Perfect Snacks: Bill and Leigh Keith

0:00 Yeah. During what I guess was was a routine kinda testing of your dough or your batter. Uh you find a possible sign of contamination of microbe. Salmonella.

0:16 And something like that. can kill your business, right? So what happened? Our own test on ourselves.

0:25 With a positive microbe. And Costco major retailers, they do recall everything. They don't want to take any risk, which is totally understandable, so I'm calling these folks that I've spent years you know, a decade of creating trust with and telling them that this product needs to be returned and it it's crushing.

0:45 And so we're just thinking, gosh, this could shut down things permanently. I remember not wanting to go to sleep because you have to wake up the next day and go through it all again. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. they built. Guy Raz and on the show today, how a family rescues itself from financial ruin by selling hand rolled energy bars, which eventually Wind up in every major grocery.

1:26 In the country. I'm gonna let you in on a little secret about this show. Even though it's an audio program. I actually want you to experience it. Visually.

1:42 Almost like a movie in your head. And oftentimes the stories on the show are so implausible, so Against the odds crazy that Indeed, they sound like fiction. Maybe you heard the episode a few years back with the McBride sisters.

1:57 How the sisters only discovered the existence of each other after their father died and then connected and started a wine brand. That story was incredible and So is today's. And make no mistake, you will learn business lessons in this one for sure. In fact You will hear how Bill and Lee Keith brother and sister

2:18 turn their dad's homemade energy snack into a big business. Perfect bars. A business now owned by the multinational company Mondelez. Bill and Lee grew up with 10 brothers. They were raised in the 1980s and 90s, traveling around the western United States.

2:36 Mostly in a school bus, which they also sometimes lived in. Their dad, Bud Keith, was a small time health and fitness guru who was also a deeply committed Christian. He was a complicated man who struggled financially, and It's fair to say

2:54 The kids grew up in conditions most people would describe. as poverty. but Bud also emphasized health and nutrition at home. before Bill and Lee came along. Bud ran a gym on Mission Beach in San Diego and at one time worked with fitness pioneer.

3:10 Jack Lane. So growing up my father was larger than life. Um, you know, he was two fifty, three hundred pounds. Uh any time he could go into a gym and pick up the hundred pound dumbbells and, you know, just do a few reps with them just to show the young kids. Wow. Yeah, he was a big guy, super strong. Full head of hair, curly blonde hair. Just so charismatic.

3:35 Always a thumbs up to people on the boardwalk. Just saw life. Just saw life through the rosiest glasses and just um Absolutely such a positive person. Maybe to a fault. So he had several different lives. By the time you guys

3:53 were born. Bill, you were born in in nineteen eighty two and Lee I think you were born in eighty five. Yes. Um your dad married your mom, Barbara. Which was his Fourth fourth wife, is that right? Yes.

4:05 And you guys were raised? basically kind of like this you were like an itinerant family. You were on the road Tell me about your life in the Eighties and nineties. What does that mean, living on the road? So we um we were born kind of all over the place. So our parents would go between living in a motorhome, maybe signing a six month lease somewhere, maybe parking in someone's driveway and kind of living with them.

4:30 Um, and then eventually as the kids grew that became a school bus that we lived in, not a converted fancy thing by any means. Uh, you're sleeping right in the bus benches. Um, so it was just kind of a nomad lifestyle always. So California, Utah, Texas, Arizona. Well, primarily there, but we went all over the country end to end.

4:54 I I'm looking at a photo of you guys in the early nineties. Bill, you must have been uh Seven or s eight or And there's seven kids in this photo. Your mom's holding a baby so number Seven.

5:06 So she's still gonna have Five more. Mm-hmm. And and I'm I'm trying to figure out They had all of these kids.

5:16 Um and your dad was trying to make a living by selling nutritional supplements. Tell me about school. I'm assuming you never really went to a regular school because you were on the road all the time. Correct, so

5:29 Early on. We were taught from my Mom just out of like a hundred Lessons. There was a book called How to Learn to Read and A Hundred Easy Lessons. And I remember that. That's how Bill and I Learn to read as you're at the same time, by the way.

5:46 It's to say the least, uh like a s very unorthodox upbringing, right? And You talk about your dad quite fondly and and your mom and and I imagine with twelve you know, with so many siblings and Billy the oldest. I mean you probably had to

6:03 take on some responsibilities with all those younger brothers and sisters. How aware? Were you guys of your unusual circumstances. Like for example, did you have access to to T V? Did you watch cartoons? Did you were into like Pokemon cards and other things other kids your age would have been into? Like w was that part of your like your world? Yeah, so we

6:26 Um We really learned how to read, at least for me, out of the Bible. Just um taking the Bible out. Um We would have little I would call him glimpses into What we'd call quote unquote the world.

6:39 Um we would have this little box grain white television. Yeah, it had the clicker broke off, so you'd have to use pliers to turn the channels and you had like one or two stations and you'd see some cartoons and it would just You know, we were glued to it, but then

6:56 You know, my father would say, All right, no more TV for a year. We knew. To your question, we knew how small our world was. Um, you know, I I'd say our dad we we were very mature to kind of look at him and reflect on

7:11 why things were the way they were. And probably why we would leave a lease and hit the road again, I think Bill and I have like as we've gotten older maybe viewed he always made it like it was his choice, but I think you come to learn he probably was out of money and he needed to hit the road and and take some of the pressure off and kind of go find another place to settle or opportunity. I think like now we look back on it now being parents ourselves and we say there was a bit of a midlife crisis probably here, um, and just wanting to take

7:43 control um of This chapter of his life and to forget the ties to any responsibility to the The modern world, he didn't want to owe anybody anything. He said, If you don't have anything, nobody can take anything from you. I'll never forget him saying that s sentence. And I said, Well, we sure don't have anything. Yeah.

8:04 I imagine Given that the twelve of you we're really all kind of together and and uh travelling and moving every few months. Uh, that you didn't have other friends. Your friends were your siblings. That is correct.

8:20 You know, I would be typically the one watching the kids. And so Yeah, we you know, not only All of us getting together, sort of getting to to know us, but we I built I feel like we built a lot of trust during that time, Lee. You know, so that we've carried the rest of our lives that

8:38 When it was time to do something big to take care of our family. I knew I could trust Lee. Because I uh you have this survivor instinct that goes back to when we were kids just trying to help each other out.

8:51 It's a bond like no other, that's for sure. Yeah. Meantime, while you're sort of travelling around the country, um, your your dad was also like like visiting people to I guess to advise them on their health and and nutrition. I mean it sounds like I mean I I use this word very carefully'cause it can be pejorative, but was almost like a guru to some people.

9:12 Right. And and I guess w one of his messages was like, in order to become healthy you need to to follow the path of of God or Christ or or whatever however he presented it. Is that fair to say? That was part of it. Mind, body, spirit, uh definitely a religious element. to his healing practice. uh but also really mind, body, and then food.

9:33 being the cure for everything. That's right. And My dad was just He was so excited about helping people, and this is again a really positive aspect.

9:45 Um, he had folks with different uh you know, diseases. M S. uh Crohn's disease and he would bring him into his house and do his absolute best um to get results and he wouldn't charge people for this. He would do uh mind, body, soul therapies through reflexology on the beach.

10:04 Um, he would use his organ meat tablets and protein and essential fat supplements and just You know, these are all things, by the way, mixed up in barrels in our backyard. You know, these are not lab tested. And We we would see these folks go through a lot of transformation. And it was incredible.

10:24 I mean today He would have been an influencer on Instagram and would be making hundreds of thousands of dollars. Um and and but it sounds like he was motivated by by his faith, like it may uh basically your description doesn't sound like he was a m he was making money off of this. Like you could imagine people coming to him and him saying, Listen, I can work with you and consult with you and it's gonna be, you know, a hundred bucks a week or something. Like he didn't do that. Usually no. No, you're exactly right. He was motivated by his faith and results. That's what he cared about.

