← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
631: He Built a $125M Brain Food Brand With Just 10 People | Will Nitze
00:53:09
Will Nitze went from selling Linsanity T-shirts in his college dorm to building IQ Bar into a $125 million brain food empire—with just a team of ten people. No bloated headcount. No burning through VC cash. Just ruthless focus on unit economics and a contrarian approach to funding that let him scale aggressively while maintaining control.
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- [00:02]
A
Hey, founder fam. I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know on average, OMNISEND customers make $68 for every $1 they spend, which is an insanely good return. And because you're part of the founder community, you get 50% off your first three months with the code. Founder50. Just head to omnisend.com founder without the e to get started. All right, now let's jump back into the show. What if I told you that one entrepreneur went from hustling selling Linsanity T shirts in his college Dorm to building $125 million brain food empire with just a team of 10 people? And he says it never gets easy. You just go f. Well, today's guest, Will Nitz, the founder and CEO of IQ Bar, who's mastered the art of hyper lean growth in one of the toughest industries out there, cpg. While most food brands burn through VC money and have bloated teams, will build a protein bar company engineered for your brain using an unconventional funding strategy and ruthless focus on unit economics. So in this episode, you're going to learn why Will believes bootstrapping is the worst thing you can do in cpg. His contrarian fundraising approach of raising less money more often to maintain control while scaling aggressively. The exact moment five years in when he knew IQ Bar could be a massive company and how he pivoted from direct to consumer to really cracking major retailers like Costco and Whole Foods. And why he treats building a company like a knife fight that requires constant reinvention to survive. So if you're building a physical product business or you just want to learn how to grow faster with less, this is an incredible conversation. It's going to change how you think about scaling your brand.
- [02:10]
B
Hear the stories, learn the proven methods, and accelerate your growth and future through entrepreneurship. Welcome to the founder podcast with Nathan Chan.
- [02:24]
A
Will, you went from selling Linsanity T shirts in your Dorm to projecting $125 million in top line revenue on for IQ Bar this year with a team of just 10 people. What was that time where you knew that, you know, software sales when you realized brain food was like really a viable category?
- [02:50]
B
I still don't you know, you know, you never. Nothing's viable until it's a hundred year old company on the long run. But I guess when did I know that it could be a self sustaining business? I would say five years in, but again, we're still, it's still a knife fight on a daily basis. And we have changed who we are, we have changed the fundamental identity of the company and our product set, I don't know, over 10 times. And by the way, the market is a moving target. So even if it's viable now, you know, Polaroid was a viable company until it wasn't, until digital cameras were a thing and they didn't adapt. So you can also be viable and then not viable. Right. So every year we have to go out there and prove viability. But yeah, I would say five years was when we thought, okay, this could be a big company.
- [03:55]
A
Yeah. Okay. And you started on Kickstarter, right? You raised $73,000. Talk me through how you came up with the product idea. Why Kickstarter? Interesting to take. You've also famously said that, you know, bootstrapping is the worst thing you can do in the CPG space. So yeah, talk us through, like the funding and.
- [04:16]
B
Yeah, yeah, I mean, so why Kickstarter? I had no money is the short answer. Why? And the thought process was basically, I want to go raise money at a pretty good valuation. I want to justify, at the time it was a $4 million valuation. I was like, okay, if I can get some traction, I'm worth 4 million. Which is like plucked out of thin air. Not really based on anything. But I thought, okay, if I can generate sales, you know, tens of thousands of dollars of sales, I can convince investors that I'm not just some guy, you know, this thing has legs. And so how do you generate sales with no money to make inventory? Pre orders. What's the big, you know, the biggest pre order platform? Kickstarter and I had also known of a couple other brands who had done Kickstarter successfully. Food and Bev is not really a great category for Kickstarter. Board, board games, electronics, things like that are much better.
- [05:10]
A
It's more inventions and stuff.
- [05:12]
B
Yeah, yeah, totally. So it's not, it wasn't like perfect, but it was the best way to start. Like I wouldn't, I wouldn't do it differently than how we did it.
- [05:22]
A
Yeah. And so when it comes to raising money, starting a business, why do you think it's like the worst thing you can do to bootstrap when it comes to CBG space?
