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Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
I'm Guy Roz, and on the show today, how Coel Tomei discovered a delicious passion fruit yogurt in an Australian beach town, became obsessed with bringing it to the US, and built Nusa into a major yogurt brand.
Coel Tomei, like a lot of the founders on this show, was an accidental entrepreneur.
She left her native Australia in the late 90s and moved around the rocky mountain states doing different, mainly temporary jobs.
She waited tables, worked at ski resorts, and in shops.
But eventually, she landed a junior role working supply chain for a startup in Boulder, Colorado.
That startup was a sparkling beverage brand called Izzy.
And while working there, she caught the bug.
She started to think that maybe she could come up with an idea as well.
And the idea actually came to her on a visit back home to Australia in 2005.
Coel was visiting her mom and tasted what she thought was the most delicious yogurt of her life.
It happened to be a local brand made in a small beach town in Queensland.
But for years, she didn't do anything about it.
She just dreamed about finding a way to bring that kind of yogurt to America.
How she did it? With no experience working in dairy or running her own business?
Well, that is today's story.
How Coel Tame and her partners managed to turn Nusa into a multi -million -dollar yogurt brand that was eventually acquired by Campbell's, as in the soup company.
Coel grew up in Australia in the 70s and 80s.
She came to the U .S.
after college and bounced around Oregon, Montana, and Utah before landing in Colorado.
And so in 2000, I landed in Boulder and ultimately got a job working for this IT company, thinking again that it would be this sort of Kickstarter to a real career.
And realized pretty quickly that I was not very passionate about the IT world, dying in a cube.
But I loved living in Boulder, and I really wanted to stay.
Boulder was and is an IT hub, but it also was and is a food hub, I think in part, in large part because of Hain Celestial, which I think is based there and kind of started there, I think.
Hain Celestial, White Wave.
White Wave, yeah. Some of these really big brands that started there.
And so Boulder became kind of like the Silicon Valley of food.
And were you aware of that when you were living there in 2000?
I wasn't initially.
Food has always been the sort of common thread in my life, from growing up and going to farmers' markets, I think being raised by a single mom who just sort of had bigger expectations of me being independent and sort of helping.
So I started cooking at a younger age.
I'm a weird nerd. I like going grocery shopping.
I like just cruising grocery aisles.
There's nothing nerdy about that.
That's what I do in every city I go to.
It's so fun, like just the discovery of things.
It's the best. And so yeah, so food was this sort of passion point for me, I realized.
And here I am in the mecca of natural food.
And I just decided I was like, I'm going to work in the food industry.
You stayed in that this sort of job that you hated for at least three and a half, four years.
For this IT company, you were there for quite a while.
I was. And once I sort of had this epiphany that food was where I should be, I didn't really have any defined career role within food.
I was like, I'll do anything just to get my foot in the door.
And because I had been nomadic, my resume looked very spotty.
And so it was probably over a year and a half of applying for every job that I thought I was reasonably qualified for before I landed my first food job at Izzy Beverage.
And Izzy, of course, the sparkling juice brand.
And that had started in Boulder.
And so presumably, this is more interesting for you than the IT job that you had before.
Yeah, well, I learned so much, you know, sales, marketing.
I was loving it. Absolutely loving it.
I guess you're in Boulder and around 2005, from what I understand, you go to Australia with your new boyfriend at the time, a guy named Tate.
My now husband. So you go to, you take him to Australia to meet your family.
So clearly, you're serious about this guy.
Yeah. And you go stay with your mom at, she has a small beach house in, on the Sunshine Coast in Queensland.
And tell me about that trip.
We were on the Sunshine Coast, we, so he had gone to the beach, we'd gone surfing, and we're walking back.
We had stopped in at this little local corner shop and, you know, back to my love of just perusing stores, I ended up in the back and there was a cooler and there was this container, which was clear.
It wasn't really very apparent what it was, but I could tell that it had passion fruit in it.
And in Australia, passion fruits are pretty, actually, traditional flavor.
And for anyone that doesn't know, passion fruit, when you cut it open, is this vibrant orange, has black seeds.
So it's very distinctive if you know what you're looking at.
And so I picked it up, turned it over, there's a label on the top of the lid, Discover It's Yogurt, so I buy it and we walk back to my mom's apartment and I immediately try it.
And it was one of those just stop you in your tracks taste moments.
Like, think about eating the best peach in the dead of summer or, you know, things like that where you're just like, you don't want to think about anything else and it was like that for me.
So I'm like, Tate, you've got to taste this, this is like literally the best thing I've ever tasted.
He tastes it. He's like, it's good, but it's just yogurt.
And I'm like, hey, look, you don't understand.
This is amazing. This is revolutionary.
And so I end up calling my mom later that day and I'm telling her about this yogurt that I've just discovered in Australia.
It's called Queensland yogurt.
And you know, throughout my whole life, my mom has been somebody to dare me to do things out of my comfort zone.
And so she said, you know, you should call them.
And I was like, and tell them what, that their yogurts delicious.
She's like, well, why not?
Like, OK, you know, I turn it over.
There's a phone number on the lid.
And so I call and I end up connecting with this woman, Kay Mathewson.
And it's this small family business.
They've only been around for about 18 months.
And, you know, I give her this sort of like mini pitch.
Hey, I'm an Aussie expat.
I live in Boulder, Colorado.
It's amazing food community.
Have you guys ever thought about doing anything with the US?
She's like, no, we're way too busy.
It's like, OK, well, you know, here's my here's my email address.
If anything changes, we'd love to hear from you.
So I go back to Colorado, you know, having tasted this yogurt literally one time.
And I'm back in Colorado.
I'm back working at Izzy.
And I start just looking for something that tastes remotely like this yogurt.
And the yogurt was it wasn't like Greek yogurt.
It was like thick, but not as firm as Greek yogurt.
Yeah, so it's a whole milk yogurt.
I mean, the best way I can describe it is eating velvet.
It was just so creamy.
And then it's infused with honey.
And then that paired with the passion fruit was just this like beautiful, sweet, tart sort of flavor opposition.
And yeah, I couldn't find anything like it in Colorado.
