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My dad always kind of gave me a hard time saying you know, you're the only son that doesn't have a master's degree.
I never saw a point to get an MBA.
And so this to me was like a living case study.
Like, let's do this.
Let's see if I can get it off the ground.
That business Rashid Ali wanted to use as a living case study?
Chomps, the wildly popular meat sticks that live in my and countless other travelers' snack bags.
It's safe to say the company has paid off more than an MBA for Rashid at this point.
He'll sell about a billion dollars of Chomps just this year.
But it hasn't always been that easy.
It was a bad situation, but we could always see on the other side.
Pete and I do our best work when stress is high, when our back's against the wall.
We both kind of have a bit of a chip on our shoulder where if you want to see us work really hard, tell us something's not possible.
You've got to have incredible talent at every position.
There are fires burning when you're going home.
Can you believe it?
Such an idiot.
And then you go back to, this is totally going to be amazing.
There are so many easy ways.
I have no idea what to do.
Sorry, we made a mistake.
But you have to time it right.
Oops.
Working out of a three-bedroom apartment.
Stuff that just seems absolutely nut balls.
Ten years later, we're like, well, that's just how you do it.
We haven't made just how you do it.
This is Masters of Scale.
I'm Jeff Berman, your host.
This week on the show, the co-founders of Chomps, Rashida Lee and Pete Maldonado.
They'll share lessons from failed startups that shaped Chomps, how a phone call from Trader Joe's changed everything, and advice for co-founders about making a partnership work even in tough times.
Rashid, Pete, welcome to Masters of Scale.
Thanks for having us.
We were all playing cards.
And he had mentioned that he had started a company to compete with Omaha Steaks, right?
To offer grass-fed, grass-finished, like a healthier version.
And it was just interesting, because I always felt that people would eat healthier if it was convenient, right.
And what he was doing was effectively offering a convenient option.
And then the next day I texted him and said, hey, would you ever... want some help.
I talked about my background in ops and finance and we met at that diner in the South Loop and my wife was an attorney at the time.
So she like drafted a partnership agreement and that's ultimately how it started.
Guys went from poker game to hanging a diner to let's do this.
The speed, I would put it on Pete.
He runs pretty quickly.
I'm a little bit more thoughtful, but I think he kind of pulled me forward and it was awesome the way it worked out.
Pete, this was not your first foray into consumer products.
Is that right?
No, I had a frozen food company in my early 20s.
It's called Frozen Fitness.
Entire meals.
And so we were selling them out of glass top ice cream freezers.
And then the goal from there was to start selling online.
And that's kind of when it all fell apart.
What happened?
Why did it fall apart?
Well, for one, kind of going too big too fast.
But then also raising money from the wrong person.
I think was probably one of the bigger reasons, mistakes that we made which kind of influenced the way that we built Chomps going forward.
We wanted to make sure we could do this all on our own grow a self-sufficient business that wasn't relying on outside capital.
What does it mean to have raised money from the wrong person?
What happened there?
He really had unrealistic expectations, let's put it that way.
He thought he was going to cut a check and get a quick return. which is not how it works.
I think anybody knows that.
Definitely not if you're in venture.
Right.
He was supposed to give about $250,000 to buy into the company.
Gave me about 80, 60 of that went into frozen meals.
So it was an inventory.
And then the rest of it was to be for marketing, building a website and all that.
I spent the money.
I was ready to go.
You know, I need to get another check now because it's really to get to a launch.
And, um, he cut me off.
So he said, no, I need that money back.
Because this was actually when the real estate market was melting down.
Late 2000s.
Late 2000s.
Yeah, it was like 2008, 2009.
And so we were right in the epicenter of it all.
Naples, Florida got rocked.
And so he decided he wanted his money back.
And I'm like, that's not possible.
It's an inventory.
I ended up actually just handing the company over to him and his attorney.
And I decided I was moving to Chicago with my wife.
And I was going to start over.
And for a lot of people, that would be a turnoff to pursue an entrepreneurial life.
Why did you decide to start another company?
I can never imagine myself having a real job and a boss and all that.
