Kodiak Cakes: Joel Clark

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Your home might be worth more than you think. Find out how much at Airbnb.ca. So I put together a promotion at Safeway. I'm going to offer a dollar off, right?

And suddenly I got a call one day from my distributor rep. He's like, Joel, he's like, look, some mistake happened, and your promotion got doubled in the system. And it showed two dollars off on the shelf. Well, that's a huge discount.

That's a deep discount. So he's like, so I turned it off before it got worse. And I was like, oh man, you got to be kidding me. This is another near death experience that we're going to be going through.

And when I found out, you know, the bill was 50 grand. Man, I was like, what am I going to do? From NPR, it's how I built this. A show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I've got Ros and on the show today, how Joel Clark ran into every roadblock you can think of on his way to building Kodiak Cakes, a pancake mix based on his mom's recipe that he grew into a $200 million dollar brand. There are crucial moments in the lifespan of a business that almost every entrepreneur encounters, moments when you face a hard decision. When does your side hustle become your main hustle? What's the right moment to make a pivot in your business model?

Or what is the time to give up, learn from your mistakes, and start over? This last question is probably the hardest, because in many cases, it makes sense to cut your losses and move on. If Mark Constantine hadn't shut down his failing mail order cosmetics company, he probably wouldn't have started Lush. If Topo Atona didn't give up on his failing e-commerce site selling backyard grills, he might never have built Calendly, which just got valued at over $1 billion.

And if Stewart Butterfield had stuck with his money-losing video game concept, Glitch, Slack may never have become a business. But then, there is Joel Clark, co-founder of Kodiak Cakes. The brand is best known for its pancake mix. And for more than 15 years, Joel struggled to make his business sustainable.

Sometimes, as you will hear, to the point of folly. At one critical juncture, he launched a second business selling cookies just to keep Kodiak Cakes alive. But when the cookie store failed, it almost took Kodiak Cakes down with it. In 2007, Joel thought he could fund the business by investing in a piece of real estate.

But months later, the real estate market collapsed. He tried to kickstart sales by launching a product promotion, but it ended up costing him thousands of dollars. And to help pay the bills, he even took a job running a home healthcare company for a while. To be perfectly blunt, Joel had every reason to give up during a 15-year-long streak of failures and struggle.

And yet something kept pulling him back. He really believed that his whole brain pancake mix could really take off. And the thing is, his hunch was correct. Because today, Kodiak Cakes is one of the best-selling pancake mixes in America, and the company is approaching $200 million in annual revenue.

And the thing that got in there? Yes, perseverance, and yes, luck. But also, protein, specifically Kodiak's protein power cakes that happened to enter the scene just as a high protein diet craze was sweeping the country. And it all started as a simple pancake mix created by Joel's mom.

Joel grew up in Salt Lake City in the 1970s. He was the youngest of five kids. His dad taught religious classes for the Church of Jesus Christ of Latter-day Saints, as they're known as the Mormon Church. And his mom took care of the house where she made sure there was never any junk food lying around.

I remember my friends would come over to our house. And it was always like, let's look for food. You know, you're always that's what you do when you're growing up. Well, you go to my house and you open up the fridge and it's full of lettuce and vegetables.

And my sister used to say, everything we eat is green and brown. So I always loved going to my friends' houses because they always had all that stuff. You could open up their pantry and they're like gummy bears and jelly things. Doritos.

Doritos. I was at Oreos. Look at my friends' houses. They had like pantries full of junk.

I'd go back to my house and we were like, like, wheat germ. I was there. Same house. Yes.

Oh, that's funny, man. So what kind of things would your mom make you eat? I remember her saying, you know, you should eat a yellow vegetable every day. So we had a lot of carrots or squash and things like that.

And then she baked a lot of bread, like whole wheat bread. We had a wheat grinder in the garage. We didn't have a lot of white flour and white sugar. So, you know, everything we ate was clean and whole.

And I remember her kind of saying that like it's about eating real food. I guess her whole wheat pancakes were like a family kind of favorite. And then so good that other people would ask for them when they would come over. Yeah, well, we loved the whole wheat pancake recipe.

So, you know, I have fond memories of waking up to the smell of that. Like that was an exciting morning. It's like, oh, yes, mom's making pancakes. And they were really good.

