March Interview: Frozen Yogurt with Yul Kwon

Presenting Yul Kwon, this month's guest interviewee...

After graduating from Stanford with a degree in Symbolic Systems, Yul Kwon continued his studies at Yale Law and went on to work at law firms and other companies, including McKinsey and Google. In 2006, he was the winner of Survivor Cook Islands and went down in the show's history as one of the greatest strategists. Last year, he opened his first Red Mango frozen yogurt shop in downtown Palo Alto. In addition to Red Mango, he spends his time doing nonprofit/charity work and supports issues in the Asian American community, including bone marrow donations and political activism.

Froyo is one of my all-time favorite snacks and one that I partake in with best friends and family, so it was a real treat speaking with Yul Kwon and learning more about the froyo market from him. I found him to be a very genuine and funny individual to talk to. And who would have thought that Yul Kwon is lactose intolerant?!

After winning Survivor, why and how did you enter frozen yogurt industry?
It was completely serendipitous. After Survivor, I stopped eating well. I wanted to find something healthy to eat because I gained 40 pounds. When I went to LA, someone introduced me to frozen yogurt, and it helped me get back into shape. I met Dan Kim, the CEO of Red Mango, through a mutual friend, and he asked me if I was willing to help him expand in the Bay Area. I had never owned a small business before, never done franchising. Having worked in the corporate world, I never had the desire to work in retail food, but I thought it'd be an interesting experience. I love the product and the guaranteed supply of yogurt!

What is your specific role at Red Mango?
I'm a franchisee, a small business owner, of Red Mango. I'm the public face in the Bay Area, the deal maker kind of. I spend a lot of time on overall strategy and organizational fit and building relationships with landlords, brokers, and Red Mango corporate. I spend some time in the stores, too.

Is frozen yogurt a fad or here to stay?
I believe it's a sustainable trend. First, if you look at the frozen desserts market, frozen yogurt occupies only a small share, so there's room for growth, especially if you look at other parts of the world where yogurt consumption is much higher. Second, the product is healthy, and there's been a long-term trend and desire for healthier products in all categories of food. Consumers are choosing food options based on health investments. Frozen yogurt is a low-calorie food with a lot of health benefits. Red Mango was the first frozen yogurt brand to be certified by the National Yogurt Association.

Since Survivor, you've been getting a lot of media attention, including negative coverage on Red Mango being denied entry into San Francisco's North Beach community. How do you cooperate with the press and what did you walk away from North Beach with?
Engage the press and get to know reporters too, so that they can understand your perspective. Be proactive and develop a relationship with the media. When North Beach happened, the press wasn't positive because Red Mango seemed to be bringing a large chain into a local community.

San Francisco is a crazy place to open a business. There are lots of local politics, different political factions and local stakeholder groups. It's hard to navigate unless you're an insider. You need connections. For us, the problem was that there were written rules and unwritten rules. We didn't reach out to the right groups and politicians. We walked into a longstanding political issue (preserving the identity of the local North Beach community and preventing large chains from commercializing the neighborhood) that we weren't familiar with. That's an important and valuable goal.

So you now have two locations, one on University Ave in Palo Alto, and another in Valley Fair mall in San Jose. How would you compare the two?
Our Palo Alto store is an outdoor location, it's more of a neighborhood, whereas the one in Valley Fair is in a large mall, so there are different patterns in terms of the traffic you get and at what times. In Palo Alto, people go to Red Mango specifically because they want Red Mango. In a mall, it's a different proposition: people are shopping for other things and making spontaneous buying decisions along the way. There's less seasonality in a mall location; in Palo Alto, we've become weathermen.

Red Mango on University Ave:

What do you get at Red Mango?
It changes, but I guess my favorite right now is pomegranate with blueberries, Ghirardelli dark chocolate, and mango.

Who are your target customers at Red Mango?
The majority of our customers are women, ages 18 to 44, interested in health. Young kids like sweeter things, but once they get used to it, they like it a lot. We're trying to get men right now. They follow the women.

Haha. How do you stay competitive with popular brands in the area like Pinkberry and Fraiche?
There are relatively low barriers to entry in the frozen yogurt space, thus the proliferation of different frozen yogurt brands. The process of education is important, as are other factors such as the product, ambiance, location, and brand. I picked which yogurt I wanted to be involved with based on taste and quality. It's tart, but not so tart that it's off-putting. I'm actually lactose intolerant, so there are very few dairy products that don't give me digestive problems, but for some reason I'm able to eat Red Mango.

Fraiche recently opened a store on Stanford campus this year. Is this a missed opportunity for Red Mango?
It's a missed opportunity because Stanford is my alma mater, and it would've been personally meaningful for me. I wasn't involved in the negotiation, but there was some misunderstanding/miscommunication. I was pretty bumped and upset, but it is what it is.

What is your favorite non-Red Mango frozen dessert?
Quickly. It's made with Dreyer's.

The reason why you participated in Survivor was to break stereotypes of Asian men in the media. How do you continue to challenge stereotypes as a small business owner?
Premium frozen yogurt is an Asian concept that's been able to cross over. In general, though, there's a perception of Asian products being shoddy/inferior. As a Korean American, I like the fact that Red Mango is a Korean product, but is seen and accepted by a broader community that includes many racial and generational lines. In an indirect way, the Red Mango brand serves the larger purpose of trying to demystify Asian images and products.

