[00:00:10] Ray Latif: Hey, everyone, I'm Ray Latif, and you're listening to the Top Podcast for the food and beverage industry, Taste Radio. This is episode 223, which features an interview with Ynzo van Zanten, the Chief Evangelist for Tony's Chocolonely, the mission-driven chocolate brand that aims to eradicate child slavery. Just a reminder to our listeners, if you like what you hear, please share the podcast with friends and colleagues. And of course, we'd love it if you could review us on the Apple Podcasts app or your listening platform of choice. You might recognize Tony's Chocolonely by its quirky labels and comic font logo, but the Dutch brand's playful vibe stands in contrast to its profound mission to end the use of child labor within the cocoa industry. Founded in 2005, Tony's has emerged as a popular and global chocolate brand whose purpose-driven strategy is grounded in fair trade business practices, deep relationships with its sourcing partners, and measurable goals for social impact. In the following interview, I spoke with Ynzo van Zanten, who represents Tony's as its Chief Evangelist, about how the company has navigated the development of a premium brand while staying focused on its overarching social mission, how to build a purpose-driven team, and how to attract investors when quote, money is not a goal. Hey folks, it's Ray with Taste Radio. I'm going to call right now with Ynzo van Zanten, the Chief Evangelist at Tony's Choco Lonely. Ynzo, how are you? Good, good. Great to be here. Great to hear from you. Where are you calling from today?
[00:01:42] Ynzo van Zanten: In Soest, the Netherlands, a tiny town half an hour outside of Amsterdam.
[00:01:47] Ray Latif: Very nice. Have you lived in the Netherlands your whole life?
[00:01:50] Ynzo van Zanten: Just about, just about. In my youth, I lived in Indonesia as well, and I've traveled quite a bit in my lifetime, but I'm Dutch to the bone.
[00:01:58] Ray Latif: Very cool. When did you join the company?
[00:02:01] Ynzo van Zanten: I officially joined Tony's about five years ago, but I've always been involved with Tony's initially as an external advisor too.
[00:02:10] Ray Latif: And what were you doing before you joined the company? It sounds like your travels have been tied to your career experience as well.
[00:02:17] Ynzo van Zanten: Yeah, I've been an independent advisor in the field of strategy and communication and sustainability for a long time. I taught at the University of Applied Sciences in Amsterdam. I wrote a couple of books. I've done loads of stuff.
[00:02:32] Ray Latif: It certainly sounds like it. So, you know, Tony's Chocolonely is a really interesting brand. So many amazing things to talk about as it relates to the company. Briefly, could you just describe what the company is all about and how it got started?
[00:02:47] Ynzo van Zanten: Yes, so in the early 2000s, there were a couple of Dutch journalists that ran into a tiny newspaper article on page 12 of some newspaper that were talking about child slaves being traded in Mali for the cocoa industry. And they were shocked. They had no idea about this bitter reality that was going on in the sweet field of chocolate. So they started investigating and they were also shocked that this wasn't front page news, right? So they were digging into the issue and they realized that it was really a widespread issue, forced child labor, illegal child labor in the cocoa industry. But unfortunately, none of the big chocolate players wanted to speak to these guys, neither on camera nor in interviews. So anyway, long story short, in the end, they launched Tony's Chocolate Only, a tiny chocolate company. merely to really get more issue awareness around that issue of forced child labor in the value chain of cocoa. Not really to become a successful chocolate company. But one thing led to the to another. And now 15 years down the road we became market leaders in the Netherlands. And We still say we're not a chocolate company. We always say we're an impact company through the way of chocolate. I mean, there's other people that make our chocolate, but what really we're focused on making an impact on the cocoa industry and making sure that all chocolate becomes 100% slave free.
[00:04:09] Ray Latif: That's amazing. You know, I've spoken with other entrepreneurs who have a social mission first and foremost, when it comes to their company, people who say we're not a, we're not a company, we're a mission.
[00:04:19] Ynzo van Zanten: Right. You know, we tend to, we tend to even say we're not even a social enterprise. We think that this is just how entrepreneurship should look and other companies might be anti-social enterprises, honestly.