And Greek yogurt, by this point, 2004, 2005, you started to see Chobani and Faye was around.
There were some Greek yogurts that were available.
Yeah, they were they were just coming onto the market.
So I could I could see that there was a trend happening with Greek.
But to me, it didn't taste as good as Queensland yogurt.
Yeah, and you keep thinking about this.
But obviously, you just go back to your job at Izzy because it is what it is.
But but I guess you you were telling a lot of people about this yogurt, right?
Like you it becomes like a weird obsession for you when you go back to Boulder.
Yeah, I mean, I sort of embarked on what I like to describe as my my yogurt, like PhD.
Right. Like I literally would go to my local Whole Foods.
There was a guy working in the dairy section.
His name is Joseph.
He still works at my local Whole Foods.
And he and I would just ruminate about like all the different brands and what did you think tastes the best.
And and then we started talking about packaging.
And, you know, we just had like very deep, meaningful conversations about yogurt.
But why are you in Boulder?
Like, you know, sometimes you'll meet people who are born in another country.
Like I have a notice somebody from Bulgaria and they'll say, oh, in Bulgaria, the tomatoes and cucumbers are so much better than they are in the U .S.
And you're like, are they really?
I think there's pretty good cucumbers and tomatoes in California.
But, you know, whatever, I get it.
You know, I get it.
And so you would have been saying to me, oh, the Australian yogurt is the best in the world.
And I would have been like, OK, great.
And I would have kind of, you know, sort of subtly rolled my eyes.
But I would have, you know, I would listen to you.
You were that person.
I was that person. I mean, driving my husband crazy, driving everyone at Izzy crazy.
I think when you're an expat, you become very nostalgic about things that you can't eat in your new home.
And so I think that was part of it for me.
But I just couldn't find anything that tasted that good, in my opinion.
Yeah. All right. You go back to Australia in 2007 for another family visit, but this time you go back with the idea of making an appointment of meeting the owners of this Queensland yogurt company.
So you're really thinking, all right, I'm going to take another shot at this and see if there's something there there like you really.
I was obsessed and it was actually my boss at Izzy who was really the one that encouraged me to reach out to them again.
That's cool. I love it.
I told you that. I do, too.
So I actually have my mom call the second time.
She definitely has the gift of the gap.
And my mom organized a meeting with the Queensland yogurt family.
And you met these are the owners, the Mathesons, the Mathesons.
Yeah. So it ends up being Kay, the two sons and one of their wives.
We meet in my mom's beach apartment.
And, you know, I go back to I live in Boulder.
It's this amazing food community.
And I said, I really believe that the American palette is not that different from from an Aussie palette.
And there's just nothing like it.
I said, you know, yogurt is growing as a category.
I can attest to that from just having watched it over the past two years.
And I think there's this amazing opportunity.
And again, my vision wasn't to create this national brand.
I just thought I could have this really cool Colorado based company and then I selfishly get to eat it more than once a year.
The idea was maybe could I license it from you?
Like, did you have an ask at that lunch?
Yeah, it was. Would you would you consider licensing the recipe to me?
And when you do an Aussie lunch, you definitely have some beers.
And they essentially said, look, yeah, we think there is an opportunity in the US.
So we'd happily license to you.
We'd want to invest in the business.
And we'd be happy to bring like a yogurt maker over and just help with the initial startup of the business.
And did this from a three hour lunch and a handshake?
But no no numbers were discussed at that point?
None. None. OK. And and just out of curiosity, I mean, as somebody who makes yogurt myself in my Instant Pot, it's not, you know, commercial quality yogurt.
But is it that like, did you did you need to license the recipe?
Was it that complex?
Could could was there a world where you could just have figured it out?
Maybe. But that was not what I was thinking.
I just felt like this was so unique.
And why try and reinvent the wheel?
Fair enough. And and you're this is now 2007.
Yeah. You go back to Boulder.
Let's just pause for a second and talk about where you were at this point in your life, because Izzy had sold to Pepsi.
Yeah. And you got some equity when you joined.
So you got a nice size check when Pepsi bought out Izzy, I would assume.
I did. And more money than I ever envisioned having in my life.
Do you mind telling us telling us how much you got from that equity?
I got about seventy five thousand dollars.
Wow. That's pretty good.
Because you're you are like in your early thirties at that point.
Yeah, I mean, and just a junior position had just bought my first house.
Yeah, it was sort of revolutionary to have this this kind of money.
All right. So you get back to Boulder.
You've got probably after you bought the house and the down payment, maybe you got, I don't know, maybe between twenty five and fifty grand that you'd be willing to put in.
What was your next step?
I mean, now you had you knew that they were willing to commit to this.
But I'm assuming, I mean, what did you know about the yogurt business?
What did you know about how to start it or anything?
Did you know anything?
I knew nothing about dairy.
I just knew I loved to eat it.
Yeah. But yogurt, as I realized, very different industry from the U .S.
to Australia, like way more regulated in the U .S.
You know, the Matheasins were pretty adamant that we would only be able to make this yogurt if we built our own manufacturing facility.
And so I'm like, OK, I can figure this out.
You know, thinking more small scale commissary kitchen.
Then ultimately realize I have to go talk to the state health inspector.
Right. Because that's right, because you want to kill people, you want to kill people with bacteria or something.
Right. So so you go to the state health department to get more information.
And where did you find out?
I found out that I was even more ill equipped than I imagined.
And, you know, this state health inspectors kind of like figures me out pretty quickly that I am completely green when it comes to dairy.
And he asked me, do you even know what the PMO is?
And I say, I have no idea what you're talking about.
So the PMO is the pasteurized milk ordinance.
And it is this voluminous document that governs dairy, essentially.
And he handed me a copy and sent me packing and said, don't come and talk to me again until you understand this document.
Fair enough. I walk out of the building and literally like shed a tear.
What was the what was the problem with the document?
Was it just impenetrable?
I mean, I felt like it would take me an entire year to read it and really understand it.
So you felt like you just did not have the skillset to do it.
And so at that point, what do you do?
I mean, I mean, this is the point where a lot of early stage founders just kind of say, you know what, this isn't for me, I'm going to move on.
