Justin’s Nut Butter: Justin Gold. He Was Waiting Tables, Then...He Reinvented Peanut Butter.

0:01 Yeah. Yeah. You can imagine the Confusion. When when you

0:14 Are studying to become a lawyer. And then I move to Colorado and I'm waiting tables and I'm like, yeah, I'm getting closer to going back to school. You know, I'm in a college town now and everyone's so then I come home and I'm like, hey, I've I've got something I want to show you guys. I'm really excited about it. And they're like oh you know Is this a college application or are you going back to school? And I'm like, and I take the lid off the shoebox and I'm like I want to make peanut butter.

0:47 Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built. I'm Guy Roz, and on the show today, how Justin Gold used his home food processor to make a better tasting peanut butter, and turned Justin's nut butter into a category defining brand. There's a strange thing that happens when you build something successful, and you'll hear this from a lot of founders. The chase?

1:22 It never really ends. You get your first customer. And then you won a hundred. You hit a million in sales? Then you go for ten million. The more you grow, the more complicated it gets.

1:35 And the bar just Keeps kind of moving. All of this was definitely true for Justin Gold. Justin started with a simple idea. He wanted to make a peanut butter that was better than the stuff sitting on the supermarket shelves.

1:49 And at first, he just wanted to sell a few jars around Boulder, Colorado, where he lived. At the time he was waiting tables and working at the local REI and he thought, hey, this could bring in a few more bucks. But every time he sold a jar of peanut butter, every time a customer reacted? it opened the door to a bigger ambition. So eventually he pitched his local whole foods.

2:12 and then more whole foods, and then grocery chains across the country. And along the way, Justin kept experimenting. What started with a food processor in his kitchen became a business built around flavored nut butters, flavors like maple and honey and cinnamon. But there was a problem. A typical jar of peanut butter in someone's pantry lasts a long time.

2:36 Especially if you're not making PBJ for kids on a daily basis. So after some early success, sales of Justin's nut butters started to stagnate. And that was a problem, because well What do you do when you hit a wall that seems immovable? Well in Justin's case, he climbed over that wall with an idea he got while working at REI

2:58 and going for long bike rides. An innovation that would help propel Justin's nut butters into a huge nationally known product, a brand that would come to be worth hundreds of millions of dollars. Justin Gold grew up in Western Pennsylvania. His dad was a dentist, and his mom's family owned a natural food store in the area. In college, Justin studied to become a lawyer, but instead of going to law school, he decided to go in the opposite direction.

3:28 Yeah, I was vegetarian, I had long hair. I really felt like I was a hippie. And so the goal at that point was to move as far away as I could and I went to the Bay Area. And I lived in

3:39 Point raise. And I lived there for about a year. And then I met like, you know, some real like living up the land hippies. And I realize I'm actually quite square. And and maybe I'm not a hippie, but you know, what am I? Where are my people? Where do I belong?

3:56 And so after a year of waiting tables and working in Norkow I um decided that I wouldn't give the mountains a try. But I wanted to go to a university. Town. I went to find a town near the mountains. It had a university. And at that time it was like all right, well

4:11 I had a friend who went to the University of Boulder and he loved it. And so I just started there. Um totally on a whim and just moved out here and started to to wait tables in Boulder and that would have been in two thousand and one. So you're all right, so you're in Boulder, you're waiting tables, but in the back of your mind, it sounds like the idea was you would maybe go back to school, you there's the University of Colorado there.

4:34 maybe get a degree in in something, was that Kind of in the back of your head. Honestly, like For the first year that I'm here, I just want to make friends. Fit in.

4:45 And I wanna learn. Where the good mountain biking spots. You know, the good ski areas and just get settled. And in the back of my mind is okay, there's a university here. And I would like to go back to school at some point. You were waiting tables, but you were also

5:02 doing the things that people do in Boulder, right? Like biking and hiking and skiing and all those things. Tell me about um About your diet. You're vegetarian, so for protein You were eating

5:15 Beans, nuts. Stuff like that. Yeah, a lot of salads. Beans, nutch a lotta tofu, tempeh. You know

5:24 Textured protein chicken nuggets and things were coming out. And so, you know, boca burgers and veggie burgers. Yeah. And and when it came to things like Like peanut butter or or nuts. I mean Was that a big part of your diet? Yeah, I'd say growing up

5:40 You know, peanut butter and jelly was the first thing I learned to make. You know, uh peanut butter and banana is to this day one of my favorite sandwiches. And it was cheap. I guess one of the things you notice is that the peanut the options for peanut butter are limited, right? This is like two thousand two, two thousand one and and there are like

5:59 Basically two options. Crunch or smooth and that's it. And and That struck you as Unusual. Yeah.

6:08 What's interesting is We've walked into a a a a natural food store, you were going to a co op or you were going to a specialty. Store. And And even like the at the regular grocery food stores, it was smoother crunchy and they'd all have all the oil at the top of the jar.

