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Hey, it's Guy here. The team and I are taking a little summer break this week, and so we thought we'd replay one of our favorite advice line episodes from earlier this year.
One of the reasons I love the advice line so much is that I get to talk to early-stage entrepreneurs from all over the world representing so many industries from food to cosmetics, clothing to home goods, and together with some of your favorite past guests from how I built this, we answer questions about fundraising, marketing, manufacturing, distribution,
hiring, and lots more. And we've got some incredible guests lined up for the summer.
So stick around, take a listen, and let us know what you think of this new Thursday edition of the show.
You can reach us at hibtid.wondery.com or leave us a review on your podcast app, and please tell your friends, okay.
And now on to the show. What is something that you wish you knew at the beginning that you maybe learned the hard way or you just learned with experience?
There's a few things. So one of them is you selling to the retailer and getting out on the shelf is the easy part.
That's when the work starts.
And I think a lot of new founders or new startups, when they're starting to retail, they're celebrating the win.
They celebrate the... They're like, I'm on Trader Joe's shelves, but that's just the beginning.
Oh my gosh. And it really is.
And so it's everything you could possibly think of when it comes to new quality control issues that you need to put into place, trade spend, and figuring that whole animal out, which is massive.
It's a big part of any CPG brand or any brand it's selling in retail.
It's going to be a huge part of their spend.
And how do you manage that?
How do you get the most impact out of that?
And then on top of it, I think once you get even just the initial trade spend isn't where it ends, now you start getting chargebacks and fees and penalties.
And the bigger the retailer, the more that they're going to charge you.
And you need to get beyond your toes and on your A game.
A lot of people don't realize that retail stores, big retail stores are sort of like big billboards in Times Square.
You actually have to pay essentially to get shelf space.
And it's hard to get in there.
And then once you're in there, if you don't sell product, they toss you out.
So the pressure really starts to, that's when you really have to start selling.
Oh, absolutely. And these retailers, they make more money from slotting fees than they do from actually selling product.
So you've got it. It's an amazing business, by the way.
Every store is amazing because they have all these revenue streams coming in.
Yeah. And that's the thing.
You have to understand as the brand owner, you're putting your product in the store, you're taking all the risk there.
They're going to do everything they possibly can to eliminate the risk and make sure that they're getting paid upfront or along the way.
And it's coming from you.
All right, Pete, what do you say we take a call?
What do you think? Let's do it.
That's great. You ready?
All right, let's bring in our first caller, caller, you are on the line.
Hello, welcome. Hi, how are you?
Hello, who is this? This is, I'm Jennifer Ballin and I own Badass Bagels.
Welcome. We are 100% sourdough and we are the masters of fermentation.
Okay, what is your question for Pete, Jennifer?
My question is really, we're sort of at a crossroads now these days because we've established several brick and mortar locations.
We are making upwards of 8,000 sourdough bagels a week.
We participate in a dozen farmers markets.
We have a bunch of different products now, almost like a brand, an accidental brand that we call Badass.
We have 12 cream cheeses spreads.
They're all like farm to bagel.
We support the local farmers in our area.
And I'm just wondering, I mean, I have franchise companies calling me.
I have investors asking me, do I want money?
At this point, I'm really happy being a bagel slinger.
I'm always knee deep in dough.
It's like super fun. Everyone's happy.
Everybody loves the bagels.
But like, how do I know what direction to go in?
Do I want to put all my eggs in the consumer product goods basket location in Westchester County in Armon, New York, and one location right here in Norwalk, right near Westport where I live, about a mile from my house.
I often go to work at night in my pajamas to check on my sourdough starter.
I'm about a mile away. It's a lot of work, but now I've got an incredible staff and we crank out a lot of bagels.
So initially, just listening to your background here, you mentioned that this is what makes you very happy.
And so I guess my first question is, what is it about what you're doing right now that needs to change if you're already happy?
What is your vision for this that would make you feel really excited about bad ass bagels?
So I think I'm happy because I love my customers, but I do see the scaling potential and it is profitable in a great and positive way, shocking as that sounds because it's not easy to be profitable.
Bagels are very labor intensive.
I think I could see myself with many stores in many areas of the country.
We spend a lot of time shipping bagels.
Like, I spend at least three hours a day shipping boxes of bagels to Utah, to Colorado, to Los Angeles, to Florida.
You sell them, by the way, D2C.
People order on the website or are there retailers that sell them?
We are the only distributor really of our bagels.
So they order through me.
I did just pick up a local distributor a couple of weeks ago.
My bagels are freezable.
That's the other thing about sourdough.
They're like 70% water.
So they freeze beautifully.
So if I gave you a frozen bagel, you could pop it in your oven in a minute.
It would taste like I just baked it for you.
