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Hello and welcome to How I Built This Lab.
I'm Guy Reyes. So over the next few months, we're going to be taking your calls about the challenges you're facing and hopefully we can help you get closer to solving them.
And helping me out each week will be a past guest from this show, a legendary founder who is here to help new founders trying to build their own amazing businesses.
And by the way, if you are building something and you need advice or help, give us a call and you might be the next guest on the show.
Our number is 1-800-433-1298 and we'll also put it in the podcast description.
All right, ready? Let's go.
Today, I'm so excited to be joined by Pete Maldonado.
He's a co-founder and co-CEO of Chomps, the grass-fed meat stick brand that is, man, Pete, it's everywhere.
I just bought a multi-pack of them at Costco last week, actually.
Pete and his co-founder Rashid Ali joined me in January of 2023 to tell the story of turning their side hustle into a national brand.
Pete, welcome back. Thank you for having me.
One of the things that I remember about your appearance on the show is how you really work to learn how to be a better deal maker, which is a critical skill for any entrepreneur to learn.
For sure. Yeah. I think my background was a number of different roles and jobs and I think probably real estate was the one that really got me into deal making, dealing with big numbers and just putting big deals together and then having that skill set, especially at this stage, just dealing with the big dollar amounts.
I think that could really scare people away or really get them a little nervous.
So I think for me, just having those reps in the arsenal, I think that was it.
Doing them again and again.
Yeah. That was really helpful.
Well, Pete, all of our founders calling in today are they're all exploring different ways to reach new customers, especially by trying to build partnerships with retailers.
And we thought you would be the perfect mentor to help us hopefully answer some of their questions.
When you started to explore retail partnerships, what is something that you wish you knew at the beginning that you maybe learned the hard way or you just learned with experience?
There's a few things. So one of them is you selling to the retailer and getting out on the shelf is the easy part.
That's when the work starts.
Yeah. I think a lot of new founders or new startups, when they start selling to retail, they're celebrating the win.
They celebrate the... They're like, I'm on Trader Joe's shelves, but that's just the beginning.
Oh my gosh. And it really is.
And it's everything you could possibly think of when it comes to new quality control issues that you need to put into place, trade spend and figuring that whole animal out, which is massive.
It's a big part of any CPG brand or any brand it's selling in retail.
It's going to be a huge part of their spend.
And how do you manage that?
How do you get the most impact out of that?
And then on top of it, I think once you get even just the initial trade spend isn't where it ends, now you start getting chargebacks and fees and penalties.
And the bigger the retailer, the more that they're going to charge you.
And you need to get beyond your toes and on your A game.
A lot of people don't realize that retail stores, big retail stores are sort of like billboards in Times Square.
You actually have to pay essentially to get shelf space.
And it's hard to get in there.
And then once you're in there, if you don't sell product, they toss you out.
So the pressure really starts to...
That's when you really have to start selling.
Oh, absolutely. And these retailers, they make more money from slotting fees and then they do from actually selling product.
It's an amazing business, by the way, grocery stores and amazing because they have all these revenue streams coming in.
Yeah, and that's the thing.
You have to understand as the brand owner, you're putting your product in the store, you're taking all the risk there.
They're going to do everything they possibly can to eliminate the risk and make sure that they're getting paid up front or along the way.
And it's coming from you.
All right, Pete, what do you say we take a call?
What do you think? Let's do it.
That's great. You ready?
First caller, caller, you are on the line.
Hello, welcome. Hi, how are you?
Hello, who is this? This is, I'm Jennifer Ballin and I own Badass Bagels.
Welcome. We are 100% sourdough and we are the masters of fermentation.
Okay, what is your question for Pete, Jennifer?
My question is really, we're sort of at a crossroads now these days because we've established several brick and mortar locations.
We are making upwards of 8,000 sourdough bagels a week.
We participate in a dozen farmers markets.
We have a bunch of different products now, almost like a brand, an accidental brand that we call Badass.
We have 12 cream cheeses spreads.
They're all like farm to bagel.
We support the local farmers in our area.
And I'm just wondering, I mean, I have franchise companies calling me.
I have investors asking me, do I want money?
At this point, I'm really happy being a bagel slinger.
I'm always knee deep and dough.
It's like super fun. Everyone's happy.
Everybody loves the bagels.
But like, how do I know what direction to go in?
Do I want to put all my eggs in the consumer product goods basket?
Do I want to open more brick and mortars?
Jennifer, we're going to get to your questions.
But before, if you don't mind, can we ask a couple of background questions?
100%, yes. All right. So you're based in Norwalk, Connecticut.
Is that right? Yes. And tell me the story.
How did you, by the way, great website.
I'm looking at Badass Bagels now.
Tell me the story of, I mean, did you come from a, are you a baker?
Is that your profession?
Did you train as, tell me a little bit about how it happened?
Well, I was a stay at home mom with my kids and I opened a restaurant and was open for years and years, 10 years.
The pandemic came. I was thinking about shutting it because it was a good time to do that.