10:54 Yeah. Right. One of the things that he started to to m make was these like energy bars or whatever, just just nutrition just bars to feed you, I guess, and it was a Like a combination of of peanut butter and honey and

11:08 fruits and t tell me about these bars that he would make for you guys. So he he uh The way the recipe was born, uh, as little kids, he wanted us to take those whole food supplement powders and oils. And tablets that he I had concocted and would sell. And the supplements were m were like what, powdered, I don't know, vitamins. They were whole food powder concentrate, so all like beef uh spleen powder, beef liver powder, all dehydrated concentrates pressed into a tablet. And as kids didn't know how to swallow those big tablets, and of course they tasted really gross to chew. And so he ground them into a powder

11:51 and mix them with his protein powder and his omega oil. Mom had the stainless steel bowl kind of smashing it all with her hands and adding honey as a sweetener and we would roll them. into balls and we'd eat them and you couldn't taste the tablet powder. And they were sweet and peanut butter and honey and they were so delicious to us and we were allowed to have one of those little balls every day and that was getting our five tablets that we were supposed to have. And so we've been eating this recipe. You know, for almost forty years now. I guess your dad

12:26 Uh that this became one of the things that he would he thought could make some money for the family. You guys I I read in like 1995.

12:37 You thirteen and Lee were nine or ten, you guys were Helped him sell these Door door. Corrects, so we would have Ziploc bags. And we'd have these labels over it that would say

12:49 Perfect foods bar plain. You know, that was that would be our flavor name. That was just peanut butter and honey. In in no official label or anything and We would give these to friends, to folks at gym as a way to get your protein. Um in a really easy digestible way. With no sugar, just honey.

13:08 And um And it was a great tree. So we would sell a few hundred of these and My father, if he he ever had any big trips for us to go on, he'd make this uh like for instance we were going to Disneyland and he put the goal that we needed six hundred dollars and so We would mix these many bars up over the next year.

13:27 all of our garage sales money and all these different ways to raise six hundred dollars, um So that was part of the motivation in us getting up there and You know, making these bars. Yeah. So So so this was so you were selling these bars

13:42 And I guess around I don't know, Bill, you must have been seventeen, eighteen. You guys moved up to Northern California to a a town called Willow Creek, which I had to look up on the map. I live in northern California, but this is like Like Oregon almost of California. It's like way up there. Like it's a tiny, tiny town Probably a couple of

14:03 Hours. south of the Oregon border. Willow Creek. Why did why did you guys m move there? Wha what happened? So he he was really wanting to get into the woods. Um pretty isolated where he could be off the grid.

14:19 And we headed up there from San Diego just And I remember thinking, gosh, this is isolated, not seeing a house for hundreds of miles in the middle of the forest and then You come across this little uh this little valley Um so we moved to the little town uh without a plan. And um he started talking to the townsfolk and kind of figuring out where we could work, you know, and we would uh harvest someone's cherries and split it with them and sell the cherries to the local co op and make a few dollars that way. We'd um from you know harvesting crops to landscaping to

14:56 Kind of just odd end jobs putting us kids to work. And then we settled in a um abandoned pizza restaurant behind the one gas station in the town. And um I was fourteen. Bill was seventeen, um had no windows, still had the old pizzas moldy in the oven, and we cleaned that place up and slept in the booths.

15:19 where people used to dine and that was home for A year we had Christmas there. A sister was born there. Which keep in mind the last three siblings my sisters and I delivered without a doctor. You were the midwife to your

15:34 Three of your siblings. Yes. The first one, the midwife couldn't make it. And then um it went well enough, I guess, that we were hired. And so uh there was no Um no doctors after that. Keep in mind it was number eleven and twelve, so my mom. uh was a pro experience. Uh yeah. But I you know, it's things like that guy, I look back and think, gosh, you know, we

15:59 We're pretty lucky in a lot of ways and things could have gone a lot of different avenues and Um, yeah, that pizza restaurant was where um our our youngest sister Faith was born. Amazing'cause it it like this is not Little House in the Prairie. Um Just a remarkable upbringing. I mean this we could do a whole episode on just your childhood. Um

16:26 But but meantime, this I guess an inn or a bed and breakfast becomes available for sale. And y your dad bought it. How did he have the money to buy it? So he actually carried a note with the owner. They were getting older.

16:40 And we Oh, we're able to carry a note. and um spend the next few years trying to pay aggressively and and the thought process behind is that if we could put the work in to fix the motel up. we'd be able to raise the rental amounts'cause we're talking about fifteen, twenty dollars a night.

17:02 Very small margins. Um, and so that was gonna be our next business venture. It was this little Little Motel. Um on the highway uh that was uh built in the eighteen seventies, so it's a hundred and thirty year. Stagecoach stop.

17:18 Unreal Code. And it was all overgrown and the folks that own the place were elderly and really not able to take care of it. And then we also really came to learn there wasn't really a you know uh any kind of industry in the town, so there wasn't necessarily people even needing to stay in a motel. Um, and it had a middle house and that that was probably felt like most home for us. That was for me fourteen to eighteen. Years old was

17:45 Living there. Wow. Meantime, your dad's getting sick. Um Did he know what he had? Did he know what was going on, or was he just not feeling like did

17:56 Did he go to a doctor? It was obvious he had Skin cancer. That was progressively getting worse on his head. Mm.

18:03 And so we saw this spot grow from You know, a pimple It it took fifteen years to where it took over the side of his head. It eventually took his ear off. You know, it was really sad. It's really sad.

18:16 Was he Getting Any kind of Like medical treatment. At all.

18:22 No, none, and he actually wouldn't even take aspirin and so nothing. Nothing. And he never saw a doctor and I I think that the strain that also came with him being in so much physical pain, um, was it became a very volatile home. Um, but we, you know, education wasn't around. Um I remember asking my dad at you know, fifteen years old there wasn't any textbooks around and I

18:48 was the maid in this motel. And so he said, Well if if it's meant to be, God'll provide it. And um We were at a yard sale a few months later and there was a book with no cover on it that said G E D. It was for twenty five cents. And he said, Well, there you have it. And he bought that for me.

19:06 And um through that I had gotten my GED with that book. And I'll never forget my dad was sitting in the living room and I I I knew That would really bother him. He didn't want any of us to leave. I think he His world was a little bit closing in on him and um He also needed us to take care of his younger kids. That's just plain and simple. I knew that's

19:27 w was a part of it. And so I remember telling him, Hey Dad, remember that book? Um, I got my GED. I I took the test when I uh went on a grocery run with mom. Like I was nervous to tell him because he would probably be upset. And um I remember he like muted the TV. And he looked at me and he.

19:48 And then he unmuted the TV. And that was the end of my high school graduation. Um, didn't get a reaction. It was better than a bad reaction. And then I went on with my day. And it's wild to think back now having my own kids.

20:01 How it just you know. Un unbelievable, um experience for me, but it absolutely kind of shaped my character for sure. Yeah. Yeah, m I'm always impressed with Lee's motivation'cause I

20:12 Um early on I started getting into basketball and my dad had a little bit of a funness coming from Indiana for basketball. So I that allowed me to sort of go out into the quote unquote world. Uh and I was able my dad met with the local principal at the high school in Hoopa and said, Hey, he needs to work, but he wants to play basketball here. I was sixteen and so They allowed me to come one day, uh every two weeks. And Hoopa was a town about what twenty minutes north of the fifteen minutes north so met with the coach out there. And it was my sur first um

20:45 Sort of look at the outside world. So you you end up playing basketball in high school and then you actually went on to play basketball at the community college in in uh I guess where Eureka. College of the Redwoods. Yeah. So

21:01 You You took a business c class and one of your ideas or you had to come up with a a business idea. Was to make Your dad's

21:13 bars to to create a business out of your dad's bars. Um was this a serious idea? I mean was it something that you had talked about with any of your siblings or was it just like okay I gotta do this assignment and this is an idea? It was just I had to do this assignment. Making bars for us was a pretty tough um chore and good memories for sure. And so that was sort of the last thing I wanted to do, funny enough. Um But we have this assignment in business class, um a class that I've used all throughout my career, quite honestly, that in accounting. And

21:45 The presentation was the perfect foods bar was this name that I was s you know, that we were putting together and and so I presented it, handed out samples. Uh and I never forget my teacher going It's a delicious tasting product, but a refrigerated bar, that just doesn't make sense. That's what he told me on the note. And uh He wasn't wrong.