She'd beat the egg whites, like, you know, separate those, beat them up. So they're nice and fluffy white, fold those into the batter. And it really was a great breakfast. I mean, that was an awesome meal.

All whole wheat, freshly ground. She would grind the wheat for her pancake mix. Yeah, we had a wheat grinder in the garage. And that thing was turned on a lot.

And it was pretty loud. You could hear it, you know. You just buy like unmilled grains of wheat and then make flour. Yeah, you just, you know, the whole wheat, throw it in the grinder and it would turn out this freshly ground flour was awesome.

And so, yeah, friends would come over once in a while and have those. I remember like my brother's friend having breakfast with us a couple of times. And I mean, I think it was some of the neighbors probably asked. I also think it was my mom kind of feeling like there's a need out there for more real food products made with whole grains.

And there's probably an opportunity to sell this as recipe as a mix. So she was making this pancake mix and decided, hey, maybe I'll, like, package this up and try to sell it to her door. Right. She would shop it.

Natural food stores looking for real ingredients, real food, you know, raw sugar, things like that. And the mainstream supermarkets really just didn't have a lot of options. You know, the whole grains were out there, but they just weren't that common. And so, you know, I think that's how she, why she thought of this would be a good niche.

But I think she also thought there's probably maybe she could make some extra money doing it because money was tight for us growing up. It was very tight. So she basically said, look, I'll package this up. And how would she sell it?

So she started packaging these things up. And I think the initial plan was, hey, let's try selling these to neighbors and see how it works, see if people like it. And what'd you call it, by the way? That's a good question.

I don't know if we even had a name for it. What's your mom's name? Her name's Penny. Her name's Penny.

She didn't call him Penny Cakes. What? She was blessed with a name like Penny to be used in marketing and advertising and she didn't use her own name? Seriously.

Penny Cakes. We should have done that. So she's putting them on brown paper bags, like lunch bags? Totally.

So she packed all these brown paper lunch sacks on the counter with the freshly ground wheat, dried milk, and the other ingredients, salt, baking powder, stuff like that. And then she hand-wrote on these bags. My mom has the most incredible handwriting. And she literally hand-wrote on every bag how to make it.

Wow. She hand-wrote every single bag. All right. So you got all these bags.

Yeah. So she came to me and she said, hey, I remember her kind of doing this project. And I don't remember how it sort of came about that I was going to do it. I just remember, like, we were having this conversation.

It's like, hey, you know, do you want to go sell these? So we, we loaded up this, I had this old red wagon. We put all these bags in there and went out and started knocking doors in the neighborhood and asking people if they wanted to buy a pancake mix. And by the way, how much do you remember how much you sold these bags for?

You know, I want to say $5, but that sounds a little expensive for 1982, you know? But for hand-milled wheat. That's pretty great. And so this is 1982.

How old were you at the time? I was eight. And so I'm imagining you pulling a red wagon full of pancake mix and the neighbors buy them. They totally did.

I remember, I knocked on, so we looked at a cul-de-sac. And I went around to all the neighbors in the cul-de-sac. And I think everybody bought one, you know? I mean, I'm just eight-year-old kid, right?

And I was actually pretty outgoing as a kid. Like, that didn't bother me at all. And so, you know, I remember doing that and going around to some of the other neighbors outside of our street and I ended up selling all the bags that we had. All right.

So now there's a viable business. And so does this become like a family affair at this point? No. So you know what happened was, so we sold all the mixes in the wagon.

Yep. But then we didn't keep going with it. You know, we kind of just let it die out and didn't keep pursuing it at that time. And that was it.

That was it. Yeah. That was it. All right.

So you go on, start your life, get through school, and did you do a mission when you were 18? Yeah, I did. I left when I was 19, just like a month after my birthday. Yep.

And yeah, I did. I went to Australia. Wow. That's pretty great.

I was stoked about that. That was like perfect, right? Go for it and didn't have to learn a language. And, you know, we've talked about this in the show a little bit.

I love this example. People who listen to the show know about this. Young Mormons who go on missions, I think, are very well prepared to become entrepreneurs, who are knocking on $1,000 a week, and 900 of them are just like slamming in your face. And you still need to like, right?

You do. It's so hard. It's one of the hardest things I've ever done in my life. You know, I mean, yeah, you're just doing that over and over and trying to talk to people, trying to get somebody to listen to you.

