Nick Kokonas - Know What You Are Selling

Three-Entity Business Structure

Aligning long-term interests across investors, operators, and management

Creating three separate legal entities (investor LLC, operating company, management company) to structure a single business ensures interest alignment across all stakeholders. This prevents short-term extraction behavior, protects creative operations from quarterly pressure, and enables sustainable reinvestment in quality. Originally designed for high-end restaurants but applies to any passion-business hybrid.

Messaging Discipline Framework

Controlling narrative through systematic word choice

Identify words that alienate your target audience and systematically avoid them in all communications. Simultaneously, identify 2-3 universal positive attributes and use them in every interview, presentation, and customer interaction. This creates message consistency while maximizing appeal. Originally developed for fine dining but applies to any business seeking mass appeal in a niche perceived as exclusive or intimidating.

Revenue Stream Identification Framework

Enumerate, categorize, expose, and sell all revenue sources

Most businesses have 5-10 distinct revenue streams but only actively sell 1-2 of them. This framework forces enumeration of every revenue source (products, services, experiences, private events, merchandise), categorization by customer type, exposure to customers at the point of decision, and deliberate selling mechanisms for each. Originated in restaurants but applies to any business with multiple revenue streams.

When competitors lie about availability (telling customers 8pm when they have 9pm), truthful businesses must match the lie or lose customers. This creates a race-to-the-bottom lying cascade where all participants defect. Breaking the cascade requires changing the rules (ticketing with deposits) to make lying costly.

In Practice: Kokonas explaining why restaurants lie about reservation times

Demonstrated by Leg-nk-001

Demand varies by time, but most businesses price uniformly. Saturday 8pm restaurant slots are worth 3x Tuesday 9pm slots to customers, but restaurants charge the same. Dynamic pricing (proven in sports, airlines, hotels) captures this elasticity but requires overcoming cultural resistance.

In Practice: Kokonas explaining Tuesday Is Not Saturday framework and industry resistance to dynamic pricing

Demonstrated by Leg-nk-001

Suppliers incur waste costs when buyers delay payment (net 120). Prepaying eliminates supplier waste, enabling 50%+ discounts because suppliers recover carrying costs and avoid spoilage. The buyer gains lower COGS; the supplier gains cash flow and reduced waste. Both win.

In Practice: Kokonas explaining how prepaying for beef eliminated dry-aging waste and halved costs

Demonstrated by Leg-nk-001

Like a casino, winning requires only slight edge (51% vs 49%) applied over many iterations. Ownership combined with high decision velocity compounds small advantages into sustained wealth creation. The house doesn't need to win every hand, just a slight majority over thousands of hands.

In Practice: Kokonas explaining his ownership philosophy rooted in trading floor experience

Demonstrated by Leg-nk-001

Decisions without measurable outcomes create illusion of progress. Logo design in a notebook feels productive but produces nothing testable. Favor completion over perfection: get to an outcome that can be measured, even if imperfect, over endless refinement of non-shipped work.

In Practice: Kokonas warning against preparation theater that never ships

Demonstrated by Leg-nk-001

Innovation begins with asking the right question, not brainstorming solutions. Alinea asked 'how do you make an adult feel like a kid again?' which generated the helium balloon and table-plate desserts. Starting with a well-framed question produces more creative solutions than starting with constraints or existing solutions.

In Practice: Kokonas explaining how questioning generated innovative dessert experiences

Demonstrated by Leg-nk-001

Business model innovation often requires reframing the category. Restaurants resisted ticketing because 'restaurants aren't entertainment,' but eating out IS entertainment (not biological necessity). Reframing the category unlocks business models already proven in the reframed category.

In Practice: Kokonas explaining why reframing restaurants as entertainment justified ticketing

Demonstrated by Leg-nk-001

When you're uncertain but the situation demands action, project absolute certainty to enable team execution. The discipline is not dishonesty but recognition that paralyzed teams debate forever. Conviction (real or projected) breaks paralysis. Being wrong with conviction beats being right too late.

In Practice: Kokonas explaining how he enforced COVID protocols despite team skepticism

Demonstrated by Leg-nk-001

When existential crisis demands immediate compliance, threaten termination instead of explaining. Explanation invites debate; termination threat forces action. This is crisis leadership, not sustainable management. Use sparingly: only when delay means death and you're confident you're right.

In Practice: Kokonas explaining how he forced COVID protocol compliance by threatening termination

Demonstrated by Leg-nk-001

If you cannot describe your business on one page from the customer's perspective, you don't understand the business. The constraint forces clarity: what experience are you creating for whom? Founders who cannot pass this test have product clarity but not customer clarity, which dooms execution.