[00:04:30] Ray Latif: To be honest, if I'm being really upfront, I didn't know about the company's social mission until I started investigating it. You know, when I think of Tony's and I think about the brand, I get this fun, playful vibe. Right. The mission, however, is about solving a very, very serious problem, as you spoke about. You know, in today's world with everything going on, that's a balance that a lot of companies are struggling to find. So how do you walk that line in terms of tone and messaging?
[00:04:59] Ynzo van Zanten: Yeah, I think first of all, by letting go of the idea that it's two ends of one spectrum, right? Being a financially successful company and having this clear purpose and mission in front of us as well. For us, it's really these two things are completely intertwined. So our financial success isn't a goal, it's a means towards a goal. For us, that goal was crystal clear. That's 100% slave free chocolate. But we do it in a very entrepreneurial way. So it is, I mean, we're commercial as hell, but it goes hand in hand with this mission that drives us. So I don't think those two things are mutually exclusive. And I think as soon as you start working that that central path of the idea that those two things are completely intertwined, and it makes it much more easy to be a mission-driven company, I think.
[00:05:45] Ray Latif: In terms of promoting that mission, though, I feel like that's a balance that folks don't necessarily know how to approach or address. Right. And so when I think about Tony's, once again, just looking at the packaging, I didn't notice the mission. I see a small yellow button on the front that says, together we'll make chocolate 100% slave free. On the other hand, your website talks almost exclusively about the mission and a lot less so about the chocolate itself. So what's that strategy in terms of how you promote the mission on your labeling versus digital content?
[00:06:22] Ynzo van Zanten: So there's three paths towards our mission i would say first of all it's a direct path so people really clinging on to or hooking up to attorneys to call only because of that mission the second one is merely the portfolio of chocolate we have we have. 25 to 30 different recipes. We have rotating recipes, we have seasonal recipes, etc. So we constantly have this surprising portfolio of chocolate. And I wouldn't say that, I wouldn't be so pretentious to say that we make the best chocolate in the world because there's bound to be some chocolatier somewhere in the mountains of Switzerland that makes better chocolate. But I would say we're probably the best tasting chocolate on shelf available almost globally nowadays. So that's really the chocolate bars that we make. And then the third one is, the packaging, the communication, the look and feel, the rainbow of colors that you see on a shelf. In the end, all three paths need to lead to us reaching our mission, though. I mean, that's first and foremost. But we try, I mean, we work on such a serious subject that we try to make it as fun as possible along the way as well, not just for ourselves internally, our team, but also for our consumers and the people that love our chocolate. I think it's better to fight such a battle with a smile on your face, I would say.
[00:07:36] Ray Latif: I like that. Fight such a battle with a smile on your face. As it relates to your customers, your consumers, you have a really loyal customer base, it seems. In terms of the product and brand attributes, and you discussed this a little bit, but what's the hierarchy of importance for your consumers? Is it that fun brand? Is it the quality of the chocolate? Is it the mission itself?
[00:07:58] Ynzo van Zanten: It's literally the combination of those three. And we sometimes jokingly say that people don't even care about the mission. It's a small percentage, but it's not true. We measure this. So it's about divided equally over those three pillars of portfolio, communication and packaging, and the mission. So it's equally divided. And I think that balance is good. I mean, if people only buy our chocolate because of the great taste, fine. We still, it helps us towards our mission. If only people only buy us because of the great tasting chocolate, fine, because it helps us towards our mission. We do try to educate them along the way, though. So now and then, I mean, for example, the inside of our wrappers tells the story of where we come from and what we stand for. We try to lure them towards our social media and our website and explain more of the story over there. I mean, people in the end don't read much more than six or seven words while walking through a supermarket, right? So it's more about engaging them at a later stage.
[00:08:57] Ray Latif: Yeah, I mean, it's interesting, too, because, you know, that fond branding also relates to the way that your chocolate is actually, I guess, shaped and cut up. They're not in equal squares. I see a lot of rhombuses and trapezoids and all kinds of things. Can I explain where that comes from? Yes, please.
