All righty, we are here with Kat Cole, CEO of AG1, and we're going to set a record for things that have three syllables or three letters. Boy, I'm on top of it today. Kat, thank you so much for joining. How are you doing today?
Great. Thanks for having me.
Of course. Of course. Thank you so much for making time. You know, it's really cool. Like, I love whenever I have a guest on, I love listening to them on their podcast and looking at their LinkedIn and learning more about their background, just so I know a couple questions to ask you. And for you, it kept coming back to Hooters and Cinnabon. So, two iconic brands, very different realms. So, of course, I want to talk a little bit about that before everything with AG1. Hooters is near and dear to my heart. We actually have, you know, we used to go to Myrtle Beach growing up, and there's some big family picture we have, like including my grandparents and cousins and all, like a huge family picture that for some reason we took outside of the Hooters in Myrtle Beach. So it's like, if you look at our family lore, you know, the Hooters brand is there. Also, I know growing up, I was nervous whenever I was talking to a Hooters waitress there. So let's hope today I'm able to get over that, and as a former waitress yourself, things can be smoother. So, on the Hooters front, obviously, you know, there's so much we could say about the brand there, but what's something about the Hooters brand or the Hooters business as a whole that you think most people would be shocked to learn?
I mean, the big one, look, it's a very mature brand. It was born out of the early '80s. It's gone through many iterations of the concept, but because it's known for female waitstaff, there is this assumption that, oh, there are these women, these girls who are waitresses, and then the men run the place. And actually, women ran the company. One, like 80% of the hourly workforce was female. Every person I worked for in my 14 years there, until I worked for the CEO, was a woman. So you just think, 14 years, assistant managers, general managers, marketing managers, promo managers, regional managers, and I had incredible male mentors in the company as well. But it's pretty wild to think about an entire career of that duration that is predominantly female leadership. And certainly that contributed to not only my story of seeing incredible examples of women in leadership, but many others. My story is not unique. There were a ton of former Hooters hostesses, waitresses who moved up into salaried roles, management roles, became franchisees, became executives like I did. I'm one of many, actually. So I think that's the thing that might surprise people.
Yeah, it's really, really cool to hear. And from your standpoint, I saw, I think you were 26 when you got your first VP role there and moving up there. So what do you think made the difference for you to go from, you know, working at one location to actually being like in charge of, you know, training and development across, you know, all these places around the world?
Well, first, I think, again, it wasn't very different from my predecessors there. So many of the executives came out of operations, came out of running restaurants. So in that system, it wasn't exceptional. But it is exceptional when you compare it to many other people in different businesses and different industries. So I just want to give credit where credit is due. Like, the business was just a talent machine, pulling people from the stores into roles where they would shape policy, procedure, and make decisions that would then affect the employees on the franchise and corporate side. So that should just be noted. It wasn't all me. But it was me among many others. And so if I look back and think of the me-related things that made a difference that were similar when other people got those opportunities as well, one was I worked all the jobs, right? Not everyone wants to work all the jobs. I worked all the jobs. I was a hostess, a waitress, a bartender, a shift leader, a promotions manager, regional training coordinator, a new store opening manager, a fix-it trainer who would go to stores that had problems and retrain team members, a management trainer. So that's part of the outlier element of the people who did move up in the company, including me, is we had the breadth of experience of knowing end to end how the restaurants ran, and that is required to be exceptional in corporate management at such a young age, right? Because there's so much when you're that young. I was 20 when I took my first corporate gig. So I moved to Atlanta and became an employee training manager in the training department, and then moved up as the company grew. And as you said, at 26, became one of the vice presidents, and then was in various executive leadership roles for six years there. And so what I lacked was experience in years at that level of management in multiple companies. But what I had was unparalleled knowledge of the way the operations worked, what the employees and managers needed, what good looked like from the inside, not just the outside. And that makes a difference if you're willing to tap into that internal experience as