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There was like a TV host in the UK.
She always had kettle chips like she was eating them.
And she wasn't even paid.
She wasn't like an influencer.
She would just eat them on her show, right?
Well, it was similar to what we'd experienced in the U.S.
People started talking, and then there was a photo of Princess Di with a bag of kettle chips in a grocery bag.
She would go shop in those days.
Wow.
Can't beat that.
That's better than her HRH seal on the side of the package.
Yeah.
And so it just started to get this mystique.
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 Cameron Healy built a $300 million brand by making potato chips in Salem, Oregon, and finding a market for them 5,000 miles away.
A typical trajectory for a food brand goes something like this.
First, you start small, maybe regional, and then you slowly expand across the U.S.
And only once you're established, maybe years later, you try going international.
Well, today's guest, Cameron Healy, pretty much skipped the whole middle part, because when his company Kettle Chips was still barely known outside the West Coast, Cameron made a decision that for most people would make no sense.
Cameron lived in Salem, Oregon, but he decided to expand sales of his thick-cut, hand-cooked potato chips in the United Kingdom.
And if you've ever spent time in the UK, you might know what that means.
Britain doesn't just have potato chips.
It has an entire culture of crisps.
Endless varieties, endless flavors.
Not just salt and vinegar, but prawn cocktail marmite, pigs in blankets, grilled steak.
It's one of the most competitive, most discerning snack markets in the world.
But Cameron had a hunch that kettle chips with that extra crunchy kind of rustic style would stand out.
And he was right.
The brand took off in the UK first, and only later did it expand across the United States, where it eventually became one of the biggest natural potato chip brands in the country, now owned by Campbell's.
In many ways, this is a story about improbably long distances.
Kettle Chips was based in Oregon, but the inspiration came from a trip Cameron took to Hawaii.
And about a decade into building the chip business.
Another trip to Hawaii sparked yet another idea, this time for a beer brand Kona Brewing.
For a while, Cameron was juggling both chips and beer, logging thousands of miles between Oregon, Hawaii and his most successful early market, the UK.
And through plenty of anxious moments, Cameron seemed somehow mostly undaunted.
And part of that might go back to his upbringing.
His dad was an entrepreneur who turned a simple rope tow and warming hut in Bend Oregon, into what became the Mount Bachelor Ski Resort.
But another part of Cameron's grace under pressure comes from his many years of meditation and yoga and eventually, his deep involvement in the Sikh community.
In the early 1970s, Cameron ran an organic bakery near Eugene, Oregon.
And then, a few years later, he relocated with his wife and young family to Salem, where he continued living communally as a Sikh.
Yeah, in a way, it was kind of the post-Woodstock 70s.
It was certainly trending.
And from my experience it was very empowering because it was a wonderful sense of purpose in creating kind of an alternative culture, an alternative economy.
It was a form of rebellion, but constructive rebellion is what I would call it.
So let me just imagine this.
You get there in 1973 to Salem Oregon, and you and your wife, who are sort of a young white family, but you're wearing turbans and you're dressed like you would be a Sikh.
And was that – and your kids were also wearing turbans?
Yeah.
And was that –
I don't know.
I'm just imagining a tiny place like Salem in 1973.
Did anybody notice you?
I'm sure they did.
Do you remember the reactions that you got?
Well, certainly it wasn't sort of the best way to fit in, but that wasn't really our goal.
Our goal was to bring yoga and meditation to that community.
And one of the requirements to be in the community is you had to get up at three in the morning and do two and a half hours of group yoga and meditation.
Wow. you know, builds a lot of character.
I was, you know, wasn't that employable the way I looked.
And so that caused me to start a new business, which was, you know, the natural food movement, which was growing and a lot of products were being developed.
And I, of course, was exposed to that with the bakery in Eugene.
So I decided to become a distributor of natural foods.
And just to clarify so you this is the mid 70s the sort of the natural foods movement was really starting.
It was coming out of the hippie movement and there was a kind of back to the land and whole grains.
And you were seeing people making products and you thought, hey, I could distribute them.
I could get all these products and then distribute them to stores in the area.
That was the idea you had.
Exactly.
I knew the stores.
I had the contacts.
And so I talked my father into loaning me a little bit of money to buy an old refrigerated truck.
It was the only time I ever borrowed money from him.
And I started distributing it. raw milk.
And so it was initially dairy oriented.
And then I started bringing snack food makers.
And ultimately I had a weekly truck that would come up from Southern California with these products that I would distribute.
And you had a refrigerator truck that you yourself would drive all over Oregon.
Mm-hmm.
Seattle to Southern Oregon, I-5 corridor.
And that probably took you a couple days, right?
Yeah.
Yeah, that took a good chunk of the week.
But, you know, I needed to put food on the table and—
It ultimately, I gave, turned over my ownership to the, you know, the community ownership.
By then we had, we were living communally.
So eventually, you know, we were employing quite a number of people.
