← From the Ground Up
From the Ground Up
Challenger Brands with Babba Rivera, Sarah Paiji Yoo, and Justin Rosenburg
00:34:44
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- [00:01]
A
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- [00:26]
B
Josh hi, I'm Josh Christensen, executive producer of Inc. Podcasts and this is from the Ground Up's fall programming. Today we have another panel from this year's Inc. Founder House in Philadelphia. Staff reporter Ali Donaldson led a discussion about Challenger Brands companies that punch above their weight to succeed. Her guests were Sarah Pagiou, founder and CEO of Blueland, a microplastic free cleaning products company Baba Rivera, founder and CEO of the clean hair care line Ceremonia and Justin Rosenberg, founder and CEO of the fast casual chain Honey Grow. All right, here's that conversation. Enjoy.
- [01:02]
C
I'm Allie Donaldson, I'm a staff reporter here at Inc. And we have three incredible panelists for us here to talk about Challenger Brands companies punching above their weight to win. And as opposed to me telling you about their CVs, I'm going to let all three of them introduce themselves, tell themselves a little bit about themselves, their business. Also with Sarah Amazing.
- [01:25]
D
Hi everyone, I am Sarah Paiji Yu. I'm co founder and CEO of Blueland. And at Blueland we are on a mission to eliminate single use plastic packaging, starting with cleaning products. The idea for Blueland was born when I became a new mom and I discovered that the drinking water I was using to mix with my baby son's formula was riddled with microplastics. And so 70 patents later, the first set of products that we launched were spray cleaners and hand soap. So products that are typically up to 90% water and come in a new plastic bottle each time. And so the big idea was to create tablets, dry tablets that provided just what you needed and encouraged people to refill their own bottles or one of our forever bottles with tap water that they have at home. And because the tablets are dry, we could PA package them in a compostable paper instead of single use plastic. Since then we've launched into a range of other products like laundry detergent and dishwasher detergent tablets, which I'm especially proud of because these are replacing pods which many consumers don't realize are actually wrapped in a thin piece of plastic. And yeah, we started our journey. I was very resolute about being direct to consumer sold online for our first three years because I recognized that what we were trying to do were brand new formats for the industry and brand new behaviors for the consumer. But that we launched about six years ago. And since then, we have now launched into retail. So really exciting to share that we're now in a range of retailers from Whole Foods to Costco to, as of yesterday, we just started selling in Target.
- [03:19]
E
Well, I'm a consumer of Blueland and big fan. My name is Baba Rivera, and I am the founder and CEO of Ceremonia. And we are a clean hair wellness brand that is very proudly rooted in my Latin heritage. I started this brand after spending over a decade frantically damaging my hair. And I am looking at all the women in this room because a lot of us have a shared history of really not feeling confident in our own natural hair. And for me, that meant going on this vicious cycle of straightening my hair every day. I used to bleach it. I used to spray all sorts of toxic products to tame my hair and make it look like something it just simply wasn't. And the result of that was that my hair ended up completely fried. It was so burnt and so frizzy and would just break by itself. And this is when I started researching how to sort of like, restore my natural, healthy hair that I had as a child. I wasn't born with damaged hair. Like, what happened? And I realized how the hair industry was really not designed to keep your hair healthy. It was this perfect cycle of making sure you keep your hair damaged so you come back for more. And one of the most sneakiest ingredients that I have, the biggest beef with in the beauty industry in particular in the hair category, is silicones. Even clean beauty products are packed with silicones, which is basically like a microplastic that creates a coat on your hair to give the illusion of shine. But the only thing that it's doing is that it's actually suffocating your hair and preventing it from actually obtaining moisture and other nutrition from maybe other good products you're using. So this set me on the journey of making peace with my natural beauty, embarking on a hair wellness journey. And I realized I actually had the answers for how to solve this problem all along. As the daughter of a Chilean hairdresser. So Ceremonia is really a full circle moment for me of embracing my heritage, my culture, my beauty, and bottling it up into a modern brand that is global. And in the US we have a nationwide partnership with Sephora, as well as Credo, which is sort of like the clean beauty authority, as well as direct to consumer.