a strength, and I did. So worked all the jobs is one thing. The other is I enjoyed working all the jobs. I wasn't working all the jobs because I felt there were rungs on a ladder to get up the ladder. That certainly ended up being the case. But that wasn't my why. I was working all the jobs for three reasons. One, I grew up in a, you know, tough upbringing, very poor family on both sides, single parent, alcoholic father, helped raise my daughters, my sisters who are like my daughters, I guess. And so I needed to make money, and if you can work more different hourly jobs, you have more access to income. So it was very self-serving, the reason I wanted to work all those jobs. The second driver of the why is I love to help. Sometimes the way I learned the job was not thinking, 'Oh, if I learned how to be a bartender, I could have two more shifts this week.' It was that the bartender had to go home because her son was sick, or the manager needed help because her assistant manager called out, and I wanted to be helpful. So the second of my why is I'm a helper. I like to be helpful. I like to enable others' success. I have since I was very young. And the third is I was curious, like, can I do it? I think I can. Can I do it? No way to know unless I try. And usually when it's a moment where someone needs help, it gave me more courage to be not perfect at something because no one would expect me to be perfect because they're asking for my unexpected help. And so I'm like, can I do it? Yeah, it's probably fine if I'm not perfect. So I needed to make money. I wanted to be helpful. And I was curious to see if I could learn and do the new thing. Put those together, and I ended up raising my hand for almost every opportunity that came up, whether it was an impromptu need or something that was more typical like a job opening or an opportunity to travel and open new operations.
Well, the other thing that we didn't even talk about with Hooters, but I always found delicious was the food. And speaking of delicious food, Cinnabon. So I will raise my hand involuntarily. You know, if you ever need Cinnabon taste testers, you know, I'm always game for that. But these are kind of quirky questions, but I just have to know. First, what's the secret? Like, how did the team create the Cinnabon smell anytime you buy a Cinnabon to be like the best smell in the world?
It's funny, you know, people have all this lore around, do they pump it through fans? And it's just the fact that the ovens are out front. And so when you're baking all day, fresh baking, I mean, every hour you're pulling fresh-baked cinnamon rolls. It's like when you bake cookies in your house, right? The whole house fills with that aroma. Same thing, except imagine baking cookies in your house all day, 24/7. That is what we were doing. They're all fresh-baked. Many of them made from scratch for many, many years. Hand-rolled in the store, baked in these ovens right behind the counter. And so that aroma is just getting out everywhere. And there were times that the founders of the concept tested putting the ovens in the back like a normal restaurant. The reason they were in the front to begin with was they just got a small space, and so it was an accident. And when they put the ovens in the back, the sales dropped by half. So they're like, even if we have more space, those things are going out front. And it was also part of the theater, right? It helped you see that they were fresh-made. You literally could see them going in the oven as raw dough roll and coming out fresh-baked. So there was something about the theater that also drove the watch, the awe, the gawking, in addition to the aroma attracting people. So nothing other than just fresh-baking delicious, full of sugar and fat products that you definitely should not be eating every day or very frequently, but iconic, right? Like iconic aroma, iconic product, a cinnamon roll the size of your face. And something that in the '80s and '90s was beloved and, you know, in every mall. And then over the years, even trends of consumption and indulgences changed. People wanted smaller products, more responsible indulgences. We ended up expanding the product into grocery stores where it was just the cinnamon and coffee creamer or just the cinnamon in coffee flavors and finding more ways to extend that nostalgic flavor and that delicious aroma, but into things that were less insanely indulgent as the world moved to more conscious indulging.
Yeah, that's actually, and that hints to my last question for now before we get to AG1. I promise we will get to AG1 in this interview. This, I guess, the distribution or retail strategy, whatever you want to call it. There's not that many brands that come top of mind when you think about like airports and malls and historic, like there are very specific locations that like Cinnabon, Auntie Anne's, I know another brand that, you know, you touched over the years, brands, they're, yeah, another fantastic smelling one, by the way. But what went into this like such a defined distribution strategy there of like, hey, we need to be in all these airports, we need to be in those malls, and then ultimately testing out grocery as well?