I decided to pivot.
I was like, OK, I can't do this by myself.
I need a dairy expert.
And so I sort of reached out to my network and I said, do you have dairy consultants?
Do you have anybody that's in dairy?
And who is your network, by the way, my Izzy people?
Yeah, just small network.
Yeah. Just and asking if they knew people in Boulder who are connected.
You just started asking people you knew.
Do you know anybody in dairy?
Yeah, exactly. And it's it's an old world process.
And what I'm thinking is very entrepreneurial.
When you say old world, it's like small families, generational families.
Exactly. In this business.
Because a lot of dairies are small, but then they sell to larger brands.
Yeah. That just, you know, right.
And a lot of these, as far as I know in this area, they're their families that have been in the business for two, three, four generations.
And and that's what you were running into.
Exactly. But I don't see them as somebody that I can necessarily partner with until one day I'm at my local coffee shop and I see a flier for this fourth generation dairy farm in northern Colorado called Morning Fresh.
A flier advertising what?
That just sort of gives a little blurb about their family story, how they're treating their cows, how they're growing their own feed.
I do a little bit of research and realize that they're selling their bottled milk already at Whole Foods.
So it was a flier advertising the dairy because they were, they were branding their milk, Morning Fresh milk at Whole Foods in Colorado.
Yeah. And so I ultimately cold call.
Getting really good at cold calling at this point.
And I connect with Rob Grapes, farmer Rob, as we like to call him.
And he was, who was Rob?
Was he the owner? Rob is the owner of Morning Fresh, fourth generation dairy farmer.
You know, I sort of give him a little mini pitch on the phone.
And your pitch was what?
That I've discovered this amazing yogurt.
I have a license to make it and I'm looking for almost like a co -man or a co -manufacturing facility that can help me produce it.
And he's intrigued.
He invites me up to the farm.
How far, how far away from Boulder was it?
It's about an hour north.
You know, he was generous to, to even have the meeting.
I think he thinks I'm pretty crazy at this point.
Cause I don't have any product, right?
Cause tasting is believing.
Right. And you're just saying, I have this amazing yogurt.
But, and he's like, where is it?
Yeah. You're like, it's in Australia.
Exactly. So then I call my mum, I asked her to ship me some samples.
I don't even remember how we got them through customs.
Cause you can't technically ship dairy internationally.
She just like ships them in, in, in like with dry ice or something.
I think she froze like milk jugs.
Oh, I mean, imagine this yogurt gets to me and it's probably not food safe at this point, but I go back up to the dairy, to morning fresh, meet with Rob again, and I get him to taste the product.
And at this point, he has the same taste moment that I did back in Australia.
He finds it to be as amazing as you do.
He does. Right. Cause, cause he could have been like, you know, it's pretty good, but it's not amazing.
No. So he's, he's immediately intrigued, um, agrees that this is a huge opportunity.
He's like, you know, good timing.
I'm in the process of designing and developing a new bottling plant for my fluid milk.
He's like, we can probably add a little extra space to make yogurt.
So they were not making yogurt.
They were just bottling milk and maybe cream.
Yeah. Because that's a whole different process.
Yeah. That's a, that's a whole nother line that he's got to put in.
Exactly. But he's like, yeah, we can do it.
So then as we, you know, the conversation sort of continue, we realize it probably makes more sense for him to come on as, as a partner, as a partner.
Fair enough. Yeah. All right.
Let's, let's kind of break this down because this is really important and it's always one of the most complicated, awkward, um, frustrating and just generally unpleasant parts of starting a business, which is talking about the details of, of, of, of what to do, how to divide it up, especially when you,
when it has no value, like this is worth $0 and 0 cents.
And you know that the partners in Australia are willing to put some, some money in, and, but in exchange for ownership, you, you want to own a significant amount because it's your idea.
Yeah. Rob is going to have the, um, equipment.
He's going to make it.
You probably, first of all, in terms of overall startup costs, did you, were you able to figure out how much you would need by this point?
We would lease the space from Rob, right?
So that's, that's cash, but it's not like huge upfront costs.
Um, the Australian family was willing to do a pretty, pretty minor lease on the product.
Basically it was a dollar license agreement.
Okay. Um, because they wanted to be investors.
Right. And we were thinking about, okay, who are the retailers in Colorado?
What's the opportunity set here?
How much do we need to make to service this market?
Um, and sort of backed into this number of $400 ,000.
That would cover the costs of, of getting off the ground.
Exactly. How did you have, you didn't have that money.
Um, I had some of that money, um, had a chat with my mom and my stepdad, so they were on board.
They had tasted the product.
They were believers.
Um, and then the Mathew Sins and Rob.
So we were the three sort of blocks of investment.
So you put all your money together to start this thing.
And then in terms of figuring out ownership and equity, did you just make it simple and just divide it a third, a third, a third?
It was a half a quarter, quarter.
It's because the Mathew Sins family put in a larger share of money.
Got it. So you, you, you and Rob each got a quarter.
They got half and you would try and make a go of it with, with the $400 ,000.
Yeah. And, and I mean, here you are, you are approaching maybe your mid thirties.
Were you in any way nervous about putting all that money into this business?
All your life's like all the money you saved up so far.
No, I mean, I think, no, you were not nervous.
There was nothing nerve wracking about that.
Not really. I think I was so excited by this opportunity.
And, you know, I grew up where I didn't have a lot of money as a kid, but my mom always prioritized experiences over things.
I've always been a hard worker.
So I just felt like if it all went up in flames, I could always get a job again.
And, and I have to assume that, and you're still working at Izzy, right?
At this point, I had actually left Izzy.
Uh, I had gone to work with one of my Izzy alums who had started another company called Snickety.
So you became a, this is interesting because how I built this always comes together in these, like, I know that Izzy a cheque from Izzy also helped to finance the start of SoulCycle.
We did that episode years ago.
And I know one of the founders of SoulCycle was an early investor in Izzy and they got a $200 ,000 check and that helped to finance SoulCycle.
And then Snickety, I think that it was founded by the wife of Brett Shulman who would go on to help create and scale Kava, which we've done on the show because Snickety never really took off.