And this was a lifestyle that fulfilled, you know, so many of our dreams and, for you know, living in this ideally counterculture manner,
It wasn't until 19...
In 1978, where the bubble kind of popped a little bit.
The bubble of what?
Of natural food?
Sort of the communal, idyllic vision of what we're— What happened?
Well, the natural foods as a movement was growing tremendously.
There was lots of new products and it was scaling and challenging these grassroots business people who had had no prior training to adapt and run these businesses properly.
But what ended up happening, you know, I was the progenitor of all the businesses in this community.
I was always coming up with the next vision and next products.
And I think that I was just a threat to kind of what was a movement, to slow it down and make it a little more conservative.
So I was summarily dismissed from the businesses.
I was basically fired and of course, there was no, no severance money or anything.
So i was with four kids and no, no income.
I was, wow kind of out the door.
Did you uh, feel angry or resentful when that happened?
Yeah, I did.
I definitely did.
But I was also still very committed to the overall vision and movement of the community.
And so, you know, I sucked it up, but I had to find some income and pretty quickly.
Yeah.
But, I mean, at that point, you know, you had experience in the natural foods business.
So were you thinking that you could still do something with that, like maybe sell your own natural foods or what?
Well, I wasn't sure what exactly I was going to do.
I was basically living by my wits and my previous experiences.
But I knew that I was going to start a business that was going to be my own – for my own ownership –
I wasn't sure exactly how it would evolve.
My main priority was just to get enough income to feed my family.
So that was distributing cheese, bulk cheese, which within a year I started bulk nuts.
But I had to get some working capital.
And I got to know a local banker in Salem who happened to be an avid skier in Mount Bachelor.
And so I talked him into it. giving me a $10,000 working capital loan.
And I sweetened the pot with a bunch of free passes to Mount Bachelor.
You shouldn't have been loaning me money.
I was at complete risk.
And he loaned you money to start a business.
You called it the Enes Kalsa Company.
And the business, because you had been for about a year distributing, as you say, distributing cheese and nuts.
And this business was going to be what?
Well, the nut distribution evolved into starting to roast nuts to add value.
So you would, instead of buying nuts that are already packaged or ready to be, you would produce your own, roast your own nuts and then sell them.
I managed with that some of that loan money.
I purchased a probably a 1930s dry roaster and started roasting bulk nuts mostly a lot of peanuts for grind your own nuts, peanut butter in natural food stores.
And that ultimately evolved into making trail mixes and then ultimately making our own branded peanut butter and almond butter.
How was the nut business?
I mean, was it successful?
Were you doing very well?
Like how did you know two, three years in?
Did you find it to be challenging or did you start to really see some results?
Well it was yeah, I think by let's call it maybe 1980.
You know, I had a little nice little factory in Salem with a warehouse.
I had a broker.
I was buying all my peanuts through and he tipped me off that there was going to be a big crop failure that year because of drought and, And so I went very bullish.
I speculated, which was really crazy.
And I contracted way, way more nuts than I actually was currently producing.
And sure enough I was sitting on all these valuable contracts in the market for peanuts, essentially tripled.
So I ended up selling truckloads of, you know, 50,000 pounds of peanuts.
And I was making like $25,000 a truckload.
And that effort capitalized my little business which prior to that, was extremely thin on working capital.
All right.
So you've got this nuts, mainly nuts business.
And I'm not sure this is really the story or if it's apocryphal or maybe it is the story.
I don't know.
But from what I've read, around 1982, so you're about four years into the business.
You are in Hawaii and you are on the beach and you have some of these.
Someone gives you homemade potato chips, which if anyone's made homemade, you should make them.
They're amazing.
You just use a mandolin.
You slice them on the mandolin.
You fry them.
I've done it for dinner parties.
People are amazed when you give them homemade potato chips.
They're delicious.
You tried these and.
You already, from what I understand, you were thinking about what other products could I sell?
And this was like a light bulb moment.
Is that true?
Is that what happened?
It's a good story.
Not exactly true.
I had read about the Maui Potato Chip Company.
I'd read an article in the Wall Street Journal that had gotten my attention.
I'd planted a seed.
And so I was considering the idea of making handmade potato chips.
Because we had oil roasters, we made nuts in.
And...
But, yeah, I went went to Hawaii for a vacation, but also to check out the Maui potato chip company.
Interesting.
But it's a this is the early 80s.
This was a potato chip that was thicker, crunchier.
Right.
It didn't taste like a Lay's chip like it was.
And it was totally different from anything else out there at the time.
Exactly.
And I called up this gentleman and told him who I was.
He's the owner of the Maui Chip Company.
Yeah.
I'd like to meet him.
And he said, sure, come over.
So I showed up at this little industrial estate.
It was in this little metal building.
And he came out and greeted me.
Very nice man, Filipino man.
I had a grandchild on his side, hip couple dogs running around, and had this little factory.
He was making potato chips.