- [05:57]
F
That's great. Justin Rosenberg. I have no hair and if I had your product maybe I would.
- [06:02]
E
I ask if you're a consumer.
- [06:04]
F
I wish, I wish you had your product back in the day, in the 90s and maybe still have a head of hair. Founder, CEO, company called Honey Grow based here in Philadelphia.
- [06:13]
C
Some fans.
- [06:15]
F
Thank you Honey Grow fans. We're a freshly made to order stir fry salad company, Mostly stir fry. 58 locations at this point base here in Philly, but we're now as north as Boston south northern Virginia, D.C. metro. And we just opened our third Ohio location on Friday which is doing great. Started the company here in Philadelphia 2012, had no clue what I was doing. Ran a restaurant, worked open the second one in Ballotkinwood and we won best affiliate in 2013 and then raised a bunch of money, grew too quick, had to stop growth before we went out of business. And then we're able to. Fortunately we have an awesome team. 2019, 2020. Turn it around and open 35 locations since 2020. So not much else to talk about. I'm sure you have a bunch of questions and thank you for having me.
- [07:05]
C
Thank you all for being here. And as you all heard, we have three fast growing consumer businesses. I'm just curious, show of hands, who here runs a consumer facing business? And so I kind of start by going back to the earliest days. How did you all think about getting your brand's name out there? Where did that first batch of customers come from? And Sarah, if you want to start.
- [07:29]
D
Ours is a more unusual story but I will share it because early days we were very focused on not spending money on marketing. I think again, Blueland was a brand new behavior, brand new format. And I think there's a type of founders that are like, I'm a visionary and I know what people want before they even know it. And then there's me. That's like more like all I know is that I'm wrong. But look, I can listen and iterate and get it really right. And so early days we were very focused on product marketing. That's where I want to spend our time. Make sure that we really get the product and positioning and the pricing and the assortment right. That said, I had an opportunity to go on Shark Tank. So Shark Tank ended up, we ended up filming Shark Tank about a month after we launched. So that really was the first big way that the name Blue Land got out there and into the world.
- [08:28]
C
And Baba, what about you?
- [08:30]
E
Yeah, for us it was very community driven. So already before we launched the brand, I started Talk about being frugal. I started a WhatsApp group with people that I thought of as potential customers, and I wanted to bring them into the development process. I realized how, in particular, women of color have never really had a seat at the beauty table, which is kind of crazy because we're the biggest spenders in the category. So I wanted to flip that script from within the company. So one of my first hires was a chemist, and my first marketing spend was just building this community of people that initially lived on WhatsApp and then moved into, like, little dinner table series in my Brooklyn apartment. And I remember the first one, I think we had like 10 people, and then for the next one we had 25. Like, somehow everyone brought a friend. And then you do the math, you know, it just kept growing. And then we hit the max people you can have on our WhatsApp group, and we had to be more, you know, professional and move over to an actual community platform. So, yeah, community was really like the DNA for us from day one and continues to be. It's just, you know, looks a little different now that we are a bigger brand, but it's still a big part of our DNA in marketing.
- [09:51]
C
And, Justin, I'm curious too, if you could talk a little bit about that community aspect, especially for you when you're picking those first locations. How important was that in thinking about where I want to start this business?
- [10:01]
F
Yeah, the first location was here in Center City, Philadelphia. 16th street between Sansom and Chestnut. It was honestly what was available. And my thesis at the time was, I think the customer is Citi and this Asian demographic, etc. And that space became available. Center City is just a tough place to get real estate at a decent rent. So it's really more fortuitous than anything else to get the word out. The name Honey grows the plain words of honest eating. Growing local. A lot of people don't know that it's an amalgam that smashed two things together. Honest eating. We're making everything freshly made to order. Unlike a lot of other concepts, that's more assembly line. We're cooking your food freshly made to order freshly made noodle. You pick what you want, we put it in the wok, we cook it for you. The growing local. When I did the business plan originally, I thought I could buy all local, which is virtually totally impossible. I cannot buy avocados and bananas from Jersey. So I found that out. So that's where the local component came in. But as we grew, one of the key things that we do is Integrate ourselves in the communities. So that's the growing local aspect of it. We do a ton of fundraisers. It's one of the key things that we do, really. When you go to a market, you really want to be a part of the community in a very genuine way. People are smart, they're going to, you know, if we're just here to make money and screw you, like, no one's going to want to be a part of our ecosystem. So we are very much so integrating ourselves in the communities. From, I don't know, 5Ks to whatever fundraiser, to working with local PTA, schools, leagues, et cetera. We generally want to be a part of the community. Otherwise, you know, this long term, whatever concept it is, it's just, it's just not going to work.
