A month ago, co-founder of consumer goods brand Thankyou, Daniel Flynn, was discussing the success of his social enterprise business model with President Barack Obama.
It was a humbling experience to be invited to the Obama Foundation’s inaugural conference on entrepreneurship, but Flynn tells SmartCompany it wasn’t long after returning to Australia that his business was making a significant decision to cut part of its operations, a change in pace he says reveals the “realities” of business.
“He [Barack Obama] was the nicest guy, so down to earth and grounded. And one thing that he said was that ‘change is hard’. It’s a simple statement, but it’s true. I’m there [speaking] with Obama and then four weeks later we’re like, ‘well, now we’re pulling food’,” Flynn reflects.
In an open letter reflecting on the past year of operations, Flynn this week told to customers that the company has decided to scrap its food business, including cereals and snack foods, explaining the company’s products didn’t end up changing the food game as intended.
The decision to be frank with the struggling food business came down to the founders wanting to be up-front about the continued struggles that happen in business even once a brand has been established, he says.
“We wanted to be transparent with people, we think this is reality. We wanted it that people don’t just look at the Thankyou model and think, these people have it made,” Flynn told SmartCompany.
The decision leaves the company with plenty of work to do in growing its remaining three categories: body products, bottled water and baby products.
“There was a sense that the choice [to focus on these categories] feels hard, but it feels right,” he says.
“We’ve got some really key wins with body care, and we’re hoping to get some of the body washes, those that are not the ‘hero products’ like hand wash, up to that level. In the baby category, we’re still very young in that market,” he says.
In the company’s 2017 review letter, Flynn outlined the company went into 2017 with the water business “on the decline”, but with the team working on solutions for improvement.
“In 12 months we lost 47% of ranging for our food and water range. For water, the category has become heavily commoditised (some days you can buy a 24 pack of water on special cheaper than we can make it),” Flynn wrote in his annual review letter.
Speaking to SmartCompany about the challenge of creating an independent brand, Flynn says he accepts competition is fierce on supermarket shelves, saying Thankyou has made piece with this reality.
“It’s hard for anyone building anything, when you put a lot of work in and then see it [the results] play out in front of you. But that is the nature of competition and capitalism,” he says.
Observing that the company’s biggest wins have never come from watching what competitors are doing, he recommends entrepreneurs “learn from things that pop up” when it comes to challenges, but not to obsess over other brands.
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“Try to play to the higher ground, rather than get too demoralised by it.”
Decision to exit a product line just the beginning
The Thankyou food range will be off shelves by May of next year, with Flynn saying the decision to delete the range is just the beginning from a process perspective.
“We first spoke about this a year ago, and then we were starting to talk probably not even about deleting it, but pivoting within food,” he says.
“We came to the conclusion at the start of this year that it wasn’t going to work, but it has been a bit of a process to unwind it.”
Part of that process is thinking about whether personnel will stay in the business and which roles might suit them if so.
“We always try and see where we can make roles fit wherever we can, but it’s not always the case,” he says.
Then there is communicating the decision to all parts of the supply chain, including those that supply materials to make the products, he says.
Flynn says he hopes people understand the choice to move away from food is the “best decision” for the business, but says the past year has shown the value of scaling back operations to focus on the areas where you are on track to win.
“Entrepreneurial people naturally like doing bigger and more,” he says.
“But you have to prune to grow, even if that can be quite counter entrepreneurial thinking.”