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We just decided let's, let's stop dreaming and, and talking and start doing. We put a date in the calendar when we would both resign from our jobs on the same day and, you know, move to London and start Black Sheep. We had 20,000 pounds b- between the two of us, and we built the first few shops ourselves. We signed, uh, over 60 new shop leases, and we had 35 shops at the time, and, uh, we didn't have money to open a single one of them. It's fun. I, I think at the same time, it's taxing when you're in multiple markets until you get established in each. We're kind of wearing two different hats depending on which market you're in. It's been, uh, 13 years now, so that's it's a good acid test that we haven't killed each other yet. Welcome to The Business Game, the show that breaks business down into real levels, from zero to $200 billion, so founders can see exactly where they are and what comes next. Today's guest is playing at level six, which sits in the 50 to $150 million bracket, the architect stage. At this level, governance, data, finance, and infrastructure can't be informal anymore. They must be engineered. The challenges? Enterprise systems, compliance, cross-functional complexity, and financial sophistication. The goal? Architect a resilient, data-driven organization built for serious scale Welcome to The Business Game. I'm Steve Plummer. And I'm Kalina Steno. Be sure to like and subscribe to the show wherever you're listening. Today we're joined by Eirik Holt, co-founder and co-CEO of Black Sheep Coffee. In 2013, Eirik and his team bet on a type of coffee the industry had largely written off, challenging decades of conventional wisdom and building an entire brand around being the Black Sheep. Do you have water do you want to- Yeah, yeah, all good. All right. And that bet paid off. What started as a series of bootstrap pop-up coffee stands has become a global brand with more than 100 stores across Europe, the Middle East, and the United States. Along the way, he shut down an entire wholesale business to go all in on retail, built a franchise network that now powers most of the company's growth, and expanded into Dubai and Dallas in the same year. And today, Eirik is navigating the challenges of scaling internationally, while proving that sometimes the best opportunities come from going against the grain. Let's dive in with Eirik Holt. All right, fantastic. Eirik, welcome to the show. Thanks for having me. Pleasure. Thank you. For our listeners who are meeting you for the first time, what's been your journey from childhood until now, and what were the steps that led you eventually to sitting in front of the microphone today? Yeah, so, uh, I, uh, as, as you can tell, uh, I've still got a bit of an accent. I grew up in, in Norway, and, uh, uh, I guess always, always had a, an idea that I wanted to build something of my own. And, and so when I went to college to, to university, I went to Scotland where I met my co-founder Gabriel, who had similar aspirations. And so, you know, we, we naturally chatted about, uh, about starting something together early on, and we were really passionate about, uh, about coffee. And, and so wh- what we landed on in, in terms of, uh, business ideas that we wanted to pursue, you know, we had some very simple criteria. Uh, we wanted something we could really stand behind and felt passionate about. And, uh, and so then we were both in corporate jobs after leaving college, and we'd been chatting more seriously, uh, on Skype at the time. You know- Mm-hmm we would dial in every, every Sunday, uh, and, and have a chat. And, and at one point we just, uh, decided let's, let- let's stop dreaming and, and talking and start doing. And so we, we put a date in the calendar when we would both resign from our jobs at the same, on the same day- Oh, wow and, and, you know, move to London and, and start Black Sheep. So that's, that was in 2013. So it's, uh, yeah, uh, k- you know, it's been a, been a, been a few years, uh, of, of doing that and, and, and that's what I've done the, the bulk of, of my kind of professional life if, if you like. Yeah. Yeah. So, so just on that really quickly, that date you set, was that a nervous time coming up to the date where you're both going to resign or was that, um, an exciting time? Yeah, it was a, it was an exciting time and- Mm-hmm and I don't, I don't think there were any hesitation, uh- Cool there for, for either of us, actually. Um, we, we had a very, very vague idea of, uh, of the, of the business plan- Yeah and, and what we were actually going to do. Like, we hadn't come up with a name for the company, for example. Um, we knew s- we, we knew the sector we were going into and, and, uh, and, and had an idea of, of what we would like to, to change and, and do differently. And, um, and then the rest is, you know, really come to- come together after that, so. Yeah. Yeah. Wow. Mm. And so when you set this date, was... You didn't feel that you could be building while you were working? 'Cause I know that a lot of people try to do that. Mm. I know it can be challenging. Mm. Um, is that something you just felt, "No, we need, we need all hands on deck. We need a clear calendar where we can just get our teeth straight into this thing that we wanna build"? Yeah, I think for us, we, we really, uh, we really thought that if, if we're gonna compete and, and win and, at anything, everyone else are gonna be dedicating their, you know, all of their- Yeah brain power and passion and- Yeah and, uh, time to, to being the best at that. So, so if we don't, then, uh, you know, it would be a bit, uh, foolish to think we can, uh, we can build something great and- Yeah and, and so we did, uh, we did take it a step further than that and, and say as part of the, the roadmap for the venture that we're not gonna have any outside interests. We're gonna be doing, pursuing this, you know, day and night, uh, without any other commitments. And, and, uh, and we're gonna be building one brand and, and, and not run multiple brand. Yeah. And, and that was pretty important kind of- Yes principle and commitment we made to each other on, on day one. Yeah. Mm. That's amazing, and it's really great that you've been able to find a co-founder that you could create those non-negotiables with from an early stage, 'cause I think that that's, um, goes unnoticed a lot with co-founders- Mm is finding someone that you can both- Yeah both agree and go, "Yep, cool. We're in this together." So that's really cool. Mm. Um, going back to 2013, you launched the world's first specialty grade Robusta coffee in a market that was completely dominated by Arabica. Can you walk us through that decision? What did you see that everyone else was missing, and how did the industry react when you went against the grain? Yeah, so I guess we were, we were coming into an industry, uh, really as outsiders 'cause we had, uh, uh, certainly no coffee experience other than as consumers. We really liked coffee as a, as a product. We really