Noosa Yoghurt: Koel Thomae

Summary

How I Built This with Guy Raz: Noosa Yoghurt Featuring Koel Thomae

Release Date: November 25, 2024

Introduction

In this compelling episode of How I Built This, host Guy Raz interviews Koel Thomae, the visionary founder behind Noosa Yoghurt. Koel shares her extraordinary journey from an accidental entrepreneur to building Noosa into a multimillion-dollar brand, ultimately leading to its acquisition by Campbell's. This episode delves deep into the challenges, triumphs, and pivotal moments that shaped Noosa's success.

---

Early Life and Career Beginnings

Koel Thomae's entrepreneurial spirit was ignited long before she ventured into the dairy industry. Growing up in Australia during the 70s and 80s, Koel developed a passion for food, nurtured by her mother's emphasis on independence and experiences over material possessions.

“I'm a weird nerd. I like going grocery shopping. Like, I like just cruising grocery aisles. It's so fun. Like, just the discovery of things.”
— Koel Thomae [07:16]

In the late 1990s, Koel moved to the United States, navigating various temporary jobs across Oregon, Montana, and Utah. Her career took a significant turn when she landed a junior supply chain role at Izzy Beverage, a sparkling juice startup in Boulder, Colorado. This experience planted the seed for her future entrepreneurial endeavors.

---

The Eureka Moment: Discovering Queensland Yogurt

In 2005, during a visit to her hometown in Queensland, Koel had a life-changing experience that would steer her career towards yogurt entrepreneurship. While shopping with her then-boyfriend Tate, she discovered a local passion fruit yogurt that captivated her taste buds.

“It was like eating velvet. It was just so creamy... the passion fruit was just this, like, beautiful, sweet, tart sort of flavor opposition.”
— Koel Thomae [12:03]

Despite loving the yogurt, Koel didn't act immediately. However, her obsession persisted back in Colorado, leading her to embark on what she describes as her "yogurt PhD," extensively researching and sampling various yogurt brands to find something akin to her Queensland discovery.

---

Taking the Leap: Founding Noosa Yoghurt

Determined to bring Queensland yogurt to America, Koel utilized her network and entrepreneurial instincts to connect with the yogurt's family owners, the Mathewsons, in Australia. With the support of her mother and investment from Rob Graves, a fourth-generation dairy farmer from Morning Fresh in Northern Colorado, Koel co-founded Noosa Yoghurt.

“I didn't see them as somebody that I can necessarily partner with until one day... I connect with Rob Graves... inviting me up to the farm.”
— Koel Thomae [22:18]

By early 2010, Noosa launched in Colorado's Whole Foods, featuring four flavors: honey, raspberry, blueberry, and mango. Koel emphasized no Greek yogurt inclusion initially, focusing instead on maintaining the unique texture and flavor profile inspired by her original discovery.

---

Overcoming Early Challenges

Noosa's initial growth was promising, with successful in-store sampling and a burgeoning presence at Boulder Farmers Market. However, the company faced significant hurdles when expanding beyond Colorado. In 2011, Noosa secured a deal with ShopRite, aiming for national distribution. Unfortunately, operational missteps, including inventory management and distribution logistics, led to severe financial strain.

“We were literally hemorrhaging cash for this customer... And finally I was like, this is not working.”
— Koel Thomae [03:28]

After approximately six months of mounting losses, Koel made the difficult decision to pull out of the ShopRite partnership, incurring substantial financial losses but safeguarding the company's viability.

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Strategic Growth and Target Partnership

Undeterred by setbacks, Koel focused on refining Noosa's operations and product offerings. In 2012, presenting Noosa at Expo West caught the attention of Target buyers, leading to a significant partnership with SuperTarget. This collaboration catapulted Noosa into over a thousand stores by 2012, marking a pivotal growth phase.

“We're now probably operating at least four to five batches a week... it's such a constant leapfrog.”
— Koel Thomae [58:45]

Despite scaling rapidly, Noosa maintained lean operations, achieving profitability by late 2012 with revenues nearing $20 million. However, internal disagreements over growth strategies and equity distribution began to surface, highlighting the challenges of managing a fast-growing business with diverse stakeholder visions.

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Navigating Internal Conflicts and Strategic Investment

By 2014, Noosa faced intensifying competition from major brands entering the creamier yogurt space. Internal conflicts over strategic directions, such as compensation structures and team expansion, strained relationships between Koel, Rob, and the Mathewsons. Recognizing the need for external expertise, Noosa sought a strategic investment to support continued growth.

“We ended up hiring an investment banker and running a process to find more of that private equity type investment.”
— Koel Thomae [67:32]

Advent, a Boston-based private equity firm, invested in Noosa, acquiring a majority stake but allowing Koel and Rob to remain as key employees. This transition ushered in a new professional chapter for Noosa, with enhanced operational structures and strategic guidance.

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Acquisition and Legacy

Under the new investment structure, Noosa continued its upward trajectory until Campbell's Soup Company acquired it in early 2024. Koel and Rob retained their roles during the transition, ensuring continuity and leveraging their deep understanding of the brand's ethos.

“It was two bites at the apple.”
— Koel Thomae [71:07]

The acquisition not only validated Noosa's market position but also provided Koel with substantial financial rewards and the opportunity to explore new ventures within the dairy-free space.

---

Reflections and Insights

Throughout the journey, Koel attributes Noosa's success to a combination of luck, timing, and relentless hard work. She acknowledges the importance of leveraging trends, such as the rise of Greek yogurt, and emphasizes the critical role of operational efficiency and strategic partnerships.

“I think there's a huge element of luck... coupled with that is, you know, as much as I may have disagreed with my business partners over different things, we all worked really bloody hard.”
— Koel Thomae [73:57]

Koel concludes by highlighting the invaluable lessons learned from her entrepreneurial experience, particularly the significance of aligning strategic visions and the necessity of scaling thoughtfully to sustain growth.

