Hey, folks. It's Ray with Taste Radio. Right now, I am honored to be sitting down with Nima Fotovat, who's one of the co-founders of MadeGood. Nima, it's great to see you. It's amazing and exciting to be here. Thank you so much for taking the time. I wish I could be where you are right now, which is Toronto, Canada.
I've never been to the city. How long have you been there? I've been here for 38 years. We moved here as immigrants from Iran in 1988. So if you do the math, you can guess my age. I'm not that quick- ... but maybe some of our listeners are. But it sounds like you've carved out a pretty amazing business, and life, in Canada, and you have fed so many people with your amazing snacks, the MadeGood bars, bites, and beyond.
And, I am one of those people who you've been feeding. I've been eating MadeGood bars for a long time now. Awesome. Awesome. And I know you started out as a brand that was really focused on allergen-free snacks and have become a much broader snacking platform. But if you could, just tell us a bit about the origins of the company and your interest in CPG in particular.
Absolutely. The need was a personal need that we identified for MadeGood. I had young kids. My kids don't have allergies, but as they were heading to kindergarten, we noticed that if there are other kids that have allergies, we as parents have to be mindful of what we send to them to school. So that was when I realized allergen free is not just about protecting those who have allergies, but also to create an inclusive environment, an inclusive snacking environment.
That was one tension point. The other tension point as parents were like, "You know what? Why don't we just pack fruits, vegetables? We don't need to give our kids any packaged snacks." But Ray, it only lasted a couple of weeks. We got a high return rate on those veggies. They got exposed to granola bars and cookies, and we're like, "Wow."
So I've got the tension between the parent, I wanna give my kids something healthy. I've got the kids who want something tasty, and the school who wants to keep everyone safe. And so we grew up in a family business that was in the food space, that was in snacking. We had just left that business, went into the grocery store.
There was really nothing that met all those three need states. So we brought our experience, our passion for food and organic food and better for you, and designed MadeGood to solve that tension point between those three stakeholders. So yes, at the beginning, very much focused on that lunchbox occasion and being all-inclusive.
But an insight that we had from day one as parents is that even though the parent is the shopper and buying for kids, they are also the consumer, so they wanna eat and enjoy snacks as well. So when we designed MadeGood, we designed it for the whole family, and that's why today we are more than just an allergen-free family.
We are a taste-forward, nutritious, and delicious snack that everyone can enjoy. In what year was it that you launched the brand? We launched in Canada in 2014, and a couple of years later in the US. In the US, it's been about 10 years. You were a bit ahead of the game in terms of allergen-free snacking, which is now ubiquitous and something that is really revered by parents for the reasons that you explained.
At the outset, did you see MadeGood as being the brand that it is today, one that is multinational and has legs that go well beyond the classrooms that you described? We did, and the reason for that is that insight that I mentioned is that, is When the shopper, when the parent, whoever it is, buys the product, they eat it themselves as well.
So when you go into the pantry of someone's home, then your audience is the whole family, everyone in the household. And so we had that insight through some shopper research that we did. When shoppers are deciding what they eat, they want it to be healthy for them and taste good for them. So we knew that, and then the second thing that we brought into the brand as a result of that insight was the design of the package.
So it's a modern-looking, not a kid forward. We don't have any cartoons on the pack. So we knew from day one that this brand and this platform is beyond just the lunchbox. However, when one launches and when one is small, one needs to be really focused and narrow in what we're going after. So the first few years, we really had to focus on a solution that was very clear what we were delivering to the consumer.
It gave us a strong sell story early on to the retailers, and it was easier for the company that didn't have a lot of, or much dollars to spend in communication to have really a narrow focused message. You mentioned a word that I think is critical for the success of any CPG brand, which is taste. And the reason that I eat MadeGood bars and snacks is because they taste amazing. They always have. And getting taste right, I think is the most critical part of a brand. How did you determine the taste and the flavor for a consumer that was both on the allergen-friendly side of things and probably used to more bland food, and that person who was only buying your product for its taste and flavor?
