KIND bars: Daniel Lubetzky. From peace in the Middle East to a $5 billion snack bar

[Music] Walmart came to us and the buyer liked our product and you know one of the most significant dangers is when a buyer loves you because sometimes you're not ready and you couldn't say no to Walmart and we didn't have sales people or systems to check if our product was selling through and one of the things that I learned in our industry is you can get reports and look at yourselves per store. What do you think it means guy if you're selling zero per store? It means it's not good. No, no that's what I thought. If you're selling zero it could be that it's really not good but it could also mean that the product didn't even make it to the shelves. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Ross and on the show today, Houghton Lubecki tried to bring peace to the Middle East and ended up building a five billion dollar snack empire with kind bars. Starting a business with a mission in mind is great. I meet a lot of entrepreneurs who want to solve a critical social problem with the product they sell. Again awesome everyone loves a good cause. The problem is when a founder tries to sell the cause is their product. It may feel good and righteous but most consumers don't shop to support a cause. They buy things they like. Girl Scout cookies are a great example. There's a reason the thinments and samosas and tagalongs sell out first. They're good cookies and yeah it's nice to support the Girl Scouts too. But if they were only selling say the lemon ups or the tree foils, do you really think as many people would buy Girl Scout cookies? I doubt it. My guest today Daniel Lubecki learned that lesson the hard way. In the 1990s Daniel was trying to build a business around one of the most challenging most intractable issues on the planet, the Middle East conflict. He started a company called Peaceworks. It was built around the idea that if people from different sides of a conflict could build a business together and succeed together it might create a meaningful path towards peace. So Daniel started producing gourmet foods with partners from Israel and neighboring Arab countries. Things like olive toponod and sun dried tomato spreads. The story behind the products was compelling. People loved hearing it and they admired it. Unfortunately they just didn't buy a whole lot of it. But while running Peaceworks, Daniel came across a snack bar at a trade show. And even though it had nothing to do with the business he thought he was building, he had the good sense to say yes when he got the chance to distribute it. That bar became a badly needed source of revenue. And then when that revenue suddenly disappeared for reasons completely outside of his control, Daniel found himself at a crossroads. Walk away or build something of his own. And that's something became kind bars. And once kind bars hit, they really hit. But not without major challenges along the way. Today, kind snacks is owned by Mars. They bought the brand and deal valuing it at around five billion dollars in 2020. And Daniel never really backed away from his original passion project. Even though he admits Peace seems as elusive as ever. Daniel Lubetski was born in Mexico to a family of Eastern European immigrants. His mom was second-generation but his father arrived to Mexico as a Holocaust survivor after the war. And Daniel says his dad's resilience and kindness were huge influences on him. He was born in Rigaladvia, raised in Lithuania. And when he was nine years old, the world worked two broke out. He ended up in a concentration camp. And after surviving, he was for six months in the refugee camp and then ended up in Mexico. So he was in a concentration camp as a child as a teenager? Yeah, it was very rare guy because only one percent of kids his age survived. And he was a tall kid. So when he was registered in the Dachau concentration camp, he was 12 and a half years old. But the doctor would say that he was 15 and a half because my grandfather lied and convinced the guards to let him work for. He was a labor camp. There's a lot of deaths, but he was designed to make the inmates build machines for the Nazi operation. And my father ended up being with my grandfather in that camp for three years. And so both of them survived? Dem and my own Colari who was his older brother was with him also. Well, I have to imagine you I mean did your dad talk about it? Because there were so there were many people who survived the camps that didn't do today. The remaining survivors do talk about it because they're encouraged to do so, but they're very few left. When you were a boy, did he talk about it? He did. And guy, you're correct. There were a number of survivors in our community in Mexico City. And there were predominantly two types. One were the people that shot it out. They could not talk about it because it's too consuming and painful. And then there was the others who were so consumed that they were embittered and and and darkened. And my dad was neither. My dad was very rare in that he talked about it. And when he talked about it, he consumed them. But then he lived his life with kindness. He didn't let that darkness of that chapter darken him quite the opposite. He saw his new life as an opportune firm to bring light to the world. And he always even today, if you come to San Antonio, Texas where we moved to after when I was 16 years old, people when they see my last name, they're oh, were you related to Mr. Roman Luets? Yeah, I'm like, yeah, so I call my god. He was and they'll tell you stories about how kind he was to them. Like everywhere you go, people still talk about him. And you look back and it really did shape almost all of my decisions. So your father comes to Mexico as a 17, 16 year old kid probably by the time after a couple years, 17 in Europe and presumably, he doesn't speak Spanish and had had had no education for the previous seven years during the war. I'm assuming. And what did he do? What do you tell you? He did when he got there. The way he educates himself is by watching movies and reading the subtitles. And then by borrowing or being gifted, use the encyclopedias and devouring them, reading them, cover to cover volume A, volume B, volume C. After working two and three shifts in a factory, he eventually garnered enough money with my grandfather to start a little jewelry shop and that grew and grew in Mexico city. And then almost like a like a bad Jewish joke, five Holocaust survivors joined forces to build a business on the border between Mexico and the United States where they sold duty free wares. For example, my that was in charge of watches. One of his partners was in charge of wine and leakers. The other was in charge of cosmetics. One electronics was very big. Okay. You're born in 1968 and you spend the first 12, 13 years of your life maybe longer in Mexico and we'll get to you moving to the US. But what was life like for you? What do you remember about being a kid in Mexico city in the 70s and you know in early 80s? I was raised in an immigrant community where there's like a little bit of a bubble of a lot of Jewish survivors and immigrants in Mexico. And in my school, they taught you Yiddish and Spanish. Wow. Because Yiddish is not spoken by anyone very few. It's not more but back then we were living a little bit of a bubble or a cocoon and we're very proud of being in Mexico and being Mexicans but we're also very proud of our heritage and like all sorts of funny things like my grandmother would make you know how people make fun of the most disgusting thing the world. I'm sorry not