6:24 And then you could also just grind your own, right? They used to have these grinders in the store. Right. And you would just take a s an empty container, put it under it, and you would wait thirty seconds and watch it grind. Some stores still have it. Yeah. Oh yeah, they're great. They're great. And then what was what really got me Curious is is you'd walk the aisle. And There was a small little

6:46 peanut butter and nut butter section. And there was a a preserves, jams, and jellies section. That was three times the size of the nut butter section. And it was just Shocking to me, there's all this variety.

7:00 in all of these different preserves, but not with nut butters. And so then I have a sweet tooth and so I would go home And I would make it peanut butter and jelly. And sometimes Guy I'd run out of bread?

7:12 We just take the jelly and the peanut butter and mix it in a a little bowl together. And just eat it with a spoon. Right? Yeah. Sounds pretty good. So now you're eating this sweetened peanut butter with jelly, right? And you're like Wow.

7:29 This is really good. Like and then now you're using honey and you're like, this is really good with honey. Why isn't anybody just selling it? You know, peanut butter and honey. It seems Pretty simple. And then you know, and so then y you just start thinking uh

7:43 Can you not make peanut butter and honey? Does it not work together? And so then that's when I started to get curious and started to kinda like Create. Formulations and recipes. In your in your apartment. Yeah, I was living in an apartment with uh three other roommates. Okay, so you're living in an apartment with three other roommates.

8:01 And what you start to make Just like make your own Peanut butter? You're like, Okay, if you can grind it in a store

8:11 How hard can it be to make it? So you're like I've I bet a food processor. Can make peanut butter. So then I would go to the co op and I would buy You know, five pounds of dry roasted peanuts.

8:23 And five pounds of dry roasted almonds, and then I'd bring them back to the apartment and I would use the food processor. And you would literally you turn the food processor on, it grinds everything up, and then you stop it, you take a spatula, you push down the sides, mix it up a little bit, turn it back on, do that three or four times, and you have peanut butter and like You know, under a minute. And so then I would take the peanut butter and I would add honey to it. Then

8:48 You know, once I once I add the honey and then you put it in a jar. And it's warm and it's Freshly made. Perfect. Perfect. Yeah.

8:57 But then You know, if you wait three or four hours or overnight. It gets kind of mealy. And it it doesn't hold up well.

9:05 And after Right. You start thinking, Okay, well probably the water activity and the oil. Oil and water don't mix

9:22 What if I used to be Less honey. What if I use something that had, you know, very little water if no water, and then you start to Run these experiments. You know, an example. Is

9:34 banana, right? So that's kind of the holy grail For me. Right. There's banana chips. There's Freeze dried banana. There's dried banana. There's banana flavor, banana syrup.

9:46 So then you start like experimenting with different types of banana. And before you know it, like you know case should this be Ten percent banana? Five percent banana, twenty percent banana, and so all of those Two ingredients.

9:59 can turn into like 10 jars. Yeah. And all these jars are numbered. And I would keep a journal. And the journal would have the number and it would have the percent of peanut butter and the percent of You know, other ingredients including salt. So I'm like, okay, well, if I find one I really like.

10:16 I wanna make sure I can replicate it. And so I'd have all these jars, they'd all be numbered. I put some in the cupboard, I put some in the fridge, I'd wanna understand how temperature impacted the product. And I tried a lot of different things at that time. Yeah, it's interesting. I mean you are your experiment with the chemistry, right? And the the interactions between ingredients. It's sort of like ice cream. Like if you put too much water in ice cream, you get crystals, right? Which is why a lot of ice creams use like liquid sugar or

10:43 tapioca syrup because the water content is lower. And so It's not like now where you c you can literally go on Amazon now and buy powdered anything. You know, you can get powdered spinach and whatever you want. But I'm thinking two thousand one, like, that's not so easy to get. Yeah. I mean I I would buy freeze dried

11:02 Strawberries. And then I would grind them in a food processor and turn it into a dust. Yeah. And you know, or I would You know, buy cinnamon. And um and I would make a cinnamon peanut butter, you know, and

11:15 'Cause it was a powder. And so so very quickly I had thirty or forty different jars. And again, like So let's just say you wanted to make honey peanut butter. Really it sounds simple. Three ingredients. Right. Peanuts, honey, and salt.

11:31 Right. All right, well, what type of peanuts do I want to use? Because at the store here, there's Valencia peanuts, there's Virginia peanuts, there's Spanish peanuts, there's runner peanuts. And then do I want a light roast or a dark roast? And some peanuts have skins on them and some don't. What happens if I make peanut butter with a skin on it? Right. And so now one ingredient turns into like eight different You know. You know, and so all of a sudden three ingredients turns into

11:57 A lot of trial and error. So I'm curious, I mean you're like twenty-four, twenty-five at the time. You're living with roommates in boulder, you're waiting tables. And you're doing this Process and just by by the way, how long roughly were you kind of doing this experiment, like A few months?