Well- The best taste critics, the most honest taste critics are kids, and I have two of them at home. So whenever we developed a recipe, if they don't like it, they're gonna tell me, "Dad, hey, this ain't gonna work." So being taste forward was in the DNA of the brand from day one, because I also believe that you can only do so much on nutrition or protein or allergen-free, the must-haves, but ultimately, we love food that tastes good.
So the magic here of MadeGood is how do you make it taste good, but at the same time, deliver the nutrients, the organic, the hidden nutrients from vegetables, but also be safe, the allergen-free component. Designing and developing great-tasting products that are allergen-free, Ray, it's extremely difficult because it narrows the scope of ingredients we can use, and especially when it comes to sweets and baking and all of that, it just makes it much, much harder.
Now, we grew up in a food business. We did a lot of R&D work. We had a lot of experience in the past. So we brought that experience when developing this to make sure that taste was anchored into MadeGood from day one. I love your strategy of figuring out what is going to taste good by utilizing kids, more specifically your kids, to give you the real truth.
Because, focus groups will oftentimes give you some information about how consumers might feel about a particular product or brand, but at the end of the day, you want the most transparent feedback on a product. I wonder why more entrepreneurs don't do that, is just give their products- ... to kids and let them tell them exactly what they think of them.
They'll spit it out if they don't like it. Yeah. Perhaps people listening right now, founders listening right now, will start to employ or at least ask kids what they think of their products. So snacking and the snacking category and snack bars and bites and so on and so forth has become increasingly competitive over the years.
You have legacy brands that have gone into snack bars. You have new players come in, whether they are entrepreneurial brands or otherwise, and to be able to stand out really depends on differentiation, and you have differentiation, or at least you had a specific differentiation in being allergen-friendly.
I think taste was another big differentiator because, again, I thought MadeGood was better than other products that I have tasted. But were there any other ways that you differentiated? Were there any parts of the brand or aspects of MadeGood that you thought helped it stand out on the market? I think one has to play the long game.
So as entrepreneurs, myself included, I want success right away. I wanna be in as many doors, and I want my revenue to grow as fast as we can. But I think one thing we did well was a disciplined growth path that was narrow and focused at the beginning. Really from the very, very beginning, my wife, Ladan, actually started selling MadeGood at farmer's market.
Then we went into local retailers. Then we went into the natural channel. Then when we launched in the US, we launched in the Northeast. Then we went into the natural channel in the Northeast. Then we started to go into the natural aisle of the retailers, conventional retailers. It's only recently in the past three, four, five years that we've broadened our reach because I think it's important to build a fan base, build a consumer base, and it takes time to do that.
If one has distribution ahead of awareness, then we won't be able to grow velocity at the same time. So the strategy also helps. So strategy is part of the brand. Like when one launches the brand, you can have the greatest positioning, but how one goes to market and deploys that go-to-market strategy also can set brands up for success or failure.
So I think that was one of the key things. The other thing as well is the fact that we're vertically integrated. We manufacture everything from day one We built a factory, and part of that was because this is an allergen-free product, so we wanted to make sure our factories are safe. So no one in any of our plants can bring in any nuts, any tree nuts, any peanuts, so we are fanatical around protecting our consumer and really making quality products.
This morning, just before this podcast, I was walking the production floor. I smell the food. I love to see how products are made. So our passion about the quality of the product comes to life through this vertical integration, which most brands, I believe, my hypothesis is that work with co-packers. So you're outsourcing that making component of the product, whereas for us, we're passionate about making our own product.
And then the other thing that allows us to do is as we scale, we can really deliver on our mission, which is access to good food becomes a reality for all. So we really have tried to continue to deliver value to consumers, avoid increasing our prices over a decade, so that as we scale, we also become more affordable and can access more households.