to offend people but Gifilte fish have ever tried Gifilte fish and it's cold and just horrible. We had a Mexican expression of that called Gifilte fish, a la vera cruzana. So we would melt this red warm sauce with a lot of spice and made a Gifilte fish warm and taste good. So we did a bunch of combinations between our Mexican and Jewish cultures. And in the 70s I mean this was a I guess a little bit of a I would I don't want to say unstable time in Mexico but I mean there were you know in the 60s for sure there was a lot of upheaval there were student demonstrations and I think the stories of students who were actually fired upon right in the 60s and maybe even the early 70s can't remember the exact time frame but did Mexico city as you remember it as a kid in the 70s did it feel safe did it feel like a pretty normal place to you. It never crossed my mind that I was unsafe as a kid I probably was a little bit naive but it felt amazing and yes there was a lot of horrible periods of instability including the 1960s that you're describing about when a lot of university students were slaughtered. But when I grew up, I was not fully aware of that. And around 1984, there was earthquake. I think it was '85, if I remember correctly, the big one. Maybe it was an earthquake in '85, but there was also one earlier, 'cause I remember one building fell. And they started blaming the Jews for earthquake. And my dad was like, I'm not taking a risk again. We're gonna move. What do you mean? What, how did they say that? The newspaper, people started saying that it was the Jews fault. You know, you can't really fully explain anti-Semitism or all this thing. So all I remember is that my father said, my grandfather made a mistake to not take the warning signs. I'm not gonna take the risk. And so something that's very interesting, even with epigenetics, that there's a lot of studies about children of Holocaust survivors. We see the world differently. I, in my mind, 24/7, part of my brain that worries is hyperactive, about everything. And I worry about democracy, about rule of law, about humanity, about how to fight injustice. Like, it's just in my DNA. And I think it has a lot to do with what my parents taught me, but also with what I inferred from learning from his experience. All right. So you guys moved to the United States in the mid-80s. Your teenager, I'm assuming because your dad was part of this business, this sort of duty-free business on the US Mexico border, he just continued to run that business. Yeah. Well, he and his partners, their headquarters were in La Rado, Texas, which was truly a border town. My parents wanted to be a little bit more, you know, in the cradle of civilization. So we moved to San Antonio, Texas. Is he traveling to La Rado a lot? Is he going back and forth? He's traveling to La Rado a lot, and he's traveling all over the world, because all of his clients are predominantly in Switzerland, because he had the representation. They only duty-free representation in the world for these quality watches. And so that's why. Wow. So he had big time watches. I mean, today, I don't even think some of those brands sell to third parties. They only have their own boutiques. They play a fascinating game. They control the inventors. Yes. There's more demand that there's ever supply. But yeah, it's a very coveted thing to have a license to sell those watches. And I guess, while you're in high school, you also get into the watch business. Like you start selling a certain particular brand of watches. What tell me about that? So I had a bunch of jobs. I had the right to be in the United States. I was lawfully arrested, but I didn't have the right to work for somebody else. So I had to create my own businesses. So I would go to flea markets and sell. Not just watches, but also singing cops that you'd lift them up and it would start singing and Christmas lights. And all the crazy things you can imagine. And my dad helped me out. He connected me to a couple suppliers. I would sell me some of these products and then I would buy them. But then I had to wake up at 5 am in the morning and set up the booth in the Eisenhower flea market and then finish at 6 pm. And it was really fun. And I had car washing business with my cousin and we had a lawnmower business. But we didn't have a lawnmower. So we had to borrow the owners lawnmower. I didn't even realize until I told this years later that that was unacceptable. You were supposed to have your own lawnmower. When you. When it's time for you to go to college, you stayed local. You went to Trinity University in San Antonio. And did you. I'm assuming you continued to sell watches? Or was that sort of your main. Did that become like your main source of income? Yes, it was a very good business. The most fun business was that I was a magician. And I started one year abroad and I helped pay for my studies by traveling and doing shows in the streets of Paris and the streets of all over Europe. Like car tricks or what kind of tricks? Mentalism, car tricks, sliding a sore throat with one's body. Anything you could imagine. How did you learn how to do that? I started from my dad. As a Holocaust survivor who was nine years old when the war started, he didn't have a childhood. So he lived his childhood through our childhood. Like he loved magic. So we would go to magic conventions. But yes, when I was in college, I had a network of students that would sell watches. We also had a couple of books in shopping malls. It was fun but challenging. Were you intending to be like your dad go into business and be an entrepreneur or because this is the late 80s when you go to university and there was a time where people didn't think about starting businesses. Like they'd go to law school or medical school or be a consultant. Like when you were an undergraduate, did you know that you were going to probably go to law school? Was that your goal? My hope was to become partners with my father. I wanted to start a business with my dad. And my dad wanted me to do something with my life. Quadranquad for him, who had been the predator in education and him and my mom. They wanted me to get a graduate degree. So I applied to Stanford Law School. I got in. And when I went to law school, besides starting a business, my passions were resolving the Arab-Israeli conflict. I was very passionate about theory and ways to use economics to help Israelis and all of their Arab neighbors recognize each other's humanity. Brake stereotypes, cement relationships. How did that? I mean, obviously you grew up in a Jewish home father's Holocaust survivor. But how did you, even when you were in college? This was your sort of obsession. Yes. And I started learning more about this conflict. And I started thinking, once I went to law school, I thought I was going to become a diplomat. And then that idea of building bridges with people kept being around in the back of my mind. And I ended up writing a legislative proposal in law school for how to turn my theory into practice. You, I don't think you have a really practiced law, right? You briefly worked for a law firm, but you. I practiced for a couple months. I passed the bar. I worked at Sullivan and Cromwell. And that's when the Oslo process happened. This is 1993. This is when the famous Rose Garden Bill Clinton, Yasser Erafat, Yitzhakar being that handshake that was, it's hard to imagine today. How much optimism there was in the world around resolving the conflict, but that was a watershed moment. You are at a college, at a law school. And I was in Mexico watching the Rose Garden ceremony. And I'm like, oh my god, I