Podcast Summary
Persistence and pivoting: Staying dedicated to the core mission and making necessary adjustments can lead to business success despite financial struggles and challenges
Persistence and pivoting are key elements in building a successful business. Seth Berkowitz, the founder of Insomnia Cookies, faced financial struggles and had to pivot his business multiple times before it gained traction. He started the company in his dorm room at the University of Pennsylvania in 2001, offering late-night cookie deliveries due to the limited food options. However, the business faced years of losses and even had to cut back on staff and resources. Despite the challenges, Berkowitz remained dedicated and eventually found success by returning to the fundamentals of his business - delivering warm cookies to customers' doors late at night. Today, Insomnia Cookies has close to 300 locations and is valued at around $350 million. The story serves as a reminder that even when faced with adversity, staying focused on the core mission and making necessary adjustments can lead to success.
College Inspiration: Starting a business from a college dorm room with a simple business model, creative advertising, and focus on quality and affordability can lead to success.
The founder of Insomniac Cookies was inspired by the feeling of home and warmth while being away from home during college. He started testing the idea by baking and delivering warm cookies to his dorm mates, using a simple business model of quick delivery and optimal consumption. The business began as a fun side project with minimal investment, but the founder's determination and focus on the warm, delicious cookies led to its growth. He used creative advertising methods like handing out flyers and word of mouth to attract customers, and the name "Insomniac Cookies" captured the essence of late-night cravings. The founder initially offered customized cookies but later focused on classic varieties to ensure consistent quality and warm delivery. The cookies were sold at affordable prices, and the founder's dedication to quick delivery and warm cookies helped the business gain popularity and eventually grow into a successful enterprise.
Media Attention Turning Point: Unexpected media attention from The Daily Pennsylvania led to a surge in sales for Insomnia Cookies, transforming it from a small-scale operation to a growing enterprise, requiring the founders to bring on help, expand operations, and seek additional resources to continue growth.
The unexpected media attention Seth received from The Daily Pennsylvania led to a significant increase in sales for Insomnia Cookies. This moment marked the turning point for the business, as it went from a small-scale operation to a more serious enterprise. Seth was a college student balancing classes and baking cookies late into the night to meet the demand. He eventually brought on a friend, Jared, to help him expand the business beyond the Penn campus. By the end of 2004, they had moved their baking operations to a commissary and started hiring employees. The business was generating substantial revenue, but the founders soon realized they needed more resources to continue growing. Stay tuned to learn how Seth and Jared explored different strategies to expand Insomnia Cookies into a national chain.
Expansion Plans, Funding: Clear expansion plans and securing adequate funding early on are crucial for any business looking to grow and succeed, even if it means seeking help from friends and family or external investors.
When starting a business, it's essential to consider expansion plans early on, even if it means seeking external funding. In the case of Insomnia Cookies, the founders knew they needed to expand beyond their initial location in Philadelphia to target the college market. They relied on friends and family for funding and opened their first few stores in college towns, but faced challenges in finding suitable real estate. They also made the decision to open a frozen yogurt shop alongside their cookie business in Syracuse, which turned out to be a significant mistake as it diverted resources and focus. Despite this, they were able to learn from their experiences and adjust their strategy accordingly. Overall, the importance of clear expansion plans and securing adequate funding early on is crucial for any business looking to grow and succeed.
Brand Identity: Maintaining a strong brand identity is crucial for building a sustainable business, even in the early stages. Avoid diluting the brand by associating it with other entities and focus on your core business to understand the target market.
In the early stages of building a business, it's essential to ensure brand consistency and avoid diluting the brand by associating it with other entities, even if it seems like a safer or quicker route to sustainability. In the case of Insomnia Cookies and Tasty Delight, the lack of clear brand identity and seasonal limitations led to financial struggles. It wasn't until they focused on their core business, Insomnia Cookies, and expanded into year-round markets that they found success. This experience underscores the importance of maintaining a strong brand identity and understanding the target market to build a sustainable and profitable business.
Founder's resilience: Despite initial challenges and setbacks, the founder's belief in the core product and determination led to the success of Insomnia Cookies through continuous improvement, capital raising, and team building.
The founder's determination and belief in the core product, despite initial challenges and setbacks, led to the success of Insomnia Cookies. The business, which started as a combination of frozen yogurt and cookies, faced difficulties when they tried to expand into the yogurt market. The yogurt stores began to close, and the cookie-only business was still unproven. However, the founder continued to focus on improving the cookie business, tweaking the model, and standardizing the product. He also raised meaningful capital to expand the business and hire a team to help run corporate operations. Despite the initial struggles, the founder's belief in the brand and the unique concept of warm cookie delivery resonated with customers, leading to the growth of Insomnia Cookies into a profitable business.