I mean, if you think about any business's distribution strategy, there were a few things that lead to it. And it was certainly true for Cinnabon and the other brands that were in Focus Brands, the company, the parent company that I led. Cinnabon gets all the love because it was, you know, I was president of Cinnabon in the recession and we turned it around, and it's a really fun contrast comparison to AG1. People like to highlight like from cinnamon rolls to nutritious drinks and supplements, but the reality is we had many brands in between. Jamba Juice, Moe's Southwest Grill, where we had keto. Mallisters, Schlotzsky's, we had Deli Soup Salad. So we talk about Cinnabon a lot, but my portfolio of brands, I, you know, ran the parent company. There were nine presidents and seven incredible brands. Some of which were healthy for you, some where you could pick your path of more indulgent versus healthy, and others like Caribou and Auntie Anne's and Cinnabon that are just pure, you know, pure fun. Not good for you, but fun for you. And the strategy for those brands, if you think about it, is that fact that the average consumption for Cinnabon, the average frequency of a customer was 1.25 times a year, one visit per year. So if people only come see you once per year, what must be true about your location? You must be around many unique visits per year. If it's the same people every day, like a roadside of traffic patterns going to or from work, you won't do very well because those same people who drive that route every day have already come to see you. They've made their one to two visits per year. And so airports, casinos, vacation destinations, travel plazas, malls, these are places that individuals don't go very often, but many people go occasionally. And so that's just it. So the snack brands are in high unique foot traffic locations. They do not require the same people going every day. If you contrast that with something like a Moe's where you would go to lunch every day or a Schlotzsky's to get a salad or a flatbread, those, while they might do very well in a mall or an airport, perform very well with the same people, office work, travel, commuting. And so different distribution strategy versus say an AG1 that is a daily consumption habit subscription business makes a ton of sense to be online in the most direct-to-consumer convenient way for people to shop in a way that is the best value for that high-frequency consumption habit. If you put those two occasions together, very low frequency, sporadic, indulgent occasions, very high frequency, health consumption, you have this stuff in the middle, which is grocery. People who shop a couple times, it's not every day, but it's once a week, twice a week. So when you're shopping in grocery retail, you are less likely to indulge, purchase very indulgent things because you don't want that in your home. Shouldn't have that in your home, right? That's a special treat. But it might be expensive to buy something you're consuming very frequently there. But for things like an occasional like muffins, cereals, coffee creamers, grocery and retail makes a ton of sense. It also makes a ton of sense for discovery of a brand. And so we would put some of our restaurant brands, sauces, products, well-known versions of those items in the freezer section in grocery stores because it's a great place to discover the brand or be delighted by a brand you haven't had in a while if you don't go to the mall often. Whereas AG1, people who are really serious about supplementation and their health are probably likely to go to our website and find their favorite flavor and their perfect subscription package for the best value delivered wherever they want. But we've just rolled out in Costco in the last year, in Target just this week, AGZ and AG1 with seven counts and 14 counts, which is a great place for people to grab that in-between amount if they forgot it on a trip, if they want to gift it to a loved one, or just try it when they never have. That's easier for many people to do than go to a website with larger portions and a subscription model.
So, not that I'm full yet, but with that appetizer of Hooters and Cinnabon, let's get to the AG1 entree. And as you mentioned, it's fascinating to compare and contrast these brands. And the previously mentioned brands have seemingly been around forever and iconic and have very distinct personalities. And AG1 now, compared to those, it's like it's a baby, it's brand new. Yet, I mean, in my lifetime, I've never seen any sort of nutritional drink or supplement, vitamin, whatever you want to call it, product take off like this. And I know since you've been there, there's been really, really cool, you know, tripling of revenue, maybe we'll call it. We'll get into all that. But so AG1, formerly Athletic Greens, I heard that, one of the big influences of you actually landing this role in the first place has to do with the podcast. Can you tell us about that?
