Acquisition by Hormel and Future Outlook

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I'm really excited about it Oh you know, is this a college application or you going back to school? and I'm like, and I take the lid off the shoe box and I'm like I wna make peanut butter Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built I'm Guy Ross and on the show today how Justin Gold used his home food processor to make a better tasting peanut butter and turned Justin's Nut butter into a category defining brand There's a strange thing that happens when you build something successful. and you'll hear this from a lot of founders Chase never really ends You get your first customer and then you want one hundred You hit a million in sales Then you go for ten million But the more you grow, the more complicated it gets. and the bar just keeps kind of moving All of this was definitely true for Justin Gold Justin started with a simple idea He wanted to make a peanut butter that was better than the stuff sitting on the supermarket shelves At first, he just wanted to sell a few jars around Boulder, Colorado where he lived At the time, he was waiting tables and working at the local REI, and he thought, hey, this could bring in a few more bucks Every time he sold a jar of peanut butter, every time a customer reacted, It opened the door to a bigger ambition So eventually he pitched his local wholeo foods And then more Whole Foods and then grocery chains across the country And along the way, Justin kept experimenting What started with a food processor in his kitchen became a business built around flavored nut butters, flavors like maple and honey and cinnamon There was a problem. Ale jar of peanut butter in someone's pantry lasts a long time Especially if you're not making PBNJ for kids on a daily basis. So after some early success, sales of Justin's nut butters started to stagnate And that was a problem because well What do you do when you hit a wall that seems immovable Well, in Justin's case, he climbed over that wall with an idea he got while working at REI and going for long bike rides An innovation that would help propel Justin's nut butters into a huge nationally known product a brand that would come to be worth hundreds of millions of dollars Justin Gold grew up in Western Pennsylvania. His dad was a dentist and his mom's family owned a natural food store in the area In college, Justin studied to become a lawyer But instead of going to law school, he decided to go in the opposite direction You know, I was vegetarian, I had long hair I really felt like I was a hippie. And so the goal at that point was to move as far away as I could and I went to the Bay Area And I lived in point raise And I lived there for about a year And then I met like, you know, some real like living up the land, hippies And I realize I'm actually quite square. And and maybe I'm not a hippie, but, you know, what am I? Where are my people? Where do I belong And so after a year of waiting tables and working in Norcaau I decided that I wanted to give the mountains a try. But I wanted to go to a university I wanted to find a town near the mountains that had a university. and at that time it was like, all right, well, I had a friend who went to the University of Boulder and he loved it. And so I just started there totally on a whim and just moved out here and started to wait tables in Boulder. and that would have been in two thousand one So you're all right, so you're in Boulder, you're waiting tables. But in the back of your mind, it sounds like the idea was you would maybe go back to school. There's the University of Colorado there maybe get a degree in something? Was that H of in the back of your head honestly like For the first year that I'm here, I just want to make friends fit in And I want to learn We're the good mountain biking spots you know, the good ski areas and just get settled And in the back of my mind is, okay, there's a university here and I would like to go back to school at some point All right, you were waiting tables, but you were also doing the things that people do in Boulder, right? like biking and hiking and skiing and all those things Tell me about about your diet.'re vegetarian. so for protein you were eating beans nuts stuff like that Yeah, a lot of salads Beans notch, a lot of tofu, tempe you know Txtured protein, chicken nuggets and things were coming out. And so you know, Boca burgers and veggie burgers And when it came to things like butter or nuts. I mean Was that a big part of your diet Yeah, I'd say growing up, you know, peanut butter and jelly was the first thing I learned to make. You know, peanut butter and banana is to this day one of my favorite sandwiches And it was cheap I guess one of the things you notice is that the peanut options for peanut butter are limited, right? This is like two thousand two one and they're all like basasically two options, crrunchy or smooth and that's it. and that struck you as unusual Yeah What's interesting is We walked into a natural food store, you were going to a co op or you were going to a specialty store and And even like at the regular grocery food stores, it was smoother crunchy and they don't have all the oil at the top of the jar And then you could also just grind your own, right? They used to have these grinders in the store. And you would just take an empty container, put it under it and you would wait thirty seconds and watch it grind. Some stores still have it. Yeah. Oh yeah, they're great. They're great And then what was what really got me curious is is you'd walk the aisle and There was a small little peanut butter and nut butter section. And there was a preserves, jams and jellies section That was three times the size. of the nut butter section And it was just shocking to me. There's all this variety in all of these different preserves, but not with nut butters And so then I have a sweet tooth. And so I would go home And I would make a peanut butter and jelly And sometimes I'd run out of bread J take peelly and the peanut butter and mix it in a little bowl together And just eat it with a spoon Right? Yeah, sounds pretty good. So now you're eating this sweetened peanut butter with jelly, right? And you're like, wow. This is really good. like now you're using honey and you're like, this is really good with honey. Why isn't anybody just selling it, you know, peanut butter and honey? It seems pretty simple. And then you know, and so then you just start thinking C you not make peanut butter and honey? Does it not work together? And so then that's when I started to get curious and started to kind of like create formulations and recipes. in your apartment. Yeah, I was living in an apartment with three other roommates. Okay, so you're living in an apartment with three other roommates and what you start to make Just like make your own Peanut butter So at that point, You're like, okay, if you can grind it in a store How hard can it be to make itight? So you're like, I bet a food processor can make peanut butter So then I would go to the co op and I would buy, you know, five pounds of dry roasted peanuts and five pounds of dry roasted almonds, and then I'd bring them back to the apartment and I would use the food processor And you would literally you turn the food processor on, it grinds everything up and then you stop it, you take a spatula, you push down the sides, mix it up a little bit, turn it back on, do that three or four times and you have peanut butter and like You know, under a minute And so then I would take the peanut butter and I would add honey to it then You know, once I once I add the honey and then you put it in a jar and it's warm and it's freshly made, it's Perfect Perfect. Yeah But then You know, if you wait three or four hours or overnight It gets kind of mealy and it doesn't hold up well And after day or two I'd realize, o, well that's why they don't have all these different flavors because in a few days textures off and it doesn't taste good, right. And then just You start thinking, okay, well, it's probably the water activity in the oil, oil and water don't mix What if I used less honey? What if I used something that had you know very little water, if no water and then you start to run these experiments. you know, an example is banana, right? So that's kind of the holy grail for me banana chips. there's freeze dried banana, there's dried banana. there's bana flavor, banana syrup so then you start like experimenting with different types of banana And before you know it, like, you know, okay, this should this be? percent banana, five percent banana, twenty percent banana. And so all of those two ingredients butter and banana. It can turn into like ten jars Yeah. And all these jars are numbered and I would keep a journal. And the journal would have the number and it would have the percent of peanut butter and the percent of, you know, other ingredients, including salt So I'm like, okay, if I find one I really like, I want to make sure I can replicate it. And so I'd have all these jars. they'd all be numbered. I'd put some in the cupboard, I put some in the fridge I'd want to understand how temperature impacted the product And I tried a lot of different things at that time Yeah, it's interesting. I mean, you are you're experimenting with the chemistry, right? and the interactions between ingredients.' sort of like ice cream. Like if you put too much water in ice cream, you get crystals, right? which is why a lot of ice creams use like liquid, sugar or syrup because the water content is lower. And so it's not like