liked how the industry was evolving and, and quality, uh, of the bean and, and, and I mean, I'm kind of preaching to the choir here 'cause y- you, you know, the, the, the coffee scene in Australia and New Zealand, but also in, in, in Scandinavia and, and, you know, certain parts of the US was, was really advanced and there was a, you know, a real shift in, in, in quality. Um, but at the same time, we, we didn't feel like that was necessarily addressing the, the, the broader market and, and on, on researching, you know, more, more top-down 'cause, 'cause we started, you know, from, from the top, like global coffee market 40 per, uh, 40% of the market, uh, was, uh, was effectively, uh, a bean we, we had never tried and, and never heard of, uh, and certainly hadn't seen advertised, robusta coffee. And we just couldn't figure out why that was, 'cause the, the properties of robusta, uh, seemed very promising. Uh, you know, there's some objective, uh, differences there in, in, um, the caffeine content and, and in acidity. It's a, it's, it's a full pH point different in acidity and, and alkaline eating and, um, you know, the acidity in your diet was, was a big focus for health conscious c- consumers and athletes. Yeah. But beyond that, in terms of taste profile, the, the robusta bean had notes of, of walnuts and chocolate and, and if you... And it had more body, so it, it would punch through the milk more in, in what is for the majority of market, uh, a product you consume with milk or, or these days, an alternative milk. Yeah. And so, so we thought, uh, you know, the, we, we can't find a, a good reason why this bean isn't being served and why it's all about 100% Arabica. Mm-hmm. Uh, and surely if you can have all of these qualities with, uh, the same processing and treatment that you have for a fine Arabica, so you don't have the defect beans, you don't have the moldy beans. Yeah. Uh, you don't use, you know, lots of pesticides, then the results might be amazing. Yeah. And so the hypothesis was if, if we can find a robusta bean that can stand on its own- Yeah um, we'll be the black sheep of the coffee industry and, and go completely against the trend in, in the market. And- Yeah um, ultimately that's, you know, where, w- what we ended up doing and, and what we have been doing since. Yeah. Wow. And in those early days, how did you communicate to your initial customers about that, um, the coffee that, the bean- Yeah that you were producing and why it was different? Because like you said, a lot of consumers, people are just, they want a good cup of coffee. They don't, a lot of people don't know what kind of bean- Yeah they're drinking. Yeah. You're almost changing a habit, right? Correct. It's a behavioral shift- Yeah. Yeah um, to a degree. So how did you communicate that early on? I, I think the honest answer is, uh, very poorly 'cause we didn't do great comms or marketing or, or, you know, our first, our very, very first, uh, shop and interaction with customers was a rented coffee machine and a trestle table and a, and a very makeshift self-built coffee bar. Yeah. Fun. Um, that, you know, and l- looking back was, didn't look very professional or, or- Yeah um, or very impressive at all. But we did early on also r- really buy, buy into this idea that, you know, we, we, we might have a hypothesis or, or some cool idea, but this isn't gonna be very sustainable if it's just a, a novel idea and, and something interesting. Mm-hmm. Customers are gonna come back if they l- if they actually really like the flavor and, and love the product- Yes and the experience that they have at the shop. So the acid test for us was, uh, was whether we would achieve that and, and, and very organically, uh, drive, you know, customer retention and word of mouth, and that people would just like the product. I, I think very, very few of our customers knew, uh, the difference between robusta and arabica in- Yeah in the early days. They just, you know, they, there, there are some, some early adopters, uh, in any industry and, uh, you know, if, if you can speak to those and, and word spreads, then, then you can go from there. Yeah. Mm-hmm. And it's, um, it's really interesting too, isn't it, that from a trestle table- Yeah now to a level six type business, which is, you know, truly an international business, it's, it's a fascinating and, and, um, inspiring journey. So congratulations on that, Ari. That's, um, yeah, trestle table to international business is, it's quite- It's very cool. Yeah, it's, it's pretty cool. Yeah. Yeah, it's, it's, uh, very, you know, very different stages, uh, uh, of, of building and, and different challenges along the way, which r- keeps it interesting. But, yeah, we're, uh... That was o- one of the principles when, when we started also is as long as we're having fun doing this, you know, I think that's a really important ingredient, that you feel passionate about, uh, the journey itself. Yeah. Absolutely. Yeah. Yeah. So you've gone from that, almost that contrarian founding moment to now a, a level six business, as I said. And as you get that big, it becomes less about growing the business and more about governance and systems and, and, and leading a global organization. So, uh, just reflecting back on that journey, how intentional was it to build the entire brand around that contrarian philosophy? And, and how do you keep that challenger mindset alive as the company grows and gets more complex? I think, um, in, in some ways it was, uh, a, a bit of a byproduct of just coming in as outsiders and looking in with, uh, th- more through a consumer lens that you're inevitably going to be a bit of an outsider in, in an industry and, and a- Yeah and a bit of a challenger in, in that sense. Um, but we certainly didn't, uh, start a coffee business to, to be a challenger brand. We, we thought the incumbents here are, uh, you know, we can provide a better experience and, and, and compete and, um, and we always had an ambition to, to build a global brand, to build- Mm-hmm for the very long term, you know? We looked at, um, the incumbents that ha- had been built within a generation and thought, uh, you know, this is gonna be a, this is a very execution intensive industry. Um, but there's cer- certainly an opportunity here l- long term to, to build something great and then you, you know, you're i- in terms of, um, the kinda core tenets of, of the brand and it, it's, it's come, come about, uh, a, a bit by chance that we had the point of difference, uh, with the, with the robusta bean. But, but at the same time we recognize there's nothing proprietary about- Mm serving robusta coffee. Like, anyone's welcome to- Yeah to, to, uh, to do that. There's no, there's no trademark or patent that protects that point of, of difference and, and that applies to anything else in, in the business. So I think, um, you know, it's really, it's really about being better on m- multiple factors and, and, and recognizing that early you can't, you can't just kind of hold onto this ear- early point of difference, um- Yeah, yeah That's a good point you had in, in this industry. Yes. Yeah. Uh... Yeah. I, I do have a, I, I don't know if I've ever had a robusta bean. Like, how would I know if I'm drinking arabica or a robusta? Well, y- y- y- you should, you should, I think the best, best way is to, you know, try one and you'll notice it's a very, it's a very distinct flavor. Yeah. Mm-hmm. And, um, when brew... So 85% of, of our sales are, uh, 100% Robusta coffee. Yeah, I like that. And it's, uh, in a different body and, and mouth feel. Yeah, interesting. Um, yeah. Well, I, I guess the answer is to buy some Black Sheep coffee, right? Yes. And try it. That's- Yeah. What's the reason, do you think, that, um, everyone went with the Arabica or the- Mm you know, a majority went with Arabica? Is it a pricing thing? Is it a sourcing problem? What, what was it, or is it just a trend and everyone kind of followed? What, why is it that that was- Mm something that wasn't being used? 