- [05:36]
B
Well, I don't think everything is so, so, so, so contextual. So when you make food and beverage products, generally speaking, these are not, this isn't jewelry, this isn't perfume, These are not 80%, 70% margin businesses. These are 30% margin businesses out the gate that you can expand gross margin such that you can get it to call it 50%. And so yeah, I mean unless you have a rich uncle or you're rich or whatever, you need some money to physically manufacture a bunch of stuff which costs a lot of money and then you will be chasing cash conversion forever. If you are growing fast, which is the entire point of startups to grow, that's the definition of a startup is a company that is started and then grows fast thereafter. And so all of your production runs, manufacturing runs will get bigger and bigger and bigger and bigger. So even as you, after you turn profitable, you're still living hand to mouth because you're putting everything into inventory because you're going to need more inventory, because you're going to sell more product the next month. So that's just not conducive to bootstrapping. It just isn't. And so you could technically bootstrap, you could say I'm going to get all X, Y and Z credit card that has 60 day payment terms and I'm going to do all this crazy stuff. But the reality is you will grow slower by doing all of that. Even if it's technically possible and can work, you will grow slower, let's say 50% slower. So is it worth it to grow 50% slower and own 20% more of your business? I don't know, maybe for some people, certainly not for me. I think that's a bad trade off. But again I'm not, you know, I'm building a company to sell. Like that is the, the purpose of what we're building here is like get to sale and hopefully be long lasting thereafter. But once you take in an investment dollars that is the point to sell. And so you know how do you sell? You create a high growth profitable company and, and all that. But it's just that the nature of the game we're playing as an old school unit economics game and economies of scale game. So you have to get to high volume to right size your financials in categories like those that I play in. And to do that you have to grow really fast, really quickly. And to do that you need money. So it's nuanced of course because I still believe firmly you should control your company. You never want to Have a boss. So it's definitely nuanced. And we raised money, I would say, in a sort of contrarian way, we raised less money more often. A lot of people will say, go raise two years of Runway. And we did it totally different. We raised. We never raised more than one year's Runway. And we bet that we could get to the next revenue tranche such that we can justify a higher valuation, such that we could raise again at that higher valuation. We. We did that such that, you know, we raised just under $10 million. But still, you know, I still control the company. How less money more often.
- [09:05]
A
So I'd love to talk about the growth more. But before we go into it, tell me around how you came up with the product. Like, and as you said it, food and beverages is expensive. You didn't have money. You used Kickstarter to get really proof of concept. Then to go raise money to obviously fund a decent run of. Of your. Of your first run of product. You said you've done at least 10 iterations. So, so tell me, how do you conceptualize the product?
- [09:30]
B
I conceptualized it. I don't know how most people do it. So I. Basically, the first idea was brain food. I was like, okay, let's pick a category. Well, even before that, what's the category? Because I was interested in a lot of categories, beverage and whatnot. And I quickly learned that the unit economics for beverage were just going to mean that I would have to raise whatever $50 million, let's say. And it's just such a beverage is CPG on hard mode. So I was like, okay, I'm not going to do that. I'm going to do food. And what is a category that can check, like 10 boxes? So one box is. It works on E comm and works in brick and mortar, meaning it's light, long shelf life, small cubic inches, E Com friendly. A lot of people buy it online, but also a lot of people buy in brick and mortar. And da da, da. Checkbox number two, Large total addressable market and growing, you know, blah, blah, blah, blah. And so there's a long laundry list of check boxes and bars. Checked all of them. And also at the time I was starting roughly 2017, 2018, the RX Bar sale had happened. They sold the Kellogg's, and it was this big $600 million exit. And I was like, boom. Like, that's like a blueprint that I can follow. And so that had an impact and influence on me within bars. Then, okay, what, where, what, where can I carve out A niche. And for me brain food was this kind of cool idea because everything was body, body, body. So it was build muscle, improve digestion, you know, so on and so forth. But there's nothing for your brain. And I thought that was so crazy because everyone has a brain, everyone cares about how their brain works. There were products like bulletproof coffee at the time that were geared towards mental acuity. So clearly there was demand. It just didn't exist in this form factor in this category. But that was. The original thesis was like, if I make brain food they will come. And that was wrong by the way. But I think it was a half decent thesis. It was a starting point and that was the. And then in terms of how I actually made it. The beauty of bars is you can make it in your kitchen. You get a KitchenAid and a bunch of ingredients, you throw them in a bowl and you mix it and you have a bar and it'll probably be terrible and you know you're going to have to iterate a zillion times. But if you just put in the brute man hours, you can get to a really good prototype. Of course, like there's so much more work to do because then you get into you, you know, how much, what are your cogs? Is this viable? Can I hit a price point that's going to move units on, on shelf? Like there's so much more, but the starting point is not all that complicated. Yeah.