12:13 Probably about f four to six months, yeah. Got it. And but it sounds like it was a real Like you got really into it. Were you doing it? Yeah. part in the back of your mind thinking, if I can crack this, I might be able to, you know

12:26 Sell these. Yeah, I was. And I was working at a restaurant, so I'd bring samples in for the the chefs and for the wait staff and I'd be like, Do you like this? Do you think it tastes good? And it was so silly'cause I'd be like, this is ten percent honey and this is fifteen percent honey. Like which one do you like better? And it's like

12:44 You know, who cares? Like but I cared. Like I was really curious. Yeah. So you did this for like Six months. Kind of just experimenting. Until you got to the the point where you were like okay.

12:55 I think I wanna turn this into a business. What then did you do like did you Write a business plan? Did you Saviour.

13:06 money from tips, like what were all the steps you started to take? to go to the next step which is like okay, this is gonna be a business. Yeah, so the f the first thing that I knew I had to do was write a business plan. And I don't know why I thought that maybe I was talking to some friends and they said, You know, a business plan is probably what you need and so And so where I really got

13:28 Lucky is Being in a college town, so I went to CU's business schools library. And and I wasn't intimidated th to go to the library'cause I you know,'cause because I wasn't a student there. In fact, I felt like a student'cause I was the same age as a lot of these Yeah, a lot of the kids there. And what was really fascinating is at the time

13:47 The library had an encyclopedia of business plans. Literally from A to Z And so I started to write a business plan. That took

13:56 Probably Almost year. But that's when as as I'm writing the business plan, that's when something unlocked that really Gave me a competitive advantage. Which was.

14:09 Boulder. Boulder, Colorado. I mean here's what's crazy. So I'm writing the business plan, but the hardest part was You know. What type of business entity do I want to be?

14:20 I wanna be an S Corp, a C Corp, an LLC? Where do you get a UPC? And how do you find a a an FDA food licensed kitchen facility? Like where do you order jars from. Like those are all things you can't just learn in a library. And so what I decided to do was well, I'm gonna figure out If there are any companies that are from Boulder, Colorado And just

14:43 Ask them. And this is where things went bonkers for me is There are a lot of food companies twenty years ago, thirty years ago. That we're National companies that were out of border, Colorado.

14:59 Horizon I did a lot. Yeah. Izzy Soda, uh Bobo's, which we'll talk about later, but that's I mean a lot of brands. But that's not where I started. You know,'cause I didn't have permission, I felt like to go right to to to Celestial. So instead I found a a tiny salsa company

15:17 That had glass jars and had labels and was in Had to use a jar filler and had to put it in there somehow. So I I contacted salsa companies. Product.

15:29 And I started to form these. These relationships And they were all like in this community. And they were all really helpful. Everybody wanted to be helpful. And it was called and did you call it Justin's Nut Butters, or did you have a name for it yet?

15:43 No, when I first started it was Paragon Peanut Butter. Okay. And uh and and paragraph so I wanted something that was really catchy. And so Paragon, I like to I start calling it Paragon Nut butter, Paragon Naturals, Paragon Peanut Butter, and my friends They didn't know what Paragon meant.

15:59 And they couldn't remember it. So they just started calling it Justin's. I'm curious, when you were writing the business plan, what did it say? And again, you were writing the business plan for You or for the idea of Of

16:13 Bringing this to people who might who might give you some money. A little bit of both. I was writing it for me, but I knew that at the end of the day The business plan is what I would use To to try to find angel capital.

16:25 Right. Let's say that this company's either gonna go pub get big enough or it'll go public. Or it's gonna get acquired. And so here's an estimate on your your return on invested capital could be And I had to write it in that perspective.

16:40 Otherwise Nobody would want to invest because there's no Endgame to get their m get their money back. I'm curious. I mean this is like two thousand three when you're working on this, you didn't go to business school, you didn't have a business background. How did you come to the conclusion that You needed to write.

16:57 a business pl like an ambitious business plan with an exit and with, you know, uh multiple returns and et cetera. Like who d was there somebody who kinda guided you or gave you advice? God, great questions. So I got help from everywhere. So'cause you were n you were probably a little naive, right? When you started. Oh big time. Big time. Yeah. So so here I am with the library. It's it's a summer and it's the weekend. Right, and a librarian comes up and is like, Oh hey, what are you working on? What class is this for? I see you here every day. And I'm like, Oh, I'm not the I'm not a student here. I'm doing this for fun. I want to start a company.

17:33 And you say that and the librarian's like, Wow. That's really cool. You know, have you talked to any of the business professors here? And I'm like, I don't know anybody here. She's like, Hey, would you like to meet one or two? And so then now You know, I got to meet

17:47 Frank Moyes, who is one of the business school professors and I got to you know hey Frank could you like go through my business plan and you know and give me input and tear it to shreds. And so I had people like him. who would give me a advice on my business plan. I would meet with other Found of small companies.

18:06 And you know, and I'd be like, hey, how do you scale a company? How do you grow it? Like, well, it's gonna cost a lot of money and you gotta go out there and find angels. I'm like, Well, how did you find an angel? Well, you gotta here meet meet with this person. So then I met with someone who was an angel investor and I'm like, hey, what are the things that you need to see? And being naive gave me an opportunity to ask really silly questions. And I met with almost every small company. That I could get my hands on.

