[00:00:10] Ray Latif: Hey folks, I'm Ray Latif and you're listening to the number one podcast for the food and beverage industry, Taste Radio. This episode features an interview with Will Nitze, the founder and CEO of brain health-focused CPG brand IQBar. By his own admission, Will Nitze doesn't give great advice. His nearly 41,000 LinkedIn followers likely have a different opinion. Will cut his teeth in CPG in 2017 when he launched IQ Bar, a pioneering brand of protein bars infused with ingredients, including lion's mane, that are said to improve cognitive function. The company has since created a portfolio of adaptogen-enhanced product lines, including zero-sugar hydration powders and instant mushroom coffee. IQ Bar is carried in over 10,000 locations, including Walmart, Sprouts, Wegmans, BJ's Wholesale, Vitamin Shoppe, and HEB. Over the past six years, Will has chronicled his experience as an entrepreneur via daily posts on LinkedIn, where he shares words of encouragement and lessons learned from building an upstart brand. But he's careful to contextualize insights and advice, including those about IQBar's successful e-commerce strategy and its unorthodox approach to financing, as specific to his business and not necessarily applicable to other brands. Nevertheless, he has the attention of many founders who praise his candid takes on the food and beverage industry. Will is equally forthright in the following interview, in which he shares and explains his perspective on everything from fundraising, quote, bootstrapping is the worst thing you can do, staffing, quote, how can we build a $50 million brand with a staff of six, and retail strategy, quote, choose channels that scale well. Hey folks, it's Ray with Taste Radio. Right now I'm honored to be sitting down with Will Nitze, who is the founder and CEO of IQBar. Will, great to see you. Thanks for having me. So originally I had hoped that we'd be meeting in Boston and recording in person, but you moved out of the area not too long ago. You're based in Miami, if I'm not mistaken.
[00:02:23] Will Nitze: Yes, just in time for the winter.
[00:02:27] Ray Latif: You did move just in time. It's actually snowing out right now. But why else besides the weather did you move to Miami?
[00:02:35] Will Nitze: I've been in mass for a very long time. I grew up in Northern New Jersey, which is also cold. And, uh, and then I went to high school in Western mass. And then I went to college in Boston and then I stayed in Boston for 10 years after college. And I don't know, I was just ready for a change, ready for warmer weather. I had a buddy who moved down here. I don't have kids. So it's like picking everything up and moving is actually pretty easy. And I also didn't do the COVID thing, you know, where you bounce around, Airbnbs or go to random cities. Like I never did that. And I was always kind of jealous of that.
[00:03:09] Ray Latif: Well, I hear that Miami is a great place to do business these days. Is that true?
[00:03:14] Will Nitze: Anywhere is a good, good place to do business. Uh, if you're selling stuff online, so we don't have an office and we had an office actually in Boston at MassChallenge. I don't know if you're familiar with them, but it's an accelerator and they give us free office space. So like 2018, 2019, we used their free office space and then COVID hit and we've been remote since whatever that day was, like March 9th, 2020 or whatever it was. We're still very small, but we're all over. Our head of sales is in Eugene, Oregon. I'm in Miami. Our creative director is in Salem, Mass. We have a warehouse in Kenosha, Wisconsin. It's truly spread out.
[00:03:55] Ray Latif: When COVID hit, I wonder, were you as active on LinkedIn as you are now? And I say that because on LinkedIn, you are quite active. You have quite a following. As of this recording, you have 40,691 followers and counting. Was that something, was your activity, was your interest in LinkedIn more COVID related or was it pre-pandemic?
[00:04:21] Will Nitze: No, I mean, it was a confluence of many things. I mean, for the first couple years of starting and running and growing a consumer goods company that was not seeking to raise mega rounds. I very quickly learned that getting coverage, it was very difficult, right? Like publications don't really want to cover you unless you raised a bunch of money or you got, you know, a zillion new doors or whatever. And so I just sort of over time realized like I have to, in some way, shape or form, we have to become our own publication, so to speak, and create organic content. And there was also a trend that had taken root by, let's say 2020, around founder-led content. I think TikTok was really big for this development. I mean, it makes sense, right? People like to hear from people over brands. And so I was just sitting in my dining room with my wife, who's our CMO, and I was like, what is the channel that I can become my own publication on? And I was kind of agnostic, right? If I loved making short-form video, I would have done TikTok. I just so happened to love writing. And I also felt there was a huge arbitrage opportunity. LinkedIn is, for lack of a better term, lame in most people's eyes, right? It's just, it's like a resume uploading site historically, and it's pretty like boring stuff that you're gonna find on there. Just an interestingness arbitrage is a lot easier there than on, let's say, TikTok or Instagram or whatever. And then it was just like fun. You know, I just like to, you know, some people wake up and they journal. I wake up and I'll write a post. It's sort of a form of journaling. And then the last thing I would say is, there was no obvious benefit. I wasn't like, oh, if I do this, that will happen. I'll get a new retail dojo or whatever. It was truly like trusting in the phenomenon that if I can get a big following, Good things will start happening. I don't know what those are, but that will happen. And that has come to pass for sure. I'd say the biggest thing is just meeting awesome people you otherwise would have never crossed paths with. But yeah, it was, it was a confluence of a lot of things.
