How I Built This with Guy Raz - Live Episode! Luke's Lobster: Luke Holden and Ben Conniff

Episode Date: November 7, 2019

Luke Holden grew up in Maine, working on lobster boats and in his father's lobster processing plant. But his parents pushed him to find a more stable career, so after college, he moved to New York and got a job in finance. One of the things he missed most about home was lobster rolls, so he decided to open his own lobster shack as a side project. Luke posted an ad on Craigslist looking for help, and linked up with Ben Conniff, a history major with a passion for food but no restaurant experience. Ben and Luke opened a 200-square-foot take-out restaurant in the East Village in 2009. Ten years later, Luke's Lobster has over 500 employees, and more than 40 locations in the U.S. and in Asia. This show was recorded live at the Back Bay Events Center in Boston. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This show is in partnership with Airbnb. This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb. It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb.

Your place, with all of its personal touches and its amazing location, could make someone else's vacation even better. Your home might be worth more than you think. find out how much at Airbnb.ca.com. Why did you feel like you had to open it within 30 days of getting into that location? I mean, that's all you're doing drywall, you're building it out, you're like, but why the rush? We needed to get open. We were, at that point in time, things were tight. You needed cash flow, yes.

I'll give you one specific example. Two days before we open, Ben, text and said, hey, can I go down to the, a Bowery to buy some trash cans. And I said, no, there's no money in a bank account. From NPR, it's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on today's show, how homesickness and an ad on Craigslist led two guys to build a single lobster shack in New York and turn it into an international brand, Luke's Lobster. If starting a business is supposed to be about solving a problem, then many of you probably deal with a version of this problem almost every day.

You happen to live in a place far from where you grew up. Maybe you're there for a job or a partner or school. And every time you go out for food, let's say fried chicken or barbecue or a bagel, maybe you are that annoying person who always asks, why can't they make barbecue or fried chicken or bagels like they do where I can't. come from. And just to be clear, I can be that annoying person. I grew up in Los Angeles, and for most of my adult life, I lived on the East Coast, and no one ever wanted to go for tacos with me because I would always complain how they are better in L.A. I have friends who will not eat smoked meat

outside of Montreal or barbecue outside of South Carolina. And for Luke Holden, it was lobster, or more specifically, lobster rolls. Luke grew up in Cape Elizabeth, Maine, in a family of lobstermen. And after college, he ended up working a job in finance in New York, where he became incredibly homesick. And he started to think, maybe he could solve that problem in New York by opening an authentic Maine-style lobster shack. Luke knew about lobsters, had to catch them, how to process them, and source them.

But he didn't know anything about how to run a restaurant. And so that's when he turned to Craigslist to find a partner who could help. And a person he found was Ben Conniff, a recent college graduate who also had zero knowledge about restaurants. In fact, Ben's degree was in history. But somehow, these two guys decided to see if they could make it work. They started with one tiny lobster shack in New York. And today, more than a decade later, Luke's lobster has grown to more than 40 stores in the U.S. and Asia. A few weeks ago, I sat down with Luke and Ben on stage at the Back Bay Event Center in Boston for a live how I built this.

Luke described how he grew up around the lobster business. His dad ran a lobster processing facility, which can be an incredibly unpredictable business to be in. Commercial fishing and processing seafood is you've got to have a passion for the business. I think any industry that is dependent on a natural resource is unstable. Ultimately, there's a lot of high-end food. and lows, and it takes passion and ultimately a dedication to your trade in order to persevere. And by the way, did you eat a lot of lobster as a kid? Every time times were hard at home, we had more lobster.

So as a kid, I mean, you knew how to, I mean, you were sort of around lobster men. Did you, in your mind, think, you know, eventually I'm going to get out of here. Like, I'm not going to do this lobster thing. I'm going to go out into the world and find something to do, or did you think, you know, this could be good? This could be my thing. When I was 16 years old, I got my first job as a sternman. I had worked in production facilities. My dad's facility, I worked on piers, on loading boats, but I really wanted to work on a boat.

So I got a job as a sternman. I can remember one day where the fog was really low, the bait was really old, and the waves were very, very, And I got sick at 4.30 in the morning. And the captain thought I was out drinking the night before. I mean, I was 16 years old. I didn't touch booze till I was 22. And I was sick all day. But the excitement of going out and setting a trap and hauling it back

and not knowing what was in that trap is an excitement that I still have today when I go out lobster and with my family. And it propelled me to go out and build it. held me to go out and build a boat in high school. Huh. And ultimately, when I was 17, 18, 19, I was hauling, hand-hauling 150 traps a day. And it's exactly what I wanted to do. You wanted to be in the lobster business when you were a kid?