And, you know, I got to ask him a few questions.
He would not invite me into the factory, though.
I never got to see how he made them.
But the one big takeaway was was um, i remember reading the article and it talked about these special maui potatoes he was using and i said so tell me about these maui potatoes you're?
You're growing potatoes here.
And he laughed.
He goes no, that was.
That was a misunderstanding.
There's no regular potatoes grow in hawaii.
All of my potatoes come from klamath falls, oregon wow.
So the light bulb went off.
Well, if this guy can make such a splash and be in the Wall Street Journal and have this kind of cult following and he's bringing his potatoes all the way from Oregon and I'm based in Oregon I can do this.
When we come back in just a moment.
Cameron learns how to fry potato chips through careful trial and error, until one error ends in disaster.
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 early 1982 and Cameron has just met with the owner of the Maui Potato Chip Company in Hawaii.
And after that meeting he's convinced that making potato chips in Oregon is the best way to grow his business.
Chips are a very high turnover product category.
People are also concerned. very committed to their brand, particularly with potato chips.
So that had been registered in the back of my mind a few years before.
And I enjoyed the nut business, but I knew it would always be limited geographically.
And I also knew, I sensed that natural foods would, Because you're thinking hey, this could be interesting, this crunchy, small batch potato chip, right?
Because again, potato chips, like I grew up on Ruffles and big bags of Ruffles and Frito-Lays.
And that is basically from what I, now I dove into potato chips while I was researching the story.
And I guess the way those are made is it's like a continuous fry process.
So basically the chips run through a vat of hot oil and then they're getting dried.
And they're on a conveyor belt and they're very thin.
And but when you eat a like one of these Hawaiian chips, it's totally different.
So you go back to Oregon and like with this idea is sort of percolating now, really thinking OK, I got to figure out how to do this.
Well, actually on that, I'm just trying to remember sequences.
I had already created a brand on paper.
And I had spent, I remember, $1,200 with a graphic designer in Salem, Oregon, which at that time seemed like an absolute fortune.
I was going to originally call the product Pot Chips, P-O-T.
Pot.
Like because it's in a kettle pot.
In a pot, yeah.
So I thought that would be a good name.
You thought it would be good calling it pot chips.
Yeah, thumbs down.
Everyone said that.
That word, that's just not the word you want to use.
It can mean a lot of different things, you know, that it was a stupid idea.
So I went.
When I got back from Hawaii, I went to this same designer and I said I want you to same design.
I just want you to change pot to kettle.
That's how kettle chips became a brand.
So here's my question.
You were roasting peanuts, right?
And so was it sort of a –.
This is like in an era before you could just go on YouTube and figure out how to do things right.
There weren't easily like internet manuals.
Like today, we have had founders on the show are like, I had no idea how to make clothes.
I just went on YouTube and learned about it and then started a brand.
Like literally –
These are stories we tell today, which is crazy.
Was it a big leap to go from roasting nuts to learning how to fry potato slices and make them into kettle cooked potato chips?
Was that a big sort of leap or was it easy?
Well, it was and it wasn't.
It wasn't because we had these fryers we knew for oil temperatures.
And it was a big leap because potatoes don't behave like nuts behave.
It seemed like every load of potatoes we would bring in would be a little different in the way they fried.
It was completely trial and error idle team and we started in the late spring buying russet burbank potatoes and we chose the russet burbank potato because it's it produces the highest natural sugars.
It wants to caramelize with the temperatures and you get a darker colored product but there's more flavor.
Interesting, Did you have equipment that automated any of this, or were you literally hand peel?
It was a teams of people hand peeling potatoes and then hand slicing them on a mandolin and then hand frying them.
Well, in the very beginning, we only made potato chips at night because our factory was making nuts during the day.
And so we had two oil fryers, which was a vat, maybe four and a half feet long by four feet wide.
And I purchased a food service potato slicer, which was not adequate, but we made it work.
And we would...
Hand-feed potatoes.
We bought them in 50-pound bags.
And this is a four-foot vat of hot oil.
Yeah, you would monitor the temperature of the oil, and when you slice the potatoes in, the temperature drops and then it gradually comes up.
And what we later learned was that temperature variation is what really creates the character of a hand-cooked chip and that extra crunchiness.
So starting out, we can make 40 cases a night, so 12 bags to a case.
But it was all very much by hand.
And I have the photograph that shows me holding the first two bags of kettle chips off the line.
This young guy in a turban in late July of 1982, with a big grin on my face.
That's you.
And imagine, I mean, this is a premium product, right, because it's handmade potato chips.
And how much, do you remember, how much did a bag cost in 1983?
Oh, boy.
Less than a dollar, I think.
You know, I think 99 cents was a very sellable number.
But probably still, like, a bag of Lay's was 25 cents, right, at the time, maybe.
You know, how much...
I don't think we were that much of a premium from Lays.
I would say we were probably 25% premium.
And how were you making sure people tried them and bought them?