[00:06:42] Ray Latif: And giving you visibility and a platform to promote your brand. Again, you have well over 40,000 followers and it seems like when people hear your name or hear the name IQ Bar, there's a point of reference. You're like, I've heard of Will, I've heard of IQ Bar. And it's not like this is the first time I'm encountering this person or his brand. Yup. The volume of your posts feels like it has a lot to do with the number of people following you. Am I wrong there? It feels like not only the content matters, but how much you produce on a regular basis.
[00:07:20] Will Nitze: I just try to do it daily for a variety of reasons. It's easier for me to do it daily than for me to do it once a week, as ironic as that may sound. Just getting that daily habit is key, because it's just like, you wake up at 7.30, 7.30 to 8, you do the post, and then you make coffee, and yada, yada. And then yeah, you see more results, right? Like the more you're posting, the more content you're putting out, the more people will take notice. And it's definitely not easy. I mean, just think about like, if someone said you have to wake up and generate an insight every morning, that's kind of stressful, just at a high level, right? Because like how many insights are in any one person's brain? that are truly different, unique, original, et cetera. Not many for most people. So I think you can do one of two things as far as I can tell. You can curate. take interesting things other people have said or done or whatever and cover it, or you can do something on a day to day basis that has a byproduct of spitting out interesting insights, which is entrepreneurship. So like just my day job on a daily basis, I'll have all these like micro insights where it's like, huh, I thought it worked like that, but it works like this. And then I just have this like messy Google Doc where it's just a bulleted list and I just add that to the list. And then so I wake up and I'm not, there's no writer's block because I'm not like, huh, how do I conjure this? This thought is just, let me look at the list. One of them will speak to me, pluck it out, flesh it out, put it into the universe. I know other people have frameworks and templates and first of all, I wouldn't find that to be fun. Second of all, I don't think it's that differentiated because it's really dry and sort of square. And then I just don't even think I could create good content that way. It's not authentic to what I would want to say.
[00:09:19] Ray Latif: Oh, your content is great. And I enjoy reading your posts daily. Your insights, I think, are quite helpful for people who are building brands. And yet, a post that you wrote on LinkedIn this morning says slightly otherwise. I'm going to read that post, the content of that post, which is, this app, meaning LinkedIn, is for inspiration, motivation, networking, and entertainment. If you ever find yourself relying on a social media feed for actual business advice, Something has gone very wrong. Hashtag PSA. So on the one hand, I think truly your insights help people to build their businesses and brand build. But you're saying on the other, this isn't really the platform for that. Can you expound?
[00:10:03] Will Nitze: I don't think my insights do help people build a better business. I just don't, I think people often confuse interesting things and business entertainment and quirky ideas or things that make you laugh or whatever, that whole bundle of stuff that's on your LinkedIn feed, they sometimes confuse that with a prescription for my business. I just think that's a terrible idea because Everyone has their own set of contextual details. They're in a certain macro environment. They have a certain fundraising profile. A company that has 100K versus 10 million, you would give very different advice to. They have a different team. They have a different product that's in a different category. They have a different go-to-market strategy. I also realized this through just asking people for advice. Unless someone has done the thing you want to do in your category or an adjacent category or a comparable category, like very recently, like no more than five years ago, unless all of those checkboxes have been checked, the advice is not only useless, it might be harmful. because it's gonna send you in the wrong direction. And it's gonna sound compelling, that's what makes it harmful. You're like, huh, this person has XYZ pedigree and this worked for them and maybe I do that. And it's like, no, that's the worst thing you could do because you're in a totally different category. You shouldn't be on e-com, you sell a frozen whatever. So I don't know, it's a PSA because it's like, I hate seeing people fall into that trap Now, there's some nuance to that. I actually think LinkedIn can be really useful for networking into the people that you can then have a bilateral discussion with and go really deep on topics and then get actual good prescriptive advice. It's a good mechanism to find the right people through what I would call maybe like pontifications or business entertainment or whatever. And then the second step there, you can actually get really good prescriptive advice given all the context.