need to do this. And so I told Sullivan and Cromwell, I'm taking a leave of absence. I'm going to try this out. All right. So from what I understand, you're so inspired by this that you get a fellowship and move to Israel to work on your idea. And basically the idea is that you believe that economic cooperation, like building businesses between Arabs and Israelis could encourage peace. Yes. All right. So you decide to start a business to try to prove this out. And I guess it's called peace works. So how did you start? What did you do? The way it works is I'm doing my research. Okay. And I go to a supermarket. And I see this obscure looking jar of Sondra tomato spread. And I don't know what it's a Sondra tomato. I've never tried a Sondra tomato. I try to spread and it's delicious. It's so good. And I go back to store to buy some more. And there's no more. And I talk to the distributor to the store manager. Where's this thing I want to buy some more? It's really good. And they're like, sorry, the company went out of business. And I can't get the idea of my joint venture, shadow my head. I can't get the idea of this delicious spread. And I'm also on the emerge. And I'm like, oh my god. What if I can restart it? So I asked for the name of the bankrupt guy. And he connects me to Joel Benish. And Joel Benish is this beautiful human being who had a number of our friends. And I tell him the idea for peace works. And the reason he went bankrupt is he was buying glass jars from Portugal. An olive oil from Italy. And Sondra tomato. He was buying all the stuff in Europe. And he was very expensive. So I start mapping up with Joel. We could buy the glasses in Egypt through my research. I knew that we could buy the Sondra tomatoes in Turkey. And we could buy the olives from Palestinian farmers. And I start showing him why don't we do this together in the Middle East. And he decides to give it a shot with me. And this could be the beginning or the first product. Because peace works was going to be, was it going to be a consumer product? Or was it just going to be any joint venture? Back then, guy, I thought I was going to have ventures in all sorts of industry. I didn't know anything. Okay, so now how do you identify the sourcing? Like how do you find a Turkish Sondra tomato producer and the Egyptian glass jar makers? And how do you start that? Because this is pre-internet. I mean, there's a little bit of internet. But it's exactly. I was going to say he was not using Google. Yeah. So you have to go to trade shows. You have to go to the governments. You have to go through introductions. You have to, it was so much harder. Okay. Now, my question is, when you started to approach some of these other suppliers and you said, hey, we're based in Israel, we want to start this company. We want to work with you. Were they receptive to it? I mean, were they hostile to it? They were super receptive because this was, remember, the romantic time. This was after 1993, after the Oslo Peace process. And it's hard to appreciate and remember how magical that time was, but you would go to our capitals. and you would go to Arab towns and they wanted to business with Israelis. Like it was like the new Middle East, it was Shimon Persia's new Middle East. There were a lot of resentments, a lot of suspicions, but I can't recall right now a single incident when somebody said, "No, I don't want to go deal with Israelis." Got it. Okay. So you settled on making, first I guess this sunrise, tomato spread, but I think the idea is to create a line of spreads, right, that you could export presumably. You're not going to sell these in the Middle East, right, or worry. It was the idea to sell them in the West, in the US. After a few months in Israel to your point, I realized that I need to go to the US because we need to develop a market. He can make the product. We figure out the first part, right, how to make it. But I need a client. And so I go to, I move to New York, I go to Zayvars, I bring him this jar of the obscure looking product, they look at it and they laugh. And they're like, "You got it all wrong. Your pricing is wrong. You didn't create enough margin for us. Your labels, all these regulatory problems. The oil is leaking. So Scott Goulson and Soul Zayvars spent, by the way, they were really tough and gruff, sweetest people. A lot of what I learned was from them and other merchants who love the concept. Because think about it, this is the mid-90s. People are rooting for the Israelis and Arabs to figure this thing out. So they would give me a ton of free time of advice. So I go back to the drawing board, I tell you all, we need to fix it, fix it. I come back six months later, they're like, "What, you're still alive. I show them the product improved. They give me a shot." And then multiple iterations till we start figure out something that people wanted and we're willing to buy. The idea is to sell these at initially specialty stores like Zayvars. It's like a farmer's market brand. I mean, you're selling jars of olive oil or olive spread and sun dried tomato spread and artichokes. I'm just imagining what you do. We started with sun dried tomato spread, basil, pesto and olive spread. And the products are actually very high quality, but the packaging and the branding, oh yeah, yeah, yeah. The brand is called Moche Pupik and Al-Emi-Schmumkens, world famous gourmet foods. I still don't know why they didn't work out. I mean, what did the jar say? What did this was about? Like, hey, this is about bringing people together. When you buy this product, you're supporting efforts for peace in them. At least, was that clear when you saw the product? Yes and no. At the top of the lid, there's something that this corporation never tasted so good. Cooperation, never tasted so good. So we were trying to talk about that. And obviously the characters Moche Pupik and Al-Emi-Schmumkens, you would buy the jar and they would be a little book. And he had this fable of how thousands of years ago, the impending armies in the Middle East were about to kill each other. And the great chef Moche Pupik called his magician friend Al-Emi-Schmumkens. And they quickly concocted this sun dried tomato spread, whose aroma was so magical that it spread across the horizon. And he put the rival armies in a friendly trance. And they were so reenergized that they used the strength of the sun to melt their weapons into spoons and use the spoons to partake the sun dried tomato spread. But what I discover along the way is that if you're too mission-forward, consumers will give you one shot, but then they think they're doing your favor. And what I discovered is you need to make sure that you're not trying to tell the consumer do this because of the mission. You want them to buy it because it's the most delicious product out there because it's the right value proposition from them. And that's earlier on, again, one of my other mistakes is I started selling in the street fairs in New York City. And everybody's, I'm talking about the social mission, I'm talking about the social mission, they're listening to social mission. And they think you're adorable and they keep walking. And when I start talking about the features of the product, then people start trying it out and thinking more seriously. And they try. And it's actually good, it stands on its own merit. So the mission cannot, it can be an added reason to believe, but it cannot be what drives the sale. Right. Okay, so you are, you're in New York and you're pounding the pavement trying to get this into stores. And it sounds like you had a great story. And so that kind of gave