The Exchanges

Q I think it, it ended up lasting about 18 months in total from the time you launched to the time it, it kind of fizzled out. What happened? Why, why did it fizzle?

A When my investor told me he wanted money back, I said, I can't give you your money back. It's all in frozen inventory. I'm like, I actually need more money to sell it. I have no way to tell anybody about this. And so the arguing went back and forth and it got ugly to say the least where I, I didn't like some of the threats that were coming my way. Um, and so I, I, I packed it up. I actually ended up walking into his attorney's office and handed him a Terribly written piece of paper where I just signed over the business to him and I said he could have all that inventory and the business because I don't want to do this with him anymore. Um, and so that was that.

AI assessment note: “I just signed over the business to him and I said he could have all”

Q of buyers for these big chains, whether it's Whole Foods or Target or whatever, is they don't always discover brands. It's not always their job. Their job is actually to manage risk, right? And to, to, to focus on velocity. You're, you're basically, you, you want to show that by bringing this product on, they are de-risked in a sense. Is that, is that a fair argument, Rashid and Pete?

A Oh, it's absolutely. Um, you also want to be able to have a good sell story. And I think one of the stories that, that, um, Rashid and I were able to get with chomps, it was from the data that we had was incrementality, meaning we're bringing new customers to the set. You need to be able to find a way to tell that story to the buyer, because they need to know that you're not just going to be cannibalizing. If he's going to take somebody else out, another brand out and put you in and sales stay flat, what's the point? Right. So he's got to figure out, okay, I'm going to put them in and they're going to bring new customers to this set that were never shopping here before and grow the category. So like, that's the name of the game.

AI assessment note: “Oh, it's absolutely. Um, you also want to be able to have a good sell”

Q a while, but then probably, like, a lot of those products, you saw a dip because, well, people were going to, weren't going to the gym, and maybe people had a chomp stick in their bag, in their gym bag, and people weren't, you know, they were in their house in their pajamas, right? And, and you, and I think you did see a dip in twenty-twenty. In sales, right?

A Yeah. So we saw that massive spike that you mentioned, then the rug got pulled out from underneath us, you know, because we're very, we're impulse, we're an impulse purchase, right? Like you're, you're at, we're at all these registers at all these different, uh, retailers. And if you suddenly see a huge drop, 90% overnight and foot traffic, that hurts. And so your product's going to stop moving. Um, on top of that, not being an essential item, um, We're not the paper towels, toilet paper, whatever, you know, other items. We're just a snack. The distributors themselves were, were not even saving room on the trucks to, for products like ours. So they were either just sitting in their warehouses, not making it to the store, or they just stopped ordering. And I think as soon as everything came back online in terms of like distributors having more of that, that capacity and other retailers opening those doors back up, allowing more people to come into the stores. We saw all of that demand come back and then some, and it, things just blew up. Like the brand just kept getting bigger and bigger and faster than we ever imagined. Um, and we hit a production capacity with our co-packer.

AI assessment note: “Yeah. So we saw that massive spike that you mentioned, then the rug got pulled”

Q And Pete, you were, presumably, some days you were out showing potential clients' apartments, but then you'd race back to the apartment and fulfill orders and pack them and ship them?

A Yeah, so I, um, well, at that time, like, I was kind of slowly weaning out of real estate and doing more and more of the chomp stuff, and I just realized that this thing has taken off, you know, faster than I ever imagined, but we would, ah, I had a Jeep Grand Cherokee at the time, and we would Pack all the orders, put the labels on there, stuff them inside my Jeep Grand Cherokee. Only one of us could fit in the car at the time. So I, uh, cause it was just like every seat was taken with boxes and I would drive up to the, uh, to the post office and they would force, they would, I wasn't allowed to go to the front door. I had to go in the back and, um, I would just load them up into one of their carts and deliver them at USPS and they would take them and ship them out.

AI assessment note: “I was kind of slowly weaning out of real estate and doing more and more”

Q was like a huge part of that. There was like a real estate gold rush happening. And from, from what I understand, you kind of got into that a little bit, right? You're a young guy. Tell me about that. Did you, were you thinking, yeah, I could like, you know, sort of get... No money down loans, and buy places, and flip them. Were you doing some of that?

A Yeah, so when I moved down to Naples, I actually moved in with a buddy of mine who owned his house, and I rented a room from him, and he was in real estate. And then my other buddy was obviously the contractor, and I'm watching him just crushing it. He's building homes for, you know, some of the largest publicly traded home builders, and um, building a great business, and And I was like, I'm missing out. I see the opportunity. Let me get in on this. So, um, had perfect credit and a really, really high credit score, which was the pretty much all you needed back then to get a loan. Um, so I, I decided I was going to start flipping houses.

AI assessment note: “had perfect credit... so I decided I was going to start flipping houses.”

Q And I guess in Chicago, you just had to get back into real estate and, and, and wind up making, you know, decent money. Doing apartment rentals and commercial deals. And, and were you happy doing that? Did you, did you enjoy that?

A So I enjoy deal making, especially big deals. I get very excited about that. Um, but you finally get to a closing or you don't, right? And so you don't and you get nothing or you get to a closing, you get a big check for it, which is great. But then you kind of, you start from scratch the next day. You were, you're not building anything. There was no residual. And that always kind of ate at me. I hated that idea. So I was just thinking like, what can I build that would have residual income for me that I could build maybe on the side and, you know, continue doing my big deals. That would be maybe my, the bulk of my income, but then this can be like the supporting, you know.