I've never had a real job in my life, a corporate job.
So where did the idea for Chomps come from?
I was a personal trainer throughout college.
I'd spent a lot of time making these elaborate meal plans and grocery lists and trying to get them to stick with it, and just never worked.
Back then, I think the options for good quality protein and easy meals was just few and far between.
They didn't really exist at the time.
So it's kind of like influenced all of my CPG ideas going forward.
And Chomps was actually one of them.
I grew up eating more Slim Jims than I'd ever like to admit nowadays.
But I liked meat snacks in general.
But I liked the sticks better because I could chew them and my jaw wouldn't kill me after.
And I feel like I would eat a bag of jerky and get a headache.
So that's kind of where the idea came from.
Like, why is there not a better free version?
Any meat product is going to have a USDA legend printed right on it.
And so we went to every C store, anywhere we could find meat sticks, bought all of them and found every single USDA legend we could find, looked up every one of those plants and called them.
And then we've stumbled on Kevin Western from Western Smokehouse, which is our first co-packer.
But now we have, was it four plants now with them?
And we're doing the big JV in Mexico Missouri, on a pretty massive plant, a 300000 square foot facility.
Rashid, where was the business when you all sat at the diner and started talking about this?
So at that point, it was really just... like a website and it was the frozen steak business, right?
So when we were doing the steaks, the co-packer we worked with also made a refrigerated multi-pack snack stick pack right.
So effectively we were selling steak and ground trim, but there's still excess trim.
And so he was like, well, why don't I make it into a snack sticks?
We wanted to build a profitable business and we didn't want to have to raise money.
And we also wanted to present a more convenient option to our consumers.
We did all the legwork and we found this co-backer in Greentop that was able to work with us on a sugar-free, grass-fed version of what we wanted to bring to the market.
I want to just dial in on this diner conversation because your background Rashid, is more corporate consulting.
This is a startup.
This is a person you don't know particularly well yet.
What was it that made you say, I want to jump into this with you and do this?
It's interesting.
So he and I both come from immigrant families, right?
We were both born here, but my dad was always an entrepreneur and he just always had his hands in these things.
So like I saw that and I think kind of in the back of my mind, there was always this desire.
And while I was consulting the firm I was at.
It was an eat what you kill shop where, like I, had a good salary but my bonus was tied directly to billables and if I sold work.
And so like it had a very entrepreneurial spirit.
So it was there.
But the honest reason that like kind of got me excited is I went to a public school.
I got a whatever degree, but like my brother's amazing private schools.
They all had master's degrees or doctorates.
And my dad always kind of gave me a hard time saying you know, you're the only son that doesn't have a master's degree.
He's like, I just say you all have master's because it's easier, like almost downplaying it.
So for me, you know, I studied business in college.
I never saw a point to get an MBA.
And so this to me was like a living case study.
Like, let's do this.
Let's see if I can get it off the ground.
And it's not like I had extra time.
My full-time role was quite demanding.
I traveled 100% of the time.
You didn't give up your day job when No, no, no.
I mean, we did both for quite some time, me longer than Pete, but it truly was a side hustle.
We purposely designed the company to be D to C, to be e-commerce, so we could support it on night and weekends.
That was the original premise.
But you know, the company took a life of its own, grew a lot faster than what we could have expected.
And at some point we had to lean in and pivot.
How did you build a plan that let you scale efficiently and make sure that you could do this without overexposing yourself and without needing to take on outside capital?
When we built the model, like we were able to find little working capital games that allowed us to do it.
I mean, if we were in early days, to 10x the business?
No, we would have definitely required more cash to be able to fund the inventory.
But we did it more gradual growth, like doubled or tripled year over year, and it allowed us to build it.
What I'm hearing is that you were willing to throttle the growth potential, to control your own destiny, to not be in a position where you had to take on the outside capital and expose yourself.
And I think it was actually smart, because in early days people get so excited and they just want to go all out.
They have a huge opportunity to go national with a partner, but it's like you haven't tested the product.
You haven't pressured your infrastructure to see if you can scale.
In retrospect, it was the exact right thing to do to grow gradually as we were trying to figure out who we actually are.
