Advice Line with Tony Lamb of Kona Ice | How I Built This with Guy Raz

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Slash with AmEx. Hello and welcome to the advice line on how I built this lab.

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All right, let's get to it.

My guest today is Tony Lam, the founder of Kona Ice.

It's a franchise of shaved ice trucks that started out not in Hawaii but in northern Kentucky.

Tony, welcome to the show.

Hey, Guy. Glad to be here.

The shaved ice capital of the world, northern Kentucky.

It's so great to have you back on the show.

We had you back on last year and we told the story of about how your kids went to buy popsicles from a kind of a CD looking ice cream truck and their popsicles are freezer burned and they're gross.

And then you start to think, well, what if you could kind of redo the ice cream truck and then you kind of had this kind of revelation, maybe a road to Damascus moment where you realize that shaved ice could be the thing.

And then you eventually built out a truck and you worked it for a while and then you turn into a franchise model, a business where people now buy, can buy a Kona Ice, shaved ice truck and run a small business.

And you've got, how many of these do you have around the United States today?

We have 1,850 Kona trucks along with about 700 ancillary pieces of equipment, but about 150 coffee trucks too.

So cool. And... Right, coffee business too, which is called the...

Traveling Tom's. Traveling Tom's, yeah.

Named after my dad. Named after your dad.

I just saw a Kona Ice truck up in Sonoma County in California the day and I thought of you.

A lot of the, and I suspect a lot of people calling in today are going to ask about visibility, growing your brand, how do you get people to be aware of what you're doing.

And so much of this revolves around digital media, social media advertising.

But really a lot of it is just, it hasn't really changed in terms of getting the word out.

And in your episode you talked about, at one point you were driving trucks with advertising and you were doing all kinds of your Obama and McCain and whoever pay you to drive the truck with the sign on it.

And now essentially Kona Ice, I mean that's a moving billboard, right?

Or Traveling Tom is just driving around and you see it.

So when it comes to things like building awareness and advertising, I mean, how do you think about doing that with your businesses?

Well, I mean, I'm listening to your advice line and I've loved several of the episodes, almost every episode I just have loved.

I just think your guest, your returning guest are so caring and gentle and loving.

And I don't tend to be that way.

So I'm hoping that I can channel some of that.

But no, but you think about like Tarte makeup.

Yeah, and Marine Kelly.

Yeah, Marine Kelly and her early stories of just grinding it through.

And then the Cliffbar guy, what was his name?

Gary Erickson. Yeah, Gary Erickson.

Yeah, yeah, yeah. And he was amazing.

He's talking about going to the writers and going out and just handing out, you know, and he actually cut bars in two.

So he's giving out chunks of stuff.

That is that tenacity that, you know, everyone now wants to figure out how to go viral and just sit back on their computer and type some things out.

And yeah, there's a place for that.

Don't get me wrong because it's a heck of a lot easier if you can figure out that magic formula.

But still, don't ever discount that grind to me.

And that out there, like you were saying, I was out there in a truck driving around my neighborhoods, my friends laughing at me and I'm like, oh God, I hope I'm right.

I hope I'm right. Tony, what are you doing driving an ice cream truck?

You used to drive a nice car.

We're a nice suit. I'm like, I swear to God, this is going to work.

Well, here you go. Almost 2000 trucks later and you have the last laugh.

Tony, why don't we take our first caller?

Excellent. Okay. Caller, let's bring our first caller and hello.

You are online. Hey, guy.

Hey, Tony. Welcome. Please tell us your name, where you're calling from and just a little bit about your business.

Yeah. My name is Dylan Richter.

I'm the co-founder with my wife, Katie, of the Sweet Spot in the small rural town of Hillsborough, Illinois.

We are a good old fashioned brick and mortar candy retail shop.

Everything that a sweet tooth would desire, we have ice cream, candies, craft sodas, all of the above.

Amazing. And what's your question for us today, Dylan?

My question's around expansion.

So we are about to have our one year anniversary, but the store's been super successful.

It's been super fun and it is a format that I think could work in small towns all over the country.

So we are about to open our second location about 40 minutes away, but my question is, what metrics and milestones should we be looking at to see if this concept is indeed viable across the country?

Okay. We'll get your question in a sec.

I've got some questions for you, Dylan.

So Hillsborough is not, it's in Illinois, but it's like in central Illinois.

Like you're closer to St.

Louis than you are to Chicago, right?

Little over an hour away from St.

Louis. That's right. And how big is the town of Hillsborough?

About 5,000 people. Wow.

Okay. So tell me, so you opened the store last year, right?