It didn't work out, but it, but this was a snack, kid snack company that you were.
Yeah. It essentially sustained my family while I was getting new stuff off the ground.
Um, and we were in sort of this little coworking office with a few other consultants, so they sort of became my in -house advisory board.
All right. So it's going to be you, Rob and the Mathew sins and that, that, that company was called like Queensland yogurt company, but that was not what you were going to call it in the U S.
No, I, I really felt like that had.
No connection to Colorado to the U S no one would have any understanding of what Queensland is, but I wanted it to have a link back to its Aussie heritage and you know, the family, the recipe, it all comes from the sunshine coast and it's like, well, what are some of the beaches on the sunshine coast
and new stuff? I was like, okay, it's easy to say it's not very long.
It ties into the storytelling.
This is the name. So, you know, it took a little bit of convincing, but finally everyone agrees.
It's new. So, all right.
So you call it new say yogurt and, and I go get with an H two with an eight yoga with an H.
Yes. Right. Okay. Because that H is really important in the word yogurt without it.
You would not know how to pronounce that word.
I mean, part of me would have been like, well, we're gonna have to pay the typesetter a little extra money for that H.
Like, could we save a few pennies by removing the H?
But no, I get it. You wanted the H in there.
Okay. Yeah, but just again, linking it back to its Aussie heritage.
When we come back in just a moment, how Coel brings her first tubs of Nusa to a major retailer and how she responds when they say, we hate this packaging.
Stay with us. I'm Guy Roz and you're listening to How I Built This.
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Hey, welcome back to How I Built This.
I'm Guy Roz. So it's 2009 and to launch her new yogurt brand, Coel has built a partnership that's 8 ,000 miles long.
In Australia, the Matheson family is handling the recipe and in Colorado, Rob Graves, the dairy farmer, he's getting ready to make it.
So Rob's building his new bottling plant.
And as things go with construction, it's delayed.
Yeah, so we initially thought we were going to launch in 2009.
The building's taking longer to get finished.
I'm with the direction of the Australian family trying to find equipment at auctions.
And ultimately, you know, it really is we're going to push to a 2010 launch.
Things are just too delayed.
I think another thing to note too is just people thought we were crazy because this is coming off the heels of the global financial crisis.
So I think there was sort of like, what, you're going to invest all this money, you're going to start a new business when the world is sort of imploding.
And I didn't even really consider that.
I just was like, I still think even in hard times, people are going to invest in delicious food.
Yeah. All right. I wanted to just go back to the process for a moment, right?
Because you had the Matheson's come and show you guys how to make this yogurt, right?
Yeah. And I'm assuming there's probably I know, we'll get to this, because you're not with the company anymore.
So there's probably some proprietary things that maybe can't be discussed.
But can you sort of generally describe what made it so complex?
Because, again, what did it require?
What was required to make this yogurt into this creamy yogurt that you loved so much?
You know, I don't know that it ultimately was that complex.
But I think part of what made it unique initially was that it was being made in 10 gallon buckets, which is crazy.
Like, I mean, I remember doing runs to the Home Depot because we were running out of buckets.
So you essentially are cooling the yogurt faster because it's in a smaller volume vessel.
So that changes sort of the way the cultures are interacting with the product.
I think the fact that we were infusing it with honey, I mean, there was certainly sugar added as well, but infusing it with honey gave it a different flavor profile.
And what made that unique made it harder to scale as we grew.
And also were you like, was it fermenting the right term?
I don't know. Was it was a culturing like for how long?
Like eight hours, 12 hours, 15 hours?
Was that an issue too?
Certainly, right. I mean, again, taking it from this small vessel to a larger vessel to a larger vessel and trying to have consistency in the flavor profile was really unique.
And it's sort of a testament to Rob because it was sort of his engineering brain that really figured out how to develop that.
Yeah. I mean, we were making it in 10 gallon buckets for over a year, which gave the state health inspector a lot of heartache.
You know, he gave us a pretty long runway, but out of the gates, he said, you can't do this long term.
You couldn't do it long term because there was a risk of contamination.
Yeah. I mean, there was too many touch points was his opinion.
Yeah. You wanted to do it in like a few 100 gallon buckets.
Yeah. Sealed. Okay.
So once once you guys get manufacturing going, you obviously have to start getting the yogurt into stores.
And you said earlier that Rob like was already selling milk to a few Whole Foods in Colorado.
So at least he had an in right with Colorado Whole Foods, which is not not the entire country, but still it's still something.
And and I guess you guys were able to get a meeting with a buyer to see if they would be willing to sell your yogurt.
Yeah. So by this point, we've, you know, we've invested in the equipment, we've invested in the packaging.
And, you know, with the packaging, we really wanted it to be reflective of that first experience I had in Australia, which was transparency, letting the product sort of speak for itself.
And, you know, in that initial sort of startup capital, we didn't really factor in a custom mold, we just sort of assumed that we'd be able to find a traditional dairy cup that was transparent off the shelf, just a clear, like a clear container off the shelf.
Exactly. Okay. And it actually didn't exist.
So, you know, at that point, most yogurt was sort of between 5 .3 to six ounces.
And there was nothing, there was nothing available in stock packaging in those sizes.
Right. I was pretty adamant that we needed to be in transparent packaging.
And so that ultimately led us into this eight ounce container.
It looked more like a hummus tub.
But, you know, with some refinement, I felt like it could stand out, it could be unique.
But it was a little nerve wracking because we knew that just by volume, it would drive us to a higher price point on shelf.
And so this is what we've got as we go to our first meeting with Whole Foods.
With Whole Foods. You show them this packaging.
Okay. Yeah. They just see the packaging and are like, we hate your packaging.
And I'm like, okay, I understand.
I was like, but let's taste the food, like let's taste the yogurt.
So we do a taste testing.
They're raving about the product, but then they immediately go back.
And they're like, but we hate your packaging.
We hate the packaging.
Yeah. It's eight ounces.
It's going to take up all this space on the shelf.
Like, you know, they're thinking all of these unit metrics.
And I'm like, look, all I could do is be honest.
I said, we have already invested all of our startup capital in this equipment, in this packaging.
We can't pivot at this point.
