Pod Insights How I Built This with Guy Raz Live Episode! Luke's Lobster: Luke Holden and Ben Conniff About this episode 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.
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0:02 Guy Raz? 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, why the rush?
0:13 Speaker 01 We needed to get open. We were, at that point in time, things were tight.
0:19 Guy Raz? You needed cash flow.
0:20 Speaker 01 Yes. I'll give you one specific example. Two days before we opened, 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.
0:36 Guy Raz? From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
0:50 Guy Raz? 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.
1:08 Guy Raz? 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 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
1:52 Guy Raz? are better in LA. 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, how to catch them, how to process them, and source them. But he didn't know anything about how to run a restaurant.
2:34 Guy Raz? And so that's when he turned to Craigslist to find a partner who could help. And the 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 US and Asia. A few weeks ago, I sat down with Luke and Ben onstage 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.
3:14 Guy Raz? His dad ran a lobster processing facility, which can be an incredibly unpredictable business to be in.
3:22 Speaker 01 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 highs and lows, and it takes passion and ultimately a dedication to your trade in order to persevere.
3:40 Guy Raz? And by the way, did you eat a lot of lobster as a kid?
3:44 Speaker 01 Every time times were hard at home, we had more lobster.
3:48 Guy Raz? So as a kid, I mean, you knew how to-- I mean, you were sort of around lobstermen.
3:56 Guy Raz? Did you in your mind think, you know, eventually I'm gonna get out of here? Like, I'm not gonna do this lobster thing. I'm gonna 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?
4:10 Speaker 01 When I was 16 years old, I got my first job as a sternman. I had worked in production facilities, my dad's facilities. 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 roly. 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
4:53 Speaker 01 and not knowing what was in that trap is an excitement that I still have today when I go out lobstering with my family. And it propelled me to go out and build a boat in high school. 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.
5:14 Guy Raz? You wanted to be in the lobster business when you were a kid?
5:17 Speaker 01 I did, and my parents made me get out of it.
5:19 Guy Raz? Your parents did not want you to do it? Why didn't they want you to be in it?
5:24 Speaker 01 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.
5:34 Guy Raz? Yeah.
5:35 Speaker 01 And my sophomore year, my parents basically said to me, "Forget Georgetown unless you go pursue some other interests. We're not dealing with this financial burden."
5:45 Guy Raz? They wanted you to go to Georgetown to pursue something stable, like law or, you know, finance?
5:50 Speaker 01 Or like investment banking in 2007.
5:56 Guy Raz? All right. So you, all right, you go off to Georgetown. Let's put this on hold for a sec. I want to turn it to you, Ben. You grew up also in New England, in Connecticut?
6:07 Speaker 02 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 very different industry.
6:17 Guy Raz? 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, was that where your sort of head was?
6:30 Speaker 02 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 seem to be pretty okay at this. Maybe I can find a job writing or in an editorial position.
6:49 Guy Raz? And did you move to New York after college?
6:51 Speaker 02 I did.
6:52 Guy Raz? Okay, so you moved to New York thinking, I'll get into writing. And what you started to do is food writing, right?
6:58 Speaker 02 Yeah, I worked my way and 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.
7:12 Guy Raz? 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.
7:19 Speaker 02 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 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.
7:40 Guy Raz? Really? Are you a big, like, a home cook?
7:43 Speaker 02 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.
7:57 Guy Raz? So what did you want to do?
7:59 Speaker 02 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.
8:13 Guy Raz? Yeah.
8:14 Speaker 02 So I applied to basically every job I could find.
8:18 Guy Raz? Like, what kind of jobs? Like sous chef?
8:21 Speaker 02 Dishwasher.
8:22 Guy Raz? Dishwasher.
8:23 Speaker 02 No way I would have even tried for sous chef.
8:24 Guy Raz? Okay, but like dishwasher.
8:26 Speaker 02 We're talking dishwasher, counter service, you know, anything that would put me in a kitchen in a position to learn something that could eventually get me.