18:32 And not only did Boulder have the natural food companies, but they had a natural food retailer here called Wild Oats. And they were number two to Whole Foods. And we have natural grocers called vitamin Cottage. Yeah. And so I was able to learn all of these things and a condensed amount of time.

18:51 And fast track. The whole process. Um All right, so you get enough data to m to write the plan. You've got a plan and

19:00 What's your What's your goal? How much money were you looking to raise? I wrote the business plan for friends and family. The idea was thirty-five thousand dollars. was gonna bu was gonna buy me a grinder. buy some raw materials and some labels and then rent kitchen time and have build enough inventory then to get started at a farmer's market.

19:21 So I would basically take my business plan and I'd have a shoe box Of of jars that I would make with a food processor of different flavors. And I probably had about five that I wanted to launch with.

19:34 And so I would I would go back to Western Pennsylvania and visit with my family. And um and you can imagine the What's the right word here? It wasn't disappointment. It was confusion. When when you You know. Are studying to become a lawyer.

19:52 And then you moved to California, you know, and y had a a fantastic Jewish grandmother, Gladys Gold. Who When I went to university I was on work study and financial aid and at a at all this debt and that I was gonna have to repay. And then when I graduated, her gift was she financed my college, which was incredible. But she was a real stickler on education and making sure I got a good career.

20:16 And so You know I I move out west. moved to Colorado and I'm waiting tables and everyone's and I'm like, yeah, I'm getting closer to going back to school. You know, I'm in a college town now and everyone's so then I come home and I'm like, hey, I've I've got something I wanna show you guys. I'm really excited about it. And they're like, oh you know Is this a college application? Are you going back to school? And I'm like, and I take the lid off the shoebox and I'm like I want to make peanut butter. Here's a plan that I wrote.

20:45 And you know, and and literally the first thing people say is Peanut butter's fine. It's been like this for a long time. It It doesn't need to change. Like why do you think you're gonna make it any different? Right. And some people thought was really cool. And so anyway, so then I I went to my friends and went to my family. My first investors were my uncle, my mom and dad.

21:03 And my sister And then I was able to kind of, you know, get some inheritance that you know was being saved for me by, you know, my grandma. So I was able to get thirty five thousand dollars together. And um That's how I got started. All right, so you so you've got about thirty thousand dollars from different sources.

21:22 But just awaiting tables, right? I mean that's you you need to like make money and you're getting tips. And what w so with that How are you gonna start this thing? I mean you you've got a food processor at home, but you know from your research that You've got to go to like a commercial kitchen that's USDA certified so you can actually sell this stuff.

21:40 So I'm imagine the first step is like find a place where you can make this. Yeah. So this this took forever. So The first thing I had to do was I had to find a industrial sized grinder. And I found out there's two types of grinders. There's a stone mill. that has two grinding plates that come together and the peanuts come through the grinding plates and the tolerance of the plate is what creates the butter. And then there's a food processor, which is

22:06 Uh basically an impeller. that pushes product through this circular Cutting head. Yeah. They make soy milk, they make ketchup, all kinds of stuff. So right away I'm like, okay, I need this Urshell.

22:19 New ones cost seventy five thousand dollars. And I'm like, okay, well I can't get that. So I I found the local Urshial representative. Uh Ted Dietz. And Ted like

22:34 Like look, I'm I'm I really shouldn't be doing this, but I got an old one That's forty years old. I'm taken out of an old factory because they're buying a new one. I'll sell it to you at a really cheap deal. And and so what was the price he sold it to you for? Three thousand two hundred and fifty dollars. Okay, so it's a great deal. And can I just ask a point of clarification? I mean. Couldn't you just buy one of those

22:56 peanut butter machines you see in a natural food store. Like I go to my local Oliver's in Sonoma County and you can But Jar under there and make peanut butter. Is that just too slow? So y I talked to a few stores about them and um they break down a lot. Okay. And and so I w and and then then you talk to other

23:15 Peanut butter Companies'cause I mean the first thing y I did guy. Is before I even looked at buying equipment, I I contacted a few peanut butter companies. Yeah.

23:26 And I asked them, hey, you know, do you guys make peanut butter for other companies? Like, yeah, we do stores, we do other companies. I'm like, that's great. Could you make it for me? And they're like, Yeah, of course. Send us your recipe. So and then we got to the where the rubber hit the road, which is the MOQ. You know, what what what's the minimum order quantity? Yeah. And it would be in the hundred of thousands of units just to turn the equipment on. And they're like, look, kid. We can't help you, but I I tell what, here's what you need to do. Like And that's how I found out the type of equipment they were using.

23:55 And I'm like, okay, I want the equipment. That these big guys are using. But because you know, that's what they use and that's and some day You know, I want to make a hundred thousand units. And a production run.