22:06 A hundred percent. Oh absolutely. In in the meantime, while this is going on, uh Lee Um You also left home, I guess after you got your GED.

22:18 Uh, but I mean you you really left. Like you kind of Like kinda ran away, right? Yeah. I had turned eighteen, And was trying to

22:28 talk to my dad about g you know, letting me move out or uh maybe I could go to college or go to the College of the Redwoods with Bill and my sisters and I um wanting something more and that wasn't an option for our dad. Yeah. I had run away.

22:44 With my brother. our little brother and um my sister in the middle of the night. And um I came to Bill's house and Bill was like, I'm I'm living a fine life, Lee. What are you doing? Go back. And I was like, I'm 18. Like I There's there's no doing this on dad's terms and I have to make my way. And so Bill

23:06 Let me um and my sister. Move into One of his uh One of his bedrooms with two twin mattresses on the ground and we started taking the bus and uh worked at Blockbuster Video and um well had little, you know, small checks and then we could mail um some of that money

23:24 Uh back to Mom. Hm. You know, it's It's kind of remarkable, and I and I'm and I say this With admiration.

23:33 That Neither of you seem to have resentment. about this. Maybe you did at some point, maybe you worked through it. with therapists or on your own, but it seems like Uh upon reflection.

23:47 You're not angry. No, I think that I we've got the I'd say yes, we definitely had for Setman, at least I'll speak for myself as we stepped into Um

23:57 taking over financially for our family and having that responsibility of all the kids. I think that was really hard and difficult. But I think that harboring any kind of anger or resentment and instead just have a lot of empathy for our father and we're able to really forgive a lot of those. Those things. I think it took time for me speaking for myself, um Because it was so unique and it it it felt like you were tied down in a sense. Um

24:27 that it did take some therapy. I took years of of just talking to folks, working it out. And You could be held hostage in a sense. um by your past, or you can just say

24:42 I can write my own story, you know, and that's where Lee and I uh really shared sort of the same vision Uh for That's not gonna hold us back. We're gonna Do it in spite of.

24:53 Yeah. And when we um were faced with this really devastating point where our father gotten severely sick Um our outlook was very grim. Mm.

25:06 We had less than a thousand dollars, a thirty five hundred dollar mortgage that we were behind two months on. And We needed a way to um quickly or we were gonna Lose our place. Lose everything we had.

25:20 Yeah. We been Uh Get that call that You know.

25:26 we are going to lose the motel and um our mom saying we'll have no place to live. And there were nine little kids under the age of eighteen at that time. And um so there was just a long road. In front of our family. When we come back in just a moment. How the family gets rescued by its own recipe for peanut butter bars.

25:49 And how those bars eventually find their way into Whole Foods, Starbucks. And beyond. Stay with us. I'm Guy Raz and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

26:18 So it's two thousand five and the Keith family is in trouble. But Keith, their dad, is getting sicker and sicker. So the older siblings, Bill and Lee, decide to head back to the little town of Willow Creek. Help support the family.

26:34 I mean That's a massive amount of responsibility to take on at such a young age. You know. But now. This is gonna fall on your shoulders, Bill, primarily yours,'cause you're the oldest kid. How did you I mean

26:49 Well you kind of an autopilot like I I just have to do this. I gotta figure this out. First of all, the love for my family, um, the love of all of us. And it definitely wasn't just me, it was Lee and Heather and Monise. And Amias and Sharice. If you were at all an adult, like that's who was in that circle. Standing and saying what were we gonna do? Yeah. And so all of us huddling together in thinking all of the best options and uh at that time a lot of my brothers and sisters started getting jobs to help support the family

27:22 My job was to get this motel ready to sell'cause there was no way that we could uh run this place and try to get whatever equity we we could out of it. And then we we found a A buyer that would be willing to give us cash.

27:39 And we had a hundred thousand in equity. So that's pretty great. And we'd never seen money like that in our bank account. Uh And

27:49 That was a moment for our family was uh talking to our mom and we had had our dad Move out. uh and take care of himself and take some space from the family. He moved out to like a an apartment in Willow Creek. A motor home. Yeah. Um he he, you know, took to a motor home and kind of went to stay with some folks that he knew in Southern California. That wasn't his choice, that was ours. Because he was so Volatile.

28:16 Yes. Yeah, and um you know, we thought it best for him to take space, which he did, and um We turned around and said, Okay, the idea that we had the best idea and Bill really led this charge.

28:30 Well. we could try and control our own destiny by Um if we could put our family recipe in a real candy wrapper, uh we could start selling it in stores. The vision was if we could sell enough of these bars, we could support the family. And make this peanut butter bar turn that into a business. Yes.

28:49 Alright, this is a crazy idea. This is like Jackin' the Beanstalk. This is like here're some beans for your goats. I mean who's gonna take that hundred thousand dollars. And say Let's Let's take it all and sp invest it in a peanut butter bar, but I mean it's

29:07 Totally nuts. Well think about mom. Right, and she's gonna let her twenty one, twenty two year old son take all the family finances and You know, roll the dice on this bar. And I I still having kids now can't believe that she did it.

29:24 Um, but she she always says she had so much faith in us. Yeah, we It's wild to look back, but we spent sixty five thousand cash. on a candy wrapper machine off of eBay and it's arriving on a truck Bill signs a lease at a thousand square foot little warehouse in Sacramento. You decided and this this at this point you all moved to Sacramento, right? The whole family most of the family moves to Sacramento.

29:51 So the family actually moved down to San Diego to be um a little bit more closer to my father and stuff down there, um, even though he was uh separate. Um, Lee had gone down there and m it was me and my brother in Sacramento. It was you and your brother. W what's your brother's name? Amaya, you move to Second Mary, so you you basically take sixty thousand of the hundred thousand and buy a machine that automatically wraps candy bars thinking. Once we get this machine. That's gonna transform

30:25 This product because you had these things you were selling in Ziploc, just for a moment. Was there a cheaper way to do this? I mean, did you Did you have to buy a candy bar wrapping machine to do this? So I researched Copackers out.

30:40 And the copacking minimums were so large'cause we're talking about fifty thousand bar minimum, which back then I mean That would have been everything. And not only that, they couldn't make the bar with the quality we Wanted and expected. Um,'cause for us in this company it was always about if we can make a great tasting

31:01 highly nutritious protein bar folks are going to love it and every time we'd give it to our friends Folks would say this is the best snack that they've ever had. I mm there there's so many reasons why I can see people saying this is not a good idea. Okay. Like a refrigerated bar made out of peanut butter and honey and like

31:23 I mean ha you're basing the potential success on this Just from feedback from friends, which I know, having done almost seven hundred of these episodes, Every entrepreneur when they start

31:35 And they hand out, you know, their cookies or their bars or you know, their apparel to friends. Their friends are like, These are awesome. I love these. And and friends do aren't all they're not always the best, like, control group here, right? Like the best panel. Oftentimes they're not. And keep in mind in two thousand five, that was in the height of the Adkins era, so low carb. Uh zero fat.

32:00 was everything trending in food and we were High fat. Clorically heavy from nut butter. Um, by no means were we on trend. We also think about um the category. This was the same year Kinebar founded. So, you know, still the key prominent players were Power Bar.

32:18 Uh, Cliff was still very much, you know, kind of on the Lara Bar had been around for a couple years. Lara Bar was still new. We did demos in the grocery store next to Lara herself, and so many new brands that were coming into the space at that time. And let me just g get a sense of how you were doing this,'cause well, first of all, from what I understand It's you and your brother. originally in Sacramento. And and not only were you trying to sell them, you guys were physically making the bars?

32:45 Yeah. Tell me how you were doing that. A little mixer. Um and then we had Just these trays where we would take it by twelve bars at a time, weigh it out after mixing.

32:59 roll it into a firm tray and then cut it by hand. And put it through this uh packaging machine. and box it up ourselves. So we uh me and my brother could do about a thousand bars in about ten hours. Okay, that's pretty good.