- [11:36]
C
And all three of you are in very crowded categories. And when we think about these consumer choices, where I want to go to lunch, what shampoo, I want to buy my cleaning products, those are very routine oriented decisions. Those habits are really sticky. How did you all think about communicating to the consumer to have them say, okay, I'm going to take a chance on this new brand?
- [11:59]
E
I'm happy to jump in here because we actually went about it quite interestingly. So a lot of our investors, you know, they read all the reports and they're, you know, numbers people and they're like, you should definitely launch with a routine shampoo and conditioner. That's where the money is. And I was like, if I think of myself as a customer, like, I already have a shampoo and conditioner whether I love it or not, like, there's no one here that doesn't own a shampoo, right? Like, so I thought to myself, instead of asking people to basically change something they're already doing, how can I enter the market more from like the side? Like, is there something I can introduce that will be a value add that doesn't require them to completely change their routine? And ideally a product that can be highly differentiated, that will yield trust and then we can start getting them onboarded on a daily regimen. So our first product was actually scalp oil. It was a scalp remedy oil called Aceta de Mosca. Talk about a mouthful. It is still one of our number one bestsellers because it really stood out. This was during the time that no one was talking about scalp care. And most people still to this day don't have a scalp routine. But the reality is that if you want to transform your hair, it really has to begin with a really good scalp routine. So for us, that was like the perfect entry point into the market. Aceta de mosca is also heritage ritual derived from the Dominican Republic. So there was a lot of brand DNA there for us too with being a brand inspired by Latin American rituals. So yeah, we sort of came in from the side and then once people started using the aceta de mosca, which is a pre wash treatment, the first question we got was, what about shampoo? Now that I'm doing this clean hair wellness routine, our customers wanted to also wash their hair with something that was silicone and sulfate free. So that became our follow up launch.
- [13:51]
C
You kind of pulled them in. And I'm curious, Justin too, how much did you think about when you were launching this? Like you're thinking about your competitors and differentiating from them?
- [14:01]
F
Yeah, it was a huge part of the thinking process. When I started Honeygrow, there were a gazillion salad concepts here, dc, New York, Miami, et cetera. Some have gone public or won and many have gone away. And I kind of knew that I didn't want to be a salad concept because you look at the demographic, it really wasn't generating both a lunch and daytime nighttime business in the way that you look at a chipotle, which is able to. And so for me, I really thought about how do I capture two day parts, lunch, dinner, how do I get a two year payback on my model, how do I get X&AUV averaging the sales and how do I get a full profit north of 20%. And personally, and I'll back up, my goal remains, we want to have this be a national, not international organization. We think our tam is no different than say a cava or a chipotle. And I personally didn't think salads would be the way to do it. So burgers have been done, Mexican's been done. I did salads and stir fry. We're 85% stir fry to 20. I can't do math today, 15% salads. And the reason is there's not really a lot of stir fry competition out there doing directly what we're doing. There certainly are some Mongolian barbecues, but we've seen probably eight or nine groups try to do what we've done with kiosk ordering and everything else we call them phony grows. And not one through the years has lasted. And there's a lot of reasons behind that. But there's a bit of a moat around the concept. But the key really has been the differentiation of the model.
- [15:27]
C
And I'm curious for all three of you having these Upstart brands having to really compete against the big giants. How important were customer reviews early on?
