner, but we wanted to be sure we were absolutely best at delivering the premier and most enjoyable, B2B, snacking experience. Additionally, we're very sales and marketing driven. We have a sales team now of just around fifty inside sales folks, who are out there aggressively marketing and prospecting. I think it's a combination of the quality of our products, and the ease of experience, for both the office and also on the consumer front. We have a great sales and marketing team which really believes in what we do, and honestly, are pretty resilient folks. Plus, we're very on trend. It's funny, because snacks are becoming the “new coffee” in the office. They used to say, “coffess is only for closers”. However, 85 percent of offices now offer free coffee. If you don't offer coffee, you're perceived as a bad employer. The same thing with snacks. It used to be a very small percentage of offices offered free snacks to employees, but it's now becoming an expectation. If you don't have snacks on site, so your employees can have some fuel during the work day, you can't say you care about your team. That's helped us a lot.
On the theme of recurring revenue, are the biggest things you've learned about making the model work?
Sean Kelly: There are a lot. It's so easy to go after new revenue and closing new deals, which you have to do to grow, but, I always come back to the tried and true method behind building the strongest recurring revenue business you can, which is focusing on selling more to your existing customres, and number two, focus on keeping those customers around. I think for us, it's been a massive focus on retention, ensuring your customers are happy, especialy as you scale and grow. When you get to a 8 figures of ARR, your churn become far more damaging to your revenues than new customers are beneficial, if you don't focus on your existing customers as you should. When we started out, it was all about new revenues and new sales. But, you quickly learn that maximizing retention and maximizing member experience and customer happiness, is far more critical on your financials and business.
What advice would you give to new entrepreneurs, looking to start their own business?Sean Kelly: Oh, that's a big one. This may seem strange, but I would ask, first, if that entrepreneur has to be the entrepreneur to do this. Would it make more sense to be number two or number three at an existing organization, where they can cut their teeth, learn the tricks of the trade, and learn from phenomenal mentors and others? Is there a way to learn from others' mistakes and successes? Do you literally have to be the one to start this right now, or is there a better path for you? One of my favorite quotes is, don't be short term greedy--be long term greedy. I know everyone wants to do this right now, as quickly as possible, but you have to make sure your timing is right. That will save a lot of pain, and create lots more success, by being more long term with your approach. I see a lot of entrepreneurs today, where entrepreneurship sounds so sexy. Lots of entrepreneurship seems awesome and sexy, but far more aspects of it are not. I don't like it when it seems that the entrepreneur or the founder should receive all of this glory and amazing praise, because many times, it's the number two, number three, or number four person who is much or more valuable. I love the promotion of entrepreneurship, which I think is the way we are going to solve the majority of the world's problems. I wholeheartedly believe that. But I think we should glorify the process of working together, rather than focusing just on a sole entrepreneur.
Finally, what's next for Snack Nation?
Sean Kelly: We're putting one foot in front of the other, and we are seeing fantastic growth. We went from zero to 100, and added 30 employees in two years, and we're continuing to capture more offices while keeping all of our current members happier and happier. Next month, we are launching beverages and coffee, expanding our categories, and trying to grab more share of the wallet inside offices. We also are continuing to grow our B2C business, which we really see as a way to get more consumer insights and data analytics, more than anything else.