- [12:22]
A
And how many man hours do you think it took for you to get to a place where you felt comfortable with the first prototype bar?
- [12:30]
B
Thousands.
- [12:31]
A
Thousands, yeah. Just mixing around in the kitchen.
- [12:34]
B
Yeah. I mean I spent a full year. So what, what's, what's a work year? Right. A work year is 20, 80 hours, 40 hours a week times 52 weeks. Right. So a work year is multiple thousands of hours. And it took me a full like year and a half really to. And, and that was working at nights and on weekends I had a full time job, but at night like it'd be like nine to five and then five to whatever, midnight every day and then I would work all weekend and. Cause I knew nothing, I had no background in it. I didn't even know anyone who had a background in it. I was like truly starting from zero. And so I just had to build up that muscle memory. And then I had a lot of like sort of rabbit holes I went down that ultimately I pulled myself out of, you know, So I started with brain food. Right. So what is good for your brain? Curcumin resveratrol all these kind of wonky inputs, but have a bunch of data that says they're good for your brain. Well, cool. Let's put those in a bar. Oh wait, if I put curcumin in a bar, it turns my fingers orange when I touch it and it doesn't taste good. Well, not going to use that. Like resveratrol, it's a compound in grapes that's good for your brain. Let's put incredible compound. Let's put it in the bar. Oh wait, the bar is going to cost $10. Like pull that out, you know, so it's, there's, there's so much start and stop going on, let alone getting. We, we actually made our lives a lot harder too because we, you know, the, the thought was let's be super low sugar and super low net carb. And it turns out it's just incredibly hard to make something that has more or less no sugar in it and have it taste good. It's just, and have it be clean label. You can go the Celsius energy drink route and put sucralose in it, let's say. And, and low sugar, you know, low to no sugar. But tastes great. Well, yeah, but you're using a lab made ingredient. So if you, if you want to be low sugar and high protein and clean label and taste good, that's really, really, really, really hard. I mean it takes years and years. So we definitely like did not make it easy on ourselves.
- [14:57]
A
And I think, look, that level of naivety is usually how a lot of founders step into a space, right? Because if you knew how, how difficult would be, you probably wouldn't do it, right?
- [15:07]
B
I probably would do it, but I would, I would think a lot harder about it. That's always a funny one. Like, if I knew, would I still do it? I think I still would. Because here's the thing. I knew the alternative. I had a job out of college and I was selling software to oil and gas companies and I just, I was like insanely not passionate about it. And I just, you know, it was like most people, you dread Monday and you're making PowerPoint decks and flying to the client and delivering them and you're just like, oh, I can't do this for 30, 40 years. And so that. I'm so glad I did that because I, I was able to juxtapose that whenever things got hard, entrepreneurial or entrepreneurially, I could juxtapose that and be like, but at least it's not that, you know, so I would trade that for anything.
- [15:59]
A
Yeah, I. Look, I respect your honesty. I remember when I started founder, I was doing the exact same thing, and I had a similar drive to you. I just wanted to do work that I was passionate about. I think life is too short to not do work that you don't enjoy. Yeah, money and all that kind of stuff is great, but fundamentally, we spend a big part of our life working. Does that mean that you have to start a business? No, but you definitely need to do work that you enjoy. And I didn't enjoy the work that I did, and that was a big driver for me. There's part of me that misses those early days as well. Like, it was less care less, like, you know, less responsibility, you know, a lot less stresses. It's just fun. Like, more solo operator. So I really respect the fact that you've kept your team intentionally really, really small. And I want to talk about that. So, you know, you guys are on Track to do 120 million-plus. Will you be able to do that last year? Okay, that was last year. Okay, so you've done 120 million. So you've got 10 people. Like, revenue per employee is insane. It's like 10 mil. Do you think that is. How sustainable is it to have that less amount of people?