- [15:38]
F
I'll jump in. I mean they're beyond critical. They still are critical. We do a weekly P and L call with all of our district managers and the executive team and we look at every single restaurant. It's a two hour process. We'll have to figure out how to rejig this. But one of the things we talk about are customer reviews. Every morning I wake up, I look at two things. I get an email early for Salescom and I get customer reviews aggregated in a program and I'm looking at Google, Yelp, whatever it is. So critical people optically are going to get a first impression of your brand and we don't bet 1000. But then it's like okay, well what do we do to get better and how do we actually proactively get those reviews? Oftentimes people won't necessarily give you a good review. They'll be like, oh this thing sucks you guys. Honey girl, driver was smoking a cigarette on my porch. That was doordash. But then we get a bad review. So proactively getting after it so you can have optically that I think it's going to lead to more sales. More importantly, having a team that could execute to your standards and exceed them is what's gay.
- [16:39]
B
We'll be right back after a quick break.
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A
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- [17:14]
D
Reviews are absolutely critical. I think very top of mind is we just reached our hundred thousand five star review and I just actually heard in a meeting yesterday. Thank you. That that actually are currently our number one ad that's running and so it can obviously be very important for social proof. But beyond that, I think reviews been critical to us from the beginning and really driving that deep consumer understanding. I think that listening to the consumer is the most important thing that you can be doing. I think my ability to listen is my superpower as a founder and I think that's the only way that we've been able to do something that has been so massively different for the category and compete alongside again. We compete against brands that are generating billions of dollars of revenue and I think had I not been Listening to the consumer and the reviews, like I would have gone out there and you know, marketed Blueland on our point of differentiation, which is absolutely zero percent single use plastic. And that would have been a miss, unfortunately, because as much as I was living that lifestyle, you know, when I started Blueland, I was zero waste. I did cloth diapers for both kids, I was making my own toothpaste tablets. But that's not most all people. And I think if you want to, yes, and if you want to build a business of scale and that's really. And if you really want to maximize the impact that you can have, you need to be able to reach as many people as you can. And through that listening, that's how I was able to learn that, you know, for most all people it's not being sort of pristinely sustainable, it's that they felt that most sustainable cleaning products out there, there were trade offs, that it was like less efficacious and it was more expensive and it was more work. And that's when like very early on I was like, duh, efficacy is important. Like cleaning is not a hobby, it's a job to be done. We need to build the most efficacious cleaning products out there if we're going to get everyone to adopt these products. And so those are the types of things that we are sort of ruthlessly focused on efficacy. For example, we test all of our products third party independent labs, make all those results available on our website because we are so proud of how well our products work. And we do not launch a product unless we can show that not only do we compete against natural competitors, but against the conventional ones. And price point, that's another one. Sometimes people are like, why did it take you four years to launch something? And it's like, I don't want to further this bad reputation of sustainable products. I want to be price parity with ideally the conventional brands because that's how you really get people to try not just Blue Lamp, but sustainable brands generally.
- [19:57]
E
And I can just chime in on that. That like the customer is the hardest critic, right? Because the customer is not thinking about you in comparison to the other sustainable options, they're just thinking about you in comparison to what they have and know from home. So customer reviews were super important for us too from day one. Sulfate free shampoos historically have been kind of a not super exciting experience in the shower. They don't lather, which is kind of like a bummer. You're like, is this thing working? So for us it was really important that we needed to mimic the same experience, experience that people know and love from their conventional beauty products. But they're cleaner and more sustainable. And the reality is that consumers, they want to be sustainable and clean, but not at all costs. Like to your point, not everyone is on that life mission as much as we all wish they were. So, yeah, consumer reviews is super important. Then once you have the product to deliver on that, I think it's really important to get that message out there to customers, through customers. And that's also where creators and influencers come into play, where they can really show how it looks and works in their own homes, or in my case, in their own hair.
- [21:08]
C
In all three of you in your categories, you're competing against multi billion dollar public companies, multinational companies. Obviously they're going to have a lot more resources. You don't have the ad budgets you don't have. What do you think are the kind of unfair advantages of being smaller, more upstart companies?
- [21:27]
E
I used to think about all the things I could not do because I was a small company. And now I try to instill into my team all the things we can do because we are a small company. So that mindset shift, I think is really important. I always remind my team about the fact that if we have an idea and we like it, we can launch it. That is an unfair advantage. If you work at l', Oreal, you might go through three years of reporting and risk analysis and ifs and buts, and then by the time you launch it, the moment is gone. So being a small company actually has a lot of advantages. And speed is definitely one of them.