Wow. So Pete, the question I think that you asked is a really good question, which is, is Jennifer happy?
It seems like she's looking for some help and advice to figure out whether she should consider bringing on partners to grow this thing in a bigger way.
Let's just say she does.
What do you think about the idea of bringing on a partner to maybe try and franchise this thing?
I think that could work.
I think you've done this at two locations right now, so you were able to replicate it.
I guess my question is here, are you comfortable enough to teach somebody else?
Of choice. I mean, I think in the world of cream cheese, do I really want to take on Philadelphia?
I've got really big boxing gloves, but can I do that?
The world of dairy is like a whole another thing.
It seems to me, Jennifer, that your competitive advantage is your brand, right?
And also, they're sourdough bagels, which is somewhat of a differentiator, but it's your brand.
Badass bagels. You've got logo.
You've got a great look.
We have an episode of our show about Dave's hot chicken.
And that brings... Not.
You don't want to find somebody that's going to be...
And I've looked at various franchise models over the years, just as looking at side investments potentially.
I'm not the guy that you want to franchise to, right?
Because I've got my main business.
I've got my day job. If you're going to franchise, it should be that person's day job.
I think that's probably critical to the success of any franchise.
Right. And the Chick-fil-A model, where they allow them to own one unit, I think that's a really...
That's probably a better model, more chance for success.
Right. That's true. The other thing I would add is that...
And Pete, maybe you can weigh in a little bit on this because you've got such a strong brand.
And if you were to look at...
I don't know if you can use the website for Badass Bagels?
I do. Yep. I'd like to offer some helpful feedback on things that you might adjust or you might kind of think about and lean into.
Yeah. So I love the story, obviously.
I think, you know, and going back to what I was talking about, the differentiation piece, like, you know, it's a sourdough angle.
And I love the background too of your story about transitioning from a Dreamline and a little bit, make the ordering process a little bit easier.
That's from a D2C perspective.
I know some of your questions were going CPG and going into retail.
What could I answer for you on that?
Like, what are you thinking?
Well, it's interesting because I didn't know anything about this whole industry.
And now I am working with a couple of co-packers.
I'm about to start co-packing.
So I have three dairy farms, Single Origin, Grass-fed Milk, Cheese.
It's my language. Great.
Yeah. I mean, I didn't even know it existed like that in my reach.
And what happens is it's sort of like, sure, I can make this product, but can I mainstream it enough?
I mean, the flavors we make preserve lemon and fried caper, smoky black garlic, hot honey pistachio, shallot and French vinegar, hibiscus rhubarb.
I mean, which one do you want?
Man, you were on fire. Yeah.
I'm on all of them, but I think it's up to you to really determine like, what's, you know, where are you going to focus?
And then once you get that, then you just, then you kind of back into what's the strategy to get there.
Right. Jennifer, my takeaway here is if you go the Rout of Franchising, interview all of your suitors, study them or research them, and really, really know and try to understand who the best potential partner is.
Same with distribution.
If you can find somebody to help you with distribution, I mean, you should go back and listen to our story about Kava because that could be really helpful.
They also distribute their dips and spreads and that was a whole business that started before they franchised.
So my takeaway is really think deeply and carefully about who that partner is.
Jennifer Ballin, badass bagels.
Good luck. Thanks so much.
Thanks a dozen. I hope to see you both soon.
Take care. Take care. All right.
Okay. This is exciting.
We may have, we may be at the cusp of a bagel empire, a new bagel empire, the next Einstein.
I like it. I don't want to say Einstein.
I don't think they do sourdough.
That's a different, but anyway, it's an airport bagel.
Okay. We're going to take a quick break, but when we come back, we're going to take another call and answer some more questions.
Stay with us. I'm Guy Rhoads and you're listening to the Advice Line on How I Built This Lab.
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Hey, welcome back to the advice line here on How I Built This Lab.
I'm Guy Razz. And today we're talking about when to scale up and how to build the right partnerships.
And one of the things I remember when you were on the show was that you were contacted by Trader Joe's pretty early on in Chomp's life cycle.
And initially you said no, right?
Yeah. It was just, we can't support that type of growth.
And it was more so around the specific ask.
We wanted us to do a private label product line for them, which would have been a huge undertaking for a small team like ours.
It was just me and Rashid working full time.
And it was hard enough to manage one brand.
And with a private label brand, you're essentially, it's adding another brand to the umbrella.
I mean, a pretty bold decision at the time, because it would have been a lot of cash coming in.
It would have been a nice revenue stream.
But at the same time, you wouldn't be able to focus on building the Chomp's brand, which is unless they love it or they're crazy or a little bit of bone.
All right, Pete, what's your take?
Yeah, Brandy, nice to meet you.
Yeah, love hearing the story here.
It looks like there's a lot of passion behind this.