Like we've just got to go.
So I just wore them down.
I'm like, let's ignore the packaging.
Let's think about the food.
If you give us this opportunity, I will be in every one of your Colorado stores demoing the hell out of it.
And we're going to make it successful.
All right. That which is great that you did that because Whole Foods, they know what they're doing.
And here you are, a new entrepreneur.
And so the fact that you stuck to it, I guess you didn't really have a choice.
You kind of had to.
But I wonder, I mean, before even before you, they agreed and you went into Whole Foods, right?
How did you how are you going to differentiate it just in that millisecond or one second that somebody was just passed by this brand on in the refrigerated yogurt aisle?
The only thing that we had on the packaging besides the name, Nusa, we had a little tagline that said Aussie Culture, which obviously has a double meaning Colorado fresh.
That was the only thing that implied that there was sort of a link to Australia.
Again, I think because it was in transparent packaging, you could see the freshness of the product.
The fruit puree with the white yogurt really popped.
And nobody on the shelf at that point in time was doing transparent packaging.
So I just had this strong belief that if I had discovered it purely because I could see the product when I first tasted it in Australia, somebody else was going to take that leap of faith.
All right. So finally, finally, you get this first run into Whole Foods, I think in January of 2010.
And it's just in Colorado, just all in all over Colorado?
Yeah, only the Colorado stores because the Rocky Mountain region at that point umbrella, I think Idaho, Utah, but the bulk of the stores were in Colorado.
And how much yogurt at this point?
I read that at this point, you could only make about 200 gallons of yogurt a week, which was probably plenty at that point.
Yeah. Yeah. So we I mean, we were making one, maybe two batches of yogurt a week to start.
And what were your first flavors that you were going to put on the shelves at Whole Foods?
So we had four flavors, we had honey, we had raspberry, blueberry and mango.
So you did not do the passion fruit.
We did not do the passion fruit.
tricky in Colorado to get I mean, probably expensive to get.
Yeah, at that point, like just even trying to figure out how to source that puree was more than we wanted to address.
And I think knowing that yogurt consumers are still pretty traditional, we wanted to sort of stay in that bandwidth of having flavors that we knew would sell.
And mango was sort of maybe the most exotic in that lineup.
Alright, so you get into the Whole Foods, and then you spend every opportunity you have to go to each of these Whole Foods in Colorado and roughly how many were there in Colorado in 2010.
It couldn't have been more than seven or eight.
Yeah, I think max, maybe 1010 stores.
So I would just sort of, you know, we hired a few other demo people, but just sort of rotating through those stores really sort of connecting with the store managers.
Because I really I think from my time as being a server, right, like really understanding relationships, and how they can serve you.
When you're getting out of the gates, I really wanted to build those relationships with not just the store manager, but the people stocking the yogurt.
So in a sense, I would not only sample consumers, but I would go and sample all the store employees as well.
So you would make sure that the employees at the store tried it, too.
Yeah, absolutely. And did that work?
I mean, in -store sampling?
It did. It absolutely did.
And obviously, as we grew, I couldn't be in all of these places.
But when you actually meet the founder of a business, there is sort of a more openness and emotional connection to trying something and believing in it.
So I actually had a lot of friends and family do sampling events for me as well.
I just, I tried to think of as many avenues where I could get people to taste this product.
And also doing farmer's markets.
Yeah. So that started spring of 2010.
That was sort of a, actually a harder sell than Whole Foods was getting into the Boulder farmer's market.
It's considered one of the top 10 farmer's markets in the country.
So, you know, essentially, if you come to Colorado in the summer, you'll probably end up at the Boulder farmer's market.
And when you were when you were doing this, the farmer's market, again, like probably weren't that many people selling yogurt at the farmer's market.
We were the only yogurt vendor.
I, I still have to laugh thinking about how crazy it got.
And that just sort of built a groundswell.
And people obviously were then like, well, where can I get it?
You know, if I can't make it to the farmer's market on the weekend.
And at that point, we still were really only available at Whole Foods and a few independent markets.
Did that have, I mean, did that get you, I mean, were there, were there people coming up and saying, hey, who are you guys?
Like, can we talk? I mean, did you start to hear any of that?
Yeah. So we actually had a lot of inbound emails from out of state.
And one of those inbound emails was actually from a retailer called Hy -Vee, which is in the Midwest in Iowa.
And essentially, I don't know if I sampled him or somebody else did, but the president of Hy -Vee had been at the farmer's market and tried Nusa and loved it and basically told his dairy buyer to contact us that they wanted to carry it.
So we said yes. And I think the learning from that was that yes, is with the right partners were good opportunities.
But we learned that not every opportunity was the right one.
And you did not presumably have the logistical capacity to really go that far beyond Colorado, maybe into the Midwest.
Yeah, I mean, at that point, we were producing the product with about 28 days of shelf life, which is short.
I know there's other products out there with even shorter shelf lives.
But you know, you add in shipping and like logistics of getting it onto the shelf and it got like 15 days.
Yeah. And how did they do at Whole Foods in Colorado?
Like it was hard to keep up with the growth in Whole Foods.
And they quickly expanded us into their Rocky Mountain stores.
Yeah, I think in your first full year of business, so you really launched in January of 2010, were you profitable?
I mean, getting there.
Getting there. So pretty great first year.
Yeah. I mean, not accounting for the fact that we weren't paying ourselves.
Yeah. Right. I guess you got an opportunity to work with a pretty big retailer in New York in 2011.
First of all, who was the retailer?
The retailer was ShopRite.
Oh, that's a big one.
It's a big one. And they wanted to carry your products.
Now, that's New York.
That's not Iowa. That's FAR.
That's FAR. That's not Colorado.
But it was a big opportunity.
Yeah. To go in there.
And how many stores were you?
They want you in. They were, I think, about 250 stores.
Wow. And you guys said yes.
We said yes. So in 2011, we brought on a business development manager.
He was an outside contractor and, you know, a very good salesperson.
Let's just say. And at this point, we still have not ever sat down and created any type of strategy for the business.
We're just pinch hitting.
Like if an opportunity comes up, we're going to say yes.