33:19 A knife. To cut. through peanut butter bars, like you're not gonna get a perfect cut. It's not gonna look like machine cut. Like did they kinda look sort of like you know, it was made by the it was a hodgepodge of trying to get it right. Um we we'd try to make sure we got the net weight correct, but a lot of times that would send us way over And folks would get bars that, you know, were basically a bar and a half in one. And uh so

33:45 wildly inconsistent. And um We had a label. It was We made it on Microsoft Word. Yep, on Microsoft Word. And the nutrition facts we we didn't we looked up how to make a supplement fact panel. Uh how to display the ingredients, all of that. You know, we didn't have any advisors or anything. Where were you trying to sell it? I mean you're in Sacramento and traditionally, you know with these kinds of stores you've done on a show, a a food product, you there's concentric circles. Like you're in Sacramento, you start with a couple of stores in Sacramento, then maybe you get into a local chain in Sacramento, and then you maybe begin to whole foods in Sacramento. That was not how you guys were

34:24 Do this. No, so we were trying to get an audience with whole foods with some of these bigger retailers, but just not breaking through the clutter, quite honestly. And so we would sell'em in gyms and we would sell'em in like uh Oh, co-ops? Actually festivals as well? How are you making all these bars and then going out and trying to pitch it to co-ops and like w tell me about

34:51 Your day to day up there in Sacramento. Oh, it it was we would spin Oh, or mornings. Prospecting, going door to door. Um, and then we would spend our time doing demos if we were lucky enough to get a gym here or there. We actually had a chain of four different gyms in Sacramento that we were in.

35:12 Um at night time after we were done pitching we would Um make the product we did almost every day. And We put a big old goal, I'll never forget in my office. It was a small office and then next to it was the warehouse. And it was ten thousand bars a month. If we can get that was our break even point. And

35:33 I the first month it'd be twenty five hundred. The next month would be twenty seven I mean Yeah. it it was taking too long and you you start going three or four months, five months into it, not hitting your hurdles, starting to get in bigger and bigger debt. Well

35:48 we found ourselves in a point where We had a month's worth of Cash left. And this was gonna be it. All of the credit cards, I was over a hundred thousand dollars in debt. And I was reaching the breaking point.

36:02 Hm. So you've you've really got to do something. to generate more sales here, right? And And I guess one idea that you had

36:13 Going to like Like like music festivals, rock festivals in in Northern California. To hand out samples though, right? Yeah, so we looked at uh

36:22 These festivals went into the a local Uh sort of a hippie festival up in Sonoma County, a a harmony festival. Mm-hmm. They would come and and, you know, listen to music and everybody was feeling great. And let me just tell you, they had the munchies for peanut butter and honey snacks, you know, and uh Um, and so we did very well.

36:41 And one of the folks that attended our booth worked at Berkeley Whole Foods. A grocery team leader. And she tried the product and she loved it. And she said, Oh my gosh, I'm gonna put this in my store and and me knowing that you had to get corporate approval You know, I I I called her afterwards.

37:01 And Um I end up getting Uh a meeting. at the local corporate office in Livermore. Mm-hmm.

37:09 After going through the all the details, um We were fortunate enough to get a a one store test. For thirty days. For thirty days. And that's when I I called up my sister Lee and Lee remembers the desperation in my voice and I go, Lee Please I need help. We have we have a chance.

37:27 Remember, I mean that's all it was. It was just we have a chance. Meanwhile, Lee, you are in San Diego. Is and is it you and another one of your siblings that were trying to also kind of market and and and get Get this product in front of Into stores in San Diego?

37:44 So I um one of my uh roles was to demo at the accounts that we did have in San Diego. So we had a few gym that would sell our product. and um also working at a real estate office and uh helping my mom with the kids. And so we got in our car, Sharice and I, and um I think drove north within a day. And uh these brothers of ours, guy, they needed um they needed a kick in the butt. Their apartment was pretty dirty. They weren't eating well Uh and so we um did a big reset in that apartment and started bossing them around and um we started making bars and uh we took advantage of that thirty day test. And Bill, you were driving back and forth Sacramara Berkeley.

38:32 Every day or every other day to get fresh bars in to stock the store. Yes. Well. They allowed us to demo sun up to sundown, I think just to kinda prove that that That team leader had a good idea. Um, but Bill gosh, there was I think you moved thirty thousand dollars. Thirty thousand dollars were the sales in those thirty days. What you were demoing it every day? Every day.

38:57 But After those thirty days, I end up calling the buyer And he got right back to me, which never happens, you know. Because you sold thirty thousand dollars worth of and I slow played it too. I said, Hey, how's our store in Berkeley doing? Like acting like we were all big, you know, and uh He called me back quickly and he said, My gosh, that was gamebusters. That was some really, really great sales. He said, tell you what, we'll put you in 10 more stores. This seems like a hit. But still.

39:27 Mainly what you're selling is a peanut butter bar. I think you have maybe a two or three other flavors. Maybe you added Yeah, like a carob. Chip bar, right? What what are the flavors you have in in the beginning? We had a mixnut, fruit and seed, carob chip, and peanut butter.

39:43 And and did people buy the carob chip?'Cause carob to me is more controversial than Uh I don't know what, than than any controversial issue. Like to me, Carib is the third rail of American politics. I love it. We i in the natural channel, um, you know, i if you couldn't find a chocolate option of a perfect bar, I think people settled on having uh carob if if that's kind of where their cravings led them. It definitely is no chocolate chip. And uh that came later.

40:13 Yeah. And and just to c clarify, I mean again, like if you go to Whole Foods Today, it's it's it was different in two thousand six, but if you go to Whole Foods Today, there's half an aisle that's just energy bars. Right. Then at the time there was probably like a quarter of an aisle, maybe less. Um but nothing in the refrigerated section. Like you're going so so but because you're demoing in the store you could direct people to where to get them. Well, that was the key. Demos have always been our key because to your point, whenever we were try to do um recommendations or ads, they would always go to the dry bar set. No one would ever consider going to the refrigeration set and uh

40:50 So we were first put next to the orange juices. Um kombucha was just coming on board at that time. We'd get put next to the kombucha's. And so it was really a hodgepodge of whoever had you know, six to to twelve inches of shelf space. Why did it have to be refrigerated? I mean it's peanut butter and And honey.

41:12 And protein powders. Um, I mean peanut butter doesn't have to be refrigerated. Yeah, so what it really is, it's from a stability aspect. So The cold just uh It it kept it firm. If you don't put something structurally in there, a lot of folks will use uh

41:30 an emulsifier or some type of binding agent to bind the the proteins and the oils together. Um what happens is it just spreads apart. Right. It's like salad dressing. Correct. And if you've ever had anything peanut butter out of the freezer, it just tastes better. It's delivered better that way. It it sort of calms down the peanut butter taste a little bit that can be overwhelming. And and I the refrigeration seems to me to be like

41:57 There were some disadvantages'cause you know, people aren't look if they're looking for an energy bar, they're going to the energy energy bar shelves. But the other Side of that coin is If you see something like that, next to orange juice or yogurt or salsa, you're like, wait. That's interesting. That's different. Which stands out too.

42:17 That created curiosity. And so we'd always say if we can make the product good enough with the best quality When they bite into it, they're gonna tell their friends about it. Yeah. Okay, so now you're gonna go to ten whole foods. That's right. What does that mean?

42:32 We needed more demo people. We needed more demonstrators. How did you how did you did you Did you Bring more siblings on or hire people, what'd you do? We all did those demos ourselves. Um, you know, that was our weekends for standing behind tables and you could make sure you sold through the product on the demo table, and then you could leave them fully stocked when you left. And so we could sell four hundred dollars in a three hour demo and then leave behind A couple hundred dollars. So you're generating six hundred dollars to make that store stop and you're doing that weekly.

43:06 Um It was really cobbled together. So all right, so you guys were doing that, and and you're in ten whole foods, but were you getting anybody coming to you to just kinda help you and give you some mentorship? I mean, you're you are all really young.

43:22 And and I would be super excited to see what you guys were doing as a family, but d was there anybody who was like, Hey, I've got some experience here, let me give you some advice, or or not quite yet. Love the product. And He said, Tell you what, I would buy half of this company for fifty thousand dollars and I'll help you make it. I'm a professional business person.