you a foot in the door with, like you would go from store to store and make the case and try to convince people to carry it on their shelves. I started 7 a.m. in the morning on 120 seconds on Broadway. And I walked down, store by store, store by store. And I tell myself, I shall not go to the next door till I get a purchase order from that store. I think it's all about grit and I think I need to get this product in every store. And in my mind, that means that product belongs in Whole Foods, but it also belongs in the convenience store in the corner. And it also belongs in Bloomingdale's and Macy's. And so the best example I can tell you about this is I go to a Korean grocery store. There was Mr. Lee on 84th and Broadway. And I tell about my product and I tell them all the social mission. And he says, I'm sorry, like this is a bodega. We only sell, you know, toilet paper, ketchup, just essentials. We don't sell fancy son, right? To my surprise. And I said, yeah, but you don't understand. He's about pissing them at least. And you have a community that's going to appreciate it and try these. And I open the jar and I force feed the poor gentleman with a piece of baguette and like let him try the product. After two hours, he gives up and he gives me purchase or he offers to buy 12 jars for 33 dollars. And I leave the store and I tell myself, Daniel, you're a winner because you didn't give up, you're going to win. But then the next week I go by the by that store and the shelves, he hasn't moved one jar. And then a month goes by, he hasn't moved one jar. And the jars are not full of dust and they look bad and they look bad for him and they look bad for me. And that's when I start learning to think more long term and to think about where should this product fit and only be there for them. One of the things that you did is you because this pieceworks was not just about the Israel, Europe and Israel, Palestinian conflict, you started to look source products from other conflict zones. I guess you did like, uh, product from Indonesia or like East Timor or the idea here would be conflicts zones around the world and people working across the conflict zones to build and sell products. 100% but what I was getting wrong then guy is I was so enamored with the social mission that I was my own worst enemy because instead of focusing on one product line and winning, I was starting ventures where I could. So I was working like a horse, right? And it's taking so much time to figure out these partnerships instead of focusing on one and getting that one right. So consequently, this whole pieceworks business, you know, I was very proud, but the first year we sold if memory service in real $33,000, second year, $226,000, then I get to about a million and then it's just like, plateaus. And were you profitable at a million? I was profitable every year in our journey except one where we lost tiny like a few thousand dollars. I was profitable every year but profitable because I wasn't paying myself a $24,000 salary. And so to get to let's just say a million, I mean you had to be and a lot of retailers because this is not like toothpaste or shaving cream. It's not moving out the shelf. Did you eventually work with a distributor? Yeah. So the way you do it at least during my time is distributes are not going to open markets. No. They're going to continue stuff. So I open New York City. I develop New York City. Once I have 50 accounts or 100 accounts and I find a distributor to continue supplying and distributing for them. So then now I can go open Philadelphia. Presumably you had a couple of employees, right? Did you have at least people who were dealing with warehousing and logistics and maybe even sales? Like how many people did you have working for you? Five team members, every one of eight 24,000 dollars or something like that. I called them victims because they poor guys like none of us know what we're doing. Like most of them are kids that just graduated from college and they don't have a better option. So okay. So you are kind of humming along. And I guess at a certain point you are because you're going to trade shows and you find a product that is like a yogurt apricot almond like a granola bar but coated in yogurt I guess and you like it and you ask if you could distribute it. No, no, no, what's the story? So at the natural products expo as I'm working and looking at the products I try this product which is an apricot yogurt almond bar and it is delicious and I'm like wow this is really good. And it was called the B natural bar. The product was called B natural. And Peter Sudarma who owns that company asks me for advice and then like since months later or a year later his Daniel my product is really good. Why don't you start distributing it and I'm like Peter I can't. I have a piece of transmission. Your product is not made through pieces. It doesn't matter Daniel. You come up with different company distributed for us. Long story short he convinces me to start a separate division of pieceworks. But you had a business that was focused on building piece between so didn't this I mean in your mind why would you do this? Why would you sell this? I mean unless you could make money out of it right? To make money. Yeah, for a while I am eight years into this actually. And you guys are not doing well. We're barely making ends meet. It's very very hard and this product is a good product. You start distributing it and did it do well in the US? Everything is relative. For us it was Nirvana. At that point we're selling half a million dollars of this product. One million dollars of this product. It's incredible. It's very quickly become something. And then something bad happens. Peter tells tells me that there's a company that wants to buy the product. The company decides that they still want to keep me as their distributor. But they start adding a number of ingredients that were not approved by Whole Foods. Whole Foods at the time and still, their list is like the Magna Carta for natural. And they start adding two or three ingredients that are not approved in the Whole Foods list. We plead to them to not do so, but they don't care because in Australia they sell predominantly to convenience stores. They don't have a highly developed natural marketplace. We explain to them that in the United States it's going to kill our market. They said, "Sorry Daniel, but we have to do this." So we lose all of ourselves from one day to the other. So all of our hard work goes to nothing. When we come back in just a moment, how Daniel turns disaster into opportunity, and gets back into Whole Foods in an even bigger way. Stay with us, I'm Guy Raaz, and you're listening to How I Built This. Hey, welcome back to How I Built This, I'm Guy Raaz. So it's 2003, and Daniel's in trouble. His cash cow, an apricot almond yogurt bar that he's been distributing, has been reformulated and kicked out of Whole Foods. And that's a huge chunk of his revenue gone. And it's not the only struggle he's facing. This actually was one of the darkest periods of my life because along the way, my dad passes away. And I'm doing a lot of civic work in the Middle East, and as you know, the second into Father Breaks Hour, and there's a lot of violence and stuff, and it's a very difficult time. And so I'm exhausted, I've been 10 years at this, and I remember very well the meeting that happened, where we had about 60 members around the table, and everyone of us has to vote whether we give this another shot or we just give up. And we unanimously say, "Let's give this one last shot." A few months later, we design it, and we