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Conclusion

Koel Thomae's story is a testament to the power of passion, resilience, and strategic foresight in building a successful brand from the ground up. Through Noosa Yoghurt, she not only introduced a beloved product to the American market but also navigated the complexities of scaling a business, overcoming operational challenges, and forging meaningful partnerships. Her insights offer invaluable lessons for aspiring entrepreneurs aiming to turn passion into purpose.

“I worked a lifetime in that decade.”
— Koel Thomae [71:43]

---

Notable Quotes

1. “I'm a weird nerd. I like going grocery shopping. Like, I like just cruising grocery aisles. It's so fun. Like, just the discovery of things.”
   — Koel Thomae [07:16]

2. “It was like eating velvet. It was just so creamy... the passion fruit was just this, like, beautiful, sweet, tart sort of flavor opposition.”
   — Koel Thomae [12:03]

3. “We were literally hemorrhaging cash for this customer... And finally I was like, this is not working.”
   — Koel Thomae [03:28]

4. “We ended up hiring an investment banker and running a process to find more of that private equity type investment.”
   — Koel Thomae [67:32]

5. “It was two bites at the apple.”
   — Koel Thomae [71:07]

6. “I worked a lifetime in that decade.”
   — Koel Thomae [71:43]

---

Key Takeaways

• Passion-Driven Entrepreneurship: Koel's love for a unique yogurt flavor led her to explore and create an innovative business.
• Strategic Partnerships: Collaborating with Rob Graves and the Mathewsons was crucial in establishing Noosa's foundation.
• Navigating Growth: Rapid scaling requires robust operational strategies and clear internal alignment to sustain success.
• Resilience Through Challenges: Overcoming setbacks, such as the ShopRite partnership failure, demonstrated Noosa's resilience.
• Importance of External Expertise: Bringing in professional investment and management was pivotal in transitioning Noosa to the next growth phase.
• Legacy and Reflection: Koel's journey underscores the balance between personal passion and strategic business acumen.

---

Koel Thomae's journey with Noosa Yoghurt offers rich insights into the entrepreneurial process, highlighting the interplay between passion, strategy, and adaptability. Her story serves as an inspiration for aspiring entrepreneurs aiming to build impactful and enduring brands.

Transcript

[Guy Raz]

WonderYPlus subscribers can listen to How I Built this early and ad free right now. Join WonderyPlus in the Wondery app or on Apple Podcasts. This episode is brought to you by American Express. In today's ever changing landscape, business owners like you are constantly adapting to new challenges you're always on, relying on your instincts while seeking partners and solutions to help flex and grow. That's where the American Express Business Platinum Card comes in. It works just as hard as you do to help you pursue your passions. With its world class business and travel benefits, you can get more for your business wherever it takes you. Like earning five times membership reward points on flights and prepaid hotels booked on amextravel.com, so that going the extra mile for your business is even more rewarding. And with complimentary access to more than 1400 airport lounges worldwide, including the Centurion Lounge, you can keep your business running while you're on the go. See how the Amex Business Platinum Card gives business owners like you the tools and rewards to do more of what you love. Terms apply. Learn [e-mail] AmExBusiness you know what I love most about listening on Audible? It lets your imagination soar. Whether you listen to stories, motivation, expert advice, any genre you love, you can be inspired to imagine new worlds, new possibilities, new ways of thinking. There's more to imagine when you listen. I've recently been listening to Table for Two by Amor Toles, an incredible collection of short stories and a novella that takes us back to a character from his book Rules of Civility. And as an Audible member, you can choose one title a month to keep from the entire catalog, including the latest bestsellers and new releases. New members can try audible free for 30 days. Visit audible.com built or text built to 500500 that's audible.combilt or text bilt to 500500 to try audible free for 30 days audible.combilt Ah, and here we have travelers in their natural habitat enjoying guaranteed 4pm checkout at fine hotels and resorts booked through Amex Travel. And they don't even see what's coming at them. We're in. We got the table. Yep. With resi priority notify they're alerted when hard to get reservations open up reservation for two.

[Koel Tomei]

Save the best for last thanks to.

[Guy Raz]

Amex Platinum, the last day vacation brings yet another experience. That's the powerful backing of American Express. Terms Apply. Learn [e-mail] With Amex.

[Koel Tomei]

Shoprite is probably one of the hardest Operationally, retailers to work with, everything that could go wrong was going wrong. We were literally hemorrhaging cash for this customer, from spoils to the slotting fees.

[Guy Raz]

Yeah.

[Koel Tomei]

And finally I was like, this is not working. Like, this retailer could sink the entire operation from a cash flow perspective.

[Guy Raz]

So what did you do?

[Koel Tomei]

We pulled out.

[Guy Raz]

You pulled out?

[Koel Tomei]

We pulled out. And I mean, they pretty much said, you'll never sell at our store again.

[Guy Raz]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Koel Tomei discovered a delicious passion fruit yogurt in an Australian beach town, became obsessed with bringing it to the US and built Noosa into a major yogurt brand. Koel 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, Koel 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 Koel Tame and her partners managed to turn Noosa into a multimillion dollar yogurt brand that was eventually acquired by Campbell's, as in the soup company. Koel grew up in Australia in the 70s and 80s. She came to the US after college and bounced around Oregon, Montana, and Utah before landing in Colorado.

[Koel Tomei]

And so in 2000, I landed in Boulder and ultimately got a job working for this IT company. Thinking again, you know, that it would be this sort of kickstarter to a real career. Yeah, and realized pretty quickly that I was not very passionate about the IT world dying, you know, in a cube. But I loved living in Boulder and I really wanted to stay.

[Guy Raz]

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 Haines Celestial, which I think is based there, and kind of started there, I think.

