Hey everyone! Today’s interview is with Sean Kelly, co-founder of SnackNation, an easy, hassle-free way to get delicious, healthy snacks delivered right to your office. I used to intern for Sean, so it’s great to be able to chat with him again!
In this interview, Sean and I talk about B2B versus B2C business models, how content marketing has enabled them to grow at high double digits, month over month, why educating their customers with awesome 10x content gives them about 1/3 of their leads in return, and how showing vulnerability makes you a stronger leader.
From Biomedical Engineer to Healthy Vending Machine Founder
Sean grew up in Travers City, Michigan, cherry capital of the world, with a dentist father and stay-at-home mom who taught him the importance of health and nutrition early on. He was the kid in school who brought lunch from home with organic jam and peanut butter and whole-grain bread while everyone else was on Wonder Bread with mayonnaise and bologna!
He went into biomedical engineering to become a surgeon, but in that process he found fitness and became a personal trainer instead. One day back in 2002 he saw a woman purchase a Coca Cola out of a vending machine at the sports club he was working at and thought: you’ve got to be kidding me. If people don’t have access to nutritious food inside a health club, then what the heck is the rest of the world doing?
And that was his first foray to providing increased access to healthy foods via health vending machines.
The Evolution of SnackNation
He started with a healthy vending machine business and was placing them in gyms and schools and hospitals. Believe it or not, healthy vending machines work especially well in schools and educational environments because kids love vending machines. But adults don’t love using them as much—we’ve all heard stories of the products getting hung up or the machine not accepting your money—so in business environments, vending machines don’t work well. People don’t want to buy stuff behind glass.
And that got him into micro markets, which are unattended, self-check-out convenience stores. Imagine a miniature Whole Foods in a company’s break room where people can come in and just grab what they want—a meal, a snack, a salad, a drink—scan out with their thumbprint at the kiosk, and then go on their merry way. But the thing about micro markets is that it doesn’t sense to spend $10,000-20,000 to establish a micro market for businesses with less than 200 employees because you’re not going to get enough purchases to justify that type of investment.
So that’s where SnackNation came from. Sean says they just kind of stumbled upon it and were actually resisting SnackNation for a couple of years. About 90% of the leads that came to them said, “We want your service!” But they were just too small. So finally they decided to test it out and found out that their B2B food service sales and marketing expertise over the last 7 years played very well into SnackNation. They were able to build a decent business pretty quickly and SnackNation is now one of their major focuses.
Snacking Frequency Has Increased By 25% – Which Is Good News For Them!
Millennials snack three times as much as their grandparents and two times as much as their parents, and snacking frequency has increased 25% per individual over the last 4 years.
There are a lot of B2C companies that ship directly to the consumer, but SnackNation is focused on the office. SnackNation is a B2B healthy snack delivery and membership service that is democratizing access to emerging, innovative, and better brands by establishing the office as a hub for healthy snacking. Another way to say this is: they deliver the best healthy snacks that make people feel awesome and make employees feel cared for to the office on either a weekly, biweekly or monthly basis.
Typically 2/3 of the contents of each box is different from the previous month so there’s constant rotation and people don’t tire from the same thing every time. What’s really interesting is that they’ve become the discovery point for their consumers who are telling them that the first time they see any of these snack brands is through SnackNation. So they’re really a discovery and curation platform that takes care of snacking in the office.
How They Stand Out In Such a Crowded Space
Almost everybody else is B2C, which is a really challenging model. You’ve got a much higher churn rate because a customer is going to be much more fickle than an entire office. Plus you just have a much higher revenue per member when your “member” is an office of 10-100 employees.
So even though these two business models (B2B and B2C) seem similar in terms of the distribution of snacks and increasing access to healthy snacking, they’re actually quite different. Look at Nature Box, for example, which, for the most part, acquires customers via online funnels, and are certainly important to Sean and his team, but they’re far, far less important than their inside sales team. When you’re B2B you’re going to acquire sales primarily through an inside sales team rather than online acquisitions funnels.
They’ve had all the B2B processes in place from micro markets and vending machines for the last seven years, so they have learned what to do and what not to do. If they had started from scratch, decided to launch SnackNation without all this other experience, without having built this foundation, it would have taken them a lot longer to get to where they are.
