FuelFood For Thought: Three Key Lessons Learned From This Week’s Episode Of ‘The Profit’
I really enjoy watching business shows like Shark Tank and Restaurant Start-Up, but I usually miss the original airing and find myself watching re-runs late at night. However, this past Tuesday on CNBC’s The Profit, when Marcus Lemonis visited Erik Leander, the founder and CEO of FuelFood, the show hit home in more ways than one. Like The Fresh Diet, the business I founded, Fuel Food is a healthy meal delivery service that sends balanced meals to customers’ doorsteps. In addition, FuelFood operates out of West Palm Beach, FL just a short drive from where I live. I waited anxiously all day to watch the episode and to see what Marcus would do. At 10 p.m., I had my remote in hand and my popcorn ready.
Despite seeing the tremendous opportunity that investing in a health food company could bring, Marcus decided not to invest. Entrepreneurs can learn many lessons from this exciting episode, especially by reflecting on the mistakes made by Erik, the founder. Here are the top three I identified.
1. Find A Cofounder (Or Two Or Three).
When I started The Fresh Diet, I realized right away that this was a business I could not build alone: I would need real partners to grow the business quickly; I couldn’t rely exclusively on employees. Erik, the founder of FuelFood, didn’t come across as someone who works well with others, so I wasn’t surprised to learn that all five of the other shareholders were investors as opposed to sweat equity partners. In a business like the Fresh Diet, there are many important roles being played: Head Chef, Head of Sales, Head of Operations, Head of Technology and more. Realizing this, within the first few months of launching my company, I filled three key roles with equity partners: Yosef Schwartz, our Chief Culinary Officer; Judah Schlass, our Chief Operations Officer; and Ray Willig, our Chief Technology Officer.
By having key roles filled by partners instead of employees, I knew I could count on the people in those roles to have the best intentions of the company in mind, no matter what. In contrast, during the FuelFood episode, Dianna — the sales manager and second in command — walked out when things got “hot in the kitchen.” If Diana had been a partner instead of an employee, would she have walked out? I doubt it. For Erik, going at it alone seemed to be big part of the reason for the bad situation he found himself in.
My advice to any entrepreneur thinking of launching a business, no matter what the industry: find a co-founder — or two or three — to help share in the ups and downs. I know The Fresh Diet would never have been as successful as we are if I decided to go it alone.
2. Always Be Up Front With Potential Investors.
Despite finding a number of issues with FuelFood, Lemonis still seemed interested and excited about investing because he realized that the healthy meal delivery segment had tremendous upside. Although the founder led by intimidation, spent recklessly, and had little handle on the finances (among other issues), it still looked like Lemonis was going to become a 51% partner. But then Lemonis found one detail he couldn’t get past: the largest investor in FuelFood was involved in a Ponzi scheme and his assets had been frozen.
“I feel like I dodged a bullet,” Lemonis said during the episode. “If Erik didn’t think that his primary investor being involved in a Ponzi scheme was a big deal, I don’t know what other surprises he had in store for me.”
But did Lemonis ultimately back out because of the investor situation, or was it because Erik hadn’t been up-front about it? In my experience, the answer is the latter. Potential investors usually understand bad situations because they’ve seen a lot of them. If an entrepreneur is direct and honest, investors can usually get past the issue. But when an entrepreneur hides crucial information, it will often cause the investment to fall apart on the spot — as it did with FuelFood. When raising funding for my company, I always made sure to start with the bad news and end with the good. This makes potential investors feel comfortable with you, because they know you will have the integrity to come to them with any problem.
3. Not All PR Will Be Good PR, So Make The Best Of It
I have no doubt that anyone reading this article would be ecstatic if they found out their company would be appearing on a show like The Profit. Not only is the show seen by millions, it’s replayed over and over again for more to see. A positive public relations event can bring in millions of additional revenues and jump-start a company into instant success. But if you watched the episode on Tuesday, you would have noticed early on that it was not going to be a positive PR event for FuelFood. From food quality to marketing message, the founder and the entire company looked like a bad joke. A pretty telling fact was that FuelFood didn’t promote the show on their Facebook page or other social media outlets. A public relations opportunity went from being a potential national media success to one that the company had to distance themselves from. Erik and FuelFood should have seen it coming.
As an entrepreneur, your company’s brand is the most important asset you have, but when it comes to PR you really need to understand and manage each opportunity. Allow me to illustrate with an example from my own experience.
A few years ago The Fresh Diet hired Carnie Wilson as our spokesperson. As someone who had dealt with weight loss ups and downs all her life, Carnie was a perfect brand ambassador for our company. As soon as we locked down the deal, we pursued every PR opportunity we could. Our work resulted in an appearance by Carnie on the Dr Oz show and an article in People magazine. However, things took a quick downward turn when Carnie stopped sticking to the plan and started gaining back the weight she had lost. In fact, she even started her own cheesecake company while signed as our official spokesperson.
I needed to act fast, so I quickly fired Carnie and got the word out. Within a few days Star Magazine published an article on how Carnie was fired over cheesecake. I even made an appearance on Inside Edition to discuss the story. By acting quickly and being creative, I took a bad PR situation and spun it in my favor. As an entrepreneur, you need to do your best to keep your company’s image as positive as you can, but sometimes it’s out of your control. For Erik and FoodFuel, The Profit episode may have seemed like too large a hole to climb out of, but as entrepreneurs we need to be magicians and turn bad into good, no matter what.
You can find me on Twitter (@ZalmiD) and learn more about my work at www.ZalmiD.com
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Originally published at www.forbes.com on June 19, 2015.