AI assessment note: “I enjoy deal making, especially big deals... But then you kind of, you start from scratch”

Q but to make this, right, for CrossFitters, you couldn't use sugar. You can't use any grains or wheats or stabilizers or who knows? There's tons of things that a CrossFitter wouldn't be able to ingest. So how did you, you got there and you met with him? What'd you say? Did you say, hey, could you do something for us, but, but we want it with none of these things?

A That's exactly. Yeah. We even talked about, you know, what, what would it take to, to, you know, to remove some of these ingredients that you're clearly using a lot of this for shelf stability and like, do we need that? Do we absolutely need those things to, to keep the product shelf stable? And he's like, no, you don't, you don't. It just makes life easier from like a yield perspective or, you know, to get longer shelf life, you can do this, which is more of just a way to make more money as a small producer. Um, but we decided, okay, we want to do this with the best ingredients, using the best beef, um, and none of the added stuff, the added ingredients that aren't necessary.

AI assessment note: “That's exactly. Yeah. We even talked about, you know, what, what would it take”

Q Can you give Jennifer some helpful feedback on things that you might, you know, you might adjust, or you might kind of think about and lean into?

A Yeah, so I love the story, obviously. I think, you know, and going back to what I was talking about, the differentiation piece, like, you know, it was a sourdough angle, and I like, I love the background, too, of your story about Transitioning from a restaurant over to the bagels. I love all that. Um, I think here, if I was to Make it a little easier to actually order from you. If you think, I'm putting it from a D to C perspective, I think there's a lot going on in the website, so just cleaning things up a little bit would be a little easier. Um, which platform is this on anyway? Do you have this, uh, doesn't look like it's Shopify, is it?

AI assessment note: “there's a lot going on in the website, so just cleaning things up”

Q So Pete, if he wanted to go into grocery, let's say, how would he start?

A So going into grocery is going to be, you know, just networking, right? So it's going to be walking into the grocery store. And by the way, the way I would start, this is not going to the chains. I would go to, you know, independent grocery stores first. You're not going to go to a big grocery chain and say, hey, I want to take over all of your salmon, uh, you know, supply. You do need to show some track record. I think for any new item going to a grocery store, they do want to see some sort of record of success. So you've got to, you've got to show that and get people comfortable with that. Um, a few other things I would think about is how are you going to be packaging this? Is it going to be in fillets? I think I read somewhere that you keep the bones in Is that normal, or is that, or are these usually de-boned? Because I don't, I actually don't buy a lot of salmon, um, quite honestly, so I just wanted to understand.

AI assessment note: “I would go to, you know, independent grocery stores first.”

Q All right. So, so you graduate, I think around 2004 and, and then did you become a full-time personal trainer? Is that what happened?

A Yeah. Yeah. Oh, I never graduated actually. Um, funny story. So I was in this, um, my business class, one of the classes, it was, uh, one of the professors, we leave the class, he was done teaching it and he goes, goes start his car up and he starts driving to the parking lot. I see him driving and he's got a flat tire. He's driving this little tiny, like, hatchback car, and, um, it was a real beater, but, you know, I, I felt bad for the guy. It was freezing out, and so I went and changed his tire for him. Um, And I was just, like, talking about him, about his car, and he's like, this car is terrible, it breaks down on me all the time, and I just remember thinking to myself, like, how am I learning business from this guy? Like, this can't be, this can't be right, like, like, there's no way he's a successful businessman. Um, like, I made that decision literally as I was changing this guy's tire that I was done with college.

AI assessment note: “Oh, I never graduated actually.”

Q And, and so you could do all of this, like, build the website and make the product with the 7000 dollars. It was, you didn't need more money to start it?

A We just had to be as scrappy as you could possibly, you know, imagine. But at that time, I was handling all customer service as well, so anybody that came to the website, like, I, I would try to make it a very personal experience. That was one of the things that Rashid and I talked about, like, early on. It was, you know, we have no money. We have this product. You know, what can we do that's not going to cost us any money? Let's give good customer service, and one of the things that I would kind of, you know, grade myself on was on my response time, and you have no idea how many emails I've gotten back from people. They would email in. I would respond within seconds, and they'd be like, that is the Fastest email response I've ever gotten from a company, and I would say, I would actually save those emails as proof that, like, this is working and people are appreciative of it.

AI assessment note: “We just had to be as scrappy as you could possibly, you know, imagine.”

Q first of all, this seems like a very, like, cash-intensive process, like, a business proposition, like, you can't just do this with a thousand bucks, and, you know, I guess if you were selling them yourself, but, like, you've got to get the food, and it's got to be packaged, and then frozen, and then shipped, and then the refrigerator, so where, where did you, how did you finance it?

A So, thinking back, this is probably one of the, one of the more, um, lucky instances of my life, where one, I was, I, one of my house, I ended up buying a house in Orlando, um, was one of the four that I was, I was left with, and that house, a guy reached out to me, he and his wife wanted to rent it, and I asked him what he did for a living, and he tells me he works for a frozen food company. Wow. And he managed, he's on the op side. He does that. He handles the manufacturing. He was actually a really good guy. He wanted to, he, he kind of just took me under his wing and he taught me everything about the USDA, about co-packing, about sourcing. And, you know, and so I let him live in my house for next to nothing. And then he helped, helped me find a co-packer.

AI assessment note: “I let him live in my house for next to nothing. And then he helped”