'Cause it sounds like a better bean to me you know, we couldn't really un- understand that either, but I, but I think what w- the conclusion we, we came to, uh, was this had to do with, um The, the way you, the way you grow and, and the cost of growing, uh- Mm-hmm the two beans in high volumes where, you know, one grows on bigger trees with a higher yield per acre, and so it lends itself more to mass production. Yeah. And so- Yeah in the early waves of coffee commercialization where instant coffee and freeze-dried coffee was really pushed into everyone's, uh, homes, um, at that point there was a bit of a race, uh, over who could produce coffee the, the cheapest. The, the input into that process mattered less. It needed to be, be coffee with, with... there was certainly less attention to- Got it to detail and, and processing methods. And so off the back of that, Arabica became synonymous with, um, with quality and, and there was- Mm a, a very easy way to get a s- get a seal of approval if you could advertise that. And so you'd find the slogans on, on all the coffee bags, "Only fine Arabica." E- even though the, only a small fraction of Arabica production was premium grade. Mm. Yeah. That became a big, uh, big marketing message. And, and, and in turn it, it was a vicious cycle 'cause then no producer would have an incentive to- Yeah actually apply, uh, these processing techniques to Robusta beans 'cause you, you wouldn't get a premium for that extra effort in the market. There, there just wasn't a, a market for, um, high, high grade Robusta coffee. And then I think that's, um, you know, that, that's changed, uh, since, um, just before we started Black Sheep. And, uh, and I think we'll... The, you know, it's certainly on a, on, on a course now to, to be a much bigger deal in the future 'cause it, as, as it turns out with, with climate change and temperature fluctuations, it's much harder to grow Arabica coffee or, or organically. Yeah. And so Robusta has a lot of advantages in, um, in this, you know, changing world. Yeah. Interesting. Watch this space then, hey? Yeah. Yeah. Hmm. So in 2015, you made a bold call to shut down all B2B and wholesale- Mm operations overnight and go all in on retail coffee shops. That's a significant revenue risk. Uh, so what gave you the conviction to make that move, and what did the business look like on the other side of it? Yeah, so we had, um, we went out on the, on day one, uh, in kind of all directions. Uh, so we were in the coffee industry, but we did B2B wholesale. We went into some supermarkets. We had the, um, the pop-up shop operation, the retail operation. And what, what we found was, um, the, the B2B wholesaling, if you play that out, you, you don't really notice when you have a small number of locations, but as you ex- as you expand, you, you inevitably end up competing with your own customer on the one hand. So you might be supplying an establishment with, with beans and machines, and then open a shop next door. Mm-hmm. Um, but also it's much harder to deliver the same product and the same experience to customers if you don't control the en- the entire package, so the interior and the- Mm the service level and the complementary products, the, the, the music, the whole ambiance of, of the shop. And so, so we just thought, you know, these are, these are two different, um, industries. Uh, also what we hadn't appreciated with the, with the B2B channel was aside from distributing coffee beans and, uh, you know, we would also get like the, the phone call on a, on a Sunday that, you know, there's a plumbing issue. The, the machine you've supplied is, is, is broken, and so, so you need, you know, your whole engineering network to service that. And, uh, and we just thought this coffee shop- Mm-hmm retail model, that's what we really enjoy and, and that's also where we can really con- control the- Mm the customer experience. Mm. Yeah. Yeah. So with that, B2B wholesale was the only, uh, in aggregate, profitable part of, of the business at the time. Uh, but we did take the tough decision to, to just shut it down overnight. Wow. Yeah. Mm. And what did that moment look like for you? When was it that you both just agreed, "Yep, okay. Let's, let's just go all in on this, the coffee shops, and shut down everything else"? Where was... H- how did that land? How did that How did you end there? Yeah, so it was, it was, um, um, year and a half after we- Okay we started. Yep. So we had, um- We had our first permanent location, like a small kiosk, um, that was trading, but, but we also had about 150 wholesale accounts at the time. Yeah, wow. Um, so, um, you know, it, it was, it, it was very clear that you couldn't, uh, operate those two models in tandem long-term- Yeah. Sure uh, without major challenges. Like, uh, it, it was clear to us, you, you... we had to, to do one or the other. Yeah. Um, yeah. Yeah. And, and, and I, and, and I think, you know, it's, um, it's a difficulty that many smaller retail companies run into when you're trying to, you know, on the one hand just generate enough cash to stay afloat- Yeah and, and you have these different channels that you can loop into the business or different ways to capitalize on, on a, on a kind of fledgling brand. But at the same time, it's, uh, it's not gonna be viable long-term, and it might be a, a blocker actually to grow to the next level- Yes unless you pick one or the other. Yeah. Uh, so, so we did see a lot of peers in the space who would, um, who, who would run these multiple models, uh, in parallel. Yeah. Ric, I just wanna, I wanna pick up on something Kalina, um, mentioned there about decision-making. Um, how do you and your business partner make those decisions, for example, to stop doing the, the wholesale? Have you guys got a process you go through? Good question. You know, do you flip a coin? Like how is that, how does that work for you? And have you got any wisdom to impart on our listeners about if you're in a partnership, what are some good ways to go about, um, decision-making within that partnership? Yeah, I think, um, you