And you get all this rejection. Yeah. Sometimes people are nice, but most of the time people are nice. But every now and then you get someone who is who's just upset and they're just like, man, get out of here.

And, you know, it happens. And how long did you spend in Australia? Was it two years? Yeah, it was two years.

All right. So you come back from your mission. You go to college at the University of Utah. Yeah.

And then I guess while you're in college, your older brother, John, is like, hey, I'm going to start a business selling pancake mix based on mom's pancake recipe. That's exactly what happened. It was actually, he started thinking about this while I was still on my mission. And so he started talking to my mom about how he wanted to start a business.

And my mom was the one who kind of planted the idea of, you know, hey, John, why don't you take the pancake recipe and make a real product and start a business on that? And just as curiosity, what was the value proposition here? Was there, I mean, there was answer to my mom, there's plenty of pancake mix, biscuit, and whatever, you know, out there. What was this?

It was different because it was whole grain pancake mix. And that wasn't really out there. Well, yeah. So the way John thought about it was he thought he didn't think there were enough really great whole grain options out there, which is true.

The pancake category really didn't have much in it in the way of healthy items. But he also thought, look, if I can get a product that tastes awesome, that's number one, that is healthier, number two, and then convenience was the other thing he was really going for. So he wanted a product that was just to add water. And he felt like if he could get all three and one, then he really accomplished something.

And did you say, did you kind of reach out to him and say, hey, I'm going to join you? Well, the timing of this was so perfect because I was getting off of my mission in October of 1995. And so I went and stayed with John and his wife temporarily until I could figure out what I was going to do. And so right then, that's when John was about ready to go out and start selling this pancake mix that he had been working on while I was gone.

And so timing, that was great. And John said, hey, Joel, do you want to help me? And he wanted to kind of, you know, obviously evolve it from where we did out of the red wagon, make a real product, create a brand, and then go start selling this in stores. And how did he have any capital to do this?

I mean, I guess he was a bit older than you at that point. He was probably in his late 20s. Exactly. And he was just going to start this up.

It was incredibly tight. So John was about 28 when he started this. And as he got ready to really start putting money into it, I helped him find a truck that he was able to flip. So I used to flip old trucks and make money on him.

And I still do it, actually. It's pretty fun. You just buy a truck and fix it up. Yeah, buy an old truck, fix it up, sell it and make money on it.

And I did that all through college and I paid for my mission that way, most of my mission that way. And what I would do is look, this is really funny. I would go around, I'd drive around neighborhoods, let's see old truck on the side of the house and I'd walk up to the door and go, hey, do you want to sell your truck? And man, I had so many people say, yeah, actually, we're not driving that truck anymore.

And often you find them in really good conditions. So they would just need like, you know, a detail being cleaned up, maybe a little bit of paint touch up or, you know, so usually minor things. So, you know, I found this truck for John and John drove around for a while. And then he, he sold it and he made 1400 bucks.

And so he was kind of like, look, I think I can actually start my business on this. On 1400 dollars? On 1400 bucks. Wow.

So you're in college. He's starting this thing up and you want to be involved with it. What do you do? Well, I had time and so John was ready to go.

He was ready to, he had found a little producer in Salt Lake City to produce the first kind of run of, of Kodiak cakes. And by the way, was he calling them that by that point? Yeah, actually by then he had created the brand, created the first product. And how did he come up with that name?

The way John approached it was what he really wanted something that was rustic, that was, you know, wholesome, that had a bit of a Western rugged feel to it. And so, you know, he had my older brother, Tim, my oldest brother, Tim. They were talking about it one day and kind of just brainstorming ideas and Tim said to John, he's like, hey, John, what about bear cakes? And we've got kind of hearing stories from our dad who lived in Alaska when he was in his early 20s on a survey crew and he tells these stories about Kodiak bears and that evolved into Kodiak cakes.

What did the package look like? So it looked pretty similar to what it looks like today. The logo hasn't changed a lot. It has a big bear on the front, brown, craft look, you know.

But what was different about it then is it was in a paper bag, like a printed craft paper bag. And it was like sewn across the top, you know, to seal it off. Oh, yeah, the bag was sewn. You had to like cut it off or take the string out.

Exactly. Take the string out. So if anyone is in a picture, right, there's that bear growling and it says Kodiak cakes. It's got like a sort of a maroon, rust colored circle around it with wheat.