[00:12:25] Ray Latif: Well, you've been in CPG since October, 2017, six years and four months, according to LinkedIn. And it's interesting to me how entrepreneurs learn about the business and use information that others share with them about how to be successful in business. Where did you develop your foundation for learning and ways to succeed in CPG?
[00:12:51] Will Nitze: not through any human being. I'll tell you that much. So I just, I think advice is not helpful to get to that end goal. The only way I know how is trial and error is doing it yourself. And there's a good book called traction by Gabriel Weinberg and I think Justin Maris that kind of like covers this topic of, you know, forget the quote unquote playbook, how people 10 years ago got to the promised land. You should look at every possible way you can develop traction. Let's say there's 20 different ways, and don't discount the ones that sound crazy, right? Direct mail, going to events, or this or that. Don't discount those. Keep those on the list. And then try all of them. And pretty quickly, you'll learn a number of things. Maybe you'll be surprised, maybe you won't, at what delivers the most traction for any input of one unit of energy. you're going to learn a lot and then just siphon down, double, triple, quadruple down on those things that drive traction. What is going to drive traction though today, you would get totally different results 10 years ago. By the way, the number of black swan events in the last couple of years is breathtaking, COVID, the Silicon Valley Bank collapse, it's I mean, so much crazy dynamic shifting events have occurred that have changed the game. I just fundamentally believe you have to Engage in trial and error, collect data, learn from data, and iterate. And I don't know a better way of doing it. Now, there's some objectively right ways to do certain things. Accounting is accounting. Gap accounting is gap accounting. There's a right way to set up a P&L. Fair enough. But the things that actually drive success or failure in a business, sales, marketing, product, go-to-market, et cetera, that is constantly changing.
[00:14:49] Ray Latif: Yeah, you're right. It is constantly changing. I don't necessarily think it's sort of flip a coin and maybe this will work. Maybe this won't work based on the brand or category that you're involved in. I do think, as you mentioned, fundamentals are so important to nail down. And, you know, if you don't have a CFO or, you know, an accountant on your team, or at least someone who knows numbers, you would do well to hire someone like that. But are there any lessons just in terms of the basics of building a brand that have helped you? Cause I don't want it to sound like, or I don't think you're saying that we tried a whole bunch of things that weren't common to or traditional to building a brand. I don't think you're saying that. I think it's more, there are certain fundamentals you need to adhere to, but there are other things that we had to learn as we went.
[00:15:45] Will Nitze: Totally. To be clear, you should be copying 90%. Everything I just said is in the final 10%. Don't try to get creative in incorporating your business. Don't try to get creative in how you do financials. I would argue for most people, don't try to get creative in how you do flavor profiles. There's a whole series of things that I think in the vast majority of cases, you should not try to get creative on. You should do what's either right and or give the people what they want. And then in that last 10%, though, which is really just like, how do I take this thing and scale it up? It is trial and error, but it's not haphazard trial and error, right? It's trying things based on highly educated guesses or data or anecdotes you're seeing in the marketplace. And then just like constantly refining your perspective you were asking about, you know, what are like the basic block and tackling things of building a brand. I think I won't give a revolutionary answer to that. It's like products. It sounds weird, but people stop at pretty good. And I think that kills brands. Like everyone knows you got to get from like, okay, to pretty good. And then one thing I've seen is a lot of people just stop at pretty good or good enough. And then they'll start obsessing over, LTV to CAC metrics and how do I make better creative and how do I hire more people and not realizing that if you had gotten that product from pretty good to excellent, like all of that would have improved. The number one thing you could always do to improve all metrics is improve your product 10%. And I think branding is not that far behind that, right? There's just such a fundamental uptick in business you can do if you have branding that appropriately calls out the right hierarchy delivers the right aesthetics, etc. Product brand, just table stakes and push that truly to the limit because the multiplier effect across all other aspects of the business is so massive. The other thing is just gross margin and fundraising. It's very basic concepts. How much money am I making before taking all other expenses out? Then how much money do I have in the bank? This is another really interesting topic around bootstrap. There's a whole thing in the last couple of years where bootstrapping, it's like the rise of bootstrapping. Everyone's obsessed with bootstrapping and keep more equity and yada, yada. I fundamentally think that's the worst thing you could ever do in consumer goods, unless you're rich or you have a rich uncle or whatever. Then fair enough. Even if it is possible, I don't think it's advisable. Let's say you do need some money. On the flip side, how do you be as minimally dilutive as possible? For me, my whole thing was own more than half the business when I sell the business. How do I make that possible? You can just work backwards from it. I need to raise it over across x, y, z rounds. Over this period of time, the valuation needs to be this, this, this, and this. I'll