And so we get this meeting with ShopRite.
We know that we have to invest with these retailers as far as, you know, potentially slotting fees and all of their in -store marketing programs.
But we started asking and tried to get creative where we would say, look, we're willing to invest whatever that slotting fee is to get on the shelf.
But can we put it in to demos?
Can we put it into your retail marketing programs?
Where we have a real opportunity to get off the shelf because we're proving out in Colorado that if we can get people to taste this product, it's going to sell.
And interestingly, ShopRite said, OK, well, we're willing to defer your slotting fees.
We're going to give you a 12 month time horizon.
So you would have to pay them the fee to pay it up front.
Yeah. Because again, I know we've said this on the show before, grocery store, if it works, is an amazing business because they get the markup and they make money from that.
And then they make money because the brands have to pay them to put you're essentially renting space on their shelf.
So they have all of these multiple revenue streams.
Yeah. So it was really learning on the job for me.
But, yeah, so ShopRite says we're going to instead of charging you $100 ,000 out of the gates.
We'll bill it quarterly.
And I'm like, OK, well, this sounds like, you know, something that we can, that we can cash flow.
So we launch. So we're already $100 ,000 in the hole out of the gates.
And you got to ship it a truck it out there.
We're tracking it out.
LTL, which, you know, doesn't move as fast as a full truck is more expensive than a full truck.
These are refrigerated trucks, obviously.
Yeah. Come to learn that ShopRite is probably one of the hardest operationally retailers to work with.
Like if you miss, if you miss their delivery window by like five minutes, they'll refuse you and then you have to reschedule.
Wow. Getting it. I mean, you're making this in Colorado.
It's got a 28 day shelf life.
The product. Yes. And to your point.
Yeah. So we've got 28 days of shelf life.
We just get rejected at the dock.
Takes another two days to get rescheduled.
I mean, it was it was a nightmare.
Yeah. They were sort of a disconnect between what was coming from corporate down to the individual stores.
So we were seeing not all the stores were getting set.
So everything that could go wrong was going wrong.
And I mean, we were literally hemorrhaging cash for this customer from spoils to the slotting fees to not getting much velocity because it wasn't getting set in all the stores.
And finally I was like, this is not working like this retailer could sink the entire operation.
So what did you do?
We pulled out. You pulled out.
We pulled out which you just ate it.
You just knew you're going to.
How long before you how long did you before you made that decision a year or six months?
It was probably about six, six months that we realized that we couldn't continue to do it.
You were just and you basically lost at least 100 grand off that deal.
And some and some. It was such a hard even though I knew we were losing so much cash, it was a really hard decision to make because I knew that if we pulled out, that might be the last opportunity to ever sell at that retailer.
Right. And we've had these examples on the show where, you know, it's a struggle to struggle, it's a struggle.
And then eventually, you know, after just bleeding for years, like it works out.
And that could have happened here.
But what you're saying is you didn't do all of the kind of planning and projections in maybe in the way you should have done because you because that would have you would have realized this was not going to be sustainable.
Absolutely. I mean, we didn't do any of that.
We just were kind of operating in the wild west.
Yeah. You know, it's interesting.
We did an episode on this brand called Zumiez, which sells skate wear and snowboard gear and Tom Campion who was on the show.
And I remember him saying something which was what makes a retail brand successful is basically relentless focus on inventory control.
Yeah. And the point of that was like, it's this little boring things because I think accounting is so boring.
It's the boring boring part of a business.
But it's so critical.
Like it's sometimes that is not sometimes often it's that which can make or break a business.
Absolutely. I 100 % agree.
And we weren't focused on that in the first, I'd say two years until we had that big misstep.
Yeah. So I guess you you're on the East Coast in New York.
It's an influential area.
Like, it must have also shattered the idea that that, oh, the American palette, it's just like that.
Like it must have part of you, I would assume, must have thought maybe I was wrong.
Maybe this is just working, going to work in some parts of America.
Yeah. I still had this strong belief that New York could be a great market for us.
And it's, you know, ShopRide is an amazing retailer.
Like they do a ton of velocity and a ton of volume.
But for where we were at the time, it was too much.
And I mean, they pretty much said, you'll never, you'll never sell at our store again.
And I was like, OK, but I'm not going to be a business if I don't do this.
When we come back in just a moment, the delicate partnership between Coel, Rob, the Derryman, and the Matheysons starts to break down.
Stay with us. I'm Guy Raz and you're listening to How I Built This.
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Hey, welcome back to How I Built This.
I'm Guy Roz. So it's 2012 and after an abrupt exodus from ShopRite in New York, Coel has managed to steady the business and is even thinking about expanding again.
So she takes Noosa to Expo West, the big natural food show in California.
All right, so you guys have a booth there.
Got a lot of buyers and, you know, vendors, all kinds of people are walking around and trying different things.
And one of the I guess a group of people who came by were from Target.
Did you know they were from Target or were they hiding their badges or?
I didn't know they were from Target.
No. Yeah, no, they were hiding their badges.
A lot of those buyers are pretty good at being stealth.
Yeah, it wasn't too, you know, post -expo that we actually got an email from Target.
I think Target maybe had been a little bit behind the curve with Greek.
And wanted to be ahead of what they saw as sort of the next evolution in yogurt.
And they thought Noosa could be that.
So they essentially offered us a test in I think it was about 250 of their super target formats.
Wow. And did you have the capacity to fulfill that?
I mean, at this point, how much yogurt were you making a week?
We're now probably operating at least four to five batches a week.
So we're starting to butt up against what I would consider some capacity constraints, right?
Because you're now having to bring on probably two shifts of people to work a seven day schedule.
And at this point, I'm happy to say we're out of the 10 gallon buckets.
And so it was just, it was sort of this constant leapfrog.
We've got at this point, we have a line of credit from a traditional bank who's allowing us to buy more expensive equipment.
And we're just constantly investing in the manufacturing process.
By the way, out of curiosity, what is the maximum shelf life you can get for cold, pasteurized yogurt?
You know, I'm not sure about some of the competitors, but we were at 45 days.
Okay, so huge improvement over 28.
Yes, but still, it just shows you like the minute that leaves the warehouse, the clock is ticking.