8:34 Guy Raz? And did you get any offers?
8:35 Speaker 02 No, I didn't even.
8:37 Guy Raz? Right.
8:38 Speaker 02 I didn't get interviews.
8:39 Guy Raz? So you 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.
8:46 Speaker 02 Yeah, and that's exactly right.
8:49 Guy Raz? Totally get it.
8:51 Speaker 02 And I kind of wasn't.
8:52 Guy Raz? Yeah. All right, let's pause for a sec because I want to go back to you, Luke. So you are, you graduated from Georgetown and you do exactly what you are meant to do. You go work in finance in New York City. Your parents are happy, they're really excited, you got health insurance, some stability. Is that more or less the scenario?
9:10 Speaker 01 Yes, my parents were happy with it. So was I. It was a, it was a really neat experience to, to go explore right out of graduation.
9:19 Guy Raz? Where were you living, in Brooklyn?
9:21 Speaker 01 No, so I was terrified of the subway system. So I worked at 49th and Park and I lived at 52nd and Second.
9:30 Guy Raz? Got it. So you just walked back and forth?
9:32 Speaker 01 There was like three Irish bars that I was comfortable at, a gym and my desk.
9:37 Guy Raz? Right.
9:38 Speaker 01 And like, that was it.
9:39 Guy Raz? Got it.
9:40 Speaker 01 Yeah.
9:41 Guy Raz? And you're doing this for a couple of 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?
9:49 Speaker 01 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, 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 Maine style lobster roll. And there was all these great restaurants serving their interpretation of a lobster roll, but it was not a quintessential, affordable experience.
10:19 Guy Raz? I'm curious about, what was a good lobster roll to you? What, what did you want? It to be.
10:26 Speaker 01 An unadulterated product. So a good lobster roll is a, it's a New England top slip bun, shaved sides, get a nice buttery toast, a little slick of mayonnaise, quarter pound of, of fresh lobster meat.
10:42 Guy Raz? Just from a particular part of the lobster, right?
10:45 Speaker 01 Knuckles and claws. It was the most tender part of a lobster.
10:47 Guy Raz? Got it.
10:48 Speaker 01 Then a little bit of lemon butter and a little bit of secret seasoning.
10:52 Guy Raz? 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, there was nothing like a Maine lobster shack anywhere near where you lived.
11:03 Speaker 01 That's right.
11:03 Guy Raz? All right. I want to, I just want to pause for a moment because, I mean, I know a lot of times we talk about these business stories and it's this, this eureka moment, but it's really more complicated than that. Cause I have to imagine that over those two, that two-year period or whatever it was where you were working at the finance firm, in the back of your mind, you knew that you were going to start something or, or no? Was that, was that the case?
11:26 Speaker 01 I, 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, and owning your own business ultimately gave you the lifestyle that, that I thought my dad and my uncle were living. I mean, the reality is that now that we're doing it, like you realize that they were just burning the clock when I wasn't paying attention.
11:52 Guy Raz? Yeah.
11:53 Speaker 01 But they made me feel.
11:54 Guy Raz? Right.
11:54 Speaker 01 Like they were always there.
11:55 Guy Raz? Yeah.
11:56 Speaker 01 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.
12:07 Guy Raz? And what was the first thing you did? Did you like call your dad up and say, hey, dad, I have this idea?
12:13 Speaker 01 I kind of saved that. So I, I wrote this business plan and my network of, 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.
12:30 Guy Raz? And were people encouraging or was anyone like, this is dumb, stay in investment banking?
12:35 Speaker 01 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, a side hustle.
12:48 Guy Raz? Oh, this was going to be a side hustle?
12:50 Speaker 01 Absolutely.
12:51 Guy Raz? All right, so when you told your dad, how did he react?
12:54 Speaker 01 Yes.
12:55 Guy Raz? He didn't say, "We sent you to Georgetown so you wouldn't get into this crazy business."
