INTERVIEW

Rupert Warburton, CEO, Caffe Kix

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Transparently, Rupert is my uncle, though he’s also one of the entrepreneurs I admire the most. Rupert has kept full control of his operationally brilliant business, Café Kix, as a sole trader – despite its high growth levels – and designed the lifestyle he wanted for himself and his family.

Rupert touches on both his own journey, his advice for other entrepreneurs, and some of his exceptional sales wins in this concise and telling interview.

You can read Rupert’s full biography here

Jamie: What are your thoughts on the relationship between sales and being an entrepreneur?
 
Rupert: It’s critical obviously, but the entrepreneur doesn’t need to have those skill sets. If they don’t have them, they will need to buy them in. I don’t think it’s necessary to have someone engaged and skilled in sales from the start of a venture, but clearly in launch planning and getting to revenue as quickly as you can, then it’s critical.
 
Jamie: What advice would you have for a founder and entrepreneur who hasn’t sold before?
 
Rupert:  When I think of entrepreneurs, I think of a salesman, but that doesn’t mean that it’s a necessary precondition. It’s possible to have a “brain on a stick” with a concept, who’s an entrepreneur, who has horrible people skills, but the idea is so compelling that they’re able to build momentum around the idea and draw in employees who are attracted to the business.
 
Jamie: Did you do much selling before you became an entrepreneur?
 
Rupert: No.

Jamie: In terms of you becoming an entrepreneur, running your own business, and starting Caffe Kix, is it fair to say that you have done more selling than in your previous life? 

Rupert: Yes.

Jamie: How have you found that transition into sales?
 
Rupert: I’ve found it enormously fulfilling. As an entrepreneur, when you start to form your idea, articulate your idea, and then sell your idea, it’s a form of self-actualisation. I can’t really separate out the dry or functional aspect of sales from the excitement of creating something new.
 
Jamie: What have you found most fulfilling about running your own business? 

Rupert: It’s that sense of creation and self-fulfilment. Being self-determined, but also trying to change the world in a tiny way. In my case, by slightly improving – or hopefully, significantly improving – the hour-to-hour experience of somebody working in an office building or a business park that has one of my cafes in it. 
 
Jamie: Did you do anything specific mentally or from a skills perspective to help yourself to sell a lot more?

Rupert: Not formally. What I found quite useful is to write down conversation plans before I picked up a phone. I would spend hours on these.
 
Jamie: Can you take me through the kind of research you do and your thought process when you’re making a plan like that?
 
Rupert: I had a coffee wholesale business called Kix Coffee, which did well because I managed to land the global supply contract for beans for a major airline – for their business lounges. I did that within three months of leaving my previous job. That paid a good base salary. The build-up to that was modelling up the entire UK coffee wholesale supply industry and seeing how opaque and inefficient it was. I had also modelled up factory economics of coffee and realised that the airline was paying twice as much as they should be for coffee that was half as good as it should be. I was effectively able to improve BA’s value by a factor of four, which is a pretty compelling proposition.

Jamie: Can you tell me about the competitive advantage that preparation gave you when you actually went into the sales conversation? 

Rupert

A lot of people don’t really understand how much numbers matter. Particularly, some of the guys I was selling to, the buyers. I realised that to them it was my job to make them look good to their bosses.

One buyer didn’t have any handle on this analysis, but when I eventually got to meet his bosses and was able to deliver all of the analysis, that was the sell, and it was done. I was just a one-man band with no coffee credentials but managed to displace the largest producer in Europe.

Jamie: How do you avoid overwhelming someone with that analysis? 

Rupert: All you do is say, “I’m going to double your quality and halve your cost.”

Jamie: As a one-man operation or small player, what are the biggest challenges to winning business?

Rupert: The biggest challenge to winning business is winning the first business. Once you’ve got a café up and running in bricks-and-mortar and you’ve got your first customer, then it’s easy to demonstrate what you’ve got and what you can do. I remember we struggled to get the second café up and running, and in fact, it took several years. Then we had this huge growth spurt in the late 2000s where my phone suddenly started ringing as the commercial property agent community saw our cafés pop up, and could see how a great on-site café could help make it easier for them to sell office space.

Jamie: If you had sales skills, but without specific product expertise, how would you go about choosing a product? 

Rupert

I don’t think it’s sales-specific. I think the interesting question is how to choose what sector to be involved in. I wasn’t actually looking for a particular industry. I was looking for the characteristics of business that I found attractive.

I wasn’t wealthy, so it had to be an industry that did not need a lot of capital to get started. I also liked the idea that the business should be fun; i.e. the proposition should add an element of fun to customers’ lives. Another critical thing for me was going into an industry which seemed not to have undergone a lot of innovation. When I was going into foodservice, it was a much less sexy industry. Now the rate of innovation is accelerating, as is the rate of failure, by the way. So, that was the third criterion. The fourth criterion was profitability; a profitable product. Coffee unit profitability is compelling, but you need volumes to be high for a viable business.