I did. And my parents made me get out of it. Your parents did not want you to do it. Why didn't they want you to be in it? So I think because of some of the unpredictability and the lack of stability in the industry at the time, My parents worked very, very hard to send me and my two brothers to four-year colleges. Yeah. In my sophomore year, my parents basically said to me,

forget Georgetown unless you go pursue some other interests or not dealing with this financial burden. They wanted you to go to Georgetown to pursue something stable, like law or, you know, finance. Or like investment banking in 2007. All right. So you, all right, you go off to Georgetown. Let's put this on hold for a sec. I won't turn to you, Ben. You grew up also New England in Connecticut.

I did, yeah. I grew up in coastal Connecticut. My dad was a writer, so he also had been his own boss since before I was born, but a very different industry. And you went off to college, also to a good university, went to Yale. You studied history. What did you think?

I mean, did you think maybe I'll do something around history or writing like your dad? What was that where your sort of head was? I was very bad at thinking about the future at that point in my life. But eventually I graduated and I had to find a job. So at that point, I thought I seemed to be pretty okay at this. Maybe I can find a job writing or in an editorial position. And did you move to New York after college?

I did. Okay. So you moved to New York thinking, I'll get into writing. And what you started to do is food writing, right? Yeah. I worked my way. started freelance writing about food. I had struggled to find a focus, but I found that what I really loved to do was cook and eat, so it made sense that that's what I would start writing about.

Did you like it? Was this, did you think, okay, this has legs? I think I can do this. I can be the next, I don't know, Craig Claiborne or something. The longer I did it, the less I liked it. And it wasn't just that it was extremely hard to pay my rent. It was, I felt all. I felt always alone. You know, I was sitting at my computer, sending pitches out into the ether, waiting to hear something back. And I always wanted to shut my laptop and just go cook something. Really? Are you a big, like a home cook? I am a big home cook. I've cooked my whole life. My parents got us a little teddy bear cookbook when I was old enough to stand. But from what people had told me, being in the restaurant business was too stressful for a career. So what did you want to do?

Well, at that point, I decided, no matter how stressful it was, it made sense for me to go find a job in the restaurant business. Because that was clearly my passion. And, you know, I was done kind of sitting on my butt at a computer. Yeah. So I applied to basically every job I could find in a restaurant. What kind of jobs? Like, sous chef, dishwasher. Dishwasher.

No way I would have even tried for sous chef. Okay. But like dishwasher. Counter service. you know, anything that would put me in a kitchen, in a position to learn something that could eventually get me. And did you get any offers? No, I didn't even...

Right. I didn't get interviews. So they're looking at your resume and they're like, this Yale graduate is not qualified to wash dishes in our restaurant. Yeah, and that's exactly right. Totally get it. And I kind of wasn't. Yeah.

All right, let's pause for a sec. I want to go back to you, Luke. So you are... You graduate from Georgetown and you do exactly what you are meant to do. You go work and finance in New York City. Your parents are happy. They're really excited. You've got health insurance, some stability.

Is that more or less the scenario? Yes. My parents were happy with it. So was I. It was a really neat experience to go explore right out of graduation. Where were you living in Brooklyn? No. So I was terrified of the subway system.

So I worked at 49th in Park, and I lived at 50 second and second. So I'd like... You just walk back and forth. There was like three Irish bars that I was comfortable at, a gym, and my desk. Right. And like, that was it. Got it. Yeah.

And you're doing this for a couple years. Did you... Was there a point where you just started to get unhappy doing it or bored? Because it can be a grind, right? It was definitely a grind. I was with a great team. I just didn't have any passion for it. It was just a job.

and really nothing more. And the honest-to-God story is that I was at my desk on a summer Sunday afternoon. I was missing home. And so I went online, yeah, just looking for an affordable, classic main-style lobster and there was all these great restaurants serving their interpretation of a lobster but it was not a quintessential affordable experience. I'm curious about what was a good lobster role to you? What did you want it to be?

An unadulterated product. So a good lobster roll is a New England top split bun, shave sides, get a nice buttery toast, a little slick of mayonnaise, quarter pound of fresh lobster meat. Just from a particular part of the lobster, right? Knuckles and claws. It was the most tender part of a lobster. Got it. Then a little bit of lemon butter and a little bit of secret seasoning.

