What stands out to me about themes over time of navigating uncertainty or growth or opportunity is one I'm constantly thinking about: where is the team and where are the individuals in the team on the journey? And this is what hiring managers are looking for too. Where are you going to crush it? Because I'm looking for you to add value, and can you learn and grow here? Because I'm not hiring you for one minute, one day, or one year in most cases. In order to be deep in e-commerce in a dedicated site, I needed to go down the rabbit hole of education. And so this is where I did follow tradition: technologically enabled learning opportunities, listening to performance marketing podcasts because we marketed on the internet, going deep on supplements and the regulations that are different than food and beverage. There were a few things actually that were very new to me. One was solely owned e-commerce. The second was a subscription business. AG1 is a daily health drink and as a result lends itself to a subscription. And then maybe the most stark of the differences is it's a single product company.
Kat Cole, CEO of AG1, welcome to Change.
Thank you. Thanks for having me.
Excited to have you. One thing that when I think about both of our journeys, and I've known you for quite a while, both of us experienced I think some adversity earlier on in our lives. And when it comes to founders or executives overcoming crisis and being good wartime CEOs or wartime executives, do you think that's innate or do you think that's something they can learn?
Oh, it can be learned, but it takes intentionality. And I've had this question, interestingly, when I've spoken at some top tier universities and business schools. And in those programs, you often have people who are, you know, first generation in college, like such inspirational stories. And then you have other people who are like legacy, whatever you call it, students in that institution. And I've had them come up to me, which I think takes a lot of courage, and say, 'Look, I haven't had that hard of a life. Am I screwed? Because, you know, I don't have that fire.' I'm like, no, no, no. It is learnable. But what is required to teach it is to put yourself in situations where you are unpopular. Unpopular. And I choose that word very specifically. I didn't say uncomfortable. Unpopular. And then there's a few other un-words. Unfamiliar. You don't have relationships. Be the new person, right? The cousins of whatever unfamiliar, unpopular, not embedded might be. When people have grown up in a situation where they are unex— right? Something other than what people in a more comfortable majority in their group are experiencing. It shapes you. For most people, not everyone, but for most people, it builds a level of resilience, grit, humility. If you've faced rejection, sets you up pretty well for business. Certainly for being a founder, you have had to find sources of your sense of self that go beyond the masses, the mob, who's popular. And if you can make it through those stages and come out loving yourself, not feeling ashamed of your background, but loving yourself, seeing the power in what you've gone through, that's fuel for greatness. So for people who haven't had that shaping them like water weathering a rock, got to go put yourself under a pressure washer. There is no shortcut. There are books, there are podcasts, there are leaders who can coach you. Absolutely. But there is nothing that will do it more quickly and more deeply than putting yourself in a place where you're not known and you still have to deliver an outcome. And I experienced that when I was very young. I was traveling around the world opening franchises when I was 19 years old. And between 19 and 20, I was in I don't know how many countries, many. And every time I would go to a new country, I would show up as the official corporate representative there to organize the training for the restaurant to allow it to get prepared to open and in many cases get the restaurant fully open. But I'd never met those people in my life. I'd show up. I did not know the hourly employees. Of course, they live in that country. They just got hired. The training team that flew in from all over the country or the world were often people I'd never met before. So now my team, I'm having to build trust, build relationships, get to know them, set expectations, and manage them. Then the team we're training are people we've never met collectively. And we were only there for on the low end 20 days, on the high end 40 days. I'd spend 20 to 40 days in a country to get the restaurant prepared and open. And then once it's open, you leave a training team behind and go to the next one. I had to do that over and over. It was Australia when I was 19 and then it was Mexico when I was 20, Argentina when I was 20, Gatineau, Quebec was a very difficult and interesting one. And so I keep showing up and I don't have people who know me. I don't have people who are like, 'Oh, that's just Kat. She means well.' It's the most brutal leadership mirror when you have to lead a team and they are reacting to you on your surface. And after two or three or four openings, there were certain things that went well consistently that I could say I probably have something to do with that. I'm the only common denominator. And there were definitely things that did not go well. And I'm like, it is either caused by me or happening because I am not doing something that I should be. I am the only common denominator. And the first opening, you're like, ah, it's probably the franchisee. They don't get the concept. And then the second country like, well, it's a totally different country and culture and the food systems are different here, the outlets are different, like it's them, not me. By the third country, you're like, 'It's me.'