So from MadeGood, we could deliver the promise to the consumer I'm really happy that you've talked about a long-term strategy, because as you pointed out, a lot of entrepreneurs get into the industry and want to get as big as they can as quickly as they can. But how did your perspective on being a business that would succeed over a number of years as opposed to a couple of years, what formed, what informed that perspective?
I think part of being a family business and why we are in business together is really important. So if our why was to scale and sell and retire by the beach, that's a different why. So for us, we really enjoy what we're doing. We enjoy coming to work. So having an end date or an expiry date is not what gets us excited to come to work, and I think that mindset is really important.
Now, it doesn't mean that we will never sell this business, but what it means is that we don't even think about that. We just think about coming here and building a business that will last for a long time, and I think that mindset was embedded in us from day one, and it's still there. And so everyone in the organization knows there's a certain level of stability and continuity when they come to work and when they make decisions.
Have you taken outside capital, or has this been a self-funded business? It's been primarily self-funded. We've had to tap into some support. It's very difficult to build manufacturing and all the infrastructure that goes with it, self-funding it, but we are independent. It's essentially my sisters and I that run the business.
But we've had some outside capital from various forms that has helped us throughout the years to be able to fund our growth. I ask because oftentimes growth strategy is influenced by investors in the company. They wanna see a return on their capital. How do you find patient investors or ones that believe in your long-term strategy?
That's a great question. So I think aligning your vision as a founder, as an entrepreneur, to the investor's vision is one of the key things early on. So whenever we brought in, whether it was debt or otherwise, we made sure that everyone was clear that this has a duration And that the exit is not an exit out of the company, but it's an exit where everyone agrees what good looks like, and we adhere to that.
So I think the key is to set all of that up upfront, align my desired outcome with my partner's desired outcome. When we have disconnect, that's when we have challenges. So many brands love to have a private equity type that is focused. And there's many varieties of private equities, but those that are really focused on a five-year horizon that want to come in grow, and sell.
So what happens, what could happen in those scenarios is your time horizon shrinks to that five-year hold window. So decisions that are made is to maximize return within that five-year window. Really, that investor doesn't... Technically, why would they care what happens beyond that five years? Because they're not gonna be there anymore.
That's a really good point, and if someone is just investing for a particular financial outcome, how much passion and care do they actually have for the brand itself? And it sounds like you and your sisters could not operate a business that way, and finding someone or finding investors that are aligned with your perspective is critical.
I think also finding investors that are comfortable with a manufacturing business as much as you are a sales and marketing business I'm sure you've talked to other entrepreneurs about being vertically integrated, but for upstarts, what is your advice? For someone who's just getting into snacking or some other form of CPG, how do you advise them about starting their own manufacturing business?
Great question, Ray. I think if one decides to do manufacturing and have a branded business, you're essentially starting two businesses at the same time. You're starting a manufacturing business and a sales and marketing business. So one is already very difficult, so having to start two at the same time is extremely challenging.
I would say what we brought to the table was a couple of decades of experience prior to that in a family business, so we were hands-on manufacturers. So what I always say to founders/entrepreneurs, beyond capital, beyond the idea, what does one bring to the table? I think one thing that's forgotten is the experience.
I think the most valuable thing you can bring as the recipe for a startup is what experience am I bringing to the table? So that experience could be I was employed for, in the CPG space for 10 years, and I built brands, so I have that. So whatever it is, I think we need to bring, as founders, an asset that goes beyond the capital and the idea, and that comes from what is the knowhow that I'm bringing.
So the knowhow that we brought was the knowhow of manufacturing, so we could capitalize on that. And towards the latter years of being in the previous family business, we had launched a branded business, so we had some branded business. And the other fun fact Is that in that previous business, we were also contract manufacturers.
So as a contract manufacturer, we saw many brands come to us, and we saw when they were successful and when they were not successful. So we learned by observing from a manufacturing lens. So those are all pieces of experience. I'm just giving you examples of that ingredient that is experience that sometimes we don't talk about as much.