The candy store, the sweets bar?

That's right. That's right.

Tell me, what were you doing before that?

How did that happen? Were you in the candy business?

Not at all. And this was not part of the plan.

So the fun is exciting and happy as a candy store is.

The origin story is unfortunately not quite the same.

So if I rewind a couple of years, my wife and I were living in Chicago.

I have worked since 2014 for DoorDash and had a fantastic time seeing that company grow.

My wife is a scientist. She is definitely the brains of the family.

But if we get to around COVID, unfortunately, we got a phone call and my father-in-law was diagnosed with terminal brain cancer.

So as soon as we got that news, we packed up our bags.

We moved to Hillsborough to spend time and help out with the caretaking.

And to be honest, that was a very difficult couple of years.

And going through that experience, this is going to sound cliche, but it was one of those things where you kind of realize how valuable time is.

And through that experience kind of came to the conclusion that I want to have more agency over my time.

I've always wanted to start something of my own.

We thought it would be, frankly, just a lot of fun to start a business in the small town, kind of get back to the community that showed us a lot of support.

And next thing you know, we decided to open a candy store.

Wow. Okay. So you guys opened a candy store?

It presumably is on the Main Street.

It is. We are literally on Main Street.

It's a small, probably like 40 retail storefronts.

And it was one of those experiences where we're coming from a big city.

We've only ever lived in quote, unquote, big cities.

And through moving there after a couple of years felt small town USA overlooked underserved.

I did a little research and candy, not the most expensive thing, kind of a routine habitual type of experience.

So if you can invest in a good experience for the people in the town, give back to the community and it can work in a small town like Hillsboro, I thought that that was bones that could potentially work in many other places.

I've driven through many small towns in rural Illinois, but I know that same concept applies elsewhere.

It's interesting, candy is probably a little bit like, I mean, it's shelf stable.

It doesn't go bad that quickly.

It's probably relatively inexpensive.

And then the margins are probably pretty good, right?

Absolutely. All of that is true.

Yeah. So Tony, I mean, we can get to Dylan's question in a second, but I'm assuming you've got some, you probably have some questions for him as well.

No. I love. I love the idea.

I mean, it's just, it's nostalgic.

You picture the small town, you're going in and it's experiential.

Dylan, are you and your wife working the store every day?

Is that who's in the store?

I'm there 100% of the time, the first six months I was behind the counter just because I've never done this before.

It's the best way to learn how to do it.

My wife's aunt is now at the counter all day, every day with us.

And then my mother-in-law is going to be joining us when she retires from the high school in a couple months.

So these are small towns, these are OGs from that town?

Exactly. Everybody knows everybody, pluses and minuses to that I have learned, but there's definitely a very strong community feel.

Tell me a little bit about your customers that walk in.

These families that walk in, is it, is a, I picture a grandpa bringing their granddaughter in, is it, tell me about that a little bit.

What does that look like?

It is, it is exactly what you picture.

It is grandma and grandpa bringing the kids in during the day in the summer when the parents are working.

It's kids in the high school coming after school and getting a snack.

I had someone in there two weeks ago buying candy to use as potty training for their kids.

So the use cases. I did that.

Yep. Did that work? Totally worked.

Bribery. So right now you're expanding and the question you're sort of asking is what do, what kind of metrics, what are our KPIs?

What do we need to be thinking about to turn this into something scalable?

Before I answer that question, let me ask you this.

What do you want to be? I mean, you're talking to Tony, he turned Kona Ice into a national franchise.

What do you think that you'd like to be if you thought about that?

Yeah, 100%. Look at the end of the day, going through the experience that we went through, I would say I and we, we're optimizing for creating as much joy as possible.

And that might sound like a cheesy answer, but it's, it's the honest truth.

So if I can bottle up this concept and hand it off to someone else to run, I not only think that brings a tremendous amount of, of happiness and joy to the people in those communities, but also a pretty good job, a pretty enjoyable and rewarding career for a family who wants to invest back in their hometown.

All right, so you're open to some kind of franchise model.

In my head, that's the way that this works best.

But yeah. All right, Tony, what do you, Tony, you're looking at this with me.

You successfully launched two franchise models with, with coffee and shave ice.

What are your thoughts on that?

You know, you got to ask yourself, Dylan, and listen, let me say this, you're merchandising the idea.

I'm looking at your website, whoever's doing your merchandising.

And I'm assuming that you are in your scientist wife, but, but you are, it is looked, it looks fabulous.

It really does look fabulous.

I have to ask myself first.