now where you can literally go on Amazon now and buy powdered anything you know, you can get powdered spinach and whatever you want. But I'm thinking two thousand one, like that's not so easy to get I mean, I would buy freeze dried strawberries and then I would grind them in a food processor and turn it into a dust. Yeah And you know, or I would, you know, buy cinnamon And and I would make a cinnamon peanut butter, you know, and because it was a powder. And so so very quickly I had thirty or forty different jars And again, like so let's just say you wanted to make honey peanut butter. Really, it sounds simple. Three ingredients. R. Peanuts, honey, and salt.. All right, well, what type of peanuts do I want to use? because at the store here There's Valencia peanuts, there's Virginia peanuts, there's Spanish peanuts, There's runner peanuts. And then do I want a light roast or a dark roast? And some peanuts have skins on them and some don't. What happens if I make peanut butter with a skin on it, right? And so now one ingredient turns into like eight different, you know roads You know, and so all of a sudden three ingredients turns into a lot of trial and error So I'm curious. I mean, you're like twenty four or twenty five at the time. You're living through roommates and Boulder, you're waiting tables and you're doing this P just by the way, how long roughly were you kind of doing this experiment? likeike a few months Probably about four to six months, ye. Got it. But it sounds like it was a real, like you got really into it Were are you doing it in in the back of your mind thinking if I can crack this, I might be able to, you know Sell these I was And I was working at a restaurant. so I'd bring samples in for the chefs and for the wait staff and they be like Do you like this? Do you think it tastes good? And it was so silly, ' I'd be, this is ten percent honey and this is fifteen percent honey. L which one do you like better And it's like, you know, who cares? L But I cared. L I was really curious Yeah So you did this for life. six months kind of just experimenting. until you got to the point where you were like, okay I think I want to turn this into a business thenen did you do like did you business plan? Did you save your money from tips, Like what were all the steps you started to take Let go to the next step, which is like, okay, this is going to be a business. Yeah, so the first thing that I knew I had to do was write a business plan I don't know why I thought that. Maybe I was talking to some friends and they said, you know, a business plan is probably what you need. And so And so where I really got Lucky is Being in a college town. So I went to CU's Business Schools liibrary And I wasn't intimidated to go to the library because I, you know, because because I wasn't a student there. In fact, I felt like a student because I was the same age as a lot of these a lot of the kids there And what was really fascinating is at the time The library had an encyclopedia of business plans literally from A to Z And so I started to write a business plan That took probably almost a year But that's when as I'm writing the business plan, that's when something unlocked that really gave me a competitive advantage. which was Boulder Boulder Colorado. I mean, here's what's crazy. So I'm writing the business plan, but the hardest part was You know, Business entity though I want to be I want to be an S cororp, a C corp, an LLC? Where do you get a UPC? And how do you find an FDA food licenseed kitchen facility? Like where do you order jars from Like those are all things you can't just learn in a library And so what I decided to do was, well, I'm going to figure out If there are any companies that are from Boulder, Colorado, and just ask them And this is where things went bonkers for me is There are a lot of food companies twenty years ago, thirty years ago that were National companies that were out of Border, Colorado. Yeah, Celestial seasonings and silk, soy milk and Horizon I did a lot. Yeah, Izy soda Boboos, which we'll talk about later, but that's I mean, a lot of brands But that's not where I started You know, because I didn't have permission I felt like to go right to Celestial. So instead I found a tiny salsa company that had glass jars and had labels and was in had to use a jar filler and had to put it in there somehow, so I contacted salsa companies because that was the most like product and I started to form these these relationships And they were all like in this community And they were all really helpful. Everybody wanted to be helpful And it was called and did you call it Justin's Nut butters? orr did you have a name for it yet No, when I first started, it was paragon peanut butter. Okay And and Parag So I wanted something that was really catchy And so paragon, like I started calling it paragon nut butter, Paragon naturals, paragon peanut butter. and my friends D didn't know what Paragon meant And they couldn't remember it. So they just started calling it Justin's I'm curious when you were writing the business plan, what did it say? And again, you were writing the business plan for you or for the idea of of bringing this to people who might give you some money A little bit of both. I was writing it for me, but I knew that at the end of the day business plan is what I would use to try to find angel capital So the idea was, okay, let's say that this company is either going to go pub get big enough or it'll go public or it's going to get acquired And so here's an estimate on your return on invested capital could be And I had to write it in that perspective otherwise Nobody would want to invest because there's no end game to get their get their money back I'm curious I mean, this is like two thousand three when you're working on this, you didn't go to business school. you didn't have a business background How did you come to the conclusion that You needed to write a business like an ambitious business plan, with an exit and with, you know multiple returns and etcetera. Like was there somebody who kind of guided you or gave you advice questions. so I got help from everywhere. So because you were not you were probably a little naive, right? when you started. big time B big time. Yeah. So here I am at the library. It's a summer and it's the weekend Right? And a librarian comes up And it's like, oh, hey, what are you working on? What class is this for? I see you here every day And I'm like, oh, not I'm not a student here. I'm doing this for fun. I want to start a company. And you say that and the librarian's like, wow, that's really cool. You know, have you talked to any of the business professors here? And I'm like, I don't know anybody here. She's like, would you like to meet one or two And so they now You know, I got to meet Frank Moys, who is one of the business school professors. and I got to you know like, hey, Frank, could you like go through my business plan and, you know, and give me input tar it to shreds and so I had people like him give me advice on my business plan. I would meet with other founders of small companies And you know, and I'd be like, hey, how do you scale a company? How do you grow it? Like, well, it's going to cost a lot of money and you got to go out there and find angels. and like, well, how did you find an angel Well, you got to meet with this person. So then I met with someone who was an angel investor and I'm like, hey, what are the things that you need to see Being naive gave me an opportunity to ask really silly questions I met with almost every small company that I could get my hands on. And not only did Boulder have the natural food companies, but they had a natural food retailer here called Wild Oats. and they were number two to Whole Foods And we have natural grocers called Vitamin cottage Yeah And so I was able to learn all of these things in a condensed amount of time and fast track the whole process All right, so you get enough data to write the plan. You've got a plan and what's your what's your goal, how much money were you looking to raise I wrote the business plan for friends and family. The idea was thirty five thousand dollars was going to buy me a grinder, buy some raw materials and some labels and then rent kitchen time and have build enough inventory then to get started at a farmer's market So I would Basically take my business plan and I'd have a shoe boox. of jars that I would make with a food processor of different flavors And I probably had about five that I wanted to launch with And so I would go back to Western Pennsylvania and visit with my family And u And you can imagine the It's the right word here. It wasn't disappointment. It was confusion. when you you know are studying to become a lawyer And then you moved to California, you know, and I had a fantastic Jewish grandmother, Gladys Gold When I went to university, I was on work study and financial aid and at all this debt that I was going to have to repay And then when I graduated, her gift was she financed my college, which was incredible. But she was a real stickler on education and making sure I got a good career And so You know, I move out west I moved to Colorado and I'm waiting tables and everyone's and I'm like, yeah, I'm getting closer to go back to school. You know I'm in college town now and everyone's So then I come home and I'm like, hey, I've got something I want to show you guys. I'm really excited about And they're like, Ohh, you know, is this a college application or you going back to school? And I'm like, and I take the lid off the shoeox and I'm like I wanna