launch what became kind, and then the company just takes off. So you decide that you're going to build, you're going to make your own bar. And let's talk about this from it, so tell me how you get to the kind. We knew we wanted to have three pillars for the product. Kind to your body, meaning helpful ingredients. Kind to your taste buds has to be tasty, and kind to your world that the way you do things matters. And my dad just passed away, so I think he's front of mind. And I told you earlier about how, in spite of all of the darkness, he just was a very, very kind human being. So we named kind in honor of my dad. And initially, the model was all natural always, because we're so freaked out by the incident that we had, and we wanted to control our destiny. This is a very, very important moment. Up until that moment, I don't have control of the manufacturing ever. I work with my manufacturing partners. They have control of manufacturing. After I get my ass kicked here, I say, "All right, I have to control the manufacturing." I control the formulas, I control the recipes, and I identify a manufacturing partner that can do it for us, but where we control the rights and control our destiny. Tell me about the concept, because the concept we know, feel like kind bars, it's basically nuts and fruit, depending on the bar, kind of stuck together. Was that the concept from the beginning? Yeah, I would just say it a little bit more bravo. I am trying to solve a problem for my needs, which is a healthy snack on the go. And so what are some of the implications of a design process? It cannot melt too easily in your hands. Right. It has to be portable. It has to be compact. It has to be nutritionally dense. I think initially, it's just like almonds and different nuts bound together in a bar, right? Maybe some fruit too. That was the original bar. So let's talk about this first set, because it's going to be a bar, and it had to be cut, and it was going to have whole nuts in it, and it had to be bound together. I think a lot of people listening might think, "Okay, what's a big deal?" But I think this is going to be a challenge to actually produce. It's really, really hard, because in our industry, most bars, I think 95% of the bars are what's called an emulsion or a paste. And it flows really easy to the manufacturing line. If you take a product, you master it and make a mix. It flows very well through the line. It's very easy to cut. It's very easy to low. When you're not doing that, when you're trying to preserve the wholeness of the almond, because the almonds are better preserved. They're not pulverized. If you cut them, they can oxidize. They can go rancid. They lose some of their integrity. So you want to try to preserve the whole almond. And it's very hard to do that and do that at scale, and do that through a manufacturing line. So it took us a very long time to develop the technology to protect nature. And who was going to manufacture these for you initially? So initially, we tried to find somebody to do it in the United States, and nobody wants to. And so we went with relationships of Peter that were willing to do it for us. In Australia. Initially Australia, I imagine that creates some challenges, because you've got to export them to the US. And then how did you finance even the early production in Australia? How did you pay for that? Remember, we didn't have that big a sale. One of the most interesting challenges for consumer partners is that the more you succeed, the harder it is for your cash flow. But ironically, when you're starting, you don't have that much sale. So you don't need, like if you're selling $10 or $20,000 a month, you just need those $20,000 for your working capital. Once you're selling $1 million a month, then you need a million dollars in working capital. So the problem starts getting harder as you grow up. But the first year, I can pull it off from what I've saved over those last 10 years. Right. And did you also work through the branding and the look of the packaging? Or would that come later? I mean, it's evolved somewhat, but it really, the essence was worked out from the day one. It was the thought of the four blocks and they were kind and the lock up and the colors. And also very importantly, we wanted a very, very clean design. We didn't because everybody out there used a lot of photography and allegorical stuff and designs to obfuscate. And for us, the hero was a product. We had a transparent window which we introduced, which was very, very revolutionary. From the beginning, you had the transparent packaging? The transparent wrapper was, it was very hard to achieve because about, I don't know, 50% of the product is just, you're seeing that product itself. And so it's very hard. How do you communicate everything you need to communicate in only 50% of the space? Or if it may be 40% of the space? Because the transparent part of the wrapper, you were not going to print anything on it. Exactly. We wanted people to look at the product themselves and know, oh, this is real. This is not like everything else. This is clearly high quality. I'm seeing the whole knots and fruits. That was a big insight. But the challenge is how do you then explain the brand kind, the value proposition in the real estate that you have left? So there was a lot of work that went into it. And with the piece of years, I caught so many corners to save myself some dollars and it ended up costing me more. With kind, we really worked hard on the design to get it right. And this is also a challenge because a clear wrapper, like one of the reasons why so many products are in opaque packaging is because it preserves the product for longer. And a clear packaging, a clear wrapper is different. That's harder to do. There's proprietor in knowledge that goes into the design, a product, packaging that's both transparent and good quality. Okay. So in the, in sort of the year before you launch kind, you're kind of in a crisis. Peaceworks is kind of in a crisis because you're still trying to sell spreads and other products. They're not really, it's not enough revenue to sustain your team. Your team decides, let's go all in on this new bar. But you're not going to be able to launch it, I think until 2004. So first of all, were you able to get it into a lot of Whole Foods or do they give you like one region initially? At the beginning, it started slow, but it very quickly ramped up. How, how did you sample it? Did you guys market it? How did you do it? The product, the product was just the right product, the right time. There was nothing else like it. But it was on a shelf with like 50 other energy bars and. Oh, oh, oh, that's great. It just reminded me something. They didn't know where to merchandise it, probably. Whole Foods didn't. Because they had what they called a nutritional bar set. Right. And the nutritional bar set, I remember being at a Whole Foods and they're like, Daniel, the problems we don't know where to put it. And I'm like, what do you mean put it in the nutritional bar? It's like, no, because nutritional bars look like this. But so what happened is that they gave us a chance to put POP this place. So what was a really big problem turned into a huge opportunity? Because we had racks on the check out counters in a lot of the stores because they didn't know where where else to put it? - So instead of being next to all the energy bars or with candy or with nuts or dry fruit. - They were by themselves. - By the register. - In by the registers, yes. It was a huge, huge, huge advantage. - So people could see 'em as, and that's a mass, I mean, that's like five