24:08 You know, and so that was the goal was to how do I get started so eventually I can hand this over to somebody else. I always had that in my mind. When we come back in just a moment, Justin begins to share his peanut butter with more people. and learns when to listen to their feedback. When

24:25 To ignore it. 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 2003, and Justin has finally gotten his hands on an Urshul. an industrial strength grinding machine for making large quantities of peanut butter. It's literally this Urshul is like a jet engine, right? Yeah. And

25:07 On one end, you put in a peanut. And it's it literally you turn on And then you put peanuts in it. You know, and it literally pulverizes them and the other end comes out this peanut butter goo and it kinda drips out. Right. And I'd have to collect it into a bin, into a a a stainless steel bowl. Yep. And then I would and then from that stainless steel bowl

25:31 I'd have to add my ingredients. Cinnamon or honey. Powdered honey or I was using liquid honey at the time, but it is small enough percent that still worked. I literally had to go to a to a f a restaurant supply store. And I bought a stainless steel

25:49 Like soup. Paddle. Mixer. Yeah. And that would make maybe

25:54 fifty pounds, forty pounds at a time. You know, which is you know, forty jars, thirty And you would hand scoop them into jars? And then I would have to pick up this big container. Put it on like a

26:07 a roll cart that would be like, you know, chest high. Right. Pick it up, put it on this roll cart, and then I'll take a spatula and And I would spatulate into a hopper. That was probably, you know, above my head. Yeah. And then once that hopper is full. You could stand under it with one jar at a time and you'd put there's a little foot pedal.

26:26 And you'd stand on the foot pedal and it would cycle. this jar filler and you'd hold the jar underneath it And it would fill it. Like like ice cream comes out of a Soft service.

26:36 But what happens is You fill it and there's a little bit of air in it, so you have to tap it on a table every single jar. Jar by jar. Yes. You cannot do this in your apartment. I would be I would think that okay, maybe I'll just find like some warehouse space in Boulder and

26:53 And just do it there. But that's not what you did. Yeah, so in in order to sell to even a farmer's market in the state of Colorado, you need to have an FDA certified kitchen facility. The ceilings are clean and there's no rhodent infestation or insect infestation and that there's a three compartment sink

27:14 that allows you to sanitize all your, you know, utensils correctly and that there's floor drains. Now now you're right, I have to find a kitchen. And And so what I did is I'm like okay, well I have the grinder. Yeah. Now I need the jar filler and the labeler. So

27:31 Who uses that equipment? Pasta sauce companies, salsa companies. Let's find one of those. So then I found a salsa uh called all the salsa companies and they're like, Well, we use this shared kitchen facility in South Denver, about an hour, hour and a half from me. you know, we pay to use their jar filler and their kettle and their jar labeler and so I meet this guy. I'm like, hey, how much does this cost to use this?

27:55 He's like, Well, I don't I don't I don't have any openings. Like we're we're booked solid. Throughout the day making all these different products and I'm like all right. Okay. And here's what's interesting. So so this guy, so the the the classic thing for an entrepreneur is is we can't take no for an answer, right? We've gotta find a way to get to the yes. And this was the only place that had the equipment that I needed to be successful.

28:20 And they were booked. So literally it was like all right, well, are you guys making product at ten o'clock at night? He's like no you know, we we close down at you know seven thirty every night and I'm like Well what if I came in In the middle of the night. And you never saw me? And it'll just be extra money in your pocket. You'll never know I'm there.

28:39 And that's what we did is we went in on off hours. At the end of the day, when their shift ended, Is when my shift would begin. And um And at that moment I I was still waiting tables and I eventually switched to a different job.

28:53 um a side hustle in order to t to accommodate those hours. Yeah, I was gonna ask. I mean you're going for ten and nine and this is in Denver, so it's an hour Yeah, hour plus drive each way. Okay, so you're g you you're doing the overnight shift there, and and did you have someone help you? Yeah. Yeah, God bless.

29:10 Johnny Caboon. So my first co worker, employee, partner was my roommate. He was chasing a career that wasn't something that was exciting him and then he saw how

29:24 I'm here to help. And the idea was you were I'm assuming you're gonna make a certain number of jars'cause they last a peanut butter lasts a long time, right? It's not Can last about a year. And

29:37 The idea was I'm gonna sell these at farmers markets. Yes, but it wasn't farmer's market season yet. So now I'm trying to get it into stores. Like like natural food stores, co ops and boulder? Yeah, so And every store I went to said no.

29:52 Wild oats said no because they only wanted to carry, you know, a a national They they only want to work with brands that can work nationally. So then I went to some specialty stores Yeah. And they all said, Okay, you know, we'll we'll we'll think about it. And then I went to the co op here and they're like, Okay, drop off some samples, we'll get back to you. And then I went to this store called Great Harvest Bread. Have you ever been to one of those Great Harvest bread companies? No, I haven't.

30:15 It's a bakery, but they're they're franchised. Okay. And there's maybe fifty of them around the country and there's one in Boulder And I'll never forget. I went into uh the Great Harvest Bread And they have like honey and maybe, you know, some some jams there on like a little retail section.