- [22:05]
D
I mean, I think another one is just the authentic storytelling. Right. I think that's been huge for Blueland. I've been so grateful for all the incredible opportunities that we've been able to receive for me to be able to go out there and share Blueland and Ry. So, for example, I've been on Good Morning America multiple times, CBS Mornings multiple times, the Today Show. I just had a full page in the New York Times. Yeah, that just came out this weekend. You know, following my family's Sunday routine. And like, that's something that a P and G or a Clorox, like, who's gonna be out there? Like, who's the person that's gonna be out there talking about, like, why they just launched a sustainable offshoot to some major brand, I think, you know, and. And it's a huge advantage. So I think we always tell ourselves it's an advantage to be Small. You're only small once. Really embrace it. But, yeah, absolutely. I think our journey is testament to all the advantages that come with being small.
- [23:11]
F
Yeah. If anyone ever read Walter Isaacson's Steve Jobs biography, one of my favorites, and it's interesting, back when I'm like, oh, Steve Jobs. Not necessarily the greatest human, but really just phenomenal innovator, obviously. And someone I'm deeply fascinated by it, talked about when they were developing the Macintosh, how they were like the pirates in a separate area of the campus or their office, and IBM was like the bad guys. Right. But they were the pirates. And I think there's something really special about being the underdog and really saying, like, we could be more flexible, we could move faster. And I love being an underdog. Anyone here? Rocky IV fans. Like, when Rocky fought Drago, we're in Philly, so I gotta mention Rocky. Right? But, like, you know, it's kind of like we like being Rocky to fight Drago, and we're going to train harder, nasty or meaner to get after it. And that's a grittiness that I had a conversation with someone today who's a CMO for a rather large company, and she was saying that she misses that scrappiness that is part of it. And she saw the transition of that scrappiness to not being scrappy with big ad budgets and national campaigns. And as we grow, it's something I think about often. It's like, how do we maintain that grit, that nastiness that really kind of makes us, like, exciting and excited? Because obviously, once you get complacent, you die.
- [24:29]
C
And I'm curious, too. Sarah touched on this a little bit, especially for Baba and Justin, how you think about leveraging your personal platform as a founder for your business, and then how you find that balance. Because one thing I hear now from a lot of founders is it can feel a little exhausting. The pressure to feel like, I need to be on LinkedIn, I need to have a podcast, I need a substack. Where do you all draw that line?
- [24:49]
F
I don't care. You're lucky I'm even here. Nah, I'm not, because I'm important. It's just like, I'm here, there, and nowhere. I might be different than you guys. I like being very under the radar. I don't have a public Instagram. I don't go on LinkedIn often. I want the business to speak for itself. I want the team to be the reason why this thing's successful. If I got hit by a bus tomorrow, I want the company to thrive without me. And I think that as a leader, my job is to build more leaders and to make sure that people in the company are flourishing. And if it's all about me, then I'm failing at this phase as I do think there's a transition period and a need for founders. And I think that some founders should evolve to CEO and can and some founders cannot. And so part of my growth has been that I've been through periods of honey girl, where we thought we were going to go bankrupt and it was pretty scary and I had to put my CEO hat or find a CEO hat and become one. And it was a tough transition, which isn't for everyone. But my personal style is I like to be under the radar and big with my family and I like to train jiu jitsu and surf and play guitar. So I want the brand to speak for itself. And yeah, that's it.
- [26:01]
E
Yeah, I mean I lean into a lot of like the founder advantages that you can get if you have a public Persona. But I always say that that's definitely not a must. And I get asked a lot like, how do you build a personal brand and do I need to do X, Y and Z? And the reality is you don't need to do anything. You just need to lean into your own unfair advantages. And if being a public figure is not your jam, then that's certainly not where you should be spending your time. Right. But I think for me there is so much mission behind what I'm doing and I think that one of our unfair advantages is that am not going to rest until we have created the best hair care brand in the world. And that is something that is really hard to hire for. Like I can't think of someone that would take a job on a startup salary and just be relentlessly obsessed with the mission the same way a founder can be. And I think that's why I personally shop mostly founder led businesses and you know, down to like the clothes I wear, the beauty I consume. Because generally when you have an obsessed founder behind the brand, they just make really good products because they care so much.