[00:09:15] Ynzo van Zanten: So our bars are unequally divided, and we decided upon that a decade ago because it reflects the reality in the cocoa industry, which is very unequally divided. So our bars become a discussion piece. If somebody opens a bar of chocolate after dinner with somebody next to him who doesn't know the story of Tony's, then that person is bound to explain why that bar is so annoyingly unequally divided. And that helps in spreading our story, because we never spend a single cent in our whole existence on paid media. There's never been any advertising by Tony's. So it's really just to help spread that word of how unequally divided the world of cocoa is through this direct representation in the shape of our bars. But many people don't realize that our bars do reflect the map of Western Africa as well. So on the left bottom side of our bar you actually have the map of Western Africa that shows the origin of our cocoa beans and the pride that we have in working with these strong farmers in Ivory Coast and Ghana.
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[00:10:34] Chief Evangelist: Tune in at the end of this episode for an exclusive interview with Matt Lin of Belay Solutions. He sits down with Melissa Traverse to break down the biggest inventory and accounting mistakes CPG founders often make. You'll learn how to bring clarity to your numbers so you can scale with confidence.
[00:10:52] Ray Latif: One of the other attributes of a product that's so important to consumers is price. And I can imagine that it's quite expensive to source your ingredients, ensure they meet the high standards that you have set for your products. That being said, how do you consider margin and profitability when pricing the chocolate? Because at the end of the day, you might have all of the attributes of an NGO, but you are still a business.
[00:11:18] Ynzo van Zanten: Right. Yeah, we are. But first of all, I would say that our bars aren't that much more expensive than other bars, I would say. And even if they were, I would say that the other bars are simply too cheap. And the only way they can be that cheap is by exploiting farmers and having illegal child labor in their value chains. The second step is that we simply take satisfaction with a lower net margin. than the rest of the industry tends to do, thereby also distributing this wealth throughout the value chain in a more equal manner. So that isn't that hard. But again, we are commercial, so we do need to make a net profit, but the net profit simply isn't as high as some people in the industry think you need to make.
[00:12:03] Ray Latif: In our industry, we always preach 40% gross margin. That seems to be the baseline for any successful brand.
[00:12:11] Ynzo van Zanten: Exactly. Same with us. The only difference is net profit. So I tend to hate the word KPIs, but here we go. We have three very clear KPIs. One is we want to grow 50% year on year, which is a ridiculous growth rate after 15 years for any company. But we've managed to reach that until about two or three years ago when we really started to become market leader in the Netherlands, thereby you immediately, the growth diminishes, obviously. And then we started expanding abroad a lot, which takes a lot of investment. So our growth has been about 25 to 30% over the last three years, which still is great for a company after 15 years, obviously. And then the second KPI is 40% gross margin. And the third one is where we slightly differ from the rest of the industry, because the banks that have always financed us tell us that we would normally have to make 25 to 30% net profit in our business. And we are fine with making 4 to 6% net profit. We can do everything we want to do and still have commercial success, but also still be able to distribute this wealth throughout the value chain.
[00:13:18] Ray Latif: It's easy to measure growth. It's easy to measure revenue. It's a little bit more difficult to measure impact, but you guys have a very specific way of doing it. Can you talk a bit about it?
[00:13:27] Ynzo van Zanten: Yeah. So there's a couple of ways that we do this, and it becomes more important the more you start doing business internationally, because Honestly, I would rather notice difference than measure difference, but obviously we need to measure difference. So what we have, we have a system in place that is called the Child Labour Monitoring and Remediation System, which is implemented at all the cooperatives that we work with, all seven of them throughout Ghana and Ivory Coast. And what happens is that locals go around and they interview people on the cocoa farms, at the cooperatives, ask questions about situations, and also when they run into incidents, they log these incidents. And the good thing is, is that enables us to remediate those incidents. So for us, this is really a cultural change on the ground too, because say a decade ago, when we didn't have this system, farmers would be afraid to come forward with any incidents that they might have around them, because they were afraid they might lose their Fairtrade certification. And in the current situation, we really want them to come forward so we can help them remediate those systems. So if there are kids that are old enough to help around on the farm, but we see them, for example, carrying bags of cocoa beans, which in our opinion is illegal because they weigh so much, we help them with support through wheelbarrows, et cetera, et cetera. So this is really to remediate any case that we run into and we are completely open about this in our annual report as well.