30:33 And I told him about the peanut butter and this guy Scott, Scott Creevy. He um he looks at me like I'm like I've got you know three eyes and he's like, You got peanut butter? He's like, Okay It's like huh. Interesting. He's like

30:46 All right, I'll take it. Are you sure? That was it? Wow. And and he's like, Yeah. He's like, You have any you have any now? And I'm like I'll be back in ten minutes. You'll be here, right? And so then I went home. And'cause I had samples and things and I came back You know, and I had a s a sell sheet that I made that had pricing and then

31:03 Um so Great Harvest Spread was my first Customer in Boulder. And then um then I got into the co op. And then I slowly got into some specialty food stores. And what what were your What were your products? What were your like what

31:17 I had three products that I started with. I had uh I had honey peanut butter. Okay. I had honey almond butter. And then I had cinnamon peanut butter. And so when I first started Um the almonds were

31:29 Natural. And then the peanuts were organic, and and on top of that, what I was obsessed with was stabilizing the peanut oil. So you wouldn't have that like thick layer of peanut oil when you open the jar. And the way that some brands solve this is by using palm oil.

31:45 Right, which is what we use. And honestly, when I first started, palm oil wasn't a thing. Like when I first started, you know, I was I was trying shea butter. I was trying cocoa butter. You know, as I'm working on all these things, you know, palm oil is introduced as a hardened vegetable oil.

32:01 And so it it was that now this new ingredient. It's like awesome. It's a new ingredient, let's use it. Wow, it works. It's not perfect, right? If if it sits in a hot car for too long or if it Or if you don't add it correctly at the right temperature so it melts perfectly, it doesn't work, but it's good enough. And it limits the oil separation, which I think solves a problem in the marketplace. And probably we should mention, like

32:25 I think that sort of there there was a lot of controversy around palm oil for a while because Some palm oil is produced by Clear cutting forests, right? And and and so there's controversy around rainforest degradation, but You can also get palm oil that is Certified and and that's

32:42 Sustainably grown, etc. But at that time, you're talking about two thousand three. Very few. Nut butters were using palm oil. Correct. So long story short, we don't use a ton of palm on our products.

32:55 But when you have a food product That has two or three ingredients? You notice it. Yeah, and so peanut butter people associate palm oil. With a lot of peanut butter brands because there's only few ingredients, and in a lot of other food companies they have more palm oil or cosmetics, but they don't even list the ingredients. Right. And so it's a little unfair, but at the end of the day.

33:16 We still use it, we own it, and we have to step up and do the right thing. And so it's just a tiny bit of palm oil to stabilize a peanut butter. Okay. But the You know, when you're going to to Great Harvest Bread Company and these co ops and in i initially Um give me your pitch. What would you say? I'm I'm a

33:33 owner of a store and you're you come in and I'm like I already I'm already selling peanut butter, what w like Why should I sell yours? Right. So you have to know your audience, right? And and I was so good at this. I'd understand, you know, is it local that they really like? Is it, you know, something that differentiates on the shelf?

33:50 Is it something that that's the highest quality premium? You know, like what do they feel sorry for you'cause you're just a kid Right. Right. Do I remind them of their grandson? Yeah. And so So if I'm I'm at a specialty store, I'd be like, look, this is the most premium Top tier Gray Poupon nut butter you can buy, and it belongs here in your store of all these fine cheeses and meats, right? Yeah.

34:14 Or you go to a great harvest and say, Look, you know, this is you can eat this with a spoon. You don't need to add anything to it. It can go on a slicer bread and you're good to go. You don't even need the jam'cause we have honey and we have cinnamon. Or you go to a Whole Foods or or to a co op in in this case and say, look, this is a really unique product that, you know, that has the differentiation for what you're already carrying. In those first few stores, how much was a jar? And this is like a six twelve ounce jar, sixteen ounce jar? Sixteen ounce jar. Right. Okay.

34:47 And you know It's tricky'cause when you're first getting started. You know you can't price yourself too high, even though you should. So we're probably selling peanut butter for six dollars. And almond butter for for eight or nine dollars.

34:59 And um And not charging enough. Right. What your c what do you think your costs were? to produce a jar of peanut butter. You know, probably four dollars.

35:09 And so I I was making virtually no money on any of these things. And And it was it was a hobby. This wasn't for me to to make money. This was for me to to build something that someday could be a business that makes money. For me it was real. I treat it as a business, but I'm working on waiting tables. Now at this time in my life I'm working at REI.

35:31 which is a sports, you know, retailer. And I'm and I'm not paying myself. I'm paying my roommates. I'm paying the kitchen I'm working at. I'm everyone else except me because I already have a job and I know that if this thing works Eventually I'll get paid. And And you are

35:49 How were you sell I mean, how I mean, if they're just sitting on the shelf in a store How were people discovering them? Were they? Did anybody buy them? No, no one was buying them. Right. So I would um

36:03 I'd set up a demo, so I would, you know, dedicate time to set up a table and I would hand out samples. And and that's where the farmers market. down the road became such a great Because you're standing at a table And you can

36:18 Talk this thing. So so imagine The farmer's market was probably a really important sales channel. It was it was so important. So so so now it's now it's into the winter. And And it was tricky even getting the farmers market because, you know, we're not a a an agricultural product that's grown locally.

