Episode 198 Summary: "They Built a $490M Business with NO Money (using this one move)"
Podcast: Making It with Jon Davids
Host: Jon Davids
Release Date: June 24, 2025
Episode Title: They Built a $490M Business with NO Money (using this one move)
Introduction
In Episode 198 of Making It with Jon Davids, host Jon Davids delves into the remarkable journey of Pete and Rashid, the entrepreneurial minds behind Chomps—a company that transformed humble meat sticks into a $490 million business without significant initial funding. This episode unpacks their strategic moves, the challenges they faced, and the invaluable business lessons that aspiring entrepreneurs can glean from their story.
The Genesis of Chomps
[00:00] Jon Davids:
“These guys sell meat sticks, and last year they made $490 million. But it took a while and they made a lot of mistakes on the way. Their names are Pete and Rashid and they run a company called Chomps.”
Jon introduces Pete and Rashid, highlighting their initial venture into the meat stick market. The idea was born out of Pete’s experience as a personal trainer in 2012, where he noticed his clients’ struggle to find healthy, convenient snacks. This observation led to the creation of Chomps—a brand dedicated to offering clean, protein-rich meat sticks.
Building the Brand: Early Struggles and Breakthroughs
Pete and Rashid began with a modest investment of $6,500, which they used to develop their product, establish a basic e-commerce presence, and execute low-budget marketing strategies, including Facebook ads and influencer outreach.
Sales Trajectory:
- Year 1: $35,000
- Year 3: $400,000
Their persistence began to pay off as sales steadily increased. However, the pivotal moment came unexpectedly when Trader Joe's expressed interest in piloting Chomps in one of their stores. Despite being a lesser-known brand, Trader Joe's was intrigued by the product's potential.
The Game-Changing Move: The Free Fill Strategy
[12:30] Jon Davids:
“Trader Joe's can sell Chomps at zero cost. And if it works, they can buy more. It's called a free fill.”
Pete made a bold move by offering Trader Joe's a "free fill"—providing a full store's worth of inventory at no cost. This strategy eliminated the risk for Trader Joe's, allowing them to test the product without any financial commitment. The result was immediate and astounding:
[15:45] Jon Davids:
“Chomps sells out at Trader Joe's in just a few hours on the shelf.”
This successful pilot led to a massive surge in sales, catapulting Chomps from $400,000 to $4.3 million within the year. The partnership with Trader Joe's opened doors to other major retailers like Whole Foods, Thrive Market, and Walmart, propelling Chomps into mainstream retail and leading to their eventual nine-figure revenue milestone by 2020.
Key Business Lessons
1. Remove Friction in Deals
Pete’s free fill offer exemplifies the importance of removing barriers to entry for potential partners. By eliminating the financial risk, Pete made it an irresistible proposition for Trader Joe's.
[25:10] Jon Davids:
“He knows they're hesitant, so he removes every reason they have to say no. And it works.”
This approach mirrors strategies used by successful companies like Dropbox and Casper, which focus on reducing customer hesitation to adopt their products.
2. Masterful Positioning
Chomps didn’t just sell meat sticks; they redefined the category. By positioning their product in premium retail environments and associating it with health-conscious, urban consumers, they differentiated themselves from traditional, gas station-bound meat sticks like Slim Jim.
[42:20] Jon Davids:
“It is masterful positioning. It's reframing and redefining the category.”
Chomps emphasized attributes like being clean, portable, and functional, aligning with modern wellness trends and appealing to a niche yet expanding market segment.
3. Counter Positioning Against Established Brands
Entering a market with established players necessitates a unique positioning strategy. Chomps effectively countered the existing market perception by associating their product with premium health standards rather than the mass-market, impulse-buy image.
[47:35] Jon Davids:
“You need to counter position. If not, you're just offering another option to the thing that already exists.”
This tactic ensures that the brand stands out and appeals to a specific target audience that values quality and health over convenience.