So I guess a couple of questions for you.
I see here a lot of the packaging.
And I love actually the way that you're breaking things up by functionality.
So like get up and go, and then you have your wellness tea, sip and relax.
So from a branding perspective, how do you plan to lead with these things in retail?
Because when someone looks at the packaging on a shelf, they need to know immediately, what is this going to do for me and why should I buy this?
Can you talk a little bit about that?
What did you do when you created this packaging to thinking about retail?
Yes, I used the farmers market as our experimentation with that.
All of our jars in our stores and at our farmers markets are in clear containers because people shop with their eyes.
So if you go on a lot of retail shelves, you'll see stainless steel tins.
So we still offer that with a wrap.
Sourcing that. Also, there's something about the story of your grandmother and just the warmth of a hot cup of tea that I feel needs to be told somehow on the bag in a small way.
I don't know if you're doing that, but I feel like that story about your grandma having different tea blends, growing up in that environment in New Orleans is so powerful.
So much so that part of me is like, I would even consider having blends with, I don't know, some names, maybe your grandma's name, or just names that evoke your direct connection because you've got this double connection.
You've got your grandma and growing up and then going to the tea farms and sourcing the tea yourself.
I mean, that is an incredible story and I want to see more of that up front.
I totally agree. And we've got a brand video, which is very prominently displayed on the website.
And we've got, it's Rashid and I, my co-founder and I at the farmers pastures with the animals, with the cows that they're raising.
And we're out there shaking hands with people.
We're out there eating dinner with them.
And people love to see that.
They want to know where their food comes from.
And they also appreciate, I think, that the relationship that you have with those suppliers as well, just for them to see that firsthand is amazing content and it makes them kind of fall in love with the brand a little more.
And then to Guy's point, that should be all over your website.
You've got to tell that story because that's something that no one else could replicate.
No one else could take that from you.
Your grandmother's story.
Grandma, New Orleans, I mean, are you kidding me?
Totally ownable, totally differentiated.
And it's just a crowded market, obviously, right?
So if you're going into big box, like what is it that's going to differentiate you guys?
It's creating that brand and that brand story around it and a real loyal following.
So yeah. I appreciate that.
We do it on social all the time.
But because it's quick, easy snippets, but to have it on our website would be a great place for it to live.
And on your bags, put it on your bags.
And on the bags. I tell that just a little paragraph.
It doesn't have to be a novel.
Yeah, because she lived to be 96 and she was just an amazing woman who was a great force in my life.
So to pay homage to her would, yeah, I totally should.
I mean, maybe there's even like a stylized photo of her that you would put on it.
I mean, something, anything like that.
It's such a cool story. But Brandy, my takeaway here is consider starting with Whole Foods and just scaling from there.
Because I think, I mean, you have so much experience.
Obviously, you're making a great premium product.
Now it's just a matter of, okay, let me take the next step.
And then it's like one sort of pretty big sign.
I think it's, I think it's Jake.
Is this Jake? Is this Jake?
How are you? Welcome, Jake.
Introduce yourself. Tell us the name of your business and where are you from?
Yeah. My name is Jake Meyer.
I own Annie Alaska Inc. I am from Alaska originally.
And we have a commercial salmon business out in Bristol Bay, out in the bush.
And what's your question for Pete?
Yeah, my big question is I'm trying to take our salmon that we catch and go the direct to consumer route.
If I should, I'm kind of exploring all the different options.
We're in the baby stages.
I just purchased this operation I used to work for.
But the price for salmon is pretty volatile out in Alaska.
And so what I'm nervous about is putting all our life savings into this company.
And if we get a bad price, like we're probably going to lose a lot of the life we've tried to build.
So that's why I'm trying to go direct to consumer, get a little bit better margins and make the business a little more stable rather than just hope that there's a good price.
So how did you grow up fishing?
How did you come into starting this business?
Yeah, so I was born and raised in a small little town, Kenai, Alaska.
It's funny because I'm not a big fisherman.
Fishing to me is more of a job.
A lot of people die to go fish and for some reason go through a line out and wait for a fish.
But to me, it's a job. It's not my hobby of choice.
I used to work for a good family friend.
I was a deckhand and kind of got promoted to a captain.
And I'm making this small percentage on a decent operation where the owners didn't really do anything.
It was very hands off. And the last year in a month, I made $40,000, but I was just the captain and the owners really, I saw the potential of, why don't I go buy this thing?
And I would love to be in their position because I was only making a small percentage.
And you can make enough for the entire year easily in one season.
You can, if it's a good season, you can crush it.
You can make hundreds of thousands of dollars, right?
Yeah. The last year I was out there, the operation in six, it's about a six week season, but it pulled close to $350,000 net.
That's after expenses.