Like, what were you doing to get people to buy one of these bags?
Were they put by the register?
Like, what was the strategy?
So initially, Guy, there was no marketing.
We just put them on the shelf.
We did within six months, we started doing tastings in stores and things when we had more capacity.
But initially, the stores promoted them.
So there were the Maui chips in Hawaii that were probably only available in Hawaii.
Was there anything like kettle chips in the U.S.?
I mean, I know there's there's Cape Cod brand.
I don't know if that was around yet.
It might have been.
But was there?
Were there other, as far as you knew at that time, anyone else making small batch sort of thick cut, super crispy crunchy potato chips?
There were some makers in the East.
Cape Cod had started, I don't know, probably a year or less than a year before us.
And so they existed.
There was one in New Orleans, I think, called Zaps.
Oh, Zaps.
It's still around.
Yeah.
You know, they started about the same time we did, I believe.
Got it.
Okay.
So it's the summer of 1982, and you guys are making— cases of potato chips a night.
So what was the next step?
Like, were you thinking about expanding or and or making more?
Yeah.
So I talked our landlord into building a building.
It's in Salem, Oregon.
In Salem, which he did.
Yeah.
I then got a bank loan.
I ordered all new equipment.
And by, I think by December of 82, we had moved our production area into this new factory, which could produce a whole lot more kettle chips.
And so by January or so Safeway Northern California division came calling and they were very enthusiastic and they wanted to put them in all their stores.
But To fulfill that, we had to go to a second shift, a night shift.
And I was actually in San Francisco on a certain day getting ready with my family to fly to India.
I was going to make my trip to India.
Because you were still a Sikh.
Yeah, I was still a Sikh.
Practicing, yeah.
One of my main people at our factory in Salem, Jim Green, you know, there were no cell phones in those days.
And I was at the terminal waiting to catch a Pan Am flight and I got paged.
And it was my guy, Jim, sounding pretty stressed out.
But when Safeway Northern California got their product, they tested them and the oil was rancid in the chips.
And they were rejecting the whole truckload.
Oof.
We didn't understand the management of fryer oil and how it degrades.
And it just so happened when we went to the second shift that threw the balance off.
And so I was literally about to step on this flight and I had to tell.
My Guy said I'm sorry, you got to figure it out.
And so I went to India amidst this kind of disaster.
You know I it was hard to make phone calls, even from India, but I was able to kind of stay in touch.
But we had to take a lot of product back and By the time I got back, you know, we had shut down the plant.
Demand had kind of evaporated for the moment.
And it was kind of an existential situation because I'd taken out some large loans to set up this new plant.
But fortunately the nut operation made a small profit and it It buoyed up.
You know, kettle chips would have never made it.
Without the nuts.
We had the nut operation.
I imagine Safeway canceled its contract.
They did not come back to you.
Yeah.
So you had one shot with Safeway and you blew it.
We blew it.
And the reputation.
And so I went up to Seattle for a little regional natural food trade show to talk to our customers to tell them that we were fixing the problem.
And on the drive back my then wife was driving and I was pretty, pretty depressed uh, about the whole situation and pretty down about it.
And um, my wife fell asleep at the wheel on I five and the car went out of control and skidded across the southbound lanes and then rolled up on the very outside onto a grass bank with all the windows breaking out of the car.
And, uh, We were all fortunately okay.
I was a bit bruised and battered.
Wow.
So that was kind of a wake up.
We were kind of blessed by not getting hurt.
And it kind of jolted me. out of my, you know, bit of depression about where we were.
And so it just said, Okay, you know, we were going to figure it out.
And so we got it together and started making good product again.
And we managed to get through that period.
Wow.
All right.
So by the time I think the company is, as I understand, in like 1983 overall was doing 3 million in sales.
And 1986, the company was doing four and a half million in sales, which is nice.
You know, it's growth, but it's not explosive growth.
But I think it makes sense now peering forward about the challenges and the crises that you face with kettle chips, because you took on a lot of debt to finance it.
I want to turn now to 1987 because this is sort of the backdrop to where you are.
You've got kettle chips.
You've recovered from the crisis, but it's still a pretty small regional brand.
And you go on a trip to England, a motorcycle trip with your 19-year-old son in 1987.
And this is going to become a very important trip.
But you were just going there to have a vacation.
Am I right?
To cycle around Europe or motorcycle around Europe?
Yeah, in general.
Things were by then going well with our family kettle foods operation.
I had a good team, i had management team.
I'd never been to europe and i wanted i wanted to sort of experience the food cultures of europe.
That was an interest and also kind of a coming of coming of age trip with my son who was 19 and in a way, without admitting it, it was sort of a coming of age of myself.
I wanted to get out into the world and explore it a little more, And I guess it was during that trip that you met up with an American guy that was living in the UK named Tim Meyer, who I guess you had been introduced to a little earlier.
And I'm jumping a little bit ahead here, but I guess you ended up kind of starting to talk with Tim about bringing kettle chips to to the UK.