Acquiring Their First 100 Customers
SnackNation gets more leads on healthy vending and healthy micro markets than any other company out there, so they built a really good online presence around healthy vending and convenient on-site food service. And even though they’re now not the best leads, the first 60-70 actually came from existing leads, people coming in and saying, “I want a healthy vending machine or micro market,” and they just converted them.
Beyond that, they knew that concept was going to be very important, so they’ve been writing great articles around employee engagement and employee retention, creating an awesome office, creating a great experience, and personal growth inside the work space. That has actually been their main inbound lead generation tool.
Earlier this year Sean formed the Association of Workplace Engagement (AWE) to help companies create more “awe” in their office, create an environment where people can truly thrive because the business is maximizing employee well-being and productivity. After hosting their big Awesome Office event a few months ago plus their Awesome Office show and all the stuff around AwesomeOffice.org, that’s become a great funnel for them, too.
They also use Google AdWords—and do a really good job on the cost of acquisition—and a Facebook funnel, which is a little tough as a B2B so they still don’t have their numbers where they’d like them to be. So far, it’s really been about content. Sean is a huge believer in truly meaningful content that you, yourself, would love to read, and thinks that if you’re not positively transforming your customer, you’re going to be hurting.
So about 30% of their leads are coming in from that content marketing. And then the rest is from their inside sales teams.
Deliver 10X Content for 100X Returns!
SnackNation is growing at high double digits, month over month—10x in ARR (Annual Recurring Revenue) in 2015 alone, which is more difficult to do as you get larger and larger. They’re doing this primarily through educating their customers—focusing on the positive transformation of their customers through great content marketing. That medium is where they get about 1/3 of their leads, as well as through a quickly-scaled and fast-growing inside sales team which now has over 30 people.
Keep in mind that writing keyword-stuffed content for content’s sake may have worked 10 years ago, but today it does not. If you create 1x content, it’s just like all the other stuff that you’re seeing out there, and you’ll actually get less than 1x returns, so for the amount of time you spend creating that content, you will not get an ROI that you’ll be happy with.
But if you deliver 10x content, content that you know is awesome because you’d want to read it, and that educates the reader, not only are you going to feel great, but you’re going to receive at least 10x, if not 100x on returns. So their shift in creating awesome content that they like and their friends and fellow CEOs want to read has been ground-breaking for them.
On the Brink of Failure…
Human launched in 2008 and Sean and Andy Mackensen (co-founder) made the relatively common mistake of trying to build up this perfect platform before launching. And because he had a previous nutrition distribution company, he wanted to improve everything and make this absolutely perfect before they launched. However…
Well, we all know that you don’t really learn until you get out on the market, you don’t really learn until you have customers, you don’t really learn until you see what’s not working in the field.
After spending 18 months perfecting it, they finally launched with 50 vending machines in the field, and almost all of them were having significant issues. So he and Andy—not the manufacturer, not the vending technicians—were flying across the country constantly to see what was going on. And he knew that if they did not get these machines working, if they had to issue refunds, their business would be a 100% failure.
So pretty much from the very beginning, Human almost lost course and they would not have been able to continue on. But, clearly, they figured it out, learned their lessons the hard way, and went on to success.
A Piece of Advice For His 25-Year-Old Self
One of his main mentors told him that he was not empathetic—and this man was a phenomenal leader and businessman—because he associated empathy with weakness. People who know Sean know that he’s a really compassionate guy, but there was a time in his late 20s where he thought that being a leader meant not showing weakness, being super direct, and always knowing the course.
He’s learned since then that having empathy for others is absolutely not the same as weakness. It’s understanding where people are coming from. And showing vulnerability as a leader is also not a weakness. It’s admitting fear, it’s admitting you don’t always know how to do things, but in doing so you create more trust in the people around you and you create a better team environment. So at the end of the day, he says he would tell his 25-year-old self, “Don’t be scared of being empathetic, don’t be scared of being vulnerable. Be strong and be direct and be confident and have conviction and have strong character.”
Remember that at the end of the day, as much as we all want to talk about online acquisition and digital media and inside sales teams, business is about people, and if you are not an empathetic and vulnerable leader, you’re going to have a really tough time building the culture and the environment that you want.
How Sean Kelly Structures His Day
I am a fervent believer that the success of the rest of your life will be determined by the first two hours that you spend in the morning.
A typical day for Sean:
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Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.