As part of the series about the “How Business Leaders Plan to Rebuild in The Post COVID Economy,” I had the pleasure of interviewing Harrison Fugman, CEO and Co-founder of The Naked Market.
Harrison Fugman was previously the Head of Credit Suisse’s Venture Capital Coverage business. While at Credit Suisse, Harrison worked in their New York, Hong Kong & San Francisco offices. He was also part of the firm’s fast track employee program becoming a Vice President at the age of 26. In his spare time, you can find Harrison running Marathons with his father, trying to visit every country in the world (currently has visited 62), skiing in Whistler, or in a group workout class (likely Barry’s Bootcamp). Prior to Credit Suisse — Harrison attended McGill University (where he and The Naked Market Cofounder, Alex Kost, started their first successful business together) and was born in Vancouver, Canada.
Thank you for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Prior to starting The Naked Market, I spent the first +7 years of my post-college life in finance. I most recently ran Credit Suisse’s venture capital coverage business. However, entrepreneurship has been in my blood from a very young age. My first “business” was importing wallets from China and selling them to my classmates in high school (Alex and I then ran an events business together in college). Throughout my time in finance, I was consistently looking for my next business venture and wanted to be sure it was something that:
A. I was incredibly passionate about
B. It was a massive opportunity & a pain point I felt in my own life and
C. I would be doing it with people I trusted & admired
My background as a foodie and health & wellness maniac, combined with my time at Credit Suisse, led me to become giddy over the opportunity to get involved in the food & beverage space. We specifically wanted to bring a portfolio approach to the startup food world where we would build the infrastructure to quickly and efficiently launch multiple brands, identify winners amongst the brands that we launch, and then scale the winners to become household names.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
We launched our first three brands in a six-month period, so our whole team was basically drinking from a firehouse during that time — there is no shortage of funny stories and learning experiences to share! One that comes to mind is when we launched Flock, our Chicken Skin Chips, we started getting a bunch of questions online about where the 2G of Carbs came from which is when we realized a last minute design typo led to the bags being mis-printed to state 2G of Carbs when there is actually Zero. That may not seem like a big deal but, to the keto/low carb community we market the product to, it was a big question mark and unfortunately, led to us writing off a bunch of bags straight out of the gates.
They key lesson from that is no matter how much you are doing, never skip the small details. We also learned from that experience that things aren’t as bad as they seem once some time passes.
Is there a particular book that you read, or podcast you listened to, that really helped you in your career? Can you explain?
While working in finance, I consistently had a business book by my bedside table and listened to podcasts on-the-go. Since making the shift to the entrepreneurial world, my mindset has shifted to more learning by doing & through in-person interactions. Podcasts (i.e. How I Built This) or books (i.e. The Everything Store) that once were my bible, now kind of stress me out when I listen to them. I guess I reached my tipping point of reading about other people’s success and failures and wanted to start experiencing them first-hand. Not to say that won’t change in the future — just a reflection of the headspace I am in right now.
Extensive research suggests that “purpose driven business” are more successful in many areas. When you started your company what was your vision, your purpose?
I would break down our purpose into three core pillars.
- Create products that leave you feeling good both on the inside and out.
- Make giving back as habitual as eating (i.e. you eat 3–5X a day so let’s give back 3–5x a day as well).
- Specifically, all of our brands are launched with a unique giveback component. For example, for every order of AvoCrazy, our avocado puffs, sold, we donate one meal to the San Francisco Marin Food Bank, benefiting people in need. We amplified this giveback in March of this year, donating 5 meals for every one order placed, giving back over 26,000 meals to food banks across the US.
- Create a business and foster a lifestyle that optimizes happiness
- These pillars were shaped from our time in finance and our collective desire to create a positive impact and take action to better the world after spending years sitting behind our desks.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
“Get comfortable with being uncomfortable”
This is something that comes to mind every day — whether things are going good or bad. If we are going to grow, disrupt and challenge the norms with our products & strategy, that will come with stepping out of our comfort zone and getting comfortable with that!
The Covid-19 pandemic has affected nearly every aspect of our lives today. For the benefit of empowering our readers, can you share with our readers a few of the personal and family related challenges you faced during this crisis? Can you share what you’ve done to address those challenges?
Thus far my friends & family have been very fortunate in staying positive & healthy throughout the crisis and my thoughts are with those where that has not been the case.
In looking at the biggest challenge I have dealt with, it focuses around family. I was born in Vancouver, Canada which is where my family still lives, so while I am living in San Francisco, the current travel & border uncertainty (as a result of COVID) has put a big question mark on our future in person gatherings. On top of this — I worry about them getting sick and not being able to be there to care for them if need be. So, while it is unfortunate, I do not know the next time I will see them, we have tried to stay creative about ways to stay in touch whether it be virtual cooking competitions or board games.
Can you share a few of the biggest work-related challenges you are facing during this pandemic? Can you share what you’ve done to address those challenges?
From a professional perspective, when the crisis hit, our business focuses had to become laser targeted on three things: A. Keeping employees safe B. How is demand going to hold up and C. Keeping our supply chain intact.