I started, I slipped down that slippery slope of sourdough and I started making bread like everybody.
Everybody, yes. Everybody, but I figured it out sort of quickly and was making loaf after loaf.
They were laying all over my house.
My kids were like, please stop making bread.
So I made a Bobca. Chocolate Bobca.
Chocolate and cinnamon.
And then I started with the sourdough bagels and I realized that there were no recipes.
There were no stores selling sourdough bagels.
Sourdough bagels weren't really a thing.
So I love a good challenge because I tend to get bored very easily.
So the challenge was how the heck do you make a sourdough bagel?
Well, let me tell you, it is not easy.
It's not easy. It's not because traditional bagels are made with just like dry yeast or not, right?
And sourdough is a starter that, right?
It's a, I'm in the Bay Area, so there's so much sourdough here, but it's a fundamentally a different taste.
Well, not only is it a different taste, but when you are making a yeast leavened bread, a commercially leavened bread, you can do that in 45 minutes.
When you're making a sourdough leavened pastry or bread, it is a slow process because the fermentation is what's good for you.
And the bagel structure is very different than a loaf of bread.
Many of us bake sourdough bread in a Dutch oven that has sides.
A bagel is free, free standing on its own, on a sheet or on a, in a hearth oven.
There's a million combinations and a million ways you can do it.
All right. So you pivoted from the restaurant to the bagel shop, and now I think you've got, is it two shops, two locations in Norwalk, Connecticut?
I've got one location in Westchester County in Armond, New York, and one location right here in Norwalk, right near Westport, where I live, about a mile from my house.
I often go to work at night in my pajamas to check on my sourdough starter.
I'm about a mile away. It's a lot of work, but now I've got an incredible staff and we crank out a lot of bagels.
So initially, you know, just listening to your background here, you mentioned that this is what makes you very happy.
And so I guess my first question is, you know, what is it about what you're doing right now that needs to change if you're already happy?
What is your vision for this that would make, you know, you feel really excited about bad-ass bagels?
So I think I'm happy because I love my customers, but I do see the scaling potential and it is profitable in a great and positive way, shocking as that sounds, because it's not easy to be profitable.
Bagels are very labor-intensive.
I think I could see myself with many stores in many areas of the country.
We spend a lot of time shipping bagels.
Like I spend at least three hours a day shipping boxes of bagels to Utah, to Colorado, to Los Angeles, to Florida.
You sell them, by the way, D2C.
People order on the website or are there retailers that sell them?
We are the only distributor really of our bagels.
So they order through me.
I did just pick up a local distributor a couple of weeks ago.
Wow. My bagels are freezable.
That's the other thing about sourdough.
They're like 70% water, so they freeze beautifully.
So if I gave you a frozen bagel, you could pop it in your oven.
In a minute, it would taste like I just baked it for you.
Wow. So Pete, the question I think that you asked is a really good question.
Which is, is Jennifer happy?
It seems like she's looking for some help and advice to figure out whether she should consider bringing on partners to grow this thing in a bigger way.
Let's just say she does.
What do you think about the idea of bringing on a partner to maybe try and franchise this thing?
I think that could work.
I think you've done this at two locations right now, so you were able to replicate it.
I guess my question is here, are you comfortable enough to teach somebody else how to run it in the same way that you do?
Because in the franchise model, you know you're not there to operate it.
So you need to find someone that's a really good operator.
And is there some special sauce or juju or things you have going on in you and your team that you could potentially lose by scaling that through franchising?
Definitely it's scalable.
It's teachable. I could show you how to do it without a doubt.
I actually started working on a manual that would give everybody a full proof way of replicating.
That's one avenue for sure.
So if you are going to do these things and you expect somebody to come in and pay you money to franchise your model, what value do they get by paying you that franchise fee and what stops them from creating this really on their own?
I guess what they're getting is, for example, our proprietary, like we have a whole gluten-free line of bagels.
So these franchises, other locations would be able to then buy from the mothership all of these great products that we've already figured out how to make.
I mean, franchising isn't necessarily my first avenue of choice.
I mean, I think in the world of cream cheese, do I really want to take on Philadelphia?
Like, I've got really big boxing gloves, but can I do that?
I mean, the world of dairy is like a whole other thing.
It seems to me, Jennifer, that your competitive advantage is your brand, right?
And also, they're sourdough bagels, which is somewhat of a differentiator, but it's your brand.
Badass bagels, you've got a great logo, you've got a great look.
We have an episode of our show about Dave's hot chicken, and that brand was started in basically a parking lot.
It was a couple of friends, and they basically decided to sell fried chicken sandwiches.
Within a year, they were approached by somebody who had experience in franchising and paid them a significant amount of money, and that's actually really worked for them.
But, you know, Pete, it seems to me that if Jennifer were to do this, she would want to really be mindful about who that partner is.
Absolutely. I think, you know, finding people that are going to be, this is what they're going to do for a living, not, you don't want to find somebody that's going to be, and I've looked at various franchise models over the years, just as looking at like side investments potentially.
I'm not the guy that you want to franchise to, right?
