Meet Lee Fitzpatrick, Founder of Muscle Cake, an innovative food company delivering freshly baked macro balanced protein-rich cake to your door. Lee is an emerging entrepreneur with a history of Founding companies. Born in Edinburgh and after working for a year in property, he identified a gap in the property market and secured funding from the Scottish Government for a company called ‘Market Prepare’. At the age of 25 he sold the company to his business partner and has now moved into the food industry. We spoke to Lee to find out the whole story behind his journey to entrepreneurship… GETTING TO KNOW LEE Have you always wanted to become an entrepreneur? Yes, it comes from my family background – they are all entrepreneurs and have their own businesses, in diverse areas. My parents run an electrical store in Scotland , which has been in the family for generations and generations – about 70 years. They eventually asked me to join but I wanted to have my own business. Why did you leave your first business? It was making me unhappy. It was reasonably successful, but it didn’t have the funding to scale it as quickly as I wanted to. It is a very traditional market so it didn’t fit with my ambition and my passion. The name Muscle Cake suggests that you are quite involved in fitness? I had a love hate relationship with fitness because of my entrepreneurial lifestyle. I would exercise and eat healthily for a few days at a time and then I would do the complete opposite. However, as soon as I closed down my last business a year ago, it was like a switch clicked. All of a sudden I worked out consistently and my eating totally transformed – losing 24 pounds in the space of 6 month. I became a lot happier as I found balance. I actually feel that fitness is very similar to entrepreneurship, because it comes from your own personal motivation. Now I’ve been a personal trainer for a year and run outdoor bootcamps…in the cold Scottish weather! Running a business that I love and I am passionate about, made it easier for me to find balance. What makes you passionate about Muscle Cake? Something we are very passionate about as a team is that we are a very human brand. A lot of the industry leaders, or the big players in the market are shaming the act of indulging in treats – which is not realistic. Everyone goes off track but it’s easy to come back and you don’t need to be ashamed or feel guilty. We want to encourage people to do that as part of a healthy lifestyle and just be human. CRITICAL DECISIONS How did you and your co-founder come together? Victoria and I met through fantastic organisations that funded both of our previous businesses, mainly the Prince’s Trust and the Power of Youth. We just got on during a retreat in Loch Lomond, stayed friends after that and kept in touch. After I closed my business down I had said to myself that I was going to give myself a year out of the entrepreneurial lifestyle to get my breath back. I was only two months into a temporary job back in property for a rental portal, when Victoria approached me with a business idea and I immediately said YES, I’m in, let’s do it! I actually missed being an entrepreneur and needed to do something exciting. Where did the idea of Muscle Cake come from? Similarly to me, Victoria was quite interested in fitness, bodybuilding and was also looking for something new to do. Having a few really good friends who run successful subscription model businesses we were interested in that business format. So the idea came from a combination of the subscription model and fitness. We identified that there wasn’t a freshly baked good that is delivered conveniently to the fitness market at the moment. Essentially, Muscle Cake delivers protein rich cakes through your letterbox, once or twice a month. What we are trying to do is bridge the gap between the synthetic tasteless protein bar alternatives that are on the market to a nutritious freshly baked product and bring them together conveniently through your letterbox. That’s the key innovation we are bringing to the market. What products do you have? We are launching with two initial flavours: chocolate chip brownie and sticky toffee blondie. We have aimed to hit the consumers’ sweet spot in terms of really tasty, really fresh treats that are also really balanced, healthy and rich in protein. What kind of ingredients do you use? We use 100% natural and fresh ingredients. Our products are free of refined sugar, gluten free and contains no preservatives. All the sugars are natural – we draw them from prune puree. We also use cottage cheese and coconut oil for example. Do you also live by these sugar free, gluten free rules? Oh yes, but again it’s about balance. I’ll be the first one to say that I have treats and I reward myself with indulging. I work by a 90-10 rule. 90% of the time is clean, 10% is not clean. Are you thinking about making different treats and cakes in the future? Yes, our aim is to develop two recipes every two months and then put them in the product development lifecycle. We want to do things like vegan treats, endurance lines, donuts, cheesecakes, pancakes, rocky roads…lots of different stuff. The number one priority for us was to get the first product to market, see what the customers like and then open it up. We would like