So you start to, the gears in your head start to turn, and you're thinking, there might be a lobster opportunity here because there was nothing like a main lobster shack anywhere near where you lived. That's right. All right. I just want to pause from a moment because, I mean, I know a lot of times we talk about these business stories and it's this is a sort of eureka moment, but it's really more complicated than that. Because I have to imagine that over those two year period or whatever it was where you're working at the finance firm in the back of your mind, you knew that you were going to. to start something or no? Was that the case? So I grew up in a family between my uncle and my dad who were partners,

and they were great role models. Both entrepreneurs were always there for their family, and I had it in my mind that an owning your own business ultimately gave you the lifestyle that I thought my dad and my uncle were living. I mean, the reality is that now that we're doing it, You realize that they were just burning the clock when I wasn't paying attention. But they made me feel like they were always there. Yeah.

So I had definitely had it in my mind that investment banking was a stepping stone to ultimately start my own business someday. But I had no idea it was going to be back in the lobster industry. And what was the first thing you did? Did you, like, call your dad up and say, hey, dad, I have this idea. I kind of saved that. So I wrote this business. plan and my network of friends and mentors ultimately reviewed this, as you guys might be able to tell. I'm someone who thinks a little bit more clearly in writing. So I shared my thoughts through this

business plan. And were people encouraging or was anyone like, this is dumb, stay in investment banking? Most people were honestly encouraging. That concept of like, you're three years into investment banking, you've got that notch in your belt, you're positioning this so you can keep your daytime job and and pursue a side hustle. Oh, this was going to be a side hustle? Absolutely. All right, so when you told your dad, how did he react? Yes.

He didn't say, we sent you to Georgetown, so you wouldn't get into this crazy business. He didn't, and especially because it was initially positioned as a side project. My mom, on the other hand, even dipping my toes in the water of the Lops industry, made her cry. She was upset about this. Because? Gateway drugs.

ultimately. Got it. Okay. So dad's on board. Mom's not. And did you have any cash? Did you have any money to do this? We had a little bit of cash. So I had about $15,000 in savings. My dad, I said, could you match this and be 50-50 partners with me? He says yes. A couple years later, he told me he literally borrowed the money against his 401. Okay. Wow. All right, let's get back to, I'm going to positive to get back to it. It was like, you decide at a certain point, can't do this alone. So first of all, why did you decide that you needed a partner? I was pretty risk adverse. Again, no real passion in investment banking, but it was paying the bills. And I ultimately, you needed somebody to help you run it.

100%. Okay. So how were you going to find your business partner? Through Craigslist. And I got like 500 responses. in a matter of a couple of days. All right. I'm going to turn back to you, Ben. What were you doing trolling Craigslist one night? What were you really looking for? We always say we met in the men-seeking men section,

but it was men-seeking men for help, you know, to start a lobster business. Wait, you were like on Craigslist just looking for some opportunities, and what did the ad say? So it's in the restaurant section, I'm there applying to dishwasher jobs and counter jobs and getting no response. And I see this ad. It says, I'm a guy from Maine. I have a good job.

But what I really want to do is start a lobster shack that is similar to what I know from my Maine childhood. And while I wasn't lucky enough to grow up in Maine, I was lucky enough to go visit a bunch of times as a kid, and we would rent a little house in Five Islands, Maine. and I would go down to the Five Islands Lobster Co-op and hang out of the lobster dock there and watch the guys steam in and out and unload and, you know, eat at the lobster shack there.

So the ad basically says, hey, I'm opening a lobster shack, I'm looking for somebody to help me out. Like the last sentence was, I just need somebody you can raise their hand because I really don't exactly know what this job description is at this point in time. But so, okay, so you get 500 applications

and what stood out about Ben's. He wrote a really nice cover letter, kind of bringing back his fond memories at these lobster shacks. He understood kind of the essence of what I was looking to create here in the city. He was clearly smarter than I was. But you get this letter and did you email him right away and say, hey, let's meet. Yeah, I said, I got to be at my desk at 8.30. Why don't you come by Starbucks underneath my building at 7.30 and let's talk for half of it.

And this is in August of 2009? Yeah. Okay. So one morning, you guys meet at Starbucks, and had it go? It was great. It was an easy conversation. It was a two-way interview, which I appreciated. I shared the business plan with them, asked him to follow up, give me his thoughts on it.

And then my next move was, all right, go up to Maine and meet my family. Wait, that's really fast. You're moving really fast. Yeah. It was weird how that came out. But it's true. But so, okay, and Ben, what was it about his business plan, his idea that appealed to you? Was it that, you know, Luke was so interesting and smart and enthusiastic about this?