get diluted that down there. Cool. And then of course, like I said, gross margin plays right into that because the better your gross margin, the less times you're raising and the quicker you get, get to profitability. And so like product branding, gross margin, having enough money in the bank. And then the last thing I would say is just like, go to market. This is one where I think people drink the Kool-Aid of people who have been successful. Like there's the playbook start in natural, go to conventional, go to big box, go to club. I think that's so dangerous when people just try and shove that down your throat as an entrepreneur. It's like, yeah, maybe that works. That could work and that did work. But what about eCommerce? I would argue for most brands that can pull it off, they should be in their first couple be doing doing e-com only. I think nut pods just got acquired. I think they did e-com only for the first three years before they even touched and they crushed it on e-com and then subsequently crushed it in brick and mortar. I don't think that's a coincidence but you don't really hear that from like people purveying the playbook because frankly they don't understand e-commerce in many cases and they don't understand how e-commerce has evolved. Like one random anecdote we got our biggest retailers we got because of our online presence. Think about that. It wasn't like, oh, what are your velocities at other retailer? It was like, oh, I saw your Amazon ranking. That was literally how we got into the biggest retailers we're in. That's not necessarily intuitive and people wouldn't have predicted that or told you that that was going to happen, but that is what happened. Just your go-to-market, is the last thing I would say, and just sub-bullet point, choose channels that scale well. Amazon would be an example that scales well. And what I mean by that is, can I double, triple, quadruple my revenue in this channel and hire zero new people? In other words, what's like a dial I'm twisting, and I could just twist it harder, and it scales really well. And then there's some brick and mortar channels that are similar to that too. So those are my blocking and tackling tips.
[00:21:14] Ray Latif: Will, you said a lot there and I love everything that you said. I want to break down a couple of things. One, you talked about Nutpods and Nutpods is a great example and a great brand for this conversation because when it came out, frankly, I didn't really understand the need for a brand like this, but I am not someone who needed a brand like Nutpods, but it did solve this demand, this thirst for a vegan, non-dairy creamer. When you thought about launching IQ Bar, did solving a need come into play or was it much more of a personal drive to create a CPG brand and a personal need for this type of product?
[00:22:03] Will Nitze: It was definitely a personal need. And I don't even know if it was a need, it was like a want. Often people say, you know, find some need. You could also just find some strong want. I was really into brain-related stuff. I studied psych and neuroscience, among other things, in college. And then I experienced failings of my own brain in my first job because I had a terrible diet and I was getting headaches. brain fog, mental fatigue on a daily basis, yada, yada, yada. So I just, I got really interested in the intersection of nutrition and cognition and how the things you eat today impact your brain this afternoon. And then also how the things you eat for the next 30 years impact what happens to your brain when you're 60, 70, whatever. And a couple of books really impacted me too. Grain Brain was one of them by David Perlmutter. But basically what I realized was there's really nothing that no ready-to-eat thing that sat at that intersection. Like if you looked at cookies or bars or what have you, it was all body, body, body, like build muscle, improve digestion, lose weight, like all body, right? Cliff bar, the classic bar, go, it's a rock climber, go hike a mountain. And I didn't really get that, like why? There are two things we care a lot about, which is our brain and body, and we seem to be focusing on functionality around just one of those. But there was, of course, no data, like market data, that the market wanted this thing. I mean, this is why a general mills or whatever would never do this, because there's no data that people want it, right? You're taking a total shot in the dark. But I wanted it. And I thought other people probably wanted it too. What I then learned over the ensuing year was incredibly nuanced and that whole idea of what people want and how they're related to our product got massaged many times. The net out of it is basically I created brain food, I did a Kickstarter, it went well, raised a little bit of money, started selling, and very quickly I learned people don't really want brain food, which may sound funny for me to say that. They want a bar that delivers the checks, four or five checkboxes they have that are nutritional checkboxes. Let's say protein, protein source, sugar count, carb count, label cleanliness, price point. And then, and only after you check all five of those boxes can you kind of interest them in some pluses, shall we say. So, oh, and there's this kind of unique brain element to it. But the order of operations there is critical. If you inverse, if you invert that order of operations and you start with sort of a off-putting or arcane framing of your brand, it's intimidating to people. Instead, meet them where they are. I want a chocolate sea salt bar that has 12 grams of plant protein and one gram of sugar and the price point I can get behind and, oh, by the way, you know, brain nutrients. That was maybe the biggest unlock of the entire company's history, that realization, because then it allows you to scale into Walmart, and Target, and Costco, and Sam's Club, and BJ's. No one's going into BJ's looking for brain food. That's not a thing. That was the scale unlocker.