Otherwise, you have to throw it away.
Absolutely. I mean, it's just an argument for going into dried beans.
Oh, 100 % guy, I will never start a perishable food company again.
Yeah. All right. So you guys have some automation and you finance this mainly through loans.
So once you're going into a target, you're also going to go from like, you could go from like 2 million in sales to like 10 million in sales, 15 million in sales within months, a year.
Like, I mean, just because of the scale of a target.
Well, I mean, so we launched, there was probably like mid -year that we launched in SuperTarget.
They came back four months later and expanded us into a thousand stores, a thousand more stores.
A thousand stores. And were you at breaking point, like at that point as a business?
Yes, we were at breaking point and basically I had to stop selling at that point.
You had to stop signing contracts with the retailers.
Yeah. Which is, I mean, a good problem to have, but like hard once you're sort of in the groove of selling, you know, because again, like in the back of my head, I have sort of like, okay, well, if I say no now, will that opportunity exist in 12 months?
And are you putting all your eggs in the target basket, which could or could not work?
Yes. Thankfully, it worked.
Tell me a little bit about the business by by this point, end of 2012.
You're in a thousand targets, but from what I've read, you guys are really running lean.
I mean, we were profitable at end of 2012.
We were close to a $20 million business, so we were able to pay people reasonable market, like competitive salaries, but it was still such a small team.
Right. To attract a good CEO, you would have had to have paid at least 150 grand.
150 grand, and then we were able to offer some options.
They ended up being the only person that we offered options to, which actually became a bit of a point of contention between the partners as we started growing even further.
Yeah, I imagine. And we never had a board of directors.
We never had an internal advisory board.
So it just became sort of butting heads as far as how do we continue to grow this business and put appropriate team members around it.
Yeah. I mean, who was in charge?
It was you. There was Robert the dairy and then the brothers, the Matthewson family in Australia.
Who actually was the decision maker?
Was that ever was that ever kind of discussed who would ultimately make the decisions?
No, no. So everybody had a veto in a sense.
Exactly. Which is not great.
It's it's definitely a recipe for not great, especially when you're on a rocket ship of growth.
Why didn't you guys have that discussion?
I'm not I'm not browbeating you because I've made the same mistakes.
I'm just curious why you didn't.
Was it just an oversight?
Was it like you never thought that this would be required?
Yeah, for me, personally, you know, it was my first time ever being in business.
You know, I could see that other companies were doing it, but I had a naive sense and trust in my business partners that we could just all get along and be aligned because things were pretty rosy in the beginning.
But with growth and harder decision making, it just became readily apparent that we were all not super aligned in how we wanted to go forward.
What were the disputes over?
Oh, my gosh. I mean, ranging from should we pay ourselves?
You know, I was sort of the poor business partner where I had to have that second job where the other two partners had businesses that they could rely on to pay themselves to yeah.
How to grow the business, you know, even with that mistake at ShopRite, there was still sort of this pressure to say yes to every opportunity where I was sort of pushing back and saying, we actually have to have more strategy if we want to keep cash flowing this rather than taking outside investment
and then sort of coming into 2013, 2014.
And I could just sort of see that we were going to hit this wall around around if we couldn't if we couldn't agree how to hire a real team of people to help us run the business because, yeah, when things start to really take off, sometimes founders need to get out of their own way.
Yeah, just reading between the lines here.
And again, they're not here to kind of refute this.
So I'll do my best to, you know, we always try to be very fair to everybody because it's a great product that you were selling.
But it sounds like the clashes really were with you and the Australian partners.
And Rob, I mean, Rob and Rob, we all just had very different viewpoints on how to go forward with growth.
They were more, you felt like they were more conservative.
More conservative, really didn't want to give up equity.
And I understand that too, like I understand that perspective.
But I think I knew that that's what it would take to really recruit the right people.
And we essentially hired a salesperson without sort of that equity ask and literally had to fire them two months later, right?
Like we just couldn't get the right people.
When they have no skin in the game, they're just, you know, I mean, you're just, it's a crapshooter so they could be great.
Yeah. But if they have skin in the game, they're incentivized to really do well.
Yeah. And then I had had my daughter in 2013, so I was starting to like max out on just my capacity.
Wow. That's a lot. That's a lot.
And then interestingly, we had sort of created or revolutionized whole milk yogurt and we started getting big players coming in and directly competing with us.
So within, I would say sort of that 2012 to 2014 timeframe, there was probably six knockoffs that came into the market from Danin from Haynes celestial to even Kroger doing a private label version of Nusa.
All right. So I imagine you're starting to think we got to do something about this or this might all go down the tubes.
Yeah. So it was beginning of 2014.
The Australians were starting to talk about wanting to take some chips off the table and Rob probably could have just gone in perpetuity because he's a fourth generation dairy farmer, right?
Like, I feel like dairy farmers, people of that world just work hard and just keep going no matter what.
And so it just became this sort of dialogue of like, how do we solve all of these problems?
So I think by 2014, you guys are doing like $40, $45 million in revenue and growing.
Yeah. You were feeling like the four of you guys were not necessarily the right team to turn this into $100 million business.
Maybe not the right team is not the right way to sort of view it.
But it really was a bigger team.
I'm somebody that was positioned to take it into that hundred plus million realm.
Cause it does become a very different business, right?
Like you are an important brand to retailers.
There's just different expectations from your business partners.
I mean, I feel bad for a lot of our employees that were with us from the early days in the sense that they never really got, you know, a lot of oversight, you know, we weren't building like actual career paths for these people.
So even though we were a cultured product, I didn't feel like we had a great internal culture in the sense of, Interesting.
You know, creating real business opportunities or, you know, growth opportunities for our employees.
And then we finally sort of got alignment around, okay, we don't think we want to sell to a strategic at this point.
You don't want to be acquired.
We don't want to be acquired because, you know, Rob still really wants to be part of the business.
I'm sort of on the fence.
I could have probably gone either way.
And then, you know, these drain family just really wanted to sort of realize their investment.
So we ended up hiring an investment banker and sort of running a process to find more of that private equity type investment that would support the growth and help us build out that team.
