Justin’s Nut Butter: Justin Gold. He Was Waiting Tables, Then...He Reinvented Peanut Butter. | How I Built This with Guy Raz

You can imagine the confusion when you are studying to become a lawyer and then I move to Colorado and I'm waiting tables and I'm like yeah, I'm getting closer to going back to school.

I'm in a college town now and everyone's – so then I come home and I'm like hey, I've got something I want to show you guys.

I'm really excited about it.

And they're like, oh, you know, is this a college application?

Are you going back to school?

And I'm like, and I take the lid off the shoebox and I'm like, I want to make peanut butter.

Welcome to How I Built This a show about innovators entrepreneurs, idealists and the stories behind the movements they built.

I'm Guy Raz and on the show today how Justin Gold used his home food processor to make a better-tasting peanut butter and turned Justin's nut butter into a category-defining brand.

There's a strange thing that happens when you build something successful and you'll hear this from a lot of founders.

The chase, it never really ends.

You get your first customer, and then you want 100.

You hit a million in sales, then you go for 10 million.

The more you grow, the more complicated it gets, and the bar just keeps kind of moving.

All of this was definitely true for Justin Gold.

Justin started with a simple idea.

He wanted to make a peanut butter that was better than the stuff sitting on the supermarket shelves.

And at first, he just wanted to sell a few jars around Boulder, Colorado, where he lived.

At the time he was waiting tables and working at the local REI and he thought hey, this could bring in a few more bucks.

But every time he sold a jar of peanut butter, every time a customer reacted, it opened the door to a bigger ambition.

So eventually he pitched his local Whole Foods, and then more Whole Foods, and then grocery chains across the country.

And along the way, Justin kept experimenting.

What started with a food processor in his kitchen became a business built around flavored nut butters flavors like maple and honey and cinnamon.

But there was a problem.

A typical jar of peanut butter in someone's pantry lasts a long time, especially if you're not making PBJ for kids on a daily basis.

So after some early success, sales of Justin's nut butters started to stagnate.

And that was a problem because, well, what do you do when you hit a wall that seems immovable?

Well, in Justin's case, he climbed over that wall with an idea he got while working at REI and going for long bike rides.

An innovation that would help propel Justin's nut butters into a huge nationally known product, a brand that would come to be worth hundreds of millions of dollars.

Justin Gold grew up in western Pennsylvania.

His dad was a dentist, and his mom's family owned a natural food store in the area.

In college, Justin studied to become a lawyer, but instead of going to law school, he decided to go in the opposite direction.

You know, I was vegetarian.

I had long hair.

I really felt like I was a hippie.

And so the goal at that point was to move as far away as I could.

And I went to the Bay Area and I lived in Point Reyes, Florida.

And I lived there for about a year.

And then I met like, you know, some real like living up the land hippies.

And I realized I'm actually quite square.

And maybe I'm not a hippie, but you know, what am I?

Where are my people?

Where do I belong?

And so, after a year of waiting tables and working in NorCal, I decided that I wanted to give the mountains a try.

But I wanted to go to a university town.

I wanted to find a town near the mountains that had a university.

And at that time, it was like, all right, well –

I had a friend who went to the University of Boulder and he loved it.

And so I just started there totally on a whim and just moved out here and started to wait tables in Boulder.

And that would have been in 2001.

So you're in Boulder.

You're waiting tables.

But in the back of your mind, it sounds like the idea was you would maybe go back to school.

There's the University of Colorado there.

Maybe get a degree in something.

Was that kind of in the back of your head?

Honestly, like...

For the first year that I'm here, I just want to make friends fit in and I want to learn where the good mountain biking spots, the good ski areas, and just get settled.

And in the back of my mind is okay, there's a university here and I would like to go back to school at some point.

All right.

You were waiting tables, but you were also – doing the things that people do in Boulder, right?

Like biking and hiking and skiing and all those things.

Tell me about your diet.

You're a vegetarian.

So for protein, you were eating beans, nuts, stuff like that?

Yeah, a lot of salads, beans, nuts, a lot of tofu, tempeh.

You know, textured protein, chicken nuggets and things were coming out.

And so, you know, bokeh burgers and veggie burgers.

Yeah.

And when it came to things like peanut butter or nuts, I mean, was that a big part of your diet?

Yeah, I'd say growing up, you know, peanut butter and jelly was the first thing I learned to make.

You know, peanut butter and banana is to this day one of my favorite sandwiches.

And it was cheap.

I guess one of the things you notice is that the options for peanut butter are limited, right?

This is like 2002, 2001, and there are like...

Basically two options, crunchy or smooth, and that's it.

And that struck you as unusual?

Yeah.

What's interesting is, if you walk into a natural food store, you were going to a co-op or you were going to a specialty store store and and even like at the regular grocery food stores, it was smoother crunchy, and they'd all have all the oil at the top of the jar and then you could also just grind your own right.

They used to have these grinders in the store right, and you would just take an empty container, put it under it and you would wait 30 seconds and watch it grind.

Some stores still have it.

Oh yeah, they're great.

They're great.

And then what was?

What really got me curious is you'd walk the aisle and there was a small little peanut butter and nut butter section.

And there was a preserves, jams and jellies section that was three times the size of the nut butter section.

And it was just shocking to me.

There's all this variety in all of these different preserves, but not with nut butters.

And so then I have a sweet tooth.

And so I would go home and I would make a peanut butter and jelly.

And sometimes, guy, I'd run out of bread.

I would just take the jelly and the peanut butter and mix it in a little bowl together and just eat it with a spoon.

Right?

Yeah.

Sounds pretty good.

So now you're eating this sweetened peanut butter with jelly, right?

And you're like, wow, this is really good.

Like now you're using honey and you're like, this is really good with honey.

Why isn't anybody just selling it?

You know, peanut butter and honey.

It seems pretty simple.

And so then you just start thinking, can you not make peanut butter and honey?

Does it not work together?

And so then that's when I started to get curious and started to kind of like create formulations and recipes.

In your apartment?

Yeah, I was living in an apartment with three other roommates.

Okay, so you're living in an apartment with three other roommates.

And what, you start to make, just like make your own peanut butter?

So at that point, you're like, okay, if you can grind it in a store, how hard can it be to make it?

Right. and five pounds of dry roasted almonds.

And then I'd bring them back to the apartment and I would use the food processor.

And you would.

Literally you turn the food processor on, it grinds everything up and then you stop it.

You take a spatula, you push down the sides, mix it up a little bit, turn it back on.

Do that three or four times.

And you have peanut butter in like, you know, under a minute.

And so then I would take the peanut butter and I would add honey to it.

Then once I add the honey, and then you put it in a jar and it's warm and it's freshly made, it's perfect.

It's perfect.

But then if you wait three or four hours or overnight- it gets kind of mealy and it doesn't hold up well.

And after a day or two I'd realize oh well, that's why they don't have all these different flavors, because in a few days the texture's off and it doesn't taste good.

And then just...

You start thinking, okay, well, it's probably the water activity and the oil.

Oil and water don't mix.

What if I used less honey?

What if I used something that had very little water, if no water?

And then you start to run these experiments.

An example is banana, right?

So that's kind of the holy grail for me.

There's banana chips, there's freeze-dried banana, there's dried banana, there's banana flavor banana syrup.

So then you start experimenting with different types of banana.

And before you know it, like, okay, should this be 10% banana, 5% banana, 20% banana?

And so all of those two ingredients, peanut butter and banana, can turn into like 10 jars.

Yeah.

And all these jars are numbered.

And I would keep a journal.

Yeah.

And the journal would have the number and it would have the percent of peanut butter and the percent of other ingredients, including salt.

So I'm like, okay, well, if I find one I really like, I want to make sure I can replicate it.

And so I'd have all these jars, they'd all be numbered.

I put some in the cupboard, I put some in the fridge.

I'd want to understand how temperature impacted the product.

And I tried a lot of different things at that time.

Yeah, it's interesting.

I mean, you're experimenting with the chemistry, right?

And the interactions between ingredients.

It's sort of like ice cream.

If you put too much water in ice cream, you get crystals, right?

Which is why a lot of ice creams use liquid sugar or tapioca syrup, because the water content is lower, and so it's not like now where you can literally go on amazon now and buy powdered anything.

You know you can get powdered spinach and whatever you want, but i'm thinking 2001, like that's not so easy to get Yeah.

I mean, I would buy freeze-dried strawberries and then I would grind them in a food processor and turn it into a dust.

And you know, or I would you know, buy cinnamon and I would make a cinnamon peanut butter.

You know, because it was a powder.

And so very quickly I had...

30 or 40 different jars.

And again, like, so let's just say you wanted to make honey peanut butter.

Really, it sounds simple, three ingredients.