And basically what it looks like today was what we made in 1995. Yeah. I mean, it's we've been just some subtle changes over time, but I mean, the bear hasn't changed at all for people. So tell me, how did you guys as you kind of started up this business, where did you go to?

I mean, would you just go door to door to little shops? Yeah. That's basically exactly what I did. So John had a full time job still.

So we had this product ready to go, which we stored in his basement. We made this little makeshift warehouse down there. Right. So this is his side hustle.

You were a student. Yeah. And where were you going to try and get people to carry your pancakes? Yeah.

So I remember the first day John went to work and I was going to go out by myself. So I started downtown Salt Lake and I started going into hotel gift shops. And I remember thinking, man, I have no idea how to sell a product. I'm just going to walk in and start talking to people, right?

Yeah. And so I started going to these hotel gift shops and people were like, hey, that's actually really cool. You know, leaving a sample here and I'll talk to my manager about it. Right.

And so, you know, we give business cards and follow up or whatever. So I started there and then just a few, like I remember I went into a flower shop in Salt Lake that had gifts and a furniture store that had gifts. And so that was kind of my first day out was right in Salt Lake. Huh.

You know, this is just like just going back to your mission. You're doing right? Yes. That's so true.

That's really funny. Because man, I was fresh home. I mean, I've been home a month. I was ready to go like that.

That did not phase me at all. Right. Walk into these stores. Yeah.

And so you start with just like hotel gift shops and small gift shops here and there. And mainly in Salt Lake or did you venture out of Salt Lake? Yeah. So the first day or maybe a couple of days I was in Salt Lake.

And then on December 1st, 1995, John and I took a trip to Jackson, Wyoming. We left at like 4 a.m., 4 or 5 a.m. We got in his car. And I remember he had this Mazda 626 and it would hold exactly 19 cases of cognac.

And the cases were big. I mean, they were 30 pound cases back then. And so, you know, we're putting like almost 600 pounds of product in his car. By the way, a Mazda 626 was a sedan.

It was a sedan. It's right. Yeah. So load that thing up with all this pancake mix.

And you know, so John and I, we get up there and we both just kind of went out and started walking into all these gift shops in Jackson, Wyoming selling pancake mix. So by the end of the day, we sold all 19 cases of product into it. Into these gift shops. And so, you know, we were like, yeah, that was a successful day.

So you would go in with a bag of pancake mix. Because normally you'd go like, you'd think that, you know, you'd have a sample, right? Like if you were selling soap or cosmetics, but you've got a bag of pancake mix. But you can have like prepared pancakes.

You weren't able to say like, try this pancake. Right. It was a bag of mix. That's exactly.

We couldn't make it right then. But what happened is these people looked at and they're like, this is the coolest packaging. Oh man, this will work great in here. But even then, I mean, for every 30 customers or 50 customers in a gift shop, 40 of them are there to buy breath mints or cigarettes or, you know, whatever they told by.

Maybe one out of 50 would buy the Kodiak case. Totally. So, I mean, how are you going to get any attention for it? Yeah.

I mean, honestly, that was tough. I mean, we did, we picked up a few more. We went to Sun Valley Idaho the next weekend and did the same thing. And I think we ended up picking up about maybe 50 gift shops in the first few weeks.

So we're kind of like, okay, cool. We got 50 gift shops. And then I think that was really one of the hardest things was gift shops. You don't sell a lot.

I mean, just what you were saying, you don't sell a lot in a gift shop. Yeah. And by the way, when they were placed in gift shops, how did it work? Would the gift shops just pay you when they sold the bag?

No, they would buy the case. So they would luckily pay us. So they'd say, hell take a case or two and then we'd give them 30 day terms or whatever. And then they'd pay us.

Right. And they were selling, do you remember how much they were trying to sell? Or they would sell the bag for? The retailer for?

I think that we sold those bags into the stores for $2.99. And then they would sell, they'd double it. They'd basically try to put a 50% margin on there and try to get $5.99 out of it. Right.

And in general, did you have any feedback from those stores about how sales were doing? Actually, yes. People loved it. I mean, people loved the product.

And for a gift shop, it was doing well. But the best feedback we started to get were that people started to write letters in. And that was just incredible. I mean, we started getting letters in.