It's "Give me money. I have a great idea, and let's get to work." Where is this component which is what am I bringing to the table? What experience, what expertise, what network am I bringing to the table? I'm sure even with all that experience from working with brands and co-manufacturing and building a food business, that launching MadeGood was challenging, and you probably encountered problems that you thought you would have not encountered because of your experience.
What were some of the roadblocks? What were some of the biggest pitfalls of launching the business in the first couple of years, and how did you address them, again, given your experience in the food business? We had a manufacturing plant. It was very small. It was only 20,000 square feet, and it was maybe we had 15, 20 employees back then, right?
In the early days But what becomes real is that I have to pay my rent every month, I have to pay our employees every month. So expenses come due every month. And building a brand takes time. So the gap between the time it takes to build a brand to start to cover your just day-to-day cost, how long does that take?
So that took us a couple of years, and my sisters and I weren't taking a salary. I was living on a line of credit, like everything was... So there's this financial stress, right? Financial stress that how are we going to make this work was one of the key things to overcome. So those early days, it was all about getting products produced and out the door so that we can start to cover expenses.
The other thing that I would say, I'll give you another one. We actually started ideating and doing product development in the kitchen, so it was very much tabletop stuff. And then as we started to scale that up in the factory, there's always this learning curve of scaling up recipes such as bites, because bites were a unique, they're still very unique format in the category.
If you look at the breakfast granola bar category, it's all bars. We wanted to disrupt it with the bites, but developing a recipe that gets your ingredients to stick together in a bite format, but when you put them in a bag or a pouch, they don't stick together, that didn't come easy. Or there were times where "How are we going to make this work?"
So it's also getting these ideas that were great on paper, but commercializing them and manufacturing them at scale were also some of the challenges that we had to take on those early days, at the same time that we had to generate the revenue to cover our financial needs. So it's not for everyone, I would say, but I think what we had is we had great people from day one, whether it was family support, the employees.
We had grit and determination, and we had experience, and we plowed through it, and we had the right product that ultimately resonated with the consumer. So when they got their hands on it, they tasted it, they looked at the package like, "Ah, I get it. I like it." Yeah, and I think that's key when you're thinking about innovation and new product development is what does the consumer want and how can we give it to them, and is it the right time to give it to them?
Mm-hmm. You know, MadeGood markets bars, granola, cookies, crackers. I saw your new muffins in Target a few months back, and I think about what the market opportunity is for certain products and the timing of launching those products. So how do you think about innovation as it relates to both opportunity, timing, and the consumer itself?
As an entrepreneur, we... And a founder, and I've met many of them, we love to innovate. That's part of being. It's let's create something new, and I think that's a great energy that we have as entrepreneurs is that energy of creation and innovation, and that's what I bring every day to the business.
And we have, as you can see, we've created a lot of products. Now- I would say early on, I'll confess here, it was not driven by insights, it was driven by gut of myself and saying, "You know what? I think we can do crackers. I think we can do crispy squares, and I think we can do this. I think it just makes sense."
So there was really no insight other than the gut feeling that I had around what the consumer wanted. Now, there's some good in that, and there's some negative because your hit rate, number one, is not as good. So we had some successes and some items that didn't work. That's one part of it, and then the other part of it is as you created more products, it creates more complexity and lack of focus in the organization.
In hindsight, I'm sitting here and I'm saying too much innovation, innovating too fast, SKU proliferation, going into different categories. It sounds good. Initially, it generates a spike in revenue, but is it sustainable in the long run? It's that fallacy of rushing for volume and rushing for sales. It can happen in distribution.
It can also happen in innovation. So now we are a lot more mindful. We're really listening to our consumers, understanding what they want, what gets them excited. Also being culturally relevant, what's resonating with them today, and really starting there to inform our innovation versus what does Nima think.
Where do you source those insights? I'm sure you use data, but how do you talk to consumers? How much of the anecdotal aligns with the analytical insights that you're able to acquire? So I'm a believer in the fact that you need both. So yes, there's the classic marketing research and focus groups and insights and all of that, but I do believe that you need to Add two other elements to it.