But that's also why we're so successful in retail is all of that foundation that we laid in the D2C world building that community building, a loyal following, brick by brick, one person at a time, one email list at a time.
That's why, when we came out of the gate at Trader Joe's, our velocities were insane, and they still are insane.
You referenced Trader Joe's, which was your first retail partner.
When did that deal happen?
How far into the company were you and how did that change the company for you guys?
Yeah.
So I was walking my dog early 2016.
I get a phone call on my cell phone from some random number and it's a very high up person at Trader Joe's and introduced herself and said we want to put chomps in the store.
This is a cold call from one of the largest grocery chains in America.
Yeah, just saying we have my favorite store like in the world.
And i was like yeah no, this is totally i'm not getting punked here and i thought it was you know a prank for sure.
So first initial questions were like could you support this type of volume and do you have the funding to do this?
And i'm just like, of course we do and we got this.
And the other thing was like, you know, they wanted to discuss private label, but for us it was.
It was me and rashid um.
Neither of us were full time at the time.
Like I was still doing some real estate deals to pay bills and he was flying around the world.
And so it was like, you could barely support what we're doing.
One single brand.
Like if you do a private label, you're essentially running a second brand.
So I said, you know, we just don't have the bandwidth to do that.
So I said, no, we could do it as a chomps branded item.
Back and forth, a few phone calls like that.
And then she decided she wanted to put us in and give us a shot.
They were specifically looking for Whole30 approved items at the time.
They put us in, I think it was RX Bar.
There were a couple other ones.
Their buyers and their category managers were so in tune of what's trending, before the trend actually happens.
We always thought we had the ability to grow into something big, but they saw it even before we did, I think.
How big was that initial order?
1.1 million sticks, I believe.
It was big.
And they don't pay in advance for that, right?
No, they don't.
They have great terms, though.
They pay like net three half the time.
They're good to work with in that way.
But yeah, we needed the upfront capital to produce.
Now we know Trader Joe's is really the unicorn retailer where the way they operate is quite unique.
Did we say more about that?
90% plus of the items are products private label.
So they're Trader Joe's branded products.
So for you to actually get a branded product within Trader Joe's, it's extremely rare.
They say, give us the product for your best price and we deal with the rest.
They won't even let you.
You can't go in there in the store and go merchandise.
It's all on them.
And so that for us, it was great because one, we didn't have a team.
It was the two of us.
And two, we had no idea what the hell we were doing.
We just were able to focus on creating great product, a quality product and deliver it to them.
And then they took it from there.
That doesn't happen at any other retailer that we work with.
So that was incredibly blessed and fortunate to have that as our very first retailer to work with.
From a revenue perspective, how big were you when the Trader Joe's deal came in?
Yeah, so I think we had finished the prior year at about 400.
And I think after we got the Trader Joe's order, we did about 4 million that year.
Wow.
Yeah.
Incredibly backloaded, by the way.
But the bulk of that was between August 8th and the end of the year.
So I mean you're talking about 10x growth in a few-month period here and it's still just the two of you guys.
How do you manage that?
When the purchase orders came in, I remember I'm at home.
My family was in town.
We're playing spades.
And Trader Joe's would fax the POs, and so we would get a text or email of the fax.
And so it was like one, two, three, I think there were seven for each of their DCs.
And I'm doing math in my head, and I'm like...
I told my family, I was like, I got to go pull up my Excel.
And I called Pete.
I'm like, dude, this is like 1.1 million sticks.
And he's like, he's so excited.
For me, I'm like, well, this is not what we discussed.
Like I had to do the math to say like, what would it cost us to even fund this order?
And it was just over a million.
This was like a Thursday, Friday.
Over the weekend, we had to figure out how are we going to raise a million to fund this order?
Where does it come from?
We did friends and family.
We did debt only.
And we were able to find the right folks that would trust.
I mean, we were transparent, too, because we were like, look, this is backed by a purchase order.
But at the end of the day, I'm like, we've all cooked steaks.
We've all screwed something up.
And we're going to do this at significant scale.
But we can...
