When the first Pinkberry store opened in West Hollywood in 2005, it was not just the start of a now-booming business, which boasts 200 stores in 17 countries, it was the beginning of an entire industry. Before long, dozens of other frozen yogurt chains, from Red Mango to Yogurtland, began lining city streets, hawking the tart flavor of frozen yogurt made famous by Pinkberry. The company's CEO Ron Graves, who joined Pinkberry in 2007, stopped by Inc.'s offices to talk about a new product launch, what he's learned from his mentor (and Pinkberry board member) Howard Schultz, and the truth about the company's now infamous co-founder Young Lee.
Recently Pinkberry started selling Greek yogurt in stores. How did that product launch come about?
I think great companies have to continue to innovate. You can't get too complacent with what you're doing. So, about two years ago, as I started thinking about how to innovate. At our core we're about two things: yogurt and freshness. We decided Greek yogurt would be a natural progression. It took us two years to formulate the product, to develop the right recipes, the customer experience, the supply chain. When you have 200 stores globally, it's not easy to just put a new product in a store. About the first of June, we launched in 17 test stores--four in Los Angeles, six in Boston, and seven in Washington, D.C. Greek yogurt is obviously catching on tremendously in the U.S., especially in grocery aisle. So far, the response from our retail customers has been phenomenal.
Have you ever considered bringing the product into grocery stores, or are you sticking with retail?
I love being a retailer, as opposed to a consumer packaged good company, because we get to talk to our customers every day over our products. Still, grocery is a consideration, and at some point we'll likely take our products to grocery, but it's a very different skill set. For us, it'd take a lot of effort. We're building our brand through retail, and once we've done that through user experience, then we can go to grocery, because we will have already established a connection with the customer.
Speaking of your customers, how have they reacted to the news about Pinkberry co-founder Young Lee standing trial for assault?
He's certainly in the news lately [laughs]. What he does, unfortunately is more of a reflection on him than it is on us, since he hasn't been involved with Pinkberry in years. Our customer, I don't think, really cares.
Was he always a bit of a loose cannon?
Young is very creative. He's a designer, and there's always a fine line with creative brilliance. Super, super creative people kind of live on the edge, right? But you have to give our founders a lot of credit for what they created. Young was a very positive force for the company. Our other founder, Shelley Hwang, is now on our board.
You've also got Starbucks founder Howard Schultz on your board. What is it like having him as an advisor?
He's a personal mentor of mine. I was a partner at Maveron, which is a venture capital firm in Seattle he co-founded. We invested in Pinkberry when it had only 30 stores, and I came in as CEO. Ever since, Howard's been committed to the company. The one thing about him that I've always been in awe of is he brings together two things you usually don't see in one person. He's a fierce competitor. You want him on your team, whether it's in basketball or business. He has an intense desire and ability to do whatever it takes to win. But the other thing he brings to the table is an amazing amount of humanity and heart. To this day, he will tell you that giving part-time employees stock options and health care benefits was probably the single biggest key to Starbucks's success. It was about the people they were able to attract and retain.
Both Pinkberry and Starbucks operate in crowded markets. Do you have any advice on staying competitive?
We're the most copied brand on the planet. I talk to Howard about this all the time. He faces big competition in coffee, but the frozen industry is unbelievable. Anyone you see today who's not TCBY was inspired by Pinkberry. Competition comes with any good idea, any success. The key is to figure out how to leapfrog competition, as opposed to being defined by it. For instance, in the frozen space, everyone's gone self-serve. A lot of people tell me, "You should go self-serve. It's so successful. Look at the lines!" Well, we have lines, too. Their success doesn't have anything to do with our success. I refused to go self-serve. Why? Because that would be letting the competition define us. I don't want to be like them. I want to be like Pinkberry. Our push into Greek yogurt is the first of many future innovations that will take us a different direction than the competition. But resisting that pressure has been very difficult to do. It takes a lot of courage to actually stay true to who you are.