Posted: 2:10 p.m. Monday, Nov. 11, 2013
By Kimberly Weisul
Katherine Berman and Sophie LaMontagne talk about the challenges and rewards of quitting their jobs to start a family business.
00:09 Kimberly Weisul: Thank you so much for joining us today. This was one of my most fun stories to research as you can imagine. I did--read Burt's story, which Christine referred to, the Cupcake Wars. And I would daresay you won the cupcake wars in that story. I have to say Burt traveled around DC eating lots and lots of cupcakes.
00:27 Katherine Berman: He did. And I actually remember when he came in because he said that he would come in at one o'clock in the morning, which was when we started baking in the morning.
00:35 Sophie LaMontagne: (Inaudible) no way. He's not--
00:35 Berman: He's not going to show up. And sure enough, there's a knock at the door and he was there. And he stayed with us for probably five hours in the bakery.
00:44 LaMontagne: So he was with us from the beginning of our workday really up until opening. And he was a trooper. I thought, you know, it's a pretty big commitment to say you're going to come in and I think it was like in a very--it was the spring, or maybe the wintertime and it was very cold outside. I'm like he's not going to come. He did.
01:01 Weisul: Yeah, that's Burt. So I wanted to ask you just to start. You're sisters. You work together. You run a business together. Had you ever worked together before you started your cupcake business, before you started Georgetown Cupcake?
01:14 Berman: No, we hadn't. You know, Sophie was a microbiology major at Princeton. I was a poli-sci major at Marymount University in Arlington, Virginia, grew up baking with our grandmother, had this passion for it, never thought it could be a viable business. We are a year and a half apart. We did not play well together growing up. And we basically fought, you know, over everything, toys, clothes, boys, you know, and then ten minutes later we would be having lunch again or playing together again. And I think is one thing that really helped us decide to start this business together was that we were able to communicate to each other in a way that I don't think we could with any of our friends or previous employees.
01:56 LaMontagne: And I think the fact that there was just the two of us and we're a year and a half apart, I think anyone who has a sister very close in age, you know about that special bond. And it's something like you're on the same wavelength. Sometimes we don't even have to say the words. We just know what each other is thinking. And we have this passion of baking with our grandmother. And she really was the inspiration for starting our business. And so we always knew we wanted to do something together one day. But, you know, as you asked, we had never worked together before. In school, we played the same sport and did the same activities, but this was our first foray into working together. And it's been a roller coaster. We've been having a lot of fun. Working with your sister is a very complex thing as some of you with family businesses know. Family businesses are challenging, but they're also very, very rewarding. So for us it's been a blessing.
02:35 Weisul: So did you have any conversations beforehand like okay, if this happens, then mom has to stay over here and if that happens, I mean, did you talk this through before you dove in?
02:46 LaMontagne: Well, even now, we live across the street from each other. And, you know, people who watch our show know our mom and our family are pretty much in the bakery the whole day. They're extremely supportive. Even though when we first started, they did not want us to start this business. They didn't want us to quit our jobs. Anyone who's an entrepreneur knows that making that decision is very, very scary. To quit something known and stable for something unknown is one of the scariest decisions you'll ever make. And, you know, your family and friends are honest with you. They're like listen, I don't think you should do it. I think it's a stupid mistake. And at the beginning it was like that for us. And we were very--
03:16 Weisul: Well, it's not supposed to be that to be an entrepreneur you need this like huge support network that's behind you 100% of the way.
03:21 LaMontagne: Yeah. And it's scary because when you have doubters, you start to doubt yourself. And at the beginning, I remember distinctly and we talk about this in our book, the first day we were open and we were baking and we were in the kitchen and I remember exactly where I was. I'm like I wonder if anyone's going to show up today? Because you really, I mean, when you're starting a business, you don't know if anyone's going to show up. And, you know, you really, you start to believe all of these doubts in your head. People are saying do you really--I remember a family member before we started like do you really think you're going to sell 100 cupcakes a day? And now we sell over 20,000 across all of our locations a day. And so you have to put aside all of those negative feelings that others are kind of throwing on you and follow your gut. And if you're, you know, if you have this dream, you got to believe in yourself and go after it.