For sure. Yeah. I mean, to reiterate what you're saying, I think if people think about someone, a friend that they had growing up who moved around a lot as a kid and what they're like today as an adult, the chances are like they're very adaptable and they understand like EQ and communications because they had to make new friends everywhere they went.
That's right. And if they didn't have to make new friends anywhere they went and if they did not successfully make new friends, chances are they have something else that's driving them. And at this point, you know, they're figuring out another way. So, what does it look like to shape this? If you're in a company, ask to go lead or be a part of a team you've never met. Volunteer for roles where you're going to be unfamiliar and uncomfortable. And you can imagine all the ways this might show up. Volunteer for a nonprofit. Go knock on doors and fundraise. You know, anything that you can do to put yourself in a position to be unfamiliar and maybe not someone everyone's welcoming with open arms or that doesn't have the first invitation. And do that a lot and do it often and watch your confidence grow, your calm grow, your grit and resilience. And then you start almost inviting it and looking for it. It's very scary for people who have not experienced a lot of rejection because they think they're bad. They think something's wrong with them. And it can be something people deeply and wrongly internalize instead of this is just part of the journey. And when you see it that way, it's like no big deal. Doesn't slow me down. One more no is then I get that much closer to a yes. But if you haven't experienced that, it's really tough to lead in those environments.
I think I want to highlight something that Josh Kopelman asked me when I had a conversation with him like six years ago and he said, 'How do you like to learn?' Now, to take that even further, if you unpack how somebody came up a curve at whatever job it is that they're at trying to attack the thing that they don't know and you hear an answer like that, hire that person right away. Because like if they are a learning machine, that is exactly what you want in the seat to try to make big decisions day in and day out.
And for years I've said learning is my currency. It's why I said yes to going to Australia when I didn't have a passport and had never been on a plane. And that played out many, many times through my career. And it was a little bit of playing into the opportunity with AG1. I could have run much larger companies. I had the opportunity to do so. But there was something about the intersection of a product that I was so deeply passionate about that the more I learned, the more excited I got. The quality is even better than I thought. The opportunity was even bigger than I thought. I only appreciated a slice as a customer. And then meeting the team and seeing the opportunity to push that into the future. Seeing an understanding as a mom, as a woman who is heavily marketed to by this industry, where we needed to take the business with investments and science and human clinical trials and quality, like it was just so exciting and it's where I believe the consumer was going, like real health ownership. So to me, while there was this not hesitation, it was just this question of wow, the business is smaller than what I've run. I could have run much larger companies, but the opportunity to come in and bring what I know. But to your question, learn like I want it to be hard. I'm not here for easy. That's how people atrophy their brains, their muscles. Like you atrophy when you don't have hard. You know, you've had Cody Sanchez on the pod and I just love her and she always says, you know, choose your hard. I say the phrase I've used over the years is pick your poison. There will be poison. There will be hard. It will come at you or you will choose it. I'd at least like to have agency over it. So, this felt like the right amount of exciting and hard, type two fun as the endurance community calls it, as I've learned from my husband.
Amazing. Kat, you run AG1 now. It's over a billion dollar company. What do you think you've figured out about building teams that other people have not?