hour energy in Slim Jim's. Like that's where you wanna be. - And we had a very, we designed a display that was not occupying too much real estate. The boxes were small, the product was compact because retailers, what they sell really is real estate. So the more you can turn product into less space, the more they like you. And our product was a $2 bar. You could put in a little rack, you know, $500, turn it around quickly. So it was a really, really good deal for the retailer. They liked it and then they started just growing. - I read that in the first year, you sold about a million dollars worth of bars, which is great 'cause that's what you were selling with the previous bar, but now it's your own brand. And do you remember having, I mean, probably had no budget to spend on marketing at all? Do you remember anything you did in that first year to get the word out about this product? - It was worse than that. I had trained myself over 10 years to not waste money 'cause I didn't have money to waste. But I had made the mistake to then turn the culture of my company into a scarcity mentality rather than a resourceful mentality. So you don't want to gluttonous, wasteful mentality. But if you have a scarcity mentality, then you're not investing. So the first few years, we're lucky that the product had the success of our packaging, our product and those displays. But that was basically it. We didn't even have a sampling budget. Because really, we saw sampling as a cost center rather than as an opportunity for people to score a product. Our budget as late as 2008 for sampling was $800. And that was $800, including samples to the retailers. - 'Cause you didn't also didn't want to be unprofitable. You wanted to have a profit at the end of the year. - I think after 10 years of barely surviving, I was very good at driving the bottom line up to the point that I was actually shooting myself in the food by not investing in my future. Like we doubled for 10 years in a row. But the first few years, certainly 2004 to 2008, I mean, we did creative promotional things, but it was really the product that was just selling itself. - I guess in 2007, so three years in, you get an opportunity to sell a Walmart. But that didn't work out. What happened? I mean, Walmart, amazing opportunity, you get into Walmart and then I guess you get dropped. What's the story? - Walmart came to us and the buyer liked our product. And you know one of the most significant dangers is when a buyer loves you. Because sometimes you're not ready. And you couldn't say no to Walmart. And we didn't have sales people or systems to check if our product was selling through. And one of the things that I learned in our industry is you can get reports and look at yourselves per store. What do you think it means, guy, if you're selling zero per store? - That means it's not good. - No, no, that's what I thought. If you're selling zero, it could be, that is really not good. But it could also mean that the product didn't even make it to the shelves. - Right. So the system, at least back when I was starting at Walmart was so complex that the destroyer would drop off the product in the back of the store. And nobody had thought to put it in the front of the store. And so it was my job to identify that. I didn't know that. And so after we failed miserably at Walmart because we didn't know what we were doing, we leaked our wounds. And a year and a half later, John Leighy, who's got the great hurt to prove it and the experience comes in as our president and as my partner. And then he taught us how to do it right and how to get to Walmart. And I'm like, John, let's get back into Walmart. It's like slow down, buddy. Slow down. We need to be ready. - Up until this point, you're still, I mean, up until 2008, I think you had not taken on any outside investors at all. It was entirely funded by you or-- - I had three friends, two friends and a friend of a friend who had, in the pieceworks years, invested $100,000 in pieceworks. But when I started kind, it starts with in pieceworks I wanted to find a way to thank them and my investor and my award for that. So eventually, in 2008, we started getting a lot of interest. - You were getting investors coming to you saying, hey, we're interested in-- - 2008, it's very interesting how the industry works. Nobody wants to touch you till everybody wants to touch you. It's fascinating. Like, we were like persona non grata in the investment community. We didn't even try anymore because we couldn't raise a cent. And which turned out to be really good for me because then I didn't dilute myself. But then all of a sudden, 2008 people are seeing the data and the company is big enough we're reaching now. Like all these private equity companies, they're looking for the promise. It needs to have more than $10 million in revenues. This, this, this, and they see it. And all of a sudden, everybody's calling us. And now we're ignoring them because we're cash flow positive and profitable, so we don't need the money. But then we wanted to have a partner that could be a partner to help us. So in 2009, we allowed an investor to come in and they wanted to spin out the peaceworks business because they didn't care about the peaceworks business. So we separated peaceworks from kind and then they both lived separate lives. - Got it. So, and this is VMG, the private equity firm, I believe, that bought a share. I mean, at that point, 2009, they valued it at $45 million the business. And does peaceworks then die? Do you continue, like were you selling tomato spread and olive oil, tap and odd? Like, or was that done? - So I didn't want to give up on the peaceworks dream. Kind of was growing like crazy, but I didn't want to give up on the peaceworks mission. So my friend Joshua Scherz was an amazing entrepreneur. I agreed to take it on and he had his other lines that he was selling and then he started selling peaceworks. Peaceworks lived for 25 years. So from '93 to 2018, I think, when we decided to close it. - I wonder, I mean, you're kind is doing really well. Obviously, really successful product, but it's completely different from what you originally intended to do, right? Which was like, source the nuts from here and the sun dried tomatoes from there and bring people together. And was any part of you like, you know, I just, I don't know what to think. - First of all, kind was such an amazing journey and it brought so much happening, so many people. It never was, am I doing the wrong thing. I was always delighted about the kind journeys. I'm so grateful for it. But yes, there was a piece of me that misses the opportunity to get peaceworks right now. Along the ways, I helped build something with an Israeli Arab co-founder, Muhammad Darazha, called the One Voice Movement. And we recruit close to a million Israelis and Palestinians to stand up against extremism and hate and terrorism on all sides. And that gave me a lot of meaning and helpful fill my need for purpose. Kind also has its own purpose, but obviously not as deep as peaceworks or one voice, but the One Voice mission kept me very busy. And between 2003 and 2007, I was spending more time on one voice than I was on kind. And it was interesting that kind did so well when I was distracted also building the One Voice Movement. Part of the way I explain it is that I am a very creative guy, but sometimes I can drown my team with creativity. And I kind of divided myself between what I was doing with One Voice and I was doing with kind where we managed to stay focused and kind and do a good job. That's the explanation I give myself. But I'm in the process of ideating additional things to do in the context of Israeli Arab and Israeli-pastorian relationships to try to help develop a better future for the people of that region. When we come back in just a moment, why Daniel goes on a years-long quest to get kind associated with a very specific brand. Stay with us. I'm Guy Raaz and you're listening to how I built this. (upbeat music) (bright music) Hey, welcome back to How I Built This. I'm Guy Raaz. So it's 2008, 2009-ish. And Daniel has taken a private equity investment and separated pieceworks from kind. He's now focused entirely on kind and on the verge of realizing a personal obsession. One of the things that is interesting to me is you were from what I read, like just obsessed with getting these in Starbucks, which makes sense because Starbucks has not that many products available to buy, but they're right there as you're at the register. What was it about Starbucks? 