Wednesday, July 23, 2 p.m. ET
Voices on Leadership: Charles Nelson
Wednesday, July 23, 2008; 2:00 PM
Charles Nelson, founder of Sprinkles Cupcakes, was online Wednesday, July 23 at 2 p.m. ET to provide business leadership advice.
About Nelson: Formerly an Oklahoma investment banker, Charles Nelson founded Sprinkles Cupcakes with his wife Candace in 2005. In less than three years, the couple has expanded from one to three stores, and began selling their mixes nationwide. An appearance on the "Oprah" show gave them national exposure.
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The transcript follows.
Washington, D.C.: Your website says you plan on opening a store in DC which I highly anticipated, but now that there are 2 cupcakeries, plus other bakeries doing cupcakes, will you still open here?
Charles Nelson: Yes, definitely! We have so many local customers from DC and we are very excited to open there. We are looking right now in the upper Georgetown area. Our hope is to be open 2009. Thank you for your excitement about Sprinkles.
New Orleans, La.: I have found that good leaders seek out information and opinions from all levels of staff rather than sitting in their offices reading reports. Would you agree with this observation?
Charles Nelson: The best ideas always come from employees on the line. It has been my experience that you must seek out answers from the people who do the job every day in order to be successful.
Seattle, Wash.: Hello Charles-
I am a VP in Marketing for a large bank (for 17 years). I have a household product idea I am extremely anxious to pursue.
I have two questions: 1. What steps did you take to protect your business idea? 2. When your business began to gain national awareness, what steps needed to be taken to protect the idea and manage the growth of the business (and sustain)?
Charles Nelson:1. I hired an intellectual property lawyer before we opened to protect our trademarks and other protectable secrets. This has been an invaluable decision. 2. Managing growth is difficult. It took us our first year to get on our feet and even have a plan for growth. Three years in now, I try to hire and invest in people 6 months - 1 year ahead of when I know I will need them. It takes this long to train employees to the point where they will be productive.
Washington, D.C.: Any advice for an amatuer baker would like to open a cupcake business? What issues did you face not being a professional pastry chef?
Charles Nelson: The most important things about opening your own bakery is (1) to have a sound financial footing because it always costs more than you expect, (2) to have a great partner you can trust to share ideas with, and (3) to have the commitment and time required - we work 7 days a week to keep Sprinkles going. Candace, my wife, went to a professional pastry program in San Francisco. This has been a valuable asset to the growth and development of our business.
Jonesboro, Ark.: Does your company plan on expanding their online services? For example, regular cupcake orders and custom cupcake orders online with overnight shipping?
Charles Nelson: Our online order system now takes orders for pick-up and delivery in our local markets as well as orders for nationwide retail shipping. We do not have plans for overnight shipping of our cupcakes since we want people to enjoy our cupcakes on the day they are baked. Additionally, there is the difficulty of packaging and shipping our cupcakes in a way that allows them to arrive in good condition. Our web address for ordering is Sprinkles Orderform.
State University, Ark.: How do you go about developing new flavors? What do you believe has helped you set yourself apart from the growing number of cupcake shops across the country?
Charles Nelson: When it comes to flavor development, there are only so many flavors of cupcakes that make sense. The key for us has been to use the most premium ingredients and make the best tasting cupcake we can. There are many bakeries whose focus is not on creating the best tasting product, but on joining the cupcake "fad."
Dallas, Tex.: How did you get the product on Oprah?
Charles Nelson: Personally, we did not have a way to contact the Oprah Winfrey Show to get Sprinkles on. Luckily, Oprah had tasted the cupcakes because they had been sent to her by Barbra Streisand. Her producer called us asking if we could bring our cupcakes to Chicago the following day to appear on the show.
Washington, D.C.: To me, learning from failures is just as valuable as learning from sucess -- with that said -- did you try building any other businesses before you started Sprinkles? What challenges in your early days of Sprinkles were most important in overcoming in order to achieve success.
Charles Nelson: My wife had a custom cake business in San Francisco from which we learned a lot. We had never started a business with a storefront before Sprinkles. Having a storefront presents operational challenges that do not exist in other businesses. Being open to the public every day of the week presents many issues (staffing, production, inability to take a break).
Williston, Vt.: How much money do you need to start your own cupcake busniess? How many cupcakes do you need to sell daily to be profitable?
Charles Nelson: Depending on location, you should probably be prepared to spend at least $250,000. In major metropolitan cities, you should be prepared for that figure to double. Profitably has everything to do with your cost structure (how many employees you have, rent, ingredient cost, etc.). You need to sell at least a few hundred a day just to break even.
Mentors: Do you and Candace have mentors? If so, how did you choose them and how does the relationship(s) work? Do you recommend that people find mentors in their fields?
Charles Nelson: Neither one of us has a mentor. We did seek out friends in the bakery industry and spent many hours asking them questions about production, suppliers, and the challenges they face. To enter an industry knowing no one who can answer your questions would be difficult.
Hyattsville, Md.: Hello,
I have dreamed of opening a bakery and have been held back by fear. What advice would you give an embarking entrepreneur?
Charles Nelson: Fear is a part of entrepreneurship. When we opened, we were the first cupcakes-only bakery in America and it certainly was a fearful time for us - we put our life savings on the line to open Sprinkles. With great risk comes great reward. I do not think it is possible to take the fear out of entrepreneurship.
Publicity: Can you talk at all about the power of publicity? Getting a few celebrities to try your cupcakes has led to way more publicity than if you took out ads on TV or wherever. Do you have specific outreach plans for celebs or film productions or whatnot?
Charles Nelson: Certainly, publicity has played a role in our success. From the start, we had no plans for celebrity publicity, but it fortunately came on its own. While celebrity endorsements have certainly been helpful, we also feel having a top-quality product has been the key driver of our success.
Rockville, Md.: Thanks very much for your chat, and congratulations on your success. I love the cupcake mixes, which are always a big hit when I bake them for family gatherings. My question pertains to the future of Sprinkles, specifically, how will your company's vision grow and change with the times? You have a wonderful product, and I realize that Sprinkles goes beyond the fact that cupcakes are a fad that may be replaced in the relatively near term. However, with competitors emerging and some of the interest in cupcakes inevitably dropping off as time goes on, how do you plan to cope, especially since Sprinkles is basically synonymous with cupcakes?
Charles Nelson: One of the keys to any successful business is to adapt to a rapidly changing environment. Our competition is not just cupcake shops, but other dessert options as well. Any business that can survive longterm will have to make many strategic decisions along the way. While we do not know exactly what is ahead of us, we do have strategies to address market changes in the future.
Charles Nelson: Thank you so much for your questions. We look forward to opening in Washington, D.C. in 2009.
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