[00:14:52] Ray Latif: I assume your annual report is something that investors would love to read. And you announced two big investors into the company in February, Verlinvest, which is well known for its investments in the food and beverage space, and then Jam Jar as well. You know, when I think about investors and strategic investors like those, I assume that at the end of the day, they're thinking about long-term, you know, revenue goals and profitability, et cetera. And then I was, you know, scrolling through the internet and I happened to see an image that showed Tony's chief chocolate officer, Hank John Beltman in front of a very big banner that says, money is not a goal. Okay. So how do you convince an investor to fund resources into your company when money is not a goal?
[00:15:46] Ynzo van Zanten: Well, mind you, in itself, it's not a goal. It's a means towards a goal, right? But don't get me wrong. It is essential for us to be commercially successful, but the commercial success in itself and the financial success in itself isn't a goal. There's nothing you can do with the money. You can take it to your grave, but you'd rather be doing good with it in the society, in the planet that you operate on. And these investors completely believe in those values that we stand for as well. So yes, we want to be financially successful. Definitely, these investors want to see payback at a certain point. So commercial success is essential for us, but it is an essential means towards a goal. And whilst we're growing while we're doing, I mean, in the end, in your bank account, it's dollars or euros, and it isn't percentages, right? So our growth has been so significant and our showcase becoming market leader in the Netherlands and being so successful international also convinced these investors and it's really helped us boost or catalyze this growth that we have also international and also towards international expansion everywhere. So it's been amazing for us to be able to get these investors on board and I completely believe in our values and our mission as well.
[00:16:57] Ray Latif: You've talked about international expansion a couple of times. You are in Europe, you're in the U.S. Is the expansion aggressive? I mean, talk about the plans to expand availability of Tonys and what goes into that planning.
[00:17:10] Ynzo van Zanten: So we have, but now it becomes slightly boring consultancy-wise. We have a couple of, I would say, rings around our company that we say the gold countries for us are essential for reaching that impact through growth and the amount of people there and the brands that are there that we want to inspire to also take the responsibility. So Holland, for example, has always been a gold country. Then the US also, that means that we also have an office. In the U.S. we had an office in Portland for ages, and we're now moving towards New York City this year. And we have an office in the U.K., in London, and we now also have an office in Germany and Australia and Switzerland, which we call the DACH region. So those are the gold countries that are essential for us. And then around that, we have the silver countries that we work through distributors. For example, Scandinavia, Belgium, and France at the moment. And then there's, we call them now Team Beyond. So that is all the other countries. That is Taiwan, New Zealand, Mexico, et cetera, et cetera. So we want to be available everywhere. Why? Because we want to be noticed. Because once people start noticing you and other brands start noticing you, they start copying you. And that's exactly what we want them to do. We don't want to be unique in what we're doing. So our USP is actually to get rid of this uniqueness. We want everybody to simply adhere to human rights in their value chain and make sure that there's no violations of those human rights in their value chain. So that is really what we want every company to do.
[00:18:41] Ray Latif: Is that specific to chocolate or is that across the food and beverage industry?
[00:18:45] Ynzo van Zanten: Well, we focus on the cocoa industry. We focus on the chocolate industry. But during our journey, we can inspire other companies to also take that responsibility. We think we can and they should. But our focus is completely on the chocolate industry.
[00:18:58] Ray Latif: You said that you're seeing some brands copy what you're doing. I'm not asking you to name any brands per se, but is the reason that they're copying you because consumers are looking to invest their dollars in a company and sort of vote with their pocketbook, vote with their wallet, so to speak?
[00:19:21] Ynzo van Zanten: Yes, I do believe so. I believe there's a very strong undercurrent in the market where consumers become more outspoken about the products that they choose. They choose more sustainable companies, and especially in these times as well, you also see consumers with a bit of a wake-up call about what we're doing to the planet and society around us. So I do believe that consumers are starting to realize that they don't actually vote whilst going to the voting booths, but they actually vote every day through their shopping baskets. So you do see a change in any consumer behavior, I think, over the last couple of years, even more so.