So, so here was a question I asked myself when I'm driving around the first trucker in the neighborhoods and I was doing well and I was like, is this all me?

Cause I'm from Northern Kentucky and I'm, I mean, I've been there 20 years and I'm calling the school teachers and I'm, I'm just busting into everywhere.

But I thought, how much am I a part of this success and can the success be garnered by someone who's, you know, not from small town Illinois.

And you're going to find out a lot when you open up 40 miles away and I would definitely hire somebody from that small town, probably a school teacher that's beloved and put her in that store.

I smile because that's exactly what we're, we're planning to do.

Yeah. That's, that's brilliant in that, in that respect.

So if you're wanting to franchise, listen, and let me back up just a second Dylan, because you said you were looking for, you know, you just lost your father in law and you're kind of going through this process and, and what that shows you about life and it's, it's, it's brevity and how much you wanted to be happy and how much you wanted to enjoy.

And I want to say this as constructively as I can, I say this to my own franchisees.

There is a sweet spot in Kona ice with a couple franchises and maybe an ancillary or two and you can make plenty of money.

You can really have a great life, but, but everyone kind of gets into this and they're like, Hey, how do I conquer the world?

Um, my wife, my wife kind of jokes.

She said, you know, Tony quit his job to do Kona so he could spend more time with his kids and all he did was just make a business big enough so he can employ all of his kids and get free labor.

So brings new challenges.

But no, I do want to, I do want to kind of put that into your ethos is like, it's not always about trying to take over the world in candy stores.

Dylan, what, what do you mind telling us?

What is, what is your revenue more or less?

We'll do about 400 in our first 12 months.

That's amazing for a candy store in a small town.

Almost did a spit take there.

I just drink a bottle of water and almost spit all over the computer.

This is 400,000 for the first year.

My projection was 62. So I think that's more of a reflection on my poor modeling skills than anything else.

I mean, I mean, that kind of revenue, right?

It's amazing. It really, you've proved out this, this concept and, but I think that to do it in a way where you can actually sell a franchise, there has to be a couple of tweaks in the stores that make this totally unique, you know, like, right?

You know, you talk about joy and I think a lot of that joy comes from seeing children come in with a grownup, right?

And candy stores just amazing.

Like, I remember when I was a kid, we had a teacher and she had a paper mache tree on one of the walls of the room and she would tape with masking tape, Tootsie Pops on that tree and once a day, one kid who was the student of the day could go and grab one off that tree.

And I mean, that was magical.

It was a lollipop tree, you know?

And if you can kind of create an experience even beyond just the candy, like I remember when I was a kid, there was a store called Imaginarium and some shopping malls and they had two doors.

They had the big door to go and then they had a small little door that kids could walk through into the store and it was so cool that I always wanted to go to that store and walk to that little door.

Love that. And so to me, like a couple of cool tweaks like that and you can really experiment with your second store, that, that kind of allows you to build out that proof of concept where you can say, okay, now we've got this model and now we can maybe go to a third store, maybe we can talk to somebody else who wants to open that third store.

Does that make sense? Makes perfect sense.

I love it. We're, we're heading that direction.

We have miniature shopping carts that little kids take around and put way too much candy in.

So I think there's a lot more we can and should do in that realm, but that advice is fantastic.

I appreciate it. The store is called The Sweet Spot.

Dylan Richter, good luck.

Thanks for calling in. Thank you guys very much.

We're going to start with this first store.

If it goes well and we want to expand, Guy, it may take us a little bit of time to get to San Francisco, but Tony, Parkersburg, West Virginia, Northern Kentucky, Florence, I think we can get there and see.

All right. I got first dibs on the San Francisco franchise.

Thank you guys very much.

It's been great. Thanks so much.

Thanks so much. Those are crazy numbers.

Those are some... I mean, you're the guy that, that figured out you can make money selling shaved ice and, and the margins on that must be pretty good, right?

Because it's ice and syrup and, you know, and there's gas.

gasoline and stuff, obviously, but, but man, candy.

And man, I just hope it's not...

I had a buddy that opened up a bar and his first three months, he was doing numbers that you couldn't even get your mind around.

And I had another friend that said, yeah, those are your honeymoon numbers.

Let's see if he's got what it takes to keep that going.

And lo and behold, he didn't.

I mean, because there's a lot of places out there, there's a lot of competition for your dollars when it comes to stuff like that.

So, but maybe not in a small town.

So maybe that's, he's tapped into something there and there's not competition for your, I know, I know we sell a lot of Kona franchises in small rural America.

