This is a follow up article to How I Reinvented Our Company in 5 Days.
At the start of 2020, we were forecasting a record year. Now, after a rollercoaster of a spring, we’re actually beating the projections we made pre-pandemic. This post picks up from the previous post and covers the tactics we used and lessons we learned as we scaled from $0 revenue to having entertained over 10,000 guests.
March, April and May: A Sprint to Break Even
We didn’t know if our new virtual culinary experience approach would work, so March, April and May became a sprint to validate the product and try to break even.
As the country entered shelter-in-place, I took quick steps to reduce expenses: I cancelled subscriptions, stopped taking a salary myself, and laid off all employees except for a bare bones staff. Cutting expenses helped lengthen the company’s runway of remaining cash and the early layoffs enabled our culinary guides to claim unemployment.
The video call in mid-March to layoff my whole NYC, LA and SF guide team and support staff was the lowest emotional point I’ve ever felt during my time in business. Through tears, I dismantled a company I had spent 10 years building.
Next, after reducing my weekly burn rate, I decided how much money I was willing to risk investing in our new virtual business — if we couldn’t make it work, I’d have to put the company in hibernation (or come up with something new to start). Then, based on my weekly burn rate, I set weekly sales goals and created a weekly virtual event scorecard in order to track our actual sales and compare with our goals.
My Director of Sales reported daily on our leading indicators: number of leads, dollars coming in the top of the funnel, and dollars booking. Then, I calculated the estimated profit we would make from those bookings. I set a weekly increasing goal that I needed to hit in order to move to the next week and keep the company going.
At the end of every week on Sunday, I had an excruciating decision to make. Do I keep going? Or do I cut my losses? Luckily, we kept trending toward break even, so I kept going.
Leverage Existing Assets
In order to produce our virtual mixology and virtual chefinars, we tapped our great network of chefs and bartenders from our in-person food tour business and brought back our guide team as emcee hosts for the events.
On the sales side, we leaned on our personal networks and long list of past clients. We reached out to our customer mailing list — and it worked! Do not underestimate the power of the people around you to be early adopters and support you. In the second week of our new virtual business, we earned just $400 — I’d never been so happy to earn $400 in my life!
Sell and Market Before you Build: Validating product market fit
We initially launched with 2 products: 1) The Break Room: Culinary Team Building Games and 2) Chefinars with Ingredient Delivery. However, now, a third product, Virtual Mixology is our most popular product.
By marketing the first two products, we were able to book calls with potential clients and get feedback on those products. We quickly realized we were missing a crucial product. Clients kept mentioning they would buy a happy hour-style event. After hearing that feedback, we built our virtual mixology product with ingredient delivery, shipping nationwide.
Having tight communication between sales and product during our daily OODA Loop meetings (read about OODA Loop here), allowed us to quickly test new product ideas and listen to our clients and build what they were asking for.
Listen to Client Feedback
One particular client booked 3 Cinco de Mayo mixology events each 3 consecutive days in a row. After the first margarita event, we received some negative feedback about our event as the client wanted more interaction for their guests. With such a short timeline and their next event the following day, our team set up a brainstorm with our bartender and rebuilt the whole flow of the event to be more interactive — we asked guests to bring 3 unusual ingredients from their kitchen to enhance their margarita: a spice to incorporate into their salt rim, a fruit or vegetable to muddle in the cocktail and a wild card item like kimchi juice or garlic. The interactive portion went so well and our clients enjoyed it so much — that it became a new style of event and product offering, Stump the Bartender!
Client needs also informed our Virtual Large Group product. We began receiving inquiries from 100, 200, 300+ person groups but recognized that our per person pricing model for small groups was not conducive to large groups. Instead, we needed a flat rate pricing structure. Since conferences for the rest of 2020 had been cancelled and moved to virtual, we booked phone calls with any new large group organizer to understand their needs.
One client asked for a cocktail with their brand colors, green and orange. We said yes! One client asked for their logo inclusion on the pre-event pages and displayed during the event. We said yes! We began to see patterns and after understanding their needs, we built a product concept, created beautifully designed marketing materials and began selling it. Our new virtual conference product is now available for bookings.
The Break Room: Cutting Quickly to Focus on Success
Our original hypothesis was that corporate team building budgets were going to be reduced, so we built our Break Room: Culinary Team Building Game Product and priced it at $25 per person with a 10 person-minimum. We had 2 companies book it in the first week. We beta tested it 3 times, and 24 hours after our third beta test, ran it with paying clients, all in the same week.
Our hypothesis in the early days of the pandemic was wrong — team building budgets weren’t just reduced, they were sometimes cut to zero. We ended up finding success with sales teams entertaining clients, so this product didn’t meet clients needs. Additionally, as the economics of this event were not as good as our other products, eventually, we converted this product into an add on to the other more successful products and no longer offered it as a standalone.
This was a calculated risk and I’m so glad it paid off. I’m deeply grateful to my team, my network and early clients for helping us virtually pivot. In my next post, I’ll detail how we scaled and built upon our initial successes.
*** To read about the continued success of our virtual pivot, read our third post, Doubling Down: Professionalizing and Scaling During a Pandemic.