Birth of a Shell Company
By Rob Orchard, Co-founder and editorial director of the Slow Journalism Company
How YPO member Luke Holden went from investment banker to lobster roll magnate
For Luke Holden, the introduction to the world of business was not an auspicious one. “When I graduated from Georgetown University in 2007, I followed all my friends to Wall Street and became an M&A real estate analyst,” the 33-year-old says. The global financial crisis kicked in shortly afterward and decimated financial firms, especially those dealing with property, which was undergoing its biggest crash in living memory. “Six months after I started work, my entire division had halved in size,” says Holden. “It was pretty dramatic.”
Three years into his time on Wall Street, he was feeling nostalgic: “I grew up in a fishing family in Maine, USA,” says Holden. “My grandfather was a lobsterman, my father was a lobsterman turned lobster dealer, turned lobster processor. I built a boat and worked as a lobsterman myself until my sophomore year of college. Seafood was really in my DNA, it was where my passion and interests lay.” It was his parents who put him on a different career path, perhaps understandably pointing out that they were loath to pay for his Georgetown education if all he wanted to do was fish.
On that homesick Sunday afternoon, Holden went online looking for something that reminded him of home, the classic New England lobster roll. What he found was that the Big Apple was remarkably short on good lobster rolls — and this culinary upset triggered an idea. “I started putting together a quick business plan that addressed the question of why all of these great chefs and restaurants are screwing this up so badly, offering super expensive, poorly constructed, mayo-diluted lobster rolls,” he says.
Unable to come up with an answer, he put a business plan together which would bring fresh, high quality lobster rolls to New York, New York, USA. “I shared it with some friends and mentors and ultimately got to the point where it seemed worth a crack,” he says. “I found a business partner, Ben, on Craigslist of all places, we opened a lobster shack and he ran the day-to-day operations.” The first Luke’s Lobster opened its doors in the East Village of New York City in 2009.
For the first six months, until they opened a second shack, Holden was still holding down his investment banking job. “I was a night and weekend warrior at the restaurant, and I just loved it,” he says. “It was so invigorating, and I was young. I was 24, 25. I just didn’t need any sleep, ever.”
The pincer movement
The real unique selling proposition of Holden’s lobster operation is that he has oversight of every step of the process. He works directly with lobstermen, brings their catch into his own seafood company for preparation and ships it straight to his restaurants. “We have complete traceability back to the harbor that the individual lobster was fished from, and we choose only to source from resources that are deemed to be sustainably managed,” he says. The green credentials of Luke’s Lobsters have become a key part of the brand, and have helped it grow from two shacks in New York to 29 across the United States in eight years.
Holden is clear that his business is on a mission. “In many areas, the seafood industry is dysfunctional,” he says. “There are examples throughout the supply chain where it is completely disorganized and fragmented, and there’s a lot of waste, which can come from overhandling, improper handling and spoilage. What we’re aiming to do is work with fishermen who appreciate the resource that they’re making their livelihood from and then bringing that product directly to our guests in the most transparent, cleanest path – we want a pure straight line rather than a zigzag logistical network.”
As is often the case, however, doing things properly costs money. “Ultimately, we’re trying to influence consumers to pay a little bit more for that type of sustainably caught seafood, so that fishermen can live a sustainable lifestyle,” says Holden. “What we’re building toward is a brand that has the scope and scale to actually make a difference. We want to create a system that rewards everybody: our guests, our fishermen and ourselves. We’re all about stakeholder theory over shareholder theory. We like to deliver value to everybody who touches the brand.”
On a roll
Luke’s Lobsters is expected to grow by five to eight new shacks a year in the United States over the next three to five years. When they hit 50 shacks, says Holden, they’ll re-evaluate their goals. Meantime, they also have a booming franchise business in Japan. “In the last eight years, we’ve had thousands of international inquiries to franchise,” says Holden. “We get them daily. About four years ago, we were approached by a potential partner in Japan. We respect the Japanese culture’s affinity for high quality seafood, and the licensee was very proactive in coming out to meet us. They were so focused on execution and quality that it was a natural fit for us. They opened up a great location and have done some incredible business out there: now they’re up to six shacks in Japan.”
Holden’s clearly enjoying growing his business, but he also makes time to relax away from work. “I love being outdoors, and of all the outdoor activities, bar none, I love being out on the water,” he says. Five years ago, he reconnected with his high school sweetheart and for their first date he took her out to sea to haul in lobster pots together: They’re now married and expecting their first child. Everything this bright young entrepreneur has, he owes to lobster …