Or were you really just desperate to get a job in the food industry at this point? Careful. When I initially wrote the email, I had said yes to a lot of worse ideas in the past. and I think in our email exchange before we met he mentioned that he was in finance and I kind of went into that interview thinking a finance guy who's got a pet project and ultimately it involves lobster so I'm excited about it and before I met Luke that morning that's kind of what I expected and walking out of that conversation it was completely different because you know this was somebody who actually had such a deep personal history in the the lobster industry and such a clear understanding of how sourcing worked and how sustainability worked and all the different pieces that would actually make a business like this. Yeah. And, yeah, walking out of that meeting, it just seemed like something that I wasn't just going to

go help out with for a little while, like this is something that could actually work. So a couple days later, you bring Ben home to meet your family. No, he didn't even come with me. Oh, he didn't. You sent him up alone to meet the parents? And did you want that to happen to get their take on him before you decided whether he was going to be the right partner? Absolutely. It was, it was, it was, he had like, he seems real smart.

He seems honest. He seems hardworking. He's interested. And it was clear that we had complementary skills. So as a business leader, there's all sorts of areas where I've got deficits and there's areas where I've got strengths. And I've always been pretty good at recognizing and reading people fairly. truly. So Ben just read very truly. And everything

about it just sort of felt right. All right. So you guys decided to partner up. This is the part of the story. It's even crazier. It's September of 2009. And you decide, we're going to open this thing in October. First of all, how did you

even find a place and get a lease? And why were you in such a rush? So we were looking down in the East Village. And we looked on East 7th Street. It was a great food street. There was a handful of brands that did one or two things really well, but really no complete menus. You could go get Narepa here, you'd get a porcetta sandwich here, you'd get a cupcake here, get a smoothie over there. And so I felt like our brand, our concept,

which was selling lobster rolls, would do well here because it was a small footprint. And if somebody wanted to go on a mini food crawl, we'd participate well in that. And I mean, $30,000. Okay, it's a working capital, but rent in New York, you got to sign a multi-year lease. I mean, how did you do that? Well, I had the guy from Yale review the lease. And, Ben? I knew nothing about leases, but I could read. I had, you know, a really strong sense of what was fair and not fair, and most of the things I asked for were flatly rejected.

Okay. And what was the size of the space that you located? It was like 200 square feet. It was an old consignment shop that was just, it was called Sosa's closet. It was painted brown, so it resembled like a big walking closet. Wow. And what was the rent going to be per month? It was $3,100 a month. Okay. So you'd get this place, and you decide that you have a month to get it in shape and to open up in one month? So it was three months security deposit. Okay.

First months ran up front. We had to upgrade the electric, which we did not anticipate. That was like a $10,000 bill. And then everything else, we fit within the remaining $10,000. Like, Ben had to go figure out how to pull all the building permits that we needed. My uncle and brothers were in there doing construction work and painting. You guys were doing all this. You were remodeling it yourselves? Anything you didn't need a license for, we were doing it. Had to do it. Okay. No other choice. Maybe some things that you didn't need the license for. And so what did you have to build in this space? Like, you had to make it look like it was going to be a takeout place.

We basically rolled refrigerators in there. We put griddles on top of them, built a little half wall to show where the kitchen was and where the seating area was. And then, yeah, the rest was really, I mean, a little bar top, some stools we bought at Kmart. and then actual decor. And we went, we got Luke's old buoys from his old lobster boat. And we had a good friend of Luke's brother, Brian, you know, stepped up to paint a mural for us. And we tacked lobster in gear on the opposite wall. And yeah.

What we didn't compromise on was we had the best tasting and most affordable lobster all. Right. That's what we were going to have. And we were going to create a team that treated people the way that we like. to be treated. Was there any doubt about the name? Were you, I mean, Luke's Lobster, it was going to be Luke's Lobster from the beginning? At that time, I had a friend who was a great marketer, and I gave him 10 different names. What were some of the other names? It was like overboard lobster, like lobster shack, clam shack, even though we weren't going to have clams. There was,

There was a variety of just bad names in there. I was super gun-shy about naming a restaurant after myself. I kind of had, still sort of do anybody who names a business after themselves is probably not a very humble person. Where I got over that was the significance and the story of my family and the direct tie that we had to fishermen and putting a person behind the brand. was something that ultimately Ben helped me realize.

But why did you feel like you had to open it within 30 days of getting into that location? I mean, you're doing drywall, you're building it out, but why the rush? I'll give you one specific example. Two days before we open, Ben texts and said, hey, can I go down to the Bowery to buy some trash cans? And I said, no. There's no money in the bank account. Things were tight.

You needed cash flow. We needed cash. We needed to get open. At that point in time, there was no wiggle room at all. Okay, you are still working at the finance job during the day, right? Yes. This is a side hustle. I didn't really have any ambition to make it what it is today.