Peanuts, honey, and salt.

All right, well, what type of peanuts do I wanna use?

Because at the store here, There's Valencia peanuts, there's Virginia peanuts, there's Spanish peanuts, there's runner peanuts.

And then do I want a light roast or a dark roast?

And some peanuts have skins on them and some don't.

What happens if I make peanut butter with a skin on it, right?

And so now one ingredient turns into like eight different, you know, roads.

And so all of a sudden, three ingredients turns into a lot of trial and error.

So I'm curious.

I mean, you're like 24, 25 at the time.

You're living with roommates in Boulder.

You're waiting tables.

And you're doing this process.

And just by the way, how long roughly were you kind of doing this experiment?

Like a few months?

Probably about four to six months.

Yeah.

Got it.

But it sounds like it was a real like you got really into it.

Were you doing it in part in the back of your mind, thinking if I can crack this, I might be able to, you know, sell these.

Yeah, I was.

And I was working at a restaurant, so I'd bring samples in for the chefs and for the wait staff.

And I'd be like, do you like this?

Do you think it tastes good?

And it was so silly because I'd be like, this is 10% honey and this is 15% honey.

Like, which one do you like better?

And it's like, you know, who cares?

But I cared.

Like, I was really curious.

Yeah.

So you did this for like six months, kind of just experimenting, until you got to the point where you were like OK, I think I want to turn this into a business.

What then did you do?

Like, did you write a business plan?

Did you save your money from debt?

Tips like what were all the steps you started to take to go to the next step, which is like OK, this is going to be a business.

Yeah.

So the first thing that I knew I had to do was write a business plan.

And I don't know why.

I thought that maybe I was talking to some friends and they said you know, a business plan is probably what you need.

And so.

And so where I really got lucky is being in a college town.

So I went to CU's business schools library.

And I wasn't intimidated to go to the library because I wasn't a student there.

In fact, I felt like a student because I was the same age as a lot of the kids there.

And what was really fascinating is, at the time, The library had an encyclopedia of business plans, literally from A to Z, And so I started to write a business plan.

That took probably almost a year.

But that's when, as I'm writing the business plan, that's when something unlocked that really gave me a competitive advantage.

Which was?

Boulder, Boulder, Colorado.

I mean, here's what's crazy.

So I'm writing the business plan.

But the hardest part was you know what type of business entity do I want to be?

I want to be an S-corp, a C-corp, an LLC.

Where do you get a UPC?

And how do you find an FDA food license kitchen facility?

Where do you order jars from?

Those are all things you can't just learn in a library.

And so what I decided to do was well, I'm going to figure out If there are any companies that are from Boulder Colorado, and just ask them.

And this is where things went.

Bonkers for me is there are a lot of food companies 20 years ago, 30 years ago, that were national companies, that were out of Boulder, Colorado.

Yeah, Celestial Seasonings and Silk Soy Milk and-

Horizon, I did a lot.

Yeah.

Izzy Soda, Bobo's, which we'll talk about later, but that's, I mean, a lot of brands.

But that's not where I started, you know, because I didn't have permission.

I felt like to go right to Celestial.

So instead I found a tiny salsa company that had glass jars and had labels and had to use a jar filler and had to put it in there somehow.

So I contacted salsa companies because that was the most like product.

And I started to form these, these relationships, and they were all like in this community and they were all really helpful.

Everybody wanted to be helpful.

And it was called – and did you call it Justin's Nut Butters or did you have a name for it yet?

No.

When I first started, it was Paragon Peanut Butter.

Okay.

Got it.

So I wanted something that was really catchy.

And so Paragon, I started calling it Paragon Nut Butter, Paragon Naturals, Paragon Peanut Butter.

And my friends, they didn't know what Paragon meant and they couldn't remember it.

So they just started calling it Justin's.

I'm curious, when you were writing the business plan, what did it say?

And again you were writing the business plan for you or for the idea of bringing this to people who might give you some money.

A little bit of both.

I was writing it for me, but I knew that, at the end of the day, the business plan is what I would use to try to find angel capital.

So the idea was okay, let's say that this company is either going to get big enough where it'll go public, or it's going to get acquired.

And so here's an estimate on your return on invested capital could be.

And I had to write it in that perspective.

Otherwise, nobody would want to invest because there's no end game to get their money back.

I'm curious.

I mean this is like 2003 when you're working on this.

You didn't go to business school.

You didn't have a business background.

How did you come to the conclusion that you needed to write a business – like an ambitious business plan with an exit and with –.

You know, multiple returns and et cetera.

Like, was there somebody who kind of guided you or gave you advice?

God, great questions.

I got help from everywhere.

Because you were probably a little naive, right, when you started?

Oh, big time.

Big time.

Yeah.

So here I am at the library.

It's a summer and it's the weekend, right?

And a librarian comes up.

And it's like, oh, hey, what are you working on?

What class is this for?

I see you here every day.

And I'm like, oh, I'm not a student here.

I'm doing this for fun.

I want to start a company.

And you say that and a librarian's like, wow, that's really cool.

You know, have you talked to any of the business professors here?

And I'm like, I don't know anybody here.

She's like, would you like to meet one or two?

And so then now, you know, I got to meet Frank Moyes, who is one of the business school professors.

And I got to him like hey Frank, could you like go through my business plan and you know, and give me input and tear it to shreds.

And so I had people like him who would give me advice on my business plan.

I would meet with other founders of small companies and, and you know, and I'd be like Hey, how do you scale a company?

How do you grow it?

Like, well, it's going to cost a lot of money and you got to go out there and find angels.

I'm like, well, How did you find an angel?

Well, you got to meet with this person.

So then I met with someone who was an angel investor and I'm like hey, what are the things that you need to see?

And being naive gave me an opportunity to ask really silly questions.

And I met with almost every small company that I could get my hands on.

And not only did Boulder have the natural food companies, but they had a natural food retailer here called Wild Oats.

And they were number two to Whole Foods.

And we have natural grocers called Vitamin Cottage.

And so I was able to learn all of these things in a condensed amount of time and fast track the whole process.

Wow.

All right.

So you get enough data to write the plan.

You've got a plan.

And what's your goal?

How much money were you looking to raise?

I wrote the business plan for friends and family.

The idea was 35000.

Was going to buy me a grinder, buy some raw materials and some labels and then rent kitchen time and build enough inventory then to get started at a farmer's market.

So I would basically take my business plan and I'd have a shoebox of jars that I would make with a food processor of different flavors.

And I probably had about five that I wanted to launch with.

And so I would go back to Western Pennsylvania and visit with my family.

And you can imagine the – what's the right word here?

It wasn't disappointment.

It was confusion when you –

You know, are studying to become a lawyer.

And then you move to California, you know, and I had a fantastic Jewish grandmother, Gladys Gold, who when I went to university I was on work, study and financial aid and at all this debt that I was going to have to repay.

And then when I graduated, her gift was she financed my college, which was incredible.

But she was a real stickler on education and making sure I got a good career.

And so...

I move out west, move to Colorado, and I'm waiting tables.

And I'm like, yeah, I'm getting closer to going back to school.

I'm in a college town now.

So then I come home and I'm like, hey, I've got something I want to show you guys.

I'm really excited about it.

And they're like, oh, you know, is this a college application?

Are you going back to school?

And I'm like, and I take the lid off the shoe box and I'm like, I want to make peanut butter.

Here's a plan that I wrote.

And literally, the first thing people say is, peanut butter's fine.

It's been like this for a long time.

It doesn't need to change.

Why do you think you're going to make it any different?

And some people thought it was really cool.

And so anyway, so then I went to my friends and went to my family.

My first investors were my uncle, my mom and dad, and my sister.

And then I was able to kind of get some inheritance that was being saved for me by my grandma.

So I was able to get $35,000 together.

And that's how I got started.

All right.

So you've got about $30,000 from different sources, but you're still waiting tables, right?

I mean, you need to make money and you're getting tips.

So with that...

How are you going to start this thing?

I mean, you've got a food processor at home but you know from your research that you've got to go to like a commercial kitchen that's USDA certified so you can actually sell this stuff.

So I imagine the first step is like find a place where you can make this.

Yeah, so this took forever.

So the first thing I had to do was I had to find a industrial-sized grinder.

And I found out there's two types of grinders.

There's a stone mill that has two grinding plates that come together and the peanuts come through the grinding plates and the tolerance of the plate is what creates the butter.

And then there's a food processor, which is basically an impeller that pushes product through this circular – cutting head.

It's called an Urschel.

They make soy milk.

They make ketchup, all kinds of stuff.

So right away, I'm like, okay, I need this Urschel.

New ones cost $75,000.

And I'm like, okay, well, I can't get that.