know, we take, uh, we, we take decisions fairly quickly. We're very- we give very direct, uh, feedback to each other, and I think the- Yeah th- at least for us, you know, there's lots of different ways a, a partnership can work. I think we've found the, the, um, ability to, to really... I mean, one- if, if one of us has an idea, uh, it's the other's duty to try to poke holes in it and- Yeah, okay and, and shoot it down and- Yeah and then we're, we're both, uh, uh, trying to, trying to keep, you know, get all, all the facts on the table and then- Yeah and then take, uh, the rational right decision. Yeah. Um, but I do think, uh, you know, we share this view that, uh, action trumps inaction. You need to keep moving, and you need to, to do stuff, otherwise you can, you can kind of sit there and, and, and philosophize about what ifs and, and, uh, and what to do. And, and, you know, uh, our, our approach, and, and we really try to instill this across the business, is one of let's, uh, let's try stuff out, let's make some mistakes along the way, uh, and let's go two steps forward and, and, and one back- Mm-hmm rather than trying to avoid errors. Uh- Yeah we're expecting everyone to make them. It's, it's fine. Let's, let's make them fast and, a- and, and hopefully there's, there's more wins than, than mistakes, uh, in the long term. Yeah. Yeah. Yeah. Yeah. Can we talk a little bit about your growth journey, in particular with, with team? Uh, 'cause, you know, entrepreneurs, founders always complain about customers and staff, right? Yes, yes. That's just- it's people. It's people. People- It's a people problem. Yeah, pe- pe- people can be difficult to deal with. So you've described your team as still relatively small for the, the pace that you're growing at. So what does that tension actually feel like day to day within the business, and, and how do you decide where to invest in people versus staying lean and growing fast? Yeah, I th- I think f- for us the main, um, I think the main challenge recently is when you expand geographically and, um- Mm you, you don't have your, all, all your functions and your, your full A-team, uh, that knows the business, that have worked together. You know, that, that, that have established ways of working, um, in each of the markets. And so, you know, you, you, you execute across multiple markets, but, um, with some cross-border support and it's, um, uh... And, and we're in that, that gradual, uh, um, limbo phase- Mm-hmm right now. Um- Mm. At, at, at, at the same time, historically on, on how we're, we're building the team and building the business, because there's a constant need, uh, for everyone's roles to, to evolve and, and for the or- organization to ro- uh, to evolve. Um, a, a learning and or, or a mistake we've had in the past might be to, to go very top-down about, you know, what is the- Mm-hmm organization structure that we ought to have today, and then try to fill that. Uh, it's not gonna result in very fulfilling roles necessarily or, or a very functional team. And so the, the way we think about it today is much more of a bottom up, and, and have done for a while, is- Yeah really much more of a bottom up, like what needs doing and how do we achieve that in the best way possible? Um, and, and who as a result, uh, might we need to, to join our team? And that's, that, that's definitely been a m- um, much more productive and, and much more rewarding way of, uh, of working for us. Yeah. The Business Game is proud to partner with HighLevel, the all-in-one CRM and marketing platform built for growing businesses. With CRM funnel, website, and course builders, marketing automations, email builders, and so much more, HighLevel software will drive your customer attention and your profits through the stratosphere. And HighLevel is fully white label, which means you can brand the platform and mobile app with your logo and company colors, and then resell it to your customers for a monthly subscription. Ready to go HighLevel? Click on the link below to begin your 14-day free trial. Yeah. And have you got some tips on hiring? Because you've hired across borders in, you know, multiple countries, multiple continents. Have you got some tips for our listeners about how you go about that hiring process, and maybe even some mistakes you've made? Yeah, so I, I think the main one, um, on, on mistakes is, uh, is, is that kind of top-down approach. At least, at least for us we found that was, um, not a great way to, to start 'cause if, if the, if the role doesn't come about more organically from, from a real need in the business and it's, it's just a, a, a kind of, um, top-down academic ex- exercise, then, uh, I think you're, you're, you're setting someone up for failure. Right. And, uh, and it's not really, really fair on the, on, on, on the employee. Uh, and, and, and so, and so I do, I do find, um, you know, really trying to be very specific and very pragmatic about what needs doing when you think about scope, and not trying to go out and go like templates for these kind of things. Because each business is gonna have different, uh- Yeah different requirements and different things that, that need doing- Yeah and different priorities. And it is really important to be specific, uh, uh, and clear about what those are. And then, you know, it's much easier to kinda mobilize around the, that challenge, uh, than, than, than going off some... And, um, you know, this is more, more general point also that we try to approach, uh, all business problems, whether it's, uh, to do with hiring or, um, anything else with, with common sense, and, and try to think from, from the ground up about, uh, the challenges and the, and the solutions and the alternatives, and not copy anything from, from a playbook. And we came into this industry with, uh, like basically no retail experience. Mm-hmm. And, and so, uh, didn't really have a, have an option on, on day one. But I think in, in terms of mistakes, probably l- listening listening to industry advice and just- Wow following it blindly. Yeah. I don't think that's, uh... Hmm. Um. Yeah. It's an interesting one, right? Yeah. Like, yeah. Can you explain that a little bit- Yeah further? What is it about that that you... What, where did you, what did you learn there? What part of that was a mistake? I th- I think if you, if you assume that, uh, something's done in a certain way because that's the, the best way to do it, or you A- assume that, you know, some, like, uh, in- industry knowledge, if you, if you take it for granted, then you're inevitably going to be a step behind. And, and w- we've certainly always thought, um, in our business that we can, you know, we can look at what others are doing and, and, and try to learn from it, but, but we really don't look too much to the sides, um, when we're building the business. Mm-hmm. We try stuff out, we see what works, and we do that very, very fast. And, um, and, and I think, I think the, the temptation for, for many, of course, will be to, to try to look at, uh, what others have done