We can tell you that we're going to do everything we can to make sure that we can operate as well as possible and avoid any issues.
But like to be fully transparent, like there's risk here.
So in exchange for the risk, we gave a really healthy interest rate.
My brother was one of the individuals that came in and he made me do a personal guarantee.
I mean, understandably.
And no equity.
This is all debt.
Why not do equity, right?
You're taking on risk, bringing that debt on.
You're giving a personal guarantee to a family member.
Why not sell equity?
Doing what we were doing was already stressful enough.
And if we can find a way to not take on equity, why do we need to?
Again, I always thought this as like, it was me and Pete were doing this.
We were going to figure this out.
And you want to hold off as long as possible, right?
Because then you just get a better valuation down the road.
Still ahead.
How Chumps totally overhauled its brand strategy when it realized something surprising about its customers.
Real leaders don't back down when the stakes are high.
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Expanding your business in the US can feel like a maze.
Every state has its own payroll benefits and compliance rules, which can pull your focus away from growth.
That's why founders use Deal.
Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team.
The National Association of PEOs says businesses can grow twice as fast if they use one.
So if you're scaling, make it simple with Deal.
Go to D-E-E-L dot com slash M-O-S and get up to three months free.
Welcome back to Masters of Scale.
You can find this conversation and more on our YouTube channel.
I would love to be in the store like demoing and stuff like what we want to do, but they don't let you do any of that stuff.
So it's literally just like you send it in and pray like that's literally what happened.
If it were me, I'd be at Trader Joe's, though, walking the aisles.
Oh, look at this product.
I mean, you already. you know checking it out i was staying in touch with the buyer it was like two days in and she's like these numbers are really strong i was like okay but that's you guys are on these end caps where they do new item end caps and she's like this happens all the time and you'll see like a big pop and then it bottoms off i'm like okay and then like five days later i keep i keep touching base i'm like is it still going still going so five days later she's like the numbers are growing It should have been dying down by now.
So you're coming off these end caps.
Actually, we're going to run out of inventory really soon.
Wow.
That first PO they gave to us.
They gave us 17 weeks of lead time to deliver it, because we needed it.
We were bringing in beef from Tasmania and all this stuff.
It was long lead time.
So anyway, she goes, I need to get POs in now because you're going to go out of stock.
This was supposed to last us five months and it's going to be gone in five weeks.
Wow.
This is from a sophisticated retailer.
They've got a lot of data.
They should have a pretty good idea of how a product's going to perform.
I mean, that's an incredible five months to five weeks.
You're flying off shelves.
Flying.
So let's put it in perspective.
So like a good retailer would now like a health food store, like a Whole Foods or whoever might do like 15 20, 30 units per store per week.
We came out of the gates doing 360 units per store per week of this product.
That's massive.
Like one stick at a time, not selling multi-packs, it's single sticks.
And so that never slowed down and it still hasn't slowed down.
Actually, we continue selling that at that rate.
That was a single SKU doing those types of numbers unheard of.
And so great relationship starter for us.
You know, we're still working with them today.
So is this a moment where you say, we really ought to quit our day jobs and do this full time?
We ought to be pitching other retailers.
We should be building teams out.
Like, what does this do for you guys leading the company?
Part of in the back of our minds, we're saying, OK, we just launched in this retailer, right?
We have to figure out, like, does it have staying power?
There are so many people in our ears saying it's Trader Joe's.
They're going to private label you, right?
There's not longevity.
But we believe strongly that our performance will lead to staying power.
Pete, thankfully went full-time to be able to like really man this.
I still was like, let's wait and see this through.
And so he went full-time in 2016.
I didn't go full-time until 2018.
And in 2018 is when we opened an office and we hired our first employee.
But like that two years when some brands may have said okay, we have a window to grow into retail, we were going to be the best Creator Joe's partner possible.
What did that mean?
That meant that was our only retailer.
We focused on e-commerce.
We focused on scaling.
We focused on, like branding and packaging, and who our consumer was at the end of this two-year stretch where Pete, you're now full-time with the business.
You are relentlessly focused on quality and on super-serving, Trader Joe's being the best vendor they could possibly ever dream of having.