make peanut butter Here's a plan that I wrote And, you know, and literally the first thing people say is Peanut butter is fine. It's been like this for a long time. It doesn't need to change. Like whyy do you think you're going to make it any different And some people thought was really cool. And so anywways, so then I went to my friends and went to my family. My first investors were my uncle, my mom and dad and my sister And then I was able to kind of, you know, get some inheritance that, you know, was being saved for me by, you know, my grandma. So I was able to get thirty five thousand dollars together And u That's how I got started. All right, so so you've got about thirty thousand dollars from different sources But you're still waiting tables, right? I mean, that's you need to like make money in your g tips. And what so with that How are you going to start this thing? I mean you've got a food processor at home, but you know from your research that you've got to go to like a a commercial kitchen that's USDA certified, so you can actually sell this stuff. So imagine the first step is like find a place where you can make this Yeah. So this this took forever. So The first thing I had to do was I had to find a industrial sized grinder And I found out there's two types of grinders. There's a stone mill. That has two grinding plates that come together and the peanuts come through the grinding plates and the tolerance of the plate is what creates the butter. And then there's a food processor, which is basically an impeller pushes product through this circular Cutting head. Yeah, it's called an Eersial. they make. Soy milk, they make ketchup, all kinds of stuff. So right away, I'm like, okay, I need this Urschel. new ones cost seventy five thousand dollars. And I'm like, okay, well, I can't get that. So I found the local Uersial representative, Ted Deets Ted like like, lookook, I really shouldn't be doing this, but I got an old one that's forty years old. I'm taken out of an old factory because they're buying a new one. I'll sell it to you at a really cheap deal. And so what was the price he sold it to you for three thousand two hundred and fifty dollars. Okay, so it' a great deal. And can I just ask a point of clarification? I mean, ye Couldn't you just buy one of those peanut butter machines you see in a natural food store? Like I go to my local Olivers in Sonoma County and you can P Jar under there and make peanut butter. Is it just too slow So I talked to a few stores about them and they break down a lot. Okay And and so I and then then you talk to other peanut butter companies because I mean, the first thing I did guy is Before I even looked at buying equipment, I contacted a few peanut butter companies. Yeah. And I asked them, hey, you know, do you guys make peanut butter for other companies? They're like, Yeahah, we do stores, we do other companies. I'm like, that's great. Could you make it for me? And they're like, Yeahah, of course, send us your recipe And then we got to the where the rubber hit the road, which is the MOQ, you know, what's the minimum order quantity Yeah And it would be in the hundreds of thousands, you know of units just to turn the equipment on And they're like, look, kid We can't help you, but I tell you what, here's what you need to do. L And that's how I found out the type of equipment they were using. And I'm like, okay, I want the equipment that these big guys are using. but guys, you know, that's what they use. and that's and someday, you know, I want to make one hundred thousand units a production run. You know And so that was the goal was to how do I get started so eventually I can hand this over to somebody else I always had that in my mind While we come back in just a moment, Justin begins to share his peanut butter with more people and learns when to listen to their feedback. 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It's two thousand three and Justin has finally gotten his hands on an Urschel, an industrial strength grinding machine for making large quantities of peanut butter It's literally, this Ursal is like a jet engine, right? Yeah. On one end, you put in a peanut And it it literally you turn on And you put peanuts in it, know and it literally pulverizes them. And the other end comes out this peanut butter goo and it kind of drips out And I'd have to collect it into a bin into a stainless steel bowl.. And then I would then from that stainless steel bowl I'd have to add my ingredients, which n cinnamon. Cinnamon oroney powdered honey or right? Yeah. I was using liquid honey at the time. it a small enough percent that still worked. All right I literally had to go to a a restaurant supply store and I bought a stainless steel like super Paddle mixer. And I would make me be fifty pounds, forty pounds at a time You know, which is, you know, forty jars, thirty. And you hand scoop them into jars And then I would have to pick up this big container. put it on like a a roll cart that would be like, you know, chest high, right Pick it up, put it on this roll cart and then I'll take a spatula and out would spatulate into a hopper. That was probably, you know above my head.. And then once that hopper is full You could stand under it with one jar at a time and youd there's a little foot pedal. And you'd stand on the foot pedal and it would p cycle this jar filler and you'd hold the jar underneath it And it would fill it like like ice cream comes out of a softerer, right. But what happens is You fill it and there's a little bit of air in it. so you have to tap it on a table every single jar. Jar by jar. Yes You cannot do this in your apartment would I would think that, okay, maybe I'll just find like some warehouse space in Boulder and just do it there That's not what you did. Yeah. So in order to sell to even a farmer's market in the state of Colorado, you need to have an FDA certified kitchen facility The ceilings are clean and there's no rodent infestation or insect infestation. and that there's a three compartment sink that allows you to sanitize all your, you know, Uutensils correctly and right those floor drains. Now you're right, I have to find a kitchen. And so what I did is I'm like, okay, well, I have the grinder Now I need the jar filler and the labeler. So Who uses that equipment? Pasta sauce companies, salsa companies Let's find one of those. So then I found aals I called all the salsa companies and they're like, well, We use this shared kitchen facility in South Denver, about an h hour and a half from me You know, we pay to use their jar filler and their kettle and their Jar labelor so I meet this guy Okay, how much does this cost to use this? He's like, well, I don't any openings. He' like we we're booked solid day making these different products. and I'm like, all you were asking if you could get time in in k face to r it. And here's what's interesting. So So this guy so The classic thing for an entrepreneur is we can't take no for an answer, right? We've got to find a way to get to the yes This was the only place. that had the equipment that I needed to be successful And they were booked. So literally I was like, all right, well, are you guys making product at ten o'clock at night? He's like, no, you know, we close down at you know seven thirty every night. and I'm like, well, what if I came in middle the n and you never saw me and it'll just be extra money in your pocket. You'll never know I'm there And that's what we did is we went in on off hours at the end of the day when their shift ended is when my shift would begin And u And at that moment, I was still waiting tables and I eventually switched to a different job a side hustle in order to accommodate those hours. Yeah, I was going to ask. I mean, you're going for tenight and this is in Denver, so it's an hour plus drive, right? Yeah, hour plus drive each way Okay, so you're doing the overnight shift there. and did you have someone help you Yeah, God bless Johnicabone. So my first corker, employee partner was my roommate He was chasing a career that It wasn't something that was exciting him. and then he saw how passionate I was about this and he's like, hey, I'm here to help And the idea was you were, I'm assuming you're going to make a certain number of jars because they last a peanut butter lasts a long time, right? It's not can last about a year, notot going to go ran so quickly. and The idea was I'm going to sell these at farmers' markets Yes, but it wasn't farmer' market season yet. So now I'm trying to get it into stores. Like like natural food stores, co ops and Boulder Yeah. so And every store I went to said no. Wild oats said no because they only wanted to carry, you know a national They only want to work with brands that could work nationally. So then I went to some specialty stores. Yeah. And they all said, okay, you know, we'll think about it. And then I went to the co op here and they're like, okay, drop off some samples. We'll get back to you And then I went to this store called Great Harvest Bread. Have you ever been to one of those Great Harvest breread companies? No No, haven't. It's a bakery, but they're franchised. Okay. and there's maybe fifty of them around the country. and there's one in Boulder. I'll never forget. I went into a good Sr Harvest bread. And they have like honey and maybe, you know, some some jams there like a little retail section I told him about the peanut butter and this guy Scott, Scott Creevy He, um, he looks at me like I'm like I've got, you know three eyes and he's like, you got peanut butter? He's like, okay He's