13:02 Speaker 01 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 lobster she made her cry. She was upset about this.
13:14 Guy Raz? Because?
13:14 Speaker 01 Gateway drug, ultimately.
13:19 Guy Raz? 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?
13:26 Speaker 01 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. Couple of years later, he told me he literally borrowed the money against his 401k.
13:42 Guy Raz? Wow. All right, let's get back to, I'm going to pause, get back to it for a second. You decide at a certain point, can't do this alone. So first of all, why did you decide that you needed a partner?
13:54 Speaker 01 I was pretty risk averse. Again, no real passion in investment banking, but it was paying the bills and I ultimately...
14:02 Guy Raz? You needed somebody to help you run it?
14:04 Speaker 01 100%.
14:05 Guy Raz? Okay. So how were you gonna find your business partner?
14:09 Speaker 01 Through Craigslist.
14:13 Speaker 01 And I got like 500 responses in a matter of a couple of days.
14:17 Guy Raz? All right. I'm gonna turn back to you, Ben. What were you doing trolling Craigslist one night?
14:25 Guy Raz? What were you really looking for?
14:29 Speaker 02 We always say we met in the men seeking men section, but...
14:35 Speaker 02 It was men seeking men for help, you know, to start a lobster business.
14:41 Guy Raz? Wait, you were like on Craigslist, just looking for some opportunities? And what did the ad say?
14:46 Speaker 02 So it's in the restaurant section and, you know, 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 at the lobster dock there and watch the guys steam in and out and unload and, and you know, eat at the lobster shack there, so.
15:30 Guy Raz? So the ad basically says, "Hey, I'm opening a lobster shack. I'm looking for somebody to help me out."
15:35 Speaker 01 Like, the last sentence was, "I just need somebody who can raise their hand, because I really don't exactly know what this job description is at this point in time."
15:43 Guy Raz? But so, alright, so you get 500 applications, and what stood out about Ben's?
15:49 Speaker 01 He wrote a really nice cover letter, kind of bringing back like his fond memories at these lobster shacks. Like, he understood kind of the essence of what I was looking to create here in the city.
16:00 Guy Raz? Okay.
16:01 Speaker 01 He was clearly smarter than I was, or am.
16:05 Guy Raz? But you get this letter, and did you email him right away and say, "Hey, let's meet"?
16:09 Speaker 01 Yeah, I said, "I gotta be at my desk at like 8:30. Why don't you come by Starbucks underneath my building at 7:30, and let's talk for half an hour."
16:18 Guy Raz? And this is in August of 2009?
16:20 Speaker 01 Yeah.
16:20 Guy Raz? Okay. So one morning, you guys meet at Starbucks, and how'd it go?
16:25 Speaker 01 It was great. It was an easy conversation. It was a two-way interview, which I appreciated. I shared the business plan with him, asked him to follow up, give me his thoughts on it. And then my next move was, "Alright, go up to Maine and meet my family."
16:41 Guy Raz? Wait, that's really fast. You're moving really fast.
16:45 Speaker 01 Yeah. It was weird how that came out, but it's true.
16:49 Guy Raz? 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?
17:07 Guy Raz? Careful.
17:08 Speaker 02 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, you know, 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 lobster industry, and such a clear understanding of how sourcing worked,
17:50 Speaker 02 and how sustainability worked, and all the different pieces that would actually make a business like this.
17:56 Guy Raz? Yeah.
17:57 Speaker 02 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, because it's something that could actually work.
18:06 Guy Raz? So a couple of days later, you bring Ben home to meet your family.
18:10 Speaker 02 No, he didn't even come with me.
18:12 Guy Raz? 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?
18:22 Speaker 01 Absolutely. It was, he had, like, 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.
18:52 Guy Raz? All right, so you guys decide to partner up. This is the part of the story that'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?
19:11 Speaker 01 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 an arepa here, you could get a pork cutlet sandwich here, you could 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.