What flips?
What gets to the point where you go.
We need to start hiring and going into other retailers, and What's the inflection there?
At the end of the day, concentration risk is real, right?
And we knew we needed to continue to grow.
I mean there was still growth opportunities at Trader Joe's.
But I think we started to learn who our consumer was and we knew right that next channel we needed to go after was the natural channel.
So in the natural channel there's two major distributors and you have to be in those distributors to be able to service like the Whole Foods or Sprouts or Fresh Market.
And so that kind of started our natural journey.
And again, Pete and I still just kind of had to figure it out because again, Trader Joe's is clean.
Single truckloads in.
And so it's almost a blessing and a curse because we thought retail was going to be that easy.
We didn't even understand what trade spend meant.
And so we had a crash course and we were able to figure it out pretty quickly.
What did you learn about the customer?
Well, I think we realized was most of our customers were female.
So if you think about the legacy brands within Jerky, it's very masculine, right?
It's serving a male demographic.
I mean, Randy Macho Man Savage, right?
I mean, one of the great spokespeople for the category.
Yeah.
And like, it wasn't necessarily about our consumer.
We call it the healthy achiever.
It's someone who's health conscious, right?
And so no one was speaking to that consumer.
And so if you look at the original Chomps branding, the Chomps logo used to be like a cow brand.
It kind of mimicked what all the other brands were.
But we realized no no, we got to lean into this.
We didn't want a feminine product right, we wanted a product that was fun, approachable and so like.
We worked with an amazing creative director at the time and she helped kind of bring this brand to life and there's a little nuance in there, like even if you open up a chomp stick, we have what's called a chompspiration, where it's almost like a fortune cookie motivational comment.
So it's like little things within the packaging that throughout 2018, we worked on The ideation.
I think late 18 19 is when it kind of came to shelf.
Retailers are notoriously stingy with data.
Where were you getting this insight that your customer was disproportionately female?
That was the first time that we had the money to actually do real panel data.
So we did like attitude and usage studies.
So it was pretty eye-opening for us.
We realized that we weren't even speaking to our core customer with the messaging and with the, you know, branding and all these things.
And so we realized, man, we need to reposition everything about us.
And that really resonated.
It was a major unlock for us.
You raised money eventually.
What led you to raise the capital?
So we actually had, it was, I guess you would call them like advisors or whatever they'd be.
Like there were small investors.
We took money from them, not because we needed money.
We were supposed to be like a formality and, you know, skin in the game here.
So that was early.
It was 2017 type thing.
How much did you raise from those folks?
A total of Less than 700000 over the course of, like the two-year period that we were working with them.
So relative to the scale that we're talking about here, it's not an incredible amount of money.
We were already doing $10 and $20 million.
So we worked with them from, you know, $17 and $18 or something like that.
But yeah, it was more for skin in the game.
So we, you know, even to this day, that's all the primary capitals ever taken.
Even aside from we did a private equity raise at the end of 2021.
Yeah. that was a little bit different.
We were, and we still didn't need the money.
It was more, the company needed the money.
We wanted people that have been there and done that.
We realized this thing was getting very big and we realized, you know, there was so many opportunities, but the risks were getting greater and greater.
And we just came through COVID and that was a scary one for us.
We learned a lot, but we also realized that we weren't bulletproof.
And so we wanted to just have a good financial partners to back us.
As you are white knuckling your way through this COVID moment, Was there a moment where you pulled the team together and had the hard conversation about here's where the business is, here's what we're facing.
Necessity is the mother of invention, and we are in a moment of need, and then insights came out of that.
I would say Pete and I are, maybe we err on the side of complete transparency.
Like, there was no hiding anything.
There wasn't, like, Pete and I behind closed doors being like, We are screwed.
Like, no, we we believe strongly want to get everybody's perspective.
Let's think about this collectively and figure out what the right path forward is.
And we're all in this together.
Right.
We need to figure it out.
So, like, no, we were completely transparent.
You know, it was a bad situation, but. we could always see on the other side of it.
You always had to have that optimism that we were going to get through it.