36:35 Right,'cause peanuts are grown in what the South Georgia or Yeah. So the farmer's market says, you know, yeah, I don't know, you know, I don't think there's a good fit for us. And you're like, oh shoot, like what Well I tell you what You know. I'll make a deal with you. How about we'll come in

36:57 early in the spring, before all the farmers start to harvest their vegetables, and once all the farmers come in and the honey vendors come in, if there's no room for us, we'll leave. And then we'll come back again in the fall. When more space opens up, because you'd rather be selling something than nothing, right? And then once I got in You know, and there's probably the first farmers market a week or two, they kicked us out'cause there wasn't any room. And people complained. They're like, we where' where's our nut butter?

37:24 And then all of a sudden I was able to get a little corner You know, not a full ten by ten, but a little Little corner and I could you know, slowly work my way in and become a regular. W people attracted to the honey peanut butter, the almond butter?

37:38 The cinnamon butter, like what What what kind of reaction are we getting from people? It's the whole experience. Like people just love to buy a product from someone that they can look look in the eye and be like, You made this? Wow, that's really special.

37:54 And the other thing that really helped Guy is like We're the only nut butter company there. So it's not like you're at the store price shopping for what is the cheapest. You're like, well, I need peanut butter and there's the only one here. And so that was really fun. The the biggest learning for the farmer's market for me was Two things.

38:12 Number one I realized that You can't make everyone happy. Right. Eventually someone's gonna come by and be like, you know what? I don't taste enough honey in this. Or you know what?

38:23 This is too sweet. Too much honey and and And then you know they're telling you, Can you add less honey? You know, and you're like Oh yeah, yeah, of course, I'll I'll work on that. You know, and then after like a year, you're like, you know It is what it is. And if you don't like it, I'm sorry. But I'm not changing it, you know? Cause when you first launch, you want to make everyone happy. And you're like, okay, well, how do I create something that everyone's gonna love?

38:47 And then you realize, okay, I just gotta put my You know, line in the sand. This is what it is. I'm not gonna change it. The second thing I learned was which was so fun for me to learn. was when I first launched

39:01 You realize I didn't have like a a plain peanut butter, everything had a flavor to it, because that was, to me, that was the big point of differentiation. Right. So you know, you have the farmers market and someone comes along and they're like, Oh my gosh, this is so exciting. You're brand new. I'm gonna take the tour. I'm I'm gonna I wanna try them all. And maybe I had four or five different products because I would come up with some specialty ones like pumpkin pie. Or um chocolate or something, you know. And so someone come like oh my god, okay, I'm gonna try em all, I'm gonna try'em all, and they'd be like

39:30 Oh, the honey. Oh, that's really nice. It's really really subtle, but I really like it. Oh, there's a maple, a maple almond. Wow, that maple's really Compliments the almonds. I really like that. And okay, here's another one. Oh, the pumpkin pie. Oh, that's just too much nutmeg for me, too spicy. Okay. What do I buy I wanna I wanna support you, so I'm gonna buy something, okay? So what should I buy? Hmm, what should I buy? Well, do you have just plain plain peanut butter?

39:54 No, no, I don't have plane. Like, why would I have plane? You can get plane at the at the grocery store. Well, you know, I really like you and I really like supporting local and And I really want something I can have every single day, not just on a special occasion, like the cinnamon would be once in a while. And then I was like, Oh my gosh, well that's interesting. So then the next week I came back. with classic, right? Not plain. N nobody wants something that's plain. Right. So it was a it was I called it classic, and guess what? It became our bestseller.

40:23 Right. Because people just wanted something simple. And now I'm scratching my head. I'm like, Well I thought the flavors Or what was important. But people just want to support something that's local and that tastes good. All right, you're getting feedback from people and you're adjusting to it, but here's the the big picture.

40:39 Right. You're working at REI? You're waiting tables, you're making peanut butter in Denver And your Demoing it at a farmer's market at least one.

40:49 farmers maybe two on the weekends. Like that's a grind of a life like you're living off your other jobs. Yeah. I'm I'm certainly Breaking even

41:00 You know, on good days. But I was having so much fun. Like it was fun to be in a community of other entrepreneurs, of other Food companies. But I knew that it wasn't gonna last forever. I knew I had to figure it out. And I didn't have a girlfriend. I didn't have a dog. I I this was all I wanted to do. So a as I'm in the farmer's market, I'm like, okay, scale is what I need. And then when the farmer's market ended

41:24 For me, it was like okay. Once I get into whole foods, like Game over. You've done it. You're just gonna have this big company and

41:32 Let's get the whole foods. Like that's the goal. Okay. So that became my obsession is how do I get into grocery food stores? Okay. And this and when you say when the farmer's market ended just seasonally, it ends. It ends in like November or whatever. The idea was Uh a and and this is a time, two thousand five, two thousand six, when you could walk into a Whole Foods it's harder now because it's you know, it's owned by Amazon, but it you could walk in and get the store manager and they would You could get them to put a product in their store.