[Koel Tomei]

Haines Celestial, Whitewave, White Wave.

[Guy Raz]

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?

[Koel Tomei]

I wasn't initially. Food has always been this sort of common thread in my life, you know, from growing up and going to farmers markets. I think being raised by a single mom who just sort of had bigger expectations of, you know, 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. Like, I like just cruising grocery aisles.

[Guy Raz]

There's nothing nerdy about that. That's what I do in every city I go to.

[Koel Tomei]

It's so fun. Like, just the discovery of things.

[Guy Raz]

It's the best.

[Koel Tomei]

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.

[Guy Raz]

You stayed in this sort of job that you hated for at least three and a half, four years. Right. For this IT company. You were there for quite a while.

[Koel Tomei]

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.

[Guy Raz]

Izzy, of course, the sparkling juice brand, and that had started in Boulder. And so presumably this was more interesting for you than the IT job that you had before.

[Koel Tomei]

Yeah, well, I learned so much sales, marketing. I was loving it, Absolutely loving it.

[Guy Raz]

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.

[Koel Tomei]

Yeah.

[Guy Raz]

And you go stay with your mom. She has a small beach house on the Sunshine coast in Queensland. And. Tell me about that trip.

[Koel Tomei]

We were on the Sunshine Coast. We. So we had gone to the beach, we'd gone surfing, and we were 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, this is. 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 yoghurt 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 yogurt's delicious? She's like, well, why not? Like, okay, 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 this amazing food community. Have you guys ever thought about doing anything with the U.S. she's like, no, we're way too busy. I was like, okay, well, you know, here's my email address. If anything changes, would 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.

[Guy Raz]

And the yogurt was. It wasn't, like, Greek yogurt. It was, like, thick, but not as firm as Greek yogurt.

[Koel Tomei]

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.

[Guy Raz]

Yeah.

[Koel Tomei]

And, yeah, I couldn't find anything like it in Colorado.

[Guy Raz]

And Greek yogurt, By this point, 2004, 2005, you started to see Chobani, and Fayet was around. There were some Greek yogurts that were available.

[Koel Tomei]

Yeah. They were just coming onto the market, so I could see that there was a trend happening with Greek, but to me, it didn't taste as good as Queensland yogurt.

[Guy Raz]

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 I guess you were telling a lot of people about this yogurt. Right. Like, it becomes, like, a weird obsession for you when you go back to Boulder.

[Koel Tomei]

Yeah. I mean, I sort of embarked on what I like to describe as 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's 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.

[Guy Raz]

But while you're in Boulder, like, you know, sometimes you'll meet people who are born in another country. Like, I've noticed somebody from Bulgaria, and they'll say, oh, in Bulgaria, the tomatoes and cucumbers are so much better than they are in the US 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, okay, great. And I would have kind of, you know, sort of subtly rolled my eyes, but I would have. You know, I would have listened to you. You were that person.

[Koel Tomei]

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.

[Guy Raz]

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.

[Koel Tomei]

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.

[Guy Raz]

That's cool. I love that I told you that.

[Koel Tomei]

I do too. So I actually had my mom call the second time. She definitely has the gift of the gab. And my mom organized a meeting with the Queensland yogurt family.

[Guy Raz]

And you met the. These are the owners, the Mathewsons.

[Koel Tomei]

The Mathewsons, yep. So it ends up being K. 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 palate is not that different from an Aussie palate, 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.

[Guy Raz]

The idea was maybe could I license it from you? Like, did you have an ask at that lunch?

[Koel Tomei]

Yeah, it was, 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, 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. This from a three hour lunch and a handshake.

[Guy Raz]

But no numbers were discussed at that point.

[Koel Tomei]

None.

[Guy Raz]

None. Okay. 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? Was there a world where you could just have figured it out?

[Koel Tomei]

Maybe, but that was not what I was thinking. I just felt like this was so unique and why try and reinvent the wheel?

[Guy Raz]

Fair enough. And you're. This is now 2007.

[Koel Tomei]

Yeah.

[Guy Raz]

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 and you got some equity when you joined. So you got a nice sized check when Pepsi bought out Izzy. I would assume I did.

[Koel Tomei]

And more money than I ever envisioned having in my life.

[Guy Raz]

Do you mind telling us how much you got from that equity?

[Koel Tomei]

I got about $75,000.

[Guy Raz]

Wow. That's pretty good. Because you were in your early 30s at that point.

[Koel Tomei]

Yeah. And just a junior position. Had just bought my first house. Yeah. It was sort of revolutionary to have this kind of money.

[Guy Raz]

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 25 and 50 grand that you'd be willing to put in. What was your next step? I mean, now you had to. 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 did it start it or anything? Did you know anything?

[Koel Tomei]

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 Mathewsons 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, okay, 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.

[Guy Raz]

Because. That's right, because you don't want to kill people. You want to kill people with bacteria or something. Right. So you go to the state health department to get more information. What did you find out?

[Koel Tomei]

I found out that I was even more ill equipped than I imagined. And, you know, this state health inspector kind of like figures me out pretty quickly that I am completely green when it comes to dairy. And he asks 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.

[Guy Raz]

Fair enough.

[Koel Tomei]

I walk out of the building and literally like shed a tear.

[Guy Raz]

What was the problem with the document? Was it just impenetrable?

[Koel Tomei]

I mean, I felt like it would take me an entire year to read it and really understand it.

[Guy Raz]

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.

[Koel Tomei]

I decided to pivot. I was like, okay, 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?

[Guy Raz]

And who was your network, by the way?

[Koel Tomei]

My Izzy. People. Yeah, just small network.

[Guy Raz]

Yeah, just. And asking if they knew people in Boulder who are connected. You just start asking people you knew, do you know anybody in Derry?