Yeah, I had been on a few podcasts that were more, you know, had more of a venture capital-backed audience, more of startup audiences. And the founder of then-called Athletic Greens heard me on two of his favorite podcasts and then asked to be introduced to me because the business was growing so quickly and he was humble enough to know he could benefit from advisors, outside perspective to help him on growth, leadership, brand, operations. And so he asked for an introduction to someone he realized was a mutual connection. That guy, a dear, just incredible human, made a connection with us, and the founder asked me to advise him. And I had just left, after 10 years at Focus Brands, was taking time off to be with my little kids post-COVID and reshaping that whole business within the restaurant and hospitality industry. So it was beautiful timing because I was in this advising era of my life. I'm like, I'm going to advise, invest, work on blogs, books, whatever I can do to share knowledge while I think about what will I do next? Will I operate again? Do I want to start a fund? Will I spend my time in more of a portfolio approach? Really, all were considerations in 2021. And then Chris reached out to me and said, 'Look, here's the things I heard you say. This is what I think I need help on. Could you be an adviser?' And he didn't know, because the subscription was under my husband's name, that I had been a customer for two years. So I was a huge fan, and actually I had no idea how big the company was, and I didn't know much about the business of the product. I just loved the product. It had helped me so much with my energy, my immune health, my hair, skin, and nails after my second child. And I was one of these over-supplementers going to the grocery store getting a bunch of pills and powders. And my husband called me out one day and said, like, half this stuff is expired. You don't travel with, you travel so much, you don't keep up with it. Try this. And he gave me a pack of AG1. And I tried it instead, and I was able to stick with it. I built a routine in the morning, shaking up this, like, incredibly healthy green drink, and then I started feeling the benefit. So I was a huge fan, and so he put that together. He asked me to help. I was in a moment where that's what I wanted to do. I'm an angel investor in many, many early-stage companies. So I have a deep love and respect for founders and early-stage businesses. And I was a fan, a customer, and so I started advising him, and that advisory work turned into him saying, 'Look, just come help me build this.' And it turned out to be an incredible moment. Many people have heard this word, the Japanese concept ikigai, where you have overlapping circles, almost like a Venn diagram, and I forget all the specific circles, but it's like your purpose, the opportunity, the chance to grow, mission-driven, fits lifestyle, right? Like all these things. And that was absolutely AG1. So I joined in the fall of '21, and alongside the founder, as we grew the business, it was growing like a rocket ship, like over 100% year-over-year. We raised our only round of funding, raised $120 million at a $1.2 billion pre-valuation, and then grew the business. And as you said, we've tripled the business since then, turned it to profitability, which it wasn't in those early hyper-growth stages, and moved it from a single-product, single-channel business to now multi-product, multi-channel, AG1, AGZ, all these things, and now Costco, Target, Amazon, and more to come with the broadest breadth of those products, flavors, and incredible science-backed innovations available still on drinkag1.com.
Well, congrats on that. It sounds like you guys have been busy. You know, you might be napping every now and then, but not constantly. So I think that's a really important point that you shared, is that you, I mean, unbeknownst to the, you know, the founder at the time, like, you were already a fan of the brand. And with brands and, you know, big-name brands like that, I always think that, like, there's only, there's like a finite level of how passionate you can get about a brand that you didn't start yourself unless you're like a fan, like if you're a customer and you're using this all the time and you kind of live that lifestyle. And so that was such a great, perfect fit, as you mentioned there. Now, looking across the category, what do you even, how do you describe the category that you're in?
We actually straddle a few categories, which is...
