The Exchanges

Q And so, tell me how you started. I mean, what did you just buy a bunch of, like, tomato paste and some spices and, you know, just simmered it down?

A You know, the way ketchup is made industrially is pretty difficult to replicate at home, because it's essentially a rehydrated paste. But, If you want to make it at home, you start with whole tomatoes, much like you're making a pasta sauce, and you just reduce, reduce, reduce. So we found these recipes, and we bought a bunch of ingredients. And, you know, we were just throwing stuff into the shopping cart, partly because we knew we wanted to make a bunch of different classic ketchup formulas to test, but also we wanted to test some flavors, some spicy ones. We had a misguided idea around a blonde ketchup, and we went back to Scott's apartment, and we cooked them all there. And we just, we just spent days cooking ketchup.

AI assessment note: “we found these recipes, and we bought a bunch of ingredients”

Q Mark, you faced a giant competitor, Heinz, with your ketchup with Sir Kensington's, and of course, Lucas is facing the, um, impending arrival of Chipotle, a 150 feet from his taco shop, um, which is a, obviously a massive multi-billion dollar, you know, empire. Um, any, any initial thoughts before we dive into his question?

A Well, first of all, I'm happy to hear that you made it out of the pandemic, and you have a concept that's working, so congratulations, because a lot of restauranteurs and chefs did not, so you should feel at least proud of where you've gotten to. I think the, you know, at the highest level, like competing with a monolith, like any major company, you just have to recognize there are some things that they do very well, and some things that they would just never do, you know, and the things that they do very well are Systems, routine, predictability, dependability, and usually cost and price, right? So that means they're very good. Chipotle is an excellent example of a restaurant that has managed to maintain the expected level of quality at significant scale, but no one would call it their local taco spot, right? I mean, what Chipotle is not good at is they're not good at creating a local integrated community feel in any of their stores, and so, you know, my initial instinct is Don't compete with Chipotle doing what Chipotle does. Chipotle is going to out Chipotle you 10 days out of 10, right? They've, they've built the machine to do that. But when you go into a local restaurant, you expect to have a local feel there, whether that's, you know, local performers or musicians, local additions to the menu, or even a little local market there. These are just random examples of how do y…

AI assessment note: “my initial instinct is Don't compete with Chipotle doing what Chipotle does.”

Q went to mayonnaise, um, and then, and then a bunch of other condiments, um, and actually crazily enough, I mean, the, the, the ketchup was eventually discontinued in 20, 23 because the mayonnaise and the other condiments were doing better. What, what, What kind of lesson did you learn from that, you know, being, sort of being willing to pivot or, or to really branch out from the original product?

A Yeah, we spent three hard years doing nothing but making and selling ketchup. And there were many times where we felt like the business would, would die that way because the traction on the ketchup was not as fast as we wanted it to be, or, you know, the adoption was not where we expected. And getting into mayonnaise was partly because we felt like we had to do something to try and pivot and save the company. Also because we were getting requests from it, from retailers, and as soon as we launched it, it really took off on its own. I mean, we were selling more mayonnaise within six months than we were selling after three years of selling ketchup. And one of the things I think we learned from that is maybe the most obvious lesson, you don't know what your best-selling product is going to be until after you make it.

AI assessment note: “you don't know what your best-selling product is going to be until after you make it”

Q Um, Mark, what, you, you launched, of course, into this incredibly competitive space, not, not crowded, because ketchup's not crowded, but it's very competitive, um, obviously dominated by, you know, and, and mayonnaise, too, by big, Multinational brands. How, how did you guys think about competing with those brands, or did you think that we're not even competing with them at all? We're not going after the same customer.

A We definitely recognized that there was competition, but I don't think we saw Heinz as the big, scary competitor, if that makes sense. If anything, we saw inertia as the competitor. People are on, you know, they're not impulse buying different catch-ups every week, and so the real competitor was Habit. And so we thought about how do we break a habit rather than how do we switch people away from Hines? And so most of what we did at the very beginning was get in front of people so they could taste it. So that was doing demos in stores, most of which at the beginning, Scott and I did ourselves, or we would be on restaurant tables or hotel room service trays, because those are opportunities for people to actually taste it. Because at the end of the day, what we were really trying to build was a taste, an emotional taste experience. And if it's just sitting on a shelf, and it's one jar out of 50, and people are on autopilot anyway, that's no way to get someone's attention. We really had to cut through the noise, and so everything we did was about how do we cut through the noise.

AI assessment note: “I don't think we saw Heinz as the big, scary competitor... we saw inertia”