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FOOD AND BEVERAGE

When Partnerships Work

Placing second in a business plan competition convinced David Weber and Kenny Lao that they had a viable business idea. Six years and 70 employees later, they're going strong.


Mike Hofman

The division of duties

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At Rickshaw Dumpling Bar's second, soon-to-open location in New York City, boxes are being unloaded, equipment is being cleaned, and new workers are being trained. A woman downstairs is already beginning to make dumplings in anticipation of the first-day rush. And outside, co-founders Kenny Lao and David Weber are whispering to one another with more than a little nervous energy. "Most of what we know from our first store is transferrable, but then there are a bunch of little nuances you have to get right, and we're going through and making lots of checklists to get those details in order before we open," Weber says.

The business has just arranged for new financing, it is pursuing two high-profile concession opportunities, and it now operates four food trucks. The weather is turning warmer, which means those trucks are primed to bring in bags of cash in the weeks to come—assuming they are all roadworthy. The partners find themselves running and biking all over the city trying to keep up with their suddenly booming company.

It's a crazy time.

But it wasn't always this way. Weber and Lao (who is, I should disclose, a friend of mine) met in 2002 when they were both students at the Stern School of Business. They joined forces to enter the Rickshaw concept in a business plan competition in 2004. (They placed second behind a scrap-booking company that was never heard from again, as far as they know.) After signing up the celebrated chef Anita Lo to help design the menu, the partners opened their first store in 2005. Under the slogan "Nice dumplings," they created a fast-casual menu of chicken and Thai basil dumplings, edamame, and savory soup.

From the start, theirs was a partnership based on mutual respect with a little bit of bickering thrown in. A tattered piece of yellow paper from those salad days, now laminated, outlines the division of duties. Weber focused on finance, bookkeeping, employee training, and real estate. Lao came up with marketing promotions, cultivated investors, and hired employees. "I feel like my job is making sure we make money, and Kenny's job is making sure we make magic for the customer—the things that drive the personality of the brand," Weber says.

"David's the calm one who thinks about what he's going to say, while Kenny just reacts, and is passionate and outspoken," says store manager Thornfin Nguyen. "But they are also like yin and yang. When one's down, the other is up."

One of the down times came in 2008. The warmly-lit storefront on W. 23 St. was flourishing, leading Weber and Lao began to think big; they dreamed of rapid expansion and, perhaps someday, a sale. With that, they opened a second location near New York University, and things took a turn. "After about six months, it was clear that something had gone awry," Weber says.

The space was quite large, but it didn't draw crowds like the smaller 23rd Street flagship. Advisers suggested Rickshaw add sushi but, Weber says, "we never wanted to be an Asian deli." Efforts to renegotiate the lease with the landlord proved fruitless. "It was a really dark time," Lao says. "Instead of going after what we knew, which was the young professional market, we tried to go after a student crowd that wasn't actually a good fit for us. Everybody was really grumpy, and I just withdrew."

"It almost bankrupted us," Weber adds.

As the search for a suitable growth strategy gave way to a search for a survival strategy, Weber suggested they try a food truck. "I thought it could be good for R&D," Weber says. "We could test locations, and we could test selling only steamed dumplings, instead of steamed and fried, which could reduce our costs. At the time, we were literally going through three tons of oil a year to fry dumplings."

"I remember thinking that the truck idea was the stupidest idea I had ever heard, and why would we ever do that?" Lao recalls. 

But Weber's analysis overcame Lao's skepticism, and Rickshaw launched first one truck and then another. The success of the trucks was almost immediate, and put the partners in a position where they could demonstrate to their investors that the business had potential. The trucks also produced steady cash flow, which made a second go at brick-and-mortar expansion possible. As an added bonus, the trucks became a laboratory for learning how to run an efficient food business; aspects of the kitchen in the new restaurant were actually designed based on the snug footprint found in Rickshaw's trucks.

The business has grown to 70 employees, and the partners hope it will double revenue this year. Weber and Lao—one cool and detached, the other outspoken and passionate—have taken a written plan and turned it into a business. They've seen reality undermine their best-laid plans. And they've allowed experiments and compromises to occur, which made their business stronger in the end.

So often, we hear that partnerships are difficult if not untenable. Paul Allen's recent autobiography only served to underline that point. But as the Rickshaw story makes clear, there are often good reasons to have a partner. He can bring talents to the business that you do not possess, challenge your basic assumptions, inspire employees (and you) when inspiration is hard to draw upon, and bring energy to the workplace when yours begins to flag.

For Lao and Weber, the months ahead will present new challenges but, having worked together for so long, they are pretty sure their business—and their bond—is strong enough to endure. "When I saw the news that the economy added more than 200,000 new jobs, I thought it was cool," Weber says, "because our little business was responsible for 20 of them."

Mike Hofman is editor of Inc.com.

Last updated: May 9, 2011




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