19:44 Guy Raz? And, I mean, $30,000, okay, it's some working capital, but rent in New York, you gotta sign a multi-year lease. I mean, how did you do that?
19:53 Speaker 01 Well, I had the guy from Yale review the lease.
19:57 Guy Raz? And, Ben?
19:58 Speaker 02 I knew nothing about leases, but I could read.
20:07 Speaker 02 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.
20:16 Guy Raz? Okay, and what was the size of the space that you located?
20:19 Speaker 01 It was like 200 square feet. It was an old consignment shop that was just, it was called Sosa's Closet and it was painted brown, so it resembled like a big walk-in closet.
20:28 Guy Raz? Wow, and what was the rent gonna be per month?
20:31 Speaker 01 It was $3,100 a month.
20:33 Guy Raz? 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?
20:40 Speaker 01 So it was three months' security deposit.
20:44 Guy Raz? Okay.
20:44 Speaker 01 First month's rent up front. We had to upgrade the electric, which we did not anticipate and that was like a $10,000 bill. And then everything else, we fit within that, the remaining $10,000. Like Ben had to go figure out how to pull the building permits that we needed. My uncle and brothers were in there doing construction work and painting.
21:07 Guy Raz? You guys were doing all this, you were remodeling it yourselves?
21:10 Speaker 01 Anything you didn't need a license for, we were doing it. Had to do it. No other choice.
21:15 Speaker 02 Yeah, maybe some things that you didn't need a license for.
21:21 Guy Raz? And so what did you have to build in this space? Like, you had to make it look like it was gonna be a takeout place?
21:27 Speaker 02 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.
22:01 Guy Raz? Wow.
22:02 Speaker 02 Yeah.
22:03 Speaker 01 What we didn't compromise on was, we had the best tasting and most affordable lobster roll.
22:09 Guy Raz? Right.
22:09 Speaker 01 That's what we were gonna have, and we were going to create a team that treated people the way that we liked to be treated.
22:15 Guy Raz? Was there any doubt about the name? Were you, I mean, Luke's Lobster, it was gonna be Luke's Lobster from the beginning?
22:22 Speaker 01 At that time, I had a friend who was a great marketer, and I gave him 10 different names.
22:29 Guy Raz? What were some of the other names?
22:30 Speaker 01 It was like Overboard Lobster, like Lobster Shack, Clam Shack, even though we weren't gonna have clams.
22:40 Speaker 01 There was, there was a, there was a variety of just bad names in there. I was super gun-shy about naming a restaurant after myself. I kinda had, still sorta 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 Fisherman. And putting a person behind the brand was something that ultimately Ben helped me realize.
23:14 Guy Raz? But 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, why the rush?
23:24 Speaker 01 I'll give you one specific example. Two days before we opened, Ben texted and said, "Hey, can I go down to the Bowery to buy some trashcans?" And I said, "No, there's no money in the bank account." Things were tight.
23:38 Guy Raz? You needed cash flow.
23:39 Speaker 01 We needed cash flow. We needed to get open. We were, at that point in time, there was no legal room at all.
23:46 Guy Raz? Okay, you are still working at the Finance job during the day, right?
23:50 Speaker 01 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 gonna bring a little bit of passion about.
24:01 Guy Raz? Alright, so we know that your dad had a lobster processing plant. He basically would process lobsters for other people in Maine. So you were gonna buy the lobster from his processing facility?
24:15 Speaker 01 We were, and luckily, he didn't make us pay for the first 90 days. So that really helped cash flow in the beginning.
24:24 Guy Raz? Alright, so October 2009, you open up. How many lobster rolls were you expecting to sell that first day?
24:34 Speaker 01 We had probably planned initially on 50 to 100 rolls.
24:40 Guy Raz? And you were not there for the opening. You were at your desk in the financial firm, right?
24:45 Speaker 01 At like 9 a.m., I gave Ben and my dad a high five and said, "Go get 'em, guys."
