Deep inside, everyone wants to make a difference. Leave their mark on the world. Have a legacy. But, what happens when your mission challenges the status quo, maybe even human nature? You become a disruptor, like this week’s guests.
Indeed, when CEO Claude Tellis of Naturade and his CMO, Kareem Cook, saw the rampant obesity in Los Angeles schools, they did what seemed unthinkable—they took potato chips and cookies away from the kids. Okay, so that’s a little dramatic. They didn’t actually go into the schools and snatch the junk food out of the students’ mouths. But, they did get junk food banned from the vending machines—close enough.
The result was a battle for the health of our nation’s kids, as well as establishing a scalable company with exponential growth and solid brand recognition. They didn’t do it alone, however, and they shared the how-to steps of their victory over trans-fats and sugar on this week’s CEO Exclusive.
Step 1: Fix a Big Problem
We’ve known this for a while, but America is putting on a few pounds (me included, arg). If only food weren’t so delicious. Seriously, according to the American Diabetes Association, over 86 million people are what they consider to be “pre-diabetic.” Overweight and inactive, if they continue on the current unhealthy path they’re on, they run a huge risk of developing the disease, and the accompanying high blood pressure and heart issues that come with it.
“Claude and I both have eight aunts and uncles, most of them have diabetes, limbs amputated, people are passing away,” Cook explains, “If you’re an African American or minority, or lower income, or educated white folks, this is not news to you.” With this in mind, Tellis and Cook went looking for a way to upend the status quo while making inroads into the natural food manufacturing industry. For these two East Coast guys, L.A. was a wake-up call. “We got to California and realized, it’s not like it is on TV…it’s just like everywhere else, except, it’s even worse,” Cook points out. “They have a 40% child obesity rate and, really, from the moment we touched ground, we were like, hey, we have to do something about this.”
With a little capital, they began a vending machine company to compete with the unhealthy options being offered to children. Things started with the local YMCA, and within a year, they had signed up three or four schools. Next, they joined a consortium of teachers and state senators. Before they knew it, they had junk food banned in all Los Angeles public high schools and middle schools. They were then awarded the contract to provide healthy options. Within two years, they went from outsiders with an idea to the prime movers and shakers of the cause.
Step 2: Develop the Business Model
So, the question becomes, how did they do it? Not from the activist standpoint, but from the business, nuts-and-bolts standpoint. The answer was a company in turnaround. “We realized that being cool and not dying are the two things that can motivate a person to change their behavior,” Tellis says. As part of their pitch, they brought in celebrities to champion healthy choices. Next came the doctors who argued the detriments, like heart disease and amputated limbs. Then they targeted the social media influencers.
In essence, they began the process of ‘disrupting’ the way to market thought. They also decided to ‘disrupt’ their own model. “We looked at the business that we were in, in the vending machine company, and realized it’s not scalable,” Tellis admits. He also recognized the lack of exponential growth under the current corporate concept. “We said, hey, what we really need to do is acquire a company that’s going to give us some kind of platform to scale,” he adds.
Then there was branding. In their particular industry, it’s crucial. “Obviously, if you can own a brand that is growing and scaling and outsourcing all of the things that are high capacity, you’re in a much bigger and better situation,” Tellis points out. Using connections at their college alma mater Duke University, they raised enough capital to buy a distressed company called Naturade. The rest changed the food choice options for students throughout California.
Step 3: Watch for the Horizons Ahead
After Naturade became their vehicle, the team had to develop their corporate mission. Following a bit of advice from one Steve Jobs, they began having corporate retreats; the goal was to foster the best ideas to help the company move forward. “You have to just focus on two or three key, critical things that are going to drive the business, but also to drive culture and leadership and things that you can get behind,” Tellis states.
Soon, the company was developing a strategy that would serve them once their rapid expansion started. For Naturade, it was a question of crossing four very important horizons:
- Finding a company in bankruptcy or turnaround to acquire
- Solidifying theproduct offerings
- Going after the status quo and changing the way the industry thinks and operates
- Scaling the company
As the team looks at growth, scaling the company will require a significant investment in data analytics. Once again, we see how every company is a tech company, needing to change and adapt in order to satisfy the desires of the marketplace and the customers in it.
It all comes down to knowing your brand and knowing your customer base. “You’ve got to know who you are. You’ve got to know who you sell to,” Tellis shares, “and then you have to love your customers. Love and communicate with your customers all the time.” It also helps to have a team who can handle the task at hand. “We have such a small team,” Cook points out, “we can adapt. If we see something happening, we’re quick.” This helped when online sales started taking off, and other outside factors stepped in to ruin the basic business approaches.
So, do you also want to be a brave disruptor? Done right, you can become a champion, an agent for a better way of doing things. These two guys saw a problem and have been unstoppable in pursuing solutions. They took something affecting their own lives and bettered the existence for everyone…and isn’t that why you started your business in the first place?