- [27:17]
C
And as someone that covers consumer companies day in and day out, one of the biggest challenges right now is tariffs. A lot of folks are worried about higher input prices, even shortages. I'm just curious from the audience who's feeling the pinch of tariffs already? And so I'm curious for all three of you, what are you feeling on the impact from tariffs so far and how are you navigating that? Are you finding different domestic suppliers and Sarah, if you want to start maybe.
- [27:46]
D
Yeah, so I think absolutely we're feeling the pinch from tariffs. I think we are still admittedly trying to figure out like if this is ultimately where steady state is for context for the group. We do manufacture all of our cleaning products and formulas here in the US so tablets, powders are all done here. That said, through ingredients we do have exposure to places that we didn't expect there to still potentially be tariffs. So Israel, Italy, parts of Scandinavia and then as well some of our vessels, some of like glass bottles, our metal tins, we do source out of China. That said, I think internally we are getting sort of leadership team wide. We're getting the weekly tariff updates but it's really hard to do a lot of work in terms of like are we looking for alternative places to source these products? That work actually had been underway for four plus years. So we do have some places that we could potentially move to. But again, I think it's really hard to operate in this environment at the moment when it feels like there's still additional news that we're waiting for. I think as a, an earlier stage company we've been fortunate because I think with the scale that's come with the incredible growth that we've seen, we've already been able to negotiate down. So actually net, net our costs are still going down even with the tariffs. But I know that is we are in a very unique position from that perspective. But one of the benefits of being smaller and growing.
- [29:29]
E
Yeah, I mean what a year to be alive as a founder. First there was a TikTok ban, now there's the tariffs. Like geez. We are also similarly fortunate because all of our production is in the U.S. most of our componentries are from the U.S. as well, but we do use natural ingredients from Latin America. That's the whole point. So we are definitely exposed to it to a certain degree. We are holding off on any price increases to see where this lands. I feel like we are getting new information every week. So. So yeah, right now just taking it all in and doing analysis on what this will mean for future replan orders.
- [30:10]
C
What about you Justin? Am I still going to be able to get bananas on my honey bar?
- [30:13]
F
You got five seconds left in this panel. I don't know. Can I answer the question quick? I'll be quick. So we've Liberation day. So we've not seen the impact yet. I think that we all will. I can say that consumer products, I'll speak to what I'm Seeing now at least, I don't know if there's necessarily a drop in consumer demand. For me to say that sales are down for whatever reason would be conjecture relative to tariffs. I think that certainly certain products in our PMICs, for example, our pineapples are coming from, I found out Indonesia, which we'll be affected by. Our flour and our noodles actually comes from Canada. We have really, really high quality flour coming from Canada at a really good price point. We're looking domestically, but it's hard to find both the quality and the price point. We get our cups, containers from overseas, our stir fry containers come from Vietnam, our cups, certain other items come from China. But that said, the exposure isn't that bad on the produce and everything else. So we can figure it out. But it feels like there's still a lot of uncertain to suddenly switch. Hey, if this is coming from China, let's put it to Cambodia. I don't know if Cambodia suddenly will then be taxed 40%. Like, I don't know, which is part of the frustration I face as a CEO. It just. There really is no certainty. So again, this sounds a bit cliche, but it really is about controlling what you can control. And what we can control is making sure our customers are having an amazing experience at Honey Grow over and over again, making sure our team is set up for success. We're not slowing down our growth, we're not planning on raising prices, but we're pushing forward, as always. So it's a bit opaque at the moment just based on there's so much uncertainty as to what decisions will be made in terms of tariffs, but just managing it, pushing forward.
- [32:08]
C
Well, thank you, all three of you, for being here.
- [32:10]
E
Yeah, thank you.
- [32:16]
B
That's all for this episode of from the Ground Up. Our producers are Blake Odom and Avery Miles, with help from Sam Gabauer and Hawa Otori. Editing by Matt Toder, mix and sound design by Nicholas Torres. If you haven't already, subscribe to all Ink podcasts on Apple Podcasts, Spotify or wherever you listen.
- [32:37]
D
Panoply.