04:01 Weisul: So why did--I mean, it's interesting because you just said we never thought this could be a successful business, but obviously you thought enough that it could be to defy everyone in your family, so--
04:10 Berman: Actually when we first started, you know, we really thought, you know, we started it in 2008 during the recession, couldn't get a bank loan, ended up, you know, starting our business very unconventionally, maxing out our personal credit cards and using up our life savings. And, you know, we don't recommend that to anyone if you don't have to do that. But when we started, you know, we really thought listen, if we can pay our rent, that is the only thing that we really need. Everything else is variable. All we need to do is cover our rent. And when we first started, we really thought it would just be the two of us. We'd be in this small, tiny neighborhood bakery in Georgetown, in Washington, DC, and that would be good enough for us because we would be happy.
04:46 LaMontagne: That was our definition of success.
04:48 Berman: And that was our definition of success back then.
04:50 Weisul: So I don't know if this is true. I've read in my research that you signed the lease on your space when one of your husbands was on a business trip?
04:59 Montagne: This is a funny story, because when we told people we wanted to do this, they're like okay, well, I know my husband, and Katherine was not married to her husband at the time, but they thought this is just some pipe dream. Let them, you know, play around. You want to go see spaces, go ahead, see spaces. But then we had the lease in-hand and like we found the space, my husband started to freak out because it became real, you know, like I was quitting my job and Katherine was quitting, you know, her job. We were going to do this. And I think once you sign that first lease, that first legally-binding piece of paper, then it really becomes real. And I think anyone can relate to this is that you're on the hook. You know, you got to start paying rent. You got to start, you know, making sales. And all of a sudden the clock starts ticking. And my husband was on a business trip. And he said do not--whatever you do, don't do anything until I get back. And, of course, we were going to lose the spot, like there were so many people looking at this spot. And for those of you who have seen our first shop in Georgetown, this tiny little bakery, you know, it was a real hole in the wall when we found it, like we put in a lot of work. and I remember my husband took a look at it and he's like this is not a good space, like do not do this. Do you know the amount of work? This is a total disaster. But, of course, we fell in love with it and we signed on the dotted line and the rest is history.
06:05 Weisul: So I feel like, you know, having a bakery of some sort or a cupcake business, which became like very trendy around the time that you guys started to have real success with it, you know, is a business that a lot of people in the back of their minds like think they could have, right, because they're really good bakers, maybe they've sold a few birthday cakes, everybody loves what they do, you know, the only thing holding them back is they don't have a commercial kitchen. But like it's a hugely competitive business, so what about this was the biggest surprise to you that you're like okay, this is not just like baking for the family.
06:30 Berman: I think that in the beginning, the biggest shock to us was how much work actually goes into it.
06:44 LaMontagne: In any food business.
06:45 Berman: Yeah. And we have so much respect for people who run full restaurants because we just do one thing, we do cupcakes, and we try to do them best-in-class. But it kicks our butt every single day. And, you know, just waking up so early in the morning, getting in, just in our business it's so important because everything is in the details. And, you know, to find people who are as detail-oriented as you are is so hard, but I think that, you know, a lot of people see a line at our bakery and they think hey, I can do that, too. And then they just, you know, get a space, hire people, and they walk away from it. They don't succeed because customers know when you really, truly love what you do. And, you know, we're there every day. You know, there's never really a day that we take off. We're either at one of your bakeries in any city, but, you know, we're there every day. And I think our customers can tell that we really do care about our product.
07:33 LaMontagne: And creatively being in the details and the weeks is very important, but also one of the challenges in running a bakery that we didn't anticipate and I think a lot of people who get into the bakery business or the food business especially and it kind of applies to all businesses, operations. And I think to run a profitable food business is a lot of work. And it's not something we're like I like to cook or I like to bake, let me turn my hobby into a job. You really have to look at the numbers and micromanage the operations because you can't just, you know, bake and expect people to come and expect not to lose money, like you--there's a certain way you have to run your business. And it is a lot of work. And sometimes it's not so fun. I mean, I think people who love baking, especially in our field, are very creative people and they don't like to get their hands dirty with the operations. And I think one of the biggest mistakes you can make in being an entrepreneur is saying oh, I don't want to do that. I'm going to hire someone to take care that. You can't. You have to own it. When you're an entrepreneur, you have to own every single detail because if you don't, it doesn't take a lot of time before things can unravel very, very quickly. And for us, people who watch our show know that we are so--and Burt said this, too, like we are in the weeds. We care about those details, but not just creatively, but also about the business, to make sure that it's running smoothly and, you know, it's, you know, running well and it's a lot of work.