[00:25:26] Ray Latif: In your hierarchy of importance, I'm a little surprised that you didn't include taste as near the top of the list. And I feel like taste really does allow you to scale in those mass retailers that you mentioned. And earlier in our conversation, you did talk about increasing the tasteability or the flavor of your product or optimizing the flavor of your product by 10% and that can solve a lot of problems. That can solve a lot of goals or that can address a lot of goals that you have. How does taste factor into your business strategy?
[00:26:01] Will Nitze: I think it's pretty simple. Everything I just described is how you get someone to try, and then taste is how you get someone to rebuy. Rebuying is just as important as trying, if not more, because it's more cost effective to get someone to buy it a second time. So that's the delineation I would give there, and that's critically important too. It's taste, but with functional foods, it's also how you feel. When you eat a plate of fries, that tastes really good, and then you feel terrible. Now, you might go back just because it tasted so damn good that you're willing to make that trade-off. But if you can hit taste and make them feel good, Well, that's the holy grail, right? So I think it's both of those things, especially with functional, like people in the bar set, they want function. Part of the function is, oh, this digests well and makes me feel good. So no, I mean, it's critically, critically important. Taste is king and always has been. There is a moment there with certain trends where, funnily enough, that was not the case. Like take keto, right? It was such a craze that you could put the word keto on a piece of cardboard and someone would still eat it because the motivation centered around the diet superseded taste appeal and preferences around taste to such a great degree. that you could build a thriving business with the product that tasted terrible. It was a wild moment in time. That's not the only time that's happened, but it's probably a good example. Then it always, everything reverts back to the meme. A couple of years later, Hershey's stock was at an all-time high. They'd never been selling more Reese's. They'd never been selling more chopped up bars. Why? Because it tastes good and it's cheap. Price is the most overlooked variable in all of consumer goods, in my opinion. No one's going to try your thing in BJ's or Costco or Walmart if it's not priced right. Some will, but you will never hit mass market. No one talks about price.
[00:28:16] Ray Latif: When we spoke last, we talked about, or you talked about creating a $50 million brand with only six people, which you're not at $50 million yet, but the idea of trying to get to that revenue point or that revenue goal with only six people sounds pretty remarkable. How do you go about hiring and thinking about full-time employees versus outsourced help?
[00:28:40] Will Nitze: I hate hiring. It's my least favorite thing ever. Second, maybe only to hiring. because it's just so impactful and so risky. When you have six people, you bring on someone and it doesn't work. It's like devastating. Now at some point, if you really scale your business, you're going to have to hire more people. But for us, we were always like, how do we, and this coincided with the market correcting and everyone's saying you need to have tiny SG&A and be capital efficient. So we were doing it before it was in vogue, but you know, it now is very much in vogue to just have less people. And you can create an analog to hiring someone, which is hiring a third party. It's maybe more expensive per unit of time, but less expensive overall, because for a variety of reasons, they have maybe better experience, better tools, more focused, yada, yada. and you can fire them, right? And feel okay about that. And so we've definitely created a hub and a spoke model of a really awesome core team of people. And then the spokes go out to an Amazon agency, agency who helps us with emails and agency who helps us with our website, blog posts, et cetera, et cetera. Many of which we would have had to hire people to do, That's just how we did it, right? There's many examples of other people who insourced that and have won. So this is like, comes back to the LinkedIn thing of like, I could go out and say, you need to have only five people and you need to do that. It's like, no, I can give you an anecdote or a case study of how that has worked and will work, but you can also do the opposite and that could work too. But I do really like it. I do really like it. And the only other thing I would hearken back to is it is only possible if you operate in channels that scale.
[00:30:37] Ray Latif: How do your investors feel about your staffing strategy? Sometimes investors will make recommendations in terms of, Oh, you need a person for this aspect of your business, or you should consider hiring this person full time. They'll help you scale. But how do your investors think about or get involved with that strategy?
[00:31:00] Will Nitze: Well, the first question is, have they ever built the business? Maybe, maybe not. Again, advice is cheap. And I think one thing investors can tend to do, and we have great investors by the way, but can tend to do is say, oh, XYZ other portfolio company did this and that, and that worked really well for them. Again, we'll keep coming back to that same LinkedIn post from this morning. That's great that that worked for them. Are they in our exact geography with our exact retailers, with our exact form factor, with our exact gross margin? No, no, no, no, yes, no. Okay, then that's not that useful. Thank you, though. You just observed so much data being in the thick of it, on a daily basis that when people are like, maybe you should, so let's say you don't consider it, right? Someone gives you a piece of advice. You think, okay, let me take that in. Let me look at those other portfolio companies. How did that work for them? And so it's not that it's not useful. It's just the odds that you already didn't have that thought, you know, yourself, because you're so close to it all is pretty low. You can get creative to solve any one solution. So an investor might say, Hey, go hire this person. And you might say, well, have you thought about instead doing it via two third parties in this way? No, I actually hadn't. Why hadn't you? Cause you haven't seen it before. Just because you haven't seen it before. It doesn't mean it's not going to work. I mean, the classic example is like skinny pop, right? They had like no people. Right. And they scaled massively. I can't really think of, that seems to be like the goat of like low SG and a to revenue ratio. But I want to be like those guys. Because everyone talks about them in a good way. No one's like, oh, that's so lame. They didn't have more people. It's like, no, they're flabbergasted that they pulled that off. I want to be that group of people. So why would you instruct me to do otherwise if I could approximate what they did over there? But it's a dialogue, you know?