[Koel Tomei]

Yeah, exactly. And it's, it's an old world process. And what I'm thinking is very entrepreneurial.

[Guy Raz]

When you say old world, it's like small families. Generational families.

[Koel Tomei]

Exactly.

[Guy Raz]

In this business. Because a lot of dairies are small, but then they sell to larger brands.

[Koel Tomei]

Yeah.

[Guy Raz]

That just, you know. Right. And a lot of these, as far as I know in this area, they're. They're families that have been in the business for two, three, four generations. And that's what you were running into.

[Koel Tomei]

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 flyer for this fourth generation dairy farm in northern Colorado called Morning Fresh.

[Guy Raz]

A flyer advertising what?

[Koel Tomei]

It 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.

[Guy Raz]

Oh, so it was a flyer advertising the dairy because they were branding their milk Morning Fresh milk at Whole Foods in Colorado.

[Koel Tomei]

Yeah. And so I ultimately. Cold call, getting really good at cold calling at this point. And I connect with Rob Graves, Farmer Rob, as we like to call him.

[Guy Raz]

And he was. Who was Rob? Was he the owner?

[Koel Tomei]

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.

[Guy Raz]

And your pitch was what?

[Koel Tomei]

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.

[Guy Raz]

How far. How far away from Boulder was it?

[Koel Tomei]

It's about an hour north. Yeah.

[Guy Raz]

Okay.

[Koel Tomei]

You know, he was generous to even have the meeting. I think he thinks I'm pretty crazy at this point because I don't have any product. Right. Because tasting is believing.

[Guy Raz]

Right. You're just saying I have this amazing yogurt. And he's like, where is it?

[Koel Tomei]

Yeah.

[Guy Raz]

You're like, it's in Australia.

[Koel Tomei]

Exactly. So then I call my mom. I ask her to ship me some samples. I don't even remember how we got them through customs, because you can't technically ship dairy internationally.

[Guy Raz]

She just, like, ships them in, like, with dry ice or something.

[Koel Tomei]

I think she froze, like, milk jugs.

[Guy Raz]

Oh.

[Koel Tomei]

I mean, imagine this yogurt gets to me, and it's probably not food safe at this point.

[Guy Raz]

Yeah.

[Koel Tomei]

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.

[Guy Raz]

He finds it to be as amazing as you do.

[Koel Tomei]

He does, right.

[Guy Raz]

Cause he could have been like, you know, it's pretty good, but it's not amazing.

[Koel Tomei]

No. So he's immediately intrigued, 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.

[Guy Raz]

So they were not making yogurt. They were just bottling milk and maybe cream.

[Koel Tomei]

Yep.

[Guy Raz]

Because that's a whole different process. Yeah. That's a whole nother line that he's got to put in.

[Koel Tomei]

Exactly. But he's like, yeah, we can do it. So then as we, you know, the conversations sort of continue. We realize it probably makes more sense for him to come on as.

[Guy Raz]

As a partner.

[Koel Tomei]

As a partner.

[Guy Raz]

Fair enough.

[Koel Tomei]

Yeah.

[Guy Raz]

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, frustrating, and just generally unpleasant parts of starting a business, which is talking about the details of what to do, how to divide it up, especially when it has no value. Like, this is worth $0.00, and you know that the partners in Australia are willing to put some money in, but in exchange for ownership, you want to own a significant amount because it's your idea. Rob is going to have the equipment, he's going to make it. First of all, in terms of overall startup cost, did you. Were you able to figure out how much you would need by this point?

[Koel Tomei]

We would lease the space from Rob. Right. So that's cash, but it's not like huge upfront costs. The Australian family was willing to do a pretty, pretty minor lease on the product. Basically, it was a dollar license agreement.

[Guy Raz]

Okay.

[Koel Tomei]

Because they wanted to be investors.

[Guy Raz]

Right.

[Koel Tomei]

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? And sort of backed into this number of $400,000.

[Guy Raz]

That would cover the costs of getting off the ground.

[Koel Tomei]

Exactly.

[Guy Raz]

How did you have. You didn't have that money?

[Koel Tomei]

I had some of that money, had a chat with my mom and my stepdad. So they were on board. They had tasted the product. They were believers. And then the Mathewsons and Rob. So we were the three sort of blocks of investment.

[Guy Raz]

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?

[Koel Tomei]

It was a half, a quarter. Quarter. It's because the Mathewson family put in a larger share of money.

[Guy Raz]

Got it. Okay. So 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.

[Koel Tomei]

Yeah.

[Guy Raz]

And I mean, here you are. You are approaching Maybe in your mid-30s. Were you in any way nervous about putting all that money into this business all your life? Like all the money you saved up so far?

[Koel Tomei]

No. I mean, I think.

[Guy Raz]

No. You were not nervous? There was nothing nerve wracking about that.

[Koel Tomei]

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.

[Guy Raz]

And I have to assume that. And you're still working at Izzy, Right?

[Koel Tomei]

At this point, I had actually left Izzy. I had gone to work with one of my Izzy alums who had started another company called Snickity.

[Guy Raz]

So you became a. It's just interesting because how I built this always comes Together in these. Like, I know that Izzy. A check from Izzy also helped to finance the start of Soul Cycle. 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 Soul Cyc Snickity. I think it was founded by the wife of Brett Schulman, who would go on to help create and scale Kava, which we've done on the show. Cause Snickity never really took off. It didn't work out. But this was a snack. Kid's snack company that you were.

[Koel Tomei]

Yeah, it essentially sustained my family while I was getting Noosa off the ground. And we were in sort of this little co working office with a few other consultants. So they sort of became my in house advisory board.

[Guy Raz]

All right, so it's going to be you, Rob and the Mathewsons. And that company was called, like, Queensland Yogurt Company. But that was not what you were going to call it in the U.S. no.