08:47 Weisul: Why do you think you got that line outside the door the first day, right? That's what everyone dreams of, you're going oh, am I going to sell 100 cupcakes and then the first day there's like a line outside your door. How did that happen?
08:59 Berman: Well, it was--it's pretty funny because we were down to our last dollar and I remember, you know, we had just passed our health inspection. We said we need to open, you know, tomorrow. We've got to start paying back these credit cards. And Sophie wanted to print a poster for the window saying grand opening tomorrow. And her--Valentine's.
09:17 LaMontagne: Valentine's.
09:18 Berman: And her husband said you don't have any money left, like you don't understand. You don't have $10 to print this poster.
09:25 LaMontagne: (Inaudible) poster and I think it was $50. And he started freaking. He's like we do not have $50 to print this (inaudible).
09:30 Berman: But, of course, Sophie went to FedEx Kinko's, got it printed.
09:31 LaMontagne: (Inaudible) we've got to do something.
09:32 Berman: Put it up in the window. And that first day we had a line before we opened. And I think that people had passed by and saw the sign and, you know, waited in line. And we thought--we sold out of cupcakes around noon, had to shut down, re-bake, reopen, and then we sold out again. The next day we said okay, it'll be different, no one will come, and it was because it was our first day we were open. But the next day, we had the line. And the day after that we had the line. And I think that it was word of mouth. And I think that people--when you came into our bakery, we really wanted to make it an experience for our customers, so you could actually see us baking. You could see the eggs being cracked. You could see the--us pouring milk and frosting them. Everything was baked fresh onsite. And we really wanted to make this interactive experience for our customers. When you walked in, you could see the cupcakes being baked. You could smell them. And they told their friends and their friends told their friends. And I think that's what kind of, you know, created the buzz.
10:18 LaMontagne: Yeah. So I think in the beginning, you know, some type of marketing, whether it's something as simple as a sign or something else, is important to get the doors open, to get the word out, but you need something to keep people coming back. And for us, it was like Katherine said, what we were doing resonated with people. People smelled the cupcakes being baked. They had such a phenomenal visit and/or experience that they told their friends who told their friends. So it just created this word-of-mouth kind of cult following from the get-go. And it's still here today. Like five years later, we still--if you come to Georgetown Cupcakes on the weekends, there's--in Georgetown, there's a line. And people come because, you know, because of the quality of our cupcakes. You know, it’s not one thing just to put a sign in the window and expect people to come. Like if your cupcakes or whatever your product is is isn't good, your customers are not going to come back.
10:57 Berman: And I think what the founder of Gilt, you know, said is true, too, that press does help you. And I think that what really put us on the foodie map was when Frank Bruni of the New York Times came into our bakery, you know, in Georgetown. We had no idea who he was. You know--
11:12 Weisul: Did you know roughly that some critic was coming?
11:13 Berman: No.
11:15 LaMontagne: --we didn't know he had visited because he had, you know, as a restaurant critic he goes everywhere in stealth. And he wrote this glowing, glowing review. And--
11:26 Weisul: Which he does not always do. He will pan something, yeah.
11:29 LaMontagne: Yeah. And when we had found out he had visited and that a story was running, we were so nervous to open that paper. We were line oh my God, it was--for any restaurateur this is a big deal. And the review was so, so glowing, we couldn't--it was just unbelievable to us.
11:42 Berman: And then we had people coming from New York City down to DC and making us a stop, you know, on their trip.
11:46 LaMontagne: And that's where really started to gain traction beyond the local Washington, DC market.