I don't know if I figured things out that others haven't, but what stands out to me about themes over time of navigating uncertainty or growth or opportunity is one I'm constantly thinking about: where is the team and where are the individuals in the team on the journey? And by the journey, I mean what have they been exposed to? Like if we're navigating a macro environment crisis, have they ever lived through that? Do they even have the experience or the reference set to navigate this? So that helps me communicate in a way that leverages wherever people are on the journey to the betterment of their performance and the company. So I'm very thoughtful about people's experience and what they bring to the table, which requires that I know them. And so I do my best, tougher and bigger companies clearly, but to get to know people, to understand what they've been exposed to, where they've been, and to leverage that in coaching, communications, hiring, and leading. So that's one. The other is again, this is not necessarily a novel insight, but I act on it, is all about the team and the company and the business are only as strong as the weakest links on the team. And so I just I think about it a lot. I talk to people about their performance, about what the company needs, what the company needs now, what we need in six months, what we need in 12 months, and where they are on the journey to deliver that. And then I guess finally is just I listen, you know, as much as I can. And the first two themes I shared are a lot about delivering or executing or talking or from me to them, but the listen piece is just as important.
You've had a lot of success in recruiting executive talent over the years. A lot of your former employees are now running other large companies. What do you think it is about your process for selecting executive talent?
Some of the people that I've led, and what's coming to mind is leaders that I led at Focus Brands where I was for 10 years, and almost every one of my direct reports are now CEOs of companies that are similar size or larger than the brands they ran when they reported into me, which is so cool to see. Maybe a quarter of those were leaders I inherited, so I didn't hire them. Someone else had the insight to bring them to the company, but I coached them, I partnered with them, and in some cases I helped them exit the company either by their own choice or ours, and it led to their next great thing. So, I think that's important to acknowledge, but there's another big chunk that I did hire, and there's an even deeper pride, you know, when you know you interviewed someone, you remembered that process, you brought them in, you saw them go through the honeymoon period of being with a company or a leader in a brand, and then watched them mature and navigate what occurs over time, the ups, the downs, not just the fun and the new. And some of them have stayed and taken much larger roles in that company. Now they're presidents or group presidents, and others are CEOs of big businesses. So out of both of those groups, some things that come to mind are that idea of helping people know when it's time to double down and when it's time to go. And I don't just mean time to double down or go relative to their employment with the company. I mean investments, killing your darlings in the business, being incredibly thoughtful and intentional about where we invest, what fires to let burn, when to pound the table, when to support them, when to argue with them and help them see a different perspective. So, I guess what just comes to mind is just being in it with them and celebrating their strengths and putting them in a position to be successful, but being the person, the partner, the coach that will tell them things that other people won't tell them. That will tell them they have spinach in their teeth and boogers in their nose and that they shouldn't have said what they said in a meeting because it's not serving them. And to do the opposite when it's warranted as well, which is to celebrate them, to put them on a platform to showcase their talents, and make a bigger impact to the company.
And you mentioned earlier that listening is a huge part of the job. And I imagine that there's a lot of listening once you're already managing someone and understanding where they come from and why they behave in the ways that they do. How much of that comes in the recruiting process as well?
A lot. Not just listening to the recruit or the talent that I'm interviewing, but listening deeply to references, people who've worked with them, asking questions that help me get insight into something deeper. So, one of my favorite questions to ask, especially for senior talent, and this is even more important if I'm interviewing someone that's been at a much larger company than the one I'm interviewing them for, which happens a lot in venture-backed companies. You want talent that's been where you're going in many cases, not all. And yet there's a downside to that because if they've been where you're going to a larger scale or to a state of greater maturity, they are accustomed to usually a different set of resources. And so I like this question, which is the 'if not for' question. So I ask about their skills, what they've accomplished, their results, and then I ask them to break it down. What were the key enabling resources that you recall having access to? And tell me about those. Tell me about your team. Tell me about the technology. Tell me about the access to data. Tell me about the research, whatever it might be. And then I want you to think about if you didn't have those things or didn't have them to that degree, how do you think your results might have been altered? If not for those enablers, how might your performance have been altered? Or said another way, how else would you have gotten to the result? So, I'm looking for resourcefulness. I'm looking for humility and respect. I'm also looking for are they going to understand when they come to this company? Are they going to be able to identify certain things that aren't present that they need? Do they even know what enabled them in some cases? And these aren't deal breakers, but they help me create a match between very senior talent and what might be an earlier stage company or team.