[Koel Tomei]

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 I was like, well, what are some of the beaches on the Sunshine Coast? And Noosa. 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 Noosa.

[Guy Raz]

All right, so you call it Noosa Yogurt and yogurt with an H too. With an H. Yogurt 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, are we going to 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.

[Koel Tomei]

Yeah. But just again, linking it back to its Aussie heritage.

[Guy Raz]

When we come back in just a moment, how Koal brings her first tubs of Noosa to a major retailer. And how she responds when they say, we hate this packaging. Stay with us. I'm Guy Raz, and you're listening to How I built this. This podcast is brought to you by Squarespace. Squarespace is the all in one website platform for entrepreneurs to stand out and succeed online. Squarespace can help any business owner craft a strong web presence and sell anything from products to content to time, all in one place, all on your terms. With Squarespace Blueprint, you can build a completely personalized website optimized for every device. With powerful SEO tools that help you grow the way you want, Squarespace makes checkout seamless for your customers, accepting credit cards, PayPal and Apple Pay and in eligible countries, Afterpay and Clearpay. And you can easily manage your clients and invoices, from vetting leads to receiving payments in one streamlined, customizable workflow. So check out squarespace.com for a free trial and when you're ready to Launch, go to squarespace.combilt to save 10% off your first purchase of a website or domain. If you've been listening to me for a while, you know that I'm really interested in health and fitness. And for the past year the single biggest game changer for me has been a biowearable. Why is it a game changer? Well, because it's helped me figure out which foods leave me energized and which ones make me foggy and sluggish and even hungry. And that matters because it turns out 88% of us have suboptimal metabolic health. That's why I'm so excited about Lingo. It's a new bio wearable from Abbott that tracks your glucose in real time and gives personal insights and science backed recommendations to eat in a way that works for you. To see how your body responds to food and learn what you can do to improve your metabolism, try Lingo. It starts at $49 for a two week plan, no prescription needed for a limited time. Save 10% off your first order by using the code HIBT@Hello Lingo.com the Lingo Glucose system is for users 18 and old or not on insulin. It is not intended for diagnosis of diseases, including diabetes. For more information please visit hello lingo.com us you know when you're shopping for like a new car or even a new bike, which I was shopping for recently, and you want to find one with all the right features, something that fits exactly what you need. Well, that's the way it feels today, trying to find the right AI tools for your business. You want to get it right, but it's not always clear which tools are actually going to help. Grammarly is designed to fit your business's unique needs and works right away to help contribute to your overall success. Grammarly works effortlessly with the apps I already use every single day and it saves me so much time while I'm writing. With its super helpful AI prompts, Grammarly works where you work from docs to messages to emails, integrating seamlessly across 500,000 apps and websites. No cutting, no pasting, no context switching. Join 70,000 teams and 30 million people who trust Grammarly to work faster and hit their goals while keeping their data Secure. Go to Grammarly.comenterprise to learn more Grammarly Enterprise Ready AI. Hey, welcome back to How I Built this. I'm Guy raz. So it's 2009, and to launch her new yogurt brand, Coelh has built a partnership that's 8,000 miles long. In Australia, the Mathewson family is handling the recipe. And in Colorado, Rob Graves, the dairy farmer, he's getting ready to make it.

[Koel Tomei]

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 the other 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.

[Guy Raz]

Yeah. All right. I want to just go back to the process for a moment. Right. Because you had the Mathewsons come and show you guys how to make this yogurt, right?

[Koel Tomei]

Yeah.

[Guy Raz]

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 you have? What did it require? What was required to make this yogurt into this creamy yogurt that you loved so much?

[Koel Tomei]

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. Like, 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.

[Guy Raz]

And also, were you, like, was it fermenting the right term? I don't know. Was it culturing? Culturing. Like, for how long? Like, 8 hours, 12 hours, 15 hours? Was that an issue too?

[Koel Tomei]

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.

[Guy Raz]

Yeah.

[Koel Tomei]

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.

[Guy Raz]

You couldn't do it long term because there was a risk of contamination.

[Koel Tomei]

Yeah. I mean, there was too many touch points, was his opinion. Yeah.

[Guy Raz]

You wanted to do it in like, a few 100 gallon buckets.

[Koel Tomei]

Yeah, sealed.

[Guy Raz]

Okay. So 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 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.

[Koel Tomei]

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. Off the shelf.

[Guy Raz]

Like a clear container off the shelf.

[Koel Tomei]

Exactly.

[Guy Raz]

Okay.

[Koel Tomei]

And it actually didn't exist. So, you know, at that point, most yogurt was sort of between 5.3 to 6 ounces and there was nothing. There was nothing available in stock packaging in those sizes.

[Guy Raz]

Right.

[Koel Tomei]

I was pretty adamant that we needed to be in transparent packaging. And so that ultimately led us into this 8 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.

[Guy Raz]

With Whole Foods, you show them this packaging. Okay.

[Koel Tomei]

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.

[Guy Raz]

We hate the packaging.

[Koel Tomei]

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. 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.

[Guy Raz]

All right, 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, even before they agreed and you went into Whole Foods, right. How were you going to differentiate it? Just in that millisecond or one second that somebody would just pass by this brand on in the refrigerated yogurt aisle.

[Koel Tomei]

The only thing that we had on the packaging besides the name Noosa, 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.

[Guy Raz]

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.

[Koel Tomei]

Yeah. Only the Colorado stores, because the Rocky Mountain region at that point umbrellaed, I think Idaho, Utah, but the bulk of the stores were in Colorado.

[Guy Raz]

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.

[Koel Tomei]

Yeah, yeah. So we. I mean, we were making one, maybe two batches of yogurt a week to start.

[Guy Raz]

And what were your first flavors that you were gonna put on the shelves at Whole Foods?

[Koel Tomei]

So we had four flavors. We had honey, we had raspberry, blueberry, and mango.