Financial Journey: Bootstrapping to Valuation
Pete and Rashid’s financial strategy was rooted in bootstrapping—starting with minimal investment and reinvesting profits to fuel growth. Over two years, they scaled from $35,000 to $400,000 in sales through relentless reinvestment and strategic marketing.
Significant Financial Milestones:
- Initial Investment: $6,500 from Pete and Rashid
- Short-Term Debt: Raised around $1 million from family and friends to fund the Trader Joe's free fill
- 2022: Sold a minority stake to Stride Consumer Partners for $80 million
[55:50] Jon Davids:
“And that's how Pete and Rasheed self-funded this business to a valuation of probably somewhere between 200 and $300 million today.”
Jon anticipates a potential acquisition by a mega food company within the next few years, projecting a valuation upwards of $600 million to $1 billion.
Positioning Deep Dive
Jon elaborates on the concept of market positioning, emphasizing its critical role in Chomps' success. Positioning involves shaping the consumer’s perception of the product through various facets like packaging, pricing, and retail placement.
Key Elements of Chomps’ Positioning:
- Retail Partners: Placement in premium stores like Trader Joe's and Whole Foods.
- Product Attributes: High-protein, low-carb, clean ingredients.
- Target Audience: Health-conscious, urban consumers, such as Whole30 adherents and fitness enthusiasts.
[38:15] Jon Davids:
“Positioning is the story people tell themselves about your product before you say anything at all. And positioning is not one thing. It's actually the result of a bunch of little things.”
By meticulously crafting each element of their brand, Chomps created a compelling narrative that resonated with their target market, setting them apart from traditional meat stick brands.
Future Outlook and Conclusion
As of June 2025, Chomps stands as a testament to effective bootstrapping, strategic positioning, and innovative deal-making. Jon envisions continued growth and a probable acquisition, which would not only reward Pete and Rashid but also validate their business acumen.
[1:02:10] Jon Davids:
“That brand's growing super, super fast. And you know what? If that happens, it means they're going to make a whole lot of money.”
Jon concludes by celebrating Pete and Rashid’s journey, highlighting their perseverance, strategic thinking, and the importance of treating every customer interaction as a potential game-changer.
Key Takeaways
- Eliminate Barriers: Making it easy for partners and customers to engage with your product can lead to exponential growth.
- Strategic Positioning: Differentiate your product by redefining category norms and aligning with your target audience’s values.
- Bootstrapping and Reinvestment: Starting with minimal funds and reinvesting profits can sustainably scale a business.
- Leverage Opportunities: Be prepared to seize unexpected opportunities, as they can become pivotal moments in your business trajectory.
- Customer Focus: Treat every customer interaction with utmost importance, as it could lead to significant business milestones.
Notable Quotes
- Jon Davids [00:00]: “These guys sell meat sticks, and last year they made $490 million.”
- Jon Davids [25:10]: “He knows they're hesitant, so he removes every reason they have to say no. And it works.”
- Jon Davids [42:20]: “It is masterful positioning. It's reframing and redefining the category.”
- Jon Davids [47:35]: “You need to counter position. If not, you're just offering another option to the thing that already exists.”
- Jon Davids [55:50]: “And that's how Pete and Rasheed self-funded this business to a valuation of probably somewhere between 200 and $300 million today.”
- Jon Davids [1:02:10]: “That brand's growing super, super fast. And you know what? If that happens, it means they're going to make a whole lot of money.”
Final Thoughts
Pete and Rashid’s journey with Chomps is an inspiring example of how strategic thinking, resilience, and innovative approaches can transform a simple product into a market leader. By removing friction, mastering positioning, and relentlessly pursuing their vision, they built a thriving business from the ground up. Aspiring entrepreneurs can learn valuable lessons from their story, particularly the power of strategic positioning and the importance of seizing pivotal opportunities.
For more insights and stories from successful entrepreneurs, subscribe to Making It with Jon Davids and join the community of innovators shaping the future of business.