It's really shitty and it's challenging, but also there's some joy in that too.
I feel like Pete and I do our best work when stress is high, when our back's against the wall.
We both kind of have a bit of a chip on our shoulder where if you want to see us work really hard, tell us something's not possible.
Pete, having been burned once before raising capital, when you guys decided to raise the money, what did you do to get comfortable that you were taking money from the right partner getting the business, someone you could really trust and be aligned with going forward?
It was more of us interviewing them than it was them interviewing us.
I mean, we put them, I think, through the wringer.
But what actually turned out?
We really liked our current partner, Stride Consumer Partners, because of the way that they were kind of returning that hyper diligence.
And so we realized they're not going to go make a bad decision in partnering with us.
We're doing the same.
And for us it was like you know, the check part of it, like the actual money was, that was kind of table stakes, to be like negotiating with us.
Again, the company was profitable already, was doing great, didn't need the money.
And this was more of like, you know, just for us and the families.
But yeah, we asked a lot of questions.
We wanted to meet everybody.
And so it was a lot of like in-person, on-site.
The biggest thing you could do with a private equity partner is meeting the operating partners that are going to be the ones that are supposed to be helping drive value and, And so that was one of the things that we loved.
We still love their operating partners.
They've added so much value since we've partnered with them.
The other thing is, I guess, anyone going through the process talking to the team, spending time with the team but also talking to their investments, right?
Talking to the portfolio companies that they worked with and not just the ones that they give you as a reference.
Right, networking with the other ones too right, and i think one of like the eye-opening discussions is we were able to find one of their investments that didn't go so well and we talked to the founder and ceo who effectively got pushed out, and you know the individual that we work with, the lead partner.
He mentioned his name.
He's like if jm calls me for a deal, i would invest in him.
He's like the challenge i had was with there was another individual, But also he's like I understood what they were doing.
I get it.
It was a bad situation, but I got it.
But like the character, the ability to think through things like and so like, that came from an unsolicited reference from someone who shouldn't have necessarily been so positive.
So it was those little things that got us a really good comfort level where it's like yeah, I know these guys would be a good partner.
Building on what he was saying.
There you sit with these private equity guys and every single one of them goes through their list of wins.
It's win after win after win.
And you're just kind of like, this is boring, man.
Like, I want to hear about, you know, when things went bad, like what happened.
That was how they approached it, actually.
You could just tell those guys are good operators because they come in.
It's never, you know, a pretty thing.
I mean, it's a startup world.
And this is like tough.
And so they started talking about some of the things where they went wrong.
They're like, okay, this was happening at this company.
Mike had to go quit his day job, basically go jumping as an interim CEO at that place.
And he rolls his sleeves up, got it over the hump.
And like, that's what you want to hear.
Yeah.
Because anybody could be a good partner when things are going great.
I want to know what's going to happen when things go bad.
I've been through it where I had a bad partner.
I could not work.
You cannot make it.
You cannot be successful in that environment.
Where is the business today?
How big are you guys?
And what's next for the company?
Yeah, so we'll do just about a billion in retail sales this year, and that's nearly doubling from last year.
There's a lot of white space.
There's a lot of opportunity.
If you think about you know the jerky category.
Nearly half of it is in what they say C-store, like convenience, right?
Small format, travel, gas station.
And so that's all white space for us.
The other thing is household penetration.
There's just a lot of households that are just left, and the white space is enormous.
I love it.
Like we kind of laugh about it now because we love it when we meet somebody and we're like, yeah, you know, we're co-founders of Chomps and they're just like, well, I never heard of it.
And I'm like, awesome.
Yeah, that's like humbling.
I like it.
It's like there's still a ton of work to do because that happens more often than you'd imagine.
Has the recent focus on protein and diet been a boon for the business as well as that, driven growth over the last year especially?
Oh, yeah.
Tons of momentum.
It's interesting.
Last year, we commissioned a study because we wanted to understand overall snacking.
And what we understood is like snacking as a whole is one hundred and twenty six billion dollar category.
Within that in the US, in the US, in the US, within that, protein snacking is growing three times faster than any other subcategory.