- [17:15]
B
Extremely sustainable. We were doing, I mean, stupidly high revenue with, like, five people. I mean, you can build a $5 million business as one person. Like, there's no question. So it's just part of. It's a little bit of a misnomer of, like, how many humans are working on the brand more than the W2s that you know on the team. Right. So we have. We created what's called, what I like to call a hub and spoke model. So you have the hub, which is, you know, let's just say 10, 15. We now actually have 14 people. And. But they're all just, like, savages. That's the hub. Each. There's spokes that come out of each of those people to third parties. So, you know, we have a paid ads agency. We have an Amazon agency. We have a Costco broker, we have a Walmart broker. We have a target broker. We have a blah, blah, blah, blah, blah. So there's a lot of spokes, and there's a lot of humans working on it. There's just not a lot of. The hub is just very tight, very intentionally so. And we've, like. One of the things I realized is a lot of people give you advice on how to professionalize, and they're like quote unquote. And they're like, oh, you need to build out this team and this and that way. And for a while, when you're a naive entrepreneur, you believe them and you're like, oh, well, they must know because they're older than me or they did it before or whatever. And we've tried to build out the hub to be bigger and we've just always regretted it. We found that it's better to keep it small. And like, the analogy I would use is, let's just say you're one person who has two. Holds two different things in your head at the same time. So let's say you're a COO slash cfo. That would be an example. Or you're the cmo, but you're also the head of E Com. If that person's a savage and they can hold those two things in their head, the amount of dots they can connect in their head is insane. And it requires no meetings. It's ultra efficient. It just happens in their head. And so they can say, oh, that thing operationally happened. Here are the five financial ramifications of that. And therefore, I'm going to go take this action. When you have two separate people, it's, oh, this operational thing happened. Let's set a meeting with Finance for Tuesday. And then the meeting, half the meeting's like getting finance up to speed on what happened. Oh, let's talk it through. Why did it happen? Blah, blah, blah. Okay, what, what are the financial ramifications? Finance says, oh, let's do another meeting later this week and I'll have a report on what those are. Right. So then you have another meeting and then blah, blah, blah, blah, blah. Now multiply that by like a hundred. When you have a big organization, you're just always having meetings about stuff that happened. If all the people just held multiple things in their own head, you just don't have that many meetings and you move way faster. So that's just been a major learning for me. It's like, if we can keep the core small and latch on third parties who, by the way, are scalable, so we could 2x our Amazon business and our agency can just scale up what they're doing much quicker than we can scale up hiring internally, then we can, then it's ultra sustainable.
- [20:39]
A
What a fascinating approach. Don't you find, though? Like, and I'm asking from experience, like, agencies are great. They have domain expertise, but they have, like, so many competing priorities because they've got so many different clients. Oftentimes from my experience, you could start with an agency like for example, media buying, like you know, Facebook ads, whatever. But then over time you, if you brought that capability in house, you get a better outcome because that one person is just obsessed versus a media buyer that is focused on 10 different accounts. Like that's just from my own personal experience. I'm curious to hear your take.
- [21:19]
B
I think you have to decide what is your core competency? And there's no right answer. Right. Some people who are really good at buying ads, that is their core competency as a company, they are not good product people. Almost never do you see someone be good, like truly world class at two, three things. Usually it's one thing. And so they're like, we're great at buying media and we're going to go into like some commodity category because we can just buy a product off the shelf and we can move it because we're really good at paid media. Cool. That's your core competent competency. You can build company around that. Our core competency for the most part is operations and minimizing cogs and maximizing economies of scale and output and hitting really aggressive price points. It's not paid ads. And that's fine. Like my answer to you would be like, if your core competency is what ours is, you're actually okay with an 85% result. You know that if you were better at paid ads and you hired someone who's a beast and you can maybe get that to 95, maybe even 100, but the model works at 85. And so just create an internal model such that you can have, you can know that the agency is technically not as good as a unicorn that you hire internally, but if it still works, that's more scalable. And by the way, unicorns are like unicorns. So sure, it's easy to say, yeah, just hire some really, really good person, but why are they working for you? You know, how are you progressing their career? You're gonna have to pay them a lot of money. They're gonna want equity, like ba ba.
- [23:09]
A
Ba ba ba ba ba.
- [23:10]
B
None of which is true about an agency. So I think it's a way oversimplification to say like, yeah, just like hire some beasts. I think hiring is the hardest thing in the whole freaking game, in my opinion.
- [23:26]
A
Yeah, yeah, I, I, I agree with you a thousand percent. It's like your number one job as a founder is, is to get the right people on the bus. So I'm curious, how do you find these people that are affection effectively like 10x Tedx team members or 100x marry.