One day, John got this letter from Tombow. The guy that does a piece of spokesman for Motel says. He lived in Alaska and he wrote the coolest letter. And he had sent a picture of him and his girlfriend in their cabin up in Alaska making pancakes on this cast iron griddle.

It was so cool. But these letters started to come in. And people say, hey, this is the best pancake mix I've ever had. Wow.

You know, how do I get more? But I mean, clearly, you know, you guys are not becoming millionaires. Right. Right.

Through the occasional gift shops and ski towns. And I guess after a certain amount of time, I mean, the stress of running the business becomes kind of overwhelming for your brother. Yeah. So I mean, after a couple of years, it was just, it was becoming, yeah, he was spending so much time at it.

And he was working full time and he had a little baby and he wanted to go back to graduate school to pursue an MBA and just to, you know, keep building his career. And this was taking so long. And one day he was, you know, he was in his basement just kind of thinking about how much he had put into this. And, you know, we talked about 1400 bucks from a truck he flipped.

And then he took, he scraped together everything else that he had from some retirement and some smaller contributions from family members. And it ended up in the 2000s. I can't remember exactly how much he had spent. But, you know, it was everything you had.

And for a 28, 29 year old person is like, so one day he's down there. And he just had a breakdown. And he just was in tears. You know, he's just sitting there going, man, what did I do?

Why did I waste so much time doing this? And he had all these boxes of pancake mixed still down there in that little makeshift warehouse in his basement. And he picked up a bunch of boxes and he just threw them against the wall. You know, and they just exploded.

And he really did. He just had a breakdown. It was just hard because he started, you know, the culmination of that, just realizing that, you know, I can't keep going with this. I've put so much time and so much everything I had.

And he worked on it almost every night for years, you know, three plus years on this thing. And so, you know, that's when he kind of realized I've got to just shut it down or, you know, find another path for it. He actually tried to sell it. That didn't work.

And so, you know, that's when he came to me and said, hey, Joel, do you want to keep going with this thing? Did you immediately say, yes, I want to take it over? Yeah, I'll run. Yeah, it was immediate for me.

It's probably funny when you're that age, you don't always think through the long term implications as well as you should. And sometimes that's good, right? Because if you do, then maybe you don't take risks as much as you would. But yeah, I mean, when he talked to me about it, I was like, absolutely.

I'd love to do it. And I had a real entrepreneurial mindset. I mean, I really did want to do something, started this someday. I just didn't know what was going to be then.

I kind of thought, you know, I'm going to go to school. Maybe I'll probably take a job for a while. And then maybe I'll look at what to do. And little did I know that it was going to be pancakes at, you know, 23 years old.

Do you remember what kind of revenue you guys did in that first year? You know, in the first year, I don't recall it was because it was November and December. But what I do remember is so, you know, when I took it over later in 1997, the revenue that year was $29,000 total. For the year.

For the year. Yep. And so we were selling just these, you know, these limited number of stores that aren't moving a whole lot of units per week because, you know, people would, they would get it on vacation, right? And then they'd go home and they couldn't get it.

But yet we could see that people really loved the product. And so it was like, man, if we could just figure out how to hang in here on this long enough and how to get some distribution going, this could work. So how did that, I mean, it's your brother, right? So it's, you know, in the family.

But did, you know, I've talked to co-founders, did you guys sit down and kind of formally divide it up? He said, well, you know, I started it. You know, you're going to get 30% or was it just kind of like, here you go. And it was very informal.

It was actually informal, but well, it was informal that way, but you know what we did? What we did actually formalize it. We actually made a little contract and John literally sold me the business for $1. So he basically gave it to me.

And I think, you know, I think in his mind, it was like, I'm going to shut this thing down. So what the heck? Give it to Joel. See if he can do anything with it.

And at the time it was, I was running it as a sole proprietorship, which means we hadn't even incorporated the business. So, you know, it was not until about 1999 that I actually incorporated the business. And then I went back to John and I gave him half the shares back. All right.

So you become sole proprietorship. By the way, you're making the pancake mix yourself or do you have somebody make it for you? Well, actually, you know, we did have somebody making it for us in Salt Lake City. They had the recipe, your recipe, and they would make it for you.

Right. And same thing, were you like hustling on weekends and because you were a student, right? Yeah. I was going to school.