[00:19:58] Ray Latif: Enzo, you speak with such conviction and authenticity, and it's really nice to hear. I think that it can be hard for entrepreneurs and people to do that. How have you been able to speak about this mission so passionately? Has it sort of taken years for you to kind of get where you are in terms of your effective way of speaking?
[00:20:21] Ynzo van Zanten: I think once you actually physically meet these farmers in Western Africa, once you open your eyes and you see the issues on the planet, and you see how other people around us respond to what we're doing in such a positive manner, it really gives us so much energy. Because three, four, five years ago, I would have never imagined us becoming such a global brand where we are at this moment. And honestly, I don't even care about us becoming a global brand, but I do care about this becoming a global movement. and you see it happening, and that gives such energy to everybody within our company. I mean, we're not much bigger than 160 people at the moment, but everybody has this great energy because we see we can actually make a change, no matter how small we still are. I mean, we're still a drop in the ocean, right? I mean, we don't even come up in the international figures of cocoa trade. But we do see that we make a difference on the ground in Western Africa. We do see that we make an impact in Western society where companies are inspired and also start to change their ways and take responsibility for their full value chain. So that gives us so much energy. I think that's just where it comes from. And we have such ridiculous focus on just this one product and these things that we do and this one mission that we stand for that also helps us become successful, I think.
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[00:22:53] Ray Latif: Do you do any hiring yourself? You know, you talked about 160 plus employees. I would think that everyone's kind of on the same page in terms of their passion for this social mission and for the brand itself. When you are hiring and when you are thinking about staffing, do they have to be as passionate as you?
[00:23:10] Ynzo van Zanten: Or is it just something where it can just be the right fit, even if the person is a little bit more passive in how they... I wouldn't mind the people in my finance team having slightly less ADD than I do, for example. But in the end, it is about this team. And we always say, and it's slightly narcissistic, but when it comes to being serious about people, we always put our own team on number one, even before the farmers and before the consumers. Because we believe it's the most inspired and engaged and committed team that can actually reach that mission of 100% slave-free chocolate worldwide. So we do have a strong focus on it, but not everybody needs to live the four values that we have in as much, peaking as much in one value or in the other. But in the end, it's what makes the team as a whole and creates such passion and such purpose-driven organization.
[00:23:57] Ray Latif: How do you motivate people to be better? I opened up one of your websites and I saw a book, I don't know if you were the author of this book, but a page stuck out that said, it's not how good you are, it's how good you want to be. And that can be hard for some people who are just looking to, you know, to have a regular job. So how do you motivate them to be better every day?
[00:24:17] Ynzo van Zanten: Yeah, and I don't think per se that we hire people that just are looking for a regular job. There's probably better jobs for them out there somewhere. They can probably sometimes make more money somewhere else. But I see a very inspired team that doesn't need that much motivation because they're all crystal clear about where we're heading. But what really helps, I think, is this company culture where they feel that the team is placed on number one. where they feel that we put, and this is not about money or investments, it's really about focus on your people and on your team. And having this idea that this work happiness and having so much fun along the way is essential because we want people to come in on Monday morning skipping through the front door, right? we want them to be happy. So that's what we work on heavily. And it's about investment in time and effort and not so much money, even though, yes, we also invest a lot of money in our team because it's the happy employees that create happy customers, I think.
[00:25:12] Ray Latif: Now, we're living in the midst of pretty turbulent times globally and particularly in the U.S. What's been the communication to your team in terms of navigating these really uncharted, unprecedented times that we're living in?
[00:25:27] Ynzo van Zanten: When we talk about COVID?
[00:25:29] Ray Latif: When we talk about COVID, when we're talking about social unrest as it relates to the Black Lives Matter movement. When companies are thinking about this, I can't imagine even where they start.