And I mean, how did that idea start?
Like, what's what's the story?
Right.
Well, Tim was a gentleman from Salem, Oregon, originally.
But he'd gone on to become a banker in London.
And we hit it off.
He was a really interesting gentleman.
And he had left the banking world very recently in London and was figuring out what he's going to do next.
But yeah.
And how did the two of you start to talk about maybe bringing kettle chips to England to start selling on there?
Well, being interested in the food cultures, I was eager to look at some stores.
Look at what they call the crisp market in England.
Tim made a list of stores to go to and collect certain brands of English crisps.
I remember we were all at a big table with all these bags spread out and opening them and tasting them and talking about them, the flavors but um, you know, I began to feel, you know, kind of a cultural change of foot.
What drove our, the natural food movement, particularly on the West coast of the U?
S, a lot of those lifestyle values around, you know, health and fitness and all those things.
I started to sense that there that was just beginning, in the UK and um London particularly, and that Kettle Chips as a natural foods product would be an opportunity to really pioneer a category.
Okay.
I want to break this down a little bit because you're coming off a year of doing around 45 million in overall sales.
You're a very small company, and Kettle Chips is a very small brand.
And you are – in England in 1987.
And you're noticing there is a, and anyone who's been there will see there's like ham and pickle flavor and beef and mustard flavor chips.
All these were like they have had weird potato chip flavors for a long time.
Crisps, right?
What they call crisps.
So you see this and you think hey, there's nothing like kettle chips here, you know, and maybe we can enter this market.
Is that that's what you start to think?
Yeah, being an entrepreneur, I saw an opportunity.
I mean, it would be a very large leap to pull something like that off, but I felt that the brand, the product would have potentially good acceptance.
OK, that I understand.
But this is here's what I don't understand.
And I say this because this is going to be pivotal to your business.
But 1987, you are a tiny regional brand in Oregon and Washington state.
So thousands of miles away from England – this is before the internet.
This is before cell phones.
This is before email.
This is like fax machine era, right?
You're thinking, hey, the next logical move for us is to go to the UK.
I would have thought somebody would have said, Cameron –
Maybe you should think about expanding to the East Coast or maybe the Midwest of the United States first.
Why would you even think about going to the UK?
Did anybody, anything in your brain say, maybe we should expand to the US first?
Good insight.
And, you know, my best answer to that is I really enjoyed being in Europe.
I really enjoyed in the UK and I had a hunger for more.
I felt there was an opportunity, but I also wanted to have an excuse to have to keep going back.
Fair enough.
Okay, but again... Not a good business strategy, but yeah, it was naive.
It was completely naive, but I'm also a believer that really very few good things happen without a level of naivety in the beginning.
Otherwise, if you knew how hard it would be, you would never do it.
Yeah.
So you decide, I want to go into it.
Actually, on so many levels, I should now play devil's advocate to my previous argument.
On so many levels this actually makes sense because there was a potato chip culture in the UK that was stronger than maybe anywhere else in the world.
Exactly, yeah.
Because people went to pubs, they drank beer, they want a salty snack.
And if you go to a pub there's always a big wall of crisps that you can order and they'll get a nice pint of beer, some salted crisps.
Great.
So in many ways this actually made a lot of sense, because you are going to introduce this interesting, different kind of potato chip and into a culture that was already primed to want to like this thing.
But I also felt that because of that, that tendency for the product to generate, through word of mouth, this kind of mystique, I somehow felt that this would be very possible in the UK and that its population was very concentrated, and But the challenges now are?
They're insurmountable in my mind.
Like you've got to now find a place to make them and find distribution channels.
And like you have no.
So where did you start?
I mean, because I should say you launched this thing less than two years later in the UK in 1989.
But until you get to that point, how do you start to make this into a reality?
Well, in the last couple of days that my son and I were in the UK, we were in London and we agreed that the following spring I would come back to London and we would investigate this with more seriousness.
So I went back, you know, got back involved in research. life and business.
And I think January or so, I went and bought a suit and tie.
I hadn't owned one because I figured you do business in England.
You got to dress up and got on a plane and packed some samples of kettle chips and flew over.
And And um, Tim had organized a meeting with a potato supplier up in the Norfolk region, which is northeast of London a couple hours.
We'd also made contact with a company called Derwent Valley Foods.
They had begun making tortilla chips the first tortilla chips in the UK but doing pretty well with their brand.
Um, What was their brand called?
Phileas Fogg was their brand.
Oh, I remember those.
I named after the guy from the Jules Verne book, but I remember that brand, Phileas Fogg.
Yeah, they had their own distribution company.
Tim had made a connection with a small group of convenience stores inside London train stations and they'd agreed to let us put kettle chips, display them, give them the product for free and they could keep all the revenue.
But they had to give us, be willing to be interviewed about what their experience was.
And so all the product sold out in all three stores that first weekend.