- [23:47]
B
Them is my first piece of advice. No, my wife joined two years in and she's just like, so good and competent at what she does, and she runs our whole E commerce engine. She's kind of like the CEO of iqvar. E. Com. And that is an epic unlock because she cares so much and I trust her and, like, I just don't have to meddle in her affairs. She just has it. We hired our first. One of our first investors who's our head of sales, and he's so invested literally in a good outcome. So he's just, he just works 10 times harder because he owns like a decent chunk of the company. So it's like, how do you find, how do you get these hacks of. Because really, what it comes down to is, do they care? How much do they care? And so your wife's going to care a lot and someone who's an early investor is going to care a lot. But of course, you'll exhaust that group of people who really, really care. And then it's like, okay, how do you find that next tranche of people? You know what? Honestly, one, it's a really boring, like, hack, but has been really impactful. Finding a great recruiter. We. I never liked the idea of a recruiter because it's like, it's expensive. You pay a percentage of the person's salary. And. And so I thought, oh, I can find someone. Even if you can, it's still not the right move because this isn't what you do all day, every day. The recruiter, literally all they do all day, every day is vet these people, talk to these people. And so we got this guy Jay, and he's just like a, he's an animal. We'll give him a role. Within a week, he'll have like three excellent people. People. I don't even know how he finds them. Like, it would take me a very long time to find these people, but he has them and he hand delivers them. Here you go. And that was just a huge unlock for getting that next charge. So. And then like, the only other thing I would say is you have to make hard decisions so some people will not work out. And. And you. This is not new advice. Like, everyone says this, but it's so true. You have to move fast on people. And we, you know, you're gonna have a 50% hit rate. And, and that's okay. Just build that into your mental models of like, I just hired this person. They seem great. 50 chance they're not.
- [26:34]
A
Yeah, it's. It's interesting to hear your experience on recruiters. Yeah, man, I can't relate to that. Like, I, I actually did like, this exercise of the past, like, you know, five, six years of people that we've hired, and I traced back that, unfortunately, and I thought the recruiter, like, the competent people, like, inclined, like, yeah, I couldn't crack that one. Like, yeah, my best have come from usually either job boards or people that we know and, and through the network.
- [27:09]
B
People you know is best. Right. And that's why I hired my wife. That's where I hired the investor. Like, and referrals are great, right? Like, if people, especially if you bring someone over and they're like, hey, just so you know, I've worked with this other person for 10 years and they're so good and they already have that report. Great. Like, easy hire.
- [27:29]
A
I agree. I love that. That's my favorite. I just found, like, from my own personal experience and like we, like you said at the start of this podcast, like, it's. It's always contextual, it's always situational. It's not one size fits all. It's all your own experience. But I found that if a, If a recruiter finds an absolute beast and pulls them out of your business, that pulls them out of that business. They're somewhat mercenary. Like, and so then if another business opportunity comes around, that like. Yeah. And even still, even if you've got traction, all these different things, you know, it was like a couple of pieces, you know?
- [28:04]
B
Yeah.
- [28:05]
A
Yeah. So that's just from my experience.
- [28:07]
B
The other thing too, I mean, this is maybe obvious. Success cures all. Like, what you're saying is so true. Like the mercenary thing, if you keep winning and growing, people aren't gonna leave. Unless you're just like a horrible person or it's like a truly horrible experience. But it just does help if your business is on an upward trajectory. It just does. So you will retain people. You will retain people longer and have better people if the business is doing better.
- [28:44]
A
I agree. So let's talk. Okay, so I think we got. I think we got a pretty good headline. Like, you know, nine figure business with only 10 employees. That's pretty, that's pretty impressive, man. I speak to a lot of founders. So let's talk about the retail piece, because in the first six months, because this will be helpful. We have a lot of ecom founders that, you know, are part of our community. In the first six months, you landed 4,000 CVS stores, but on the first day of production, the wrappers wouldn't seal. How'd you resolve that? How did you maintain not losing that contract and how did you even get that contract and what it cost you?