I find that to be a huge issue in early stage startups. They go out and they recruit someone and they only ask about, oh, what did you accomplish, and not actually around the how did you accomplish it. And it's amazing how many people come in and like they did well in their last job, but then when they don't have the resources, implementing new data infrastructure or the tools, even the tools that they used at their last job, like feels like it's a Herculean task.
Of course there are variants, but one of two major paths or scenarios. One is they come in and just try to build an empire, which is not financially prudent for potentially an earlier stage business. So they just want to go from zero to 100. They want to build exactly what they had. Then you have the other path, which is they are so unaware of the enablers that they come in and they are delusional about their ability to deliver whatever it is they think they can. And then there's a massive culture clash over time because sometimes it's culture or it's simply the funding mechanism of the company. And I've seen this so much in consumer where if someone comes from a company that's had retail stores as a key driver and ecom was this business that they oversaw or contributed to, but it wasn't the bread and butter of their company. Then they interview for a company like AG1, which up to this point has been exclusively DTC. Not only exclusively DTC, exclusively our.com, drinkag1.com. And so when that is everything, it is a very different financial animal and operational setup than if you have cash flowing assets that are profit generators that then feed other channels. So it's a small channel example, but I see it in supply chain, data, CTOs, even presidents and COOs who it's almost a heavier burden when they show up to a company if they don't appreciate that gap between resources they've had and resources they may or may not have. And then there's the other side, which is earlier stage high growth companies have things that are really special that the big ones don't. So, it's not just you had a lot of cool stuff and now you don't have these toys. It's do you respect and understand the differences and can you use that to your advantage to then lead in that environment at that time while still trying to pull the company forward to the future, which is why you're being interviewed in the first place.
Totally agree. And I want to come back to the AG1 transition in a minute. But when you think about your process of recruiting, is there a question that you feel like you ask that many other people don't ask?
There are a few. One on the personal level, if I get to that level of interview with someone, and usually we have a deep, sometimes annoying to the candidate, thorough interview panel and process. I mean, there are seven to 10 people who might interview, especially leaders, because we have people who help us with just a level up perspective or they can really come in and help level up the company, technical experts in that area. So by the time they're getting to me, depending on the level, I'm trying to dig much more deeply into culture, grit, you know, how are they going to show up? And so, one of the questions I'll ask is, 'Tell me someone who's really close to you. Tell me about them. They know you intimately.' And usually it's a spouse, a partner, or a best friend. So, they tell me about this person. I ask a little bit about them. How do you know them? How'd you meet them? Helps me get to know them as well. And then I'll ask, 'Tell me how they would describe your bookend qualities or characteristics. What is one thing about you that absolutely annoys them to no end? They love you, but it annoys them to no end. And what is the other thing about you that when you're not in the room, they would tell me, This is your magic. This is your superpower.' Then I just let them talk and listen. And it's very interesting. It's better than saying like, 'What's your strengths and what's your weaknesses and what do you optimize for and what have you heard in your 360 reviews?' It tends to create a conversation that I then would bridge to the professional environment. So, how does that show up when you don't get what you want in a moment? How does that show up when you have a point of view that is going against the status quo of incumbent leaders or the traditional way the company has shown up? Because often you're bringing someone on to drive change, to drive improvement. So then I'll keep bringing that into how does that show up when. And so that's an interesting one.
I love that. It sounds a lot like the book Topgrading kind of describes, you know, their interview process. And I find too when I ask founders that question, like how would your friends describe you, you know, your strengths, your weaknesses, it also shows off a level of self-awareness or lack thereof. Which feels very important when it comes to hiring or investing in founders.