like, Huh, interesteresting. He's like All right, I'll take it and I'm like Are you sure? That was it Wow. And he's like, yeah, he's like, you have any you have any now? And I'm like I'll be back in ten minutes. You'll be here, right? And so I went home And I had samples and things and I came back you know, and I had a sell sheet that I made that had pricing and then So Great Harvest spread was my first customer in Boulder And then then I got to the co op and then I slowly got into some specialty food stores. And what were what were your products? What were your like No. I had three products that I started with I I hadd honey, peanut butter. Okay. I'd honey almond butter And then I had cinnamon peanut butter And so when I first started The Omens were Natural. And then the peanuts were organic. and on top of that, what I was obsessed with was stabilizing the peanut oil So you wouldn't have that like thick layer of peanut oil when you open the jraw And the way that some brands solve this is by using palm oil which is what we use And honestly, when I first started, palm oil wasn't a thing When I first started, you know, I was I was trying shea butter. I was trying cocoa butter. You know, as I'm working on all these things, you know, palm oil is introduced as a hardened vegetable oil. And so it was now this new ingredient it's like Awesome It's a new ingredient. let's use it. Wow, it works. It's not perfect, right? If it sits in a hot car for too long, or if it Or if you don't add it correctly at the right temperature so it melts perfectly, it doesn't work, but it's good enough and it limits the oil separation, which I think solves a problem in the marketplace And Pommo, we should mention like I think that sort of there was a lot of controversy around Palmwell for a while because some palm oil is produced by They're cutting forests, right? And so there's controversy around rain forest degradation, but you can also get palm oil that is certified and that's sustainably grown, etcetera But at that time, you're talking about two thousand three. very few nut butters were using palm oil So long story short, we don't use a ton of palm on our products, but when you have a food product that has two or three ingredients You notice it And so peanut butter, people associate palm oil with a lot of peanut butter brands because there's only a few ingredients. and in a lot of other food companies they have more palm oil or cosmetics, but they don't even list the ingredients. And so it's a little unfair, but at the end of the day, We still use it, we own it, and we have to step up and do the right thing And so it's just a tiny bit ofalm oil to stabilize a peanut butter. Okaykay when you're going to Great Harvest Bread Company and these co ops and initially G me your pitch. What would you say? I'm a owner of a store and you come in and I'm like, I alm already selling peanut butter. What like Why should I sell yours? Right, So you have to know your audience, right? And I was so this I'd understand, you know, is it local that they really like Is it, you know, something that differentiates on the shelf Is it something that that's the highest quality premium? You know, like what do they you're sorry for you because you're just a kid Right. Right. do I remind them of their grandson? Yeah. And so So if I'm at a specialty store, I'd be like, look, this is the most premium top tier gy poupon nut butter you can buy and it belongs here in your store of all these fine cheeses and meats, right? Yeah. Or you go to a great harvest and say, lookook, you know, this is You can eat this with a spoon. You don't need to add anything to it. It can go on a slice of bread and you're good to go. You don't even need the jam because we have honey and we have cinnamon, or you go to a Whole Foods or to a co op in this case and say, look, this is a really unique product know that has differentiation for what you're already carrying In those first few stores, how much was a jar? And this is like a twelve ounce jar, sixteen ounce jar sixteen ounce jar, wanted to basically be the same as what was already out there. Right. Okay And you know It's tricky because when you're first getting started You know you can't price yourself too high even though you should So we're probably selling peanut butter for six dollars. and almond butter for eight or nine dollars. And u and not charging enough Right, your what do you think your costs were du a jar peanut but You know, probably four dollars. And so I was making virtually no money on any of these things And And it was it was a hobby This wasn't for me to make money. This was for me to build something that someday could be a business that makes money. For me it was real. I treat it as a business But I'm working on waiting tables. Now at this time in my life, I'm working at REI. which is a sports, you know retailer And I'm not paying myself. I'm paying my roommates, I'm paying the kitchen I'm working at. everyone else except me because I already have a job and I know that if this thing works, Eventually I'll get painid. And and you are in some of these stores How wereere you sell? I mean, how, I mean, if they're just sitting on the shelf in a store. How were people discovering them? wereere they? Did anybody buy them No one was buying the right. So I would, u set up a demo. so I would, you know dedicate time to set up a table and I would hand out samples And that's where the farmmer' market down the road became such a great avenue for us because you're standing at a table and you can about this thing. so imagine the farmmer' market was probably a really important sales channel It was it was so important. So so so now it's now it's into the winter and And it was tricky even getting in the farmer's market because you know, we're not an agricultural product that's grown locally Right, 'cause peanuts are grown in what? The sour or Yeahah. The ours are from Primarily Texas and New Mexico because it's a drier climate.. So The farmer's market says, you know, yeah, I don't know, you know, I don't think there's a good fit for us And you're like, oh, shoot, like what Well, I'll tell you what, you know, I'll make a deal with you. How about will'll come in early in the spring before all the farmers start to harvest their vegetables. and once all the farmers come in and the honey vendors come in, if there's no room for us, we'll leave And then we'll come back again in the fall when more space opens up because you'd rather be selling something than nothing, right? And then once I got in You know, and there was probably the first farmer's market a week or two. they kicked us out because there wasn't any room People complained. They're like, where's our nut butter And then all of a sudden, I was able to get a little corner you know, not a full ten by ten, but a little corner and I could, you know, slowly work my way in and become a regular What were people attracted to? The honey peanut butter, the almond butter Cinnamon butter, like what what kind of reaction are we getting from people It's the whole experience. like people just love to buy a product from someonees that they can look Look in the eye and be like, you made this? Wow, that's really special And the other thing that really helped guys is like We're the only nut but company there So it's not like you're at the store price shopping for what is the cheapest. You're like, well, I need peanut butter and there's the only one here And so that was really fun. The biggest learning for the farmer's market for me was two things number one, I realize can't make everyone happy Right? So eventually someone's going to come by and be like, you know what I don't taste enough honey in this You know what This is too sweet. T too much honey and then you know they're telling you, can you add less honey? you know? And you're like, you, oh, yeah, yeah, of course, I'll work on that. you know. And then after like a year, you're like, you know, it is what it is. And if you don't like it, I'm sorry. But I'm not changing it, you know? Be when you first launch, you want to make everyone happy. and you're like, okay, well, how do I create something that everyone's going to love. And then you realize, okay, I just got to put my you know, line in the handand. This is what it is. I'm not going to change it The second thing I learned which was so fun for me to learn was when I first launched You realize I didn't have like a plain peanut butter. Ething had a flavor to it. because that was to me, that was the big point of differentiation So you know, you have the farmer's market and someone comes along and they're like, oh my gosh, this is so exciting. You're brand new. I'm going to take the tour. I want to try them all. and maybe I had four or five different products because I would come up with some specialty ones like pumpkin pie or chocolate or something, you know. And so someone come me,, okay, I'm gonna try them all I'm gonna try them all and they'd be Oh the honey. Oh, that's really nice. It's really, really subtle, but I really like it. Oh, there's a maple, a maple almond. Wow, that maple's really compomiments the almonds. I really like that. and okay, here's another one. Oh, the pumpkin pie. Ohh, that's just too much nutmeg for me too spicy. Okay, what do I buy? I want to support you So I'm want to buy something, okay? So what should I buy? what should I buy Do you have just plain, plain peanut butter? like No, No, I don't have plane. like why would I have plane? You can get plane at the grocery store. Well, you know, I really like you and I really like supporting local and