and, and learn from it. But I think the, the industry moves, moves fast and, and, and I don't think that's gonna be a winning strategy. You'll, you'll always be, uh, one step behind at least. Sure. You certainly can do that in, in this industry. Mm-hmm. You can look at, um, how people build their teams, what roles are there and, and what they do, what products they serve, and, and you'll, you'll be able to copy everything. Uh, there's, there's, uh, you know, it's all on public display. There's- Yeah very few secrets. Um, and your execution will, will lag by, by one step. Yeah. So I th- I think that, I think that, that probably applies in, in most industry. let's jump To 2024. You entered Dubai and Dallas in the same year- Mm and crossed 100 stores globally. Yeah, talk about moving fast, huh? I know. Yeah. Wow. That is moving very fast. Yeah. Mm. So operating across the Middle East, the US, and your existing markets means different time zones- Mm different regulations, and very different, um, customer cultures. These are exactly the kind of challenges that define a level six business, which of course, the level you're playing at is level six at the moment. So what does that multi-market complexity actually cost you in terms of leadership, bandwidth, and infrastructure? So f-f-fortu-fortunately with, um, w-we've not ma- had to make, uh, a, a ton of changes. You know, we've, we have a... W-we're operating in industry and we have a concept that's, um R-r-really, uh, been pretty consistent from, from Dallas to Dubai. Uh, we s- we serve robusta coffee. We serve our Norwegian waffles, the ceremonial grade matcha, and, um, and you know, those, those are like, uh, I would say equally popular acro- across all the markets. There are, there are some, some smaller differences and, and adaptations for, for sure. I think when you're, when you start off in, in a market and Over time, you, you build, um, brand recognition and, and in the UK, we, we certainly have that today. And so, uh, some aspects of the, of the business, uh, flow very naturally and, and, and, uh, and, and after a while, you know, you, you get your, your processes down and, and it's, um, you know, runs like very lean factory-like in, in the background, whereas in, in the new markets it's more arms than legs and it's back to startup mode. And so- Yeah uh, I would say for, for us, we're, we're kind of wearing two different hats depending on which market you're- Yes you're in. You know, in, in one, like in, in our new Miami office, it's, um, uh, on, on some days, uh, it might be a bit of an echo. It's basically an empty room with a few desks and, and chairs and, and we're really... You know, we're, we're getting the first team members in and, uh, and, and we're building from, from scratch. And then in London, the, the office is at capacity. There's, uh, everyone has a at least a pretty good idea about, you know, which, which direction to run and, and what to do. Yeah. And, uh, so yeah, it's, uh, it's, it's fun. Uh, uh, I, I think at the, at the same time, there's, uh... It's ta- it's taxing when you're- Mm in multiple market and, uh, markets until you get established in- Yeah in each. And so, you know, we're, we're very focused now on build- building out the, the operation in, in these new markets and not doing... and not adding too many others in the near term. So we don't, we don't have a plan to, to take a, a shotgun approach to this international expansion 'cause, uh, yeah, it is, it is very resource intensive and you need to- Mm focus your, your time and, and your efforts on the biggest opportunities. Yes. So that, that was, that was the, the reason for the GCC and, and, uh, the US. The GCC and alongside the UK was the largest market in the EMEA region and very, very rapidly growing, uh, not just coffee, uh, coffee consumption and, and cafe culture, a cafe culture that, uh, extends way into the evening and, and really re- uh, also covers the, the pub or the bar location- Mm in, in markets like, like the UK. Yes. Um, and uh, and, and the US is, uh, the biggest market in the, in the world for what we do. So w- we did think- That's gonna be, um, not an if, but a when if- Yeah if we're gonna build a global coffee brand. Yeah. Wow. And then a little bit by chance they, you know, coincided in, in timing. Yeah, right. Wow. Wow. How exciting. Mm, absolutely. Yeah, yeah. Um, well, Arek, you've got a business that's growing quickly and, um, one of the, the, the, the slogans you often hear is that a culture of continuous improvement. Um, what does that actually look like for a business like Black Sheep? Yeah, I th- I think it's a good, um, it's a good question. Uh, I'm not, um A- and, and I completely agree. I think, um, uh, those continuous improvements and, um, I guess we touched on it early on with the point of difference versus- Yeah just being better. We've- Yes we, we, we think being better at all the, all the aspects of, um, the customer experience trumps being different. Like, uh, having- Yeah having a point of difference is, uh, uh, you know, it's a cool, cool story, but at the end of the day, you need to be slightly better at speed of service, slightly better at the tech stack you use, um, better ingredients- Mm better customer experience, better ambiance in the shop, more comfortable, uh, hangout areas. And so in order to, to achieve that or, or to app- a- a- approach that level of, you know, whatever you deem perfect, and you'll never quite get there, but, you know, you need all of those increments to, to add up and, and it's small tweaks there to, to the system. So, um, yeah. I, I, I th- a- a- and there's a, a lot of facets there that need tweaking and im- improving at the same time. Um, so yeah, i- if you can do those a little bit faster than, than the other guy, then you'll, you'll compete well. Yeah. Yeah, absolutely. Yeah. I, um, I just wanna pull a little string I heard before- Mm um, that you mentioned about a tech, a tech stack, um, and how that can, you know, really change the game in terms of being a better leader and putting, getting yourself ahead. So we're always looking for good recommendations for our listeners. Can you give us, what your current tech stack is, please? Yeah. this is another another area that's evolved a lot from- Mm-hmm. Yeah day one un- until today. Uh, especially now with the international expansion. cause I- I guess the first, first few years, you know, we were test rabbits for a lot of- a lot more startup software and, and tools that came on the market and, and, and came and went, sadly- Yeah on, on many occasions. And then you're on the- receiving end of lang- having to change- Start again systems and- Mm-hmm um, and it can be, it can be tricky. I think the, the way... And I, I, I guess this pi- piece of advice also that it's, um, 'cause the, the data you're tracking, we, we try to be very objective and, and, and, uh, find good measures. Um, there are some d- some KPIs that we consider more important than others, and for us, customer satisfaction is, is probably the number