Yes. I can remember once I had a very senior executive, someone interviewing for an SVP role who really struggled to answer the question, and only one person out of however many interviews. And you know, again, none of these questions are deal breakers necessarily. Sometimes you go, maybe they're nervous, right? You give people the benefit of the doubt, but it disables my ability to draw out what I need to see to make a confident decision. Ideally though, they've been reflecting on those types of things throughout the course of their career if they're at the level that they're interviewing with you to be an executive. I would say when I was running restaurants and opening stores and a much younger leader interviewing much more entry-level talent, and even then I asked a version of this question. It just has slightly different implications and how you pull it through.
You mentioned deal breakers. What are some of the red flags that pop up in the interview process?
One red flag is when I'm going into this bucket of 'if not for' questions. If I don't see a level of humility and or even curiosity about enablers for their outcomes, especially if they're a leader, especially if they're someone who has to work deeply cross-functionally across the company, that's a red flag. Another which feels obvious and you would think you would only see this at more entry levels of roles, but I've seen it at very senior levels where let's say someone's interviewing for a customer experience role and they are going to fill a role where they are going to manage and improve the entire customer journey. And I'll ask a question and their answer makes it very clear to me that they have barely even gone on the site and gone through the customer journey themselves. And so when there's not that chutzpah, that initiative, that ownership mentality, you contrast that with the other side that's major green flags where people have gone through the site, talked to customers, taken video, done testimonials. I mean, the contrast of effort, just effort that says, 'I'm really interested in this. I want it. I'm hungry.' But it's also a sign of just obsession with your craft. And so when that's not present or is very weak or light, it is a deal breaker for me. It's a red flag, a purple flag, whatever is the worst flag, because I put it against the many times where I see people do the opposite. And this is the interview, right? This is when you're supposed to be like winning friends and influencing people. And so if you're not showing up with that level of it is an entrepreneurial spirit, it is an owner mentality, an owner mindset, that's not going to work on our team. May work somewhere else. It's not going to work on our team.
One thing I think a lot of founders struggle with though is, you know, you're an early stage founder, you're maybe post Series A, post Series B, and you're like, 'Okay, I'm going to go hire a chief revenue officer.' And you're going out and you're doing outbound, you're networking, and you try to find somebody who is maybe out of your league, you know, and I'll throw quotes up. How much work should they really be doing in the interview process versus you trying to sell them?
Usually it's a bit of a dance if someone's a bit of a stretch. Of course, sometimes the selling them has a lot to do with convincing that incredible talent that the company is solid, on a great trajectory, that it's not more of a risk than they may perceive. Right? So that part I do believe founders should be able to do an excellent job of selling the dream, the vision, the mission, and where are we at this stage? So you can make a decision eyes wide open. On the other side, once you get into that, if that candidate's comfortable, then it should be more sell and tell versus the pull and convince, especially after a second or third interview. If you're getting to that point where you're having dinner and you're talking and you feel like you're begging, for lack of another term, or pleading for them to come, there's a difference between inspiring and convincing and having a disproportionate interest in the match of the talent to the role. In many ways, I think a good interview process and a good recruitment process goes from a pull where you're pulling the executive in trying to get them interested in what you're doing to a push process where they should be doing the pushing to try to get the job. And it doesn't matter about the level, honestly.
I was talking to your husband, Dain, and he had mentioned that probably your biggest strength is that you are an amazing wartime CEO and somebody who handles crisis very well versus peacetime.
Yeah. Yeah. I haven't lived in peacetime in quite a while.
So, what is it about leading in crisis that gets you going and how do you become successful when it comes to leading in crisis?