And I really want something I can have every single day, not just on a special occasion, like the cinnamon would be once in a while And then I was like, oh my gosh, well, that's interesting. So then the next week I came back with classic, right? Not plain. nobody wants something that's plain. Right. So it was called it classic. and guess what? It became our best seller becausecause people just wanted something simple. And now I'm scratching my head. I'm like, well, I thought the flavors are what was important P peopleople just want to support something that's local and that tastes good. All right, you're getting feedback from people and you're adjusting to it. But here's the big picture You're working at REI, you're waiting tables. you're making peanut butter in Denver and your demoing it at a farmer's market, at least one, farmers maybe two on the weekends That's a grind of a life like you're living off your other jobs Yeah. I'm I'm certainly Breaking even. you know, on good days. But I was having so much fun. L it was fun to be in a community of other entrepreneurs, of other food companies But I knew that it wasn't going to last forever. I knew I had to figure it out. and I didn't have a girlfriend. I didn't have a dog. this was all I wanted to do. So as I'm in the farmer's market, I'm like, okay, scale is what I need. And then when the farmer's market ended For me it was like, okay. Once I get into Whole Foods, like, Game over. You've done it You're just going to have this big company and Let's get the whole foods like that's the goal Okay. so that became my obsession is how do I get into grocery food stores And this when you see when the farmer' market ended just seasonally, it ends. It ends in dreirect right in like November or whatever the idea was and this is a time, two thousand five, two thousand six when you could walk into a Whole Foods, it's harder now because it's, you know, it's own by Amazon but you could walk in and get the store manager and they would you could get them to put a product in their store Yeahah like you could have that conversation. Was that? Did you do that in two thousand. Five or six, I mean or not quite yet So two thousand six was when I started to deliver to retailers. and here's how it started. had kind of an idea of how this might work And so then I walk into the One Whole Foods That was in our town ask who the grocery buyer is and that the buyer is you know at that moment in time stalking a shelf and And I walk up And I'm nervous and I'm in my twenties and And I've done this a few times, but not with Whole Foods And so I asked the buyer who's like I'm wearing knee pads and he's, you know, sock something in a low shelf ' my kid. Do you have a second? I ask you a quick question. And this guy's name's David, David Spice and he's like, looks up at me you it, spill it because I got a lot of stuff to do here. And I'm like, Hey, my name's Justin. I have a food company and I really want to sell it to. And as soon as I said that, you could kind of see I lost him, right? He's like, G I, you know, kid, I hear this five times a day. likeike He's like, all right, stands up. He's like, Look, here's what I need you to do. I need you to get into a food distributor called UNFI. You know UNFI is who distributes all of our food products. Once you work with them, then I can bring you in and Is that simple? I'm like, Okaykay, hey, thanks. I'll let you know when I get into UNFI. And so then I go to UNFI We can't get you just into one store because we have this big warehouse and in order for us to get enough ecomies of scale to deliver to enough stores, we need to be in at least thirty or forty stores, which is usually the whole region And I'm like, well, I don't want to be in the whole region. I don't have enough capacity for that. I just want to be in a few stores. And she's like, well, you know Maybe they'll make an exception and just work with you. and I'm like, well Okay, I get it. so It was going be harder than I thought. Then I go back to Pearl Street and I find Dave Spice, who's, you know, again working in the store And so the next time I came in, I was ready. like, Hey, Dav's Justin. Hey I went to UNFI and they said that they can't just deliver to your one store. So What if I come in and I'll check my own shelf and I'll deliver just what you need. And then I'll walk it out to the shelf and I'll stock my own shelf And so you'll never even have to worry about it. right? Well That all sounds great, Justin, but you know I'm nervous is a new product. No one's going to notice it. Are you going to be able to support it? And I'm like How about If I'm here every day and I'll do a demo And at the end of a month or two, if we don't sell enough jars that makes you happy, you can take everything off the shelf, give it to the staff, take it home And it's free. It's on me and you'll never see me again. And if finally he was like, oh my gosh, he wass like, Okay, fine. like take your jar, takeake it over to, you know, this person at scanning and let's get it set up in the system and We'll see you next week, but you're starting in this one store in Boulder I'm starting at one store and I thought that by getting into the store it would be this big unlock Once I was on shelf, I kind of thought, okay, everyone's going to notice it, it's going to be great And then like Nobody really noticed it. I had to stand there like three, four times a week and hand out samples people excited about it. But still like the internal optimist is like, okay, well, hey, this is just one store Let's get into thirty stores because then once UNFI has it, but you can't get into thirty stores if you're not doing well in one store well enough, right? And like, you know, so so you get into the store and maybe like You know, two weeks goes goes by and it's like, okay, well, I gott to get into another store because I have I can at least service fifteen stores So now you go to the Whole Foods across the next town over And you're like, hey You know, David over at Whole Foods Pel Well, yeah, he just brought us in. You guys should be carrying us here. They're like, well, you're and you and a fight? Oh, no, no, I'm gonna deliver. I'm going to stock my shelf, and I'm going to do demos. like, well, okay, well, if David has it, then I guess I guess we'll try it. And then, you know, you really leverage that one relationship. And then I would get into more and more stores and I would deliver to these stores And I would be kind of like Yeah, for me it was like, all right, well Pearl's doing okay You know, And these other stores, if I can get them to do what Pearl's doing and now I can get into thirty or forty of those, you know the target's always moving So now the target's moved from gettinget in the farm's market to getting into Whole Foods. All right, now I'm in Whole Foods. Now I got to get into UNFI so I can get into more Whole Foods and then then I'll made it. And so the target's always moving. And how many stores were you? I mean, How many stores are you able to get into just going store by store on your own and doing your own deliveries? So two thousand six, I'm like two or three years in. I could deliver to specialty stores I could deliver to natural grocers and I could deliver to wild oats into about ten to maybe twelve Whole Food stores So now I've got I've gotten into about twenty five stores. Wow So twenty five stores. Okay. so and at this point, I think you were you're ready to go to UNFI and they became your distributor,? This is like like around two thousand six, I guess. And you're now getting into stores all over like Colorado and Texas and New Mexico. U So at this point, like how much were you doing in sales? Were you or you breaking a million Yeah, no, we were probably around one hundred fifty thousand dollars in sales R And so you were really tiny tiny. Yeah Yeah. And and the thing about peanut butter is the velocity of it, right? So the velocity is how often it moves off the shelf And for a consumer You might buy peanut butter Once a month If you're a heavy consumer once a week or once every two weeks And so It just wasn't flying off the shelves like like a bar or an energy drink would because you'd have one every day So now I'm, you know, I'm a few years in. I'm working, you know now at REI. I'm You're still working at REI. still doing all this stuff. Okay, how many shifts were you doing at REI by the way? About three or four days a week. I work at RAI part time and mostly' mostly to maintain the minimum to get health insurance RAI they provide health insurance to you And at this point, I realize that This isn't working becausecause now I have real data. I'm like, oh yeah, I was a little overly optimistic on how many you know, jars I was going to sell my first year this pace It's going to take me a lot of stores to get to the scale that I need to to, you know, break even. I'm like, oh man, this is. So now reality is setting in And when I would get really now nervous or upset, I would go and exercise, you know, going a big bike ride, going a big trail run, you clear my mind, come back exhausted and just feeling refreshed the next day. And so I'm on a big mountain bike ride, you know? And this is now two thousand six is two thousand seven And I'm on a bike ride and I'm eating a squeeze pack of an energy Joe And as I'm meeting the energy gel Man, you know, this energy gel is good, but why isn't I really want peanut butter? Why isn't anyone putting peanut butter into a squeeze pack It just comes to you like that. Well, it makes sense, right? You're born these like I'm obsessed with something. Yeah. Yeah. I'm with peanut butter all day every day. Yeah. and here I am with a jel pack. You know, and I'm like, and I just put one and two together and it's like, whyy isn't anyone doing this? Holy cow. when we come back in just a moment, Justin quickly discovers why nobody is putting peanut butter in a squeeze pack and then decides Do it anyway Stay with us, I'm Guyi Raos, and you're listening to how I built this. 