So that basically sets you up to, so you don't have to really do, you have to work for the rest of the year if it's a good season.
Right. And then on a bad season like this last year, it only made like maybe $40,000 or $50,000.
And so that's where the volatility of the prices really scares me.
So I'm excited for the happy years, but I'm also, I'm trying to prep for some storms and DTC.
Yeah. And Jake, correct me if I'm wrong, it seems like you wanted to bring all the salmon to Utah and then distribute it at a site there.
But I wonder, is there a world where you would consider working with a third party fulfillment group to ship salmon and then to maybe expand the potential customer base from just Northern, just Utah, because I keep thinking about ButcherBox that we had on the show, but it sounds like you want, you're going to be fishing the...
You're going to have success.
So you've got to show that and get people comfortable with that.
A few other things I would think about is how are you going to be packaging this?
Is it going to be in fillets?
I think I read somewhere that you keep the bones in.
Is that normal or is that...
Or these usually de-bone because I actually don't buy a lot of salmon quite honestly, so I just want to understand.
No, there's bones. You got to get pliers and pull them out, Pete.
You got to eat your salmon, Pete.
What we really need, Pete, is we need to make a salmon chomped.
That would sell. So that led me to another question for you is, if selling the salmon fillets, if that is kind of a difficult and uphill battle, is there some sort of value add product, whether it's a canned salmon or is it salmon jerky or some other format that you can get into to go into grocery and help build a brand?
Is that something to think about?
To get in front of people now, one of the things that worked for us the best is driving trial and driving trial means sampling.
What can I do to get my product into people's mouths because that's what sells more chomps, right?
I think that's one of the things that...
Sorry, I'm reading a little bit about you.
I see that you were a missionary for the church of Jesus Christ of Latter-day Saints.
It would seem to me that the natural place to start is in your community, right?
It is with the people you know, emails.
Ask them to email people.
I'm sure you've done versions of this, but you've got to do it again.
And again, I mean, you know this as a missionary.
You got to knock on 100 doors before one person's going to talk to you, right?
So it's about persistence, about going out there, talking about your product.
And because it's your first year, you've got to start with the people you know because it's next year that you're working on.
It's the repeat orders and the other people who are like, wow, where can I get that amazing salmon?
Right? Does that make sense?
Yes, 100%. And to be honest, I also, I did after I finished...
Restaurants will say, look, I'm going to bring the best salmon in the United States here to Utah and I will sell it to you for $12 a pound or something like that.
But just to see, but in exchange, I want you on your menu to say, you know, this comes from any Alaska from Bristol Bay, something like that.
Yeah, I've made a few phone calls there and of course, probably not enough.
I just don't know, should I go that route?
Should I keep knocking those doors or which way to go?
Knocking on doors is going to be your best bet.
Like hands down. I mean, if I could scale that with what I do, I would do that all day long because I'm going to get the sale, man, every time.
Now, to be honest with you, someone actually knocked on my door yesterday selling meat and fish and my wife's like, took his card and she's going to call him and she's going to order stuff.
So it works and it worked at our house.
So a few things here. So you have a really cool story.
I was looking on the website, just reading about the family, the whole family angle, where you started, the fact that you like knocked on doors to go raise enough money to start this business is also really cool.
You're enjoying your product and just have them talking to the camera saying, this is amazing, you should order it.
Pete, what you're talking about is exactly what you should be focused on, Jake, which is setting yourself up for year two.
Year one, it's going to be all about knocking on doors, talking to people, getting people, restaurants, whoever you can to order.
But year two, it's getting those people who ordered to do exactly what Pete is saying, to write reviews, to post them on the website, have photos of what you're doing, recipes.
I mean, you can take one of your salmon, you know, salmon.
Shaking hands with people and telling them what you're working on and they're going to want to support you.
Jake, Meyer, Annie, Alaska, good luck.
We'll be following you.
Thanks so much. I'll be knocking doors.
I really want to eat some grovelocks right now.
I can't, you're like a paleo guy.
I can't believe you don't eat salmon.
I don't, you know, I don't eat any fish if I don't catch it and there's no salmon down here.
Oh, okay. That's no salmon, Florida.
It's too warm. Yeah. Pete, thank you so much.
Thank you for having me.
And once again, if you want to be on the show, give us a call 1-800-433-1298 or send us a voice memo to hibt.id.wondery.com.
This episode was produced by J.C.
Howard with music composed by Ramteen Ereblewe.
It was edited by John Isabella.
Our audio engineer was Gillie Moon.
Our production staff also includes Alex Chung, Carla Estevez, Casey Herman, Chris Messini, Elaine Coates, Katherine Seifer, Kerry Thompson, Malia Agadelo, Neva Grant, and Sam Paulson.
I'm Guy Raaz and you've been listening to the advice line right here on How I Built This Lab.
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