The Exchanges

Q of just experimenting, until you got to the point where you were like, okay, I think I want to turn this into a business. What then did you do? Like, did you write a business plan? Did you save your money from tips? Like, what were all the steps you started to take to go to the next step, which is like, okay, this is going to be a business?

A Yeah, so the first thing that I knew I had to do was write a business plan. And 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 library and, and I wasn't intimidated to go to the library cause I, you know, cause, cause I wasn't a student there. In fact, I felt like a student cause 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, as I'm writing the business plan, that's when something unlocked that really gave me a competitive advantage.

AI assessment note: “the first thing that I knew I had to do was write a business plan”

Q into peanut butter cups as, right, a really interesting idea, right, an elevated version of Reese's peanut butter cups, but like Reese's peanut butter cups, it's iconic, I imagine it dominates the, the category, um, but you felt like, hey, this could be The next thing, imagine, but it's also a shift, right? Because it's, it's, you're kind of going into candy, like you're going into a slightly different category.

A Yeah, so the idea was, if Reese's can't sell a peanut butter cup into Whole Foods or into any natural food store, then someone should, and why can't it be Justin's? We already make the best peanut butter. Reese's 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, than jars and even squeeze packs. You know, people will, will eat peanut butter cups Every day if they could. Hopefully they don't. But so the velocities were higher, and then people would be, 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 aisle. They're like, oh, these guys make, make peanut butter and almond butter. Now it was this surround sound in the store, and it amplified both sides of the business in a really, you know, critical time.

AI assessment note: “if Reese's can't sell a peanut butter cup into Whole Foods... then someone should”

Q bakery that makes, uh, 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. Um, they were not able to, for whatever reason, accomplish what they wanted to accomplish with the brand. What's your take on what happened?

A I think to Hormel's credit, they're, I don't know, a six billion dollar company. They've been around for 110 years. Like, they clearly know what they're doing. They're good people who run that organization. And Justin's was such a small company that 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 have the focus on the Justin's brand because that wasn't paying their bills. You know, Skippy and Dinty more stew and spam was paying the bills, and so Justin's didn't get the focus that it needed to be successful, but to their credit, the Justin's brand 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 frozen right from when it was acquired to right where it is today. It's just been on cruise control, and so during COVID, Um, 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, could use some help and use support.

AI assessment note: “when they integrated it into all the functions of the Hormel portfolio, the people there didn't have the focus”

Q Um, alright, so you get enough data to, 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?

A I wrote the business plan for friends and family. The idea was 35,000 dollars was gonna, was gonna 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 shoebox of, 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, I would go back to Western Pennsylvania and visit with my family. And, um, and you can imagine the, what's the right word here? It wasn't disappointment. It was confusion. When, when you You know, are studying to become a lawyer, and then you move to California, you know, and I had a fantastic Jewish grandmother, Gladys Gold, who, when I went to university, I was on work study and financial aid, and I had 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, I move out west, move to Colorado, and I'm waiting tables, and everyone's, and I'm like, yeah, I'm getting closer to going back to school. You know, I'm in a college town now, and everyone's, so then I come home, and I'm like, hey, I've, I've got something I want to show you guys.…

AI assessment note: “The idea was 35,000 dollars was gonna, was gonna buy me a grinder”

Q Right, okay, it makes sense, and it, and, and it doesn't, it doesn't move?

A So after a few months, the buyer's like, hey Justin, you know, these, these squeeze packs aren't really moving, right? I'm probably going to have to ask you to, to remove them because, you know, I feel like the test is over and we're probably not going to bring them in. And, um, 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, I was devastated, but instead of just You know, pulling it off the shelf and giving up. I, I literally stood at the shelf and 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, but 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 people would see it. They'd pick it up. They'd be like, all right, 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't know what it is. It's just peanut butter in a squeeze pack. I should ju…

AI assessment note: “these squeeze packs aren't really moving, right? I'm probably going to have to ask you”

Q know in the back of your mind you're looking for institutional money, um, What did you have to do to attract a big institutional backer who was 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 2012, still small, but maybe attractive to a private equity group or, or a VC firm or something like that.

A So we had a really, you know, we had a fast growing company in a category that was notoriously stagnant. We had an innovation with the squeeze pack. And so we, 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 was the right ecosystem for us. But then I met a group out of San Francisco called VMG. And dang it, like, these guys, they specialized in, you know, in Kind Bar, Pretzel Crisp, Pirate's 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, make sure you have the right people and know how to do that.

AI assessment note: “we had a fast growing company in a category that was notoriously stagnant.”

Q of trends are you, are you noticing or seeing in terms of sales and consumption? I mean, are, are people sort of Back to consuming Justin's nut butters in the same way, you know, because people aren't making school lunches for kids as much, but people have more time, for example, to exercise, and also they're eating at home, so are you noticing any trends that you hadn't seen before?

A Yeah, and it's fascinating because one of my roles is innovation within our organization, so it's trying to guess and to understand the things that I need in my daily life. The trends we're noticing are People aren't shopping the stores as much right now, right? You're in and you're out. So a lot of the impulse purchases have been flat, if not declining. So some of our chocolate items that were single serve aren't doing nearly as well as the chocolate items that are in multi-backs. Same goes with our jars are doing really well because it's something you can take home. Our squeeze packs aren't doing as well as the jars because it's more of an on-the-go activity, and I feel like people aren't as on-the-go as they are right now. They're at home, and they can take a A spoonful of almond butter or peanut butter rather than have a squeeze pack or something. And so we've noticed that a lot of the trends are at home. We've also positioned ourselves well with a lot of retailers by being a part of their, their online kind of shopping programs. Um, consumers aren't going into stores as often. And so the brands that have leveraged themselves with the online platforms, the Instacarts and whatnot are seeing success with that as well. And that was something that caught me by surprise. But now I get it, right? That's part of the future.