So I found the local...

And so what was the price he sold it to you for?

$3,250.

Okay.

So it's a great deal.

And can I just ask a point of clarification?

I mean, couldn't you just buy one of those peanut butter machines you see in a natural food store?

Like I go to my local Oliver's in Sonoma County and you can put your jar under there and make peanut butter.

Is that just too slow?

So I talked to a few stores about them and they break down a lot.

And then you talk to other peanut butter companies.

Because, I mean, the first thing I did, Guy is, before I even looked at buying equipment, I contacted a few peanut butter companies.

And I asked them, hey, do you guys make peanut butter for other companies?

They're like, yeah, we do stores.

We do other companies.

I'm like, that's great.

Could you make it for me?

And they're like, yeah, of course.

Send us your recipes.

And then we got to where the rubber hit the road, which is the MOQ.

You know, what's the minimum order quantity?

And it would be in the hundreds of thousands of units just to turn the equipment on.

And they're like, look, kid, we can't help you.

But I tell you what, here's what you need to do.

Like, and that's how I found out the type of equipment they were using.

And I'm like, okay, I want the equipment that these big guys are using.

But you guys, you know, that's what they use.

And that's and someday, you know, I want to make 100,000 units. a production run, you know?

And so that was the goal was to, how do I get started?

So eventually I can hand this over to somebody else.

I always had that in my mind.

When we come back in just a moment, Justin begins to share his peanut butter with more people and learns when to listen to their feedback and when to ignore it.

Stay with us.

I'm Guy Raz and you're listening to How I Built This.

Hey, welcome back to How I Built This.

I'm Guy Raz.

So it's 2003 and Justin has finally gotten his hands on an Urschel, an industrial strength grinding machine for making large quantities of peanut butter.

It's literally this Urschel is like a jet engine, right?

Yeah.

And on one end, you put in a peanut, and it literally, you turn on...

And you put peanuts in it, and it literally pulverizes them.

And the other end comes out this peanut butter goo, and it kind of drips out.

And I'd have to collect it into a bin, into a stainless steel bowl.

And then from that stainless steel bowl, I'd have to add my ingredients.

Which is cinnamon.

Cinnamon or honey.

Powdered honey or.

Right.

I was using liquid honey at the time, but it is small enough percent that still worked.

All right.

I literally had to go to a restaurant supply store and I bought a stainless steel like soup paddle mixer.

Yeah.

And that would make me be 50 pounds, 40 pounds at a time, you know which is.

You know, 40 jars 30, 50 jars.

And you hand scoop them into jars?

And then I would have to pick up this big container, put it on like a roll cart.

That would be, like you know, chest high.

Pick it up, put it on this roll cart.

And then I'll take a spatula and I'll spatula it into a hopper.

That was probably, you know, above my head.

And then, once that hopper is full, you could stand under it with one jar at a time and there's a little foot pedal and you'd stand on the foot pedal and it would cycle this jar filler and you'd hold the jar underneath it And it would fill it like ice cream comes out of a soft serve.

But what happens is you fill it and there's a little bit of air in it.

So you have to tap it on a table, every single jar.

Jar by jar.

Yes.

You cannot do this in your apartment.

I would.

I would think that OK, maybe I'll just find like some warehouse space in Boulder and just do it there.

But that's not what you did.

Yeah.

So in order to sell to even a farmer's market in the state of Colorado, you need to have an FDA certified kitchen facility.

The ceilings are clean and there's no rodent infestation or insect infestation.

And that there's a three compartment sink that allows you to sanitize all your utensils correctly.

And there's floor drains.

Now you're right.

I have to find a kitchen.

And so what I did is I'm like, okay, well, I have the grinder.

Now I need the jar filler and the labeler.

So who uses that equipment?

Pasta sauce companies, salsa companies.

Let's find one of those.

So then I found a salsa called all the salsa companies.

And they're like well, we use this shared kitchen facility in South Denver, about an hour, hour and a half from me, know we pay to use their jar filler and their kettle and their jar labeler.

And so i meet this guy.

I'm like hey, how much does this cost to use this?

He's like, well, I don't have any openings.

We're booked solid throughout the day making all these different products.

And I'm like, all right.

You were asking if you could time in this space to rent.

And here's what's interesting.

So this guy – so the classic thing for an entrepreneur is we can't take no for an answer, right?

We've got to find a way to get to the yes.

And this was the only place that had the equipment that I needed to be successful.

And they were booked.

So literally, it was like, all right, well, are you guys making product at 10 o'clock at night?

He's like, no, you know, we close down at, you know, 730 every night.

And I'm like, well, what if I came in in the middle of the night?

And you never saw me.

And it'll just be extra money in your pocket.

You'll never know I'm there.

And that's what we did is we went in on off hours at the end of the day when their shift ended is when my shift would begin.

And and at that moment I was still waiting tables and I eventually switched to a different job side hustle in order to accommodate those hours.

Yeah, I was gonna ask, I mean, you're going for 10 a night, and this is in Denver.

So it's an hour plus drive, right?

Yeah, an hour plus drive each way.

Okay, so you're doing the overnight shift there.

And did you have someone help you?

Yeah.

God bless John Ichabon.

So my first coworker, employee, partner was my roommate.

He was chasing a career that wasn't something that was exciting him.

And then he saw how passionate I was about this.

And he's like, hey, I'm here to help.

And the idea was you were – I'm assuming you're going to make a certain number of jars, because they last.

Peanut butter lasts a long time, right?

It's not – Can last about a year.

Not going to go rancid quickly.

And –

The idea was, I'm going to sell these at farmer's markets?

Yes, but it wasn't farmer's market season yet.

So now I'm trying to get it into stores.

Like natural food stores, co-ops in Boulder?

Yeah, so...

And every store I went to said no.

Wild Oats said no because they only wanted to carry, you know, a national.

They only want to work with brands that could work nationally.

So then I went to some specialty stores and they all said, OK, you know, we'll think about it.

And then I went to the co-op here and they're like, OK, drop off some samples.

We'll get back to you.

And then I went to this store called Great Harvest Bread.

Have you ever been to one of those Great Harvest Bread companies?

No, I haven't.

It's a bakery, but they're franchised.

Okay.

And there's maybe 50 of them around the country.

And there's one in Boulder.

And I'll never forget, I went into Great Harvest Bread.

And they have like honey and maybe, you know, some jams there, like a little retail section.

And I told him about the peanut butter.

And this guy, Scott, Scott Creevey, he looks at me like I've got, you know, three eyes.

And he's like, you got peanut butter?

He's like, okay.

He's like, huh, interesting.

He's like, all right, I'll take it.

And I'm like, Are you sure?

And he's like, yeah, he's like, you have any, you have any now?

And I'm like, I'll be back in 10 minutes.

You'll be here.

Right.

And so then I went home and cause I had samples and things, and I came back, you know, and I had a sell sheet that I made that had pricing.

And then, um so great, harvest spread was my first customer in Boulder uh, And then I got into the co-op and then I slowly got into some specialty food stores.

And what were your products?

I had three products that I started with.

I had honey peanut butter, I had honey almond butter, and then I had cinnamon peanut butter.

And so when I first started, the almonds were natural and then the peanuts were organic.

And on top of that, what I was obsessed with was stabilizing the peanut oil.

So you wouldn't have that like thick layer of peanut oil when you open the jar.

And the way that some brands solve this is by using palm oil.

Right.

Which is what we use.

And honestly, when I first started, palm oil wasn't a thing.

Like when I first started, you know, I was I was trying shea butter.

I was trying cocoa butter.

You know, as I'm working on all these things, you know, palm oil is introduced as a hardened vegetable oil.

And so it was now this new ingredient.

It's like.

Awesome.

It's a new ingredient.

Let's use it.

Wow, it works.

It's not perfect, right?

If it sits in a hot car for too long or if you don't add it correctly at the right temperature so it melts perfectly.

It doesn't work, but it's good enough and it limits the oil separation, which I think solves a problem in the marketplace.

And palm oil.

We should mention, like I think, that sort of – there was a lot of controversy around palm oil for a while, because some palm oil is produced by clear-cutting forests, right.

And so there's controversy around rainforest degradation.

But you can also get palm oil that is certified and that's – sustainably grown, etc.

But at that time, you're talking about 2003, very few nut butters were using palm oil.

Correct.

So long story short, we don't use a ton of palm on our products.

But when you have a food product that has two or three ingredients... you notice it.

And so peanut butter.

People associate palm oil with a lot of peanut butter brands because there's only a few ingredients.

And in a lot of other food companies.

They have more palm oil or cosmetics, but they don't even list the ingredients.

And so it's a little unfair.

But at the end of the day, we still use it, we own it and we have to step up and do the right thing.