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Apple Card is a no fee credit card you can apply for right from the wallet app on your iPhone AppleCard has no annual fee, no late fees, and no foreign transaction fees. No fees, pereriod. Every credit card should be this easy Get started in the wallet app today subject to credit approval. Variable APRs for Apple Card range from seventeen point four nine percent to twenty seven point seven four percent based on credit worthiness rates as of january first, twenty twenty six. Existing customers can view their variable APR in the wallet app or at card. apppple. comot Apple Card issued by Goldman Sachs Bank USA, Salt Lake City Branch, terms and more at Applecard. com Hey, welcome back to How I built this. I'm Guy Ros. It's two thousand seven, and Justin has just come up with what he thinks is a brilliant idea peanut butter in a little squeeze pack so people can eat it on the go. And I'm like, do I find out if I can even make a squeeze pack So I u T Talked to a few friends. I've made a lot of friends now in the natural Foods community And one of them was the founder of Boulder Chips is national P potato chip brand and John Magio and I talk to John. I'm like John, I got this great idea. like How can I find out if someone can make it for me? He's like, Well, you know, just like there was for peanut butter, a contract manufacturer There's contract manufacturers for squeeze packs. Here's three that I found for you. They're the largest three in the country. You callall them up, see what they have to say. And so I'd call them up, I'd be like, hey, you know, my name's Justin. I have this natural foods company in Boulder, Colorado. I was hoping you could, you know, put my food product into a squeeze pack. Oh they like Yeahah, of course, you know, No squeeze packs too big or too small. Your squeeze packs are us. What are you doing? Oh wow, this is really great. I'm doing peanut butter. I'm doing almond butter. I want to do a chocolate hazel and they'd be like, whoa who whoa, you can stop right there. We're not going to be able to help you All three of them just said no, flat out, outright said no. They're not real if you Why Be of food allergies, the nut allergy, that's where it finally showed up. And again, these are companies that are making what energy gels or what like what are they? Everything, mustard, mayonnaise, ketchup air conditioner honeyoney sticks, anything that comes into a squeeze pack, you know, salad dressings these guys are doing. So they will not do peanut butter for obvious reasons because there I mean, I say this as the uncle of a kid with a peanut allergy. it seemed like every school, every daycare center, every youth organization was was banning nuts, like and it just would go on and on. So I can understand why some of these brands were like or companies were like We're not get we're not touching that because we, you know, people are freaking out about this stuff Yeah, the liability was too great and you'd have to label product process in a facility that handles or shares a line with and And you know nobody wanted to do that. and And at first As you can imagine, I was kind of devastated. I was like, o, I had this great idea and it was going to be so fun and now No one can make it. And then it was like Wait a minute Maybe if I'm the only one who can make it. I should make it. All right, well now of a sudden I'mergized o well How do I find a squeeze pack machine? I gott to make it myself and this is you know, this would be really interesting. And so then goalpost have moved again Once I get the squeeze pack, it's going to fix all my problems. Y anyyway, so I get I get really excited and inspired, and then I find out that these squeezeback machines, as you can imagine, are hundreds of thousands of dollars And so finally, like through calling around, there's, you know, I find a equipment broker who sends me to someone out of New Jersey This guy has a company called Protoack. and they basically would take these old machines and refurbish them So I started talking to him, he wass like, Well, you know, I got this machine that does one at a time Back in like the eighties and nineties, you'd open the Sunday paper and there'd be like this You know, squeeze pack of, you know, Perl air conditioner and like that it was that machine You know, and it's been sitting here collecting dust and I'll happily sell it to you and And I'm like, how much? She's like, well, it wouldd be about thirty thousand dollars and it's like, thirty. Okay, well, okay, so if that's thirty thousand, I'm going to need a kitchen to wire it into because it's not going to fit in the salsa company. I need one in Boulder. And so at this moment in time, I'm okay, well, to get that, I need seventy five thousand dollars. And I went out to my family. They didn't have any more resources for me I talked to a few angels and they were like, exxcuse me, a squeeze pack of peanut butter to do what? They're like I don't know too risky So I had nowhere to go The only place that I could go and God bless him again was my roommate who was helping me with the farmer' market. He was helping me make it at night And I went to his parents and laid down the idea, showed them the business plan And his parents loaned me seventy five thousand dollars. Wow then allowed me to go out and buy this machine Now I needed a kitchen And I found a kitchen facility in Boulder of a company that had just gone out of business. But it was too big of a facility. I couldn't use it by myself. You couldn't I couldn't put this in the salsa place. Correct. It's too big was a size of a small car was this squeeze pack machine Yeah. And so I was able to find another company that was also growing at that moment and they were a few years in called Bobos Oat bars. Yeah. And so Beryl and I The El Stafford, the founder Boboos, Yeah. We shared a kitchen together and we'd work like, you know, we hired some employees and we'd share them and on even days we'd make Boboos and on odd days we'd make Justin's and we had the squeeze pack machine now hardwired into this facility. And so I'm making these squeeze packs. Can I just ask s could be the game changer because now it's like runners and people doing outdoor activities. And I imagine because you have you're in forty stores, right, you could make the case, Hey, can we add the squeeze packets as another sKw? Is that right? Is that fair to say It is. And so I went to Whole Foods and I said, lookook, you know In Boulder You went to that Boulder. Okay. I have this great idea. Here it is, hereere's a sample. It's for athletes and it belongs right here with the energy bars. And I don't want to sell it to you in a five because I just want to sell it to a few stores and see how it does. I've been working this for the past year and a half. I'm so excited. It's going to crush Let's, you know, can I put Oh yeah, Justin, we see here all the time. Yeah, we'd love to let's put in an energy bar section. We'll put it right next to Lura Bars and it'll be great. And And it doesn't work. It doesn't sell. This is one store first of all in one store. Okay. and so in the energy bar section, assuming this is where people are going to look for this, right? Because you want a quick hit of energy Right inststead of getting getting or whatever gel that I was using it for exactly. Right. Okaykay. makes sense. and it and and it doesn't, it doesn't move So after a few months buyers like hey just, you know, these Swese packs aren't really moving. I'm probably going to have to ask you to remove them because you know, I feel like the test is over and we're probably not going to bring them in. Well And to me, this the squeeze pack, this was the big idea. This is what was going to, you know, elevate the brand and set us free and put us into every, you know, REI and running store and you know, and be this big Athlete food And so I was devastated But instead of just you know, pulling it off the shelf and giving up, I literally stood at the shelf watched people shop for, you know, half an hour and And it came really clear to me that when people and I know this is this isn't like, you know earth shattering news When people go shopping, they're in a rush And so it's so hard to get people to try new things. And the problem was, peopleeople would see it, they'd pick it up, they'd be like, all, this is a squeeze pack where my bars are It says protein on it, it says energy on it. I don't understand like what do I do with this? What is it? Like I don't And then they would just ignore it And so at that moment It was like, oh my gosh Rather than try to force this to be an energy food, Like, people don' know what it is it's just peanut butter in a squeeze pack I should just sell it next to the jars And that way people will, you know, they'll know what it is instantly. It started to work peopleeople started to buy them And what I started to learn was the number three reason why people were buying the squeeze packs was for, you know, portable protein, right? And I was like, oh, well, that's why I created it. I'm glad put it on fruit, put it on a, you know, on piece of toast. That's great The number