And we had very positive feedback from each of the managers.
And so that was the extent of our research.
We said, okay, the consumer wants the product over here.
And on the strength of that, I guess, you go to a food convention in London and They were introduced at the Foon Convention.
And so was there significant demand to order these bags of chips from the get-go?
Well, we didn't know.
Our main goal was to set up a network of independent distributors, small distributors, to get our products in, initially the smaller stores.
Yeah.
OK, I so, from what I understand you initially, the first few months you managed to get small distribution, mainly on the shelves at Heathrow Airport, which is actually a great place to be.
Then things went quiet for a while.
There were no reorders for some time, which I from what I read made you quite nervous.
It did.
Through these small distributors we got initial production, but then there weren't new orders coming because we had no marketing.
We were counting on the consumers discovering the product on the shelf.
We didn't really anticipate though, how quiet things would be, but it went quiet, and I had literally bet the farm with loans to set up a factory over there, and I figured either it's just going to take time for word of mouth and then it will take off, or we've misjudged this and they don't want to pay a premium price, or maybe they don't want the product, but it was one of the two, and So yeah, I was sweating bullets.
When we come back in just a moment, as Kettle Chip starts to take hold in the UK, Cameron decides to launch a new venture about as far from London as you can get.
Stay with us.
I'm Guy Raz, and you're listening to How I Built This.
How I Built This Hey, welcome back to How I Built This.
I'm Guy Raz.
So it's around 1989, and Cameron has risked his whole company by expanding into the UK.
But with no marketing budget, he's counting on word of mouth for people to discover his kettle chips.
You know, we some orders started coming in, but they were small and uh, the beginning of june suddenly, the product just switched on.
It just word of mouth clicked and we just got deluged with orders.
And that's when all five of the supermarket chains all called.
Well, in that same week.
They all wanted it, they all saw it as a symbol of this kind of new wave of natural foods that they wanted to get into.
Did people know that it was an American brand?
Was that part of what made it exciting?
Yeah, I think it was evident it was an American brand.
The package was however, adapted to the UK somewhat, but we still called them kettle chips, not kettle crisps.
So it's interesting because the brand grew very, very fast in the U.K.
And it took off and it very quickly surpassed the sales you were doing in the U.S.
You were selling more kettle chips in the UK, much more than you were selling in the US.
Yeah, we had jumped over the ocean, you know, and skipped the East Coast.
And I think there was like a TV host in the UK at the time, an American woman who lived there named Ruby Wax, who was very popular TV show.
I think she she always had kettle chips like she was eating them and she wasn't even paid.
She wasn't like a paid influencer.
She was just eat them on her show.
Right.
Well, it was similar to what we'd experienced in the US, where we got product placement, not anything that we'd engineered.
And so people started talking.
And then there was a photo of Princess Di with a bag of kettle chips in a grocery bag.
She would go shop in those days.
Can't beat that.
That's better than her HRH seal on the side of the package.
Yeah, and so it just, you know, it started to get this mystique.
And then we, Tim Meyer became ever more involved, and he has a finance background.
He insisted on putting a very, a more premium price on the product than I would have.
He said, well, if it takes off, you know, we will be able to gain profitability much quicker.
And so...
It, it did.
And we had to keep expanding the factory and buying more equipment.
And those were big investments.
But we were able to.
You know, we had a small banking relationship but largely we were self funded in our growth, which was pretty amazing actually.
I would think, the success of this product in the UK.
It's almost like a backdoor way to expand in the US.
Did that then make it easier for you, to say, to go to a Kroger or another supermarket brand and say hey, do you guys want our product?
Or did they start to come to you because they had heard about this product in the U.K.?
?
Well, I think less so that more so we had a way more sophisticated sales team in the UK.
And so, you know, we ultimately got to the, you know, the East Coast and did well.
But I think the education we got doing business in the UK was absolutely key.
And you probably also had to or had to, but you probably introduced, like some unusual flavors in Britain, right?
For that ham and pickle.
We did.
I mean, we didn't go totally crazy, but yeah, flavors we wouldn't do in the U.S., but...
Actually, one of the most successful flavors even today is the crinkle cut in the US salt and pepper, and that flavor we originally pioneered in the UK and then created a version in the US.
Okay, let's now pivot to something so totally different and, I guess, not weird, but you are seeing incredible success with kettle chips in the UK.
You take another family vacation to Hawaii.
This is in around 1993.
And, while you're there, I guess you – this is sort of the craft beer – boom is just gonna start at this moment, and you are from oregon, a lot of long-standing craft beer tradition in oregon and you, i'm assuming, love craft beer.
But you're there and you realize hey, no one's making craft beer in hawaii.
Why don't we do this?
Like you've got this whole business kettle.
I mean, were you just restless?
Did you feel like okay, i've done that, i need to start something new?
Well, it actually has a link all the way back to my time in England and that, being a yogi and a Sikh, you didn't drink alcohol.