And so it's just a tiny bit of palm oil to stabilize a peanut butter.

Okay.

But when you're going to great harvest bread company and these co-ops initially, give me your pitch.

What would you say?

I'm an owner of a store and you come in and I'm like, I'm already selling peanut butter.

Why should I sell yours?

Right.

So you have to know your audience.

Right.

And I was so good at this.

I'd understand, you know, is it local that they really like?

Is it, you know, something that differentiates on the shelf?

Is it something that's the highest quality premium?

Do they feel sorry for you because you're just a kid?

Right.

Do I remind them of their grandson?

Yeah.

And so if I'm at a specialty store, I'd be like look, this is the most premium top tier Grey Poupon nut butter you can buy.

And it belongs here in your store of all these fine cheeses and meats.

Right.

Yeah.

Or you go to a Great Harvest and say, look, you can eat this with a spoon.

You don't need to add anything to it.

It can go on a slice of bread and you're good to go.

You don't even need the jam because we have honey and we have cinnamon.

Or you go to a Whole Foods or to a co-op in this case and say look, this is a really unique product that has differentiation for what you're already carrying.

In those first few stores, how much was a jar?

This is like a 12-ounce jar, 16-ounce jar?

16-ounce jar.

I wanted to basically be the same as what was already out there.

Right.

Okay.

And, you know, it's tricky because when you're first getting started, you know you can't price yourself too high even though you should.

So we're probably selling peanut butter for 6 and almond butter for 8 or 9 and not charging enough.

Right.

What do you think your costs were to produce a jar of peanut butter? you know, probably $4.

And so I was making virtually no money on any of these things.

And it was a hobby.

This wasn't for me to make money.

This was for me to build something that someday could be a business that makes money for me.

It was real, I treated it as a business, but I'm working on waiting tables now, at this time in my life, I'm working at REI, which is a sports you know retailer, and And I'm not paying myself.

I'm paying my roommates.

I'm paying the kitchen I'm working at.

I'm everyone else except me because I already have a job.

And I know that if this thing works, eventually I'll get paid.

And you are in some of these stores.

How were you – I mean, if they're just sitting on the shelf in a store.

How were people discovering them?

Were they?

Did anybody buy them?

No.

No one was buying them.

Right.

So I would –

I'd set up a demo.

So I would dedicate time to set up a table and I would hand out samples.

And that's where the farmer's market down the road became such a great avenue for us.

Because you're standing at a table and you can talk about this thing.

So imagine the farmer's market was probably a really important sales channel.

It was so important.

So now it's into the winter and it was tricky even getting to the farmer's market because you know we're not an agricultural product that's grown locally.

Right, because peanuts are grown in, what, Georgia?

Yeah.

Ours are from primarily Texas and New Mexico because it's a drier climate.

Yeah.

So the farmer's market says, yeah, I don't know.

I don't know if this is a good fit for us.

And you're like, oh, shoot.

Well, I'll tell you what.

I'll make a deal with you.

How about we'll come in early in the spring, before all the farmers start to harvest their vegetables?

And once all the farmers come in and the honey vendors come in, if there's no room for us, we'll leave.

And then we'll come back again in the fall when more space opens up, because you'd rather be selling something than nothing, right?

And then, once I got in And there was probably the first farmer's market a week or two, they kicked us out because there wasn't any room and people complained.

They're like, where's our nut butter?

And then all of a sudden I was able to get a little corner, not a full 10 by 10, but a little corner and I could slowly work my way in and become a regular farmer.

What were people attracted to?

The honey peanut butter, the almond butter, the cinnamon butter?

What kind of reaction were you getting from people?

It's the whole experience.

People just love to buy a product from someone that they can look in the eye and be like.

You made this.

Wow, that's really special.

And the other thing that really helped, Guy, is like...

We're the only nut butter company there.

So it's not like you're at the store price shopping for what is the cheapest.

You're like, well, I need peanut butter and there's the only one here.

And so that was really fun.

The biggest learning for the farmer's market for me was two things.

Number one, I realized you can't make everyone happy.

Right.

So eventually someone's going to come by and be like, you know what?

I don't taste enough honey in this.

You know what?

This is too sweet.

Too much honey.

And then they're telling you, can you add less honey?

You know, and you're like.

Oh, yeah, yeah, of course.

I'll work on that.

And then after like a year, you're like, you know, it is what it is.

And if you don't like it, I'm sorry, but I'm not changing it.

Because when you first launch, you want to make everyone happy.

And you're like, okay, well, how do I create something that everyone's going to love?

And then you realize, okay, I just got to put my...

You know, line in the sand.

This is what it is.

I'm not going to change it.

The second thing I learned, which was so fun for me to learn, was when I first launched.

You realize, I didn't have like a plain peanut butter.

Everything had a flavor to it because that was to me, that was the big point of differentiation.

Right.

So you have the farmer's market and someone comes along and they're like, oh my gosh, this is so exciting.

You're brand new.

I'm going to take the tour.

I want to try them all.

And maybe I had four or five different products, because I would come up with some specialty ones like pumpkin pie or chocolate or something.

And so someone would come up, oh my God, okay, I'm going to try them all.

I'm going to try them all.

And they'd be like, Oh, the honey.

Oh, that's really nice.

It's really, really subtle, but I really like it.

Oh, there's a maple, a maple almond.

Wow, that maple's really... compliments the almonds.

I really like that.

And okay, here's another one.

Oh, the pumpkin pie.

Oh, that's just too much nutmeg for me.

Too spicy.

Okay.

What do I buy?

I want to support you.

So I'm going to buy something.

Okay.

So what should I buy?

Hmm.

What should I buy?

Well, do you have just plain, plain peanut butter?

And I'd be like, no, no, I don't have plain like Why would I have a plane?

You can get a plane at the grocery store.

Well, you know, I really like you and I really like supporting local and I really want something I can have every single day, not just on a special occasion, like the cinnamon would be once in a while.

And then I was like, oh my gosh, well, that's interesting.

So then the next week I came back with classic, right?

Not plain.

Nobody wants something that's plain.

So I called it classic.

And guess what?

It became our bestseller.

Right.

Because people just wanted something simple.

Now I'm scratching my head.

I'm like, well, I thought the flavors are what was important.

But people just want to support something that's local and that tastes good.

All right.

You're getting feedback from people and you're adjusting to it.

But here's the big picture.

Right.

You're working at REI.

You're waiting tables.

You're making peanut butter in Denver.

Right.

And you're demoing it at a farmer's market, at least one farmers, maybe two on the weekends.

Like that's a grind of a life like you're living off your other jobs.

Yeah, I'm I'm certainly breaking even, you know, on good days.

But I was having so much fun.

Like it was fun to be in a community of other entrepreneurs, of other food companies.

But I knew that it wasn't going to last forever.

I knew I had to figure it out.

And I didn't have a girlfriend.

I didn't have a dog.

This was all I wanted to do.

So as I'm in the farmer's market, I'm like, OK, scale is what I need.

And then when the farmer's market ended.

For me, it was like, okay, once I get into Whole Foods, game over.

You've done it.

You're just going to have this big company and let's get to Whole Foods.

That's the goal.

So that became my obsession is how do I get into grocery food stores?

Okay.

And when you say when the farmer's market ended, just seasonally, it ends.

It ends in November or whatever.

The idea was, and this is a time, 2005, 2006, when you could walk into a Whole Foods.

It's harder now because it's owned by Amazon, but you could walk in and get the store manager and you could get them to put a product in their store.

Like you could have that conversation.

Was that did you do that in 2005 or six?

I mean, or not.

Not quite yet.

So 2006 was when I started to deliver to retailers.

And here's how it started.

I had kind of an idea of how this might work.

And so then I walk into the one Whole Foods that was in our town.

I ask who the grocery buyer is, and that the buyer is, you know, at that moment in time stocking a shelf.

And I walk up.

And I'm nervous and I'm in my 20s and I've done this a few times, but not with Whole Foods.

And so I asked the buyer who's like wearing knee pads?

And he's, you know, socks something in a low shelf.

And I'm like, hey, do you have a second?

I can ask you a quick question.

And this guy's name is David, David Spice.

And he's like, looks up at me and.

He's like, yeah, come on.

Spill it.

Because I got a lot of stuff to do here.

And I'm like, hey, my name is Justin.

I have a food company and I really want to sell it.

As soon as I said that, you could kind of see I lost him.

Right.

He's like, God, you know, kid, I hear this five times a day.

Right.

He's like, all right, stands up.

He's like, look, here's what I need you to do.

I need you to get into a food distributor called UNFI.

Yep.

You know, UNFI is who distributes all of our food products.

Once you work with them, then I can bring you in.

And I'm like, oh, that simple.