Finally, looking for a market that has high growth I kind of chanced upon cafes through business school and one of the founders of Cafe Nero is a close friend of mine. I saw Nero and thought, “I’m not going to do that because I don’t have their private equity background.” That’s too big an entry point for me. I want something that I could own 100% of.

Jamie: Do you think that anyone should become an entrepreneur? 

Rupert: No. 

Jamie: What are your criteria for who should or shouldn’t?

Rupert: It’s the desire and determination. I find it easier to think about really smart people I know who should probably never become an entrepreneur. Some people are interested in ideas, but not interested in changing the world.

Jamie: What is the financial motivation for you as an entrepreneur?

Rupert: Independence and freedom. 

Jamie: What advice do you have for aspiring entrepreneurs? 

Rupert: Talk to as many entrepreneurs as possible. Network like hell. Research, research, and research before committing. In my darkest and toughest early days when I was losing any sense of whether I was making progress or not, and there were months of this, I made it a rule to speak to one new person every day. 

Jamie: What benefit did that give you? 

Rupert: A new perspective. A new voice. It might’ve been a 10-minute conversation or could have been at lunch or could have been a drink in the evening. My thinking was, “What’s the worst that’s going to happen from doing that?” The upside vs downside comparison is massively asymmetric. There’s almost no downside. On good days, I talked to three or four people who I’d never spoken to before. 

Jamie: If you were starting your entrepreneurial journey again, what would you do differently? 

Rupert: I have no regrets, but I did waste a lot of time. I made some bad decisions on appointing suppliers along the way. I should have been more brutal and objective in some cases. I was also far too loyal to some suppliers when I should have changed it up.

 

I think I was resistant to moving away from the 100% ownership model. But that’s turned out to be one of the best things for me, given my objectives, which was rather than make a huge amount of money was to have total financial and time freedom. I think there’s no question if I had taken one of the offers of investment or given away some of the business that the enterprise would be a £15-£20 million-pound-turnover business rather than half that size. But I’ve enjoyed a lot of the journey without external funding, which if I’d taken would have made it harder to get involved in adventure motorbiking in the way I have.

Jamie: Would some of your advice to entrepreneurs be – know what you want to get out of it at the end?

 

Rupert: Exactly. But you’ve got to be flexible, right? What matters to you might change. If you’d said to me, would I prefer at this point that the journey where I took a lot of investment and had slightly less fun along the way, but had cashed out today – would I prefer that? I don’t know.

I am still really enjoying myself. There are still operational things that we are not doing in the business, and we were trying to fix them, and that’s incredibly satisfying. For example, getting the processes right on food innovation, margin management, and designing of management reports. What information do you actually need to be able to run the business? On Monday mornings, now we’re generating great data, which is going straight into the hands of area managers. The feedback loop is incredibly tight, but that same loop used to be three months back in the day. I just love trying to get that optimisation right. This is a brick and mortar business, but the same principles apply to any business.

Jamie: Can you think of a specific time when you didn’t make a sale, but it taught you something?

Rupert: I’m going through one of those right now. Sometimes, when things are going well, it’s easy to take the credit without understanding the underlying causes, which might be outside your control. There are a lot of large and powerful players in my sector. I remember not winning a particular cafe because I think I was a bit cocky, and a bit arrogant, in the way that I conducted the process. But I think, I just sort of assumed that it was coming to me and it didn’t. So never assume.

 

Jamie: Can you think of a time when you did win a significant contract that really showed off the skills and the capabilities that you’ve developed throughout your career?

 

Rupert: There was a particular cafe opportunity which we won and is one of our most successful cafes. I pulled the stops out on a full graphics package describing our proposition. We are talking about the 40-page colour extravaganza. It was for a major institutional client, and we now have three cafes on the back of that piece of work.

Jamie: What advice do you have on doing everything you can to win in a competitive tender situation?

Rupert

I think what you’ve got to do is just recognise that it’s a market. There is supply and demand balance. There are things that you can control and things you can’t control. Only worry about things you can control.

Don’t bend over too far on commercial terms. In other words, don’t fall in love with the idea of a piece of business because there will always be more business. There’s usually a temptation to get emotionally involved when you’re starting out.

As each day passes, you’re learning more and more about the competitive landscape, what your comparative strengths are, and how to compete. You end up getting in with the right team. You end up getting into a virtuous circle, and you just want to keep that going. Then, it’s just a constant balance between continuing to do what you do driving for scale; doing what you did yesterday, and having one eye on innovation; looking ahead saying, “What’s the next thing that’s going to change our delivery? Who else is doing interesting things? What can I learn from similar industries?”

 

 

[END]

 

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