But while I was beginning to transition out of that and I discovered real ales in England and with Tim we would go to his neighborhood pub and have our.
And so, coming back to Oregon, I became aware of the craft brewing movement, which really was analogous almost to the natural food movement.
It was an alternative to the industrial movement. approach to making beer and yeah i my son had same son that i went to europe with the motorcycle had gone to this is your son's spoon right spoon yes and his spoon his nickname or is that his real name is his nickname yeah okay And he had gone to Hawaii on vacation with his Portland girlfriend and didn't come back.
They said they found paradise and they found jobs on the big island of Hawaii in Kona.
And I decided to come over for Thanksgiving.
And we rented a large house on this bay in South Kona.
But while there I just had this epiphany that I had to figure out how to live part time, not only in Hawaii, but on that day, in that specific area.
Just it spoke to my spiritual self that by then was no longer a Sikh.
And.
But out of that same trip there was no beer being brewed in Hawaii and very little craft beer being imported.
And I just, you know, talked to my son.
I said Why don't we together start a brewery and i'll i'll mentor you yeah so um, i contracted an advisor in portland to design the brewing equipment and what?
I'm just curious, what was the idea of?
I mean hawaii, i love hawaii, i'd live there in a second, but it doesn't produce hops or malt.
I think it's too uh, tropical to produce those two things.
What would a signal like a hawaiian be?
I'm thinking like a, like a crisp lager, right?
Like that you have outdoors when you're like a Mexican beer a little bit.
Was that the idea you had?
Like what would a Hawaiian beer taste like?
Well, an impression again.
Another Hawaiian impression was when I was 15 years old.
I went to Hawaii for the first time Waikiki, with my family.
And I became aware of primo beer, which was the beer of hawaii.
It was a big deal in those days and by the time we started primo didn't exist.
It had been bought out and left the market, and i just sensed that there was one.
Not unlike launching kettle chips in the uk, there was a timing window to pioneer making local craft beer with a Hawaiian brand.
That would have that mystique, not unlike Primo beer.
There are a lot of challenges of distributing beer, at least at that time, in Hawaii, because even though Hawaii is, you know, each island is small.
It's like 270 miles from Kona all the way to Kauai, and you've got to distribute the beer across the islands.
It's very expensive.
I think the taxes on liquor and alcohol in Hawaii are very high.
A lot of challenges.
My biggest question about the challenges is you were the CEO of Kettle, you've got a plant in Salem, you've got a thriving business in the UK and you're starting a beer company with your son.
So were you flying like Kona to Salem to London to Salem to Kona?
Like, was that your life?
You know, by that point we had a really good team in the UK and we had a good team in Oregon and I was able to, you know, have a little bit of arm's length role, but also.
Having been a yogi, I still do yoga and meditation.
That always balanced, that kept me in a healthy mindset and helped the stress from overwhelming me, particularly in high-risk periods.
We got the brewery open.
In 95, we produced the first beer.
I thought we could figure out this manufacturing thing in Hawaii, but I quickly became aware of how expensive it is to manufacture in Hawaii and why there weren't any beer producers in Hawaii.
But it kind of plateaued at a certain sales that causing it to lose about $20,000 a month.
And this went on not for months, but for several years.
Wow.
So what happened?
I mean, obviously, we know Kona Brewing turned into a successful brand.
So what turned it around?
I mean...
$20,000 a month is a serious amount of money to be losing.
Yeah, and I was the one that had to cover the cost.
I think it got very stressful for my son.
He did a good job getting it to a certain place but at a certain point he moved off island, left the business and I recruited a young guy in Portland that I
We worked together and it was.
You know it was tough the first six months, but then we made some key decisions to move the bottled part of the production to the mainland.
Find a good contract producer, because that's where we were losing our shirt.
You know, it's interesting.
I know I mean you start the brand.
The brand officially launches in 1995 and it was sold in 2010, right?
And partially sold.
Partially sold.
But it sounds like it's still a tough business that like potato chips.
Great.
It was profitable.
And but that the beer business, it took a lot longer to turn this into a profitable business.
Well, it took three years to turn into a profitable business.
By January of 1999, we became profitable, went into the black.
Okay, so I want to go back to Kettle.
And I guess by the early 2000s, you and your partner Tim, who was really kind of, I guess, overseeing operations in the UK, You decided that you needed to grow or to scale.
You needed a more professional board.
And I guess you brought on a private equity firm.
You sold a chunk of the brand to them.
What is the idea in 2004 at this point?
Hey, you know, we've got this really successful brand.
Let's start to look around for maybe an acquirer.
Yes, we were by that point, you know, we're doing about $100 million in sales, scaling and scaled.
But Tim and I were, were the board of directors, we were co CEOs.
And we were literally making all of our key decisions in pubs and restaurants.
You know we'd sit down, have a meal and make those decisions and you know that worked well.
But we realized we needed a proper board with some outside influence to help kind of guide the next coming years because we felt there were even greater opportunities.