43:47 And We were close to closing that deal. fifty grand for half the business. We were running out of options. We had no money. Yeah. Um he actually backed out of that deal. He backed out of it saying I usually get fifty one percent is what is what he said. So um thank God That deal didn't didn't come through. Uh you know.

44:10 Divine intervention. Absolutely. I'm'cause I'm sure the time was super disappointing. You're like, Oh we lost this chance to get the fifth grand. Right. Right. Well we thought, you know, that was during the times where you're still not sure you're gonna make it. Yeah. So you know, by two thousand seven you're in

44:28 you know, ten Whole Foods that year. Just out of curiosity, uh did anybody at Whole Food say, you know, you really might have more of a shot at scaling this if you can Make it shelf stable. Yep, we definitely had folks telling us, hey, this would be great if you can just, you know, tweak your recipe. And and we had, you know, um we had tried to do that. I remember taking it to a manufacturer and saying, hey, can you um what could we do? But it just changed the taste of the product. And then also when you

45:00 buying the oils and protein in the bar kind of leave like a rock in your stomach and you think like it's hard to digest, you know, proteins that are bound with the fats. And so um it really it changed the product and it changed the way you felt consuming the product. And so It was back to no, we need to just continue using kind of our more fragile product. And still hand rolling it, hand making it? Hand making it with rolling pens. In Sacramento in that warehouse? So in two thousand eight we had kind of built up a little bit of revenue, a little bit of business that we Uh moved the kitchen.

45:36 We also like our family did need us closer, like we offered a lot of stability for our siblings. And so we moved down to San Diego and um signed Uh at least for a little warehouse there. And um You know, started continuing to roll the bars with rolling pins. Co manufacturer, co packer.

45:59 Um I I just as a as an aside, Bill, I mean you are ostensibly the CEO and you're the oldest sibling and you're kinda the leader of the tribe here. Um How how did that work with your siblings? I mean I think Based on the two of you, I think probably you're all pretty nice people.

46:16 and um have good values. But You know, still, like you've gotta tell them what to do, and they've gotta listen to you, and you're the boss. And so How was that going? Mm-hmm. It had its challenges.

46:29 Because um I think there was a lot of personal development that my brothers and sisters were going through because of sort of the big life change that we had had. Going from one thing in one direction of our father to being sort of independent. And so

46:45 we we felt like we d we did our the best that we could at the time. And it and sometimes that meant Uh splitting apart for a little bit. And uh but we always sort of gravitated back together with the goal in the early days of just survival. That was always the rallying cry across the family. Huh. And and I think

47:05 right around this time. Like this is still in two thousand eight. You guys hit a You know, a a decent milestone. a million dollars in revenue, right? And and and meanwhile Bill, I think

47:17 I think you what you move out to Denver for a while to to expand. the the products into some more stores out there. I moved to Denver for a year. I had just gotten married Um

47:30 was the sister of a demonstrator we had in Northern California. And uh she moved with me to uh Denver. Lee was running the show. Back home and I was in Colorado. Um going store to store pitching, trying to get traction out there.

47:45 Wow. that market was that important that you move there. We still needed sales. Um you have this fear in your head that something bad is gonna happen because you're not official at every touch point.

47:57 You know what I mean? And what would the bad thing that would hap like what was keeping you up at night? Maybe, you know, the the food processor folks would come in and shut us down or the FDA. um having everything buttoned up the way you want it to be. You desperately want that. You just can't afford it. And so you're running in a race to try to get to that point. Yeah. While Bill was gone, um and starting to we were continuing to grow, you know, in a grassroots kind of way where we were sold. And it was time to take a big leap. You know, we had to become official. And so I toured this space that was 6,500 square feet. It was beautiful. It was zoned uh to be a commercial kitchen. It was just an empty warehouse. And to think about what it takes, even just out of the material or the know-how to build out a kitchen.

48:46 We had no idea. We called up the health department and said, What kind of floor can we use? What kind of ceiling? What kind of walls? What's what's a drop sink mean? Like and we just started putting one foot in front of the other, but we signed a lease in two thousand and nine on um a kitchen on East Gate Mall in San Diego and uh went to work with our own money, still totally bootstrapped, um, to cobble together a certified kitchen. How much was a kitchen, by the way? What are you paying for it? It was it was into the ha half a million dollar range, which back then is It was enormous. Um and that was being cheap. That was taking a lot of shortcuts.

49:21 And you're living in Denver at this time. I'm living in Denver. Well, I had I had got the message from Lee We came back home after about a year. We needed to build this kitchen together. We needed to build this kitchen. And um during that time we needed some sales. We ended up getting a national fresh market account. And so we jumped in a van. And we took off across the country, me and my buddy from San Diego to Miami up to Washington, DC, and back. selling bars, um, pitching accounts to really try to promote a national launch.

49:54 After that We came back and we had spent ten thousand dollars on this trip and Lee looked at me and she's like, Ten thousand dollars I said, Bill, you could have done this for seven. I know it. Where did the ten thousand go? I mean you weren't staying at like the wrist. I know. Well It was food. I saw some Six flags, magic. Amusement parks? You're supposed to be selling Bars. You need to have a little motivation in there. Ma my buddy, that's all he asked for was that if we go to amusement parks on our way through Um he'd go with you. Yeah. Bill and I were always the yen to each other's yen guy. You know, I think when over the years people ask how did it work? I think

50:37 You know, I I could over analyze and hesitate and be to you know, like maybe thoughtful, critical, and you really do have to just go, right? And I think to Bill complimenting that, he's just he goes. Lee, I just wanna sort of Pause for a moment because At any

50:58 But this point, I mean again. You grew up With like Mm. Just enormous disadvantages compared to

51:06 a lot of people that you were you knew. Here you are. Just like Four years. After you get a G D And you're talking about margins and you're talking about P and L's and you're doing all the accounting like

51:20 I mean it's Did you ever stop and think I Freaking like Taught myself this stuff. We were so hungry to not be those

51:30 those homeless kids in the motorhome without an education. Like it really lit a fire in us. And um We wanted to give a different life to our brothers and sisters, and I really value those parts of my upbringing. Like we used those hard times, I think, to our benefit, but self-taught in QuickBooks, self-taught in manufacturing, we would we just We just, you know, how do you eat an elephant one bite at a time? That was our mantra. Yeah. So I I in two thousand nine I I guess you guys

51:58 get a really big break, right?'Cause this is just three and a half years After you launch the business you get A meeting with Costco Um which is huge, right? The potential's huge. And I guess Uh

52:10 It was like a broker there had reached out to you? Correct. I was able to get a presentation with Costco. Um very janky. If you look at our old packaging, it's wild that they even met with us, but um The buyer liked the product. He tasted it and it was great. Well they started obviously going back and forth on price.

52:29 Yeah, because Costco is Again, we've done this on the show. It's it's risky because in many cases very risky you're essentially subsidizing the consumer for a while. It can be that the case where You have to price the bars or the product. a at at a certain price point where you're essentially losing money for a while. Right.

52:48 So we we didn't want to do that. So we made sure that it it was gonna be One of our best accounts from margin perspective. Um and on the third time we drop the bar by one cent. That was the'cause the buyer literally told us if if we don't do a deal. We're not gonna come back here and

53:07 Uh we dropped the product by one cent. That was enough to sort of close the deal. We had favorable terms and We started road showing And by the way, just ten Costco's in Southern California. It was five in Southern California and uh And so keep in mind like we had done these demos standing in the traffic of a Whole Foods and you could sell four hundred to six hundred dollars um in product. where a Costco, you could walk in and we would commit to a four day road show Thursday through Sunday. And you'd set up your ten by ten booth and we could move anywhere from a really slow moving Costco, you know, twelve thousand dollars in revenue in those four days to

53:46 thirty five, forty thousand dollars uh in four days off of that ten by ten table. And it also was really quality interactions where we were able to point to the refrigerator, they could see what the product looked like, they could hear why, and it was we've talked to thousands and thousands and tens of thousands of people. And you get great feedback directly from the customers to Lee's point about the product and that and you bring that because there was no middle management or any you know, we would be the ones making the product, we would make the adjustments, little quality adjustments, based on customer feedback in real time. I uh people who listen to the show regularly know I'm a big fan of Costco. I think it's a great equalizer. I think everybody will just l I just think most people love it. And so

54:29 Uh uh but I wonder like I don't ever do the samples of Costco because I I just I don't they're very lot like a lot of things I just choose not to eat. But I I my I wanna go with my kids. They'd just go and just sample everything. So

54:43 Part of me is like, yeah, you know, people are just sampling and sampling. But but I guess only if a tiny percentage buy It's still Works out in your favor, right?