24:52 Speaker 01 I just didn't... It's the first day. We had a handwritten sign on the window. We had no press. Not a lot of press. What was gonna happen on the first day?
25:02 Guy Raz? Yeah.
25:03 Speaker 01 2 o'clock, total crickets. Didn't hear from either one of the guys.
25:07 Guy Raz? So your dad was at the shop with Ben, and they did not... Nothing? You heard nothing from them?
25:13 Speaker 01 Nothing. So I'm like, "They're protecting me from the bad news. We haven't sold a lobster roll yet. This is horrible. What are we gonna do with a couple hundred lobster rolls that we've got on site?" 2 o'clock, Ben 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.
25:37 Guy Raz? Wow. Did you run out of inventory of lobster rolls? Lobster?
25:40 Speaker 02 Not quite that day, but 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, you know, everybody in the kitchen's 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 this, 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.
26:16 Guy Raz? Wow.
26:16 Speaker 02 We, we need more lobster.
26:18 Guy Raz? How many lobster rolls did you sell that first day?
26:21 Speaker 02 It was 500 the first day.
26:29 Guy Raz? 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.
27:13 Guy Raz? 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 realized pretty quickly that they are a lot better at making lobster rolls than running the actual restaurant.
27:30 Speaker 02 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.
27:43 Guy Raz? Yeah.
27:44 Speaker 02 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 scratched on paper to Luke and at his desk he could put it into Excel and send it back to me.
28:05 Guy Raz? Yeah.
28:06 Speaker 02 In a way that made sense.
28:08 Guy Raz? And how, I mean, how were 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 gonna have enough? And how many rolls do we need?
28:19 Speaker 01 I actually think this is one of those areas where inexperience was our friend. All of the lobster came down from Maine in units.
28:28 Guy Raz? When you say in units?
28:29 Speaker 01 Wrapped per lobster roll. Perfectly steam-cooked. Next day shipment.
28:34 Guy Raz? Because lobster's in a roll is cold.
28:36 Speaker 01 It is, it's sort of 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 on a very complicated Excel sheet.
28:51 Guy Raz? Yeah.
28:52 Speaker 01 And then we just used those historical sales to predict what we would need and that's ultimately how we did all of our purchasing. So we were, never had lobster in the shack that was more than a couple of days old.
29:02 Guy Raz? 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 gotta get it to your stores really quick. So how was it, was it coming in refrigerated, frozen? Like, how was it coming in?
29:21 Speaker 01 So typical day, you catch a 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.
29:42 Guy Raz? 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?
29:51 Speaker 02 We had an amazing team that started with us on day one. And that was, I mean, it was, it was crazy, but in, in all of that, like figuring out permitting and building out the restaurant.
30:02 Guy Raz? And you had to get a food license in 30 days too, right?
30:05 Speaker 02 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.
30:24 Speaker 02 And then, and then reading responses from people on Craigslist. And we ended up with just extraordinary people, partly because it was at the height of the recession and there were, there was a lot of people looking for jobs. But amazing support team there from day one.
30:39 Guy Raz? And your price point was $14 initially for lobster roll, presumably a lot cheaper than a restaurant in New York, right?
30:49 Speaker 01 More affordable.
30:50 Guy Raz? Right, more affordable, right. It is not a cheap product.
30:53 Speaker 01 More affordable.
30:53 Guy Raz? Yeah.
30:55 Speaker 01 Yeah, so we certainly, working directly with a processor, working directly with fishermen, there was no middleman from day one.
31:04 Guy Raz? Right.
31:05 Speaker 01 So we had access to the best quality product at the best price. And our economic model was, was, we needed volume in order to be successful. So we got that from day one and, and tried to price the roll accordingly.
31:20 Guy Raz? 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 burned 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?
31:39 Speaker 01 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.
31:54 Guy Raz? I mean, I understand you were making like a premium product, a 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?
32:14 Speaker 02 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 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.