Because I've got my main business, I've got my day job.
If you're going to franchise, it should be that person's day job.
I think that's probably critical to the success of any franchise.
If you look at like the Chick-fil-A model, where they allow them to own one unit, I think that's a really, that's a good, probably a better model, more chance for success.
Right, that's true. The other thing I would add is that, and Pete, maybe you can weigh in a little bit on this, because you've got such a strong brand, and, you know, if you were to look at, I don't know if you, can you see, can you see the website for Badass Bagels?
I do, yep. Can you give Jennifer some helpful feedback on things that you might, you know, you might adjust or you might kind of think about and lean into?
Yeah, so I love the story, obviously.
I think, you know, and going back to what I was talking about, the differentiation piece, like, you know, it's a sourdough angle, and I like, I love the background too, of your story about transitioning from a restaurant over to the bagels.
I love all that. I think here, if I was to make it a little easier to actually order from you, if you think, I'm thinking from a D to C perspective, I think there's a lot going on on the website, so just cleaning things up a little bit would be a little easier.
Which platform is this on anyway?
Do you have this, doesn't look like it's Shopify, is it?
It's not, it's a simple Squarespace, and then I have a third-party ordering.
Both sponsors of the podcast, so we're not going to weigh in.
I have to say, I love Squarespace.
It's fabulous to work on, fabulous to work on.
Yeah, so I think, and also here's the other thing I really like, your gift boxes, and the way that you package those up, where you get the bagels and the smears, or the cream cheese with it, and I think, I thought that was really cool.
And you're doing the right thing.
It looks like you're by creating more of a higher order value.
That's going to allow you to handle all, and absorb a lot of that shipping cost.
So I think you're doing a lot of things right here.
To supercharge that again, to my point, I was just saying, I think if you could figure out a way just to streamline it a little bit, make the ordering process a little bit easier, that's from a DTC perspective.
I know some of your questions were going CPG and going into retail.
What could I answer for you on that?
What are you thinking? Well, it's interesting because I didn't know anything about this whole industry, and now I am working with a couple of co-packers.
I'm about to start co-packing.
I have three dairy farms, single origin, grass-fed milk, cheese.
My language. Literally, I didn't even know it existed like that, right in my reach.
And what happens is, it's sort of like, sure, I can make this product, but can I mainstream it enough?
The flavors we make preserve lemon and fried capers, smoky black garlic, hot honey pistachio, shallot and French vinegar, hibiscus rhubarb, I mean, which one do you want?
Man, you're on fire. So here's the thing, people come in and they buy three cream cheeses and a dozen bagels.
That is like the average person.
That's a lot of cream cheese.
And are your margins higher on cream cheese than on bagels?
They actually are. Yes.
Yes. Eight ounces from cream cheese is $10, and people are spending $30 on cream cheese.
Now, we're doing cultured cream cheese.
So this also has the beautiful probiotic quality, like yogurt.
I just wonder, can I take on the big men and women of the dairy world?
Because it's really a monopoly, big one.
Pete, I'm not sure that she has to worry about taking them on, right?
That's it. I mean, you weren't thinking, I'm going to take on Slim Jim.
You were thinking, I'm going to introduce Chomps.
Yeah. So like Chomps, we've grown substantially.
We're approaching the half a billion dollar mark in retail sales this year, right?
Wow. I still would never even think about trying to compete with the big guys in the space, right?
It doesn't work, and they would bleed us to death.
It just wouldn't work. But the reason we've been successful is because we serve an entirely incremental customer.
So incrementality is a keyword for you to think about and how to think.
When I talk about differentiation, I think about positioning yourself as a brand that's for a different customer that's not currently being served at a retailer.
That's how you find success.
And now these big guys, they're trying to hit the masses.
They're not going to do all the, and put the blood, sweat, and tears, and creating those amazing flavor profiles that you have.
I don't remember ever seeing, is there a grass-fed cream cheese now?
I don't even know. There probably is, but you don't really see anybody leaning into that, right?
You don't. You're in an enviable position, right?
You've got something that's already working right now, and you have all these opportunities and people interested in working with you to build it up and build something else out of this, which is great to have, right?
I think what you need to do for yourself, though, is think about my early question I started with.
It's like, what's going to make you the most happy?
Because running a big business and driving a lot of revenue and making money, that doesn't always make people happy, and you're going to be basically living for this.
So you need to kind of think through, what do you want to be doing with all of your time, and what's the most meaningful to you?
So you could franchise the bagel stores, you could go to the CPG route.
I think you'd be successful in all of them, but I think it's up to you to really determine, like, what's, what, you know, where are you going to focus?
And then once you get that, then you just, then you kind of back into, what's the strategy to get there?
Yeah, right. Jennifer, my takeaway here is if you go the route of franchising, interview all of your suitors, study them or research them, and really, really know and try to understand who the best potential partner is.
Same with distribution.
If you can find somebody to help you with distribution, I mean, you should go back and listen to our story about Kava, because that could be really helpful.