to be very interactive with our customers, where they can choose their own flavours for example. We have done a really good job in getting to market quickly as it took us three months to develop our first two products. Normally it takes 9 months, from getting the product conception through to market. SUCCESS SECRETS How did you manage to bring your product to the market in such short space of time? Two significant things helped us make it happen. A local University in Edinburgh has a food technology unit and they have food scientists that helped us create our product. We got a £5000 grand to help us through developing the first two recipes with them, which was great. On the back of that we managed to develop a relationship with Scotland’s largest bakery called McGhee’s. Their managing director took a phone call from me three months ago and he really liked what we were doing. Straight away he said that he wanted to be involved. A couple months later they have manufactured our products and have also invested in the business, giving us a first round of investment, so it’s pretty fantastic. They are a very traditional bakery, and are also very process-orientated – producing 3 million morning rolls a week for example. A year ago they invested in a gluten free business and that has been a success for them. I think they are looking to duplicate that in the fitness protein market, so it’s a perfect fit. They gave us access to 25 different desserts that they produce and are helping us develop and make them suitable to our consumers. So it’s working really well so far. In London the health food space is really big, what is it like in Scotland? It’s different. When it comes to technology Edinburgh is doing pretty well. However, Food Tech, as a term is non-existent in Scotland. It is difficult for a business like us to raise investment in Scotland. As investors don’t understand the food tech business they won’t invest in you. Investors believe that we are a traditional food business, and not a technology business. If you come down to London, people get Food Tech. In that sense there is a big difference. Are consumer’s lifestyles evolving towards a healthier lifestyle, like in the capital? Yes. Actually, interestingly, Glasgow is a city that is further ahead when it comes to healthy lifestyles. They have big fitness and bodybuilding community. In terms of alternative retail shops for example, they have a number of health food businesses in Glasgow. They don’t have that in Edinburgh. Who are your target customers? We had to make a strategic decision. Based on another entrepreneurial book I like called Disciplined Entrepreneurship, we have identified our early adopters as serious gym goers. That means anyone who takes part in exercise 3+ times a week and uses a healthy diet and nutrition to support that. They are quite serious and educated people, led and influenced by ambassadors and celebrities in the sports industry. It is actually a pretty huge market. After that point, the general gym goer is definitely a key target for us. We identified that customer as someone who is starting to engage in an activity and is interested in learning about the way nutrition can help his or her fitness objectives. Beyond that we are talking about the lifestyle market, the foodie market, and we are looking at general sports, such as endurance, running etc. We want the product to be enjoyed by as much people as possible because we think it bridges quite an important gap in the market. Are you mainly selling through your website? Yes. Something interesting about the subscription model is that our only real touch points with the customers are the website and when they open the box. As a result, we have to be very quirky and interactive, because consumers can’t go into a shop, feel the product or pick it up. How do you grow your subscribers list? There are so many ways we could go to market but for us the main things are probably affiliates. As an affiliate you can be a personal trainer, and the Personal Training network across the UK is quite huge. Additionally, a lot of active personal trainers are giving nutrition plans to their clients and we want to integrate Muscle Cake as that – a sort of networking referral as such. We also have quite a large gym network and will tap into them in a second stage, in July. We are already targeting a mixture of gyms as part of our pre-sales campaign. We will deliver 200 samples to gyms across the UK and we are running a competition, where 10 gyms will be selected to taste the product before it goes live. It will be a pop up day with Muscle Cake’s team ambassadors giving cakes to the members. Then we are going to do an interactive competition with the gyms that can taste the cake: they get an Instagram piece of equipment and they post a photo or video saying why we should be at their gym for our pre-launch. We are hopping this will create quite a lot of interest then in terms of launching to a 1500 customers. Are influencers and ambassadors important to you? Absolutely. It’s a key strategy for us. We have not been really able to act on it yet because our product hasn’t been ready. Now that it is, it opens up a lot of opportunity. We are confident that our product is great and that if someone tastes it they will want to be