'Cause I think you worked on this for like three or four years to try and get the kind bar into Starbucks. Tell me about that obsession. Why did you think that that was gonna be? a breakthrough. For me, the insight was, this is an incredible iconic chain. Back then, I think 11,000 stores. And they didn't at that time sell any healthy snacks. They didn't have a single healthy snack. I'm like, this makes so much sense for you to carry a kind maroon the go. And on Benones to me, they liked us too much. They were trying to make their own versions. And fortunately, that did not plan out for them. And they, after years, of years of developing relationships, things aligned and they gave us a shot. You got into Starbucks in 2009, I think. You landed a deal with them. And was that, did it prove to be, I mean, I imagine, it did prove out to be just massive. Because, I mean, at that point, 2009, probably not everybody in America knew what a kind bar was. A lot of people discovered us, well, they discovered us through ways, right? Word of mouth, they saw it for a ton at Starbucks or through our sampling. Because our sampling went from $800 in 2008 to $800,000 in 2009. And within a couple of years, we were sampling $20 million. It's like maybe 40 million bars or 30 million bars. Just giving them away. Giving, because what we found out, guy, is that anytime somebody tried a kind bar, 9 out of 10 would fall in love with the brand, would tell others about it. Within a month, they would pay for itself because they would start buying the product. It was a great ROI. So sampling was the biggest thing. Getting in check out counters at Starbucks and other places was another really, really important one. And those things were probably the reason why we accelerated our growth. You mentioned this guy. Was it John Leahy? Yeah. Who joined in 2008, I think, right? John joined other 2009 or 2010. And he became the president of the company. And became the president of kind. And you remained a CEO. But tell me a little bit about it. I mean, this brand is just growing and growing. And so I imagine you are also hiring more people. And then there's also people coming to you or you to sort of really, as you're scaling, you want to bring in people with like deep experience. How are you sort of thinking about the team that you were building as you could see this thing scaling? What's an amazing question. John Leahy without any doubt was one of the most pivotal forces to help kind become what he became. So John had a lot of experience. He had worked at playtex. He had worked at a nutritional company that sold vitamins. But he didn't have snack food. He didn't have snack experience, but he had experience in huge CPG companies. And the rest is history. Like John was one of my best friends. Partners very different from me. King Yang, like his personal, any personal complimentary, but we knew we had each other's back like completely different temperaments and personalize is very operational. I was very creative and marketing whatever. And together we created the magic. So did you have a COO as well? Or basically was John as president to COO? He was a COO president. And also to be fair, these titles are silly. Like he was a co-CO. He was a co-president. Like we were running the show together. One of the things that I learned is that all of us are deeply insecure. And it certainly happened to me along the way in my early years where I wanted to find somebody that was like me and that was not better than me. So consciously, I don't think I consciously said that. But when you win is when you find people that are different from you and they're better than you. And you're a company that was better than me at sales. Somebody that was better than me at finance. Somebody that was better than me at new product development and marketing. You're bringing super smart people and they're teaching you how to do better and you're growing your brain and you're creating a culture. You know, every single team member had a stake from the beginning. If you were in the company six months or longer, you got stock options. Everybody was an owner. How were you coming up with different innovations and different products? Because I mean, eventually you'd have chocolate dipped bars and then oat bars and all kinds of different bars. But how were you developing those ideas? Because you can't just have one product in hope that that's going to build a business. I think one of the things that made us succeed the most is to initially stay focused on discipline. So what happened in my piece of work series is I was taught that you just grow by extending your shelf presence. And so I have three spreads, then six spreads and nine spreads and 15 spreads. And eventually some of our products really did not live up to the quality of the regional products and that hurt the brand. And I learned a hard lesson that if you disappoint the consumer once, they're not just going to not try that 15th product. They'll stop buying your brand altogether. So it was very protective of our brand and I was very focused. And I remember when we have I think eight flavors at the beginning, every word of the sentence, look at the success. You need to launch more. You need to launch more lies. You need to know. And I was like, no, we're going to stay focused with these eight flavors. So I think for several years, we just executed the hell out of what we had. Now, eventually you're right. Eventually you want to innovate. And the way we did it, we developed a set of guardrails to understand what is a brand stand for and what our brand is not. A brand is a promise and a great brand is a promise well kept. A brand is just a shorthand for knowing what you're going to get. And if you're giving people different promises each day, then they don't know what to get than the brand is worthless. So we really need to understand what we are and what we're not. Healthful, tasty, socially impactful. And also guardrails up behind this is like a product should not contain more than this ratio of sugar. And then within those guardrails, we're just playing and thinking. And if memory serves me while our second line were the kind healthy grain squares. And then we created the granola kind of green clusters. And then we created the kind breakfast bars. And also many times guy having the humility to not launch something that doesn't exceed expectations like we spent two or three years designing a product where we're going to have yogurt with granola on top. And when we tried in the marketplace, it did fine, but it didn't do great. And that's by the way the hardest thing is if the product sucks, it's easy to kill it. And if it does great, then of course you launch it. But what if it's a six out of 10? Do you have the discipline to say that's not good enough? You know, kind bars by 2012 already. He was doing $120 million in sales and it was just growing. And eventually you attracted interest from Mars who purchased the minority stake in 2017. Eventually would buy it out for billions of dollars in 2020. Would they bought a controlling stake in 2020 and then they bought the rest of it in December 2024? 