two reason I learned why people were buying them was for portion control. And then the number one reason why people were buying the Seez pack for a trow size. They're like, you know what? I saw a squeeze pack of almond butter and I've always wanted to try almond butter, but it's too expensive and I don't want to take the risk, but you know, I'm gonna to buy this squeeze pack and see if I like it. And you know what? I really like almond butter. Turns out, I like your almond butter, so I'm gonna buy your jars And then what happened is the squeeze pack became this tral vehicle. So now our jars that were weren't selling that well started to pick up It's kind of crazy just by moving it from one aisle D different ale that it actually has that much of an impact. Like it just shows you how It' kind of crazy consumer behavior is, right? It's the same product that's just moved two aisles down or three aisles down I mean, it was really like An eye opener for me, how lucky I got So now I'm like, okay, all this is working Now I'm like Oh no, like the word is out. I couldn't patent protect it. I didn't invent peanut butter. I didn't invent the squeeze pack I couldn't protect it. I couldn't do anything And now my secret's out and people know and know what if this natural food company starts making squeeze pack? And what if what if a squeeze pack company starts, you now paranoia really like grabs ahold of you. And I'm like, okay, well, I got to raise money and I got to move fast. And that's when I started to continue to revamp and rewrite the business plan and then really go for angels And I guess someone who helped you raise money was a guy named Lance Gentry Who you soon brought on to help manage the business to manage Justin. and I guess he had a lot of experience. I think I think he'd been a former executive at Izy Sodaass, which which was another brand started in Boulder, right Well, so it took about a year But here's where things went a little interesting. Lance meets me and he's like, Hey, I'm looking for my next career. I really like what you're doing here. I think I can help you. And I look at him and I'm like, good because I could use some help. Yeah And so then we get together and he's like, all right, well I tell you what, you need to raise money. because you can't afford me, and I couldn't. And he's like, you probably need a million dollars and that's going allow us to hire a few more people, including me And then let let's rebrand the packaging. Let's update it. so it looks a little different. And I'll help you go out there and try to raise the money. He was going to connect you to investors. Yes So all right, a million dollars Proving this out, right? At this time, you've got UNFI distributing your stuff And are the packets also being distributed to forty stores or they just in that one wholele food? I had to go to every single store and Tal it in And you'd have to like work this system and get people to want to help you The biggest advice I can give to an entrepreneur who's doing this I kept a notebook in my notebook, was the names of all the stores and the people who worked in those stores So when I would walk back into Houston, Texas, Whole Foods, I hadn't been in a year. I would have the names of all the people I'd met a year ago, and I'd memorize the names before I walked in the store and I'd write a description of what they looked like and maybe kids they had or where they grew up and I'd walk into that store. I'd see that person, and I'd call them out by their name and tell them a little story about what I remembered and it Yeah and they would be like, Ohh my God, if this guy remembered me, the least I can do is help him Yeah And it like it was so important. All right. so you have this goal to raise money and and you've got the nut butters and a lot more Whole Foods and you've got the packs and I'm not, you know, going to surprise anybody here. you do raise the money. I think it took you about probably about a year But you raise the million dollars from angel investors So now Lance joins you Right to help you. And what is he you're the CEO I'm assuming is he does he take an operational role or more of an advisory role or what Yeah, Lance was he was everything, everywhere all at once. And wherever we need help, Lance is there If it's working on production, you know, Lance is there helping with production. If it's meeting with a retailer, Lance is there. If it's marketing is his genius So Lance's title was president, you know, I was CEO, but really like, was working for him Because he knew what he was doing and I was learning. Did you like that? Did it feel like, okay, if finally there's like a grownup here to help me Yeah, I really did enjoy it. I felt like I didn't feel like I was alone anymore. felt like I had someone who is not only more talented than I was, but was in it deep as I was and felt like a real partner in the business And did you start to see results right away? Was Lance like? was his wasas he able to scale fairly quickly where you start to see like, I don't know fiveive million dollars in sales that year or something like that. Right away, the first thing that happened was we got into Starbucks with a squeeze pack And they put us into a bistro box, which is we're still there. It's like their protein plate little right grab and go But in order to get into Starbucks, we had to have a food audit And our little shared kitchen space with Bobos wasn't cutting it And so we had to find a food manufacturer who would overnight take our existing peanut butter making process and put it into their facility where they have full sanitation team parts and maintenance team. They have employees that are, you know, come in all the time. and so we literally took this whole room and moved it into their facility and they made a bunch of other food products there And then they had the credentials and the licensing and the auditing that Starbucks needed in order for us to be a customer of theirs. and I kind of like told them we already had these things, hoping that if they accepted it, this food company would want to bring us in anyway Right. So they take your equipment, they're running it, okay So you start to see, I mean, Starbucks huge deal. It sounds like Lance is a transformational guy business is growing you're now at like two thousand nine, you've raised the money, you're getting into twenty ten and I I think that year was a was there were a lot of setbacks. It's actually not the year you expected. What happened So So twenty ten just set this the set the stage. We're in Starbucks nationally All right, We are in Whole Foods nationally We are now getting a lot of cononventional retailers like Kroger and Target to notice us And in Lance who is My mentor, my hero and kind of This everywhere all the once guy is diagnosed with brain cancer and has two young kids And then within a year passes away And so now it's twenty eleven. twenty twelve in Lance is not only like notot with the company, but he's dead likeike he's gone. Did was he ill when you started working with him No, it was crazy just suden. One day he had a headache. and then The headache lasted three days And then he went to a hospital and then they did a brain scan And they found a tumor and he had no idea So then, you know at that moment, Not only did we have to grieve And as a company, there's maybe there's, you know, eight of us you know, pause what we're doing and really like honor someone who is a deer friend of ours and'd be there for his family. and he was a larger than life human. and so the whole community was really in shock but we had to, you know, And I had to and I had to step up into a really like powerful leadership role where had to show empathy and encourage, but also rooll up my sleeves and be like, all right, you know, we've got to move on becausecause the world isn't going to wait for us to be ready And that was a really, really hard moment for me And then at that moment in time My wife was pregnant with our first And so A little bit after he passed away We brought a child into the world And so now I have you know, a business I'm running on my own newborn and I think I'm no longer working at REI now. so I left REIs there for five years And all this stuff's happening all at once So I mean, this becomes your focus, right? And without Lance, I mean Were you on your own or did you have other people that could sort of you know, that you could lean on and rely on for advice Yeah, the beautiful thing about the Boulder community is I had a lot of great people I could lean on for advice and get you know, support from But at that moment, I kind of knew like you know, I had a window of opportunity and it was Closing because You know, people were noticing us. We now had a national brand and we are in Starbucks and people are like, okay, this squeezeback's a real thing And so now I felt like, okay, I need more support. I need another adult in the room And that's when I started to look for institutional capital outside investors, ye or bigger more money and maybe a private equity or somebody like that. Yeah All right, so the The packets are working and you've got the nut butters. and you decide to move into peanut butter cops as Right A Really interesting idea, right? An elevated version of Res's peanut butter cups, but like Rhes's peanut butter cups, it's iconic. I imagine it dominates the category U but you felt like, hey, this could be the next thing, imagine, But it's also a shift, right? because it'ss it' kind of going into candy Like you're going into a slightly different category Yeah. so the idea