I made the joke about I don't know if I've been in peacetime because many, many years ago I learned to redefine crisis because I've seen what real crisis is. I've done humanitarian work in Eastern Africa. I've been with people and teams experiencing deep loss. That's real crisis. But in terms of the wartime CEO analogy, I have learned to reframe crisis not only as a very real imminent threat that either our company or our industry or our consumer are facing. And so, yes, I'm very good in those moments, but I've also learned to redefine a moment that might not be an obvious crisis to other people, but make it very clear that if we don't do X, we will be facing some type of deep, deep challenge. And it's tough to get people motivated when things are, in some cases, when things are really, really good because of course like most of the things we're doing are probably leading to things being good. But in fact you might be having a great quarter, a great season, a great year driven by factors that are actually not of your doing. I remember when I was a waitress. I was a Hooters girl and there was a manager, a general manager, and I remember the corporate office coming in in their khakis and their polos with their Hooters logo and their clipboards and they were giving this guy like the manager of the quarter award and he was awful. Awful. No one liked working on shifts with him. We had many great managers by the way. So he stood out as being just a poor people leader, a poor communicator. He was always out back like one of those. And so here comes the corporate office celebrating this guy. Why was he being given the manager of the quarter award? Because sales had been up quarter after quarter in this location. Sales up equaled manager good. In fact, there was just a ton of construction going on around this particular location. And construction workers like chicken wings and they love the concept. The restaurant was busy not because there was a great GM. In fact, there were people quitting left and right. The assistant managers who were fantastic were on the verge of leaving. He made their jobs very difficult. If you were in the business, you saw that he was actually impairing sales being even higher and probably affecting profitability to the negative at that stage, but he was being celebrated. And so, of course, things look good. So, no one would call that a crisis. No one would say there's a management problem, but there was a deep management issue in that business. So in that situation, if the regional manager had been closer, had been more involved, they would have gone in and despite sales being up, said, 'We have a problem. We need to replace this manager. We have a crisis on our hands.' And acting with the motivation of that would be driven by the potential of the bad stuff that could happen or taking seriously how much better it should be and the opportunity cost that's missed. So while I am a very strong experienced wartime CEO, someone who can navigate a ton of uncertainty and bring calm, clarity, and progress, I've also learned I don't want to only lead tough things at tough times. I want to help people be motivated in the same way even when things are going quite well. And I've been running a company where things have been going quite well for a long time. But if you're in our meetings, if you're in our team, you would feel a wartime energy that is focused on how much better we should be. Continuous improvement. What are we still missing? What do our customers deserve that is even more than we're doing today? And I remember, and I've gone through a few very literal industry, what people would call wartime. So, one would be the Great Recession. I was an executive leading restaurant companies at that time. I was a young executive but I was in the boardrooms and it was incredibly difficult. Then certainly COVID is another example of that where I was running franchises and restaurants and the industry was decimated. I mean 100% of our revenue disappeared overnight. A multi-billion dollar revenue, not valuation, revenue company evaporated. We had some corporately owned restaurants and a few large franchises, but mostly small to midsize operators who were in different cities, different countries, different legislations, whether it was masks, gloves, sanitizing, hours of operation, dine in, dine out, it was just a mess. There was no clarity. If there were moments of clarity, they were micro and they were very localized. They could not be translated to the level of like organizational clarity that people are accustomed to. And so in those moments, what I've leaned on is this ability to just get really clear of what are the few things that are the most important. In the case of the pandemic and the restaurant industry and having your entire demand gone, was we have two priorities or two top focuses. One is people and the other is cash. That is it. If what you are bringing to me does not optimize the outcomes for both of those right now, or one very strongly not at the expense of the other, I'm not talking to you. No one's talking to you. Not the email, not the call. Like you just have to be that clear. And then make it clear all the way throughout the organization because how they care for people and cash is very different in their role versus me with the private equity firm and the CEO at the time. I was the president and COO and the presidents of the brands that I managed, nine presidents dealing with this. So this clarity and then sturdy leadership. Sturdy leadership doesn't mean robot. It doesn't mean not emotive. There were many times I was teary on calls, that I cried at night because you just feel the weight of the wartime. You feel it and you have to feel it. And if there's not an indication that you feel it, it's also very unsettling for people because then they think, are you not experiencing this the way that I am? Are you insulated in a way that I'm not? And that certainly showed up with franchisee-franchisor relationships globally during this time. So clear priorities, what are we optimizing for? Sturdy leadership, humanity, and then just executing against that and communicating. I have learned to be a thorough communicator and there are times where that can be a little much, but for the most part it builds teams who trust a leader even amidst an environment where the leader doesn't have the answers either.