- [29:25]
B
So for starters, that was not the right place to launch. But, you know, if I knew then what I know now, I would do quite a few things differently. But I don't regret it. We were in Boston at the time, and CVS is fairly local. They're like 45 minutes away in Providence, Rhode Island. And I knew a guy who had gotten his product into cvs and CVS at the time was thinking like, oh, we're this old kind of stodgy retailer and we need to innovate and get a younger person walking in the doors. And so let's take on like startupy brands that are on trend. You know, they're keto or their whatever, pastel colored gut health gummies or, you know, how do we appeal to millennials and younger, let's say. And so anyway, I knew this guy who had gotten his product into a set that was kind of like that type of products. And he connected me with the people who got him in at cvs. And they're like a innovation, SWAT team type people. I talked to them, they trialed the product and they said, yeah, this is cool, let's give it a try. And yeah, one thing led to another very quickly and they're like, okay, if we put in a PO for I think it was like 3500 doors, could you fulfill it? And I was like, hell yeah, I could. And of course I couldn't. There's no way. We were with at the time a tiny co packer that could not make that much product. And so I said yes. And then immediately thereafter, I turned to the guy, Alex, who was running our ops. I was like, dude, we need to figure out how to make 250,000 bars. So within a span of like a month, we found a new co packer, onboarded with them, got materials to them, and yeah, we're all poised to make 250,000 bars. Our biggest run before that was like 25,000 bars. So. But yeah, to your point, I show up and I showed up at like 5am because that's when these people start producing and the product mixes well, slabs. Well, Slab is like the line that it goes on, cuts well, goes into. It goes into wrappers, wrappers go into boxes. We look at the box, it looks great. We're high fiving. Our whole team is there. And then the line manager walks up to me and goes, we have a problem. The wrappers aren't sealing. I was like, what? Like, how is that even possible? And so anyway, it was a faulty glue pattern on, on the wrapper and wrappers and seals so scrapped all the product. I called like 10 different wrapper vendors. One of them's like, I can get you new wrappers in a week. We got new wrappers, produced the 250,000 bars. The following week we took a hit. I think, I think it was like 30 grand or 35 grand, which for at that time was like a death blow. It was like devastating. But we had this huge PO from CVS and we're like, we gotta make it. And we made it. And then there was a whole journey thereafter of like we went into CBS's in like the back left corner in this like random set. There was like a brain health set and the product did not move and had a ton of product expire on shelf and got a bill back for I think it was like six or seven hundred thousand dollars. And so that was a whole journey even after we got past the wrapper thing.
- [33:04]
A
Yeah. So I'd love to know, what advice would you give to founders that are looking to hit like a crack into retail? Like, give us a source, man.
- [33:14]
B
It's so contextual. So I would like look at it more like a framework than I would of. Oh, just go here. So it's massively. If you're selling a beauty product, of course Sephora and Ulti Ultra are. Or Ulta are the, you know, Costco Walmart targets for me. So but I would just say like, here's my widget. Where are the most of this widget sold? And like start there and you'll get like whatever 20 accounts. And then I would look at which of these accounts have the best, most favorable energy and revenue out ratio. So everything we do is according to energy and revenue out everything. So an example of something that would be favorable on that ratio would be like, let's say Costco because it's one sku and so you have. It's a variety pack. And if we can make this variety pack and price it right and get into X number of doors, it's a lot of energy. But like the, the revenue output is like a thousand x that energy versus a chain of 6, 7, 8, 9, 10 bodegas. It's actually more effort up front because it's like, okay, we want this assortment of three different flavors. And I think this like fourth flavor could work because it's kind of funky. And so we'll give them the Matcha bar and just a lot of thought and then we have to go through a distributor and so we have to onboard with them. And there was all this paperwork and just a lot of energy and then the revenue output's like 10 grand. But that's the conventional wisdom people say is start there. And I think it's like terrible advice. I actually think you should start. Well first of all you should start online because you're going to be able to iterate into product market fit, change packaging, change product change listings, et cetera. But once you feel you have product market fit, you should be going big early. So go where you have the best energy and revenue out ratio. It would be generally my advice.
- [35:35]
A
And how do you still break through those doors? Because everybody wants to be stocked in Costco.
- [35:44]
B
So Ecom is extremely helpful to do that. You were talking about Nick Shackelford, right? He's like right below you with Breeze. How did Breeze get into Fresh Market and all these other retail accounts? They built a great E comm business first. And when you build a great econ business first, retail interest falls out of the sky. It comes 10x easier. So why did Walmart reach out to us? Which by the way, I can't tell you how different that is than us reaching out to Walmart. They did that because they looked at the fastest moving bars on Amazon. Literally that's what like the guy said to me. And we were like four or something at the time and that and then we got into Walmart. So it's a, the order of operations is so important. Had we first knocked on Walmart's door they'd be like get lost. Like I could do that for. I could waste three years doing that. But because I ordered Ecom first build traction there. Walmart just plop, fell, fell out of the sky. And so that's why I said, another reason I say it's start online.
- [36:56]
A
So let's talk about, excuse me. So let's talk about the D2C component. You know you said, you said that your wife is, is leading that function. But I'm curious to ask you, you rely on a low barrier to entry sample pack offer to acquire customers online. Could you talk us through the unit economics around CPA ltv? You know the amount of people that move from a sample pack to then a long term customer repeat purchase. Like can you talk us through that model and, and is that what you guys have always done or it took you a while to Work that out, man.