2024, okay. And you know, it's just an amazing outcome. And I can't imagine that you even hesitated, right? Because I imagine from your perspective the things you could do with billions of dollars were much bigger than what you could do without it. Yeah, but I hesitated a ton till the very last minute. What drove us to start on this journey was the fear that we were going to lose control of our brand internationally. We were at a trade show at the Natural Prox X Point Nanahime and a Chinese gentleman came and said, I'd like to buy your product. We told the gentleman, thank you sir, but we're not ready to go into China. Into the Chinese market, right? We're not ready to start selling in China. He said, well, I already sell your product in China. I said, okay, I assume he buys a few suitcases worth of product, takes it and sells it. It's like, thank you sir. No, no, no, let me explain it to you. Cross-docking were Costco would sell to this guy container loads of kind bars and he would take them to China and sell them in China. And he was selling millions of dollars of kind bars and we had no control over it. And at the same time, every large brand was trying to recreate what kind did in the United States and other countries. And we were afraid that if we didn't move fast enough, we were going to lose control over the brand globally and somebody else would be the first comer. So we felt that we need a partner to help us globally and our goal was to sell them the rights to sell internationally, not in the United States. And unfortunately, none of these big companies want to do that. They want to help you build internationally if you're willing to sell them the whole in China, eventually. And to this day, I mean, to your point, thanks to the resources, we're doing a lot of good things in the world and I'm very grateful on them. But I do sometimes, it's very hard for an entrepreneur that imbues their personality and their character and their story in a brand like we did with kind and it's very hard to give up your baby. But obviously, it's not my baby anymore and you need to acknowledge that and it's very hard. You are a completely out of the company, right? I mean, maybe even divested from entirely divested from. I sold 100% of my financial stake as of December 2024 and the relationship is predominantly very informal. I think I consult with them three times a year. But I'm emotionally, I'm really, really incentivized for them to win because it's my reputation too. Yeah. You know? I want to just kind of shift for a moment because, you know, kind is certainly what you will be known for, right? That's going to be on your, maybe not in your gravestone, but I mean, you know, one day we all die. When you die, that's probably going to be in the first paragraph, kind bars. But your passion, your personal passion is this idea of Middle East piece. And it started with pieceworks. And here we are today in 2026. And it seems things are worse than ever. I don't think it seems. I think they are. I think most people agree. Like, I mean, this is a long conversation. Yeah, but I wonder what you think. I mean, you've poured decades and millions of dollars into trying to build bridges. And yet, this is where the world is today. First of all, everything you said is to some degree correct. It's also the case that out of the greatest darkness comes light. And it's not just a poetic thing. It's a reality, right? When there's so much hate and despair, people realize that that's not going to get those leaders anywhere. That's when people get mobilized and activated to find a different way. And of course, I want to be clear, I'm not an optimist. I'm also not a pessimist. I'm a I worry all the time, but then I catalyze my worries into action. I'm what I call an actionist. You may recall you and I met many years ago. And I talked to you about the one voice movement and how it was moderates against extremists. And it was a very incomplete way of thing seeing the world because the better framework is builders versus destroyers. An extremist that wakes up in the morning thing, how can I deny somebody else's humanity? How can I divide the malleys and the finish? That's a destroyer. A person that wakes up in the morning say, how can I build? How can I unite? That's a builder. And the overwhelming majority of us want to be builders. We want to put positive things to make this a better world for our children. We're not doing it for somebody else's sake for our own sake. I mean, here you are now, right? You are probably getting close to 60, I think, right? 57, yeah. Which means you're, you know, you've got a lot of life ahead of you. And I know you're on Shark Tank now and you've got you invest and you're doing other things. But how much of the rest of your life do you imagine you're going to try and commit to this project of trying to see if you can make a contribution to bring about what seems totally elusive and unimaginable, which is peace among Israelis and Palestinians and their neighbors. You said earlier that if I die, would I, the story of kind would be at the top of my power forever, I hope that what I build with builders globally will be my primary contribution. This is what you're working on now. What I'm working on now, which is not just in the Middle East, but globally in the US, it's a big, big mission. So it is going to take years. But we're making headway. And I am very confident that it will be a greater contribution than kind. Dana before you go, how much of the success of kind do you attribute to the work and the grind you put in? And how much do you think had to do with just luck and timing, like the right product, the right time, the right place? What do you think? It's both. It's very hard to separate them, but there's no question that lock played a gigantic role. Because if I were wrong, if it was predominantly me, that was a genius, and all the other entrepreneurs that you interview, you'd have many more entrepreneurs that have built many multi billion dollar companies. The fact is that you can count them with your hand. The vast majority of us get blessed if we do that once. It's very hard to replicate that. So that means that yes, you also need to be worker hard and be weedy and greedy and everything. But without an element of fortune and raw and lock, I don't think there's that many people that can do that more than once. That's Daniel Lebeski, founder of Kind. By the way, in 2024, Daniel joined Shark Tank as the first new regular investor added to the series in 10 years. In his time on the show, he's invested in everything from handle of an hammocks to fitness equipment made out of firehoses to a wearable hummingbird feeder. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack. This episode was produced by Alex Chung with music composed by Runtina Reblui. It was edited by Andrea Bruce with research help from Nora Gill. Our engineers were Maggie Luthar and Robert Rodriguez. Our production staff also includes Casey Herman, Chris Messini, John Isabella, Sam Paulson, Carrie Thompson, Catherine Cipher, Ramell Wood, Niva Grant and Elaine Coats. I'm Guy Raaz and you've been listening to How I Built This.