[00:33:03] Ray Latif: Yeah. I mean, if I were an investor, I would think having a smaller staff, but highly effective staff, would be pretty attractive. And it would also, I think, put the founder in a good position to fight for a valuation that they thought was reasonable and right for their company. And you've talked about this. You've talked about the importance of fighting for the valuation that you believe represents the value of your company. But how do you do it? and actually get an investor to buy in to that belief?
[00:33:44] Will Nitze: I'm going to say some things that may seem like mean or whatever, but they're not. It just is what it is. I think the earliest stages, first of all, angel investors are the best investors. They just are, right? You get the best terms, you move the fastest. It's just the least headaches, the documents are cleaner, more founder-friendly, yada, yada, right? I've told our institutional investors this, if I could only ever raise from angels, I would. There are only so many people who can write $500,000 checks though, right? But our first two fundraising rounds, we raised from angels. I think it was 625K and then a million a year later.
[00:34:25] Ray Latif: How many checks did you collect and what was the average size?
[00:34:28] Will Nitze: I think it was the first one, the 625, we had two like whales, 200K each. And then the last, like 225 was super easy. I think there was one guy who came in for a hundred and then the rest were like, you know, 50, 50, 25 or whatever. But a lot of people will say, I think the idea of a strategic investor is like the biggest myth, maybe in all of the startups. I think it's a total farce. Unless they're turning on sales, they have some freakish operational skills that you don't have and they can help you with. They can introduce you to other investors or help you raise other money, or they can help you with hiring. Maybe there's a couple other things, but those things almost never come to pass anyway. Go just talk to people about how many times those things have happened. They're like, yeah, I got advice here and there. You couldn't have gotten that advice by just calling them? Well, maybe. People are always like, yeah, find seasoned food and beverage investors. I do the exact opposite. I do the exact opposite. I mean, those people are going to beat you up on value all day long, because frankly, they're just smarter in this space. They're not smarter period, they're smarter in this space, because they do it all the time. Why would you want to negotiate with that guy or gal? Anyway, all the earliest money we raised was from people not in CPG. I think we raised over $2 million before we got to a single CPG investor. By the way, all those people are going to crush it. on their investment. That's like the great thing, right? But then, yeah, I mean, once you get to the point at which you need institutional money, now you are negotiating with people who have made a lot of food and beverage deals and are gonna just frankly grind you harder. And that's just comes down to like, how good are you at negotiating? How good a storyteller are you? But we have great partners. I mean, we circle up, who I guess got acquired by Rose Park Advisors, It was our first institutional investor, and then Lotus Bakeries was our second institutional investor. We were able to keep control of the company even after $10 million of fundraising over the course of whatever, it's been six and change years. Why? It's like everyone says, the first money is the most expensive. If you just get totally screwed on that first couple of primaries, it's like, that matters way more what you do there than like the third, fourth and fifth.
[00:37:08] Ray Latif: Will, you had said that getting the funding you want comes down to how good of a storyteller you are or how good of a negotiator you are. And almost like they're kind of one in the same, are they?
[00:37:23] Will Nitze: Storyteller versus negotiator? The Venn diagram overlaps for sure, because you're telling a forward-looking. What do you do when you negotiate with an investor? You tell two stories. You tell a backwards-looking story, and then you tell a forwards-looking story. Backwards-looking actually involves a good amount of storytelling too, and then forward-looking is pure storytelling. Then you're saying, and therefore, you should value us at X. So you can't really negotiate well without telling really good stories and painting a really good picture. One of the really cool things about Circle Up was that, I think it's the coolest model ever. I don't know why more people didn't do it and don't do it. They just use data. They're like, I'm not gonna get your product, try it, and then I really like it, and then I'm gonna, who cares what I think? Just look at the data. And mostly, when I say that, I mean Amazon data. Because you can create proxies for, how on trend something is, how much it's growing, yada yada. And so they had us up because we just had, it looked good in the data and it was totally unemotional. So actually, frankly, a lot of like that storytelling I would have had to tell was told for me. But yeah, and then there's all these things that are not really storytelling, which is, I mean, I guess you get everything storytelling at a certain level, but how do you play people off each other? How do you, make it seem like you don't need money. It's all the standard negotiating tactics. It's cool because I've done it now with three different types of entities, like people, angel investors, high net worth individuals, a venture capital fund, and then a strategic. They were all very different. It's cool. I've been able to see three different takes on it.