32:38 Guy Raz? Kmart stools, there's nothing wrong with that. But they could go in and have kind of a luxurious lunch or dinner.
32:47 Speaker 01 And there was no question that the recession did actually benefit the opportunity. Without a recession, there's no way a landlord would have taken a chance on us.
32:57 Guy Raz? Wow.
32:58 Speaker 01 There's no chance that I would have found smart, motivated people that needed jobs or were out there and available.
33:07 Guy Raz? 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?
33:19 Speaker 01 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? This is, we 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.
33:42 Guy Raz? You were gonna quit.
33:44 Speaker 01 You wanna pause there?
33:45 Guy Raz? No, you were gonna quit your job.
33:47 Speaker 01 $35,000.
33:48 Guy Raz? Yeah, no, but you decide, I'm gonna throw, I'm gonna jump into this two feet. This side hustle is now my full-time hustle.
33:53 Speaker 01 I'm willing to, I'm willing to do that if you guys are in this with me. And everybody said, yeah, let's, let's go ahead and give it a shot.
34:01 Guy Raz? And your mom was like, yes, go for it. Now she was on board?
34:05 Speaker 02 No.
34:08 Speaker 02 No, mom was not on board.
34:10 Guy Raz? She was not on board with you quitting your stable job with health insurance and all that stuff to do this?
34:16 Speaker 02 Not for six months of success.
34:19 Guy Raz? Right.
34:19 Speaker 02 She's a little more practical than that.
34:20 Guy Raz? All right, so you find a second location. Where was this? What was this place?
34:25 Speaker 02 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.
34:57 Speaker 02 And that was six months ago.
34:58 Guy Raz? 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?
35:09 Speaker 02 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.
35:30 Guy Raz? And the two of you cleaned it out?
35:32 Speaker 02 Yeah, so there are professional companies that do this.
35:36 Guy Raz? Okay.
35:36 Speaker 02 They come and they have, you know, this great pump system.
35:39 Guy Raz? Yes.
35:40 Speaker 02 They open it up and, but we really didn't know about those companies.
35:46 Guy Raz? Got it.
35:47 Speaker 02 Right? So, yeah, we would saw the tops off milk jugs and, you know, kind of scoop it into a bucket or like double bag trash bag and then just kind of run around to try to find a dumpster.
36:02 Guy Raz? Wow.
36:04 Guy Raz? So, I mean, you opened this. You eventually opened the second store. And how long does it take you? Again, 30 days or something?
36:11 Speaker 01 It was fast. We opened May 26th and I think we took possession of the shack May 1st.
36:17 Guy Raz? Wow. And now you've got two stores, which is double the work and double the stress?
36:25 Speaker 02 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 build-out process in the Upper East Side. And, you know, thank God, she didn't leave us. She didn't walk away. She held strong. And, but yeah, it was a stress that was shared by the entire team.
36:50 Guy Raz? 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, 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?
37:15 Speaker 01 We actually spent a year 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 shacks. 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.
37:40 Guy Raz? 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 eat them. And get the knuckle meat and ship it out to the restaurants. You guys were going to do all of that?
37:57 Speaker 01 That's right.
37:58 Speaker 02 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 are 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...
38:27 Speaker 02 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.
38:39 Speaker 01 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.
38:58 Guy Raz? Right.
38:58 Speaker 01 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.
39:11 Guy Raz? When your dad had his processing facility, it 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?
39:31 Speaker 01 Like 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 cheddar companies to make lobster bisque. So we're finding value in lobster shells. So we're now getting into that business as well.
39:53 Guy Raz? But it makes more sense for you guys to have a processing facility because of the restaurant?
39:58 Speaker 01 A hundred percent.
40:00 Guy Raz? 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 investment for a 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 Cliff Bar 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 Did you decide to take outside money? Did you need it to scale the business?
40:44 Speaker 01 We got to the point where we had been operating in cities that we had lived in.
40:50 Guy Raz? New York, Boston, DC.