- [37:37]
B
My wife would answer this way better than I would because candidly, I spend most of my time on the retail side now. But generally speaking, we want to approximate trial as like, think about me at a Costco handing out a free sample. How do I do that digitally? Because if the product's good and it converts well when someone puts it in their mouth, then trial is the number one cheapest way to acquire customers. So, okay, if that's true, how do I do that digitally? You have a really low priced entry level offer and ideally you can still make money on that or at least break even on it. It may even be worth it to lose money as a loss leader if the LTV is long enough. So yeah, we, I mean, and we try to offer maximum variety, right? Because each we have a seven bar sampler, for instance, which is very intentionally chosen for dimension purposes, weight purposes, but also variety purposes. Now you have seven at bats. You only have to like one out of seven to then convert and buy that flavor in a 12 pack. So we just, it's maximum at bats. And we even have now an ultimate sampler which is hydration products and coffee products. Because we sell, we operate in those categories as well. So yeah, I mean, but generally I could be butchering this, but I believe we try to acquire customers now for 25 or less. We look to have a LTV to CAC of over 2. And the repeat purchase rate, like quite good in food is 30%. I think we aim for 35 to 40% and then, you know, like nothing novel. Subscribers are better. Like push people to subscribe, of course, default to subscription, give people reasons to subscribe. But we are sort of purists as it relates to D to C. We are happy if you buy on Amazon or happy if you buy in store. The ltv, the true ltv, has gotten quite a bit bigger. It's just harder to track given we're so widely distributed in brick and mortar. And so there are many people we know tried us on Amazon and then they just buy us at Costco, right? And it looks like we lost money on that person and in fact we made a lot of money on that person. It's just harder to track. So all your metrics get better if you have the brick and mortar to ecom flywheel going.
- [40:25]
A
Yeah, and I'm also curious, you guys, when it comes to margin, you've also said publicly that you want to make at least a 50% gross margin. However, you guys, when you started, right, kind of like a 30, 35 at what point in time and what, what volume of scale did it take to get to, to a much higher gross margin?
- [40:55]
B
I don't actually look at it on a gross margin basis. I look at, on an, on, on a holistic business like profitability basis. Like if we could be profitable at a 20% gross margin, like that's cool. Like ultimately the only thing that matters in business is the business metric, which is net profit. And so gross margin is just a way to get there, but ultimately that's what you're optimizing towards. So for us to get to business wide net profitability, it was roughly 30 million units a year was where we had enough scale to where we could make a big enough gross margin to where we could be net profitable.
- [41:42]
A
Yeah, got you.
- [41:43]
B
And then after that it gets, you know, everything gets quite a, quite a bit better.
- [41:48]
A
Got you. So 2024 you did 60 mil top line at a 13 EBITDA. And in 2024 you did 125 at a 17 EBITDA. So you basically doubled the business. More than doubled. What was the primary growth driver there? Because that's massive growth, man.
- [42:11]
B
Brick and mortar. So here's the other thing about like D2C versus brick and mortar. I sell food. Food is bought in stores. Food is not bought online. When's the last time you bought a bag of chips online?
- [42:26]
A
True. Yeah.
- [42:27]
B
Maybe never.
- [42:27]
A
Never.
- [42:28]
B
Probably never.
- [42:29]
A
Never. I never bought a bag of chips online. No.
- [42:31]
B
So if you want to build a big chip company, you're a, a damn fool to focus exclusively on ecom. So that the beauty though about certain categories like bars is there's actually a very big buyer base online for bars because you know, it's not going to like chips break in transit and there's a ton of air in it and blah, blah. Like bars are very compact, it just works online. But still the final boss, even for bars because it's food is brick and mortar because people grocery shop, right? They buy 50 different things and you want one of those things to be your thing. So once you get to whatever, a couple deca deca million in E Com revenue, you need to be thinking very hard about what your retail strategy is because that is the final boss. That is how you get true, true, true volume. So yeah, that was the biggest growth driver. But again and again that then helps your E Comm business grow. So it's totally circular. You just want more touch points. And this is especially true in 2026. The, the consumer is less loyal every year. So how do you Convert them. Even though they're less loyal, you get more touch points with them. So we want them to see us on Amazon, but also D2C, but also Costco, but also Walmart, but also Target, but also Sprouts, but also Erewhon, et cetera.
- [44:09]
A
Yeah, and you're building a synonymous brand in the space and in the category. And yeah, it's. Yeah, it makes sense. So a couple last questions before we wrap up. And I got a dinner to go to. So you've been building your personal brand. You have a 50,000 followers on LinkedIn. You've got a podcast called Eating Glass that you often recite the phrase, it never gets easy, you just go faster. But I'm curious why. Why? You know, you talked about energy versus revenue. What is the return on the energy spent on building your personal brand, producing a podcast? You talk about, you know, the unfiltered reality of CPG on LinkedIn. Like, like, talk us through why I.