involved. CRITICAL CHALLENGES What has been your biggest challenge so far, with Muscle Cake and personally? The biggest challenge so far for Muscle Cake has been funding. It’s a lot more difficult to raise money in Scotland. Nevertheless, the fact that we have got a manufacturer that invested in the business gives us a lot of credibility when we raise our next round of funding in July. Personally, one of my main traits is that I put my personal life on the side. Business comes first. However, I did that last time with my previous business and my health suffered and I started to get into a bad cycle. For me it has just been trying to fight against that and make sure I identify it, I acknowledge it, and then I react and change it. Have you set up rules for yourself in order to achieve that? I have. Mondays, Wednesdays and Fridays I teach bootcamp and therefore on these days I finish earlier. On weekends I am taking Sunday off right now. However once we go into production I might have to work on Sunday again. It’s just the nature of the business because there is a lot of distribution. We need to be in the warehouse making sure that everything is going out at the right time. But if I have to work on Sundays I’ll just make sure I’ll try to find a balance. Have you had one person that has inspired you in your entrepreneurial journey? I always come back to one book: The E-Myth Revisited, by Michael Gerber. For me this is my entrepreneurial bible. The key lesson it teaches you is to work on your business, not for your business. It is the usual catch 22: people get stuck doing their day-to-day rubbish and they forget about the vision and what they are trying to work towards. Also, interestingly the story that the book is about is around a baker. It fits perfectly with what we are doing just now! Is maintaining your vision something that you are finding difficult? It is something I always struggle with. As co-founders we have identified an exit strategy so we know what we want to do in the next three to four years. Beyond that I have no idea. For us the lifecycle is going to be subscription, wholesale, retail. Do you have competitors in this area? We have lots of competitors in lots of different aspects of our business. Especially in London, there are many balanced, natural sweet treats companies. But none combine the subscription model with the freshly baked model. Our biggest differentiator is therefore the subscription model. I think a lot of people are scared of that because there are significant challenges with delivering a freshly baked product across the country through a letterbox. It is something we have been testing massively in terms of the box, how long the products last, its shelf life, how it reacts in the post, how we protect it in the post… It’s going well and we are getting there, which is hugely positive. I think commercially, your margins suffer especially because we are trying to deliver a natural quality product and a premium product, and those ingredients are expensive. There is a reason that big supplement companies don’t go anywhere near it: they can’t make their margins with a product that doesn’t have a 2 year shelf life, like a protein bar lasts. And then on the other side of the scale you have lots of fantastic companies that do freshly baked products but they are just scared to innovate and deliver them. Many bakeries would love to deliver their products to their customers, but they are a little bit averse to figuring out that problem. What is the key thing you did to make your margins work? I think working with Scotland’s leading bakery that has a vested interest in the business was essential. If we went to another manufacturer our price would sky rocket. Then, we have also tapped into their buying power. With things like packaging and posting we hopped on to the back of their orders. They use similar distribution companies so we just adapt it with the subscription model. Finding key partners is essential. Also, we had to be realistic with our ingredients. For certain products like coconut oil for example, we have to limit the amount we can use because it’s an expensive product. We had to make a few compromises whilst still maintaining our values as a business, of creating a fresh and natural product. REBEL WRAP UP What is your favourite treat? Obviously Muscle Cake! More specifically actually it’s cheesecake – peanut butter cheesecake. Which is why I have lined it up for product development. The thing with cheesecake is that is it tough to keep it fresh. But we can do cheesecake brownies. Half and half, to strengthen it, and you still get cheesecake! What advice would you give to someone who wants to start their own business? Having developed a product for the first time, and being quite a perfectionist, the key learning when it comes to product development is that you need to get your product almost ready and release it. Don’t wait to perfect it. We could have done another 6 months development but then we would loose our first mover advantage. So get your product almost right, then identify your market – whether there is an opportunity here and a market that wants this – and then just launch it! Once you have customers, then you can spend money on product development. So don’t get held up on perfection.