Sophie Kallinis LaMontagne knew better than to invest in perishable commodities. After graduating from Princeton, she’d spent four years learning the ropes at global venture capital firm, Highland Capital Partners. She loved her job, but loved her own entrepreneurial passion more. Watching startups scale from the other side of the table solidified her decision to go all in as an entrepreneur. To the dismay of her Greek immigrant parents, she could not abandon the dream of opening the bakery she and her younger sister, Katherine Kallinis Berman, had talked about since they were children.
Since opening its doors on Valentine’s Day in 2008, Georgetown Cupcake has evolved into a multi-location destination “cupcakery” where people bring family and friends and linger to watch and smell the premium cupcakes being made fresh every day. As the U.S. plunged into recession, people embraced this affordable luxury brand. At Georgetown Cupcake, the inseparable co-founders keep finding ways to infuse their brand experience with their childhood connection to baking and playing at their grandmother’s house. They connect with their customers and have learned to adapt and innovate from day one.
Sophie and Katherine joined Startup Grind Washington DC last month. Watch their full interview here.
Staying in Their Lane
Georgetown Cupcake’s success is a story about focusing on one thing and doing it really, really well. The business continues to grow with seven locations in DC, Bethesda, Boston, Los Angeles, and Atlanta and 400 employees who sell and ship an average of 25,000 cupcakes per day. It is a lesson in ignoring what competitors are doing, being true to your product and authentic self, making smart decisions about innovation, connecting with and listening to your customers, and putting in the hard work it takes for “luck” to find you.
Related: The Science Behind Making Your Own Luck
The Sweet Early Years
For the sisters, good food and the experience that surrounds it was grounded in the tradition, love, and care they experienced following their grandmother around the kitchen each day as she cooked and baked from scratch. Their traditional, entrepreneurial Greek immigrant parents and grandparents lived a block apart in Hamilton, Ontario, Canada, and had dropped the girls off with their grandmother on their way to work. “She was our everything,” says Sophie.
Sophie loved her job, but when she turned 30 in 2007, she declared she didn’t want to spend the rest of her life wondering “what if?” By 2008 as the U.S. recession hit, she convinced her 29-year-old sister to quit a terrific job at Gucci and co-found the bakery they’d talked about for so long.
“The business didn’t go anywhere until Katherine quit her job and we both had skin in the game,” says Sophie. “She found our first location on Potomac Street in Georgetown while she was out jogging.” Though Sophie’s husband and Katherine’s future husband supported their decisions and helped prep and paint their bare bones bakery, the sisters were not surprised to hear the rest of their family’s collective gasp.
“Starting a business was not encouraged in our family,” said Sophie, who says her bachelor’s degree in molecular biology helps her explain the science of baking to her team, particularly the importance of the order of the ingredients and the properties they enhance. “Our parents insisted we go to college, work for large companies, or go into medicine or law. Our father said ‘people in our country are trying to get out of the bakery and go into big business and science. You’re doing the opposite!'”
Sophie knew that if she and her sister let the doubters get to them, they could lose sight of their dream. They agreed the time was right, they had no kids yet, and if they failed they would be ok starting over at new jobs. “I think all entrepreneurs have this spark inside,” she explains. “You know it’s in you, and you want to do it. We kept talking about it. It’s hard to explain to people who don’t have it. We had the entrepreneurial bug early on.”
A Complex, Special Relationship
Katherine smiled, nodded, and chimed in patiently as her older sister kicked off their story at Startup Grind DC. She picked up the narrative to describe one of their first businesses when they were ages 3 1/2 and 5. They stood at the end of their driveway trying to sell rocks, holding their kittens to attract attention. “Our mother was our only customer.” By ages 6 and 7, the sisters make believe played everything together -- from running their own bakery, restaurant, or clothing store to even their own advertising agency.
Katherine says: “Sophie was the creative director of the agency and I was basically her secretary. She would ask me to file blank papers. I would pretend to answer the phone and say, ‘Oh, we got a call and this company wants us to do an ad for pizza gum.’ Then, Sophie would draw this big advertisement. It was like Mad Men.”
The complex, special relationship the sisters share has proven to be an asset in their grown-up business. They can fight and ten minutes later go get lunch. “We can speak our minds freely,” says Sophie. “If we don’t like an idea, we say it like it is. There’s no board room politics. That level of frank, honest conversation in business is an edge. We say to each other what we can’t say to anyone else and it helps our business.”
Day One: The Business Plan Goes Out the Window
When the sisters signed their first lease, the clock was ticking and the rent was due. They couldn’t get a bank loan so they bootstrapped with their savings, stretched their dollars, and maxed out their credit cards. The original plan was to take custom cake orders, use their grandmother’s recipes, and sell cupcakes in a variety of flavors to the occasional walk in.
“There’s no way to know how a business is going to go until you actually start,” says Sophie.
Katherine recalls that first day: “We passed our health inspection and were ready to open right before Valentine’s Day. We didn’t even have a sign. I have no idea how Sophie scrounged up the money, but she went out and got an $80 sign from FedEx down the street. That’s all we did. I remember baking in the kitchen at 4:30 in the morning and wondering if anybody was going to show up. That morning we opened and we had a line down the block. We sold around 800 cupcakes in three hours and made more. The point of sale company rep came to see if everything was working and we had him working the front counters, too... The next day, a few people even came out in their pajamas to wait in line because they had heard we sold out that first day and the line has not stopped since.”
“Our business plan went out the window on the first day we opened for business,” says Sophie. "We did a year’s worth of growth in the first few months. It was crazy. People came in and wanted their cupcakes then and there and they wanted to leave with them. We weren’t set up to do that. It would have been easy for us to say ‘I’m sorry, that’s not the way we do business,’ but we adapt to change quickly.”