I'm like, OK, hey, thanks.

I'll let you know when I get into UNFI.

And so then I go to UNFI.

And they're like, oh, we can't get you just into one store because we have this big warehouse.

And in order for us to get enough economies of scale to deliver to enough stores, you need to be in at least 30 or 40 stores, which is usually the whole region.

And I'm like, well, I don't want to be in the whole region.

I don't have enough capacity for that.

I just want to be in a few stores.

And she's like, well, you know.

Maybe they'll make an exception and just work with you.

And I'm like, well, OK, I get it.

So.

It's going to be harder than I thought.

So then I go back to Pearl Street and I find Dave Spice who's you know again working in the store.

And so the next time I came in, I was ready.

Like, hey, Dave, it's Justin.

Hey, I went to UNFI and they said that they can't just deliver to your one store.

So what if I come in and And I'll check my own shelf and I'll deliver just what you need.

And then I'll walk it out to the shelf and I'll stock my own shelf.

And so you'll never even have to worry about it.

Right.

Well.

That all sounds great, Justin, but you know, I'm nervous as a new product.

No one's going to notice it.

Are you going to be able to support it?

And I'm like how about if I'm here every day and I'll do a demo, and at the end of a month or two, if we don't sell enough jars?

That makes you happy.

You can take everything off the shelf, give it to the staff, take it home and it's free.

It's on me and you'll never see me again.

And he finally, he was like, oh my gosh.

He's like, okay, fine.

Like, take your jar, take it over to you, know this person at scanning and let's get it set up in the system and we'll see you next week.

But you're starting in this one store in Boulder.

Starting at one store.

And I thought that by getting into the store, it would be this big unlock thing.

Once I was on shelf, I kind of thought, OK, everyone's going to notice it.

It's going to be great.

And then like nobody really noticed it.

I had to stand there like three, four times a week and hand out samples and get people excited about it.

But still, like the internal optimist is like, OK, well, hey, this is just one store.

Let's get into 30 stores because then once UNFI has it.

But you can't get into 30 stores if you're not doing well in one store.

Well, well enough.

Right.

And, like you know so.

So you get into the store and maybe, like you know, two weeks goes, goes by and it's like OK well, I got to get into another store because I have I can at least service 15 stores.

So now you go to the Whole Foods across the next town over and you're like, hey.

You know, David over at Whole Foods Pearl, well, hey, he just brought us in.

You guys should be carrying us here.

And they're like, well, are you and you in a fight?

Oh, no, no, no.

I'm going to deliver it.

I'm going to stock my shelf and I'm going to do demos.

And like, well, OK, well, David has it.

Then I guess I guess we'll try it.

And then, you know, you really leverage that one relationship.

And then I would get into more and more stores and I would deliver to these stores and I would be kind of like you know, for me it was like all right, well.

Pearl's doing okay, you know, and these other stores, if I can get them to do what Pearl's doing, and now I can get into 30 or 40 of those.

You know, the target's always moving.

So now the target's moved from getting in the farmer's market to getting into Whole Foods.

All right, now I'm in Whole Foods.

Now I got to get into UNFI.

So I can get into more Whole Foods and then I'll then I've made it.

And so the target's always moving.

And how many stores were you?

I mean, how many stores are you able to get into, just going store by store on your own and doing your own deliveries?

So 2006 I'm like two or three years in I could deliver to specialty stores, I could deliver to natural grocers and I could deliver to Wild Oats into about 10 to maybe 12 Whole Foods stores.

So now I've gotten into about 25 stores.

So 25 stores.

OK, so and at this point I think you were, you're ready to go to, to UNFI, and they became your distributor.

Right.

This is like like around 2006, I guess.

And you're now getting into stores all over like Colorado and Texas and New Mexico.

So at this point, like how much were you doing in sales?

Were you were you breaking a million?

Yeah, no, we were probably around $150,000 in sales.

Right, so you were really tiny, small.

Tiny, yeah.

And the thing about peanut butter is the velocity of it, right?

So the velocity is how often it moves off the shelf.

And for a consumer, you might buy peanut butter once a month.

If you're a heavy consumer, once a week or once every two weeks.

And so it just wasn't flying off the shelves like a bar or an energy drink would, because you'd have one every day.

So now I'm, you know, I'm a few years in, I'm working, you know, now at REI.

You're still working at REI and doing all this stuff.

Okay.

And how many shifts were you doing at REI, by the way?

About three or four days a week.

I work at REI part-time.

And it's mostly to maintain the minimum to get health insurance and benefits.

And REI was great to work with.

And at this point, I realized that This isn't working because now I have real data.

I'm like, oh yeah, I was a little overly optimistic on how many jars I was going to sell my first year at this pace.

It's going to take me a lot of stores to get to the scale that I need to break even.

I'm like, oh, man, this is so now reality is setting in.

And when I would get really nervous or upset, I would go and exercise.

You know, go on a big bike ride, go on a big trail run.

You clear my mind, come back exhausted and just feeling refreshed. next day and so i'm on a big mountain bike ride you know and this is now 2006-ish 2007 and i'm on a bike ride and i'm eating a squeeze pack of an energy gel yep and as i'm eating the energy gel I'm like, man, you know, this energy gel is good, but why isn't – I really want peanut butter.

Why isn't anyone putting peanut butter into a squeeze pack?

It just comes to you like that.

Well, it makes sense, right?

You're one of these like goo gels or something.

Yeah.

I'm with peanut butter all day, every day.

Yeah.

And here I am with a gel pack.

You know, and I'm like, and I just put one and two together and I was like, why isn't anyone doing this?

Holy cow.

When we come back in just a moment, Justin quickly discovers why nobody is putting peanut butter in a squeeze pack and then decides to do it anyway.

Stay with us.

I'm Guy Raz and you're listening to How I Built This.

Hey, welcome back to How I Built This.

I'm Guy Raz.

So it's 2007, and Justin has just come up with what he thinks is a brilliant idea.

Put peanut butter in a little squeeze pack so people can eat it on the go.

And I'm like, well, how do I find out if I can even make a squeeze pack?

So I talked to a few friends.

I've made a lot of friends now in the natural foods community.

And one of them was the founder of Boulder Chips, this national potato chip brand, and John Maggio.

And I talked to John.

I'm like, John, I got this great idea.

How can I find out if someone can make it for me?

He's like well, you know, just like there was for peanut butter a contract manufacturer, there's contract manufacturers for squeeze packs.

Here's three that I found for you.

The largest three in the country.

Call them up.

See what they have to say.

And so I'd call them up.

I'd be like, hey, you know, my name's Justin.

I have this natural foods company in Boulder, Colorado.

I was hoping you could, you know, put my food product into a squeeze pack.

Oh, they're like, yeah, of course.

You know, no squeeze packs too big or too small.

We're squeeze packs are us.

What are you doing?

And I'm like, oh, wow, this is really great.

I'm doing peanut butter.

I'm doing almond butter.

I want to do a chocolate hazel.

And they'd be like, whoa, whoa, whoa, you can stop right there.

We're not going to be able to help you.

All three of them just said no, flat out, outright said no.

They're not going to be able to help you.

Why?

Because of food allergies, the nut allergy.

That's where it finally showed up.

And again, these are companies that are making what, energy gels or what?

Like, what are they?

Everything.

Mustard, mayonnaise, ketchup.

Hair conditioner, honey sticks, anything that comes into a squeeze pack, you know, salad dressings.

These guys are doing.

So they will not do peanut butter, for obvious reasons, because they're I mean.

I say this as the uncle of a kid with a peanut allergy.

It seemed like every school, every class, daycare center, every youth organization was was banning nuts like yeah, and that just would go on and on.

So i can understand why some of these brands were like, or companies were like we're not getting, we're not touching that, because we you know people are freaking out about this stuff.

Yeah, the liability was too great and you'd have to label on the product process in a facility that handles or shares a line with, and nobody wanted to do that.

And at first, as you can imagine, I was kind of devastated.

I was like, oh, I had this great idea, and it was going to be so fun, and now...

No one can make it.

And then it was like, wait a minute.

Maybe if I'm the only one who can make it.

I should make it.

All right, well, now all of a sudden I'm energized.

Okay, well, how do I find a squeeze pack machine?

I got to make it myself.

And this is, you know, this would be really interesting.

And so then the goalposts have moved again.

Once I get the squeeze pack, it's going to fix all my problems.

So anyway, so I get...

I get really excited and inspired.

And then I find out that these squeeze pack machines, as you can imagine, are hundreds of thousands of dollars.

And so finally, like through calling around there's you know, I find a equipment broker who sends me to someone out of New Jersey.

And this guy has a company called Protopack.

And they basically would take these old machines and refurbish them.