[Guy Raz]

So you did not do the passion fruit?

[Koel Tomei]

We did not do the passion fruit.

[Guy Raz]

Tricky in Colorado to get. I mean, probably expensive to get.

[Koel Tomei]

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.

[Guy Raz]

All right, 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 how roughly how many were there in Colorado in 2010? It couldn't have been more than seven or eight.

[Koel Tomei]

Yeah, it was, I think, max, maybe 10 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.

[Guy Raz]

So you would make sure that the employees at the store tried it, too?

[Koel Tomei]

Yeah, absolutely.

[Guy Raz]

And did that work? I mean, in store sampling?

[Koel Tomei]

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.

[Guy Raz]

And also doing farmers markets.

[Koel Tomei]

Yeah. So that started spring of 2010. That was sort of actually a harder sell than Whole Foods was getting into the Boulder Farmers market. It's considered one of the top 10 farmers markets in the country. So essentially, if you come to Colorado in the summer, you'll probably end up at the Boulder Farmers market.

[Guy Raz]

And when you were doing this at the farmers market, again, like, probably weren't that many people selling yogurt at the farmer's market.

[Koel Tomei]

We were the only yogurt vendor. 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.

[Guy Raz]

Did that have. I mean, did that get you? I mean, 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?

[Koel Tomei]

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 Ivy had been at the farmer's market and tried Noosa 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 yeses with the right partners were good opportunities, but we learned that not every opportunity was the right one.

[Guy Raz]

And you did not presumably have the logistical capacity to really go that far beyond Colorado, maybe into the Midwest.

[Koel Tomei]

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.

[Guy Raz]

And you got, like, 15 days.

[Koel Tomei]

Yeah.

[Guy Raz]

And how did they do at Whole Foods in Colorado?

[Koel Tomei]

Like, it was hard to keep up with the growth in Whole Foods.

[Guy Raz]

Wow.

[Koel Tomei]

And they quickly expanded us into their Rocky Mountain stores.

[Guy Raz]

Yeah, I think. And. And in your first full Year of business. So you really launched in January of 2010. Were you profitable?

[Koel Tomei]

I mean, getting there.

[Guy Raz]

Getting there. So pretty great first year.

[Koel Tomei]

Yeah. I mean, not accounting for the fact that we weren't paying ourselves.

[Guy Raz]

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?

[Koel Tomei]

The retailer was shoprite.

[Guy Raz]

Oh, that's a big one.

[Koel Tomei]

That's a big one.

[Guy Raz]

And they wanted to carry your products. Now that's New York. That's not Iowa. That's far.

[Koel Tomei]

That's far.

[Guy Raz]

That's not Colorado. But it was a big opportunity to go in there. And how many stores did they want you in?

[Koel Tomei]

They were, I think about 250 stores.

[Guy Raz]

Wow.

[Koel Tomei]

Yeah.

[Guy Raz]

And you guys said yes?

[Koel Tomei]

We said yes. So in 2011 we brought on a business development manager. He was a 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 into 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, okay, well we're willing to defer your slotting fees. We're going to give you a 12 month time horizon so you wouldn't have.

[Guy Raz]

To pay them the fee to pay it upfront.

[Koel Tomei]

Yeah.

[Guy Raz]

Because again, I know we've said this in 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.

[Koel Tomei]

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. I'm like, okay, well this sounds like, you know, something that we can.

[Guy Raz]

Yeah.

[Koel Tomei]

That we can cash flow. So we launch. So we're already $100,000 in the hall out of the gates and you gotta.

[Guy Raz]

Ship it a truck it out there.

[Koel Tomei]

We're trucking it out. Ltl which you know, doesn't move as fast as a full truck, is more expensive than a full truck.

[Guy Raz]

These are refrigerated trucks, obviously.

[Koel Tomei]

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.

[Guy Raz]

Wow. Getting it. I mean, you're making this in Colorado. It's got a 28 day shelf life. The product.

[Koel Tomei]

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.

[Guy Raz]

Yeah.

[Koel Tomei]

There was sort of a disconnect between what was coming from, 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 of the stores. And finally I was like, this is not working. Like this retailer could sink the entire operation.

[Guy Raz]

So what did you do?

[Koel Tomei]

We pulled out.

[Guy Raz]

You pulled out.

[Koel Tomei]

We pulled out. Which.

[Guy Raz]

And you just ate it. You just knew you were going to. How long before you, how long did you. Before you made that decision? A year? Six months.

[Koel Tomei]

It was probably about six. Six months that we realized that we couldn't continue to do it.

[Guy Raz]

You were just. And you basically lost at least 100 grand off that deal.

[Koel Tomei]

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.

[Guy Raz]

Right. And we've had these examples on the show where, you know, it's a struggle. It's a 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 that would have, you would have realized that this was not going to be sustainable.

[Koel Tomei]

Absolutely. I mean we didn't do any of that we just were kind of operating in the wild west.

[Guy Raz]

Yeah. You know, it's interesting. We did an episode on this brand called Zumies, which sells skateboard 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.

[Koel Tomei]

Yeah.

[Guy Raz]

And the point of that was like, it's this little boring things. Because I think accounting is so boring.

[Koel Tomei]

It's so boring.

[Guy Raz]

It's the most 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.

[Koel Tomei]

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.

[Guy Raz]

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, oh, the American palette. It's just like the, like it must have. Part of you, I would assume, must have thought maybe I was wrong. Maybe this is just working. Gonna work in some parts of America.

[Koel Tomei]

Yeah. I still had this strong belief that New York could be a great market for us. And it's, you know, shoprite 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 sell at our store again. And I was like, okay, but I'm not going to be a business if I don't do this.