It was just something fun that was going to bring a little bit of passion about. All right, so we know that your dad had a lobster processing plant. He basically would process lobsters for other people. in Maine. So he was going, you were going to buy the lobster from his processing facility. We were, and luckily he didn't make us pay for the first 90 days. So that really helped cash flow in the beginning. All right, so October 2009, you open up, how many lobster rolls were you expecting to sell that first day? We had probably planned initially on 50 to 100 rolls. And you were not there for the opening.

You were at your desk in the financial firm, right? At like 9 a.m. I gave Ben and my dad a high five and said, go get him, guys. I just didn't. It's the first day. We had a handwritten sign on the window. We had no press. Like, not a lot of press. What was going to happen on the first day?

Yeah. Two o'clock, total crickets didn't hear from either one of the guys. So your dad was at the shop with Ben, and they did not, nothing you heard nothing from them nothing so I'm like what are they protecting me from the bad news we haven't sold a lobster roll yet this is horrible what are we going to do with a couple hundred lobster rolls

that we've got on site and two o'clock bend surfaces and says there was a line out the door before we opened it's now around the corner it's going great people are happy the team is crushing it just wanted to give you a heads up and I just immediate like that was a good feeling

did you run out of inventory of lobster Not quite that day. So we had been just cranking away making lobster rolls. And Luke's dad was there on the line making lobster rolls. He'd driven down from Maine the day before, and everybody in a kitchen is got to wear a hat. So Jeff had borrowed a hat from one of our other teammates, who was a skateboarder.

He had this mesh anti-hero hat. So Jeff is there. He's got a big white mustache crushing lobster rolls. and at a certain point we looked up at each other and we just said, I was, Jeff, I need to go back to Maine. Wow. We need more lobster. How many lobster rules do you sell that first day? 500 the first day.

When we come back in just a moment, how Luke and Ben grew that one lobster shack into an international brand. And how along the way, in one very dark moment, they both wound up encountering the worst smell that either of them had ever smelled, which, by the way, had nothing to do with lobster. Stay with us, I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2009, and Luke and Ben have opened the first Luke's lobster in New York's East Village, and they realize pretty quickly that they are a lot better at making lobster rolls than running the actual restaurant.

We weren't using what we now call a point of sale system We were using an old school register with numbers on it and a calculator So pull up that strip and see how many lobster rolls It says we'd sold at the end of the night And then we'd back into what we had And it was, you know, I had never used Excel in my life at that point So I would do scratch work on paper And then every now and then I would sort of

Somehow I got those numbers scratch stuff some paper to Luke, and at his desk he could put it into Excel and send it back to me in a way that made sense. And how, I mean, how are you figuring out, like logistics? Were you basically just kind of winging it? Like, how much do we need today? And maybe we're not going to have enough. And how many rolls do we need?

I actually think this is one of those areas where inexperience was our friend. All of the lobster came down from Maine in units. when you say in units wrapped per lobster roll. Perfectly steam-cooked, next day shipment. Because lobsters in a roll is cold. It is. It's served chilled. So for us, we created an inventory system that we had sales based off of units that we used to just project what we needed for inventory,

all in a very complicated Excel sheet. And then we just use those historical sales to predict what we would need, and that's ultimately how we did all of our inventory. purchasing so we were never had lobster in the shack that was more than a couple days old. Yeah, I mean, this is the thing, like, lobster is not like, I don't know, Stacy's Pita Chips that's been on the show, right? Once you bring a lobster for processing, like the clock is ticking, right, or it goes bad, and then you've got to get it to your stores really quick. So how was it, was it coming in, refrigerated, frozen, like, how was it coming in?

It's a typical day. You catch lobster on a Monday. It's cooked on a Monday, shipped on a Tuesday, It's in our shack Wednesday morning, all through refrigerated trucks, and then we'd use it Wednesday, Thursday, and another shipment would come. So you have really 10 to 14 days of shelf life, and we were always through it within four or five days. So tell me, I mean, you were running the lobster shack, and at this point, did you have somebody working there during the day helping you out as well? We had an amazing team that started with us on day one, and that was, I mean, it was crazy, but in all of that, like figuring out permitting and building out the restaurant

and figuring out... You had to get a food license in 30 days too, right? Yeah, it turns out somebody needs to be on site with a New York City food handler's license at all times. So luckily, I was able to get that before opening day, but nobody else did. So in that 30-day process, there was also, obviously, a lot of Craigslist posting and then reading responses from people on Craigslist. And And we ended up with just extraordinary people, partly because it was at the height of the recession and there was a lot of people looking for jobs. But amazing support team there from day one. And your price point was $14 initially for lobster roll, presumably a lot cheaper than a restaurant in New York, right?

More affordable. Right. More affordable. Right. It is not a cheap product. More affordable. Yeah. Yeah.

So we certainly working directly with a processor, working directly with fishermen, there was no middlemen from day one. Right. So we had access to the best quality product at the best price. And our economic model was we needed volume in order to be successful. So we got that from day one and tried to price the role accordingly. I mean, you hired all these people from Craigslist to work with you. I don't know. Were you nervous that you wouldn't be able to pay people? Because you were, at this point, 30,000 you burn through it.

You're dependent on the cash flow. It's on you. All these people are like, all right, Luke, I believe in you, I'm going to come work here. Were you nervous about that? I was terrified out of the gate. I think I asked Ben not to process his own payroll for the first week. But sales were so good the first week and deferring paying for seafood for 90 days, capitalized the business very, very quickly. I mean, I understand you were making.

like a premium product or really high quality lobster roll. But like this is really now the financial crisis is like in full swing, right? But 14 bucks, even though the price is great for lobster roll, like people could get a burrito for five bucks. So why do you think it people were willing to spend that money? I think, you know, lobster is a celebratory food. And at a time when people aren't necessarily going out to the fanciest steak dinner or getting the money. most expensive bottle of wine, they could come and they could spend $14 for this, you know, the surroundings may not have been luxurious, but the product was a luxury. There's nothing wrong with that.

But they could go in and have kind of a luxurious lunch or dinner. And there was no question that the recession did actually benefit the opportunity. Without a recession, there's no way a land. Lord would have taken a chance on us. Wow. There's no chance that I would have found smart, motivated people that needed jobs were out there and available. So, all right, so you've got this store going.

You're getting momentum, making money. So what was the conversation between you guys? Were you starting to say, all right, let's open another one? I remember talking about what's next. I would put together a snapshot of the financials. and said, what do you think about scaling this thing? We've got a real opportunity here. We're having fun.

We're making money. Let's go try a second one, and I'll put all my chips in the middle. I'm willing to take the same $35,000 salary that Ben signed up for. You were going to quit. You want to pause there? No, you're going to quit your job. Yeah, no, but you decide I'm going to jump into this two feet. This side hustle is now my full-time hustle.

I'm willing to do that if you guys are in. this with me. And everybody said, yeah, let's go ahead and give it a shot. And your mom was like, yes, go for it. Now she was on board? No. No, mom was not on board with you, quitting your stable job with health insurance and all that stuff to do this. Not for six months of success. Right. She's a little more practical than that. All right. So you find a second location. Where was this? What was this place? It was on the Upper East Side in Manhattan. It had been a high-end French restaurant.

But when we started kind of peeling the layers off the onion to see what was in that kitchen, it was a nightmare. I mean, layers and layers of grease on the walls, on the floor, the original owners had sold it, and the interim owners had really just run it into the ground and then just walked away. I mean, to the extent that they had left food in the walk-in refrigerator.

And that was six months ago. And restaurants, I think a lot of people don't know this, but restaurants have something called a grease trap. Restaurants have to trap and then dispose of their grease, right? So there was a grease trap there? There was a grease trap there. And probably in the two years that the interim owner had owned it, it had never been cleaned.

And then it had been vacant for six months. So, yeah, that was about the worst smelling thing either of us have ever experienced. And the two of you cleaned it out? Yeah, so there are professional companies that do this. Okay. They come and they have, you know, this great pump system. Yes. They open it up.

But we really didn't know about those companies. Got it. Right? So, yeah, we would saw the tops off of milk jugs. and, you know, kind of scoop it into a bucket or, like, double-bagged trash bag, and then just kind of run around to try to find a dumpster. Wow. So, I mean, you eventually open the second store, and how long does it take you?

Again, 30 days or something? It was fast. We opened May 26, and I think we took possession of the shack May 1st. Wow. And now you've got two stores, which is double the work, and double the stress? Yeah, absolutely. And our first general manager

who now runs our HR department, we left her there in the East Village during the throes of the buildout process in the Upper East Side. And, you know, thank God she didn't leave us. She didn't walk away. She held strong. But yeah, it was a stress that was shared by the entire team.

All right, 2012. You're buying your lobster from your dad's processing plant. He decides he's just fed up with it. There are a bunch of regulatory challenges. He's dealing with he doesn't want to do it anymore. And so he kind of dumps it. He gets rid of it. You guys don't have a processor anymore.