So I started talking to him.

He's like, well, you know, I got this machine that does one at a time.

Back in like the 80s and 90s, you'd open the Sunday paper and there'd be like this you know squeeze pack of, you know Perel hair conditioner.

And it was that machine, you know, and it's been sitting here collecting dust and I'll happily sell it to you.

And I'm like, how much?

He's like, well, it'd be about $30,000.

And it's like, oh.

30.

Okay.

Well, okay.

So if that's 30000, I'm going to need a kitchen to wire it into, because it's not going to fit in the salsa company.

I need one in Boulder.

And so at this moment in time, I'm looking, well, to get that, I need $75,000.

And I went out to my family.

They didn't have any more resources for me.

I talked to a few angels and they were like, excuse me, a squeeze pack of peanut butter to do what?

They're like, I don't know, too risky.

So I had nowhere to go.

The only place that I could go and God bless him again was my roommate who was helping me with the farmer's market.

He was helping me make it at night.

And I went to his parents and laid down the idea, showed them the business plan.

And his parents loaned me $75,000.

Wow.

Yeah.

But it was too big of a facility.

I couldn't use it by myself.

You couldn't put this in the salsa place.

Correct.

It was too big.

The size of a small car was this squeeze pack machine.

And so I was able to find another company that was also growing at that moment and they were a few years in called Bobo's Oat Bars.

And so Beryl and I Beryl Stafford, the founder of Bobo's we shared a kitchen together and we'd work like we hired some employees and we'd share them.

And on even days, we'd make Bobos.

And on odd days, we'd make Justins.

And we had the squeeze pack machine now hardwired into this facility.

And so I'm making these squeeze packs.

Can I just ask?

The packets could be the game changer because now it's like...

Runners and people doing outdoor activities.

And I imagine, because you're in 40 stores right, you could make the case.

Hey, can we add the squeeze packets as another SKU?

Is that right?

Is that fair to say?

It is.

And so I went to Whole Foods and I said, look, you know, in Boulder, you went to that in Boulder.

OK, I have this great idea.

Here it is.

It's a sample.

It's for athletes.

And it belongs right here with the energy bars.

And I don't want to sell to you in a five, because I just want to sell it to a few stores and see how it does.

I've been working on this for the past year and a half.

I'm so excited.

It's going to crush.

Let's, you know, can I put, Oh yeah, Justin, we see her all the time.

Yeah.

We'd love to, let's put an energy bar section.

We'll put it right next to the Laura bars and it'll be great.

And, um, and it doesn't work.

It doesn't sell.

This is one store, first of all?

One store.

Okay.

And so you're in the energy bar section, assuming this is where people are going to look for this right.

Because you want a quick hit of energy, right?

Instead of getting goo or whatever gel.

It's what I was using it for.

Exactly.

Right.

Okay.

It makes sense.

And it doesn't move?

No.

So after a few months the buyer's like hey Justin, you know, these squeeze packs aren't really moving.

I'm probably going to have to ask you to remove them, because you know, I feel like the test is over and we're probably not going to bring them in.

And to me, this squeeze pack, this was the big idea.

This is what was going to, you know, elevate the brand and set us free and put us in every you know REI and running store and you know, and be this big athlete food.

And so I was devastated.

But instead of just pulling it off the shelf and giving up, I literally stood at the shelf and watched people shop for half an hour.

And and it came really clear to me that when people I know this is, this isn't, like you know, earth shattering news.

But when people go shopping, they're in a rush.

And so it's so hard to get people to try new things.

And the problem was people would see it.

They'd pick it up.

They'd be like, this is a squeeze pack where my bars are.

It says protein on it.

It says energy on it.

I don't understand like.

What do I do with this?

What is it like?

And then they would just ignore it.

And so at that moment it was like, oh my gosh, rather than try to force this to be an energy food, people don't know what it is.

It's just peanut butter in a squeeze pack.

I should just sell it next to the jars.

And that way people, you know, they'll they'll know what it is instantly.

And boom, like it started to work.

People started to buy them.

And when I started to learn, was the number three reason why people were buying the squeeze packs was, for you know, portable protein.

Right.

And I was like, oh, well, that's why I created it.

I'm glad.

Put it on fruit.

Put it on a piece of toast.

That's great.

The number two reason I learned why people were buying them was for portion control.

And then the number one reason why people were buying the squeeze pack was for a trial size.

Like you know what i i saw a squeeze pack of almond butter and i've always wanted to try almond butter but it's too expensive and i don't want to take the risk.

But you know, i'm gonna buy this squeeze pack and see if i like it.

And you know what i really like almond butter turns out.

I like your almond butter, so i'm gonna Buy your jars.

And then what happened is the squeeze pack became this trowel vehicle.

So now our jars that weren't selling that well started to pick up.

It's kind of crazy, just by moving it from one aisle to a different aisle, that it actually has that much of an impact.

Like it just shows you how. kind of crazy consumer behavior is, right?

It's the same product that's just moved two aisles down or three aisles down.

Yeah.

I mean, it was really like an eye opener for me, how lucky I got.

So now I'm like, okay, all of this is working.

Now I'm like, oh no, like the word is out.

I couldn't patent protect it.

I didn't invent peanut butter.

I didn't invent the squeeze pack.

I couldn't protect it.

I couldn't do anything.

And now my secret's out and people know.

And what if?

What if this natural food company starts making squeeze packs?

And what if?

What if a squeeze pack company starts?

You know now paranoia really like grabs a hold of you.

And I'm like, okay, well, I got to raise money and I got to move fast.

And that's when I started to continue to revamp and rewrite the business plan and then really go for angels.

And I guess someone who helped you raise money was a guy named Lance Gentry who you soon brought on to help manage the business, to manage Justin's.

And I guess he had a lot of experience.

I think he'd been a former executive at Izzy Sodas, which was another brand started in Boulder right.

Yeah.

Well, so it took about a year, but here's where things went a little interesting.

Lance meets me and he's like, hey, I'm looking for my next career.

I really like what you're doing here.

I think I can help you.

And I look at him and I'm like, good, because I could use some help.

Yeah.

And so then we get together and he's like all right well, tell you what you need to raise money because you can't afford me.

And I couldn't.

And he's like, you probably need a million dollars.

And that's going to allow us to hire a few more people, including me.

And then let's rebrand the packaging.

Let's update it so it looks a little different.

And I'll help you go out there and try to raise the money.

He was going to connect you to investors.

Yes.

So, all right, a million dollars.

You're proving this out, right?

At this time, you've got UNFI distributing your stuff.

Yes.

And are the packets also being distributed to 40 stores or are they just in that one Whole Foods?

I had to go to every single store and talk it in.

And you'd have to work the system and get people to want to help you.

And the biggest advice I can give to an entrepreneur who's doing this.

I kept a notebook and in my notebook was the names of all the stores and the people who worked in those stores.

So when I would walk back into a Houston Texas Whole Foods I hadn't been in in a year, I would have the names of all the people I'd met a year ago And I'd memorize the names before I walked in the store.

And I'd write a description of what they look like and maybe kids they had or where they grew up.

And I'd walk into that store.

I'd see that person.

And I'd call them out by their name and tell them a little story about what I remembered.

And it would...

And they would be like, oh, my God, if this guy remembered me, the least I can do is help him.

And it like it was so important.

All right.

So you have this goal to raise money and and you've gotten the nut butters and a lot more whole foods and you've got the packs.

And I'm not going to surprise anybody here.

You do raise the money.

I think it took you about probably about a year.

But you raised a million dollars from angel investors.

So now Lance joins you right to help you, and what does he?

What you're the CEO, I'm assuming is he does he take an operational role or more of an advisory role, or what?

Lance was he was everything everywhere all at once.

And wherever we need help, Lance is there.

If it's working on production, you know, Lance is there helping with production.

If it's meeting with a retailer, Lance is there.

If it's marketing is his genius.

And so Lance's title was was president.

You know, I was CEO, but really like I was working for him.

Because he knew what he was doing and I was learning.

Did you like that?

Did it feel like, OK, finally, there's like a grown up here to help me?

Yeah, I really did enjoy it.

I felt like I didn't feel like I was alone anymore.

I felt like I had someone who was not only more talented than I was, but was in it as deep as I was, and felt like a real partner in the business.

And did you start to see results right away?

Was Lance like – was he able to scale fairly quickly where you started to see, like I don't know, 5 million in sales that year or something like that?

Right away.

The first thing that happened was we got into Starbucks.

Wow.

With the squeeze pack.

Wow.

And they put us into a bistro box, which is – we're still there.

It's like their protein plate, little grab and go.

But in order to get into Starbucks, we had to have a food audit.

And our little shared kitchen space with Bobo's wasn't cutting it.