[Guy Raz]

When we come back. In just a moment, the delicate partnership between Coel, Rob, the Dairyman and the Mathiesons starts to break down. Stay with us. I'm Guy Raz and you're listening to how I built this. I love a great deal as much as the next Guy, but I'm not going to crawl through a bed of hot coals just to save a few bucks. It has to be easy. So when Mint Mobile said it was easy to get wireless for $15 a month with the purchase of a three month plan, I called them on it. But it turns out it really is that easy to get wireless for 15 bucks a month. In fact, the longest part of the process was the time I spent on hold, waiting to break up with my old provider. To get started, go to mintmobile.combilt there you'll see that right now all three month plans are only $15 a month, including the unlimited plan. All plans come with high speed data and unlimited talk and text delivered on the nation's largest 5G network. You can use your own phone with any Mint Mobile plan and bring your phone number along with all your existing contacts. To get this new customer offer and your new 3 month premium wireless plan for just 15 bucks a month, go to mintmobile.combilt that's mintmobile.comb cut cut your wireless bill to 15 bucks a month at mintmobile.combilt $45 upfront payment required equivalent to $15 a month new customers on first 3 month plan only. Speed slower above 40gb on unlimited plan. Additional taxes, fees and restrictions apply. See Mint Mobile for details. As a B2B marketer, you know how noisy the ad space can be. If your message isn't targeted to the right audience, it just disappears into the noise. With LinkedIn ads, you can precisely reach the professionals who are more likely to find your ad relevant. LinkedIn's targeting capabilities allow you to filter by job title, industry, company and more and reach your customers in a respectful environment. You'll have direct access to and build relationships with decision makers. On a platform with a billion members, 130 million decision makers, and 10 million C level executives, you'll be able to drive results with targeting and measurement tools built specifically for B2B. In the technology space, LinkedIn generated two to five times higher return on ad spend than other social media platforms. And 79% of B2B content marketers said LinkedIn produces the best results for paid media. And we know this because we hear this from the founders who are on this show every single week. Start converting your B2B audience into high quality leads today. We'll even give you a $100 credit on your next campaign. Go to LinkedIn.com BuiltThis to claim your credit. That's LinkedIn.com BuiltThis terms and conditions apply. LinkedIn the place to be, to be. Hey, welcome back to How I Built this. I'm Guy raz. So it's 2012, and after an abrupt exodus from Shoprite in New York, Koel 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.

[Koel Tomei]

Yes.

[Guy Raz]

Did you know they were from Target or were like they hiding their badges or.

[Koel Tomei]

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 late, 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.

[Guy Raz]

Wow. And did you have the capacity to fulfill that? I mean, at this point, how much yogurt were you making a week?

[Koel Tomei]

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.

[Guy Raz]

Yeah.

[Koel Tomei]

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.

[Guy Raz]

By the way, out of curiosity, what is the maximum shelf life you can get for cold pasteurized yogurt?

[Koel Tomei]

You know, I'm not sure about some of the competitors, but we were at 45 days.

[Guy Raz]

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.

[Koel Tomei]

Absolutely.

[Guy Raz]

I mean, it's just an argument for going into dried beans.

[Koel Tomei]

Oh, 100%, Guy. I will never start a perishable food company again.

[Guy Raz]

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.

[Koel Tomei]

Well, I mean, so we launched that was probably like mid year that we launched in Super Target. They came back four months later and expanded us into a thousand stores. A thousand more stores.

[Guy Raz]

A thousand stores. And were you at breaking point, like at that point as a business?

[Koel Tomei]

Yes, we were at breaking point and basically I had to stop selling at that point.

[Guy Raz]

You had to stop signing contracts with retailers?

[Koel Tomei]

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 and 12 months.

[Guy Raz]

Yeah. And are you putting all your eggs in the target basket which could or could not work?

[Koel Tomei]

Yes, thankfully it worked.

[Guy Raz]

Tell me a little bit about the business. By this point end of 2012, you're in a thousand targets. But from what I've read, you guys are really running lean.

[Koel Tomei]

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.

[Guy Raz]

Right. To attract a good COO, you would have had to have paid at least 150 grand.

[Koel Tomei]

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.

[Guy Raz]

Yeah, I imagine.

[Koel Tomei]

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.

[Guy Raz]

Yeah, I mean, who was in charge? It was you. There was Rob at the dairy, and then the brothers, the Mathewson family in Australia, who actually was the decision maker. Was that ever kind of discussed who would ultimately make the decisions?

[Koel Tomei]

No.

[Guy Raz]

No. So everybody had a veto in a sense.

[Koel Tomei]

Exactly.

[Guy Raz]

Which is not great.

[Koel Tomei]

It's definitely a recipe for not great, especially when you're on a rocket ship of growth.

[Guy Raz]

Why didn't you guys have that discussion? I'm not brow beating you. Cause 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?

[Koel Tomei]

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.

[Guy Raz]

What were the disputes over?

[Koel Tomei]

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.

[Guy Raz]

Around.

[Koel Tomei]

If we couldn't. If we couldn't agree how to hire a real team of people to help us run the business. Because when things start to really take off, sometimes founders need to get out of their own way.

[Guy Raz]

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.

[Koel Tomei]

I mean, and Rob. And Rob. We all just had very different viewpoints on how to go forward with growth.

[Guy Raz]

They were more. You felt like they were more conservative.

[Koel Tomei]

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.

[Guy Raz]

Skyrocket.

[Koel Tomei]

Yeah. To 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.

[Guy Raz]

Right.

[Koel Tomei]

Like, we just couldn't get the right people.

[Guy Raz]

When they have no skin in the game, they're just, you know, I mean, you just. It's a crapshoot. They could be great.

[Koel Tomei]

Yeah.

[Guy Raz]

But if they have skin in the game, they're incentivized to really do well.

[Koel Tomei]

Yeah. And then I had had my daughter in 2013, so I was starting to, like, max out on just my capacity.