[00:39:10] Ray Latif: How much did innovation or trends influence the investors that you've had from angels to institutional? Because when you think about sort of a brain health bar in 2017, pretty innovative. I mean, you didn't see a lot of that kind of food out there. Nowadays, it's a little bit more common to see functionality, brain boosting functionality in food and beverages. Maybe it's on trend. You could, you could probably say that, but how much does that matter to investors? How much does that matter to your investors?
[00:39:47] Will Nitze: A lot, a lot. And by the way, I like sort of hurt myself. I remember in talking with Circle Up. I said what I said to you earlier about, well, actually, people often bias because they're keto or they bias because they want 12 grams of plant protein in their external. You know, like that's interesting because your name is IQ or you frame yourself as a brain, you know, blah, blah, blah. It matters a lot. But one thing I would say, which I think is, important for a bit you know as a business leader but also just to run a company that's resilient is never ever be too tethered to a trend look at all the brands that were keto first they're all dead or dying or on their you know their way there save for a few then look at like quests right they could have gone that keto angle and they were like no we're just 20 grams of protein, three grams net carbs, one gram sugar. This is the demo we're going after. And Quest is like a billion in sales or something. They've never been doing better. So I can't emphasize that enough. Don't, don't, don't tether yourself to a hot trend or ingredient. Chia was really big back in the day, and then it wasn't, and then kale wasn't, and then it wasn't. I guess that you can call that a trend too. So for us, it's like, how do we be resilient against trends? Keto can come and go. We need to keep growing. Brain health can get hot and cold. We need to keep growing. And the way we do that is we just hook people in like 10 different ways, right? So you might just want a well-priced peanut butter chocolate chip bar with low sugar. Like you might just want that. We can hook you in that way. The brain thing might be interesting, but we can hook you in that way. You might be on a keto diet, we can hook you in that way. You might have just turned vegan and you were eating a RX bar, but now you want a plant-based protein bar. Well, we can hook you in that way. And so it's almost like a diversified stock portfolio, right? You're diversifying your value proposition such that as any given one waxes and wanes, you're gonna be okay, right? You can grow through that.
[00:41:59] Ray Latif: Yeah, risk mitigation is inherent to portfolio diversification. And I think platforming, brand platforming is similar in that way. It can be kind of dangerous though to get into other product categories. How do you know, or how did you know when to get into a different space and support it the way it needs to be supported in a particular retailer?
[00:42:26] Will Nitze: I think you need to feel that you have really sure footing on your first form factor. It's not having existential risks on a monthly basis. I don't know. It's hard to say the exact moment in time, but I think generally, that should be the feeling you're getting. Then some people would say, just don't expand. Why would you expand? You're complicating the asset. The same buyer might buy bars, might not buy hydration mixes. So the jury is out. I think we made a very smart decision in both the categories we moved into, and that's proved itself out in sales. But no, there's no perfect moment. For us, I think we took a bit of a contrarian approach because most people that are snack food companies will make more snacks. It was a bar, now it's a Reese's Peanut Butter Cup knockoff. And for us, we want it to be entirely non-cannibalized. We don't want you to eat this instead of that. We want you to consume this and that. And then it has to be coherent with the brain and body thing, right? And then it has to check 10 other boxes. It has to be long shelf life. It has to have a 40 plus gross margin out the gate. It has to be a category that's huge and growing. So we did that with hydration, and then we did that with coffee, and so now it's like, satiate, hydrate, caffeinate, all those different non-cannibalizing functions that spread across your day, sit under this umbrella of brain and body nutrition. And some people will consume A and B, but not C. And some people consume just A or A and C. And that's fine. I also think this is a function, why we did this is a function of us being an e-com first brand. That's in our DNA. So if you're just brick and mortar, it's kind of weird to go into a totally different part of the grocery store because there's no synergies there. Whereas online, there's massive synergy. We can build your cart bigger and bigger and bigger. We can grow your average order value. Because maybe you don't want 48 bars, but you'll get 24 bars and then some hydration. I think that played a big, big role as being e-commerce.
