She Built a $100M Vegan Empire. Here's the Leadership Mistake That Brought It Down. (Ft. Slutty Vegan)

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at my peak 14 locations slutty vegan it cost me between 800,000 to a million to open up each location the problem is is that when you grow that fast right sometimes you put basketball players on a golf course you understand what I'm saying so you got people that do an incredible job in their skill set but then you position them somewhere else and they can't do what you need to do to take you where you need to go

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Hey, welcome back to another episode of Leading Through Growth. I'm Tony Sanders. I am your host, and we're going to do something different this week. We are not going to have a guest. We're going to do what I'm calling a growth trap case study. This is where we examine a business who has fallen into the growth trap, and the growth trap is when the business explodes and has this tremendous amount of growth, but the leaders aren't being developed at the same rate.

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And so what eventually happens is because the business is growing really fast and the leaders aren't growing at that same rate,

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the business eventually grows to a spot where the leaders can no longer handle it. And that's what happened with our case study example today. Slutty Vegan, which was founded by Pinky Cole, is really an American entrepreneurial story. It's one of the great ones. Imagine you starting a business out of your apartment on Instagram and that business eventually becoming a $100 million business.

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And then eventually bankruptcy. This is not a failure story. It is a great story about what great entrepreneurs can do when they are growing their businesses. But it's also a little bit of a cautionary tale to show you what could happen when businesses grow, but they don't develop the leaders to keep track of it.

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And so with Pinky Cole, she did an amazing job going from her apartment and Instagram and food truck to a first brick and mortar location, which had like lines wrapped around it forever. It was almost impossible to do that. She built something culturally that I don't think we've ever seen before. I've never seen a restaurant be able to build up this culture around vegan food, especially for the black community, the way that she did. She experienced tremendous growth.

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And then tremendous loss. And so we're going to talk about it all on this episode of Leading Through Growth. I hope you're excited. I hope you're ready to learn not just about what Pinky Cole did, but what you can do at your business.

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We'll take an approach on these episodes to talk about the growth trap and these case studies really in three unique phases. I want to talk about the rise of the company. Then I want to talk about the growth trap itself and when it when it eventually settles in. And then I want to talk about recovery and not all these companies that we're going to cover in this series will recover. But we'll talk about what recovery could look like from a development standpoint. And again, we'll keep it from a leadership lens point of view.

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When we think about Slutty Vegan, it started in 2018. And Pinky Cole, according to all the things that have been documented about her, she started this Instagram food delivery service that eventually evolved into a food truck. And then in 2019, she opened up her first brick and mortar location. I remember hearing...

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from family members of mine who live in Atlanta. Like, listen, when you go to Atlanta, you have to try Pinky Cole's Slutty Vegan. They have this and they have this and they're calling out these crazy venue items and it just sounded like a fun, exciting thing. I have never said fun and exciting and vegan in the same sentence until Pinky Cole. I just haven't. That's not the way that I think about food. You know, there's some other things when we think about food, I'll say fun and exciting, but that wasn't one of them.

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But she did that right. She created this cult like brand where they sold out nearly every day. They didn't even need to have hours, operation hours, because they were going to sell out almost no matter what they did. And so that was in 2019. By 2022, just three short years later, they raised a series, a round of fundraising, fundraising of twenty five million dollars. And that gave them a one hundred million dollar valuation.

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I have my notes here at that time. They had 14 locations across four different states. And here's the part that I want you to pay really close attention to. Each location costs between $800,000 and $1 million just to get it open.

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At my peak, 14 locations, Slutty Vegan, it cost me between $800,000 to a million to open up each location. I raised $25 million in 2022. Company got valued at $100 million. We kicking in the middle of a pandemic, in the middle of a time where inflation is through the roof. You know, right? Inflation is through the roof. Supply chain is crazy. So, like, there's like a 6X on everything.

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And when I start to hear some of these things, a couple of questions pop into my brain. Here's the first question that pops into my brain. Okay, we're going to put $800,000 to $1 million in each one of these locations. Okay, great. If we're going to invest $1 million in the building, that's great.

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But we need people to run and operate the building. So how much money are we invested into the development of the leaders? I don't have the answer to that question. What I do have is a quote from her saying that,

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By 2023, when their corporate overhead hit $10 million a year and they were burning $100,000 a week, Pinky said the problem is, and I'm quoting her, when you grow that fast, sometimes you put basketball players on the golf course.

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The problem is, is that when you grow that fast, right, sometimes you put basketball players on a golf course. You understand what I'm saying? So you got people that do an incredible job in their skill set, but then you position them somewhere else and they can't do what you need to do to take you where you need to go. Basketball players on the golf course lets me know that she had a bunch of people around her that were good people and talented, but not prepared to lead the company at that level.

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It's like they were really good at the wrong sport. And I see this at so many organizations on a regular basis where they have really good people

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really good from a cultural standpoint, really good from a core values, good on integrity, really skilled sometimes at certain skills and aspects of the job, but they've never run a $50 million branch. They have never taken a company from 300 employees to a thousand employees. They've never done it. And it's not bad, but it's just the reality of the situation. And so we have a bunch of people who've never done it,

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The only thing that we can do is to help them prepare to do it at a high level, right? Whether that means investing in their growth and development by sending them out to external workshops and develop them as leaders or bringing in consultants to make sure that we are preparing them to do it.

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run the business at that level. So when I hear that saying, basketball players on the golf course, I know that she's saying our people, they really weren't prepared for this. And there's usually four failure modes that I want to give you when we think about rapid growth at a company. Number one is you get this role explosion, right?

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So imagine this. Imagine you get hired for a role and it's one thing. The job description says you're going to be running one location and then the business just explodes and all of a sudden you're running five. What does that mean? That means demand increased. That means complexity increase. That means expectations increase. Hopefully your pay increase, too. But what it doesn't always mean is that your development increased.

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Who came to you and gave you the playbook to say, hey, I know you're running five locations now. Here's how you do it. Here's how you run five locations. That usually doesn't happen. What usually happens is someone will come to you and say, hey, you're doing really good at this one thing. If we multiply it by five, maybe it'll be okay.

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And it's not OK. And we all know it's not OK. And so when we think about that, there's a development gap that just was created there. And we didn't really think about it. We didn't consider it. All we know is we need someone who has somewhat proven themselves to be capable of doing this. And we just throw it all at their feet and hope they can figure it out. You'll hear things like if you're smart, you'll figure it out.

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If you're smart, you'll find a way. Well, here, I got news for you. You can be smart and not figure it out, or you can be smart, and by the time you figure it out, you're burnt out and you don't care anymore. You're ready to walk out. And so that's the first thing that usually happens is this roll-scope explosion where you were doing this one thing and now you're doing all of these things, and it gets really, really crazy. The other thing that I see is really common