They were kind enough to share their experiences with us in a panel discussion at the KPMG Austin Finance Leadership Summit this year. Here’s a closer look.
LOCATION, LOCATION, LOCATION
One key to building a strong brand is finding the right place and time to start a business in the first place. Asked why he chose Austin for Cece’s Veggie Co, founder Mason Arnold had an easy answer: he was born and raised here. To create Cece’s, Arnold leaned on his engineering degree from the University of Texas to invent a machine that could cut vegetables into shapes that behave like noodles when cooked. The veggie noodles were a hit and took off—so much so that they were named a Top 10 Food Trend by Whole Foods and Food Network in 2017. Arnold said his successes might not have been possible had it not been for the collaborative and generous nature of Austin’s food community. “I made four phone calls and two guys who had kitchens in town said I could use their space for free,” Arnold said. “I don’t think there’s anywhere else in the country I could have done that. If I had it to do over again, I’d still choose Austin—even though I’d probably spend 20% less on labor starting somewhere else.”
Hopdoddy was started by two restauranteurs who’d had previous success in Austin with Z Tejas, Roaring Fork, Salty Sow and others. “Austin is an incredible food and innovation town, and they wanted to capitalize on that to create a burger experience that was different than anything else out there,” said Jeff Chandler, Hopdoddy’s CEO. “I’m from Seattle and have absolutely fallen in love with Austin. As an outsider, looking at Austin from a professional business lens, it was absolutely the right place for us to start and incubate.” Though Hopdoddy now has 28 locations around the country, Chandler says they still look to their early Austin days to inform everything from how they recruit team members to how they identify new sites.
Michael Portman, Co-founder, Birds Barbershop and Verb Products, had a simpler answer: he’s just always wanted to be here. Portman came to Austin by way of Laredo and L.A. in 2006 and recognized a need: Austin didn’t have a lot of choices for getting a mid-priced haircut. As moderator Cindy Matula, Central Texas Region Manager for JP Morgan Chase, observed, his choice was less about location and all about timing. Great timing, it turns out; Birds now has 10 Austin locations and one in Houston.
EXPANDING INTO NEW MARKETS
What about those new markets? Chandler says that exporting the feeling of an Austin burger joint is a key part of the brand, but “’Keep Austin Weird’ is really hard to quantify.” The company analyzes psychographic data for Austin guests and employees, then looks for other major markets that share the same data.
Portman had a more personal take, describing Birds’ expansion to Houston as a part of his “failure resume.” The new location is still not breaking even after two years, and Portman is now putting Austin people in Houston to help create a culture that works.
MOVE OUT OF YOUR COMFORT ZONE
Working closely with his CFO on brand issues isn’t difficult for Portman: he and his finance executive are equal partners, so his CFO guides marketing and branding decisions every day. Chandler, coming in as a hired gun at a larger organization, worked to create that dynamic with a self-governing leadership team in which the CFO and CMO are equally invested in all of the returns they’re monitoring. “For us, it was about creating that balanced score card everyone talks about.”
Arnold agreed. “I think the brand is the collection of every single touchpoint between the organization and the outside world. So even within the financial system—how vendors are treated, how Accounts Payable (AP) and Accounts Receivable (AR) work—those interactions should match the brand. That means a high-end brand can’t cheap out on packaging just because it will save a few points of margin. All of those things need to inform financial decisions.”
USE BAD REVIEWS TO BUILD THE BRAND
The panel invited executives to consider bad customer experiences—and inevitable bad reviews—as critical opportunities to build the brand as well. “We try to approach those problems with humility, authenticity and transparency,” Arnold said, adding that they make an effort to own mistakes, apologize and try to win customers back.
Hopdoddy has a similar approach. “You can’t hide from it. Social media is out there and gaining traction. We look at it as an opportunity to wow somebody. We get more than 50 comments a day, mostly good but some with opportunities attached. We respond with a two-hour turnaround during business hours or otherwise within eight hours.”
Portman said his business partner has personally responded to every negative Birds review since day one. “We give 25,000 haircuts a month; he’s busy,” Portman laughed, adding that, for him, brand voice is almost a code of conduct. “I think of my brand as a person: ‘Birds wouldn’t do that’ or ‘Birds wouldn’t say that.’ We have 250 people who are the faces of brand, so we need to be kind and personable to our customers and prospective customers.”
“The heart of branding is creating emotional connections with people. If you can take a bad experience and turn it into a positive experience, then that’s better branding. You’ve reached through in a memorable, personal way that builds loyalty with people,” Chandler added.
LEARN TO SMELL SMOKE
Chandler also pointed out that good communication with the CFO is critical. “Cash is the main pillar of how we grow,” he said. “You can’t assume you’re always in sync, so I put a very regular, scripted cadence in place with our CFOs.” While that often means covering the same metrics over and over again, it can lead to catching critical issues early. “It’s not like managing my CMO or my director of Operations. Mistakes or miscommunications at that level can make a material, meaningful, bad difference – so be proactive.”
One of Portman’s big lessons came when he and his partner created Verb Hair Products. “We totally took our eye off the ball, and Birds got stale for about 18 months.” From that, Portman said, he learned to keep his focus “narrow and deep, instead of shallow and wide.” Arnold said it took his first financial crisis to really understand this key advice: “Don’t hire someone who hasn’t been in a fire, because they don’t know what smoke smells like.” He said he stays firmly engaged with finance, focuses on delivering quality, and doesn’t add complexity to the business model until the market demands it.
EMBRACE CHANGE WHILE PRESERVING THE BRAND
Change can be a powerful teacher as well. “Change is hard. Most people don’t accept change. It stresses them out and creates anxiety – we realize that. We work really diligently to show and build the path for people to change. We answer the whys, we answer the what’s in it for them, we show how it fits into our overall strategy.” He pointed to Austin’s recent flooding and week-long boil-water notice as an example of how rapid change can yield positive financial results. “A lot of major chains were forced to close. People were stressed, but we worked with the City to adapt our processes so we could remain open and serve water to customers—and made a lot of fans in the process.”
Hopdoddy also understands the parts of its brand that shouldn’t change. Leadership visits each location four times a year to ask employees if the company is living up to its brand promises. “We often find that we’re not meeting expectations,” Chandler said. “It can be very eye-opening.”
Arnold says he can be maniacal about keeping everything perfectly in line with Cece’s brand, but tries to make that perfectionism like a game for team members—which helps them start to notice and correct small issues as well. For Birds, the brand is being the opposite of the “the high-drama hair salon business.” “We get that everybody hates that about salons,” Portman said, adding that he relies on employees to maintain that culture. He advised, “Write it down. We have the Birds Barber Code that shows the five or six things we’re about.” “Then your team members can hold YOU accountable,” Chandler concluded.