40:53 Speaker 01 Philly was in the middle. General level of comfort. At this point in time, we're writing 500 checks a week. Feel great responsibility for those checks. And it just, it felt like at this point in time, it made sense to bring in a seasoned partner that could ultimately just help us avoid that tripwire that we weren't going to see.
41:14 Guy Raz? So what, what do you imagine? I mean, what will Luke's... 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, there are 40 of them. What's the vision? Like, I mean, thousands?
41:34 Speaker 01 Not thousands. I mean, our, our brand mission is to be the world's most respected seafood brand. Because we're, we're not a group that is motivated by store count or revenue.
41:45 Guy Raz? Right.
41:45 Speaker 02 You know, honestly, we had, we had some moments in, 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 Luke threw out the, the most respected seafood brand in the world. We talked through and we said, well, what does respected mean?
42:19 Guy Raz? Yeah.
42:19 Speaker 02 You know, to us, respect meant stakeholder theory that working directly with lobstermen, transparency, only serving sustainable products. And then, you know, above all, being committed to quality at all costs.
42:34 Guy Raz? 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.
42:57 Speaker 01 Our brand has a great opportunity to be playing a leading role in helping to work to understand what that change is. 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.
43:42 Guy Raz? Yeah. I'm curious. When it comes to your personal lives, Luke, you're married, you've got a kid, you've got another one on the way. Ben just got married like four days ago.
44:01 Guy Raz? 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?
44:13 Speaker 02 Got to be really careful about how we answer this one.
44:18 Speaker 01 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.
44:38 Guy Raz? 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?
45:03 Speaker 01 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.
45:14 Speaker 02 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 last penny. So from that perspective, I'm exceedingly rich. But, 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.
45:44 Guy Raz? 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 attractive to you, jumping off the hamster wheel and selling it?
46:10 Speaker 02 I think that's, you know, this whole company kind of is our, it is our family now. It's, you know, what would we do?
46:21 Speaker 01 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 again, I can't imagine doing anything else.
46:38 Guy Raz? 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?
46:52 Speaker 02 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, there was so much luck that, that undergirds all of it. But, um, you know, as a team, it's what you do with kind of the, the luck that you're given, I think.
47:28 Guy Raz? Luke?
47:29 Speaker 01 I would completely echo that. The, the good fortunes of the recession were, were luck. But I would take the smarts and hard work and the, the DNA of my team and stack them up against any other team.
47:43 Guy Raz? If you were sitting in this audience, you know, 15 years ago, watching guys like you, what do you wish you, you knew then that you know now? What would have been helpful for you to know about the journey you guys took?
47:56 Speaker 01 For me, it's always been the, the strength of my, of my peer network. When I was, when I was in college and I was, 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?
48:10 Guy Raz? Yeah.
48:10 Speaker 01 And I can't tell you how important that actually is. The strength of your network, especially when resources are, are limited and times are challenging, is just so incredibly important.
48:22 Guy Raz? A network can be friends. It doesn't have to be a powerful group of people. It could just be people that you know, people that you meet along the way.
48:27 Speaker 01 Absolutely.
48:28 Guy Raz? Ben? What do you wish you knew?
48:29 Speaker 02 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, 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.
49:00 Speaker 02 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."
49:24 Guy Raz? Luke Holden, Ben Conniff, co-founders of Luke's Lobster.
49:35 Guy Raz? 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 the family has a running competition every summer to see who can catch the most lobster.
50:14 Guy Raz? Hey, thanks so much for listening to this live episode of How I Built This. Our show was produced this week by Casey Herman with music composed by Ramtin Arablouei. Our live events team includes Jessica Goldstein, Ali Prescott, Ellen Jorgensen, and Andy Huether. Thanks also to Julia Carney, Neve Grant, Sanos Meshkentor, and Jeff Rogers. Our intern is Sequoia Carrillo. I'm Guy Raz, and you've been listening to How I Built This.
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