one, and that really determines the, the, the pace of growth. Um, but there are others and, and we touched on some of them like waiting times and, um, and, and if you're able to collect data on those and, and you need some tools for, for doing that. We have, uh, self-order screens in, uh, all of our shops that allow us to see how, you know, how long we take on, on different types of orders and- Yeah But rather than looking at the, the different technology solutions, I think w- what we've focused more on in, especially in recent years, is, uh, just how we, how we manage data and, and make use of it. And so we have a whole team in-house, uh, doing analytics. We, we set up a, a warehouse for, um, you know, aggregating and, and analyzing, um, trading, trading data very broadly. Uh, and, and that also means that that stack, if, if you have changes to it, uh, you're still, you're still able to have continuity on, on your reporting and, and on your dashboards. And, uh, so yeah, I would, I would say that that's a, that's a pretty good a- approach. Uh, it's a lot more disruptive otherwise if you rely on, uh, on a third party- Yes to provide the tool of operation and your, and your dashboards and your, your kind of business in- intelligence. That's a good tip. Mm. And, uh, and, and then it's a lot less critical, uh, you know, exactly what that stack consists of from, from time to time because, you know, the, the winners in, uh, there will, will evolve over time. So, so you're, you're able to kind of switch in and switch out of, uh, of systems. Yeah. Mm. Right. Yeah. Eirik, you've... You're, you're growing rapidly, and I think you've even described it as a slightly uncomfortable pace that Black Sheep is, is growing at. So what is it that's keeping you awake at night now? Yeah, I, I think, um, you know, the, the growth is and, uh, and should accelerate now that we're, we're in two additional markets- Mm um, with, with the Middle East and, and the US. I think what, uh, what matters most to the next phase for, for us, we've, we've moved from, uh, the first 50 shops we opened were corporate owned and operated and, you know, we went through that journey of- Mm uh, really refining the, the model. Our business today is really about, uh, delivering great returns for our franchisees and, um, and so that, so that, that's really critical. You know, projects across the business, uh, revolve around h- how we achieve that and, and I think that's, um, yeah, that, that's really the, the main focus in, in terms of the business operation and, um, uh, you know, we're, yeah, what's, what's keeping me w- a- awake at night, I, I guess, you know, h- how do we, how do we achieve improvements there and, and, and, you know, prioritize the right things? And, um, there's a lot of, uh Fortunately, we have a lot of, you know, g- good heads. We th- we think it's a really good way to, to distribute the thinking and then really- Mm-hmm decentralize the, uh, the innovation- Yeah uh, to, to go down this, this route. Um, but you know, you have a, you have a big responsibility as, as franchisor to- Yeah to pick the right strategies, prioritize what you're working on and, and, and make sure you deliver, deliver those improvements fast. So- Yeah yeah, our, our team is, is really geared up to, to build the, the system and the toolkit and, uh, and make sure it, it, you know, stays, um, compelling to our, to our customers. So, across your entire journey from when you started, in that scrappy startup phase to where you are now- With the trestle table. Yes. Yes. Yeah. Which is cool. Yeah. Um, what part, what version of you have you enjoyed the most? I think there's this common misconception- Mm for early startup founders that I think success makes the job easier, which I think you probably, as someone who's managing multiple, uh, businesses across multiple countries, would probably disagree with that statement now. But what, what version of you do you enjoy the most? The CEO, the scrappy startup, somewhere in between, all of it? Uh, it's a interesting question. Yeah. I think it's really satisfying if you can, you know, sol- solve a problem and, and you, and you see some, like, tangible- Yeah progress forward. I think for, for, like, when, when Gabe and I d- discussed this also, it's, uh, it's in- incredibly rewarding when, uh, you know, we, we touched on team earlier, and I think on, on a, on a bad day, it's, uh, you know, really hard work. But on a good day- Mm when everyone's pulling in the same direction and everyone's, uh, you know, building their, their li- livelihoods and their lives ar- ar- around Black Sheep, it's, uh, it's incredibly rewarding. And, and I think with the franchise model now where we have, um, entrepreneurs and, and owner operators who are pouring their, their savings in to, to expand the, the brand, it's, um, yeah, that's a, that's, that's in- an incredibly, uh, rewarding experience. And, and, you know, f- for us personally, if we can help, help, um, facilitate that and by, by really f- focusing a lot on, on where there are issues and, and fixing them- Yeah um, yeah. Yeah. That, that journey is, is, uh, is really cool. Um, and, and we're really, uh, we're really enjoying the, the journey. You know, you're, um- Y- y- you can't, you can't, you can't really know at the outset also if you're gonna be a, um, w- what you're gonna be better at. But, but I do think in, in the very, very early days, uh, looking back, there was a You know, looking back, it felt like we were moving very slowly 'cause you're, you know, there was just a, a, a lot of, like, blood, sweat, and tears to just- Yeah uh, get anywhere and, and, and we didn't have a, a, a base to work from. Um, and, uh, yeah, it, it's, it's really fun to, to move on from, from that also, so. Mm-hmm. Yeah. Yeah, wow. Are, you, you mentioned the good and the bad days, so I, I've just got a question for you about how you, I guess, almost manage your emotions or the, y- the energy that you bring to the business because y- say you've had one of those not so good days. When you walk through the front door at the end of the day, how do you stop being the CEO who's in problem-solving mode and just become Are again? I, I don't really have a kind of big challenge, uh, in terms of like switching- Okay on and, and off. Um, I think it's pretty all, all, all, uh, consuming, uh, to, to start and, and build a business. Yeah. So you really need to want that. Yeah. It can't, uh, you, you can't really fake it, uh, or pr- pretend to enjoy it. You need, you need to wholeheartedly enjoy that, 'cause it's gonna be, um, you know, on, on your mind seven days a week. Yeah. And, uh, and uh, and, and I guess, you know, the So for, for Gab and me, it's, uh, it's been, uh, well, 13 years now, so that's, that's a good acid test that we haven't, we haven't killed each other yet. Yeah. Um, and, uh, you know, yeah, we've, um I, I, I think, uh, we would've broken earlier if, uh, if, uh, we, we didn't strike, uh, some, some balance there. Yeah. Yeah. Um All right. Let me, let me ask