And so we had to find a food manufacturer who would overnight – take our existing peanut butter making process and put it into their facility where they have full sanitation, team parts and maintenance team.

They have employees that are, you know, come in all the time, and so we literally took this whole room And moved it into their facility and they made a bunch of other food products there.

And then they had the credentials and the licensing and auditing that Starbucks needed in order for us to be a customer of theirs.

And I kind of like told them we already had these things, hoping that if they accepted it this food company would want to bring us in anyway.

Right.

So they take your equipment, they're running it.

Okay.

So you start to see, I mean, Starbucks, huge deal.

It sounds like Lance is a transformational guy.

The business is growing.

You're now at like, it's 2009, you've raised the money, you're getting into 2010, and I...

I think that year was a, there were a lot of setbacks.

It's actually not the year you expected.

What happened?

So 2010, I'll just set the stage.

We're in Starbucks nationally, right?

We are in Whole Foods nationally.

We are now getting a lot of conventional retailers like Kroger and Target to notice us.

And then Lance, who is my mentor, my hero and kind of this everywhere all at once.

Guy is diagnosed with brain cancer and has two young kids and then, within a year, passes away.

And so now it's 2011.

2012, and Lance is not only like not with the company, but he's he's dead, like he's gone.

Did you did?

Was he ill when you, you started working with him?

No, it was crazy sudden, one day he had a headache and then the headache lasted three days and then he went to a hospital and then they did a brain scan and they found a tumor and he had no idea.

Oh so then you know, at that moment, not only did we have to to grieve and as a company, these maybe there's, you know, eight of us.

You know, pause what we're doing and really like honor someone who was a dear friend of ours and be there for his family.

And he was a larger than life human.

And so the whole community was really in shock.

But we had to, you know, get back to work.

And I had to step up into a really like powerful leadership role where I had to show empathy and encourage, but also roll up my sleeves and be like all right, we've got to move on, because the world isn't going to wait for us to be ready.

And that was a really, really hard moment for me.

And then at that moment in time, my wife was pregnant with our first.

And so a little bit after he passed away, we brought a child into the world.

And so now I have a business I'm running on my own, a newborn, and I think I'm no longer working at REI now.

So I left REI, I was there for five years.

And all this stuff's happening all at once.

So, I mean, this becomes your focus, right?

And without Lance?

I mean, were you on your own or did you have other people that could sort of you know that you could lean on and rely on for advice?

Yeah.

Yeah, the beautiful thing about the Boulder community is I had a lot of great people I could lean on for advice and get support from.

But at that moment, I kind of knew like.

You know I had a window of opportunity and it was closing because you know people were noticing us.

We now had a national brand and we were in Starbucks and people were like okay, the squeeze back's a real thing.

And so now I felt like, okay, I need more support.

I need another adult in the room.

And that's when I started to look for institutional capital opportunities.

Outside investors, yeah, or bigger, more money and maybe a private equity or somebody like that.

Yeah.

All right.

So the the, the packets are working and you've got the nut butters and you decide to move into peanut butter cups as a really interesting idea.

Right.

An elevated version of Reese's peanut butter cups.

But like Reese's peanut butter cups, it's iconic.

I imagine it. dominates the the category but you felt like hey this could be the next thing imagine but it's also a shift right because it's it's kind of going into candy like you're going into a slightly different category Yeah, so the idea was if Reese's can't sell a peanut butter cup into Whole Foods or into any natural food store, then someone should.

And why can't it be Justin's?

We already make the best peanut butter.

Reese's wasn't even a competitor.

And where it really caught me by surprise, two things.

One... is the velocities in peanut butter cups are much higher than jars and even squeeze packs.

You know, people will eat peanut butter cups every day if they could.

Hopefully they don't.

So the velocities were higher.

And then...

People would come into the franchise in a whole new way.

So now we're in a different part of the store.

They see a peanut butter cup.

They buy it.

They're like, wow, this is really good.

Now they're walking the store and they're in the peanut butter aisle.

They're like, oh, these guys make peanut butter and almond butter.

Now is the surround sound in the store in an amplified both sides of the business in a really critical time.

Okay, so you've got these out there, but you need to scale and grow and you know, in the back of your mind you're looking for institutional money, right?

What did you have to do to attract a big institutional backer who was going to put in significant cash to help you guys really scale?

Because you're doing 20 million a year in 2012.

Still small but maybe attractive to a private equity group or a VC firm or something like that.

So we had a really, you know, we had a fast growing company in a category that was notoriously stagnant.

We had an innovation with the squeeze pack.

And so we had a really good brand story.

And so we had an opportunity where we could really interview and partner with who we wanted to partner with.

And I really wanted to work with a local group because I really felt like supporting local was the right ecosystem for us.

But then I met a group out of San Francisco called VMG.

And dang it, like, these guys...

They specialized in Kind Bar, Pretzel Crisp, Pirate's Booty.

They knew exactly how to scale food companies.

They had a great track record.

And so I didn't take the best deal that was offered.

I took the best partner that was there that knew how to help me scale.

And it requires a level of sophistication to make sure that everything lines up, that you have to hire – make sure you have the right people that know how to do that.

When you brought in – when VMG – I think they invested about $47 million initially –

Now you've got a big private equity firm behind you, which is great because there's cash, but there's also complications.

You've got to – it's a different beast now and they need a return on it.

What kinds of challenges did it create?

I mean, now you've got – it's not just these small angel investors.

It's a big professional private equity group.

Yeah.

So we're about a year in and one of my board members, Peter Burns, who had just left Celestial – was ready for his next thing.

And so I was able to recruit him to come and become the CEO.

And at first I was like, hey, let's be co-CEOs.

And he's like, okay.

And then I saw what a really amazing, fully functioning CEO can do.

And I was like, oh my gosh, hey man, this is yours.

You can have it.

I'm going to focus on quality, on culture, on marketing.

I'm going to go to all the sales meetings.

I'll be there for trade shows.

And I focused on my stuff first, which was making sure that our messaging and quality was right and tight.

And this is the magic of having Peter, because Peter knows how to set expectations and how to manage large private equity groups effectively expectations on how things are going to happen and how we're going to grow the company.

And he had the experience to do that, which would have probably eaten me up.

And so he was the pro.

And he, I guess he becomes a co-chief executive and you guys are now working together.

And I mean, what were you able to do with that?

I mean, I imagine a lot with that infusion of cash.

Yeah.

So what we did is we hired really intelligent people who had experience working in food companies that were scaling as fast as we were.

And so we're developing new products, getting into more stores and we are trying to grow outside of just groceries.

We're getting into REI, we're And everything is just working.

It was like it took 15 years to push this boulder up the hill and now, all of a sudden, it was rolling down the hill.

Did it also drive you to start thinking about selling?

No, it didn't.

You know, I was...

Advice I got early on, which was you build the best company that you can build and don't go out and try to sell a business.

Have somebody want to come and buy it.

And so I was so head down, all of us so head down focused.

We knew that someday we'd have to take out debt to pay back our investors or go public or get acquired.

We knew that was in the horizon.

But we were only three years in with VMG, and generally five years is when they say okay, let's start to think about what's next, guys.

We need our money back.

So we're three years in, and we were just building a really healthy business.

And larger companies started to reach out to us to say, hey, we love what you're doing.

We would love to know if you'd be open to a conversation to be acquired.

And that's what triggered a process to kind of figure out, okay, maybe this is a good time for us.

And it was Hormel who right they initially- came to you and eventually you guys would come to terms and accept an offer.

In 2016, they bought the brand for 280 million, which was certainly a great outcome, even for the VMG investors, who put in 47 46 million a few years earlier.

What was your – I mean you would end up staying with the company for like another five or six years.

But before we get to that point, I mean I can imagine it was – I mean 13 years you were doing this.

So this was really now a chance for you to –

And maybe you were able to take some money off the table when VMG made an investment.

But now here was a chance for you to really see like some significant cash from 13 years of work.

Yeah.

Yeah, it was overwhelming and it was complicated, right?

So it was the most joyous moment of my life to realize this great opportunity to set yourself free financially.

And everyone in the business was an owner.

Every single person had an equity stake.

So we changed everyone's life. in a meaningful way.

But at the same moment, I had sold out.

Because when you're a small, independent business in a liberal, values-oriented organization, being independent and being local is so important.

And when a large company buys you, you kind of feel like you've sold out.

But what I did, which I'm proud of, As I stayed for five years to learn, we stayed in Boulder and everything kind of continued on in a great way.

And here's what's interesting.

If someone's going to acquire your company and they want to scale it and grow it and turn it into a larger company, I would like to learn and figure out what the unlocks are, so I can maybe either do it again or help other companies achieve that.