42:03 At that time. Like you could have that conversation. Was that Did you Do that in two thousand? Five or uh six? I mean d or or not not quite yet. So two thousand

42:13 six was when I started to deliver to retailers. And here's how it started. I had a kind of an an idea of of w how this might work. And so then I walk into the one whole foods That was in our town. Ask who the grocery buyer is and that the buyer is, you know, at that moment in time stocking a shelf and

42:31 And I walk up And I'm nervous and I'm in my twenties and And I've done this a few times, but not with whole foods. And so I I I asked the buyer who's like wearing knee pads and he's, you know, sock something on a low low shelf. And I'm like, hey, do you have a second that I can ask you a quick question? And this guy's name's David, David Spice, and and he's like looks up at me and

42:51 It's like yeah, come on. Spill it,'cause I I got lots of stuff to do here. And I'm like, hey, my name's Justin. I have a food company and I really want to sell it to And as soon as I said that, you could kinda see I lost him, right? He's like, uh God, I you know, kid, I hear this five times a day. Like He's like, all right, stands up and say, look, here's what I need you to do. I need you to get into a food distributor called UNFI. Yep. You know, UNFI is who distributes all of our food products. Once you work with them, then I can bring you in. And I'm like, Oh It's that simple. I'm like, Okay, hey, thanks. I I'll I'll let you know when I get into UNFI. And so then

43:26 I go to UNFI. They're like oh We can't get you just into one store because we have this big warehouse. And in order for us to get enough economies of scale to deliver to enough stores, we need to be in at least thirty or forty stores, which is usually the whole region. And I'm like, Well I don't want to be in the whole region. I don't I don't have enough capacity for that. I just want to be in a few stores. And she's like, Well, you know, maybe they'll make an exception and just work with you. And I'm like, Well, I Oh okay, I get it. So

43:55 It's gonna be harder than I thought. So then I go back. to Pearl Street, and I find Dave Spice, who's, you know, again working in the store, And so the next time I came in, I was ready. Like, hey David's Justin. Hey, I went to UNFI and they said that they can't just deliver to your one store. So What if I Come in.

44:14 And I'll check my own shelf and I'll deliver just what you need. And then I'll walk it out to the shelf and I'll stock my own shelf. And so you'll you'll never even have to worry about it. Well That all sounds great, Justin, but you know I'm nervous is a new product. No one's gonna notice it. Are you gonna be able to support it? And I'm like

44:33 How about If I'm here every day And I'll do a demo. And at the end of a month or two, if if we don't sell enough jars that makes you happy, you can take everything off the shelf, give it to the staff, take it home. And it's free. It's on me and you'll never see me again. And he finally he was like, Oh my gosh, he's like

44:52 Okay, fine. Like take your jar, take it over to, you know, th this person at at scanning and let's get it set up in the system and we'll see you next week. But you're starting in this one store in Boulder. starting at one store and I thought that by getting into the store it would be this big unlock. Once I was on shelf, I kinda thought, Okay, everyone's gonna notice it, it's gonna be great. And then like Nobody really noticed it. I had to stand there like three, four times a week. And hand out samples.

45:19 and get people excited about it. But still like The internal optimist is like okay, well hey This is just one store. Let's get into thirty stores,'cause then once UNFI has it. But you can't get into thirty stores if you're not doing well in one store.

45:33 Well, well enough, right? And like, you know, so so y y you get into the store and Maybe like you know, two weeks goes goes by and it's like, Okay, well I gotta get into another store'cause I have a I can at least service fifteen stores. So now you go to the Whole Foods across to the next town over And you're like, hey. You know, David over at uh whole foods pearl, well, hey, he just brought us in. You guys should be carrying us here.

45:57 And they're like, Well, you're you and UNFI. Oh no, no, no, I'm gonna deliver it, I'm gonna stock my shelf and I'm gonna do demos and Like well uh okay, well if David has it, then I guess I guess we'll try it and then you know, you really leverage that one relationship. And then I would get into more and more stores and I would deliver to these stores. And I would be kind of like

46:17 Yeah, for me it was like all right, well Pearl's doing okay. You know? And in these other stores, if I can get them to do what Pearl's doing, and now I can get into thirty or forty of those, you know, the target's always moving. So now the target's moved from getting in the farmers market to getting into Whole Foods. All right, now I'm in Whole Foods. Now I gotta get into UNFI so I can get into more whole foods. And then I'll then I'll have made it. And so the target's always moving.

46:43 And how many stores were you I mean How many stores are you able to get into just going store by store on your own and doing your own deliveries? So two thousand and six, I'm like two or three years in I could deliver to specialty stores, I could deliver to natural grocers, and I could deliver to wild oats into about ten. To maybe

47:04 twelve whole foods stores. So now I've got I've gotten into about twenty five stores. Wow, so twenty five stores. Okay, so a and at this point I think you were you're ready to go to to UNFI. And they

47:18 became your distributor, right? This is like uh like around two thousand six I guess. And you're now getting into stores all over like Colorado and and Texas and New Mexico. Uh, so at this point, like how much were you doing in sales? Were you Or are you breaking a million?

47:35 Yeah, no. We were probably around. Hundred and fifty thousand dollars in sales. