Sweetgreen: Nicolas Jammet and Jonathan Neman

Nicolas Jammet and Jonathan Neman met at Georgetown University in 2003 and quickly bonded over their frustration at the lack of healthy food on campus. So during their senior year, along with a third friend, Nathaniel Ru, they decided to open a 500 square-foot restaurant serving fresh salads made with organic produce. They had no idea what they were doing and almost ran out of money five months in. But today, Sweetgreen has over 100 locations, and is using new technology to re-imagine the fast-casual model, even as it faces unprecedented challenges from the coronavirus crisis. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, really quick before we bring you a brand new episode of How I Built This, we are now doing twice-weekly live video conversations with founders and entrepreneurs around the theme of building resilience in a time of crisis. So come, bring your questions and learn how other businesses are working through the challenges. This Wednesday, April 15th, join me and Gary and Kit Erickson of Clifbar. And on Friday, April 17th, I'll have acclaimed thinker Simon Sinek, author of Start With Why, on the show. You can join the conversation live at facebook.com/HowIBuiltThis. They happen Wednesdays and Fridays at 12 noon Eastern. Again, that's facebook.com/HowIBuiltThis. And you don't need a Facebook account to watch.

• 0:45Guy Raz?

  OK, and now on to a brand-new episode of the show. And just a warning, there's a little salty language in this episode. So if you're listening with kids, just be mindful.

• 0:58Guy Raz?

  You went to your executive team, and you present this plan. And within a year, they all left. Basically, your entire top-level execs are gone.

• 1:09Speaker 01

  Yeah. I remember the last one, where we thought it couldn't get any worse. And I get the text from someone, and it's always the worst text when someone says, "Hey, can you talk?" And then, so the last person quits. And we're just like, oh, God. What are we going to do?

• 1:31Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:45Guy Raz?

  I'm Guy Raz. And on today's show, how three friends from college opened a salad shack in Washington, DC, and then grew that into Sweetgreen, a chain of salad restaurants that wants to transform the way we think about fast food.

• 2:03Guy Raz?

  OK, so first, before I get into today's episode, how are you doing? How are you feeling? Because on my end, I think I'm probably going through what you're going through, which is a mixture of anxiety and hope. And as far as this show is concerned, as corny as it may sound, a renewed sense of mission. Because, as I've said before, how I built this is not really a show just about business. I've never thought about it that way. It's a show about possibility. And possibility isn't just about all of the good things that can happen. It's about the possibility for things to go downhill. Possibility encompasses failure and loss,

• 2:44Guy Raz?

  but also rebirth and triumph and creativity and a path forward. Which is why this show isn't something I just host. I'm actually a fan of these stories. I love them. They're like rocket fuel for days when I'm feeling down or unmotivated, like, kind of like these days, right? Which brings me to today's story, because it really is about possibility and all it entails. Sweetgreen started out as a classic problem looking for a solution. The problem was bad food options. Three undergraduates at Georgetown University in Washington DC were sick of bad cafeteria food. Jonathan Neman, Nicholas Jamay, and Nathaniel Rue

• 3:26Guy Raz?

  wanted fresh, healthy, vibrant salads. Not iceberg lettuce with some gloppy ranch dressing. They wanted things like avocado and arugula and red cabbage and fresh kale. And believe it or not, these things were not easy to find at restaurants in Washington DC in 2007. So Jonathan, Nicholas, and Nathaniel decided to solve the problem themselves. A better lunch option for them and for their fellow students at Georgetown. With some seed money they raised from friends and family, they fixed up a rundown shack near campus. They launched a takeout salad restaurant a few months later and almost didn't make it out of year one when the cold winter weather slowed business to a trickle.

• 4:11Guy Raz?

  But nearly 15 years on, none of these three founders could have imagined that Sweetgreen would become one of the leading fast casual salad restaurants in America with more than 100 locations. And last year, investors valued Sweetgreen at more than $1 billion, $1 billion for salad. But actually, what's probably most interesting about the Sweetgreen story is a major pivot the founders took in 2018 when they decided to slow down the expansion of their restaurants. But we'll get there. The thing is, when I spoke to Jonathan and Nicholas back in early March, none of us knew that just days later, the entire world was

• 4:54Guy Raz?

  about to change in a most profound way. So at the end of this episode, I'll reach back out to them for an update about how things are going right now. But for the moment, let's dive into that first conversation with Jonathan Neman and Nicholas Jamay. So Nicholas, tell me, you grew up, born and raised in New York City?

• 5:14Speaker 01

  I was born and raised in New York City. My parents had come to the US a few years before I was born. And my father was French and my mother was Swiss Lebanese. And so I grew up in a very, what I would say, strict French household.

• 5:25Guy Raz?

  Oh, yeah.

• 5:26Speaker 01

  And French speaking, so it was actually my first language.

• 5:28Guy Raz?

  And they ran a restaurant in New York. It was called Le Caravel?

• 5:33Speaker 01

  It was called Le Caravel. And it was one of those very old school, fine dining, French restaurants of a former generation. Typical ladies who lunch, you know, Jackie O would go there for lunch a couple of times a week. And it was a really chic, old school New York environment and where you'd sit down for a three hour lunch.

• 5:50Guy Raz?

  And what do you, what do you remember as a kid? I mean, would you, would you be in there all the time?

• 5:55Speaker 01

  You know, most of my childhood, I actually remember being either there in the restaurant, or in the kitchen there, or in the office. And if I wanted to see my parents and wanted to spend quality time with them, I was quite often at the office with them. And looking back now as an adult with a business, I commend my parents because they did a great job balancing and they'd come home sometimes for dinner and then they'd run back to the restaurant for at night. But there wasn't one weekend where they didn't work. I think my dad didn't take a day off for, I would say, probably a decade at least. And I'd watch him get up at 5:00 in the morning every day and, you know, he'd go do everything himself. Flower market Monday morning, 5:00 AM, fish market, meat market. He wanted to go actually see the product, meet the vendors and actually, you know, bring it back to the restaurant. He was very hands-on. And then when the restaurant opened,

• 6:38Speaker 01

  he was there greeting every single customer. There wasn't one guest that walked into that restaurant that wasn't greeted by my parents.

• 6:45Guy Raz?

  So when you, it was time for you to go to college, you went to Georgetown. And was it your, I mean, did you have a sense already then that you wanted to, what you wanted to do? Like, did you think, I'll go study finance or economics, I'll go to a bank and I'll come back to New York and work on Wall Street or something like that?

• 7:00Speaker 01

  Growing up in that environment and watching my parents run that business, I always loved the idea of being an entrepreneur. And so even in high school, you know, I became pretty obsessive with the idea of just being an entrepreneur and trying to learn as much as I could. In high school, I fought really hard to start the entrepreneurship club. And so there's a group of students that would get together every week and just dissect businesses, talk about entrepreneurs.

• 7:19Guy Raz?

  You were that, you were that kid.

• 7:20Speaker 01

  I was that kid.

• 7:21Guy Raz?

  Oh, my God. Wow. All right. So I want to just hit the pause button for a sec and bring in Jonathan Neman because you grew up in, where did you grow up? In LA?

• 7:33Speaker 02

  I grew up in Los Angeles.

• 7:34Guy Raz?

  And your family were Iranian Jews. They left Iran during the revolution and came to LA, like a lot of Iranian Jews and non-Jews.

• 7:42Speaker 02

  Yeah. So my parents left during the revolution in around 1979. And they both had to leave suddenly. You know, they were relatively well off in Iran. And then one day, their life changed. And they had to leave almost everything and kind of come to America and start over.

• 7:59Guy Raz?

  Yeah.

• 8:00Speaker 02

  I kind of lived, you know, like my early childhood was very much. Always that worry that what we had was not permanent and that you could lose it at any moment.

• 8:10Guy Raz?

  And what did your, I mean, when your parents came to LA and sort of start over, what did they do? What was their work?

• 8:17Speaker 02

  Yeah, so my dad worked with his two brothers and he did what he was doing in Iran, which was he was an importer of textiles and then he would sell textiles. And so my early memories were going to see my dad at his office and he had a warehouse. And I remember like, my dream was to like be able to ride the forklift that would carry like the rolls of fabric. And that's what he did. He sold rolls, you know, he would design fabric and sell rolls of fabric to brands and manufacturers to make garments out of. And similar to Nick, I think, starting a business was always almost an expectation. Everyone I looked around-

• 8:53Guy Raz?

  Not to be a doctor or an engineer?

• 8:56Speaker 02

  No.

• 8:57Guy Raz?

  Because every time I've interviewed some Iranian-American, they say, "Oh, my parents wanted me to be a doctor and engineer."

• 9:03Speaker 02

  It wasn't that they talked about me being an entrepreneur, but that's all we saw. Is I saw my dad work with his two brothers, saw most of their friends were entrepreneurs. And not a lot of people had big businesses, but they worked for themselves. We didn't know a lot of people that had jobs. And from a very young age, that's what I wanted to do.

• 9:19Guy Raz?

  So you go to Georgetown for college as well. I mean, did you guys even know each other? From day one, were you like best friends? Or what was, what's the story? What do you remember, Jonathan?

• 9:28Speaker 02

  Yeah, so Nick was the first person I met when I got to Georgetown. So I remember very vividly, you know, you cart all your stuff into the dorm and I see Nick and his mom Rita right next door to me. And he was the first person that greeted me when I walked into my dorm.

• 9:44Speaker 01

  Yeah, it's funny. Growing up in New York, I had actually never, oddly enough, never been to LA. Didn't really have any friends from LA. And so I met this kid and I'm like, "Wow, he seems different. He's from LA. He's wearing a Lakers T-shirt and he's got a different energy about him." And, you know, I knew we'd be friends, but first person I met at Georgetown.

• 9:59Guy Raz?

  And were you friends right away? Or did you kind of have your own groups of friends?

• 10:04Speaker 02

  We were friends, but we were, it was really interesting now, considering what we do together. We were friends that shared, really the thing that we shared the most was a love for food. So like from the very beginning, it was, we were food friends. You know, in college, you kind of have these like functional friends. You have food, you go, friends you go see concerts with, friends you go do movies with. Nick and I were food friends.

• 10:22Guy Raz?

  Well, I understand it from, about Nick, cause he grew up around food. He grew up around restaurants, but what was your thing? Like where'd that come from?

• 10:29Speaker 02

  I just always loved food. Some people eat to live and others live to eat. I just like loved the experience of food, the sharing of food, everything about it. It just has always been something I've loved.

• 10:41Guy Raz?

  So you guys were your friends and you meet this other guy, Nate. And did you also become friends with him pretty quickly?

• 10:50Speaker 02

  Yeah, Nate, Nate and I became very close friends immediately. Nate, Nate's also from Los Angeles.

• 10:56Guy Raz?

  Right.

• 10:56Speaker 02

  And so Nate and I just saw each other and immediately bonded. You know, I remember seeing him in accounting class who's sitting in front of me and he was wearing an LA Dodgers cap and I was wearing like a Lakers t-shirt. And we looked at each other and we're like, we're gonna be friends. And we just bonded over being from LA and loving music. And we became fast friends and Nate and I ended up being roommates for two out of the four years of college.

• 11:20Guy Raz?

  Wow. All right, so you guys are all Georgetown. This is in the early 2000s and it comes time to graduate. How did the idea of, A, even before you start, how did the idea of working together even begin? Would you, would you talk about it in college? Like, hey, maybe we should like do something together after college? Were you having those conversations?

• 11:40Speaker 02

  I think the three of us all had this entrepreneurial itch and, you know, all of our parents were immigrants. All of our parents were entrepreneurs. Nick talked about starting the Entrepreneurs Club in, in high school. I also started the entrepreneur, I just found this out.

• 11:53Guy Raz?

  He was also that kid.

• 11:54Speaker 02

  I was also that kid. I found, I just found this out this week. I also started a young Entrepreneurs Club in, in high school. And so we kind of like, we were the three kids that knew we wanted to start a business. And we didn't know what that business was gonna be. We just knew we wanted to do something and maybe do something together.

• 12:09Guy Raz?

  How did the idea of like doing a salad based like lunch place, how did that, how did that even come about?

• 12:16Speaker 01

  So at the time at Georgetown, there was one class called Entrepreneurship. It wasn't a major, it wasn't a minor. There was this one course.

• 12:22Guy Raz?

  Got it.

• 12:22Speaker 01

  Taught by a professor named Will Finnerty. And the three of us actually took the class separately. John, I think I was your TA, actually.

• 12:29Speaker 02

  Nick was my TA in the class.

• 12:30Speaker 01

  I loved it so much, I stayed on as a TA. And they'd talk about how to write a business plan, how to concept a business. You know, one of the things he talked about in that class was, some of the best businesses are started by people just trying to solve a problem they have in their lives. And so at the same time, we were having that conversation, the food on campus was really bad, the cafeteria especially. And as a freshman, you actually, you're forced to buy a meal plan. They force your parents, there's a minimum, you have to buy it. It's really bad. You can go there for, you know, random lunch, but to have every meal there was really tough.

• 12:58Speaker 02

  And we were sick of eating, the closest thing we had to healthy food was maybe Chipotle or Subway.

• 13:03Guy Raz?

  Yeah.

• 13:04Speaker 02

  It was just that constant complaint that we had, a problem in our own life, and then we heard all of our friends complain about it. And so when it, we were just, the original idea was, we wish this was here, at Georgetown, while we were here.

• 13:17Guy Raz?

  You wish what was there?

• 13:18Speaker 02

  We wished that there was a healthy place to eat that was affordable and convenient and delicious.

• 13:22Guy Raz?

  Right.

• 13:23Speaker 02

  And we just want, we thought it was gonna be really easy. We thought we could open a restaurant in two months, and we didn't really know exactly what the cuisine would be. And so the first location was across the street from where we lived. And on the corner was this old burger shop that was now closed. It used to be called The Little Tavern. The whole time we were at school, it was empty. It was tiny, it was 500 square feet. And it had a "for lease" sign on it. And we looked at that, we're like, that's perfect. That's where we should do it. But it was the, the fact that it was so small, had to keep it really simple.

• 13:54Guy Raz?

  Yeah.

• 13:55Speaker 02

  And it was that constraint that was, we're gonna do one thing and we're gonna do it well.

• 13:58Guy Raz?

  All right, so there's this 500 square foot restaurant that's available for lease, it's empty. You guys are seniors in college, you're 21, 22 maybe. You, all of a sudden, you're saying, hey, you know what? Let's see if we can get that place and open up our salad restaurant. And wait, before, like, when your parents were saying to you in the fall of your senior year, hey Nick, you know, hey Jonathan, you're gonna graduate in May, what are you gonna do? That's what every senior in college, like, that's a question they get asked. In the fall of that year, you were saying, "We're gonna open up a restaurant." Is that, were you saying that already?

• 14:33Speaker 01

  It wasn't real at that point yet. And just to paint a bit of the picture, at first, I didn't tell my parents because, obviously, they were in the business and they'd probably warned me against it. But the way we actually got started, you know, we wrote the business plan, which our first version of a business plan was like two pages. It was like one page of financials, a photo of some chair for design reference, and kind of like a menu concept. And so, to John's point, once we saw that little hut, we said, "This is where it's gotta start." And we somehow found out who the landlord was, called the number in the window.

• 15:01Speaker 02

  First of all, it took us almost two months to get a meeting because we called her, her name is Marcy. And we called her, she wouldn't take us seriously. She thought we were kids doing a school project.

• 15:11Guy Raz?

  You were calling her saying what?

• 15:13Speaker 02

  Saying, "Hey, we have this idea for this restaurant on the corner. Can we come have a meeting?"

• 15:19Speaker 01

  And once she finally, you know, John called her every day for 30 days, I'll never forget. And she finally called back and said, "I'll take a meeting if you stop calling me."

• 15:26Guy Raz?

  Got it, yeah.

• 15:27Speaker 01

  And that's when she said, "You know what? Go back and write a real business plan and show me something real and maybe we can talk."

• 15:32Guy Raz?

  All right, so you go to Marcy with a business plan, a better business plan, presumably, what, a couple of days later or a week or so later? How did you improve that business plan?

• 15:40Speaker 02

  Well, she asked us to do a few things. She asked us to really build out a full business plan, which meant building out some financial projections, which meant building out the team that was gonna help execute this, whether that be the architect, the engineer. She's like, "Do you know how to build a restaurant?" She's like, "You need an architect, you need an engineer, you need a kitchen designer, you need to think about all of these things."

• 16:02Guy Raz?

  Yeah.

• 16:02Speaker 02

  And I remember we went and stood on the corner and counted people. And we stood in front of the Subway, we stood in front of the Chipotle, we stood in front of the Dina De Luca, and then we stood in front of our corner. And we would just count.

• 16:13Guy Raz?

  Right.

• 16:13Speaker 02

  How many people are walking by? How many people are at the university? How many salads do we have to sell a day? And it was, that was all happening before winter break.

• 16:22Guy Raz?

  Yeah.

• 16:22Speaker 02

  And that's when we were gonna like make a call. Is this what we were gonna do or not?

• 16:27Guy Raz?

  And that that location, it's on M Street in Georgetown, right? I think just important to point out, this is at the very, very end of the retail district of M Street, or at least at that time it was. Like, most people really didn't go far beyond M and Wisconsin at that point.

• 16:44Speaker 01

  I mean, there's no argument. It was, on paper, a bad piece of real estate.

• 16:47Guy Raz?

  Yeah.

• 16:47Speaker 01

  And that's why I think she gave us a chance, because that piece of real estate had sat there empty for five years.

• 16:52Guy Raz?

  Right.

• 16:52Speaker 01

  And she said, you know what? Why not? What have I got to lose?

• 16:55Guy Raz?

  What was the rent gonna be?

• 16:57Speaker 01

  The rent was 3,000 bucks a month.

• 16:58Guy Raz?

  And what was, what were the terms? How long did you have to sign a deal for? Two years?

• 17:01Speaker 02

  Five years.

• 17:02Guy Raz?

  So she agrees to do this deal with you. And then what? Then what do you do?

• 17:08Speaker 01

  Then it was time to raise money. We had this business plan that was more buttoned up. We had a landlord that was willing to give us the space. And we'd found an architect, someone that she knew, so she felt confident in, you know, us actually building this. And I guess she just saw something in us, and we'd gotten to know her, and she said, you know, these kids might actually get this thing open.

• 17:26Guy Raz?

  And how much money did you think you needed to raise to get this out of the ground?

• 17:29Speaker 02

  We thought we needed 100,000 dollars.

• 17:31Guy Raz?

  Okay, 100,000, that was gonna cover the deposit, and the rebuild, and, you know, your first couple of months of just produce sourcing.

• 17:39Speaker 02

  Mm-hmm.

• 17:40Guy Raz?

  And by the way, in terms of the architect, and the, what did it look like inside?

• 17:45Speaker 01

  It was a concrete box.

• 17:46Speaker 02

  Yeah, it was a concrete box. It was, we really didn't know anything. You know, we'd never, you know, Nick, Nate and I had never worked in a restaurant. Nick had some experience working in a restaurant, but he clearly never built a restaurant. And so, the space, which, you know, in my head, you see that front line, that like, that line that we make our salads on today? In my head, I figured we could just go buy one of those, and plop it in, and didn't really think about the fact that it needed power, water, like, a bathroom, all of the things that make a restaurant a restaurant.

• 18:17Guy Raz?

  There was no bathroom there?

• 18:18Speaker 02

  There was no bathroom. There was no, there was no plumbing.

• 18:21Guy Raz?

  There's no plumbing? Okay.

• 18:22Speaker 01

  There was no sewage, no electricity.

• 18:23Guy Raz?

  There's no electricity?

• 18:24Speaker 01

  You should not have opened a restaurant in this space, and-

• 18:27Guy Raz?

  Oh, so it was literally a concrete shack?

• 18:29Speaker 02

  It was literally a concrete shack.

• 18:30Speaker 01

  You know, we always say, thank God we knew nothing, because today, or even a couple of years in, we would have never even agreed to go tour a site like that. It was so bad.

• 18:37Guy Raz?

  Yeah.

• 18:38Speaker 01

  But it ended up being the perfect place to start Sweetgreen.

• 18:40Guy Raz?

  All right, so you get the architect and what did you have to put in plumbing and electricity?

• 18:45Speaker 02

  Yeah, so I remember when I remember when we got the first bid back from the architect, who just did like a a projection of how much this was going to cost. And we thought a hundred thousand was pretty conservative. We're like, that's a lot of money. We get it back and it's like three hundred and fifty thousand dollars. And I just, we just remember looking at each other like, oh shit. This isn't going to work.

• 19:07Guy Raz?

  So, I mean, obviously, I mean, you you did decide to go forward with it. Where where did you go to raise the money?

• 19:14Speaker 01

  We started raising money from, you know, anyone that would listen to us. It was friends in school, old teachers, old bosses. We'd each put in some of our savings, but really not much. It was really this process of selling this business plan.

• 19:28Guy Raz?

  And what was the like, was there a minimum amount you were asking people to give you? If someone's like, I'll give you two thousand bucks.

• 19:32Speaker 02

  We took two thousand bucks.

• 19:34Guy Raz?

  You take it?

• 19:35Speaker 02

  We did, we did take it.

• 19:36Guy Raz?

  You did take it, okay.

• 19:37Speaker 02

  We asked, we asked everyone we could and it was really hard. I mean, I think the raising money piece is something that, you know, you come with no experience. You know, people are looking at you, they're like, okay, so what have you done before? And everyone likes knows the fact that ninety nine percent of restaurants fail in their first year. But you just needed a few people to say yes. And once you found a few people to say yes, they knew a few friends that would then say yes. We probably spoke to two hundred and fifty people and we got at the end, we got fifty people to say yes.

• 20:10Guy Raz?

  And and how much did you guys raise?

• 20:12Speaker 02

  We ended up raising almost three hundred thousand. And it did cost about three hundred and fifty thousand dollars. So we were short fifty thousand dollars or so, which means we owed the contractor fifty thousand dollars at the end, which means the contractor owned a piece owned a piece of our company at the end.

• 20:27Guy Raz?

  Wow. And what about the food? Like, did you start coming up with recipes of salads to to serve?

• 20:33Speaker 02

  The food was was really the fun part because that's where what was going to make it special. What was going to actually get people excited to eat this? And, you know, fast forward to second semester, we had raised some money. We finally signed the lease. We made our first batch of Sweetgreen T-shirts that we all wore every single day, so it felt real. And it was time to figure out the product. And I remember it started just with us, you know, we saw a produce truck drive by and we just called the phone number on the produce truck and got this produce rep to come to our dorm room with samples. And that's how we started to figure out the menu and what we wanted to serve.

• 21:03Guy Raz?

  Wow. What was the produce truck?

• 21:05Speaker 01

  Keeney Produce.

• 21:06Guy Raz?

  Oh yeah, you see those all around the mid Atlantic.

• 21:08Speaker 01

  They are still our partner today. And I'll never forget Joanna, who was our rep, showed up at my dorm room and she's like, is this the right address? She came with a couple cases of arugula and I said, yeah, just put it in the fridge right there. And she saw a bunch of college kids partying and she must have thought we were crazy.

• 21:22Guy Raz?

  So this is a produce distributor. You know, you're 22 and you have zero experience in business and restaurants. Were they skeptical when they met you?

• 21:33Speaker 02

  Actually, they were really good partners from the beginning. There's something, I think, that when you're 21 years old trying to start a business, I feel like people were kind of rooting for us. And we always went in very honestly and said, we don't know anything. We've never done this before. Can you help us? They wanted to see us be successful because we weren't approaching it the same way other restaurants were. Like, from the very beginning, we went in and we asked for local and organic food. And they're like, wow, that's, that's different. Why are you, you know, what's going on here?

• 22:03Guy Raz?

  Yeah.

• 22:04Speaker 02

  And so I really think that people, people wanted to help us from the very beginning.

• 22:09Guy Raz?

  And then in terms of the menu, how do you come up with that?

• 22:13Speaker 01

  You know, again, we were all big foodies and we understood that we wanted the menu to be food that you could eat every day, that would make you feel good, and food that people would get excited about. And so we started doing these tastings in our dorm room. And we'd invite 10 to 15 friends at a time to come try it and give us their feedback. And that's how the first menu was born.

• 22:31Guy Raz?

  And in terms of like, coming up with the first menus, because it's, obviously you can make your own salad however you want, right? It's just a bunch of greens and you can, vegetables, you can add stuff to it, but you have recommended combinations that you could go in and, and what was the first like?

• 22:48Speaker 01

  So the first, the first menu, and part of why we called it Sweet Green, was the first menu was salads, wraps, and frozen yogurt. It was really important for us for it not to just be the make your own, but to have these chef crafted combinations. And I remember the first, one of the very first things we made was the guacamole greens.

• 23:07Guy Raz?

  Yeah, and what was that salad?

• 23:08Speaker 01

  So that salad was, the whole idea was taking the flavors and ingredients that go into a guacamole and deconstructing them into a salad. So a bowl that's more vegetal, that's more plant-based, but you still get that experience of crunching into the tortilla chips and the avocado and the dressing. And it becomes a really quirky moment.

• 23:24Guy Raz?

  It was like on arugula or?

• 23:26Speaker 01

  Yeah, it was mixed greens and arugula.

• 23:28Guy Raz?

  Got it, okay. And then it's time to, because I'm assuming you signed the lease in the spring of 2007, right? And you needed to build this thing out, so...

• 23:38Speaker 02

  Our plan was to open in April.

• 23:40Guy Raz?

  April of 2007?

• 23:41Speaker 02

  April in 2007.

• 23:43Guy Raz?

  When did you sign the lease? In like February?

• 23:45Speaker 02

  In like January. January, February, we signed the lease. But, again, we had no idea what we were doing. We thought building a restaurant, we didn't understand that you had to get permits. We didn't understand...

• 23:55Speaker 01

  You had to build an ADA-sized bathroom inside, that you had to like have a storage room, that you had to do all these things.

• 24:00Guy Raz?

  That takes time!

• 24:01Speaker 02

  It takes, it takes a lot of time. And what, we didn't realize back to this being a concrete box, in order to get electricity and water and sewage to the space, we had to rip up the street. So, the permitting was a complete nightmare. And beyond that, we didn't have enough space in the restaurant, we found out, to do everything we wanted to do. We didn't have enough storage space.

• 24:22Guy Raz?

  Yeah.

• 24:23Speaker 02

  And so, what we figured out what to do was, right behind us was a parking lot.

• 24:28Guy Raz?

  Yeah.

• 24:29Speaker 02

  So we went to them and we said, "Can we rent two parking spaces? And we'll build a storage unit within the two parking spaces, and we'll put all our refrigeration, our extra refrigeration, and all our dry goods in these two parking spaces." And then we would get a cart. Our idea was we're gonna get a cart and we're gonna roll down the parking lot for the food.

• 24:50Guy Raz?

  So you'd have like a refrigerator and, just standalone refrigerator on two parking spots?

• 24:55Speaker 02

  Correct.

• 24:56Guy Raz?

  Which would solve that problem.

• 24:57Speaker 02

  We built a room in the parking garage. We built like we drywalled two parking spots.

• 25:00Guy Raz?

  And he agreed to this?

• 25:01Speaker 02

  Yes.

• 25:02Guy Raz?

  So this is, this is where you had your storage facility?

• 25:04Speaker 02

  This is our...

• 25:05Guy Raz?

  Wait, how, physically, how far was it like?

• 25:07Speaker 02

  It was like, you know, 30 feet up the block, down a hallway, so it was the...

• 25:11Guy Raz?

  So you had to like roll a cart?

• 25:12Speaker 02

  Every day, a couple times a day.

• 25:13Guy Raz?

  A couple times a day, back and forth?

• 25:15Speaker 02

  Yeah.

• 25:16Guy Raz?

  Wow. And, by the way, you were still, this is like your final semester of college, assuming you kind of had a lighter load of classes, but you were still having to go to class, right?

• 25:27Speaker 02

  Yeah, we were running in-between classes and construction site. And it was, and we both lived across the street, so it was actually pretty convenient, but it was this funny trying to finish our classes and finish out, you know, second semester of our last year, but then also starting this thing that was gonna be, you know?

• 25:40Guy Raz?

  Yeah.

• 25:41Speaker 02

  And funny enough, out of all the restaurants we've opened, out of all the leases we've signed, this first one was almost one we were least worried about. We had the most confidence in this one, because we were, A, because we didn't know anything, we had nothing to be worried about yet, and B, we were building it for ourselves, we were the customer, so there was a confidence there.

• 25:56Guy Raz?

  I mean, it must have been so exciting. I mean, presumably your friends are like, those guys are building this restaurant. Was there like buzz around it?

• 26:03Speaker 02

  There was buzz and you know, we had a ton of friends and people that were supportive and really believed in it. And at the same time, you know, you get those looks from people like, oh, so that's going to be your real job. You know, I'm going to go work at Goldman Sachs or somewhere else and you're going to go run a 500, the three of you are going to run a 500 square foot salad shop. And I think people thought it was cute and cool, but ultimately didn't think it was going to be our full-time job.

• 26:25Guy Raz?

  Yeah.

• 26:26Speaker 02

  And so we graduate, we're building the restaurant, and it was a really weird time because all of a sudden, all your friends leave.

• 26:33Guy Raz?

  Yeah.

• 26:34Speaker 02

  Everyone leaves DC, everyone graduates, everyone goes home or goes on vacation and going on to their jobs and we were just there.

• 26:41Guy Raz?

  Yeah.

• 26:41Speaker 02

  And the three of us were living together then, like actually living together and building this thing. And I remember my brother came and lived with us to help us and he helped us with construction and we were all doing everything.

• 26:55Guy Raz?

  Yeah.

• 26:55Speaker 02

  We were just onsite every day, doing whatever we could.

• 26:59Guy Raz?

  All right, summer of 2007, you're building this thing out. It's hot, it's Washington DC in the summer. And finally, you're ready to open. I think it opens on August 1st, 2007.

• 27:10Speaker 02

  August 1st, 2007.

• 27:11Guy Raz?

  And you, the three of you are the only employees or did you hire some?

• 27:15Speaker 02

  We had a few other employees.

• 27:16Guy Raz?

  Who are going to help you, who are going to help make this out.

• 27:19Speaker 02

  So, so back up a little bit. So a few days before we're opening, our focus was just get the restaurant ready, right? The menu, the construction, get it ready. And we were really excited for this big opening party. We start hiring employees.

• 27:31Guy Raz?

  Okay.

• 27:32Speaker 02

  And we're like, let's just go get Georgetown kids to be employees.

• 27:35Guy Raz?

  Sure.

• 27:35Speaker 02

  Which we thought was a great idea.

• 27:37Guy Raz?

  Yep.

• 27:38Speaker 02

  So, kids show up, they show up to our apartment for training and we decided we were going to have a big opening party. And so we invited lots of friends, family, we were going to have this big party.

• 27:46Guy Raz?

  Okay.

• 27:47Speaker 02

  So we're all hustling to get this restaurant ready in time for the opening. And it was the day before we were supposed to open. And we were running back and forth from that restaurant, getting ready. And we had left the door open, or unlocked.

• 28:02Speaker 01

  Of our office.

• 28:03Speaker 02

  Of our office slash apartment.

• 28:05Speaker 01

  Which was across the street.

• 28:06Speaker 02

  Okay. And we had left the door unlocked. We come back and someone had robbed the apartment. And one of the things they had taken was Nick's laptop.

• 28:16Speaker 01

  Wow.

• 28:17Speaker 02

  Which had everything on it. It had all of the recipes, all of the training, everything we were going to do to run this restaurant was all of a sudden gone. And this is the days before the cloud. So there's nothing backed up in the cloud. This is like on your hard drive on your computer. So we're just like, holy shit.

• 28:35Guy Raz?

  Wow.

• 28:36Speaker 02

  What are we gonna do?

• 28:37Speaker 01

  Yeah, it was one of those stay up all night and figure it out moments. And you know, like John said, we'd invited all these people from around the country, all of our families from New York and LA were coming to DC for the opening of this thing we had worked on all year. And we knew we just had to figure it out. And so we stayed up all night looking through emails and trying to piece together, you know, everything we'd created. And we somehow figured it out. You know, we were, I actually remember the party started at 7:00 PM on, you know, the day before opening. And we were still in there at 7:30 PM, like finalizing the recipes. And we just got it done. And all of our families pitched in. I remember Nate's dad was in the back making dressing and chopping onions. Your brother was running around buying stuff for us. It was kind of an all hands on deck moment.

• 29:18Guy Raz?

  So, all right, so August 1st, the restaurant opens. And was there a line outside?

• 29:23Speaker 01

  There was a line and we did, we sold a lot of salads, or what we thought was a lot of salads on the day one.

• 29:28Guy Raz?

  The first day we sold just over 100 salads. And then you're off to the races? Like was it?

• 29:34Speaker 01

  Kind of.

• 29:35Guy Raz?

  Students come back?

• 29:36Speaker 01

  We opened August 1st, which is a few weeks before students come back. And so August, you know, chugs along, we're doing well, we have, you know, growing a little bit every day. And we're like, okay, we got this, we know how to do this. And we were bracing for this week when all the students came back. We knew that was going to be when our business really was going to be tested. And I remember, I think it was August 29th or August 30th or something, all the students had come back. And this idea of hiring students to be our employees sounded like a great idea. But once classes start and once all their friends are back, it actually was a horrible idea. Because I'll never forget, first day of classes, every single employee called out. No one showed.

• 30:12Guy Raz?

  Wow.

• 30:12Speaker 01

  So we had this, this day, imagine opening day, one month in, first day of classes, the three of us in the restaurant, and I think Nate had, Nate had just had surgery on his knee, and you had stepped out for a moment. So there was this moment on that first day of classes where I found myself alone in the restaurant.

• 30:29Guy Raz?

  By yourself, yeah.

• 30:29Speaker 01

  By myself, with a line out the door.

• 30:32Guy Raz?

  By the way, I'm assuming you're not profitable yet, or was the cash flow like good enough to keep things going, where you were, where you could see like, okay, this $300,000 that we raised, we're going to be fine for a while?

• 30:46Speaker 01

  The first couple of months, we actually got to cash flow profitability pretty quickly, and then the first winter came. And that's when things got really dicey and really challenged us to think about our business.

• 30:56Guy Raz?

  Up until the winter, things were fine, people were buying salads.

• 30:59Speaker 01

  Students came back, the line was out the door every day, we hired more employees, non-student employees. September was a great month, October was a great month, and then kids left on break.

• 31:09Guy Raz?

  Yeah.

• 31:09Speaker 01

  And the weather started to turn, and our business really changed.

• 31:13Guy Raz?

  And like, how significantly?

• 31:15Speaker 02

  It dropped by about, almost 70%.

• 31:19Speaker 01

  Yeah, after Thanksgiving, you know, there's, there's finals, and then I think around December 10th or 15th.

• 31:23Guy Raz?

  And once it's gone.

• 31:24Speaker 01

  Once kids start to empty out, you know, it becomes a bit of a ghost town. There's residents there, but so much of our business was the students. We were these seniors that's opened this business right out of college.

• 31:33Guy Raz?

  Yeah.

• 31:34Speaker 01

  And so much of our customers were the students.

• 31:36Speaker 02

  And today, almost half of our food is warm food. At the time, it was all cold salads with zero seating.

• 31:44Guy Raz?

  Yeah.

• 31:44Speaker 02

  And very much student-driven. So as soon as the winter hit, it just, our business just disappeared.

• 31:50Guy Raz?

  Were you working at the store every day?

• 31:52Speaker 01

  Double shifts every day. You know, I think we, in that winter, realized we couldn't even afford to have as many employees as we thought. We didn't have a manager. And it came down to counting pennies. You know, there were moments in that first December, that first winter, that we truly thought the business wouldn't survive. It forced us to think about how the business needed to evolve, right? For different customers and different weather patterns, how the restaurant itself needed to be different with seats, our menu needed to evolve. But there were some days in that first December where we almost ran out of money.

• 32:21Guy Raz?

  So, I mean, I have to assume that what happened was the weather turned. And so people started coming back, is that what happened?

• 32:27Speaker 02

  Yeah, pretty much. We got killed in that winter. But we learned how to run a very lean restaurant and build an operation that was very, very lean. And so could survive off of making a few hundred dollars a day. And as soon as the weather started to get better, in that time, we started to learn how to market. We realized that there was this huge connection between fitness and eating healthy. And so it was partnering with a lot of the run clubs and the yoga studios and anything.

• 32:55Guy Raz?

  What would you do? How would you partner with them?

• 32:58Speaker 02

  We hosted a run club. We would do like coupons and samples after yoga classes.

• 33:03Guy Raz?

  You would show up at like yoga places in around DC?

• 33:06Speaker 02

  Yeah, and we'd give them little like, you know, old school paper coupons. And just like little buy one, get one campaigns, simple like classic promo stuff.

• 33:14Guy Raz?

  And that worked?

• 33:15Speaker 02

  That started to work. It was, we realized very early on that it was just like trial was so important, especially for a new concept. We just had to get people to try it and then they would get hooked.

• 33:26Guy Raz?

  So I think it was by the summer of 2008, you guys, you guys had pretty much bounced back. And not only that, you were even thinking about opening a second restaurant, is that, is that right?

• 33:37Speaker 02

  Yeah. You know, when we first, when we started the first restaurant, it was really just one, let's do one restaurant for ourselves. But after we started doing all the research and kind of peeling the onion back on the industry, we realized that this problem that we were having in our lives was a major, major problem. There is no healthy place to eat. And the fast food brand of our generation was, or the generation before us, was McDonald's. And it just didn't make sense that there was no brand to replace that. And so very quickly, about a year in, we started to think about, all right, this can be bigger.

• 34:10Guy Raz?

  So this is early 2009. But just as an aside, I mean, you are from LA. And Nicholas, you are from New York. Obviously, you were students in DC and students at Georgetown. So I'm assuming that's why you started there. But, I mean, was there any advantage to starting in Washington DC? Because it's not really, certainly at that time, certainly not known as an entrepreneurial city. I mean, you had AOL and, but, right?

• 34:32Speaker 02

  Yeah. We're so lucky that we started there. We got to make a lot of mistakes. And the Sweetgreen that we started in DC would not have been successful in New York or LA. We needed a lot-

• 34:44Speaker 01

  It would have been just crushed by other-

• 34:46Speaker 02

  It would have been crushed by the competition. But it gave us, we were there, we were a DC-only brand for over five years. And it let us really tinker with the model and almost get ready for going to these other cities. We got a lot of attention. We were kind of like a big fish in a small pond.

• 35:01Speaker 01

  Yeah, so, I mean, fast forward a year, Georgetown is doing gangbusters, is crushing it, and line out the door every day. We figured out the model, you know, the weather hit. And we started to build our second Sweetgreen. We raised about 750 grand for it and started to look for a space that was bigger with seats. We were going to maybe evolve the menu a bit. And we actually opened it right at the largest farmer's market in DC, the Dupont Circle Farmers Market. So that was why we picked that site. And, you know, we had started to get much deeper into the farmer community. But the problem was that it was on the wrong side of the street. So all the traffic and all the business was actually across the street. So we opened this beautiful newly-evolved Sweetgreen with seats and this new menu. And we thought it was going to do incredibly, we thought it was going to beat Georgetown

• 35:45Speaker 01

  by 50%, you know, sales-wise. And we opened our doors day one, and it's crickets.

• 35:53Guy Raz?

  When we come back, how the crickets went away and the crowd started to show up. And later on, how a major decision to pivot prompted almost all of Sweetgreen's leadership team to walk out the door. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 36:28Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's the spring of 2009, and a brand-new Sweetgreen has just opened in Dupont Circle in Washington DC. It's a great neighborhood, lots of little shops, lots of people. There's even a famous farmer's market with farmers who could provide them with fresh food. But there's one major problem. That new store is on the wrong side of the street, the quiet, empty side.

• 36:56Speaker 01

  So we'd look across the street to see all these customers, but none of them were on our side of the street. This is when it really hit us that we had to figure out how to connect with those customers and get them to come try our product.

• 37:05Guy Raz?

  Right.

• 37:05Speaker 01

  And so Nate, at the time, did some DJing on the side. And so went to Guitar Center, bought a big speaker and a flip table, put it out front, and started just blasting music and trying to create this energy around our store. And we'd be sampling food outside and playing music, and we'd invite all of our friends to come. And it started to work. And on Sundays, when the farmer's market was, you know, there were thousands of people walking around that farmer's market, they would start to come over to Sweetgreen now. And so it started to work, and we started to build this community around music and connecting people to the brand through music.

• 37:38Guy Raz?

  And I just want to mention this for a moment. We're not going to have time to sort of get into the details of this part of the story because it could almost be its own episode. But basically, I mean, you eventually built like these sort of music events into a huge, like, full-fledged annual festival called the Sweet Life Festival. I remember it because I used to live in Washington DC.

• 38:00Speaker 01

  Yeah.

• 38:01Guy Raz?

  And I'm assuming this was sort of like, in part, like a marketing thing for Sweetgreen. But, I mean, it got huge. Like, you got huge bands to play, like Phoenix and The Strokes and Vampire Weekend and Kendrick Lamar. I mean, and mounting a music festival is expensive.

• 38:19Speaker 01

  Yes.

• 38:19Guy Raz?

  I mean, just to pay the band. So how did you?

• 38:21Speaker 01

  In retrospect, I don't know what we were doing.

• 38:23Guy Raz?

  It makes zero financial sense.

• 38:25Speaker 01

  The risk we took, the first year especially, the fact that there was not much of a business foundation, just in case it didn't work, was kind of crazy. But it kind of felt similar to that first restaurant where we just knew that it was going to be successful. You know, one of the ideas behind Sweetgreen was that we felt like any time you did find healthy food, it had kind of a branding problem. It was never the coolest experience or the coolest brand. And we were so dead set on creating a brand that stood for more than just the food or the transaction. We saw all these other brands out there that we connected with emotionally and stood for, you know, all these other emotions. And we wanted Sweetgreen to be a brand that people just wanted to be a part of. And so music was one of those ways that we made that connection. And to John's point, it wasn't, on paper, it was a horrible idea, but it just felt right.

• 39:11Speaker 01

  And it just worked. It really separated our brand from the rest of these other fast casual brands. But the cover of the Washington City paper, I'll never forget it, the morning after The Strokes played, we got the full cover with a photo with a headline that said, "Why Did A Salad Company Hire The Strokes?" question mark. It's kind of like, what the hell are they doing?

• 39:28Guy Raz?

  Wow. All right. So you pull this festival off, and then this becomes a thing. Meantime, you guys, the three of you, I mean, you've got now, really have to focus, I have to assume, on raising money. I know you got a very significant investment, $22 million. Steve Case, founder of AOL, he's been on this show. He puts in a big investment into Sweetgreen. By that point, when you raised that money, was it pretty easy for you guys to raise money?

• 39:55Speaker 02

  Not quite. And it came from someone on Steve's team, a guy named Evan Morgan. And Evan Morgan reached out to us. We're sitting down, and he's like, "I have this great idea. Let me franchise your business."

• 40:08Guy Raz?

  And you said?

• 40:09Speaker 01

  We laughed in his face.

• 40:10Guy Raz?

  You said, "No way. We're not going to franchise it." Because? Why?

• 40:14Speaker 02

  We're control freaks.

• 40:15Guy Raz?

  Yep.

• 40:15Speaker 02

  It's never been part of what we wanted to do, because you just can't control what we do. And what we do, from a supply chain and scratch cooking perspective, we were just always scared of franchising our business and have never done it.

• 40:25Guy Raz?

  Okay, but he's looking at you, and he's saying, "You guys are like 27, 28 years old. Like, franchise this thing, trust me, you're going to make so much money." That's a pretty convincing argument.

• 40:36Speaker 01

  Yeah. And to Evan's credit, he, the reason he wanted to franchise is because he saw, you know, he bought into what we were doing. He believed that there needed to, a food option needed to exist, a brand to own this next generation of eaters. And so, through Evan, we got to know Steve and ultimately raised our first institutional round from Revolution.

• 40:54Guy Raz?

  And Steve Case can be an intimidating guy. I mean, he's a billionaire. He started AOL. Like, he, you know, he's in the room with you, and he's like, "Okay, here's the money, and this is my expectations." And, I mean, you had to have been intimidated by that, those conversations. Maybe, you know him now, years later, but then, you know.

• 41:13Speaker 02

  Yeah, I think we were, you know, you have to remember, this was 2013. So it's six years into our business. So for six years, it was almost felt like we were bootstrapping the business, getting to this point, and just doing it with the three of us. We were always very scared of institutional capital. We were scared of raising money from like VCs or private equity because that's what it felt like. It felt like we were going to maybe lose our soul, or it was...

• 41:38Guy Raz?

  They were going to say, "Stop organic, go to like Monsanto and get all your stuff," whatever.

• 41:43Speaker 02

  Exactly. It was those fears of like, we've always had this thing, what we said from the beginning is, how do we get bigger and get better, have the food get better? And we were very scared that bringing in capital was going to force us to take shortcuts. It was going to force us to grow too fast. It was forced us to lose control. And in Steve and in all of our partners that we've brought on since then, they know that what makes us special is that we're so protective of our culture and our product. Steve understood that. And he was more a partner in helping us accelerate that than trying to help make us cut corners.

• 42:21Guy Raz?

  So $22 million in the bank meant that you could really scale it up, right? Presumably, that's why you were able to go to Philly and Boston and New York pretty soon after.

• 42:31Speaker 02

  Yeah, and a lot of it was around growth and expansion to new markets. A lot of it was, you know, capital to actually build a real team to think about scale.

• 42:38Guy Raz?

  Yeah.

• 42:38Speaker 02

  And what Steve, that capital allowed us to do was not plan for the next year, but plan for the next three or five years. And to build a team, to start investing in technology, and to really invest in our brand and platform in a way that created a sustainable business.

• 42:55Guy Raz?

  When you really started to expand and grow, I walk into Costco and, you know, half of the produce is organic. I walk into, every store now sells organic this, organic that, and I start to wonder, how, is it really organic and sustainable? Is it really, or is it just a different form of agribusiness? Like, you guys were committed to local and organic, and you want, you know, these restaurants all over the country. How are you going to do that? How are you going to, and even today, how are you going to make it so it wasn't an organic agribusiness?

• 43:33Speaker 01

  Early on, we realized as we started to scale the supply chain that things like local and organic were both really important to us. But even more importantly was this idea of like full transparency and being fully traceable. We wanted to make sure that we were showing our customers and giving them all the information. And you know, I'll never forget, I think it was Sweet Green number four in Logan Circle, was the first restaurant where we put up the source board, the local list that lists every ingredient and what farm they come from. And at the time, people asked us why we're putting that up. They thought we were crazy. They said, no one's going to want to know that in fast food. No one needs to know where your chickpeas come from or where your lettuce is from. They'll just trust it. Or customers were used to having a curtain between them and their food.

• 44:11Guy Raz?

  Yeah.

• 44:12Speaker 01

  And we wanted to open that curtain. And actually, at the time, we started also designing our restaurants to be fully open kitchen. So really, this idea of building transparency into our model from our supply chain to our physical experience, to how we talked about our food. And it really defined this next chapter for us of how we started to scale the supply chain and think about how we invest in our farmers, how we invest in making this a reality.

• 44:33Guy Raz?

  All right. So you, you start to expand and I think by 2015, you're, you hit 40 locations. By the way, just in terms of, I mean, even with all this capital coming in from Steve and from other investors, I have to assume that finding locations in those cities was still hard because you're, even though you got a lot of money, Starbucks has a lot more and Chipotle has a lot more and they want that location, they'll, they can outbid you.

• 45:03Speaker 01

  You know, as we started, as the brand started to grow and we started to get more press, actually finding real estate was, got a little easier.

• 45:10Guy Raz?

  People wanted you as like an anchor.

• 45:12Speaker 01

  People wanted us, they wanted like the cool, young, new brand.

• 45:14Guy Raz?

  Right.

• 45:14Speaker 01

  What started to become a little challenging is as we started to go to cities like New York where rents were much higher, it started to really question the economic model. Like can we afford those rents? How well will Sweet Green do there? And those are questions we just didn't really know the answers to. And opening our first Sweet Green in New York was probably one of the most pivotal moments in our growth because New York is a completely different model. You know, we've learned so much around just volume and scale and it's really challenged our model and New York has been incredibly successful for us and we're so, we're very fortunate there. But it is, it's taught us more about our business than almost any other market.

• 45:48Guy Raz?

  I mean, there's a million choices in New York, right? And there's so many concepts that you see in New York from all over the world that seem great and then they just, they, they somehow they die.

• 45:58Speaker 01

  We were so scared to go to New York because...

• 46:02Speaker 02

  The competition and the level of brands and how people show up there, we didn't think we were ready. And it was a very opportunistic situation that led us to New York, where one of our friends was helping develop the Nomad Hotel. And there was this one space next door that they wanted to bring, something that was more of a fast food restaurant, but elevated fast food. And they called us and they said, hey, can you help us find someone? And we started thinking we were about to introduce him to a bunch of other companies. And then I remember we looked at each other and we're like, maybe this is our opportunity to go to New York. It seems like this could be it. But it also, leading up to that, we rethought Sweetgreen.

• 46:47Speaker 02

  We redid the brand. We redid the menu. We introduced technology into the experience. That challenge of going to this place that we were so scared of.

• 46:55Guy Raz?

  When you say technology, like an app and ordering online?

• 46:57Speaker 02

  Yeah, introducing our app.

• 46:59Guy Raz?

  And by the way, when you were, I know you guys were roommates in DC in 2014, 2015. Were you still roommates? Were you still living in the same place?

• 47:08Speaker 01

  Yes, up until the last couple of years, we either lived with each other or on the same street.

• 47:13Guy Raz?

  All three of you?

• 47:14Speaker 01

  Yeah, John and Nate shared a house in DC and in New York for a bit. And then I always lived across the street with my brother normally.

• 47:21Guy Raz?

  You all have your own places now.

• 47:23Speaker 02

  Now we're all married and have our own places.

• 47:25Guy Raz?

  I got you. Okay. All right, fine. All right. But did you think maybe you just have a compound for you all and your families?

• 47:31Speaker 02

  We're gonna work our way back to that.

• 47:33Guy Raz?

  I got you. Okay. So, I mean, this is the other thing. Like, did you ever have any blowout fights? I mean, it's very unusual. Even, you know, we did, in the same room that we're all sitting in, the founders of Albers, we had them. And, you know, the founders of Method. And a lot of founders, co-founders went to therapists and for coaches and people to work through things, which makes a lot of sense. Did you guys ever have like a coach or therapist come and work with you or help you work through, you know?

• 48:02Speaker 01

  We've definitely had coaches and folks that have helped us along the way. And the other thing we realized early on was this is just a lot more fun with partners, with people that are in battle with you through the good times and bad. And we always look at solo founders and think, how do you do this?

• 48:16Guy Raz?

  But you're not just founders, you're friends.

• 48:18Speaker 01

  Yeah.

• 48:18Speaker 02

  We're friends first. No matter what the disagreement may be at work, we remember that there's that foundation of love and trust. And we always just remember, we have the same vision. We really do have shared, like, a shared value system in terms of how we operate and make decisions. And so any disagreements are, they're usually the stupid things. I remember some of the biggest disagreements were about who should play Sweet Life Festival. I don't know. It's one of our, I think, the greatest blessings in our, in our life, is that we really, we get along really well.

• 48:51Speaker 01

  I mean, it's the question the three of us get the most. How the hell does this work? And how are you still friends? And actually, today, we still sit in one office at one desk. And like John said, there's a lot of trust, and we know that every single day, one of us will be wrong about something, and one of us will be right about something. And we just know that, over time, it corrects itself, and we trust each other.

• 49:08Guy Raz?

  All right, so 2016, you move to LA. You move the headquarters to LA. There are obvious reasons why. It's that California's the agriculture capital of the United States, and you, you want to be close to, but what was your thinking? Why, why LA?

• 49:24Speaker 02

  So it was a few reasons. The company was growing at that point. We had, I want to say, like, 50 or 40 or 50 restaurants. We had about 35 people working in our support center at what we called the Treehouse. But we started to think about the real, long-term future of Sweetgreen, and it was a few things that we, that, one is what you talked about, was being closer to our farmers.

• 49:46Guy Raz?

  Okay.

• 49:46Speaker 02

  The second was, from a, just a brand and conversation standpoint, while it was cool being the outsider in DC, we wanted to be in the center of action, where, where people were talking about health and wellness. And then the third was from, like, a talent perspective. It started to get challenging, recruiting people in our world to DC. And so, we realized it was probably this point we had, while the company was still relatively small, to move to LA. But we wanted to bring the whole team with us. And gave everyone a really nice, like, offer to come move with us. And what was amazing, you know, that I'm so proud of, of that time, is every single person came with us. All 35 people at the time moved across the country, and it was such an incredible...

• 50:29Speaker 02

  Cultural bonding moment for all of us to pick up and start over in a new city together.

• 50:35Guy Raz?

  So here's what I'm interested in, right? You know, the adage, small business, small problems, big business, big problems. And just expanding isn't always a great idea. I mean, Howard Schultz, when he went back to Starbucks in 2008, closed like 900 locations because they expanded too quickly. Chipotle expanded too quickly. But this was your strategy. This was your plan when you moved to LA in 2016. It was, let's build out more stores and more stores and more stores. Did you start to think about, maybe this wasn't actually the way we should think about our business?

• 51:07Speaker 02

  Yeah, so we started to see the industry shift. You know, when we started Sweet Green, people used to tell us, you know, you're lucky you're in food because it's the one thing that Amazon will never touch. Which is funny now because, you know, Amazon owns Whole Foods and they're trying to tackle food. But it was the industry that hadn't been disrupted the way media had, or travel had, or you name it. But clearly, that was very clearly changing.

• 51:36Guy Raz?

  What were you seeing?

• 51:36Speaker 02

  You were starting to see delivery take off. You're starting to see, you know, online ordering take off. You're just starting to see how data could be used differently in operating a restaurant. And you started to realize that just opening brick and mortar restaurants was not going to be sustainable. Just the nightmare for us was always thinking about Blockbuster. And that was the one that we would always say.

• 52:01Speaker 01

  We would always say, let's not get Blockbuster.

• 52:03Speaker 02

  Let's not get Blockbuster.

• 52:04Guy Raz?

  Because Blockbuster, obviously, in the 1980s, they were...

• 52:07Speaker 02

  They were everything, right? And it was about going and get your videotape. But, and the story goes that they had an opportunity to buy Netflix and they didn't. But what happened with Blockbuster is they didn't evolve. And we kind of saw that happening in our world. We saw that restaurants were very much at risk to this disruption, even though we were ahead from a technology perspective. There was more we could do. And there was so much more we had to do to stay in front of the customer.

• 52:35Guy Raz?

  It wasn't enough to just make a cool restaurant with great salads.

• 52:38Speaker 02

  No.

• 52:38Speaker 01

  No, and I think that was the thing that we noticed the most is that the customer was changing. And how they defined convenience was changing. I mean, when Sweetgreen first opened, our customers told us, wow, how convenient that I have a place now that I can walk two blocks away

• 52:51Guy Raz?

  and get

• 52:52Speaker 01

  wait in line for only 15 minutes and get a healthy bowl. Fast forward five years, they're like, you know, I have to walk two blocks and wait 15 minutes to get a healthy bowl. And so this definition of convenience was, it was a moving target. And so we saw that our customers were demanding more and there was this, the experience had to become more frictionless.

• 53:09Speaker 02

  Yeah, we just knew that the experience had to evolve. You know, the world is changing. The question is always how fast? When does what you do become stale? And we were always like, we just have this constant fear of being disrupted. And so what we always have tried to do is disrupt ourselves so someone else does not disrupt us.

• 53:29Guy Raz?

  So here's where a pretty significant pivot takes place. Essentially, from what I've read, 2018, you decide, we've got to really pivot. Maybe or 2017.

• 53:41Speaker 02

  2017.

• 53:42Guy Raz?

  And the pivot, just to make it really clear, because we're talking about technology and sort of more specifically, what does the pivot mean? I mean, what does Sweetgreen 3.0 look like from a consumer's perspective? I go into the restaurant, I order salad. What, how does that change?

• 53:59Speaker 01

  So there's a few parts. You know, I think we've, we've learned over the years that it still takes a certain, a certain amount of time to build these physical restaurants. And we're at a point where sometimes change is happening quicker than we can build these things. So we've learned how to build our restaurants with enough modularity and flexibility to think about future channels. So one of the biggest differences when we build Sweetgreens today is around capacity. Really thinking about delivery or outpost or online ordering pickup.

• 54:24Guy Raz?

  What's outpost?

• 54:25Speaker 02

  Outpost is our newest channel that we've launched this past year, year and a half. And it's basically a pickup shelf system that's installed into offices or locations outside of Sweetgreen.

• 54:35Guy Raz?

  Oh, you can order it, it goes, it's like an Amazon locker?

• 54:37Speaker 02

  Exactly. So partnerships with office buildings, hospitals, universities, and you can preorder your food, it's waiting for you on a shelf, and the beauty is it's completely free for the customer. So you're not paying any sort of delivery fee and you have the convenience of delivery.

• 54:52Guy Raz?

  And you don't have to build a shop for it, so you can have like a central kitchen in a city where the salads are made and then just delivered.

• 54:58Speaker 02

  Yeah. I mean, we don't think the going and eating in-store experience is ever going away, but people are craving convenience in addition to. And there are certain occasions where people may want delivery or may want something direct to their office, and brands have to evolve to that consumer's expectation.

• 55:14Guy Raz?

  All right, you have this idea and this plan, and you had to raise money to make it happen because you're going to, you had to make a big technology investment and bring in like data engineers and like, there's an article, I think, about you in Inc. and it was like, is, you know, Sweetgreen is a food company that's becoming a technology company or something like that. And you went to your executive team and you present this plan, and within a year, they all left with the exception of like the chief financial officer, all your senior leaders, your president and the other executives who had come with a lot of experience from the food industry, they left presumably because they didn't buy into this idea. I think, and this is like a year ago, it's not that long ago we're talking about.

• 55:56Speaker 02

  Yeah, it was two years ago.

• 55:57Guy Raz?

  Two years ago, you're basically, your entire top level execs are gone.

• 56:02Speaker 02

  Yeah, it was one of the most challenging times in our history. They didn't see the world changing as fast as we did, and what we saw required a lot more risk and a lot more time versus the path we were on.

• 56:17Guy Raz?

  And probably slower revenue growth.

• 56:20Speaker 02

  Slower growth upfront. It was the, the vision that we established was, let's slow down to speed up. We're going to slow down, build a new model, and then we're going to speed up. And I think there was a lot of people here and there that were less open to the change. And it became, it was a very challenging year for all of us.

• 56:40Speaker 01

  It was way more risk. And you have to realize, just to paint the picture, you know, 2015 and 16 were two of our best years ever. And we could have very easily, it would have been way easier to stay on that path in the short term.

• 56:50Speaker 02

  Just keep going.

• 56:50Speaker 01

  Just keep going and then go public and maybe cash out and then maybe something crashes. But the three of us always wanted to build Sweet Green to be around for 50 or 100 years. And we knew that if we didn't build it the right way, that we were going to hit a wall at some point.

• 57:03Speaker 02

  We could see around the corner that we were going off a cliff. It felt like we were being blockbusted.

• 57:09Guy Raz?

  Okay, now, to be fair, in 10 years from now, or in 20 years from now, you may be proven to be geniuses with foresight and your model will be studied in business schools. There's always also a possibility that maybe you're wrong, because you're right in the middle of this pivot now, right?

• 57:23Speaker 02

  Yeah, correct.

• 57:24Guy Raz?

  And so I'm thinking, I'm on your executive team and I have got 20, 30 years of experience in the industry. I'm going to say, guys, the model is there, the playbook is there, let's open up more restaurants, we're doing well, we're going to make more money. We open up, open up, open up, we go public, we're going to be fine. I mean, you even, this is public, I'm not, I'm not tugging at school here, you've had board members like Gary Hershberg who left the board because he was saying the same thing. And, and I think, you know, at that time certainly, and even now still, because the concept hasn't been proven, they might have a point.

• 57:56Speaker 02

  Yeah, that's exactly right. We just saw things differently. We really saw things differently in that, to Nick's point, we want to build something for generations. And we knew we had to not only change now, but build a culture of being able to continually change. And we felt like we were, we were becoming one of those restaurants that just copy pasted. And that's never what we wanted to build. What we wanted to build was something that constantly evolved.

• 58:25Guy Raz?

  So when you went through this, like when you announced this to the senior staff and then basically, you know, they start to leave, was there situations where you actually saying to people, please, don't just give us a chance, stay, or were you like, okay, go?

• 58:37Speaker 02

  A little bit of both. Each one was its own situation, but I remember like the last one where we thought it couldn't get any worse. And I remember being in Boston, I was Nick, Nick and I and our assistant at the time, J Y, and we're in the Boston airport after visiting all the stores in Boston. And I get the, you know, you get the text from someone and it's always like the worst text when someone says, hey, can you talk? Big up the phone and it's like, you know, Nick looks at my face, he's like, "Another one?" And I'm like, "Yeah." And then, so the last person quits.

• 59:08Guy Raz?

  It was like 10 people.

• 59:10Speaker 02

  It was like eight, eight people, I think. And then our flight is canceled. And we're sitting in the Boston airport and we're just like, "Oh, God, what are we gonna do?"

• 59:19Guy Raz?

  I mean, I'll be honest with you. If my whole team from How I Built This left over the course of six or eight months, I would start to doubt my own judgment. I would say, "What am I doing wrong?" On the one hand, I think that's a natural human response. On the other hand, it takes a lot of resilience to withstand that and to forge ahead.

• 59:39Speaker 02

  But, you know, while the whole leadership team left, not the whole team left.

• 59:44Guy Raz?

  Yeah.

• 59:44Speaker 02

  And there were so many people that stayed with us and are still here with us and stepped up. And it also gave us the opportunity to bring in fresh blood with this, you know, with this vision in mind. And so at the time, it was so painful, but looking back, it was such a blessing.

• 1:00:03Speaker 01

  And to your point, we had all those thoughts. You know, we'd ask ourselves, like, "What are we doing?" You know, the first person leaves, you're like, "Okay, fine." The second, the third. By the fifth or sixth, you know, the three of us are looking at each other saying like, "Are we doing the right thing here?" And again, back to the point of like having two co-founders, having them here, just like the three of us together reassuring each other. If we were, any of us doing this by ourselves, I'm not sure we would have done the same thing.

• 1:00:25Guy Raz?

  Yeah. And, and today, you're, you're still convinced that this emphasis on tech and other ways of getting Sweetgreen to customers is the right way to go?

• 1:00:34Speaker 02

  100%.

• 1:00:34Speaker 01

  Yeah. More sure than ever.

• 1:00:36Guy Raz?

  And

• 1:00:37Speaker 02

  But we'll see.

• 1:00:37Guy Raz?

  But you'll see, right? Because it hasn't, it's gonna take time.

• 1:00:40Speaker 01

  And we're not gonna get it all right. There's gonna be, and there are parts of this that we get wrong and we learn and we iterate. And, you know, we open new versions of Sweetgreen that have parts of it that don't work. And that's part of the journey is the failures.

• 1:00:50Speaker 02

  But that was very much part of it. It was going from a place of, "Hey, we have this one thing that works. Let's just keep doing it," to, "Let's create a culture of where it's safe to fail and okay to try things and some will work and some won't." And Outposts, for example, is one of those things that was a little trial that now has almost 1,000 Outposts in less than a year. We want a culture and a company that Continues to innovate and evolve and not that just does the same thing. Because of the companies that we look around the world, the ones that we admire are not doing the same thing that they were 10 years ago or 20 years ago. They're continuing to evolve.

• 1:01:30Guy Raz?

  How big do you want this to be? I mean, do you want this to be? Starbucks, I think, is the biggest food chain in the world after McDonald's, maybe Subway, I don't know. I mean, do you want it to be that big? Do you want people going to Sweet Greens all around the world? Can you even do that?

• 1:01:46Speaker 02

  I mean, we want to have a really big impact. We want to create a global iconic enduring brand that changes people's relationship with food and changes and has an impact on, a sustainable impact on the future of food. But what I like to think about a lot is, what if every McDonald's was a Sweet Green? How would agriculture be different? How would the environment be different? How would the health, people's health be different? And that's what gets me really excited. And whatever number of restaurants that is, like, let's just keep going. And what we've always said is, go as far as you can see. Once you get there, you'll be able to see further.

• 1:02:23Guy Raz?

  How much do you think the success of this business has to do with your intelligence and skill and how much is because of luck, in your view? Nicholas?

• 1:02:33Speaker 01

  You know, I think luck plays a big part in any success. And I think there's good luck and there's bad luck, and we've had multitudes of both. I believe it's what you do with that luck, how you either double down on the good luck and use that as momentum, or try to fight off the bad luck and not let it sink you. And so much of our success has been about the grit, you know, the decisions you make every day, the work that goes in. You know, I credit our partnership a lot to how we've gotten through this together. But so much of it is what you do with that luck and how you actually capitalize on it.

• 1:03:01Guy Raz?

  Jonathan, when you reflect on the whole arc of these last 13 and a half years?

• 1:03:05Speaker 02

  I mean, it's so much luck went into this. The fact that I walked into Georgetown and met Nick the first day, the fact that I had the opportunity to go to Georgetown in the first place. There's so many things that were lucky breaks for us. But to Nick's point, it was then using that momentum when we were lucky and also having the resilience for all of those times that we almost failed. Because in this 13 years, it's just like being able to survive, to live another day, to get another chance for a lucky shot.

• 1:03:40Guy Raz?

  That's Jonathan Neman and Nicholas Jamay, co-founders, along with Nathaniel Rue of Sweetgreen. Now, normally, this would be the end of the show. But of course, we are not living in normal times. So just a few days ago, about a month after we recorded this interview, I called up Nick and Jonathan to ask them about how their business is going right now since the pandemic hit. First of all, before we start, where are you right now? Nicholas, where are you?

• 1:04:08Speaker 01

  So I'm sitting in the guest bedroom of my home in Venice, which has become my makeshift office.

• 1:04:14Guy Raz?

  In California. And Jonathan, where are you?

• 1:04:16Speaker 02

  I'm also at home. I'm at my home in West Hollywood, Los Angeles, also in a guest bedroom-turned-makeshift office, where I'm spending all of my time now.

• 1:04:27Guy Raz?

  Yeah. So obviously, so much has changed since our interview just a few weeks ago. Tell me the situation with Sweetgreen. I mean, have you, I have to imagine you've had to, at the very least, furlough employees and shut down stores. What's going on?

• 1:04:43Speaker 02

  So we've had to shift the way we operate all of our restaurants. So all of our dining rooms have been closed. All of our front lines have been closed. And we've shifted to a digital-only operation. So we take orders via pickup, which is done contactless, as well as contactless delivery on our app and through a few marketplaces. Because of where our restaurants are physically located, our business is especially, just we're being impacted in a very, very dramatic way.

• 1:05:16Guy Raz?

  So in our interview that we did a couple of weeks ago, one of the really most fascinating things about that interview was your discussion about your pivot, this idea of people could pick up their salads in lockers and order digitally, and there'd be a whole kind of new ecosystem around it. Can that, I mean, right now, in the current environment, can that still work? Can that still operate?

• 1:05:43Speaker 02

  So as the whole world moved to work from home, our outpost business completely disappeared overnight. It was a large part of our business and the fastest growing part of our business. And so it's literally overnight disappeared. But what we were able to do was redirect all of our outpost capability and logistics towards the people on the frontline. So specifically, we were able to redirect and set up outposts at over 100 hospitals around the country. We started by funding them ourselves. And then just recently, we partnered with Jose Andres and his World Central Kitchen to raise additional funds for that. So far, we funded over 100,000 meals for these hospitals, and we're just getting started here.

• 1:06:27Guy Raz?

  And you're giving those away? You're not...

• 1:06:30Speaker 02

  Yeah, we're giving the food away. We're giving the bowls completely free to people on the frontline. When we announced it, we got 10,000 hospitals reached out to be part of the program. So the response was overwhelming. And I think it just made us realize that during these times, while you want to save your business, and that's important, first, let's take care of your own people, but then figure out how you can use your company for the greater good of the community.

• 1:06:59Speaker 01

  Yeah, and I think for 13 years, we've been talking about why we started Sweetgreen and our cultures and values and how we show up every day. And to be honest, they haven't really been tested to an extreme until this moment, right? And we've had some challenging moments over the 13 years, and we've always been super proud of how we've used those values. But to be honest, it hasn't been since this past month that we've really taken stock and said, this is when they really get tested.

• 1:07:21Guy Raz?

  And Jonathan, I know that you and Nick and your third co-founder Nathaniel recently met face to face, socially distanced. What was that conversation like? What did you guys talk about?

• 1:07:33Speaker 02

  You know, we sat around and we told ourselves, we can't think about rebuilding our business the way we were building it before. And honestly, it felt like we were sitting back in our dorm room at Georgetown. And we literally took a whiteboard out, and the question was, if we were starting Sweetgreen today, what would we build? Let's go do that right now instead of just going back to our old plans. Or we need to be proactive around this and start to plan for the rebound and the new normal. And so, you know, we've always believed that with crisis comes opportunity. And this is a crisis like none of us could have ever imagined or any of us have ever experienced. But with this will come opportunity.

• 1:08:17Speaker 02

  And so, we've really tried to think about how we can use this time to invest in the business and to come out stronger than we went into it.

• 1:08:29Guy Raz?

  John, Nick, thanks for the update, guys. And we're wishing you a lot of luck and sending you good energy. And we hope that Sweet Green will get through this and stronger than ever and that we can go have a salad, you know, pretty soon.

• 1:08:45Speaker 02

  Thank you, Guy.

• 1:08:51Guy Raz?

  And thanks to all of you for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at [email protected]. And if you want to send a tweet, it's at How I Built This. Our show was produced this week by Casey Herman with music composed by Ramtin Arablouei. Thanks also to Julia Carney, Candace Lim, Neva Grant, and Jeff Rogers. Our intern is Raini Toll. I'm Guy Raz, and you've been listening to How I Built This.

• 1:09:24Guy Raz?

  This is NPR.

• 1:09:29Speaker 03

  Not everybody wants to run around the White House or Congress all day. That's where the NPR Politics Podcast comes in. At 5 PM, NPR's best political reporters get together and break down the biggest political stories. No noise, just friends making sense of Washington. Listen to the NPR Politics Podcast every weekday.