In Practice: Kokonas explaining his philosophy degree influence: clarity through concise writing

Demonstrated by Leg-nk-001

When one party in a transaction hides unit economics, they extract a 'tax' from the ignorant party. Publishers hide printing costs ($2) from authors receiving 10% of $50 retail, extracting 80% margin while claiming to provide value. Discovering true COGS enables vertical integration or renegotiation.

In Practice: Kokonas explaining publishing economics and why he self-publishes

Demonstrated by Leg-nk-001

If an event has 10% chance of occurring but 100% chance of wiping you out, treat it as 100% certain for planning purposes. Over-preparation for tail risks is rational because the downside of under-preparation (death) vastly exceeds the cost of preparation. Better to be wrong and prepared than right and dead.

In Practice: Kokonas explaining COVID preparation 2.5 weeks before shutdowns

Demonstrated by Leg-nk-001

Technical or exclusive language automatically eliminates 90% of potential audience. Identifying and systematically avoiding alienating words while replacing with universally positive attributes maximizes appeal without sacrificing quality. The discipline is the key, not the specific words.

In Practice: Kokonas explaining Alinea's messaging discipline: avoid avant-garde and science, use fun and delicious

Demonstrated by Leg-nk-001

Running artistic endeavors as profitable businesses (not vanity projects) enables reinvestment in art quality, creating a virtuous cycle. Profitability funds better art, better art attracts more customers, more customers fund more profitability. Breaking this cycle by prioritizing either art or commerce exclusively causes failure.

In Practice: Kokonas explaining Alinea's business-first structure enabling artistic investment

Demonstrated by Leg-nk-001

Most businesses sell 5-10 things but only actively promote 1-2. Enumerating and deliberately exposing all revenue streams increases revenue per customer 15-30% with no additional COGS. The insight: people can't buy what you don't sell, even if it exists.

In Practice: Kokonas explaining how restaurants have 7-10 revenue streams but only sell 1-2

Demonstrated by Leg-nk-001

Businesses cannot optimize for unknown customers. Collecting customer identifiers (email, not phone) enables remarketing, lookalike targeting, and personalization. Platforms that intermediate the customer relationship (OpenTable, publishers) extract value by keeping customers as strangers to the business.

In Practice: Kokonas explaining why restaurants must capture customer email addresses

Demonstrated by Leg-nk-001

When crisis converts supplemental revenue into primary revenue, existing fee structures become intolerable. DoorDash's 30% fee was acceptable when it was 10% of revenue; unacceptable when it became 100%. Competitors who undercut during crisis (Tock's 3%) capture permanently switched customers even after crisis ends.

In Practice: Kokonas explaining how COVID made DoorDash's 30% fee intolerable and enabled Tock's 3% to win customers

Demonstrated by Leg-nk-001

Five minutes per day spent engaging individual customers (emailing, commenting, calling) compounds into 700+ personal touches per year. These touches create disproportionate loyalty and word-of-mouth because customers perceive the business as caring about them individually, not as revenue units.

In Practice: Kokonas explaining his 10-year practice of emailing 2 customers daily

Demonstrated by Leg-nk-001

Being first with a new business model or technology creates a temporary time machine advantage. For restaurants, ticketing gave Kokonas visibility into demand weeks/months ahead, enabling superior capital and operations planning. The advantage compounds until competitors catch up.

In Practice: Kokonas comparing restaurant ticketing advantage to his 5-second time machine as a derivatives trader

Demonstrated by Leg-nk-001

Picasso 1920s documentary as self-promotion vs. Alinea media strategy

Picasso, the greatest living artist of the 1920s, agreed to be filmed painting to promote himself.

Kokonas explaining how Picasso documentary inspired Alinea media strategy

Sports stadium seat pricing (50-yard line vs. nosebleeds) vs. restaurant time-based pricing

Sports venues price seats by location and fans accept this. Restaurants have identical dynamics but historically refused to price differently.

Kokonas using sports stadium seat pricing to justify dynamic restaurant pricing

Baseball games, concerts, theater ticketing vs. restaurant reservations

Every other form of entertainment uses ticketing with advance payment and variable pricing, yet restaurants resisted this model for decades.

Kokonas explaining why restaurant ticketing faced industry resistance

Chef and Co-founder of Alinea

Designer at Crucial Detail

Former Head of Google Chicago, Tock Co-founder

Partner at Origin Ventures

Media and Publishing Director, Former Pixar Employee

dry aging

Controlled decomposition of meat in cold storage to concentrate flavor and tenderize texture

“After 35 days, there's only a handful of places that sell dry-aged beef for more than 35 days.”

Spanish painter and sculptor, most influential artist of 20th century

COGS (Cost of Goods Sold)

Direct costs attributable to production of goods sold

GMV (Gross Merchandise Value)

Total value of merchandise sold through a platform over a time period