They also distribute their dips and spreads, and that was a whole business that started before they franchised.
So my takeaway is really think deeply and carefully about who that partner is.
Jennifer Ballin, badass bagels.
Good luck. Thanks so much.
Thanks a dozen. I hope to see you both soon.
Take care. Take care. All right.
Okay. This is exciting.
We may have, we may be at the cusp of a bagel empire, a new bagel empire, the next Einstein bagel.
Bagels, I don't want to say Einstein.
I don't think they do sourdough.
That's a different, but anyway, it's an airport bagel.
Okay, we're going to take a quick break, but when we come back, we're going to take another call and answer some more questions.
Stay with us. I'm Guy Rhoads, and you're listening to the Advice Line on how I built this lab.
Hey there, it's Guy here.
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Initially, you said no, right?
Yeah, we can't support that type of growth.
It was more so around the specific ask.
They wanted us to do a private label product line for them, which would have been a huge undertaking for a small team like ours.
It was just me and Rashid working full-time, and it was hard enough to manage one brand.
And with a private label brand, it's adding another brand to the umbrella.
I mean, a pretty bold decision at the time because it would have been a lot of cash coming in.
It would have been a nice revenue stream, but at the same time, you wouldn't be able to focus on building the Chomps brand, which, of course, today is available at Trader Joe's as Chomps, not as a white-labeled meat stick.
Yeah, and being a branded item at Trader Joe's, where it's a private-label shop, that's a big deal for us.
There are millions of shoppers that shop there all the time.
All right, let's bring on our next caller.
I think we have Brandy on the line.
Hello, Brandy. Hey there.
Hello, Brandy. Welcome.
Introduce yourself. Tell us your first and last name, what your business is, and where you live.
Yes, my name is Brandy Shelton, and I'm the founder and co-owner of Just Add Honey Tea Company, a thoughtfully blended, loose-lip tea company here in Atlanta, Georgia.
Amazing. Okay, and what's the question you brought for Pete today?
Yeah, so we've been in business now 17 years.
What started as a professional hobby is now a retail facility, a production facility.
We just opened a Zen garden.
We sell online. We have some small mom-and-pop shops that sell our teas around the US, and now we're looking to get into Big Box.
And now it's like, all right, how do we move into this without losing our shirt, because I'm not getting any younger?
Yeah, how do you get into Big Box?
Okay, we're going to get into that.
Let's find out a little bit more about Just Add Honey.
You started this, I think back in 2006.
Tell me about what were you doing at the time, and how did you get into the tea business?
Yeah, I've worn several professional hats.
My last one in 2006, I was a wardrobe and prop stylist for print ads, advertising, commercials, and it's either ramen noodles or steak.
So during the ramen noodle times, I would create and make kind of during the DIY phase, the Etsy's and all of those companies came around.
And so I would always make things, but I always found myself holding a cup.
It grounded me, it centered me, and there were so many different combinations you can do to a cup of tea.
And so it gave it away actually as gifts to friends and family.
And then somebody asked to buy some and I was like, oh, wait a minute, I have a business.
And that's literally how it's, yeah, it's how I started.
I started doing farmers markets and festivals.
I opened a brick and mortar about 10 years ago and just kind of evolved from there.
I say co-founder because my husband joined the company about eight years ago.
Now our 15 year old is an employee and we have 38 employees.
Amazing. It's still fun and I just want to keep that train going.
I'm looking at your website and see that you, a little bit about you here says you were born in New Orleans and you grew up drinking tea because every time you were sick, your grandma had a tea for whatever was ailing you.
Yeah, I mean, I call coffee the one hit wonder because you know exactly where it's going to take you.
But with tea, it has so many like in uses.
Like, if you're not feeling well, have a cup of tea.
If you're feeling great and you want to keep going, have a cup of tea into the evening, have a cup of tea.
So I love that tea has all of these wonderful endless possibilities.
And so we try and do that, whether it's somewhere that you've traveled far away or if it's a memory of with your grandmother, like myself, or if it's just some while and crazy concoction that we do like with our teas of the month every month, we create something funny and crazy.
All right. So now you've been in business for a while.
You've got a brick and mortar and you've got a D to C business here.
You can order direct online.
Now you're looking to get into the big time.
You want to be in the targets and Walmarts and the Kroger's of America.
Is that fair to say? Absolutely.
Want to be the first nationally so black owned tea company in the US.
And I just, like I said, I really, really love it.
I mean, nobody does something for 17 years unless they love it or they're crazy or a little bit of bone.
All right. Peace. What's your take?
Yeah, Brandy. Nice to meet you.
Yeah. Love hearing the story here.
Looks sounded like there's a lot of passion behind this.
So I guess a couple questions for you.
I see here a lot of the packaging.
I love actually the way that you're breaking things up by functionality.
So like get up and go and then you have your wellness tea, sip and relax.
So from a branding perspective, how do you plan to lead with these things and retail?
Because when someone looks at the packaging on a shelf, they need to know immediately, what is this going to do for me and why should I buy this?