And my franchisees have said to me, you know, you go to a small town and you're like Santa Claus coming to town, you know, people just lose their mind because they don't have all the options.

So maybe he's, he's really tapping into something there.

I'm, I'm hopeful. All right, Tony, we're going to take a quick break.

But when we come back, a Wall Street trader trying to popularize needle felting.

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Welcome back to the advice line on how I built this lab.

My guest today taking your calls with me is Tony Lamb, the founder of Kona Ice, a franchise of shaved ice trucks.

All right, let's bring in another caller.

Hello, caller, are you with us?

Hi, guy. Hi, Tony. It's great to talk with you.

Welcome, please. Tell us your name and where you're calling from and a little bit about your business.

Yeah. My name is Zach Deets.

I'm from Northampton, Massachusetts.

And my business is called Just Fuzz.

So we make and sell Learn to Needle Felt kits.

Amazing. Okay, tell us what question you brought for us.

Of course, yeah. So we're really focusing on online selling.

And we just launched recently.

We're two months into the business.

So my question is given that not a lot of people know what needle felting is, how should we market on social media to sell a product most people are unaware exists?

All right, we're going to get to your question a sec.

And I have a lot of questions about needle felting.

So just a kit you can buy and it gives you a needle and the felt and it teaches you how to needle felt or to sew, I guess, whatever the term is.

Yeah. So these kits make felted creatures out of sheep's wool.

So it's a process that takes about three hours and you create a cute little creature.

Right now we have a penguin and a panda for sale.

And you know, friends come to your apartment and they say, wow, that is, that's a really cute thing.

You're like, I actually made that myself.

I needle pointed at myself.

How did you get, tell me a little bit about the background?

How did you get to this act?

Right. So it all stems from I was working a job in finance, so very unrelated.

And I got laid off from that job and decided to take that as an opportunity to do some traveling.

So I convinced my girlfriend to quit her job and join me in travel in Asia.

And we were in Taiwan and we were at a craft fair.

And I'm not a really crafty guy, but when I saw this stand of all these felted creatures and I saw that they actually were selling kits to do it, I went up to the booth and I bought some kits and I asked, do you guys sell outside of Taiwan?

And they didn't. And I was like, why have I never seen this in the US?

So I tried the kits and I actually, you know, really enjoyed the experience.

And I was like, I think artsy people in the US might like trying this as well.

So that was kind of the genesis.

So you are basically betting on this idea that because it's, I mean, you know, it's unusual, right?

Like you're, I think you would admit yourself like you're, you were not a guy who'd be like, you know what, I really want to get into needle point or whatever.

Like you stumbled on it and then you tried it and you loved it.

And there was something about the experience of like putting this thing together that turned into a little creature that you've just thought was really satisfying or fun.

I don't know. It must have been something that captured your imagination in some way.

Right. Exactly. I think as we become adults and I'm only 26 years old, but I've already found this, we kind of lose our creativity and lose the ability to learn a new hobby.

So that's kind of what I'm trying to bottle up in this kit.

And what, what is the sort of like, just started this?

And so presumably, you know, trying to figure out how to get the word out so you can sell them, but what do you think the market size is and what was something like this?

Yeah. So you might think it's, it's pretty tiny.

And what really kind of shaped my opinion is this learned to crochet company called the Wubbles.

I don't know their current numbers, but I think it's five plus million dollars revenue a year.

And I was just in Walmart the other day and saw, saw their kits there.

So part of why I thought this could be a good idea is because I have friends who have done these learn to crochet kits and they say, actually, it's, it's still quite intimidating.

But with needle felting, you literally start with fluffy sheep's wool and you get a needle and you just start poking it and you just keep poking and it just condenses down into the shape.

So it's really doesn't, it doesn't take much instruction, although we do provide, you know, detailed step by step instruction, but it's, it's approachable.

Wow. Tony, any thoughts?

I have tons of thoughts.

You took me, Zach, you took me into a wormhole of needle felting and I, oh my gosh, the cat faces that I think I saw online and, and some of the, some of the things are beautiful.

And, but listen, I mean, obviously, you know, you're, you're a hill that you're climbing.

You, not only do you have to get market share, but you have to develop the market, which is probably the most challenging things there is to do out there because it's, it's so two fold.

Ironically enough, guy, I sat behind a lady on a cross country flight that was crocheting and she completely did this handbag and I was like, that was amazing.

I started talking to her a little bit as she were getting off the plane and I was like, she goes, oh yeah, I just look for opportunities to spend three or four hours doing this.

And I was like, I think it looks medicinal in a lot of ways.

Yeah. And I was like, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know,

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know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know,