[00:25:37] Ynzo van Zanten: Right. Now let's take the subject of COVID first. So that hit us somewhere early March and we immediately closed down our offices across the world. and started working from home. We were fortunately well equipped for that in terms of infrastructure, because everybody already works through Teams and can easily work remotely. I, in the last, what is it, by now four months, have only touched the front door of our office twice, for example, and I work from my home studio constantly. What we did do is focus on our team first, as I explained earlier on, and then secondly, immediately also the farmers in Western Africa, how we could support them, for example. So we've been in constant touch with our cooperatives over there, see how we could support them through programs, through sanitation packages, soap and water. We had posters printed with simple tips about washing your hands anywhere, et cetera, et cetera. So we're in constant touch with them. And then thirdly, obviously, the business. Can we maintain the business as it is? And fortunately, chocolate is a product that people tend to consume from home, even though some businesses like airline travel and train station shops have all closed down. The direct sales to people at home has tripled over the last couple of months. And then, obviously, what you just spoke about, the social unrest and the Black Lives Matter discussion, we immediately started also looking internally at ourselves. We had sessions internally, we have a task force internally, where we're looking at our recruitment strategy, where we're looking at our teams internally, where we're looking at our management team as well. Is that a proper reflection of Dutch society? etc. And we're really speaking to many people and getting many people on board in our inspiration sessions. Last week, we had a global session where we spoke with Ghanaian people and a Dutch organization as well, when it came to the LGBTQ community. So, yes, there's a lot going on. And how do we cope with it? By staying in constant touch with each other. So we have weekly sessions with the complete company on these matters, but also in our teams, our heads-ups every morning through Microsoft Teams. We constantly talk about this and it's a constant process, obviously, that everybody is in. I'm glad to see that we are a company that takes that responsibility in all these fields and is adaptable for change.
[00:28:12] Ray Latif: Obviously the people making the decisions about how to navigate these issues and move forward as a company, as an organization, are folks like yourself. The communication among that C-level group is really important. How do you stay on the same wavelength as your colleagues within that group?
[00:28:32] Ynzo van Zanten: Right, so we have a very flat organization, right? It's very simple and straightforward and we're still a very small company. So it's very easy to get everybody's opinion in and we're very open to get everybody's opinion. I mean, one of our core values is actually to be outspoken, to really speak up when you see something happening and to make a change where you can yourself. So this is essential for us as a team as well. We have these round back sessions that we call our outspoken sessions, where we talk about delicate subjects and we probe everybody's opinion to see what the organization is thinking about this. So this is not just top down, it's also very much a bottom up approach.
[00:29:10] Ray Latif: So anyone in the company, it could be the newest hire can voice their opinion. Anyone. Really? Okay.
[00:29:15] Ynzo van Zanten: Anyone. We actually ask new hires after their first month. to give us their, it's hard to translate to English, but I think we can call it our fresh view session. So they present a couple of minutes of the stuff that they saw in their first month that perhaps would need change within Tony's because maybe we have a tunnel vision somewhere along the way. And these people have just come in and we actually want their opinions and we want them to be outspoken at that point in time to tell us what we can improve.
[00:29:43] Ray Latif: Has there been any specific instance of someone who came in within a month and there was a significant change in the company as a result?
[00:29:51] Ynzo van Zanten: Constantly, constantly, every time. I can't think of one example right now, but obviously the last few months have, I mean, we've had new hires who haven't been to the office. So it's important to then see how do you actually handle these situations? How do you maintain that company culture that we uphold so strongly?
[00:30:10] Ray Latif: Enzo, Tony's is a really impressive company in terms of its mission and its approach to business. I imagine that there's a lot of folks that want to learn more about how they can get involved and align with your brand in terms of how to do better in this world. What's the best way to do so?
[00:30:29] Ynzo van Zanten: Well, one very easy way is to become a serious friend of Tony's. And those are the people that not just buy our chocolate because they like our chocolate, not just buy-in to our mission, but those people that actively spread that mission amongst their family and friends. And we ask those people to come to our website, tonyshackleonly.com, and to look for our petition that we've launched, where we want to gather a million signatures at least to put up the pressure on the European Union, but also on the US government, when it comes to legislation and due diligence for companies throughout their value chain to make sure that there's no human rights violations. So I would Love to ask people to really form part of this movement that we've created, but they are essential part of it by joining up as serious friend and signing our petition on our website.