Can you talk a little bit about that?
Like what did you do when you created this packaging to thinking about retail?
Yes, I use the farmers market as our experimentation with that.
All of our jars and our stores and at our farmers markets are in clear containers because people shop with their eyes.
So if you go on a lot of retail shelves, you'll see stainless steel tins.
So we still offer that with a wrap around edge, but the window on top is clear so you can see the tea and you know exactly what you're going to enjoy.
And so that's our tins that have a longer shelf life.
Our quick grab and go. We just updated it for this big box push that we're doing where it has this really fun hexagon window that's on front and back.
So it's bright orange and yellow, which feels fresh.
It feels sophisticated and fun.
And then that hexagon that kind of sticks with our branding is clear on either side.
So you still get to see that with each grab and go bag, which is a lower price point to kind of entryway into those stores.
Awesome. You're thinking about a lot of the right things, which is great to hear.
And I love that you're taking feedback that you're learning you're hearing from the farmers markets and taking that and let that inform some of your other decisions.
From a scalability standpoint, how is this a co packer model or you sound like you're blending a lot of this yourself.
Are you just self manufacturing.
Yes, we, I travel a couple of times a year.
I try and work with as many small growers around the world as possible, whether that's India, Kenya Sri Lanka, China, Japan.
And so it works now because we're just doing a couple of 100,000 kilos a year in tea.
I know as we grow, I will have to work with a trade organization and or kind of a middleman to help us with that scalability.
But China stay as close to the ground as possible for that week to cut process.
But yeah, we still do everything in house.
We have machinery, we have equipment where we are packing for consistency, but it is still us and doing it all.
Is this equipment and the facility that you have and the labor that you have right now, is that enough to support a big box retailer.
Candidly, it's not, but we do know how to get there.
We have the equipment lined up to grow.
We're prepared for that.
It's just one of those things, you know, the chicken or the egg who goes first.
Yeah. You know, I wonder, Brandy, have you guys and you may have done this.
Have you approached Whole Foods locally?
I did when I was doing all the things like I was the farmers markets.
I was the whole sale or I was the person behind the bar.
And at the time, I knew I wasn't ready.
They asked. And so I politely decline.
And as we have been growing, it's just not something I've circled back around to.
The reason why I ask is because Whole Foods is a, as you know, it's a company that is interested particularly in local brands.
When you go in, it'll say locally made and they're really open.
The regional buyers are really open to bringing on local brands.
And it's a great testing ground because you can go in, you start with a few stores, you can sample the product and you can really build it out from there and focus on getting national distribution, which then becomes, then it's like, then it's a great launching pad to get to the targets and the Kroger's and the other places.
We've seen this with other brands on the show.
New Me Tea. We did New Me Tea on the show several years ago.
And that's why Whole Foods comes to mind because it is a pretty innovative company when it comes to being open.
Pete, you guys, I know you're at, you guys are at Whole Foods.
I'm pretty sure, right?
Yeah, we're at Whole Foods and most retailers nowadays.
And I think, you know, God, it's a great idea too because starting small and regionally like that, it's for one, they're going to prioritize you guys and they actually have a nice end cap in a lot of the stores that really drive trial.
But what it's going to do for you is let you see what the velocities might be so you can forecast if I am successful here and then I have a national rollout, this is what it could potentially look like.
Brandy, can I, I want to give you some feedback on the branding side and on what I'm seeing on your website because what you've told us here is not clear on the website.
I mean, you're doing three, four trips to Asia to source these tea leaves.
I want to see you there. I want to see pictures of you at those tea farms.
I want to see, I want to read more about that.
That's incredible that you are sourcing that.
Also, there's something about the story of your grandmother and just the warmth of a hot cup of tea that I feel needs to be told somehow on the bag in a small way.
I don't know if you're doing that, but I feel like that story about your grandma having different tea blends, growing up in that environment in New Orleans is so powerful.
It's so much so that part of me is like, I would even consider having blends with, I don't know, some names, maybe your grandma's name, you know, or just names that evoke your direct connection because you've got this double connection.
You've got your grandma and growing up and then going to the tea farms and sourcing the tea yourself.
I mean, that is an incredible story and I want to see more of that up front.
I totally agree and we've got a brand video which is very prominently displayed on the website and we've got, it's Rashid and I, my co-founder and I, at the farmers' pastures with the animals, with the cows that they're raising and we're out there shaking hands with people.
We're out there eating dinner with them and people love to see that.
They want to know where their food comes from and they also appreciate, I think, the relationship that you have with those suppliers as well.
Just for them to see that firsthand is amazing content and it makes them kind of fall in love with the brand a little more.
And then to guys' point, that should be all over your website.
You've got to tell that story because that's something that no one else could replicate.
No one else could take that from you.
Your grandmother's story.
Grandma, New Orleans. I mean, are you kidding me?
Totally ownable, totally differentiated and it's just a crowded market, obviously, right?
So if you're going into big box, what is it that's going to differentiate you guys?
It's creating that brand and that brand story around it and a real loyal following.