One is around social listening, really listening to what consumers are saying out in the wild. Unprompted, what are we hearing, either about us and our brand, but in general about how they eat, what they eat. So there's that mining work that we do, and then there's the consumer intimacy that we wanna continue to build in our company, which is get to know our consumers, become obsessed and intimate with them, talk to them, ask them questions.
Now, a little bit more anecdotal, but I think when you marry all three together, I think it's a more holistic feedback or a holistic insight around where we should go versus relying either at one end only on research or at the other end only on what a consumer said to me. So I think it's the continuum of adding all of them together and bringing good insights to the organization to innovate.
Let's get specific. I mentioned the muffins, and frankly, I was a little surprised to see muffins, not because I didn't think you could pull them off, and you did. They taste amazing. But what was the category opportunity that you saw there? Because breakfast muffins, yeah, people eat muffins all the time at that time of day.
But what did you see and what did you hear from your consumers that gave you confidence that it would be a successful product that you could add to your portfolio? The oat cups, also known as muffins to most people because they look like muffins, they taste like muffins, but we call them oat cups. My apologies for calling them muffins.
No, that's okay. No, it's okay. We cannot technically call them muffins because there's a specific definition of what a muffin is in terms of serving size and all of that, so it's oat cups. And they are very complicated to manufacture, so we, as I said, we're vertically integrated, so we also had to figure out how to make these products And how to make them allergen free in our plants.
So it's not something that happened overnight. This project took us many years to bring to life, and I would say when we started to work on it, we did not have as much consumer intimacy as we have today. So it was more driven off of a survey of the landscape and gut versus listening to our consumer. So that's the from to that I just spoke about.
So given that we are self-manufacturing, and any time we want to innovate a new platform, it's gonna take us many years, 'cause we have to build the infrastructure against it, and we're only 10 years old. So this came about a few years ago, but it came about on the back of our MadeGood Morning Bars, and understanding that morning occasion was something that consumers were using our snacks for.
And so expanding that offering from our MadeGood Morning Bars to MadeGood Oat Cups. So that's kinda, we had success on the MadeGood Morning Bars, baked bars, and so we ex- it was more of a line extension into a different format. And I think the overall thinking for us is that consumers want to try new things and formats and shape in a category that's primarily bars.
And that's why for us, the bites are a great way to deliver that to the consumer, because it is something that's totally different, that's poppable, that's fun, that's portable, that's different, and it tastes great. How much does retail buyer feedback or insight support your innovation strategy? I think about MadeGood, and the retailer that immediately comes to mind is Target.
I feel like you've developed a really good relationship with Target. Did they ask you for new products? Do they advise you on where to go or what to create in terms of new product development? I feel like their influence is just as important as the consumer, sometimes at least Absolutely, and we have great relationships with our retail partners.
We love working with them, and we take their input and insights very seriously because they have consumer intimacy. So it all comes back to consumer intimacy. Getting that through the retailer is another great way for us to get to know what the consumer is looking for. So yes, we do work with them. Now that we are at a larger scale, we can have more, what I call brainstorming sessions with them.
It doesn't mean that what we think or what they think will come to be, but I think brainstorming and just ideating, it's great. The bigger the top of the funnel, the more we can have variety of ideas to work with so that we can have a better quality of innovation coming out the other end. And it certainly helps when you have a mission-driven business or at least one that is looking to do good as much as you are looking to sell a lot of product.
And MadeGood is known for and respected by so many because of its focus and adherence on things like sustainability ingredient sourcing, social impact. But those things are difficult to, one, measure, and they're also sometimes difficult to maintain as you continue to scale. How do you measure your impact at the social level, and how do you maintain that integrity as you continue to grow?
Let me tell you a story. When COVID hit, our business declined from Q1 of 2020 to Q2 of 2020 by 70%, and that was because the lunchbox occasion all of a sudden vanished, and I don't know if you remember, all of us became obsessed about baking everything at home. So flour and oat and raw ingredients went through the roof, and then finished granola bars tanked.