[00:44:40] Ray Latif: Will, we did skip over one part of your story that I think is really important. At least I skipped over it, which is you said, you know, you don't think about the traditional way of go-to-market as being that effective. You know, you think about natural specialty, conventional, and mass. You looked at it as, oh, why not go into mass early on? Why not get into some of the bigger retailers early on? I think the hardest part is, A, can you fill those orders on time and consistently? And B, you know, how do you get on shelf? How do you get in touch with those retail buyers and develop relationships with them such that they buy into your vision and your brand? What was your process? How did you say approach a Walmart, you know, and how are you successful in landing that account?
[00:45:36] Will Nitze: E-commerce. Even if you break even, right, you can build up scale in operational excellence through e-com and get accounts through e-com. So you might have been knocking on that category manager at Walmart's door for two years. And he doesn't care until he sees, oh, you're the 10th best selling bar on Amazon or what have you. And you can make so many more mistakes too, because you can just iterate and revise them way quicker. Whereas if you're on a shelf in a thousand locations, like you can't just yank all that back. So you get way more do-overs and you can trial a lot more stuff. So I'd say Ecom helps in all of it. And then you just have more of a brand presence, right? People in Columbus, Ohio buy you online. So if you go into Kroger, some percentage of those people already know who you are. So I think it's not possible for everyone, but for us, for things that are ship friendly and a category people buy online, I just, I know I've said it earlier, but just, I really do like that move of trying to build a multi, I mean, heck, you can, again, going back to nut pods, they must've built a $10 million plus business online. before they really hammered brick-and-mortar. And that had to massively help them in brick-and-mortar. Frankly, another determinant was we just didn't get into Whole Foods, which is kind of like the bellwether or the anchor account, because originally we used Allulose, and that was a banned ingredient. So we're like, all right. It's not that we wouldn't go in. We couldn't go in. So we're like, OK, that's not going to be how we're going to grow. Like, fair enough. How else can we grow? Things like that will happen throughout your life cycle, like something that may have been a good next step is just not available to you. You still have to grow though, right? So this is why startups are so hard. You have to pull revenue out of thin air when certain doors are closed to you. So that was a helpful forcing function for us.
[00:47:43] Ray Latif: I want to come full circle here and talk about some of the stuff that you see on LinkedIn, where, you know, people are being congratulated for achieving a certain goal. I think some of that stuff, and everyone would probably admit to this, is a little smoke and mirrors. And, you know, there's just the day-to-day grind of building a brand. And you and I chatted about this last time, which is that, if I'm quoting you correctly, CPG is boring as hell. You could lie and say that it isn't. But what's interesting is the business. The fascinating stuff is the business. Is that what motivates you today? Is that what's going to continue to motivate you to build IQ Bar?
[00:48:25] Will Nitze: That's what motivates me to do that. My whole career, I think that dynamic will be true. A protein bar is only so interesting once you've stared at it and eaten a thousand of it over the course of years and years. That's not that fun. You know, that's not that, stimulating, shall we say. But all the wild dynamics that surround scaling, moving millions and millions and millions of them, that's fascinating and challenging. But to your earlier point, I keep coming back actually to the post from this morning around don't feel like a social media feed is a prescription for your business. That is harmful, in my opinion, To have all that backslapping going on makes you think you should be doing what that company is doing, when in most cases, you shouldn't. In most cases, you shouldn't. In most cases, you should be doing what Kevin's or Trufru or any of these other giant brands that flew under the radar, that no one was backslapping those people. They were just silently executing at a great gross margin. That's why it's actually like maybe a problem in some ways. Think about like the IT brands of 2018, 2019, 2020. How many of those brands are in a good financial position today? Very few, very few. Because there was a come to Jesus moment in 2022, all the money dried up. multiples went down, you know, just so many fundamentally what people want out of your brand was turned on its head. So if I had just followed you and what you were doing, cause of all this congratulatory stuff, like I'm SOL. So that's why I think it's dangerous. That's why I'm like, guys, this is entertainment. Don't get it twisted. The real facts lie in deep conversations you have with really thoughtful people offline who have all the contextual elements in their head and ultra up-to-date relevant knowledge.
[00:50:35] Ray Latif: As much as, you know, the content that we see on LinkedIn might be less useful than a lot of people realize, I think that the content from this conversation is quite useful. And I really, really appreciate you sharing it with me and our audience. And I really look forward to speaking again soon. Yeah, thanks for having me. That brings us to the end of this episode of Taste Radio. Thank you so much for listening. Taste Radio is a production of BevNET.com, Incorporated. Our audio engineer for Taste Radio is Joe Cracci. Our technical director is Joshua Pratt, and our video editor is Ryan Galang. Our social marketing manager is Amanda Smerlinski, and our designer is Amanda Huang. Just a reminder, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. Check us out on Instagram. Our handle is bevnettasteradio. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio.com. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
[00:51:47] Will Nitze: you