54:54 Absolutely. From the exposure. Costco sampling was one of the most effective ways to get product in mouth for a consumer, and that was our job because we felt our competitive advantage was our taste. Yeah. But we were concerned would getting into Costco cannibalize uh our existing business. And in fact, it only built awareness for us. You'd cut up ten thousand samples in those four days.

55:21 And they'd go away and they could find the product in the natural channel. We had built up Whole Foods Market in these regions, Sprouts Market, and we started seeing, you know, more traction without having to stand as much in those natural channels because you were t sampling tens of thousands of people with your brand. By the way, all of our policies and procedures were just Googled out and and researched and and when they came and did an audit, because Costco does an audit. Oh, they came to your m your manufacturing facility? Yes, they were really surprised how small it was I'm sure I mean you were hand rolling this stuff. Exactly. Me manufactured, produced product for two eight hour shifts and then the sanitation shift.

56:06 ran through the night and so the lights never turned off in the kitchen and um We scaled from, you know, twenty team members in the kitchen to sixty five, still using rolling pins, guy. And so that that was a a tipping point for us. Um, we had pursued that co man uh opportunity again, still came up dry and still. Couldn't find a co manufacturer that could Deal with your the viscosity of the the dough or the Correct.

56:34 And we weren't we still didn't have anybody like now we understand you don't you don't have any financing beh behind you. You don't have good credit as a business. Um, you you know, certainly our Done in Brad Street number wasn't uh anything you'd want to measure. Um, but Costco was really turning well for us and um they wanted to expand to more regions. Um and I took to YouTube and we were able to find these um kind of semi automated machine from a company out of Santa Barbara. So on YouTube I saw that these machines, um it was pressing a rice crispy treat into the tray in a pneumatic way and making it even and lo and behold, that equipment Bill, we won't forget that moment that it it pressed forty five bars into one of those sheet pans. And um we were able to go from the last year we made product with rolling pins, we produced seven million bars. And we were then able to convert to these small pieces of equipment. And um

57:37 We were able to scale that little five thousand square foot kitchen to produce. twenty million bars the last year we were. producing in that kitchen. Wow. So so this is happening and and uh I wanna back up in the timeline for a little bit'cause we did we jumped ahead a little bit, but um But I you know, there was so much momentum'cause you're in Costco and you're growing and then you

57:58 You know, you're still hand rolling it. at you know, while you're selling this at Costco twenty four hour shifts But your dad, who is getting progressively uh sicker he he passes away in two thousand nine Um

58:13 Mm mm. I know that he was w increasingly volatile as he was getting sicker and sicker. But he was able to start to see That his children

58:25 We're having some success with this business. What did he think about that? It it was wild. I I'll never forget one of the last things he said to me. As I was loading these small coolers up to go take'em to a retailer. He said, Bill, that that looks like a lot of expense. I doubt those pencil out is what he said. And uh And I said, No, dad, you know what? They actually are making money.

58:50 Do you think your dad Derived some comfort from knowing 'Cause I think probably a lot of his stress came from The fear that he couldn't provide for these children that he would he would die and and and they would be on their own. But

59:04 Seeing kind of that Maybe actually They would be okay. Did that Did you get a sense that it provided him some

59:13 Like psychological comfort? I think it did. he had spent some time kind of on his own and then Um To m our mother's credit.

59:22 being, you know, just leading her life with unconditional love. They he spent the final The final um Years of his life. I Under the same roof with our mother and our brothers and sisters. And I think we had he had come to terms with uh his illness, and um I think that we had

59:42 Their family in a nice home. And um the kids were going to school. Yeah. Food was on the table. And he saw his his kids working together.

59:52 And selling a recipe that he was very passionate about. It's kind of again I'm not I hope I'm not sounding like I'm psychoanalyzing your dad, but He strikes me as somebody who really truly was the definition of a visionary and

1:00:07 Without the discipline of a entrepreneur. Perfectly said. It it would require his children and their discipline. Yeah, absolutely.

1:00:18 We always talked about that, like we were not gonna hop to the next idea because that's what we saw our whole lives. Like we are just gonna, you know, dig our heels in and stick with it. What do we come back in? Just a moment. Lee and Bill get their first chance at private investment. and their first taste of disaster the possible outbreak. Salmonella.

1:00:41 Stay with us, I'm Guy Raz, and you're listening to how I built this. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2014 and Perfect Bars are at about 4,000 stores, with roughly$15 million in annual revenue. And Bill and Lee decide the packaging needs a new look, so they hire a branding agency to design it. And now now the label changes to what it looks more or less what it looks like now, with a giant sort of peanut um shape and uh on the front and so you see the peanut and there's the the just the

1:01:32 the protein content and It's uh it's changed even f more now where it's sort of um it's it's translucent, you can see the bar underneath it, but it but it more or less looks the same. Peanut bar very similar. It's a really nice looking packaging and and who d I mean, did that cost you a fortune to get that rebranded? So we had to take a note with them. It it was eighty-five thousand dollars for which now seems like a really good deal, honestly, but that was for a website and SKUs and and all of the branding. And

1:02:01 For the first time we got to really focus on the brand and what we were about. We're about this family full of caregivers and bullet points on our packaging. Instead of having fifteen claims, we focused on protein. We focused on You know Superfoods. Macros, basically, what people call macros now, right? Exactly. Protein, superfoods. When you change the packaging and the branding

1:02:27 What did it do for sales? Forty percent. Oh at least a forty percent lift. Forty percent lift. Just right. It's amazing. And and and you guys were in Starbucks, which I think was kind of a pioneer in in that in the refrigerator section. How did you get into Starbucks? Did they come to you or? So Starbucks, um you know, interesting. It was just a a personal connection that we had met at an event. We just we didn't know who they were. And um my sister and I were chatting with this awesome lady and uh just sharing our story and what kind of products we sold. And so never forget she handed me her card, had the Starbucks logo on it. Um

1:03:03 And you know, it was right during the Me Too movement and there had been just some things that happened, um with my sister and kind of the manufacturing space, unfortunately, you know, it's a very m male dominated sector and we were just sharing stories and so Uh we just a credit to kind of who they are as a company. That that woman just put her arm around us and gave us her card and said, you know, let's let's talk about your product. And so just having no idea who she was and having that kind of human connection, we were then able to send samples. They gave us a, you know, couple hundred store tests and just imagine how

1:03:40 Thrilling that was to see your little family recipe now with that new brand on the shelves in Starbucks. Um that was a huge awareness driver for us. Alright, so you guys are growing, growing, growing. And I imagine so w I wanna I wanna talk to you about bringing in outside investors, because you brought in outside investors in twenty fifteen VMG partners. Did you have people coming to you or or or were you still under the radar enough where you had to go find it yourself?

1:04:07 Yeah, so we we actually Um Met VM G Wayne Wu. One of the partners at VMG. Mm. And at the time we were only doing You know, three to five million.

1:04:19 And we weren't there yet, but he was gonna keep an eye on us. Um so when we reached after the rebrand, we decided that we wanted to take a next step with this brand to give it all That it could be. A little bit of what tipped us over the edge, think we had gone from Three million to seven million to fifteen million. Keep in mind, you know.

1:04:42 Target, uh Kroger, Walmart were all starting to knock on our door. Hey, you're you're really selling well in Whole Foods. You know, we were posting amazing uh numbers at Costco, rolling the dice every single day. And and it's hard to build a business and scale from seven million to twenty million like very quickly. without anything in the bank and and we really didn't have a fallback. Yeah, and you're you're really close to getting this deal. But then something really bad happens, uh, which is during what I guess was was a routine kinda testing of your dough or your batter. uh you find a possible sign of contamination of microbe.