Yeah. It's quite interesting, right? So as a product, we are a daily health drink that combines three very clear supplement subcategories. A multivitamin. There's a full stack, very thoughtfully curated, research-backed multivitamin, multi-mineral on the label with amounts showing you what is the amount of each key vitamin and mineral. We have probiotics in AG1 Next Gen, five of the most clinically studied live, dairy-free live culture probiotic strains. Incredible. And so that's the second category of supplementation it combines. And the third is what people would consider greens, superfoods, phytonutrients, prebiotics, right? This beautiful fruit and veggie blend that serves many purposes. One of the purposes is those fruits and vegetables themselves contribute to vitamins and minerals. They are prebiotic fibers for the probiotics. So you get many different plant varieties that help feed beneficial bacteria in the gut. And then you have adaptogens, herbs, mushrooms, things that have other benefits over time. And so it is a daily health drink, which used to be, I guess, in the OG days, like orange juice or Tang. Like, what do you wake up and drink that gets you going? AG1 is definitely the thing now. But it is also replacing your multivitamin, replacing your base-level probiotic, and combines those things in a ritual that you can stick with. People stick with it because it becomes a ritual versus something you have to do like pills, a lot of separate pills. And it doesn't replace everything that everyone needs, of course, but it radically simplifies a growing complex stack of vitamins, minerals, and superfoods that work together to support energy without caffeine. Love caffeine, but it's also great to have that mental focus and nutrient-driven energy throughout the day, that more natural sustained energy. Gut health. All of our human clinical trials have continued to show proof of beneficial bacteria growth that help support a healthy gut. All kinds of other markers of a healthy gut, short-chain fatty acids, perceived digestive benefits, less bloating, etc. And then all those things come together, right? Vitamins, minerals, energy, natural energy, gut health, to lead to a strong immune system because a large part of our immune system lives in the gut. So we are in the natural energy, nutritional supplement, immune support, digestive support business, but ultimately the way I think about it is it's functional food and beverage. It's your daily health drink. And what we're starting to see, really driven by GLP-1 usage, is this fusing of food and beverage and supplementation. How do I make sure what I put in my body is nutrient-dense? I can eat as healthy as possible. I can take supplements, which you have to make sure are high quality to know what's in it, it's getting into your body and doing what the company says it's going to do. What's starting to happen is those things are coming together because there's only so much food you can eat and only so many supplements you can take. So the more you can make sure you're eating and drinking the nutrients that you need on a daily basis, not just occasionally, the more you'll cover natural nutrient gaps and meet growing nutrient needs in a busy, stressful lifestyle.
I think it just, when you look at all that goes into it, it just makes the story that much more impressive because the people said, especially in the, like, you know, like the service business, people always say, like, don't try to appeal to everybody. You can't do everything. Like, you really have to find your niche and focus. And like, if you're known for, like, one thing, that's how you stand out. That's, you know, in the service business, like, that's how people refer people to you. In your standpoint, like, there's so many benefits and there's different types of ingredients and there's really, like, if you're looking at this in, like, you know, like when I was in business school, I could see back then if AG1 was around, this could have been thrown as a case study of, like, where should they focus, like, who do they market to and all those sorts of things. So it's that much more impressive that you and team have been able to put it in what started as one core product and now there's multiple products, but the brand and what's behind it is such a strong thing. What do you think has allowed you to achieve such consistent growth with a product that many people could say, you know, is kind of complicated at its core, I guess?
Yeah. An unbelievable commitment to quality. You don't get this much repeat purchase. Think about it. People are writing a check, metaphorically speaking, right? It's hitting their bank account every month, or if they're on our three-month plan, every three months. Either way, you are being reminded. You don't set it and forget it, right? You are being reminded that you are paying for this thing, and it is showing up physically at your door. It's not even like a SaaS subscription you can forget about. You have constant reminders that this is something you should value. If you don't, you cancel it because we're high integrity. We make it pretty easy to cancel if you want. And so what would drive that level of growth in a DTC business? You can't keep acquiring your way to that type of growth. Not in an economically feasible way without constant subsidies, fundraising somehow, which we've only done one of. You have to have people who love it enough to make it a part of their daily routine and tell their friends. That doesn't happen because of, no offense, podcasts or marketing. There's no amount...
And you take that back. No, I'm just kidding.