So what did you do? I mean, what did you, who did you turn to? We actually spend a year. You're actually buying from other producers thinking, hey, this is a way that we can scale the business. At this point in time, we are thinking growth. I think we had six or seven checks. It only took about a year for us to realize

that we needed to invest back into the production business in order for us to scale from a quality and price standpoint. We needed to have that. You decide to start your own production facility. We are going to bring in the lobsters, steam them or cook them, break them apart, sell the, you know, do something with the tails because you don't need them, and get the knuckle meat and ship it out to the restaurants.

You guys were going to do all of that. That's right. So once we decided to go into the processing business, I mean, it wasn't just sort of like, ah, we're going to do this now. It was a, we're going to take every penny of earnings that we've accumulated from six plus locations over a couple of years. We're going to put that next to some debt that we're going to raise, and we're going to push all of those chips in on an extremely difficult to manage technically intensive and capital intensive endeavor here where we're not in control of supply or demand of all the products that come out of it. And in this business, a lot of our vendors, folks that were selling lobster tails and lobster mints and lobster bodies.

and lobster leg meat, things that we're not using at the restaurant group, they all want to pay in 30 or 45 days, but the fishermen need to get paid in two to seven days. Right. So we had to accumulate enough earnings in order to go to a bank and get a proper line of working capital or working credit so that we could ultimately bridge that gap. When your dad had his processing facility, he was hard for him to make significant income from that. But you guys are in a better position because you've got the restaurants, because you own the restaurants and you can just take that meat and supply your restaurants. And then even if

you're not making a whole lot of money off lobster tails and what else do you sell that you don't use? I think the lobster, we've got this neat machine that rolls all the meat out of the lobster legs. We've got another machine that takes the bodies of the lobster and debones it. So we sell that to soup and chatter companies to make lobster bisque. And so there's, we're, we're finding value in lobster shells. So we're, we're now getting into that business as well. But it makes more sense for you guys to have a processing facility because of the restaurant? 100%.

So you guys were expanding, got your production facility, I mean, super impressive business. 2016, you went to private equity group and you took in outside of investment for minority stake in the business. You know, we've had founders on the show who say, I'm so glad I never took outside capital because I control it. You know, Gary Erickson of Cliffbar and others. And then there are others who say, oh, it was so great. You know, this enabled us to do X, Y, and Z.

Then there are others who say it was a mistake that I took it because now all these private equity people screwed up my company. You guys are doing really well with your own cash flow. Why did you decide to take outside money? Did you need it to scale the business? We got to the point where we had been operating in cities that we had lived in, New York, Boston, D.C. Philly was in the middle.

General level of comfort. At this point in time, we're writing 500 checks a week. I feel great responsibility for those checks. And it just felt like at this point in time it made sense to bring in a seasoned partner that could ultimately just help us avoid. that trip wire that we weren't going to see. So what do you imagine? I mean, what will Luke Slop?

I mean, you've got now, I think, what, almost 40 locations in the United States and even in Asia? It's amazing. I mean, this was like a side hustle in 2009 and there are 40 of them. What's the vision? Like, I mean, thousands? Not thousands. I mean, our brand mission is to be the world's most respected seafood brand because we're not group that is motivated by store count or revenue.

Right. You know, honestly, we had, we had some moments in 2017, 2018, where we felt like we may have actually grown our store count too quickly. And we also looked at our business as a whole and said, what is that, what is that mission that's going to drive us? Not just the restaurants, but, you know, the processing company and everything we've built up around this and looked throughout the, um, look throughout the, the most respected seafood brand in the world.

We talked through and we said, well, what does respected mean? Yeah. You know, to us, respect meant stakeholder theory that working directly with Lobsterman, transparency, only serving sustainable products, and then, you know, above all, being committed to quality at all costs.

I'm curious about sustainability, right? You know about this. There was a report in Maine from a group of scientists and they basically predict that by 2050 the lobster yields in Maine are dramatically going to be reduced like maybe by 50%.

Do you guys think about this? Do you lose sleep over it? I mean, this is your product. Our brand has a great opportunity to be playing a leading role in helping to work to understand what that changes. A great example

is the kelp business that we've been investing in. So, kelp sequesters carbon. And we've been putting funds through the Ocean Foundation to go out and do the research to understand how that type of aquaculture can positively affect the environment that our fishermen are working in. We have this great opportunity as a brand to educate and to put dollars into research that ultimately allows us to understand what the change is going to do before it actually

affects change and how to get in front of it. Yeah. I'm curious, when it comes to your personal lives, Luke, you're married, you've got a kid, you got another one on the way, Ben just got married like four days ago. Are you guys able to kind of, you know, reel back a little bit and kind of relax,

or are you working just as hard, just as crazy as you were in 2010? Could be really careful about how we answer this one. Yeah. I think we're working just as hard. But having kids just helped me prioritize my time a little bit better. My wife and my kid are honestly the most important thing in my world right now. And that makes me a better business leader because it enables me to figure out how to say no a little bit more frequently.