Frozen yogurt can get pricey. How do you set prices?
The franchiser makes recommendations, but the franchisee determines prices. It's a difficult issue because on the one hand you don't want to price too high, and on the other you don't want to feel your margins, so it's a complex problem you have to solve. It's a combination of margin-based pricing, how price sensitive your customers are, your competition, and what kind of image/brand you're trying to cultivate. Even now we debate our prices.

Red Mango is a premium frozen yogurt brand. How is the economy impacting your sales?
The whole recession threw a big curve into everyone's business model. Every food retailer has been hit by the recession and is hurting, there's no question about it. We haven't lowered our prices, but are monitoring and discussing prices depending on how things change. Before, with so many frozen yogurt operators trying to open stores, our strategy was to compete and win market share. Now, our focus is on lean operations.

Share a memorable customer interaction, please.
You know, I've had all kinds of interactions. A lot of times, fans of Survivor get excited when they see me. I remember this one time I was working behind the counter and shook a customer's hand. Later, I read on a Yelp review that I had a "meek" handshake.

Define entrepreneur.
Someone who doesn't know better, a risk taker who wants to take a big gamble in terms of trying something new and controlling one's direction and destiny.

Thank you, Yul Kwon!


And in case anyone from Red Mango is reading, a couple questions from my readers:

• Can you get more flavors of the mochi topping at Red Mango like grape, strawberry, green tea?
• Will there be a Red Mango in San Francisco soon?
  

Part 3: Follow Your Passion?

This post is the final part of a three-part series on Tina Seelig's talk, "What I Wish I Knew When I was 20," at the Women Making It Work conference.



When people tell you to "follow your passion," they are either 1) simplifying the problem (the problem being, What should I be when I grow up?), or 2) assuming that your passion inevitably aligns with your talents and market demand.

Passion alone, region α, puts you in the fan/enthusiast category. Passion and what you're good at , β, lead to a hobby. The intersection of what you're good at and the market, δ, is your job (as most will tell you). Where all three meet, that's the sweet spot. Find it, and be there.

Part 2: Lemonade Networking

This post is part of a three-part series on Tina Seelig's talk, "What I Wish I Knew When I was 20," at the Women Making It Work conference last week.

Tina Seelig walks into a supermarket. As she browses, a gentleman comes up to her with instant lemonade in hand and asks her how to make it. Seelig goes over the instructions with him, and as they talk, she finds out that he's visiting the Bay Area from Chile for a start-up related event. She gives him her card and offers to connect him with helpful individuals in her network...A few years later, Seelig travels to Chile for work and sends this man an email to see how he's doing. The man responds and asks that she meet him at the lobby of some building and bring her colleagues and friends along, too. When they arrive, they are met with a helicopter that takes them on a breathtaking ride over the country.

Seelig's message here isn't about making lemonade, duh, it's about making your own luck by, in this case, engaging with seemingly strange people (a man with lemonade powder) in unlikely environments (the grocery store). The key word here is seemingly.

"Lemonade networking," as I'll call it, is about building relationships, not networks; giving to give, not to get...and the surprise is waiting for you in the end.

Part 1: Unframe the Problem

Tina Seelig, Executive Director of the Stanford Technology Ventures Program, is coming out with a new book. What I Wish I Knew When I Was 20 will be released on April 14, 2009.

On Friday, at the Women Making It Work conference, Seelig gave a sneak preview of the lessons in career building and entrepreneurship that she discusses in her book. As I scanned the audience, I found that I was one of the few people in the room who was in her 20s and could technically heed her advice in time. Through stories and YouTube videos, Seelig shared 7 pieces of advice - three of them particularly struck me, and I'll summarize them over the next few days:

1. Unframe the problem.
2. Turn lemonade into a helicopter ride.
3. "Follow your passion" is cop-out advice.

In a class Seelig taught, she gave her students the following assignment:

• Each team receives an envelope with five dollars.
• In two hours, what's the greatest return you can make?
• Each team delivers a three-minute presentation on results to the rest of the class.

The average amount of money made turned out to be around $200. Teams set up bike tire pumping services, even scalped restaurant reservations! However, the team that saw the greatest return ($650) did not use the $5. The students in this team realized that the $5 they were given had framed the problem when in reality they were given a much more valuable asset: the three-minute presentation. They sold those three minutes to a company that wanted to recruit students in the class. $216.67 per minute...not bad.

The point is, think about all the assets you own.

Standing Ovations

I counted: President Obama received around 40 standing ovations during his State of the Union on Tuesday, which started me on a thought process around the tradition of standing ovations. A large part of their value, I feel, is that they are given out sparingly, to extraordinary individuals at rare points in time - so that when one is given, it's a signal, a message of sorts, of what resonates with the audience. But when you have 40 in a time period of less than an hour, averaging about 0.75 standing ovations per minute, each successive standing ovation decreases in value, and one is left wondering what the audience really cared about. I think this is especially true in the field of politics. I re-watched Obama's speech to track some simple trends on how he earned his standing ovations. Here's what I came up with:


Obama's statements on recovery from the banking crisis (through renewed lending) and reform (energy, health care, education) won the greatest percentage of standing ovations, but even so, when you have a relatively even distribution of consensus from an audience, what does a speaker leave the stage with? The audience has a message, too.


When you break down the reform slice of the pie, the results are a tad bit more compelling. Health care and education reforms lead those of energy/climate change.

From a more personal point of view, I've always been one to find standing ovations awkward. If you think about it, it only takes maybe 15 to 20 percent of a large audience to find something standing-ovation worthy, and then that does it, the remaining majority is forced to follow. The next time you feel pressured to do so, just remember: being stingy with your standing ovations is not a bad way to go.