that in a different way then. Outside of work, what stuff do you do for fun or exercise, or something that's non-work-related, what's your go-to thing? Yeah. So, uh, you know, spend, uh, spend time with, uh, with the family, with my wife and kids, and- Mm-hmm um, yeah, I, I think exercise and, and staying healthy, cooking. Um, yeah. Like, I like being outdoors. Mm. I think that's good, good for the, good for the soul. Oh, absolutely. I agree. Yeah. Yes. Yeah. So you launched your franchise model in 2021, and it now represents roughly 65% of your store network. What was the rationale for franchising as your primary growth engine, and what does your franchise architecture actually look like under the hood? Um, I, I think franchising is really, uh, the, the best way to test and, uh, and, you know, benchmark your systems and, and your playbook To the, in a broader industry and, and really, uh, to us it came about both, um, because we thought franchising is, is how you can build a truly global brand. There are some markets you can't enter without a good license model, uh, or a local partner. Mm-hmm. And, um, and, and there are a lot of markets where someone with, with boots on the ground and, and local, uh, connections are, are gonna execute m- much better than you and, and look after the business much better. So we, we had very high conviction on franchising as a model. And then, uh, a- alongside that and after the COVID pandemic and, and lockdowns, um, started, we, we thought this is gonna be a great opportunity to acquire new sites. And, and we went out on, on a proper spree and, and signed way more leases than what we had. Well, like we signed, uh, I think it was six- over 60 new shop leases. Wow. We had 35 shops at the time. Yeah. And, uh, we didn't have money to open a single one of them. Um, but it was a great opportunity to, to get good terms on, on new real estate. Mm-hmm. And, um, and then it catches up with you afterwards when, when you realize, okay, these, these sites, then there might be some incentive at the outset where, where you have a rent-free period or, um... But, uh, e- eventually they're, they're just liabilities. You're, you're gonna be paying rent on them and- Mm. Yes and, uh, and that prompted this v- very rapid push. So we had 60 great locations- Mm and, and we definitely wanted to see all of them open. We couldn't open them all ourselves, and so we were able to, to offer franchisees, uh, effectively a, a menu of, of options to choose from and, and sites and, um, and got them open that way. And so it accelerated the whole shift to, to the franchise model. Uh, and, and I do think for the better because very quickly we had a network of franchisees rather than, um, you know, one or two partners in, in, in the, in the network. It w- wouldn't really have been a, a network for, for a while because it's very hard to have, have someone join a network and, and then find locations on their own. Like that, that part of the process can be very time-consuming. Uh, and so if you've already pre-vetted and, and, uh, eff- effectively guaranteed the The leases and the locations then really accelerates that process Yeah. Can we, can we talk about the franchising model for a minute, uh, Aric? Um, with franchising, how have you been able to maintain your brand integrity and product consistency when you've got so many franchisees who are, basically they're running their own business and their own, with their own incentives and their own goals? So how have you maintained that consistency? It's a really good question, and I think, um, the, the f- franchising really prompted us to, to invest a lot more in, in auditing and documenting standards and making sure we had objective scoring criteria for how, how we would do across every aspect of the operation. And, um And in, in some ways, uh, I think it, it makes you a, a better operator. Yeah. Um, both, uh, uh, i- in our experience at least, growing the, the number of sites has allow- ha- has allowed us to, to execute better at the unit level. And, uh, and franchising in particular has really accelerated that. Um- Yeah you know, it, it also, it also m- holds you accountable to- Mm to a very high standard because if something doesn't make sense or if a standard isn't great, then, uh, you've got, uh, someone with skin in the game, uh, really looking for ways to, to improve the business and the system, um, who are held to the s- the same standards as the network. But if those standards are not the best, then you will, um, you will find out quickly. And, uh- Yeah. Yes and so it's- Yes it's a very good feedback loop for- Yeah for that. That's true. Um, and, uh, and, you know, some, some of it is, is down to, to systems to track- Right uh, all, all the aspects of performance. Some of it is down to, to a- auditing and, and store visits. Some of it is down to, um, communication to make sure that, you know, uh, like one thing is, uh, to establish a, a standard or, or you're, you're launching a, a new product. But if it's n- if the, you know, how we're doing it is, is not communicated effectively, um, across the network, then, um, might not be, uh, you know, a very good, uh, good launch or, or, or well executed. So, you know, it goes, um, goes both ways. Yeah. Mm-hmm. Uh, and then we're, yeah, we, we really hold all shops to the same standards exactly. And so our, our approach has been to, um, to, to have a model that's, um, identical for, for everyone in the network. So whether it's a corporate-owned stores or, or a franchisee, um, there's, there's no compromises there. Yeah. And, and I think some franchise systems may give the operator more flexibility to, to, you know, use their own tools or, or their own supply chain. If you come into a Black Sheep franchise store, it's gonna be the exact same standards on- Yes on product quality and, and, and supply chain and the in- ingredients- Yeah we use. And yeah, I've, I've For us, that was an important decision. Yeah. Yeah. Mm-hmm. Totally. That makes sense. Mm. Now, you mentioned that lowering the capital expenditure required to build a new store has been a major focus for you. Why does CapEx per store matter so much to your expansion strategy? And what levers have you been pulling to bring that number down without compromising on the brand experience? Yeah, so it's, um, we, we started a business, um thinking, you know, this is, um, uh, more capital light, like very naively. It was, uh, it was part, one of the criteria for, for the venture and, you know, we had very little, capital. I mean, if you can call it that, we had 20,000 pounds between the two of us and, we built the first few shops ourselves. So we really saw from, the ground up what it takes to, trade. And, then it, evolved from there. the upfront capital to, open a store really determines, the payback period. How quickly do you, get that capital back so you're able to open- Mm another one? And so for- whether, it's for, a corporate shop or, or for a franchisee, it really determines, um, how quickly you can grow. And, um, and, and