I appreciate that. We do it on social all the time, but because it's quick, easy snippets, but to have it on our website would be a great place for it to live.
And on your bags, put it on your bags.
Yes, and on the bags. I tell that just a little paragraph.
It doesn't have to be a novel.
Yeah, because she lived to be 96 and she was just an amazing woman who was a great force in my life.
So to pay homage to her would, yeah, I totally should.
I mean, maybe there's even like a stylized photo of her that you would put on it.
I mean, something, anything like that.
It's such a cool story. Brandy, my takeaway here is consider starting with Whole Foods and just scaling from there because I think you have so much experience.
Obviously, you're making a great premium product.
Now it's just a matter of, okay, let me take the next step and then it's like one sort of pretty big step and then one giant leap after that.
I would say, you know, with this type of product, one of the other things when you go into retail, don't fall into the trap of trying to compete on price.
You are going to be the little guy coming into the space, lean into your story, lean into the premium aspects of the products and put a premium price on it because people won't have a problem paying for it as long as they, you know, you're telling your story the right way.
Yep, and tea is the new wine, Brandy.
No one's drinking booze anymore.
Everyone wants to drink.
They want the flavors. They want the terroir.
Well, thank you for spending your time with me today.
I really appreciate all this feedback.
Thanks, Brandy. Good luck.
We'll be following you.
Thank you. 96, she lived till 96 drinking tea.
I mean, that's a selling point right there.
You won't live till 96. I was going to say, maybe there's a longevity tea that we're missing.
Right? Just have a single skew and you just roll that out everywhere.
I'd buy that right now. Right, I know, I know.
And tea is like amazing.
Tea has amazing impact on lowering like glucose levels.
You got it all in tea. Exactly.
Hey, we're going to take another quick break, but when we come back in just a moment, we're going to hear from our third and final caller.
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Hey, welcome back to the advice line here on how I built this lab.
I'm Guy Riz. Pete, what do you think?
Should we take another call?
Let's do it. All right, who is on the line?
I think it's Jake. Is this Jake?
This is Jake. How are you?
Welcome, Jake. Introduce yourself.
Tell us the name of your business and where you're from.
Yeah, my name is Jake Meyer.
I own Annie Alaska Inc. I am from Alaska originally and we have a commercial salmon business out in Bristol Bay out in the bush.
And what's your question for Pete?
Yeah, my big question is I'm trying to take our salmon that we catch and go the direct to consumer route if I should.
I'm kind of exploring all the different options.
We're in the baby stages.
I just purchased this operation I used to work for, but the price for salmon is pretty volatile out in Alaska.
And so what I'm nervous about is putting all our life savings into this company and if we get a bad price, like we're probably going to lose a lot of the life we've tried to build.
So that's why I'm trying to go direct to consumer, get a little bit better margins and make the business a little more stable rather than just hope that there's a good price.
In this baby stage, we're pretty slim on cash.
We just invested in two boats, four nets.
I've tried a few different marketing strategies on Instagram and Facebook.
We've tried Google ads.
We've tried really just trying to get our name out there at least here in Utah is where we live currently.
But my questions are like, what's what's the best route to go in this baby stage?
Is it advertising? Should I approach grocery stores?
A lot of the stories that even you've told Pete have me kind of worried about even talking to grocery stores or should I start there then go direct to consumer?
So you're going to be spending the summer because that's the season, right?
For fishing. You're going to be spending the summer, you yourself, presumably fishing for salmon.
And instead of trying to sell it to distributors because there's less predictability, you want to go D to C.
You want to go directly to consumers, ideally in Utah and sell to people there because you know that you can get better prices.
Is that more or less right?
Yeah, that's correct. And how did you come into this world?
How did you do, I mean, did you grow up fishing?
How did you come into starting this business?
Yeah, so I was born and raised in a small little town, Kenai, Alaska.
It's funny because I'm not a big fisherman.
Fishing to me is more of a job.
A lot of people died to go fish and for some reason go throw a line out and wait for a fish.
But to me, it's a job. It's not my hobby of choice.
I used to work for a good family friend.
I was a deckhand and kind of got promoted to a captain.
And I'm making this small percentage on a decent operation where the owners didn't really do anything.
It was very hands off. And the last year in a month, I made $40,000, but I was just the captain and the owners really, I saw the potential of, why don't I go buy this thing?
And I would love to be in their position because I was only making a small percentage.
And you can make enough for the entire year easily in one season.
Like you can, if it's a good season, you can crush it.
You can make hundreds of thousands of dollars, right?
Yeah. The last year I was out there, the operation in six, it's about a six week season, but it pulled close to $350,000 net.
That's after expenses.
So that basically sets you up to, so you don't have to really do, you have to work for the rest of the year if it's a good season.
Right. Yeah. And then on a bad season like this last year, it only made like maybe $40,000 or $50,000.
And so that's where the volatility of the prices really scares me.
So I'm excited for the happy years, but I'm also, I'm trying to prep for some storms and DTC.