And so we're like okay, so there is this big momentum and it is being driven by.
The GLP-1s is obviously building that momentum, because we call it like conscious calories.
Like you have to be more cautious about the calories you're consuming, because if you're not consuming the right thing, you're going to lose lean mass versus the fat.
The folks that are on it and the doctors that are prescribing it.
They're letting folks know like you need to eat the right thing.
So CHOMPS has really benefited from that.
Yeah.
There is an entrepreneur who is listening to or watching this conversation right now who's in their first few months of launching a CPG business.
I'm sure that they've gotten a lot from this conversation.
What's one piece of advice each of you has for that entrepreneur as they go off into their day and try to build to the scale that you guys have reached?
One, just get started.
That's the hardest part.
Nothing's going to be perfect when you try to get your little baby out there before you're bringing it to market.
I remember I learned that the hard way.
You can always iterate.
You can always fix it and improve over time.
That's the first thing.
Second thing is obsess over the details, period.
You should know your business inside and out.
And if you don't, you're not going to succeed.
And since P gave two, I'll give two as well.
I'll say...
Listen to everybody, but know that like what they accomplish doesn't necessarily mean that you know what you're going to do is replicate it.
I think in early days, you know, we would a brand that we may respect a lot.
They would, you know, use this agency or this partner do this.
And we would think, well, if we use it, we could replicate their success.
But no, every case is different.
And so you wanna get a lot of feedback, but then you have to look at it through your brand's lens.
And I think that's what we're doing now is we think of everything through the chomp's lens, but we'll figure out what everybody's doing and be aware not only of competition but other categories.
So it's important to look at through your brand's lens.
And then the other piece is you have to understand your unit economics.
You have to understand that.
And there's this fallacy in that economies of scale will lead to an improved gross margin, and it just doesn't happen.
Like, at the end of the day, our whole thing was like wait as long as you can before you have to take outside money, right?
Because you want to maximize your enterprise value.
So like really understanding your unit economics will allow you to build the business the right way.
And in some cases, you are going to need outside capital.
Some companies require it.
You know, we were fortunate to find a way to defer it as long as possible.
But yeah, you got to understand those economics.
We've been in conversation with a lot of co-founders on Masters of Scale.
I'm really struck by the energy between you two, the dynamic that you have.
What's one reason this works so well?
It's interesting because as you spend time with Pete and I, we're very different.
Like we approach the world and business in two different ways.
But I think from a partnership, it's actually the best thing.
Because when I'm thinking about something one way, he's kind of thinking out a little bit different.
So it allows us to really see the whole picture.
It creates a lot of tension because you think about things differently and we're also super competitive.
But I think at the end of the day, we share the same core values.
We share the same passion for Chomps winning, very similar family dynamics.
And so, like, all those things are the same, which are important.
But then when we look at the world, it's a little bit differently.
So I think that was like a really great testament to the partnership we developed.
I mean we have a lot of leadership coaches that we kind of joke around like, saying it's like marriage counseling that we've used over the years to help root out some of this period of discussions.
But I think that's probably a testament to some of our success.
When we try to instill this in the team too, it's like you operate with no ego, right?
So we're always trying to learn.
We're always trying to have that self-awareness as well.
We have mutual respect for each other, but we also understand what we're good at and what we're not.
And we've realized that we compliment each other.
And it wasn't always like that.
Like he said, we had to do the marriage counseling first.
But once we figured that out and we figured out how to work together, it was just kind of supercharged.
That's amazing.
Rashid, Pete, thank you for being on Masters of Scout.
Thank you for having us.
This was awesome.
Rashid's and Pete's story is an exceptional example of the power of focus.
Instead of chasing every trend or spreading themselves too thin, they started off slow and steady, with a dedication to quality ingredients and serving the customer.
That led to an incredibly strong foundation on which to build.
In our protein-obsessed moment.
I have no doubt that Rashid and Pete will continue to hyperscale chomps, and I really do hope they will make a breakfast stick.
Free idea, guys.
Just saying.
I'm Jeff Berman.
Thank you for listening.
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