We were at a time where we were expanding, and we had 300 production employees that were scared, and they were coming to work, and they're dependent on us and our paycheck. To survive, to pay the rent, because production employees, they live paycheck to paycheck. They need the paycheck to make the rent at the end of the month.
We are a living wage employer. We care about our frontline employees. But how that came to be when you have a situation where your business is down, you're in financial stress, you have your creditors knocking at your door, but then you have employees that also need your help. That's when purpose and all of this stuff that you talk about, that's when you're put to the test, in my opinion.
Because doing certifications and getting stuff on your package is one end, real-life situations is another. So at that time, if one employee got in contact with someone who had COVID, they had to go into a 14-day isolation Now, that means they couldn't work for fourteen days, they couldn't get paid for fourteen days, so therefore, they could possibly not pay the rent.
We covered all of those pay fourteen-day off periods for all of those three hundred whenever they got to go and isolate. We gave them a hero pay, which we kept on after COVID ended, and we did this not because we had any objectives or anything, because it was the right thing to do. We were all going through a crisis.
Now, we all know what happened. COVID ended. Everyone got out, and demand shot through the roof. What happened was that our employees were there. While other companies may have laid off people, we kept everyone, and they all showed up, Ray. It was unbelievable. Everyone came, put in so much extra effort. We never went out of stock.
When others, I don't know if you recall, many had supply challenges. We had our suppliers stand by us, we had our employees stand by us, and we were able to deliver to our customers, we were able to remain on shelf, and we were able to take a lot of market share as a result of being available during that period.
So it ended up being good for business. So how do I measure? It's hard to measure, but I think if you do the right thing, it will be good for business. You just have to wait for it to come back the other side. And so it's hard to say at that moment that you're making that decision, "What is my ROI on doing this thing?"
I think you do the right thing, and the results will come, and that's the magic of business, and I think this is what they don't teach us in business school, is that there are some unlocks, some Goldilocks about doing good, doing the right thing, not taking shortcuts, thinking for the long run, that actually help the bottom line.
But you gotta play the long game I think that's such great advice for entrepreneurs, which is if you do good, good things will come as a result. And it's difficult because it's expensive to be in this business, and the industry is tough and sometimes very unforgiving. But if you can make it past those first five years, if you can make it through COVID, it probably shows that you can make it in the long term.
And I think about how far you've come and how much more room there is to grow for this brand. Where do you see MadeGood in the next five, 10 years, and do you see its evolution as being primarily distribution-driven, innovation-driven, or some other form of growth? Oh, I believe we have great-tasting products.
We have great innovation with our bites. We have still many households and many people who are not aware of the brand, and our mission is really to deliver our great products to as many households as possible, and do that through maintaining quality and delivering value. So I think it's less of a distribution play and more about getting more people aware of what we're doing, who we are, our products, and get them to consume more of our products.
And as a result of that, we can scale and keep delivering value, keep delivering organic product at a value price to our consumers. And as we scale, hopefully, and selfishly, Ray, be able to do a little bit more good, whatever that may be, in whatever form, however small. I just think it's a beautiful circle, right?
You just keep growing, reinvest in the business, reinvest in the purpose, keep growing, reinvest, reinvest, keep growing. That's the fuel, that's the engine of who we are, and that's what gets me excited. Hopefully, we can keep doing it for the next five, 10 years. Why not? I'm still young, for those who calculated my age earlier in the podcast.
You are young, Nima. As I look at you right now, you are a young man, and I think what you and your sisters have built is just really remarkable. I'm a focus group of one, but if you go into my cabinets at my home, you'll see that MadeGood is a primary brand in my household and one that I am going to continue buying for a long time.
So thank you so much for all the amazing products that you make, and thank you so much for this outstanding interview. I really appreciate it. Thank you, Ray. I really enjoyed being here, and thank you for the opportunity