was If Reese' can't sell a peanut butter cup into Whole Foods or into any natural food store someone should And why can't it be Justin's? We already make the best peanut butter. Reeseus wasn't even a competitor And where it really caught me by surprise two things. One is the velocities on peanut butter cups are much higher than jars and even squeeze packs. You know, people will will eat cups. every day if they could. Hopefully they don't. But so the velocities were higher and then people would would come into the franchise in a whole new way. So now we're in a different part of the store They see a peanut butter cup. they buy it. They're like, wow, this is really good. Now they're walking the store and they're in the peanut butter ale. They're like, Oh, these guys make make peanut butter and almond butter Now is the surround sound in the store and an amplified both sides of the business in a really, you know, critical time Okay, so you're so you've got these out there, but you want you need to scale and grow and you know in the back of your mind, you're looking for institutional money What did you have to do to attract a big institutional backer who is going to put in significant cash to help you guys really scale. because you're, you know, you're doing twenty million a year in twenty twelve still small It may be attractive to a private equity group or a VC firm or something like that. So We had a really you know, we had a fast growing company and a category that was notoriously stagnant We had an innovation with the Squeeze pack. and so We had a really good brand story. And so we had an opportunity where we could really interview and partner with who we wanted to partner with. And I really wanted to work with a local group because I really felt like supporting local the right ecosystem for us Th I met a group out of San Francisco called VMG And Dang it, like These guys They specialized in, you know, in Kine Bar, pretzel Crisp, pirates booty. They knew exactly how to scale food companies. They had a great track record. And so I didn't take the best deal that was offered I took the best partner that was there that knew how to help me scale And it requires a level of sophistication to make sure that everything lines up that you know, you have to hire that make sure you have the right people and know how to do that When you brought in when VMG I think they invested about forty seven million dollars initially Now you've got private equity firm behind you, which is great because there's cash, but there's also complications. You've got to It's a different beast now and they need a return on it What kinds of challenges did it create? I mean, now you've got it's not just these small angel investors. It's a big professional private equity Yeah. so We're about a year in And one of my board members, Peter Burns, who had just left Celestial was ready for his next thing. And so I was able to recruit him to come and become the CEO And at first I was like, hey, let's be co CEOs. And he's like, okay. And then I saw what a really amazing, fully functioning like CEO can do And I was like, oh my gosh, likey man, this is yours. L you can have it. I'm going to focus on quality, on culture, on marketing. I'm going go to all the sales meetings, I'll be there for trade shows. and I focused on my stuff which was making sure that our messaging and quality was right and tight. And this is the magic of having Peter because Peter knows how to set expectations and how to manage you know, large private equity groups expectations on how things are going to happen and how we're going to grow the And he had the experience to do that, which would have probably eaten me up And so he was he was the pro And he, I guess he becomes a co chief executive and you guys are now working together And I mean What were you able to do with that, I mean, I imagine a lot with that infusion of cash? Yeah. So what we did is we hired really intelligent people who had experience working in food companies that were scaling as fast as we were And so we're developing new products, getting into more stores And we are trying to grow outside of just groceries. So', you know, we're getting into REI, and it's everything is just it's just working. It was like it took fifteen years to push this boulder up the hill and now all of a sudden it was rolling down the hill Did it also drive you to start thinking about selling No, it didn't. you know, I was addvice I got early on. which was You build the best company that you can build Go out and try to sell a business, haveave somebody want to come and buy it And so I was so head down, all of us so head down focused. We knew that someday we'd have to take out debt to pay back our investors or go public or get acquired. We knew that was in the horizon But we were only three years in with VMG and they generally five years is when they laid They say, okay, let's start to think about what's next guys. We need our money back So we're three years in and we were just Building a really healthy business and And larger companies started to reach out to us to say, hey, we love what you're doing We would love to know if you'd be open to conversation to be acquired. And that's what triggered a process. to kind of figure out, okay, maybe this is a good time for us And it was Hormel who right they initially came to you and eventually would you guys would come to terms and accept an offer in twenty sixteen. they bought the brand for two hundred eighty million dollars It was certainly a great outcome for even for the VMG investors who, you put in forty seven, forty six million dollars a few years earlier Um What was your? I mean, you would end up staying with the company for like another five or six years. But before we get to that point, I mean, I can imagine It was I mean, thirteen years you were doing this. So this was really now a chance for you to U and maybe you were able to take some money off the table when when VMG made an investment. But now here was a chance for you to really see like some significant cash from thirteen years of work Yeah, it was it was overwhelming And it was It was complicated, right? So it was the most Joyous moment of my life to realize this great opportunity to set yourself free financially. and everyone in the business was an owner, every single person had an equity stake. So we changed everyone's life in a meaningful way But at the same moment, I had sold out becausecause you know, when you're a small independent business in a liberal values oriented organization, being independent and being, you local is so important. And when when a large company buys you kind of feel like you've sold out But what I did, which I'm proud of is I stayed for five years to learn We stayed in Boulder and everything kind of continued on in a great way. And here's what's interesting If someone's going acquire your company and they want to scale it and grow it and turn it into a larger company I would like to learn and figure out how they what the unlocks are so I can maybe either do it again or help other companies achieve that. So I was really excited to stick around and to learn anyway. And were you going to be the CEO or what was the role you were going to play That wasn't even an option. I was going to be you know, kind of the founder on the sidelines, but I would input with innovation and with purpose and with mission and culture and things All right, you ended up staying with Justin's Rnder until twenty twenty one and then you took a position at Rudy's organic bakery that makes gluten free bread and organic bread. But I'm curious about what happened in your view to Justin's maybe after you left or even as you were leaving because It was struggling. like Hormel did not, I mean, they they recorded you know, losses, they were not able to for whatever reason, accomplish what they want to accomplish with the brand. What's your take on what happened To Hormel's credit they're I don't know, a six billion dollars company. They've been around one hundred and ten years. They clearly know what they're doing. They're good people who run that organization And Justin's was such a small company They just didn't know how to run a company of that size. And then when they integrated it into all the functions of the Hormel portfolio The people there didn't the focus on the Justin's brand because that wasn't paying their bills, you know, skippy and Denty Moore Stew and Spam was paying the bills. and so Justin's didn't get the focus it needed to be successful To their credit, the Justin's brand It didn't fall off a cliff. they didn't change all the ingredients. they didn't try to turn it into skippy But it didn't grow. It's just kind of been rozen Right from when it was acquired to right where it is today, it's just been on cruise control And so during COVID I wasn't being utilized. I wasn't helping the company. I was maybe even getting in the way And so it just didn't make sense to continue to stay there, especially when you know, a company like Rudy's really could use some help and use support All right, so you are kind of you sort of move out of Justin's. And I guess, I mean, you're now at Rudy's and know working on this new project, helping them as a advising them U And I'm assuming you thought that was kind of your your life with Justin's Nut butter was done That was that chapter was ended. Is that fair to say It's interesting. So yes and no. So When I first left Justin's pretty upset. It's like a bad breakup. You were upset because you felt you were kind of marginalized during COVID Yes you left in a bad way