1:05:23 Salmonella. And something like that, I mean we've talked to other founders who've dealt with this kind of thing. I mean something like that. can kill your business, right? Um so so what happened? Yeah. Christmas week twenty fourteen.

1:05:36 We had built our processes so quickly and and being a little bit reckless in how fast we were shipping our product and Our own test on ourselves. With a positive microbe.

1:05:49 And that product was not in the walk-in. You had shipped it out already. It had shipped the same day. Was it a false positive? It didn't matter, right? We don't know still to this day we don't know so what happens

1:06:02 Ah, never forget that Christmas week. Some of the toughest, toughest days in the history of our company. You have to recall everything from the shelves. Everything, right? So we have the specific lots that are affected, but Right. Costco major retailers, they do recall everything. They don't just They don't want to take any risk. They don't want take any risk, which is totally understandable. So I'm calling these folks that I have spent years you know, a decade of creating trust with and telling them that this product needs to be returned and it it's crushing. And we call the FDA. I remember like Just that feeling.

1:06:37 That that just sick to your stomach. Um Call the FDA on yourself. So then within a day Um, they show up to our kitchen and they have guns, by the way. Um at least those did.

1:06:51 And badges and they said we're shutting this kitchen down. Like this is it. We're taking it FTA inspectors. I didn't know they were armed. Wow. Well, so it's it's actually yeah, it's the food processors. Um, they deal with a lot of like agriculture, like farmland and stuff, and so they do carry guns. And it's wild. Yeah, so they come in. Guns blazing. Oh boy.

1:07:16 And and they're gonna do five hundred tests on our factory and finished goods and they're gonna find the root of this issue. Oh man. And all the shelves across the country are empty and we're not filling any orders'cause we're not producing products. How much money has this cost you so far? Hundreds of thousands of dollars. You know, and but but it's depleting our inventory and our cash reserves. So There is no fallback.

1:07:40 And And the inspector comes in and says, Hey, this might not be an operation that can make product like yours, this cold press product. And so we're just thinking, gosh, this could shut down things permanently and really having I remember going to not wanting to go to sleep'cause you have to wake up the next day and go through it all again. And after two weeks

1:08:01 We're just weighted you know, waiting to see the results and they didn't find one issue and so Very well could have been a false positive or an ingredient issue. We had gained a relationship.

1:08:14 uh with this one woman in particular from the FDA and And I think that she felt so sorry for us. Like you guys, if you just had that for those finished goods on hand, we could have tested to confirm. Um and so the energy shifted from we're gonna catch you, we're taking this place down. And and I mean, good on them. I I want food safety across the country. I commend people in that in that um line of work. And you know We made a call to obviously VMG during that time. Your your new investors. Yeah.

1:08:43 Um You know, and said, Uh we have a little issue going on and they did not to their credit They did not penalize. their offer at all. They said it's a wrinkle in the rug that needed to slow us down. And um and pay attention and and be open to taking on investment and and we we like to see that, you know

1:09:03 with the attitude that things happen for a reason and we still to this day believe things happen for a reason and all of that. Okay, I wanna ask you about Bringing on investors because now Ten years. A little over ten years, you guys have brought this business up to fifteen million dollars in sales.

1:09:20 All by yourselves, bootstrapped it. You've learned a lot along the way. Got the scars to prove it, you are experienced operators. Now you've got a uh professional um, you know, investors coming in and they brought in some executives to To join you guys, I think.

1:09:38 Um Did that cause any tension? I mean, I'm sure now that you've got more of a quote unquote professional group of people joining you. They have ideas of what it means to professionalize, and And w was that smooth sailing or was there some was it was it a bit rocky? Oh gosh. Talk about feeling like impostors. Like in my mind, in our minds, we were still those home school kids

1:10:00 Like Guy, we grew up showering in public bathrooms. I brushed my teeth in the home depot bathroom and washed my little sister's hair in the public bathroom. Like there's no being Um having any ego after that.

1:10:14 And so they had taken a minority position. So Bill and I and controlled the board and so we kind of always felt like kind of the you know ownership still in our business very much, but very open. Like we have learned everything we have through our lifetime from just being a sponge and putting ourselves, you know, we're smart enough to know what we don't know and putting ourselves in the room with people that are smarter than us. And so our first meeting with them, I'll never forget, was in their offices in San Francisco. At the in the presidio it overlooked the Golden Gate. Beautiful office. You know, amazing team, everyone's Ivy League, like it's just Who are we, you know? And we walk in there

1:10:55 The huge binder with everything, you know, just starting to articulate our business in a way we we never knew how, dividing it into four departments. We're gonna need four department heads, you know, finance, we're gonna house HR under there, operations, sales, marketing. Now we're gonna need a director of analytics, you're gonna need and you just start. seeing somebody that's done it before map it out for you. It was just, um Some really exciting time. I'm I'm curious about when you got this investment.

1:11:26 How much money did they put in? So they investeen million. And we put five million in the bank and took ten million off the table. That must have been massively life changing. I mean it was ten million dollars to distribute among the family and the you know equity holders in the business.

1:11:44 It was life changing. I bought a house. I think Lee did too. Bought Mama house. You know, and and having a little buffer. That was the biggest thing is not just being on a knife's edge. Yeah.

1:11:58 But Bill stayed on as CEO. You were still the CEO. Yeah, in the business. I remain the CEO. Yeah. And one of the things I guess they're So the people that came and joined you suggested was Hey, ditch the carob and use chocolate. And this was like kind of controversial.

1:12:15 among among the family, right? To use Chocolate. So early on growing up, we did not eat chocolate. Everything was carab in our household. And so carob chip was a flavor that that we enjoyed, but it just wasn't translating on the shelf. Yeah. I thought carob kind of faded away with the end of like Seventies co ops, but it didn't. Not in the keith house, you know. Not in a keith house. Yep. Carib that my mom when I was a kid used to say was chocolate.

1:12:44 She'd say here's chocolate. We eat carob. It and it was not chocolate. You couldn't fool me. It was just it wasn't good. It was not delicious. We never had chocolate or refined sugar growing up in our house. So uh carob Uh chips, you know, um was chocolate to us. It's amazing because when VM G invested, I'm assuming that they expected a certain metrics and growth.

1:13:09 And from what I gather initially they were you were not, and that created some pressure. Which I guess was the reason why, or one of the reasons why you guys introduced the chocolate chip bar,'cause it was sort of a Hail Mary. Like we need to We need to hit these metrics. Right. And and so that was the big theme around these board meetings is how are we gonna get are we just gonna be a natural and some club business brand? Are we gonna be able to make that jump?

1:13:34 Which is not guaranteed with a lot of brands that they can make the jump to conventional, make the jump to mass, target, Walmart. And Wayne Woo. He at a board meeting says Bill. We were like never Wayne. All of our customers would leave us.

1:13:52 Everybody will write in and abandon our brand. Nope. They wouldn't care. No. They wouldn't care, he's saying. Mm. In fact, Introducing a choc chocolate chip. peanut bar like that was a game changer.

1:14:04 It became the number one Seller in the country. Wow. And it still is. Wow. But sometimes you're too close to things, you know? And we just thought that was outside of our guardrails. And you know, I remember um you know, the patience it must have taken for the VMG team to sit there and I was sit next to Mike Mosai at a board dinner and I reach for the chocolate dessert and he's like, see, now so you eat chocolate. And I think about like how sweet they had to be to sit and talk us through how Maybe that was your dad's food values, but where's your food values? And um, what a credit to who they are as humans to really take us along in that.

1:14:44 And get us to get on board. Alright. you guys now are with the injection of cash and partners you hit seventy million dollars in sales by twenty eighteen. And that's I mean, once you hit fifty.

1:14:58 that's really where you start to kind of think about acquisition or a bigger investment, a hundred million now I think in CPG is uh in food is more common, but That year You guys started to search for

1:15:13 potential acquirer. So you guys made a decision that Hey, maybe now we should You know? We've done this, we've built this up. Coming into fifteen years of doing this.