[00:31:18] Ray Latif: Outstanding. Well, Enzo, it's been so amazing speaking with you. You know, I've loved hearing about Tony's and learning more about the company. Thank you so much for taking the time to be with me today.
[00:31:29] Ynzo van Zanten: Thank you. Thank you for giving us the time to explain what we're about.
[00:31:33] Ray Latif: It's been my pleasure. Thank you. That brings us to the end of episode 223. Thank you so much for listening, and thanks to our guest, Ynzo van Zanten. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
[00:32:07] Taste Radio: Hello, I am Melissa Traverse here for the Taste Radio podcast, talking about some of the biggest tension points that CPG brands and founders face when they're scaling a brand, and those are financial accounting and inventory management. I am joined by Matt Lynn, inventory accounting guru from Belay Solutions, and he's going to shed some light on all of this that is going to help everybody out quite a bit. Matt, thank you so much for joining us today.
[00:32:37] Jam Jar: Thank you for having us, Melissa. It's great to be out here at Expo West, and it's great to sit down and be able to chat this because it's kind of a passion project of ours, working mainly with CPG brands and hoping to help them scale.
[00:32:48] Taste Radio: It's been such a pleasure chatting with you and the team and learning all about what you do over there at Belay Solutions. Can you tell us a little bit about yourself and what your role is and the kinds of solutions that Belay gives to CPG brands and founders?
[00:33:04] Jam Jar: Yeah, absolutely. My role with Belay, I'm actually our inventory accounting manager. I run our inventory department, so we work with CPG brands, taking them from spreadsheets, putting them on inventory management systems, and really helping connect their tech stack between their sales online marketplaces to that inventory management system, even down to their financial systems like QuickBooks. Belay overall is kind of an outsourced accounting firm. And with that, we're helping teams. We have different levels with bookkeeping, controller level work, even high level into CFO type items. So we really help those brands in any way that they need financially. And then I just have a subset of a department where we're really just laser focused on inventory.
[00:33:47] Taste Radio: It's certainly a complex topic and there are plenty of places to go wrong. Let's start by going right and start super simple. Can you tell us what some of the biggest red flags are that would help a founder understand or, you know, the person running a brand understand that it really is time to get some help with some of these areas?
[00:34:08] Jam Jar: Yeah, absolutely. I think some of the early red flags is just everything is chaos. So when they're looking in their financial software, maybe they don't really have an accounting background, and they're kind of just piecing it together and doing their best. And what they'll see is that reconciliations take forever, if they even happen. They have a lot of transactions that don't get coded, or they just put them into placeholders to just get rid of it so it's not an eyesore. they'll notice they have revenue but no cash or they notice that they have a good amount of cash but their blind spot is really seeing the vendor invoices that are sitting there just needing to be paid and so they just lack that clarity that's going to really be around the corner.
[00:34:45] Taste Radio: You know, you were talking about one of the red flags that comes up that I think makes so much sense. When somebody asks you what your numbers are and you can't come up with the right number, that's a big problem because that's something that you really should be able to share with decision makers who you're ideally looking to do business with. What should you be able to call up at a moment's notice?
[00:35:09] Jam Jar: Really at any time, you should be able to know an accurate margin. It's amazing how many founders we end up talking to that they can tell you their revenue numbers, they can tell you their selling price, and then the minute you start talking about cost or their cost of goods sold, they just get a deer in headlights look. So really it's very hard to tell, am I even making money? or if you don't know your entire landed cost. Maybe you know what the freight cost is, the duties separately, but you're not really getting that as part of your unit cost. So it's really hard to tell. Am I even making money or am I losing money from the very beginning?
[00:35:42] Taste Radio: And do you recommend that founders are able to call up a margin by channel?
[00:35:47] Jam Jar: Absolutely. And depending on the number of products and channels, you kind of want to know what are your best sellers, which ones are making the most and which ones maybe you're not making as much. But especially if you're branching out and you're doing D to C with B to B, absolutely want to know that.