[Guy Raz]

Wow, that's a lot.

[Koel Tomei]

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 2012-2014 timeframe, there was probably six knockoffs that came into the market from Dannon, from Hanes Celestial, to even Kroger doing a private label version of Noosa.

[Guy Raz]

All right, so I imagine you're starting to think we gotta do something about this or this might all go down the tubes.

[Koel Tomei]

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?

[Guy Raz]

So I think by 2014, you guys are doing like 40, 45 million dollars in revenue and growing.

[Koel Tomei]

Yeah.

[Guy Raz]

You were feeling like the four of you guys were not necessarily the right team to turn this into $100 million business.

[Koel Tomei]

Maybe not the right team is not the right way to sort of view it, but it really was a bigger team, somebody that was positioned to take it into that 100 plus million realm because 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.

[Guy Raz]

You don't want to be acquired?

[Koel Tomei]

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, the Australian 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.

[Guy Raz]

All right, so 2014, you do get a strategic investment from a group called Advent.

[Koel Tomei]

Yes.

[Guy Raz]

Right. 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 that deal could fall through.

[Koel Tomei]

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 and my life.

[Guy Raz]

But thankfully, that ended sort of somewhat ended when they. They made the investment.

[Koel Tomei]

Yes.

[Guy Raz]

And they buy a majority stake in Noosa I think they're based in Boston.

[Koel Tomei]

They're Boston based. Yeah.

[Guy Raz]

Private equity firm. They buy a majority position in Noosa. But you guys stay on. I mean, at least you and Rob stay on as employees.

[Koel Tomei]

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.

[Guy Raz]

You were incentivized to make it.

[Koel Tomei]

Incentivized. That's the right word.

[Guy Raz]

Yeah.

[Koel Tomei]

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.

[Guy Raz]

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.

[Koel Tomei]

Yes.

[Guy Raz]

And these were people with deep experience in food.

[Koel Tomei]

Yes. And it was a game changer. It really was a game changer.

[Guy Raz]

You actually liked it. You weren't.

[Koel Tomei]

I loved it.

[Guy Raz]

God, these people know nothing about this business. I hate working with them. They don't believe in the quality or the spirit. No. You didn't feel that way.

[Koel Tomei]

No. So I sort of see these two very distinct chapters that I was involved with at Noosa was sort of like the Wild west chapter, and then our professional chapter, which 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.

[Guy Raz]

So you were committed to staying with them? I think for what, for about four years.

[Koel Tomei]

I mean, we were committed until they decided to sell the business.

[Guy Raz]

And they did eventually sell it, I think, in 2018. Right. It was a merger, Aqua merger kind of thing with a company called Sovos Brands. And they owned or own a bunch of brands like Rouse. I think Pasta Sauce is one of the brands they owned. Maybe they still do own it.

[Koel Tomei]

They did until Campbell's.

[Guy Raz]

Oh, Campbell's bought it, right. Campbell's bought them out. Yeah.

[Koel Tomei]

Yeah. Beginning of this year.

[Guy Raz]

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.

[Koel Tomei]

Yeah.

[Guy Raz]

I mean, you had two bites at the apple, as they say.

[Koel Tomei]

Two bites at the apple. Yeah.

[Guy Raz]

I mean, this business that was started really in 2010, I mean, 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.

[Koel Tomei]

It was a long journey because there was, you know, those startup years too, right?

[Guy Raz]

Yeah.

[Koel Tomei]

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.

[Guy Raz]

When you. 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 want to do? All the things you weren't able to do while you were building the business?

[Koel Tomei]

Yeah. I didn't eat yogurt for an entire year.

[Guy Raz]

Really?

[Koel Tomei]

No.

[Guy Raz]

Nothing?

[Koel Tomei]

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 a while. I decided I would say yes to any sort of travel opportunity.

[Guy Raz]

Yeah.

[Koel Tomei]

And I just needed to be, like a little chill for a while and hang out with my kid. 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.

[Guy Raz]

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.

[Koel Tomei]

Yeah, it would be hard. I think it would take something incredibly special to want to go back into the trenches again.

[Guy Raz]

You can make more yogurt if you want.

[Koel Tomei]

I could even explore buying Noosa back if I wanted to.

[Guy Raz]

Right. I think it's for sale. I think that Campbell's is looking for a buyer.

[Koel Tomei]

It is. I don't think I'm going back into yogurt, though. I am very interested in sort of the dairy free space. I know that sort of seems counterintuitive, but.

[Guy Raz]

No, no, it's interesting.

[Koel Tomei]

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.

[Guy Raz]

When you think about the journey you took, you know, and I mean, starting this business and 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?

[Koel Tomei]

I think there's a huge element of luck, right? I think about 2008 and so 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 sort of say, well, we want to be where you are. And I'm like, okay, 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.

[Guy Raz]

That's Koel Tomei, co founder of Noosa Yogurt, by the way. The company did eventually get around to launch a passion fruit yogurt, the flavor that inspired the whole thing. But today, out of the 18 different Noosa 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. Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please sign up for my [e-mail] or on substack. This episode was produced by Devin Schwartz with music composed by Ramtin Arablouei. It was edited by Neva Grant with research from Olivia Rachman. Our engineers were Robert Rodriguez and Gilly Moon. Our production staff also includes Alex Chung, JC Howard, Carla Estevez, Sam Paulson, Chris Messini, Kerry Thompson, John Isabella, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music before you go tell us about yourself by filling out a short [e-mail] survey Klaviyo powers smarter digital relationships for more than 151,000 successful brands, including Hedley and Bennett, Fishwife and Dagny Dover. Klaviyo's unified data and marketing automation platform turns your customer data into personalized connections to make every Moment Count across AiPowered email, SMS, analytics, and more. Build smarter digital relationships with your customers. Visit klav iyo.com to make every moment count.