Innovation vs. Standardization in Franchising: Innovation and standardization can conflict in franchising, but strong focus on either can lead to success. Distractions and financial difficulties can arise when too much focus is given to one aspect.
Innovation and standardization can be at odds with each other, especially in the context of franchising. Seth's experience with Insomnia Cookies illustrates this tension. While he enjoyed experimenting with new ideas, such as the vending trucks, franchising required strong standardization and marketing. However, his focus on the vending trucks led to a distraction and financial difficulties during the Great Recession. Despite the challenges, Seth's belief in his business and the support of his wife kept him going. The recession-proof nature of cookies helped the business survive, and Seth's perseverance eventually led to success.
Perseverance and adaptability in Insomnia Cookies: Despite economic downturn and competition, Insomnia Cookies founder's perseverance and adaptability led to success through brick-and-mortar model on college campuses, mobile ordering, and expansion
Perseverance and adaptability were key factors in Insomnia Cookies' success during the Great Recession. The founder built the first store himself, and despite indications that the business could be another statistic, he saw potential in the brick-and-mortar model on college campuses in a late-night environment. The introduction of the iPhone and mobile ordering was a game changer, allowing the business to reach a wider audience and tip the scale from struggling to thriving. The business was profitable by 2013, but the founder remained vigilant and continued to expand, opening stores directly from the profit of the business. The business model was refined to focus on late-night areas and a balance between retail and delivery. The founder was initially resistant to working with third-party delivery services, but eventually embraced them during COVID-19. Insomnia Cookies faced competition from other cookie brands, but the founder believed the late-night Insomniac experience was unique to their brand.
Competitor Analysis: Understanding competitors' successes and challenges can inform strategic decisions and help businesses adapt. Partnerships can bring financial discipline and data-driven decision-making, leading to growth, even during challenging times.
Staying attuned to market trends and competitors is crucial for business growth. The speaker, who closely watches the indulgent food space, shares how they learned from the rapid expansion of Crumble and the acquisition of Insomnia Cookies by Krispy Kreme. Despite different business models, understanding competitors' successes and challenges can inform strategic decisions and help businesses adapt. In the speaker's case, the partnership with Krispy Kreme enabled a focus on brand storytelling, financial discipline, and data-driven decision-making, leading to significant growth, even during challenges like the COVID-19 pandemic. However, the journey wasn't without hurdles, as evidenced by a past lawsuit from a business partner.
Insomnia Cookies legal dispute: A long legal battle with a former business partner did not hinder Insomnia Cookies' growth, as the company continued to expand with the help of app culture and the iPhone.
The success of Insomnia Cookies, a cookie company founded in 2003, came from a combination of hard work and some elements of luck. Co-founder and CEO Seth Berkowitz spoke about his long legal battle with a former business partner, Jared, which lasted for over six years. The dispute arose from an investment made by Krispy Kreme in 2018, and Seth argued that it was not a liquidation event, while Jared believed he was entitled to compensation based on the promised amount. The case went to trial in 2024, and despite having different perspectives, they eventually settled at the 11th hour. The settlement marked a closure of their 20-year friendship. Today, Insomnia Cookies has over 260 stores and is expanding internationally. Seth, who has been running the business for 21 years, remains committed to it and attributes his success to the grind and some fortunate events, such as the rise of app culture and the iPhone. He believes that both factors played an equal role in the company's growth.
Community, teamwork: Successful businesses are built on the power of community and teamwork. Surround yourself with talented individuals and tap into networks and communities for knowledge, resources, and encouragement.
Learning from this episode of How I Built This is the importance of community and teamwork in building successful businesses. Guy Raz interviewed inspiring entrepreneurs who shared their stories of starting from scratch and turning their ideas into thriving companies. Throughout the episode, a common theme emerged: the power of building a strong team and engaging with a supportive community. Whether it was the founders of Airbnb connecting travelers with hosts, or the creators of Spanx revolutionizing the shapewear industry, each guest emphasized the importance of surrounding themselves with talented and dedicated individuals. They also highlighted the value of tapping into networks and communities to gain knowledge, resources, and encouragement. Additionally, Raz reminded listeners to connect with the show by signing up for the free newsletter, following the podcast, and filling out a survey on Wondery.com. The episode was made possible by a talented team of producers, researchers, and audio engineers, demonstrating the power of collaboration in bringing great content to listeners. So, take inspiration from these entrepreneurs and build your own community to help you on your journey towards success.