Yeah. Jake, correct me if I'm wrong, it seems like you wanted to bring all the salmon to Utah and then distribute it at a site there.
But I wonder, is there a world where you would consider working with a third party fulfillment group to ship salmon and then to maybe expand the potential customer base from just northern, just Utah?
Because I keep thinking about butcher box that we had on the show, but it sounds like you're going to be fishing these salmon, you're going to be cleaning them and butchering them, and you're going to be flying them to Utah and then delivering them to people.
I mean, that is an amazing, that's amazing service.
So you're really going for a very premium product, but to a relatively small customer base.
Is that fair to say? Yeah.
And maybe that's why we're just focusing on Utah.
The one thing we do outsource is fileting.
So there is a facility next to our operation that will filet it and they have their licenses to filet and things like that.
But then they'll give it back to us and then it's up to us.
I mean, who are we going to sell it to?
So Pete, if he wanted to go into grocery, let's say, how would he start?
So going into grocery is going to be just networking, right?
So it's going to be walking into the grocery store.
And by the way, the way I would start this is not going to the chains.
I would go to independent grocery stores first.
You're not going to go to a big grocery chain and say, hey, I want to take over all of your salmon supply.
You can do any show some track record.
I think for any new item going to a grocery store, they do want to see some sort of record of success.
So you've got to show that and get people comfortable with that.
A few other things I would think about is how are you going to be packaging this?
Is it going to be in filets?
I think I read somewhere that you keep the bones in.
Is that normal or is that or these usually debone?
Because I actually don't buy a lot of salmon quite honestly.
So I just want to understand.
No, there's bones. You got to get pliers and pull them out.
You got to eat your salmon, Pete.
We really need to make salmon chomps.
That would sell. So that led me to another question for you is, if selling the salmon filets, if that is kind of a difficult and uphill battle, is there some sort of value add product, whether it's a canned salmon or is it salmon jerky or some other format that you can get into to go into grocery and help build a brand?
Is that something to think about?
To get in front of people now, one of the things that worked for us the best is driving trial and driving trial means like sampling.
Like what can I do to get my product into people's mouths because that's what sells more chops, right?
I think that's one of the things that you need to do.
I think it's really difficult to do that through a website.
So you getting out to, are you doing the farmers markets and getting in front of people and try the product first hand before asking them to buy?
So not yet an issue with farmers markets.
It's right during our salmon season.
So we're gone for most of them.
We do have a farmer. They're pretty popular here in Utah that they sell a lot of fruit and we have him on board.
He wants 3,000 pounds to just sell out of his and that'll hopefully get the word out.
We've given it out to everybody we know here in Utah and we've gotten a few orders from there.
We do have about 500 pounds ordered, but it was just this excitement on like Facebook marketplace was literally where 90% of the 500 pounds came from and then it's just kind of died.
But Jake, you now have a few months before the season starts, right?
Before you're actually in Bristol Bay or wherever you're going to be fishing for the salmon, you have to use this time to sell and sell and sell.
And so I'm looking at your website and reading a little bit about you.
I see that you were a missionary for the church of Jesus Christ of Latter-day Saints.
It would seem to me that the natural place to start is in your community, right?
It is with the people you know emails.
Ask them to email people.
I'm sure you've done versions of this, but you've got to do it again.
And again, I mean, you know this as a missionary.
You've got to knock on 100 doors before one person's going to talk to you, right?
So it's about persistence, about going out there, talking about your product.
And because it's your first year, you've got to start with the people you know because it's next year that you're working on.
It's the repeat orders and the other people who are like, wow, where can I get that amazing salmon?
Right? Does that make sense?
Yes, 100%. And to be honest, I also, I did after I fish on this boat, I went and did five years of door-to-door sales for solar out in California.
So I- Amazing! And I could go knock doors.
That's what it's going to take.
But are there better routes to get it off the ground?
What if you can cut a deal with a local restaurant?
What if you go to some local restaurants and say, look, I'm going to bring the best salmon in the United States here to Utah.
And I will sell it to you for $12 a pound or something like that.
Just to see. But in exchange, I want you on your menu to say, this comes from any Alaska from Bristol Bay, something like that.
Yeah, I've made a few phone calls there and of course, probably not enough.
I just don't know, should I go that route?
Should I keep knocking those doors?
Or which way to go? Knocking on doors is going to be your best bet.
Like, hands down. I mean, if I could scale that with what I do, I would do that all day long because I'm going to get the sale, man, every time.
And to be honest with you, someone actually knocked on my door yesterday selling meat and fish.
And my wife's like, took his card and she's going to call him and she's going to order stuff.
So it works and it worked at our house.
So a few things here. So you have a really cool story.
I was looking on the website just reading about the family, the whole family angle, where you started.
The fact that you knocked on doors to go raise enough money to start this business is also really cool.
I think you have a goldmine of various types of content that you should be putting out, getting out there, getting footage of you guys actually catching the fish.
People want to find out.
They want to know where the product came from.
This does not cost a lot of money.
You could use your iPhone, put it on your social media channels, get it on TikTok, get it on Instagram.