We shut the office down on March 11th and encouraged all of our employees to get situated in a place of safety and comfort. Then the focus shifted to demand and our supply chain. On the demand side, we were in very fortunate situation where in the first few days we saw orders increase drastically as consumers stocked up on online groceries. Our focus then shifted to keeping our supply chain intact as the pace of our sales left us with only about 1 week of inventory on hand. Consequently, we ordered several months of ingredients & packaging bags and our COO Alex literally moved to our manufacturing facility to ensure the proper safety practices were being put in place so we could keep up production in a responsible manner (as food is a critical service). He arrived at the facility March 12th and has been there ever since installing new safety measures, managing production and balancing being aggressive stocking up on supplies/inventory while also recognizing the uncertain economic climate we are in.
Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty, fear, and loneliness. What are a few ideas that you have used to offer support to your family and loved ones who were feeling anxious? Can you explain?
- One unique part of this experience is that we are all going through this pandemic together, which in itself is quite ironic given that we are going through it while in isolation. Even though we are not with many of our friends, family & loved ones, for the first time in a long time, we can relate to what one another is going through regardless of where in the world we live. Consequently, I have encouraged friends and family to stay connected. Connecting with friends and loved ones regularly on Zoom (whether it be a casual chat or a creative virtual activity like cooking competitions) enables us to find support and comfort in a time when we need it most.
Obviously, we can’t know for certain what the Post-Covid economy will look like. But we can of course try our best to be prepared. We can reasonably assume that the Post-Covid economy will be a trying time for many people across the globe. Yet at the same time the Post-Covid growth can be a time of opportunity. Can you share a few of the opportunities that you anticipate in the Post-Covid economy?
We think a big driver of opportunity will be addressing the shift in consumer mindset and behavior around sanitation, health, and cleanliness. Specifically, how this change in mindset will lead to 1. the acceleration of online grocery purchasing and 2. Demand for new types of products and services that may have become more relevant in this “new normal”.
1. Acceleration of E-Commerce Growth: Pre COVID, US online grocery consumption was expected to grow from ~3% to 20% by 2025. However, the dramatic effects of COVID triggered an acceleration of this behavioral change towards ordering groceries online. In March, nearly 1/3rd of consumers ordered groceries online and in April Walmart grocery became the #1 app downloaded. The accelerated growth in e-commerce food purchasing will present an opportunity for all food brands, but specifically newer companies as this is not an area where incumbents have an outsized competitive advantage. For example, Pepsi only just rolled out a D2C platform in May 2020 while many new food brands launch D2C first.
2. New Products & Services: At the most obvious level, it will be selling consumers new age health & sanitization products (which is already seeing more entrants every day). However, when you dive deeper, it will be coming up with substitutes for people’s previous daily activities that may now be considered “risky”. A great example of this is fitness or yoga classes, where the idea of sweating in a room with 50 random strangers could be a thing of the past. So, what are the new age workout experiences that can be delivered in a less “risky” manner? Right now, the current offerings (& supporting infrastructure) are in their very early days (i.e. doing a yoga class via IG live) and I expect some great innovations to come to the table. As it directly impacts our business — we anticipate a renewed interest in at-home cooking and eating as a form of entertainment. We think customers will be more willing to try new products than ever before.
How do you think the COVID pandemic might permanently change the way we behave, act or live?
It’s obviously very hard to say given the unknowns that remain but what is top of mind for us is thinking about how consumer behavior will change on the back end of an increased focus on sanitization, health & cleanliness.
Specifically, what are the activities that once were a part of people’s everyday lives but now will be second guessed due to health & sanitization concerns. And what are the activities that will replace them? And if those activities cannot be replaced, where will that portion of discretionary spend go?
One notable area is the restaurant world, where pre-Covid for every $1 spent on food by Americans, +50 cents were spent on food outside the home (vs. 25 cents back in 1955). In a new normal, will restaurant spend go back to historical levels? And if so, how will consumers re-allocate those previous dollars which were spent at restaurants? (Grocery? Other experiences? etc.). We think it is bullish for packaged food and grocery in general.
Considering the potential challenges and opportunities in the Post-Covid economy, what do you personally plan to do to rebuild and grow your business or organization in the Post-Covid Economy?
With no visibility on the timing of a “post-covid” economy starting (especially in the context of a potential COVID resurgence in late 2020), we are staying focused on building the business to operate & scale with continued uncertainty. There are two sides to the this. The first is ensuring our current business operations adapt and mitigate potential pitfalls. The second is to capitalize on this new normal by identifying potential growth opportunities.
- Making sure our business operations & supply chain are set up for a future of uncertainty/status quo: This is everything from how we build culture (i.e. we used to go to team workout classes & now we do them virtually), to allocating responsibilities (i.e. being much more dependent on 3rd party tools), to building inventory (i.e. we now sit on much higher levels of inventory to prepare for disruptions), to managing performance (i.e. becoming much more results driven with everyone working on different time zones) & more.
- Identifying the future growth opportunities that exist today that may not have at the beginning of the year: We previously discussed opportunities as they relate to consumers purchasing new types of products and doing so from new channels. For us, it’s about A. identifying what products consumers want (and can we create them?) and B. What channels will they buy them on and how do we position both our previous & future brands to succeed on these channels.
Similarly, what would you encourage others to do?
Similar to what I mentioned above — first and foremost, be laser focused on setting up operations and business for a new potential norm. Then once you have an element of comfort there — identify the new potential growth drivers for your business that may come out of these series of unfortunate events.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Get comfortable with being uncomfortable”
It’s relevant as I am someone who is always taking on new challenges and looking to personally better myself which often comes with stepping outside of my comfort zone and being “uncomfortable.”
How can our readers further follow your work?
Readers can feel free to email me at [email protected] or subscribe to our The Naked Market newsletter.