But tim had a relationship with a gentleman named michael chu caterton partners.
Their specialty was building consumer brands.
That was the focus of their private equity business, still is today.
Got it.
And so what we were going to do, they were going to buy a third of the business.
And we were also going to...
Recruit a top flight CEO, global CEO, and bring in a group that Catterton worked with to do strategic plans in which we'd never really done a strategic comprehensive, strategic plan before.
So you sell a third of the company to this private equity firm with the intention clearly to sort of set the business up to get acquired for more money.
And that happens within, I think by 2006.
It's announced that the brand is going to be acquired by a UK-based investment firm called Lion Capital.
They bought out...
Kettle Foods reportedly for over $300 million.
Yeah, we had grown the business by 50%.
And as a board, we agreed that if a certain dollar amount offer came in, then we would consider it.
It was sooner than what we'd planned.
But, you know, I'd been at it for 27 years.
And an amazing outcome.
I mean, $320 million and you guys still own 67% of the business.
I mean, incredible.
You know, I don't think anybody would turn that down.
Yeah.
And I have no regrets.
It was a good journey.
I realized that my time had come and along with Tim's.
They went on to sell it, I think, for over $600 million in 2010.
The brand Kettle has gone through since then.
Diamond Foods, which bought it, it was bought by Snyder's Lance.
People may know their pretzels.
And then Snyder's Lance was purchased by Campbell's for almost $5 billion.
So Campbell's actually now is the owner of Kettle.
The Kettle Chips brand.
And so now, you know, you go to any grocery store and there's like Kettle Chips on the shelves.
And basically now it's owned by Campbell's.
Right.
So that was it.
So was your time, I mean, you didn't at that point had no business interests in Salem.
I mean, I'm assuming you stuck around for a little while to help with the transition, but basically that was it right.
Yeah, I didn't.
You know, we were Tim and I were given a small incentive to be advisors for a year.
But we both sat in on the first conference call with the operator that Lang Capital was had brought in to oversee the company a Scotsman, very dynamic, forceful individual and sat in on the first management call, which you know I've never done.
I've always been in charge.
And after that first call, both Tim and I said, well, we're not doing that.
We didn't do all this to sit in the back of the bus.
And, you know, we declined on that opportunity.
So I basically walked away when it sold.
One of the things you were able to do with your newfound resources was to start a foundation.
And I think a lot of your focuses on, like um, environmental issues, i think even domestic abuse, and i read that the board of your foundation voted last year to spend the entire endowment down and within by by 2029, which is it's like brewster's millions you got to give away.
How big is it?
Is it 75, 80 million dollars?
Is this foundation in that, in that yeah, in that arena?
Tell me about that.
Why spend it now?
Why not just keep it going for another 50 years?
You know I'm turning 75 this week and, looking at it more than a year ago, is that I didn't want to have to worry about managing a foundation through my 80s but also preparing it for the future.
When i was gone, i just i decided that's yeah, that's too much and uh, but yeah, it's been a whole game changer.
It's kind of turbocharged our, our organization, and we were given the award last year of the outstanding foundation in hawaii, which it was nice to have that recognition.
That's awesome.
Yeah Cameron, you know when you think about your story, right.
I mean, you sort of started your early adulthood as part of this movement and living communally.
And for a variety of reasons, you went off on your own and then kind of stumbled into this idea of potato chips, which became a massive brand right.
I mean, it is an iconic brand today.
And you became very successful and wealthy as a result of it.
And when you think about how it all kind of worked out, how much of your success do you attribute to the work in the grind and how much do you think had to do with being lucky and being at the right place the right time?
Yeah, I think very much both.
I think you can't be overtly risk-averse if you're an entrepreneur.
You have to be able to live with ambiguity and live with stress.
Also at the core is having great teams of people.
They're the ones that really executed and made these various companies work.
And Yeah, it's the people that you know I was able to be the visionary and direct into opportunities.
But it's really so many great people that heart and soul they committed themselves to make that happen.
That's Cameron Healy, founder of Kettle Foods and co-founder of Kona Brewing Company.
By the way, in the early 2000s, Cameron was looking for a way to make sure that all that oil used to make kettle chips didn't go to waste.
So he funded a biodiesel startup in Salem that still exists today.
And he did it with another old hippie who's also a vocal advocate for biodiesel fuel, Willie Nelson.
Hey, thanks so much for listening to the show this week.
Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.
And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at GuyRozcom or on Substack.
This episode was produced by Casey Herman with music composed by Ramteen Arablui.
It was edited by Neva Grant with research help from Rommel Wood.
Our engineers were Robert Rodriguez and Kwesi Lee.
Our production staff also includes Catherine Seifer, Chris Messini, John Isabella, Sam Paulson, Alex Chung, Carrie Thompson, Noor Gill and Elaine Coates.
I'm Guy Raz, and you've been listening to How I Built This.