- [44:53]
B
Like writing and I need an outlet. And so some people journal. And I view writing out thoughts, musings, whatever on LinkedIn or Twitter as just journaling. And so the beauty of that is it doesn't need to have an ROI from a business standpoint because it's inherently ROI positive to me, because it's journaling and it makes me feel good and it's just fun. So that's a great place to start, I would say, for people. Like, start with something you would do anyway you would do. If it's like the Alex Honnold thing, climbing Taipei 101, everyone's like, oh my God, you only made $500,000. He's like, Dude, I would have done that for free. So when your baseline is you would do it for free, everything else is gravy. That's how I feel about personal branding stuff. But absolutely, there's been so many. I mean, we're talking right now. If I was like ultra private, you wouldn't know anything about me or the brand and we wouldn't be having this conversation. And this is a fun conversation right now. We know each other and so you just meet cool people and the point of life is to spend time with cool people. Like, that is the point of life. So if it helps me do that, then that's awesome. Has it generated a ton of business? Eh, not really. I would never be able to justify doing it for that purpose. I would say, though, I know someone who's a badass at everything now. So if I'm like, I need to talk through this target issue, I have a person who's like the target expert or paid ads or whatever. Right. So fill in the blank. I have a person because I've just had so many touch points with smart people through posting on social media. Like I just have this great mental Swiss army knife now of a network. But again, I would do it for free.
- [46:56]
A
Makes sense. Good answer. I've been doing this podcast for. It's crazy thinking about 10 years and I've met so many cool, interesting people, have an incredible network. He asked me how I met Nick. He started doing content for us and the rest is kind of history. Okay, so look on the dot. Last question. You gotta run 20, 26. What's the next major product category you plan to disrupt to compete in the the brain and body platform? And. And when will we sit on the shelves?
- [47:31]
B
I'll tell you exactly what it is. It's IQ Bar Bites, which is a super complicated product to manufacture. It's basically bar dough and then enrobed and then protein crisps on top and then enrobed a second time. It's. It's a peanut butter and jelly protein slash fiber bite. So it's like 22 grams poppable. Tastes exactly like a PB&J. We have a strawberry and a blueberry one and man, it was tough to like formulate and find the manufacturer who could make it. I was just at the manufacturer two days ago and saw it run for the first time and it was awesome. So we're launching that with a major retailer and it is nuanced and interesting though because it's the first temperature sensitive product we've ever launched, which of course is. Makes E Comm. Much harder. So we're trying to figure out do we ship only certain months of the year, do we do that but then also ship in the summer but now it has cold packs. Like there's all these new things we have to figure out as it relates to that. But certainly in a retail context it is just gonna crush. I think. So that's. That's the big one for this year.
- [48:50]
A
Exciting. One last question. Can you share how much it cost in from an R and D? Time and also money. Rough ballpark to work out an R and D. A product like that.
- [49:02]
B
Very little because I do it with our head of R and D. So it's. It's me and this guy and we have a woman who helps out. Part time is great too. Those are fixed costs. We don't bring in third parties. So it's the cost of our salary and time but that's another thing, man. We could do a whole pod on that. I think the founder has to be the product creator or ideally is. And if they aren't, they intimately, intimately understand the ins and outs of the product. So because I already knew all this, had all this institutional knowledge, we. It still took a long time to make, but we knew the right puts and takes to make it good, make it the right unit, economic profile, launch it with the right retailer, so on and so forth.
- [49:52]
A
Yeah. Wow. Yeah, I agree. Well, man, congratulations on all your success. Super impressive. I loved your contrarian take on team staff. The engineering approach that you have around, kind of building your business. It's super impressive what you've built. And yeah, look forward to continue to watch the journey. Hopefully catch up in person next time I'm in the States. But thank you so much, man. I appreciate your time.
- [50:19]
B
Thank you. It was a blast.
- [50:21]
A
Hey, founder fam. Thank you so much for tuning in today and if you enjoyed this episode, please take the time to leave us a review and let us know what you think. This podcast is 100 free. We work so hard to go out and find the most successful founders and entrepreneurs all around the globe. So your feedback helps us grow, grow, improve, and even bring on more incredible guests and insights. So if you have a second, please take a moment and leave us a review. It really means a lot to me and the founder team. It makes so much of a difference. Thank you again for listening and I'll catch you on the next episode.