1:15:25 Let's see if we can You know. Or you know, get some some money for what we've we've done. Yes. And we wanted to make sure that this story remained a beautiful story and that the family d dynamics Um You know, y y you hear about multi generational business to where it might have worked with the brothers and sisters, but the kids

1:15:46 Um didn't get along as well. And something that was beautiful turned into something else. Yeah. I think we not by any once did we all wanna be peanut butter bar makers growing up when we were little kids. In fact we hated making those perfect bars a lot of the times and and I think we all kind of wondered you know, a lot of our brothers and sisters, seven of us uh at one time working in the business. Sister Heather and uh sister Monise running the road show program, traveling across the country, just hard work over those years. Zane out out in retail demos, Sharice running operations with Steve and um kind of all going where

1:16:24 We were needed in the business. I think there was a little curiosity of what it would feel like as brothers and sisters to just be brothers and sisters. We had never just had that between us. It was always um a a le you know, money and a level of business and responsibility that we carried between each other. So um it was the right move for our family. It it allowed our our siblings to kinda set out into the world and um, what do you want to be when you grow up? You know, but here you are fifteen years in and and um If we could find a right partner that would leave our business independent

1:17:00 Um You know, it it would be that might be the right choice for our family. You did eventually find And acquire. Well, somebody who was interested in in in buying a majority share, and that was Mondelez, which also owns um

1:17:14 Cliff Bar and um Yeah. And um I mean there was gonna they they put in a lot of money. to um

1:17:24 acquire a majority share. Ha I mean, this is a very sensitive question. But When money gets involved, it can really It can tear families apart, it can really damage

1:17:36 um family dynamics. So I have to imagine with twelve Yeah. Thirteen siblings. And now you're talking about serious money. I mean, did it create some

1:17:47 Challenges in terms of how it was going to be distributed among the siblings? Thankfully we had it pretty spelled out. And we put together a truss So the the challenges came from, I would say Some of us knew how to handle finances and some of us just weren't taught and didn't have the the literacy. So there were some challenges there.

1:18:07 But overall it's been such a positive benefit. a across everybody and it ended up being the right decision. I know for me my health was another thing. Yeah, I mean I think on the d the like around this time where you're about to come into serious, which is gonna be just unbelievable given especially given how you guys grew up. Right. You you you yourself were very quite unhealthy. Wh and it's No, I don't want to say ironic,'cause you're doing a you you run a healthy company, but you're on the road, you're under stress, you're probably not eat well.

1:18:38 Uh tell me what health issues you were dealing with'cause you again you were a young guy. You were in your forties, right? Early thirty seven. Late thirties. Yeah. Thirty seven. Okay. And you've tried you've high prostate PSA levels or what? Yeah, so I'm not able to pee, you know, without getting too much details and I'm literally a week after seeing the number in your checking account just it doesn't make sense. You're mine you know, and then you literally week later think, Wow, I would have traded all that to just be healthy and be able to go to the restroom. And it was the the stress was pretty severe. You know, that the year of selling a business, you're doing two full time jobs. You're you're running the biggest business that you've ever ran, and then at the same time, you're on the road constantly And it caused me to get way behind in my health, um, to a point to where

1:19:30 I did a a reading that said I had a high likelihood of cancer and um and so I had to basically really take a step back and start researching what I could do um to fight this. So One of the ideas that I that I had was my father used to make this oil mixture, this omega oil mixture that he'd give to folks that had prostate issues. And uh and thankfully after six months I started seeing some really good results. My my readings were going down and

1:20:05 Happy to say. It's been five years and I'm in a really good place, um, with no cancer and But that was a very critical time that that had me take pause and work on my health and I lost fifty pounds and and really went through a transformation. And and this is while you were sort of transitioning out of O Lee

1:20:26 you and your brother served as co CEOs for for for a time. Um, but eventually but um assume imagine, Bill, at least for you As you start to focus on your health, You were think already thinking I'm gonna eventu transition out.

1:20:41 Yes, at that time exactly. We we had a few years that we could um help transition the company, what they call an earnout. And then three and a half years after that earnout in um What was that then? Q one of twenty twenty three, they purchased the rest of the business, um and Bill had exited out and And I've I've Uh

1:21:01 continued on with the business for the last two years. Chief of brand. Chief of brand. We brought in a CEO, which to Mondelez's credit, they gave Bill and I that responsibility um and discretion to find the right next leader for our baby business. And so it's just been really fun to see it continue to make ch you know, healthy transitions. Um'cause for any founder out there, you start a brand, it's like it's always gonna be Um yours forever. And now you can focus on the fun stuff like branding and and and being a an ambassador rather than Um

1:21:36 uh dealing with uh uh the the kind of the things that n it's not always fun like like tariffs or um or inflation yes. Right. Right. Your story is so remarkable and unlikely. Like the two of you based on all the things that you had to overcome, all the hurdles, all the things in your way. should not be

1:22:00 multimillionaire should not have created a very successful CPG brand should n had no background, had no You didn't come from elite schools, you didn't have a formal education growing up. You grew up in buses and with this very unstable upbringing, and yet The kids in this family stepped up and made this happen. How much of of this do you attribute to to to the work you put in the grind and how much do you think had to do with fortune, faith, luck, whatever, God call I don't know what you want to call it.

1:22:29 Um Lee, what what do you think? I would have to say it's a combination of both. Right. I mean, I reflect back in our childhood, how lucky are we built to have been born in the United States of America and to have the opportunity to take the background that we had. And to create the American dream.

1:22:45 I think that's lucky, you know. I think I'm lucky to have been introduced to the natural products industry through my dad, however eccentric that it was. Um I'm lucky to work alongside my amazing brothers and sisters, especially this brother right here. So I think um You pair that with Hard work and determination. Um

1:23:06 Just really amazing things have happened. Bill. Yeah, how do you follow that up? Um no I I think it's very cliche, but um

1:23:17 Success comes where preparation meets opportunity. Right. So We reached a point in this natural uh industry to where the timing was right to accept this kind of product. If we had launched fifteen, twenty years before this,

1:23:33 We saw what happened and wasn't ready. So when you have the timing is right. when you have determination behind you from all of the Um folks involved. um you sort of create a lot of your own luck and you have some

1:23:47 Some grace from the heavens above and and that's when magic happens. Yeah, I mean it's it is Amazing. Um to think your your mom who's sort of You know, we didn't talk about her that much in this episode, but kind of an unsung hero here. I mean she had a I think probably a difficult life for mu much of her life. And now probably has has

1:24:07 You know, is provided for, right? Has some comfort. Right. She is an amazing person and Oftentimes when she met my father on the beach that day, she took a a right instead of a left, and I go, How many times do you wish you went left? She says, No way, I wouldn't have all of you. She's the heart.

1:24:24 Behind her. our family and um And mom sort of kept things in the in the background together with that heartbeat and uh I'm thankful for that.

1:24:34 Yeah. And she's still a young woman. She's only in her early sixties. Yes. And Mom has now how many, a dozen or thirteen grandkids from us so far? I have three beautiful daughters, um But I think I've worked through so much with my mom becoming a mom myself.

1:24:53 And realizing, you know. the situation that she navigated in her life and ultimately the unconditional love that she Very much the unsung hero. So I appreciate you.

1:25:05 Asking. Because it's very worthy. That's Lee and Bill Keith, co-founders of Perfect Snacks. By the way, since leaving the brand, Bill has started a new business called Green Fat, which sells nutritional supplements. As for the other siblings, many of them have gone on to pursue higher education and start their own careers. Right now, one is in Belize rebuilding a school, another is the president of an environmental nonprofit. And remember Faith, the youngest sister who was born in the pizza restaurant?

1:25:37 She just graduated. From college. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyros.com or on Substack. This episode was researched and produced by Chris Massini, with music composed by Ramtina Rablui. It was edited by Neva Grant. Our engineers were Quasi Lee and Ko Takasugi Chernovin.

1:26:09 Our production staff also includes Alex Chung, Jase Howard, Casey Herman, Carla Esteves, Sam Paulson, Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Raz and you've been listening. to how I built this.

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