I was working a part-time job. And I mean, for me, I wasn't, you know, I wasn't married. I had a pretty, I had time, you know, I didn't have as many obligations. And so I started to drum up more diff shops and just, you know, try to get as many accounts as I could and then started to think about, okay, how do we, you know, how do we get this into grocery stores?

Right. So yeah, I would work, I would work at nights on this thing every day. Yeah. This is the late 90s.

Did you think that this had legs, that this could be something really huge? Or did you think, well, it's my side hustle, but I'm going to probably pursue something a little bit more stable. So, yeah. Do you know what's interesting is when I first took it over, I thought, I mean, seriously, I was like, I'm going to make this thing go now, you know, but what happened was like, it became, the reality check hit pretty hard, pretty fast as I got into it.

And I started to realize that, holy cow, this is actually going to be a while. This is going to be hard. Yeah. And what were your, I mean, besides obviously money, what were the other limitations that you were facing at that point?

Yeah. Yeah. Right. Money was huge.

We had no capital to put into this thing. But you know, I think the other real limitation was I was 23 years old with no experience. Like I had zero experience. The only thing I really had was a lot of enthusiasm, you know, and some confidence, which is good.

But man, I knew nothing about how to get a food product off the ground, you know, nothing. While you were, I mean, running this as a sole proprietorship and then there's a small business and still just to you in the early 2000s, right? Right. How were you actually earning a living if your revenue was still fairly low?

So I, right out, well, during my senior year at the University of Utah, I took a job working for a management consulting firm. It was right downtown Salt Lake. And after I graduated, they wanted me to take a full-time job there. And I told them, I said, look, how about if I work 30 hours a week and then that way I'll still have time for my little, my little side hustle, the pancake business.

And so they were good with it. So I worked there to make money. And then, you know, on the side, I was slipping cars to try and make extra money. Nine cars detailing.

I'm fixing them up. And that's how you make money. Yeah. I saved our bacon, man.

Because I was married at the time. I got married fairly young. Yeah. Utah standard is probably average.

I got married just before I turned 24. And did you, were you telling people, like, would you talk about this to people? You would say, yeah, I got this pancake mixed business going, like the job. And with friends, were you talking to everybody about it or were you kind of quiet about it?

You know, I was never, like, I would talk about it just if people would ask, but yeah, I talked about it. It was fun. And I'd bring it up. You know, and I wasn't shy about trying to go and get publicity either.

And I really did try hard to go and get publicity. And you just couldn't? No, I actually did. I actually had some pretty good success with it.

I remember somebody one day said, hey, Joel, you could probably go get a newspaper article on this. And this is like 1998, 1998, 1999. The internet's out there, but not a lot. So I'm like, okay, I'll see if I can get a newspaper article.

So I remember I called up the Deseret News one day and I got this. It's a main paper in Salt Lake. Yeah. Exactly.

Yeah. Deseret News, big newspaper. I got the food editor on the phone. And I just started telling her my story and our story about this pancake mix.

And she said, oh, that sounds really cool. I may want to do a story on you. And I go, I'm like, what's a press release? I literally said that to her.

And she goes, just type it up. Just type up the story. You know, kind of what you talked about. Send it to me.

So I did. And then she called me up and she's like, hey, we're going to run a story on you. We're going to send a photographer out. And you know, I was at work this one morning that the story hit.

She told me it was going to hit. And I can't remember what day of the week it was, but she told me in advance, hey, we're going to run the story. It's going to hit Tuesday or whatever. And so I'm sitting there at work.

And also I get this phone call from Dan's grocery store on foot, he'll drive in Salt Lake. And the grocery manager calls me. And I'm like, oh, you got to get over here. We sold out your pancake mix by 10 a.m.

And we have more. And I'm like, oh my gosh, you got to be kidding me. I didn't even think about it. Like getting more product in the store.

I had no idea what this newspaper article would do. And so I told my boss, I'm like, um, I got to go. You know, so I left work and I went home and I grabbed because I was delivering the pancake mix into these five grocery stores, these five Dan's grocery stores, among everything else I was doing. But that was so they called me up.

And I went in and I reloaded the shelf. And I and she's like, I'll take like 10 cases. Okay. And then usually I go in and take one case a week or last, you know, every other week.