All right. So 2014, you do get a strategic investment from a group called ADVENT.
Yes. But until they actually acquired or put in the investment, you guys were trying you were they were probably in your data room, looking at your business.
Meantime, you're running out of product like there's a lot and that deal could fall through.
Absolutely. Which was nerve wracking, right?
Like I knew this was sort of like if we lose this deal, we're pretty screwed.
Like it was probably the most stress I've ever endured in my life.
But thankfully that and sort of somewhat ended when they they made the investment.
And they buy a majority stake in Nusa, I think they're based in Boston.
They're Boston based.
Yeah, private equity firm.
They buy a majority position in Nusa.
But you guys stay on.
I mean, at least you and Rob stay on as employees.
We do. And actually became, you know, we rolled over a pretty significant minority ownership in the business that, you know, that was sort of how the deal was structured.
You were incentivized to be incentivized.
That's the right word.
Yeah. But, you know, it makes a lot of sense, right?
Like we're in the middle of this growth curve.
And to your point, we do bring a lot of value to the business at that point.
Even if we feel like we need to sort of start to hand over the reins.
And was it fairly quickly after they because I think November 2014, they made that investment.
Was it like by early 2015, the whole new executive team was brought in?
And these were people with deep experience in food.
Yes. And it was a game changer.
It really was a game changer.
You actually liked it.
You are. I loved it.
These people know nothing about this business.
I hate working with them.
They don't believe in the quality or the spirit.
No, you'd feel that way.
No. So I sort of see these two very distinct chapters that I was involved with at Nusa was sort of like the Wild West chapter and then our professional chapter, which we, I think we created an amazing internal culture and I had an absolute blast in sort of that second chapter, because I didn't have the tension with my
business partners anymore.
And so. So you were committed to staying with them, I think for what, for about four years?
I mean, we were committed until, you know, they decided to sell the business.
And they did eventually sell it, I think in 2018, right?
It was a merger, aqua merger kind of thing with a company called SoVose Brands, and they owned or own a bunch of brands like Rouse, I think pasta sauce is one of the brands they own.
Maybe they still do own it.
They did until Campbell's.
Campbell's bought it, right.
Campbell's bought them out.
Yeah. Beginning of this year.
And so you were, your remaining shares were bought out at that point.
And I have to imagine you actually may have made more money as a minority owner than when your majority stake was bought out.
Yeah. I mean. You had two bites at the apple, as they say.
Two bites the apple.
Yeah. I mean, this business that was started really in 2010, I mean, it was an, it was kind of like an eight and a half year journey, which, from one perspective, doesn't seem that long, but I'm sure from your perspective, it was a long journey.
Was a long journey.
Because there was, you know, those startup years too, right?
Yeah. So it was over a decade of my life that I literally, all I thought about was yogurt, which is a really long time to think about one thing.
And I feel like I worked a lifetime in that decade.
When you were done, which are sort of when you stepped out of the business after the acquisition in 2018, you were well positioned financially probably easily for the rest of your life.
What did you, yeah, what did you, what do you want to do?
All the things you weren't able to do while you were building the business?
Yeah. I didn't eat yogurt for an entire year.
Really? No. Nothing.
No, I didn't even want to, I didn't want to shop the yogurt aisle.
I just didn't want to think about yogurt for awhile.
I decided I would say yes to any sort of travel opportunity.
Yeah. And I just needed to be like a little chill for a while and hang out with my kid and hang out with my family more like probably one of the most important things I'll do in my life is raise a good human.
And I finally have a little more time to focus on that.
Yeah. And so there was no plan.
There is no plan for you to start another business like you've done that and you have no ambition or desire to go through that again.
Yeah, it would be hard.
I think it would take something incredibly special to want to go back into the trenches again.
You can make more yogurt if you want.
I could even, I could even explore buying Nusa back if I wanted to.
Right. It's I think it's for sale.
I think that that Campbell's is looking for a buyer.
It is. I don't think I'm going back into yogurt.
Though I am I am very interested in sort of the dairy free space.
I know that sort of seems counterintuitive but...
No. No, it's interesting.
I sort of feel like I'm back at university that university phase, right?
Where I'm like what the hell do I want to do with my life?
And so I'm just exploring a lot of different things.
When you think about about the journey you took, you know, and and I mean starting this business in Boulder, thinking it was going to be like a local business and getting the family in Australia to work with you and meeting Rob and the dairy and all that that happened.
And then making a lot of money off of this thing, which probably I'm sure wasn't in your plan, but of course was a very pleasant ending.
I'm sure. How much of what happened do you attribute to luck and how much do you think had to do with the work you put in?
I think there's a huge element of luck, right?
I think about 2008 and sort of seeing this emerging trend of Greek yogurt.
And in some ways, I actually think we thought we had missed the boat.
Ultimately, we timed it just perfectly because it just reinvigorated the category Greek yogurt and we got to ride that wave with the big players.
But coupled with that is, you know, as much as I may have disagreed with my business partners over different things, the one thing I think we can attest to is that we all worked really bloody hard.
You know, I've mentored some startup companies where they say, well, we want to be where you are.
And I'm like, OK, well, I don't know if I can actually help you because you have to be willing to work really hard and your eye cannot be on this big outcome.
Right. And that was never what it was about for me in the beginning or for Rob.
It was, you know, a passion around this product that kind of took on a life of its own.
That's Coel Tomé, co -founder of Nusa Yogurt.
By the way, the company did eventually get around to launching a passion fruit yogurt, the flavor that inspired the whole thing.
But today, and of the 18 different new flavors, including cinnamon roll and pomegranate and tart cherry, passion fruit has sadly been dropped from the rotation.
Hey, thanks so much for listening to the show this week.
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This episode was produced by Devin Schwartz with music composed by Ramtin Arabluhi.
He was edited by Neva Grant with research from Olivia Rockman.
Our engineers Robert Rodriguez and Gilly Moon.
Our production staff also includes Alex Chung, Jaycee Howard, Carla Estes, Sam Paulson, Chris Messini, Kerry Thompson, John Isabella and Elaine Coates.
I'm Guy Raas, and you've been listening to How I Built This.
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