AI assessment note: “Our squeeze packs aren't doing as well as the jars because it's more of”

Q area and begged them to have some time on their line, and I guess you got like Overnights and weekends. And you basically spent three years just packing your own nut butter into glass jars. And that was not sustainable, right? It was not profitable. It was not sustainable. It was just a grind. How did you keep going? What, what made it, what made you not just give up?

A A, I had a goal. I knew what numbers I needed to achieve. And I had a plan on what retailers I needed to roll out to, to achieve those numbers. And it was the optimism that I had from the local community. Boulder's a great community. They support local. They support natural and organic. They support the entrepreneur. And I also realized that I'm not really a skilled operator. My, my passion and skill is outside of the manufacturing, but I knew that I had to hit certain volumes in order to get to a manufacturing facility where then I could focus on other things, sales, marketing, and growing the brand. And so I really worked really hard knowing that There was a light at the end of

AI assessment note: “A, I had a goal. I knew what numbers I needed to achieve.”

Q All right, you're getting feedback from people, and you're adjusting to it, but here's the big picture, right? You're working at REI, you're waiting tables, you're making peanut butter in Denver, and And you're demoing it at a farmer's market, at least one, farmers maybe two, on the weekends. Like, that's a grind of a life. Like, you're living off your other jobs.

A Yeah, I'm, I'm certainly breaking even, you know, on good days. But I was having so much fun. Like, 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. I, I, 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 gonna have this big company, and let's get to Whole Foods. Like, that's the goal.

AI assessment note: “I'm certainly breaking even, you know, on good days. But I was having so much fun.”

Q All right. Here's another question from Facebook, uh, Stephanie Leisner. Stephanie asks, now that more competitors are coming up with their own natural organic versions of nut butters, how does Justin stay differentiated in the brand of choice?

A That's a really tough question. It's one that, you know, I haven't had to think about before. And so right now there's multiple ways. Number one, we have to stay consistent. We have to continue to deliver a high quality product. We can't take any steps backwards because that'll give a consumer reason to leave. The second thing we have to do is be better, continue to create better products, innovate the new categories, and I think the most important thing is really have a greater purpose, that buying a jar of almond butter, not only is it good for our bodies, because it's a high protein plant-based product, but we're supporting farmers, we're supporting pollinators, we're supporting hunger relief programs, we're supporting non-GMO, organic, regenerative, all the things that are going to restore balance to our bodies and the earth, and I think purpose is really important.

AI assessment note: “right now there's multiple ways. Number one, we have to stay consistent.”

Q they invested about forty seven million dollars initially. Now you've got a big 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, 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 group.

A Yeah, so we're about a year in, and one of my board members, Peter Burns, who had just left Celestial, said, Was ready for his next thing. And so we were, 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, like, Hey man, this is yours. Like you can have it. I'm going to focus on quality, on culture, on marketing. I'm going to go to all the sales meetings. I'll be there for trade shows. And I focused on my stuff and 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 company. And, and he had the experience to do that, which would have probably eaten me up. And so he was, he was the pro.

AI assessment note: “Peter knows how to set expectations and how to manage You know, large private equity”

Q I mean, when you started selling nut butters, you weren't making a whole lot of money, and I don't think you were profitable, but, but how did you know that it was going to work, that you should continue? Was it just people saying, this is awesome, this is so good? Was that basically it?

A You never know, right? I mean, you never know. And I think it's the law of attraction. I think that if you think about growth and you think about success and you'll find the people that'll help encourage it and promote it. I was always thinking that this was going to work. I just didn't know how or when. And, um, and let's face it. I got a lot of encouragement. I mean, people were like, wow, this is really great. This is a great idea. You know, I got a lot of how come no one's ever done this before. And those really gave me a lot of A lot of encouragement to continue. And I also got a few people who are peanut butter. Why would you go into peanut butter? Imagine guy, like, here I am. I wanted to be a lawyer. My parents were, oh, Justin, our son's going to be a lawyer. We're so proud. And then I decided not to go to law school, jump out of the LSATs. You know, I graduated degree in environmental policy. I moved to San Francisco Bay Area, and I worked at a restaurant in Point Reyes, Station House Cafe, worked at that restaurant for a year, moved to Colorado. My parents are now, oh, my, our son, you know, He's confused. He'll figure it out. And then I come to my mom and dad and I go, mom, dad, I figured out what I want to do. Son, you're going back to school. You want to be able to, no, no, I'm going to make organic peanut butter and almond butter. And my parents were like, oh, wh…

AI assessment note: “I got a lot of encouragement... gave me a lot of encouragement to continue”

Q What were people attracted to? The honey peanut butter, the almond butter, the cinnamon butter, like what, what kind of reaction were you getting from people?

A It's the whole experience. Like, people just love to buy a product from someone 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, like, we're the only nut butter 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 realized you 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. Or you know what? This is too sweet, too much honey. And, and, and then, you know, they're telling you, can you add less honey? You know? And you're like, 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, because when you first launch, you want to make everyone happy. And you're like, okay, well, how do I create something that everyone's gonna love? And then you realize, okay, I just got to put my, you know, line in the sand. 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…

AI assessment note: “It's the whole experience. Like, people just love to buy a product from someone”

Q So, alright, a million dollars, You, you're proving this out, right? At this time, you've got UNFI distributing your stuff, and are the packets also being distributed to 40 stores, or are they just in that one Whole Foods?

A I had to go to every single store and talk it in. You'd have to, like, work the system and get people to want to help you, and the biggest advice I can give to an entrepreneur who's doing this, I kept a notebook, and 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 a 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 look 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 would Blow their minds.

AI assessment note: “I had to go to every single store and talk it in.”