[00:36:04] Taste Radio: Gotcha. You mentioned that when things feel really chaotic, that's probably a red flag. I would say that it probably almost always feels chaotic if you're running a CBD brand. And I know this may be hard to quantify, but is there a revenue number? Is there a number of doors number that would help a brand understand whether or not it makes sense to bring on a partner like Belay? Understanding that so many brands are bootstrapped or they might be tight for cash. What is that friction point?
[00:36:36] Jam Jar: a little bit different for everybody depending on where you're at in your process and sometimes just your level of understanding of financial aspects. You know, when you're first starting and you're really cash conscious and don't want to spend that much money, you may keep it on yourself. But as you're growing, as you're getting to those six-figure revenue numbers, and especially as you're approaching seven, you want to make sure you've got good financials. Because as you scale to that point, most likely you're going to be looking to raise capital. And investors, the first thing they're going to look at is your books. And are they clean? And do they show a clear picture of your business?
[00:37:07] Taste Radio: You know, another area that folks might look to to organize some of the chaos are their systems. So many folks stick with Excel spreadsheets for a good amount of time. How do you know that you need to outsource some of your accounting to an organization like Belay Solutions versus maybe signing on to a Synth7 or a NetSuite or something like that?
[00:37:29] Jam Jar: Well, that's actually something we really help with when it comes to that cost question. That's something that trips people up. And sometimes if you just have a turnkey business, you buy and sell a finished good, you can maintain with spreadsheets. And we've had clients with million dollar revenue that can do that. But we see so many brands nowadays are using contract manufacturers. and they're just sourcing certain parts of their product. So when you start talking cost, they have no idea exactly what their unit cost is. So that's where we come in and we kind of understand, we'll speak with the customers and the clients and get their needs. And then if we think they're ready for a system, then we'll help put them on that system so they can get some of that clarity. And it's not something we force on anybody. There are plenty of times where founders come to us and we'll tell them bluntly, you're not ready for it right now, but we'll let you know when we think you are.
[00:38:15] Taste Radio: That sounds like excellent advice. What should a founder or somebody running a brand look for in an outsourced accounting partner? Are there certain checklist items that they should make sure that their partner be able to execute or be able to help them understand?
[00:38:32] Jam Jar: Absolutely. I think one of the keys there's, there's a lot of outsourced accounting firms out there. Some focus on service-based SaaS companies, but if you're a CPG founder, you really want to make sure that your accounting firm has CPG experience. I would ask them, you know, what kind of brands have they worked with and even beyond that industry specific, because there's so many subsets of CPG. And that's something that I think is great about what we do with Belay is that we kind of run the gamut. It's kind of like the insurance commercial. We know a thing or two because we've seen a thing or two across a broad spectrum.
[00:39:02] Taste Radio: Probably getting references is always helpful, right? Absolutely. All right. So this all sounds great. I think we have a really good understanding of would it make sense to hire an outsourced partner? You know, what some of the things you should be looking for are. What does offloading this kind of work mean for the brand? What can this do for lightening the load of a founder or lightening the load of a brand operator? Like, how does that help them in their everyday business?
[00:39:31] Jam Jar: It just tries to really help quiet the chaos. So what we're looking to do is just take some of the weight off that founder's shoulder. Let them focus on building the brand, building the business, getting that exposure. If you don't have sales, you really don't have anything. So we want them to be able to focus on that while we take care of your back-end office work. And we can just present that to you on a monthly basis. You can help make decisions. You can take that to investors. And really, you can just focus on growing your business.
[00:39:57] Taste Radio: I feel like I felt founders and the folks who are running brands collectively sigh. Breath of relief just hearing that. How can people learn more about Belay Solutions?
[00:40:08] Jam Jar: So people can text TASTE to 55123 for their free inventory guide to get started.
[00:40:13] Taste Radio: Matt Lynn, inventory accounting guru at Belay Solutions. Thank you so much for joining me here at Expo West. It's been such a pleasure to chat with you and learn about what you all do over there to help founders and brands with their financial accounting and inventory management. For everybody else out there, thank you for listening to the Taste Radio podcast. I am Melissa Traverse and we'll see you next time.
