When building a business, whether just beginning or a decade in, the key to success and longevity for many can be found in this analogy from Nick Martell and Jack Crivici-Kramer, entrepreneurs, founders and cohosts of the daily pop-biz news podcast The Best One Yet:
“A business can try to be like a Swiss Army knife and can try to do everything, sell everything, be everything to everyone. Or the business can try to be a steak knife. It can try to do one thing and do that one thing really well.”
It sounds like common sense. Yet, time and time again, we witness the downfall of businesses that let greed take the reins or become tempted to exist as a jack-of-all-trades. They transform into Swiss Army knives, attempting to do it all. As a result, some become mediocre in an array of endeavors, all while losing sight of the mission they committed to in the first place. Though this path may allow some to reap benefits, for many, consequences follow.
When it comes to business, strive to be the steak knife—sharp, efficient and focused on your purpose.
A business transaction worth examining
On July 22, 2024, Krispy Kreme, Inc., a publicly traded company, announced the sale of a majority ownership stake in Insomnia Cookies, representing a $350 million total enterprise value—double what it was when Krispy Kreme bought it in 2018. They sold to investment firms Verlinvest and Mistral Equity Partners for an initial $127.4 million, estimated to increase to a total of $172.4 million after “refinancing of intercompany debt,” according to their press release. The firms communicated that they would partner with Insomnia Cookies, supporting its CEO and the entire Insomnia Cookies team through its next chapter of growth.
Meanwhile, Krispy Kreme will remain a minority shareholder but shift its attention back to one primary product: doughnuts.
Acquisitions happen constantly, and this one is a win-win, right? So, why explore this particular purchase?
Martell said they “had a blast jumping in [to this news] TBOY-style” on the July 24 episode of The Best One Yet, because it’s “such an interesting angle on a company focusing on one product versus many.” The heart of the transaction holds a powerful lesson for anyone navigating their own business journey.
Insomnia Cookies’ growth has boomed since 2018. While the partnership proved successful for both companies, it may have distracted from Krispy Kreme’s core mission to sell doughnuts, ultimately influencing its decision to sell.
The risk of too many irons in the fire when it comes to business longevity
In the early 2000s, Krispy Kreme faced considerable adversities due to money mismanagement and rapid expansion. Additionally, more recently in August 2024, it was reported that Krispy Kreme stock was down 31.94%. While Insomnia Cookies thrived, delivering hot, late-night cravings in the form of cookies, the numbers showed that Krispy Kreme wasn’t experiencing the same level of success. The doughnut giant may have been experiencing the negative consequences of having had too many irons in the fire.
Now, by selling the majority ownership stake in Insomnia Cookies, Krispy Kreme has earned its expected $172.4 million. They have reported that they intend to use this newly generated revenue to pay off debts, drive profits and expand the global reach of the heart of their company—doughnuts.
President and CEO Josh Charlesworth reconfirmed this plan in Krispy Kreme’s second-quarter financial earnings results, stating that this sale allows the company to “focus on our core strategy of producing, selling and distributing fresh doughnuts daily whilst also further improving our financial profile.”
“Cookies may be a good business, but when your core business is struggling, the cookies may be a chocolate-chip distraction,” Martell said.
The power of prowess in cultivating
Krispy Kreme’s decision to refocus on strengthening roots is a valuable lesson in business and life. Reducing their irons in the fire reminds us of the risk of neglecting our core mission. It encourages us to be the steak knife, to do what we do uncommonly well, and not get distracted. Ultimately, Krispy Kreme is sharpening itself for the future while allowing Insomnia Cookies to do the same.
Goal-oriented reflections for you and your business
Helpful questions to ask with regard to your business goals include:
- What is your “why?” Think back to the start of your journey. What drove you?
- Is what you’re currently struggling with something you can control?
- If it’s your business venture that’s suffering, what can you do to redirect its course?
- If it’s not, take a step back. What parts of your involvement can you control?
- Have your goals changed?
It’s human to evolve, so we can’t expect a business not to do the same. If you feel your current “why” no longer aligns with why you started, take the time to acknowledge that. Give yourself grace, embrace the realization that you have evolved, and consider setting goals that are more aligned with who you are today.
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