Up All Night to Get Lucky
Here are a few more things nobody saw coming:
A glowing New York Times review. Several blocks away from their cupcakery lived a regular customer whose friend, Frank Bruni, wrote for the New York Times and was her guest when he visited Washington, DC. Six months after they opened, the respected reporter ended up writing a mouthwatering NYT “Dining Out” blogpost about being greeted by his friend with a pink box of a dozen assorted cupcakes and the magic of tasting one after the other. Their reputation spread.
The Washington Post selected Georgetown Cupcake’s Chocolate Ganache cupcake as the “Best Cupcake in Washington” as part of their “Cupcake Wars” feature.
Mommy joined the team. Their well-meaning and, at times, inadvertently hilarious mom -- with whom they spoke two or three times a day while in college -- started helping out in the shop. “She’s done so many crazy things you could write a book about it,” says Katherine, recalling the time she had locked herself in the refrigerator for about a half hour because she didn’t know you push a knob for emergency release, or whipped up a Halloween treat that never made the shelves -- chocolate garlic.
They were interviewed by bloggers, Georgetown University students, people posting random videos on U-Tube. The sisters said “sure” to anyone who walked in and asked.
A producer wandered into their cupcakery and recognized the potential in the behind-the-scenes drama, chaos, and creativity that became a hit series on TLC called “DC Cupcakes.” It opened the doors to more opportunities, such as becoming bestselling authors of The Cupcake Diaries and Sweet Celebrations, and catapulted them into a national brand.
Catapulting to Superstardom
Katherine recalls the day the producer had seen the line at their Potomac Street location and thought the shop was giving away free stuff. She says: “This guy got in line and saw me packing the cupcakes, Sophie was covered in flour and sugar, and I think he saw my mother come out and yell at me in front of everyone.” He asked some questions and came back the next week, and asked if he could film there for the weekend. “He came with just a camera guy,” says Katherine.
“It was a crazy weekend. We were under pressure making cupcakes and a wedding cake for one of the editors of Style Magazine in New York, plus, I think it was homecoming weekend at Georgetown University so we had a line down the street and it was pure chaos in the store. Sophie and I weren’t from the TV world so we didn’t know what a production company did. He filmed, cut the footage, and submitted it to TLC and before we knew it they picked up the first season of “DC Cupcakes” as part of their reality food show series and started filming in our bakery.”
Katherine’s favorite episode shows Sophie making her 10-foot wedding cake. Sophie loved baking with the Pentagon chefs to donate 10,000 cupcakes to the U.S. troops overseas, which they have done for the past five years. They even made a tank of cupcakes that the Joint Chiefs of Staff “fired” in honor of the Military’s anniversary.
It turns out, people like things that are real, not perfect. Viewers tuned in to see the business owners’ creativity, honest relationship, anxieties and mess ups play out. Sophie says “That first summer, we had a lot of people making road trips across the country who came to see us. It made us a national brand. People came in from different countries. We never thought it would connect with so many people. We got a number of letters, especially from young girls who said “I love your show; here’s my business plan.”
Tips and Great Decisions
Adapt to change over time, but stay true to your core business philosophy. Georgetown Cupcake bakes fresh every day and creates a very personal experience and customer connection. It helps when you’re creating custom cakes for major life events.
Engage your customers. The Georgetown Cupcake locations distribute 100 free secret new flavor cupcakes each day to solicit customer feedback. The sisters connect and share personally with their followers over social media.
Learn from your customers. Early on the sisters noticed customers would come in with boxes so they could ship cupcakes to their friends. Organizing a better shipping method to ensure the treats arrived intact helped launch the company’s successful gift shipping component.
Collect business data to make decisions. “Try to build your systems or platforms to be flexible enough to collect the data you think will help you over the long term,” says Sophie. Year round sales data tells the team how much of each flavor cupcake they sold on specific days and times to know what to bake the following year. They used shipping destination data to decide where to build their brick and mortar businesses.
This coming Valentines Day on the 8th anniversary of their opening, the sisters launch a 24/7 live stream on TLC.com/CupcakeCam. From live cameras placed throughout their flagship bakery in Georgetown, viewers can watch everything live -- from the mixer to the oven to the frosting and cooling racks to the packing of the cupcakes in boxes -- 24 hours a day, 7 days a week.
Sophie adds: “We’re always looking for ways to connect with customers and share what we do. Now, you can watch everything happening at our bakery live. You never know what’s going to happen!”
Final Thoughts
What advice do the sisters wish they had gotten when they were starting out?
“Don’t give up,” says Katherine. “There are so many times over the course of starting and growing a business you’re going to want to throw in the towel and say it’s too much, I can’t do it. It’s great to have a support system.”
“Don’t be afraid to take really big swings,” says Sophie. “I think when you’re starting out as an entrepreneur you have that mentality but it gets a little harder when you expand. But, you have to do it because that’s ultimately how you grow your company. It’s not for the faint of heart. It’s very scary, it’s hard, and it gets harder. After we got started, I thought when is the day going to come when it gets easy and everything goes smoothly and that day doesn’t exist when you’re an entrepreneur. It doesn’t get easier, it actually gets harder when you grow and that’s a good thing. Learn to embrace and enjoy the uncertainty of it because that’s part of it and you’ve got to learn to live with it and love it because that’s going to be your life.”
And, don’t forget about family. Life has come full circle for the sisters, with their mom now the “granny nanny” for Katherine’s three-year-old daughter. They love to bake together.