also in terms of the, the f- the franchise network, we're gonna be competing with any other franchise op- opportunities and, and- Mm we're gonna be assessed on, on- Yeah these kind of, um, metrics. So we're not just competing, um, for, customers and, coffee drinkers, but actually we're competing with, other franchise systems that, that might be in very different industries. and, this is gonna be a really big factor. And, uh, I think on the point of how we improve it without compromising, and I think, you know, it's a, it's a very long process from identifying a location until you eventually open the doors for trading. And, so looking at, what's the scope of the job? Like, what, what are we actually building- how can we streamline that program, has a really big cost impact. how do we perhaps buy some of the materials in, in bulk for multiple stores at the time? Mm. How do we run tenders and, uh, and, and optimize the, the equipment range? You know, how many, how many unique suppliers are there, and is there efficiencies from, from having fewer doing bigger jobs, uh, and, and handling more of, more of the, supplies? So all of those aspects, and then there's a lot of local regulations that you deal with and- like an- Yeah, yeah incredible amount actually in, in terms of the- Yeah, I was about to say construction packs and all, all the- Yeah considerations there by state and, and by market. And, uh- Mm so, you know, re- really understanding how to o- operate efficiently within that, um- But yeah, it's, it's been a, it's been a very big, uh, focus for us. Um, and, um, yeah, it's like w- yeah, one of the kind of headline, headline variables on the, unit economics. Yeah. Mm. Wow. There's a lot to consider, isn't there? Yeah. Absolutely. Yeah. Yeah, so looking at where Black Sheep is heading over the next, say, three to five years, what is the version of your business that you're genuinely proud of look like? And I guess the second part of that question is, what's the single biggest obstacle standing in your way today to get you to that? I think it's, really, really cool to, to have this, train that's, that's moving and- Yeah you know, by, that I'm thinking specifically of, of the UK. You know, we, we, we built up, uh, the foundations, um, being UK-based or- originally and, um, a- and the team there and, and things have really accelerated after, uh, Gabe and I relocated to, to the US. Mm-hmm. Uh, so I think that's, that's really cool. That's, that's definitely s evidence that, you know, we've, we've hired a great team and, we've, we've built a, car that's, that's capable of, driving o- on its own and that kind of, organism that's living its own life in a way. Yeah. Mm. And bi- biggest, biggest obstacle, I think, um That it's, it's very hard to put your finger on, on kind of one thing. There's just a ton of them all the time and- Yeah and you focus on the biggest one and- Yeah a- a- and it, it changes a lot from, from, from week to week. Um- Yes. Mm-hmm yeah, I, I, I don't really have one, and, you know, if there was one, then we would... and I knew about it yesterday, then we would be working on it yesterday. Yeah. Well, I guess that's business is solving problems, right? That's right. Yes. So, yeah, yeah. Yeah. I, I, I'm almost certain that it's gonna be some unknown unknown that I wouldn't be aware of right now. Yeah. Yeah. Yeah. Yeah, for sure. Well, it's exciting times ahead for Black Sheep. Mm-hmm. Um, I think it might be time to jump into our quick-fire questions. I reckon. What do you think, Steve? I think you're right. Yep. Uh, would you like to take the run for this? Yeah, absolutely. Yeah. I'll kick us off. So, all right, so you know, to get to know the person behind the microphone a little bit better, we ask 10 quick-fire questions where we get you to answer them within a word or a sentence. So Colleen and I will hit it, hit them, hit you with them very, very quickly. So you're ready to go? Sure. All right. You're ready to go, Colleen? Yep. All righty. So question number one: are you an office or work from home guy? Office What was your first job? A bicycle store repairing, bicycles and selling racing bikes Okay. All right. So what is your go-to productivity hack? Sleep Sleep until you wake up. Uh, Android or iPhone? iPhone Right. I am dying to know the answer to this one I know Although I had a quick, quick stint of Android also You crossed to the dark side and came back. Oh, yeah. Okay. Doesn't last long. No. Yeah. And you, you, you, you regret that when you migrate back. So I'm, I'm dying to know the answer to this one, though, Aurik. What's your coffee order? Changes, uh, changes from season to season, but I'm a big black coffee drinker in general. So- Mm-hmm lately it's been iced Americanos. Ah. Oh, yeah. Of course, summer. Mm. Um, if you weren't doing what you do now, what career would you choose? Um, I'd be building something Hmm. What's the best investment you've ever made? Black Sheep Coffee Early riser or night owl? Um, bit of both, but, uh, but I would say I'm, I'm probably a B. Okay. One piece of tech you couldn't live without? Music Hmm. What's your book or podcast recommendation? Hmm. I think yours is, yours, yours is great. Um- Thank you. Oh, thank you. Correct answer. You will take it? Yes. Yeah. You're not paying me to say that, by the It's, it's, it's a tough one when, when, uh, you're asked for, for one. There's, um, um- Or it can be a book too recently, yeah, recently read, uh, a Genghis Khan biography- Oh. Oh, yeah which was, which was interesting. Oh, there you go. Wow. All righty. I haven't thought about doing that but- Okay yeah. Yeah. I, I might even check that out. I know. Who knows? Yeah. All righty, last question today. So if business truly is a game, Ulrik Halt, what's your definition of winning? being better than your competitors Yeah You know, on all, on all fronts. Yeah. Mm-hmm. Yeah. All right. Fantastic. That's a good answer. Yeah. Um, where can our listeners find you and your business online? Uh, so we're on, Black Sheep Coffee's on, on, um, TikTok, on, on Instagram, on, on LinkedIn. Um, we might have a YouTube channel. Uh, so it's, um, yeah You're across it all Black Sheep, Black Sheep Coffee, yeah, we're across, uh, across the channels. Perfect. Mm-hmm. Thank you. Well, thank you so much for this conversation- Absolutely and sharing your story. Um- I don't know about you, Colleen, I'm gonna go and check out a robusta coffee, see if I can find one- I, that is probably- and see what it's like gonna be the first thing I do this weekend- Yeah is go and see if I can get my hands- Absolutely on some. Yeah, for sure. Yeah. Thank you so much. Um, well, that is- Yeah, thanks for having me. Yeah. My pleasure. Um, that's all we've got time for. If you enjoyed this episode, make sure to subscribe to The Business Game and check out the playlist for the level of business you're currently playing. Because every founder is somewhere on the game board, from zero all the way to $200 billion. Choose your level, and we'll see you next time