I think you have to start telling your story.
Even if you've got 10 followers, people, you've got the benefits of Wild Salmon on your website, but shout it from the rafters.
Go just use your iPhone.
Go walk around wherever you are if you're in Alaska or in Utah and say Wild Salmon is different than Farm Salmon.
Farm Salmon is not the same thing and you only get fresh Wild Salmon these months of the year.
I can get it to you. Here's what's amazing about Wild Salmon.
Jake, I think leaning into recipes and cooking, if you could work with some chefs or if maybe if your wife or you were a good cook, start doing that, show people how to use the product.
I would probably leverage people getting excited about the product being delivered to them or just again reviews.
People eating their dinner and enjoying your product and just have them talking to the camera saying, this is amazing.
You should order it. Pete, what you're talking about is exactly what you should be focused on, Jake, which is setting yourself up for year two.
Year one, it's going to be all about knocking on doors, talking to people, getting people, restaurants, whoever you can to order.
But year two, it's getting those people who ordered to do exactly what Pete is saying, to write reviews, to post them on the website, have photos of what you're doing, recipes.
You can take one of your salmon tails and make gravlox, salt, sugar, some dill.
You wrap that thing up and slice it then.
You know how delicious that is, right?
Yeah, of course. We're our biggest consumer as of now.
We eat it all the time. I super believe in it.
Jake, do you have content from you guys fishing?
Yeah, it's just not professional.
My wife and I, we're both trying to market it.
I'm the guy that I just want to push it, push it, push it, push it.
She's kind of the one that's like, no, that doesn't look good.
That doesn't look professional.
Just push that out. Just put it out.
That's it, Jake. I think if you could just tell your family, your story exactly as is.
What's on the website? Tell that to the camera.
Talk to it. Make a 30-second video and get everybody you can to share it.
Now, gearing up for this season.
I think if you spend a couple of days working on that, it doesn't have to be the best in the quality of the video.
Do not even worry about that because people totally get up.
All right, Jake. My takeaway for you is knock, knock, knock.
Sell, sell, sell. Go out there now and start thinking about building your customer base for next season.
This first season is going to be a little harder, but you've got to go out there and you've got to pound the pavement and you've just got to make the sale.
You know how to do it clearly, so you've got to start over and do that.
Pete? I'm fired up by this.
I think you're onto something big here.
I commend you for pivoting the way you have and doing all the things that you've done to get to this point.
But don't stop now because you used to kick indoors and I think you need to do it again.
That's exactly what Guy said.
That's your big opportunity.
You go shaking hands with people and telling them what you're working on and they're going to want to support you.
Jake, Mayer, Annie, Alaska, good luck.
We'll be following you.
Thanks so much. I'll be knocking doors.
I really want to eat some grovelocks right now.
You're like a paleo guy.
I can't believe you don't eat salmon.
I don't eat any fish if I don't catch it and there's no salmon down here.
I eat a ton of mahi, a grouper, a snapper, smoked salmon I've had.
I've had a friend of mine made.
That was amazing. If I could replicate that, I would do it.
Come to my house. You have my smoked salmon.
Next time you're up here in the Bay Area.
Awesome. I'm in. Pete, we've had bagels and salmon and tea.
I love it. This is what I love about our show.
Not everyone who listens is an entrepreneur or has a business, but a lot of people do.
You were there. They are not that long ago trying to figure out how do we get this meat stick into one store and then five stores and then to 5,000 stores.
Exactly. Again, it's just being bold and getting out and doing things that other people won't.
I think that's the name of the game.
You're going to get noses.
I think that's the biggest thing.
You'll hear more noses than yeses.
I preach this everywhere I go, but it's about being resilient.
Set your eyes on the prize.
Set your vision and do not break it.
Just keep going. Yeah. By the way, if you guys haven't heard the Chomps episode, it is so good.
It's full of the best kinds of things that we love on our show.
Failure, setbacks, crises, disasters, and then this incredible success story.
Do check it out. Thank you for listening to the show this week.
If you are working on a business and you would like some advice you want to be on the show, send us a one minute message that tells us about your business and the issues or questions that you help with.
Please make sure to tell us how to reach you.
You can send us a voice memo at hibtid.wondery.com or you can call 1-800-433-1298 and you can leave a message there.
We'll also put all this info in the podcast description so you can see it on your smartphone.
Thanks for listening. Pete, thank you so much.
Thank you for having me.
Appreciate it. Once again, if you want to be on the show, give us a call 1-800-433-1298 or send us a voice memo to hibtid.wondery.com.
This episode was produced by J.C.
Howard with music composed by Ramtine Erebleuie.
It was edited by John Isabella.
Our audio engineer was Gillie Moon.
Our production staff also includes Alex Chung, Carla Estevez, Casey Herman, Chris Messini, Elaine Coates, Katherine Seifer, Kerry Thompson, Malia Agadelo, Neva Grant, and Sam Paulson.
I'm Guy Raaz and you've been listening to the advice line right here on How I Built This Lab.
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