And Dan's was your biggest distributor at that point? In Salt Lake, it was. We had my brother John had gotten the product into UFC grocery stores up in Seattle prior to me taking over. So they were our biggest.

All right. So it is 2000. And because you had not taken any outside investment at this point, I mean, maybe we're not able to attract outside investment at this point because you were so small. Right.

But I guess a friend of the family gave you like a check for $13,000. What's the story about that? So yeah, this guy, his name's Gary Beener. My parents loved Kodiak kicks and he'd buy it at dance down the road.

And he would, he started talking to us and he's like, Hey, I love this pancake mix. This is awesome. You need investment money. And, you know, John and I, we would talk, I was running it, but we would talk all the time.

And I remember thinking, yeah, it would be really nice to get a little bit of capital that, you know, try to do some, do some advertising, try to do some marketing and just try to help kind of kickstart this little business. And so Gary, we all started talking and Gary said, all right, guys, I'll put 35,000 bucks in for, I can't remember. It's like 18% of the business or something like that. He's like, let's start with 13,000.

And when you need more, you know, we can, we can give you the rest of the money. So I went to Gary's house one night to pick up a check, you know, so I'm not going to store a chat for a little bit. And he wrote me a check for $13,000. And man, I, I had never seen that much money.

Like, I walked out of there. I'm like, I was probably, I was like 24, something like that, 25. I walked out of his house just going, scared. Like, man, I've got to get this guy's money back.

I've got to do it. When we come back in just a moment, Joel starts making cookies to sell more pancakes and nearly loses everything after a failed promotion, put some $50,000 in the whole. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.

And one more thing. The New York Times best-selling book, How I Built This, is now available. It's a great read and a great gift for anyone looking for ideas, inspiration, wisdom and encouragement to have the courage to put out an idea into the world. It's filled with tons of stories you haven't heard about how some of the greatest entrepreneurs you know and respect started out at the very bottom.

Check out How I Built This, the book, available wherever you buy your books. Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's the early 2000s, and Joel Clark has brought in his very first investment in Kodiak cakes, a check for $13,000, and he started to gain some traction getting his pancake mix into stores in and around Salt Lake City.

I managed to get it into Smith's grocery stores around here. That was 70 stores. And then the distributor for these dance stores took it in. And then we got some Albertson stores.

So I think I was able to get it into maybe around 150 grocery stores during that year. The revenue was around. I got it up to about $150,000 in total revenue. And it was one product.

It was pancake mix. That was it. Correct. One skew, like one product.

Yeah. I read that around this time. You actually decided to go attend business school in the UK at Oxford. I mean, you got someone to keep the business going in Salt Lake while you were gone.

Yeah. And then what? You just came back to Utah and picked up where you left off. I did.

Yeah. I came back to Salt Lake and I actually went back to the consulting company. Oh, well. So you went back to doing consulting because it was a steady income.

Right. But still working on Kodiak. Yeah, I was. I guess around this time, it's like 2003, you start to think about jumping into Kodiak and just doing it, just focusing on that business.

Yeah. I really wanted to. So like after I got back from school, so I got home in the fall of 2002 and went back to the consulting firm for about an almost two years, just, you know, over a year and a half. And while I did that, my brother-in-law ran at part-time out of my in-laws basement.

So I'd help him and we'd work on it at night together and he kept it going during the day. So in 2004, I had been working on sales, you know, kind of part-time. And I'd been working with Safeway. And I sent some samples out to this buyer and he was Donna Sullivan.

She called me and she's like, hey Joel, we're going to bring your pancake mix in to 1200 stores. It's about to like fall out of my chair. Wait, let me just get this straight. How did you, how did you pitch your product to Safeway?

You just kind of blind cold call them. Yeah. It's exactly right. So I would cold call buyers.

I'd just get on the phone. I'd call the headquarters office and say, hey, who's the buyer for pancake mixes or whatever? And I just sent her samples. I don't even know if I spoke to her initially or if I just left a voicemail and sent samples.

Then when she called me and told me she wanted to bring it in, I had never even met with her. And usually you need to meet with these people. Yeah. And I'm just curious.

I mean, when you send some, like we've done lots of products like Tate's cookies or Angie's Boom Chicapop. When you send a sample of that, all the person has to do is open the bag and eat it. Yeah. With your product, like somebody has to take that to a kitchen, add water and make pancakes.