And that keeps the business a little bit more focused. Yeah. You guys did about $60 million in revenue last year. You'll probably do more this year. Sounds like an incredible amount of money. you've heard the show before, and we've had people on the show who are fabulously wealthy because of the businesses that they started. It's not $60 million in your pockets.

It's revenues. You've got a tiny fraction of that. Do either of you guys feel rich or wealthy at all, personally? It's kind of a loaded question. I mean, there's nothing that I wouldn't be doing. I wouldn't choose any other life. So, yeah, I feel rich, but monetarily, things are okay. Yeah, I mean, you know, from my perspective, I wasn't, I was never in finance.

So when we started, Luke's, I was kind of down to my, my last penny. So from that perspective, I'm exceedingly rich. But, no, I mean, I think we, you know, neither of us are people that need all that much. And, you know, we get joy out of the work that we do and the time we spend with our families. I understand the passion and the energy and the excitement, but you guys have now been doing this for closing in on 10 years. You could probably cash out, find private equity people who will buy it out and take Luke's Lobster, and you guys will have some money probably potentially that could sustain you for the rest of your lives. Is there anything about that that attractive to you jumping off the hamster wheel and selling it?

I think that's, you know, there's a, whole company kind of is our, it is our family now. It's, uh, you know, it's, what would we do? And it's the same for me. The fishermen are my friends, the teammates are my friends, the guests and suppliers, like all of our stakeholders are my friends and part of my life. And I, again, I can't imagine doing anything else. You've heard the show before, so you know I'm going to ask you this question. how much of this success is because of the hard work you put in, your intelligence and skill, how much you think is just because you were lucky, Ben?

I mean, there's no denying that there was a lot of luck involved. I mean, the fact that I happened to be trolling Craigslist that very particular night, as we said, you know, the fact that there happened to be this recession that gave us the ability to hire such wonderful people, to get that lease, to get that first location, to do what we did. You know, there was so much luck that undergirds all of it. But, you know, as a team, it's what you do with kind of the luck that you're given, I think.

I would completely echo that. The good fortunes of the recession were luck. But I would take the smarts and hard work and the DNA of my team and stack them up against any other team. If you were sitting in this audience, you know, 15 years ago, watching guys like you, what do you wish you knew then that you know now? What would have been helpful for you to know about the journey you guys took?

For me, it's always been the strength of my peer network. When I was in college and I was definitely not the guy who would go up and shake somebody's hand and say, you know, can I build a relationship with you? Yeah. And I can't tell you how important that actually is. The strength of your network, especially when resources are limited and times are challenging, it's just so incredibly important. And network can be friends.

It doesn't have to be a powerful group of people. You just be people that you know, people that you meet along the way. Absolutely. Ben, what do you wish you knew? I think the most important thing that I've realized as I became a manager of people, there's never a time when you're the smartest person. in the room or the most right person in the room, the humility of a manager just looking to their team and asking what they think is right and how they would approach a problem.

And September 30th, 2009, that was the conversation we had with our team when we were doing practice run the night before opening day. We just looked him in the eye and said, we don't know what tomorrow's going to look like. We've never done this before. So we need you to guide us. We need you to tell us when we're doing something wrong. We need to tell us when you have ideas of what would be right. And listen, you know.

Luke Holden, Ben Conniff, co-founders of Luke's Lobster. That's from my live interview with Luke and Ben at the Back Bay Event Center in Boston. Today, Luke's Lobster has well over 500 employees. And funnily enough, even though Luke's mom did her best to keep her children away from the lobster business, Luke's two brothers, Brian and Mike, and of course his dad, Jeff, are all equity partners and working at Luke's lobster. And by the way, no one in the family has a commercial lobstering license anymore, but Luke and his brother, Brian, do have recreational licenses. And a family has a running competition every summer to see who can catch the most lobster. Hey, thanks so much for listening to this live episode of How I Built This. Our show is produced this week by Casey Herman with music composed by Rumpteen Arablewee.

Our live events team includes Jessica Goldstein, Ali Prescott, Ellen Jorgensen, and Andy Huther. Thanks also to Julia Carney, Neva Grant, Sanaz Meshkentor, and Jeff Rogers. Our intern is Sequoia Carrillo. I'm Guy Raz, and you've been listening to How I Built This.