So I was really excited to stick around and to learn anyway.

And were you going to be the CEO or what was the role you were going to play?

That wasn't even an option.

I was going to be, you know, kind of the founder on the sidelines.

But I would input with innovation and with purpose and with mission and culture and things.

Got it.

All right.

You ended up staying with Justin's under Hormel until 2021.

And then you took a position at Rudy's Organic Bakery that makes gluten free bread and organic bread.

But I'm curious about what happened in your view to Justin's.

Maybe after you left or even as you were leaving because it was struggling.

Like Hormel did not – I mean they recorded losses.

They were not able to, for whatever reason, accomplish what they wanted to accomplish with the brand.

What's your take on what happened?

I think to Hormel's credit, they're, I don't know, a $6 billion company.

They've been around for 110 years.

They clearly know what they're doing.

They're good people who run that organization.

And Justin's was such a small company that...

They just didn't know how to run a company of that size.

And then when they integrated it into all the functions of the Hormel portfolio, the people there didn't have the focus on the Justin's brand because that wasn't paying their bills.

You know, Skippy and Dinty Moore, Stew and Spam was paying the bills and so Justin's didn't get the focus that it needed to be successful.

But to their credit, the Justin's brand didn't. didn't fall off a cliff.

They didn't change all the ingredients.

They didn't try to turn it into Skippy, but it didn't grow.

It's just kind of been frozen right from when it was acquired to right where it is today.

It's just been on cruise control.

And so during COVID, I wasn't being utilized.

I wasn't helping the company.

I was maybe even getting in the way.

And so it just didn't make sense to continue to stay there, especially when you know a company like Rudy's really could could use some help and use support.

All right.

So you are kind of you sort of move out of Justin's.

And I guess I mean you're now at Rudy's and you know, working on this new project, helping them as a kind of advising them.

And I'm assuming you thought that was kind of your.

Your life with Justin's nut butter was done like that was that chapter was ended.

Is that fair to say?

It's interesting.

So yes and no.

So when I first left Justin's, I was pretty upset.

It was like a bad breakup.

You were upset because you felt you were kind of marginalized during COVID?

Yes.

You were left in a bad way?

Not in a bad way.

I was let go from the organization.

They didn't need you anymore.

Yes.

I was a line item that wasn't adding value.

And so I was crossed off.

And I was like, oh, my gosh, like, what do you mean you're firing me?

Like, I didn't do anything to get fired.

And I'm like.

So it was just bizarre.

It was so bizarre to me.

And I was angry and I was resentful.

And then I, you know, went through all the phases of grief.

And then I was like, okay, you know, then I went through, you know, acceptance.

And then I went through joy, like, oh my gosh, my life is mine.

And I can do whatever I want.

And I can go live a sabbatical in another country and I can do other, help other companies, and you know I'm set free.

Yeah.

All right.

So you you go away and you're working on other things.

And Justin's in the rearview mirror, sort of.

But I imagine people still are coming up to you all the time and saying hey man, I just bought your nut butter.

I just bought I buy your nut butter every week.

And people still say that to you.

And maybe part of you felt really happy about that and part of you felt frustrated by that because it wasn't yours anymore.

Wow.

Yeah.

I would oftentimes lie if someone who's like a peripheral friend was like oh hey man, how's business?

You know, I'd be like, great.

Because you know the 20 minutes it would take to explain what happened and what I was doing wasn't worth it.

And so I would just, it's great, you know, and move on.

But then you know, like I just accepted it and was really proud of what we accomplished and what we did and the disruption we created, and proud to still see it on the shelves.

Okay, so Justin's is in the rearview mirror, right?

And...

And then it's not anymore because you would eventually get approached to come back to the company.

This happened fairly recently.

And I guess now you're back involved with it again.

Can you tell me the story?

Like, how did that happen?

You know, it's kind of every entrepreneur's dream when their company isn't living up to its fullest potential.

And usually what happens is a company falls off a cliff and is destroyed.

Barely salvageable.

And the founder comes back and buys it for pennies on the dollar.

But by then, it's too late.

You can't revive it.

You just have a corpse.

But what happened here, like we talked about earlier, was Justin's is just kind of frozen.

It's just kind of on cruise control.

And this one investment group out of Connecticut Forward.

Their founder is a young, super intelligent way smarter than me guy, this kid, Matt Leeds.

And Matt had just come off of another fund and started his own.

And he's found kind of his sweet spot, which is finding brands that are kind of trapped under a corporate umbrella, that aren't living up to their full potential, and pulling those brands out.

And then giving them attention and focus and building them back, building them up, maybe back up, and then finding a better home for them.

And so he he loves the Justin's brand.

He grew up with it.

Right.

Like he's a kid.

He grew up with the brand.

And he's like so one day he calls me up and he's like hey, I've been trying to pull the Justin's brand out of Hormel.

What do you think about coming back and being a part of it?

It's like, okay, here we go.

So they acquired a part of Justin's.

Hormel still owns, I think, a little over half of it.

And so this group, Forward Consumer Products, bought about 49%.

They bought 51%.

51%, okay.

Controlling interest.

And they brought you in as part of this investment?

Yes.

Yeah.

So I'm an owner and I'm also a board member, but I'm not a board member.

I'm a founder.

And so I don't just go to board meetings.

I'm there for all the big calls.

I'm there at the office almost every day.

And I'm a big part of the team, but I'm not running the team, which is a blessing for me.

So what is the prospect now?

I mean now that it's partially owned by Hormel and the majority stake is by this group Forward.

What – like how do they then turn it into a return?

I mean is it then eventually one day going to be sold again?

I mean what's the – the long-term sort of play?

Yeah.

So it's to do what should have been done in the first place.

It's to grow the company to reach its full potential.

We really think that we can double, triple, quadruple the size of this business.

And then once we build a business and get it to a size that is larger, I could go anywhere.

I think that the opportunity is to find it a home where it can continue to thrive.

Just by being a bigger business and then being acquired by a larger group will give it a healthier opportunity to be integrated, because now the size demands that it gets attention.

When – Jess, when you think about the journey you took and it was – really from experimenting your kitchen to selling, it was about 13 years and the outcome was really great for you and then of course you had the – difficult departure.

But now you're back to this thing that you started.

How much of of where, what happened, where you got to and and just the outcome, do you attribute to the work you put in the grind, and how much do you think had to do with luck?

You know right timing, the right product, the right place, etc.

It's probably 50 50.

I think that I don't take no for an answer.

I worked hard when most people were, you know, partying and traveling the world at a young age.

But If I wasn't in Boulder Colorado, if Lance didn't find me and I didn't find Lance and at the moment in his life when he was hungry and ready to prove himself, if I didn't go on a mountain bike ride and was eating a lot of squeeze packs, if Reese's hadn't done a great job training consumers on what a peanut butter cup should be like and I could make one organic, all of these things laddered up into success and I can't take credit for all of it.

But if I didn't work hard and take no for an answer and surround myself with people who are smarter than me and take direction,

I wouldn't be where I am, and I pinch myself every day for how lucky I've been.

I don't deserve nearly as much credit as everyone else does, but because my name's on it, everyone's always going to look to me.

That's Justin Gold, founder of Justin's.

And, by the way, if you're wondering what might be next for the brand, I like the joke that you know we're going to go into skincare.

We're going to come out with, you know, peanut butter deodorant and peanut butter shampoo and conditioner crunchy for exfoliation.

So, you know, the sky's the limit.

But at the end of the day, protein snacking is really kind of what's not going to go away.

That's where the opportunities are.

Yeah, I mean, it's sparkling peanut water.

I mean, how refreshing does that sound?

We'll see you next time.

And I'll see you next time.

I'm Guy Raz, and you've been listening to How I Built This.

[Justin Gold: The Story of Justin's Nut Butter]-[Justin’s Nut Butter: Justin Gold. He Was Waiting Tables, Then...He Reinvented Peanut Butter.]

📋 Summary

The Genesis of a Nut Butter Empire

The Phase of Experimentation and Persistence

Overcoming Barriers and Finding a Niche

The Squeeze Pack Innovation

Scaling, Tragedy, and Acquisition

A Return to Roots

🎯Key Sentences

📝Key Phrases

📖 Transcript

[Justin Gold: The Story of Justin's Nut Butter]-[Justin’s Nut Butter: Justin Gold. He Was Waiting Tables, Then...He Reinvented Peanut Butter.]

📋 Summary

The Genesis of a Nut Butter Empire

The Phase of Experimentation and Persistence

Overcoming Barriers and Finding a Niche

The Squeeze Pack Innovation

Scaling, Tragedy, and Acquisition

A Return to Roots

Deep Learning with ListenLeap

🎯Key Sentences

📝Key Phrases

📖 Transcript

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