Like that's not, and they must get hundreds of pitches every week. People sending them all kinds of things. I'm just surprised that they actually made them and tried them. Totally.

The odds are kind of piled up against you, right? When you have no one knows who you are, you have no track record. What we had going for us was great packaging. It was so unique.

And you know, finally Donna calls me and says, hey, Joel, we're going to bring this into 1200 stores. I'm like, but we've never met. Do you want me to come down and meet you? She's like, no, we're beyond that.

We're good. We're going to hit. So that right then, I mean, 1200 Safeway stores, this is real. So I'm assuming this is when you decide, okay, I've got to focus on this whole time.

Yeah. So when that happened, I'm like, okay, I think I can live on this. So, you know, but keep in mind, it's once you, right? And so it sounded like awesome.

But I really didn't know. I didn't have a great feel for how much I was going to sell. And what kind of order? What was the amount of money that they were going to spend on this?

It was probably in the realm of 20, 25,000 bucks. Because you're thinking 1200 Safeway stores, you're going to millionaire. No, no, this is like a 20, 30,000 order. Yeah.

Because you're still, I mean, you're not sure that this business is going to make it at this point, right? Like at this time, you were still flipping cars and you started to flip houses. And I read like around this time, you actually started like a whole new business, like a cookie company. What was the cookie company?

So it was called Ben's Cookies. And it's a company that exists in England. It's a great business, great product. And my wife and I were regular customers when we were in graduate school over there.

And so one day I sat at a coffee shop with the owner before I was leaving grad school to me and I said, Hey, I'd love to start one of these in Utah. So you started a branch like a brick and mortar Ben's cookies shop in Utah? I did. We opened up two of them.

And you put all the money behind it? No, I put some. I had a lot. So I borrowed the rest.

I had a little bit left on my student loan to go. And so I took the rest of my student loan and put it towards it. And then my partner put the rest. He lent the business the rest of the capital to get started.

Ben, your partner. His name is Chris. Oh, Chris. I was called Ben.

It was the original founder who started her son's name was Ben. So she named it after him. I'm looking at website now. Yum.

So we ended up opening one in Oregon, which is about 45 minutes south of Salt Lake. And the one in Oregon just didn't do well. We had to shut it after a year and a half. And then the one in Salt Lake did better.

I mean, we kept that going for about 10 years, but it was hard. I mean, that was another site hustle that I had added. I was spread thin and I was trying to do Kodiak case. And when I first opened that store, I was still working in a consulting world.

So that was just, I bit off a ton, just trying to do too much. Wow. I have to imagine you lost. So I had to do that.

So I had to do that. So it was just, I bit off a ton, just trying to do too much. Wow. I have to imagine you lost some money from that venture.

I did. That was super painful. Yeah. And my partner lost a lot more than I did.

So it was painful for both of us. And this plan was to bring you more income for your family, but it wasn't working. I read that at one point. You went to a bankruptcy lawyer to explain your option.

Yeah, I did. So what happened in 2007, let me back up just a bit. So in 2004, my dad joined me out of retirement. He was 65 years old.

And he's like, hey, Joel, I'll help you. Let's do this together. He was a PhD in education. I've been teaching religious studies for the church.

So not a whole lot of business experience. Not a lot. I mean, what's cool about my dad though, he always had a little, he had a side hustle all those years because he just, he didn't make a lot of money from teaching. So my dad and I have managed to build revenue up to around 800,000.

So we had some pretty good success over those years, right? And 800,000 is still pretty small, but 2007 was a hard year. I mean, I think what happened was I actually tried to sell the business in early 2007. It didn't work.

Gas prices went through the roof in 2007. Egg white prices went crazy. Wheat prices went up. So I was just, we were getting squeezed.

And our margins were getting, you know, just getting hurt. And so when we were getting squeezed, I remember this phone call on Valentine's Day from our producer and he goes, the guys are manufacturing Kodiak cakes. And he's like, Joel, are you sitting down? We got some bad news.

He's like, we have to raise your price by 11 and a half percent today. And I was just floored. I was like, you got to be kidding me. It's another, I don't know how I'm going to make it.

And so, you know, it was Valentine's Day. So I didn't tell my wife we went to dinner that night. And I didn't want to tell her because I didn't want to wreck the night because I was so stirred up and just concerned about it. And I decided that I had to quit Kodiak cakes.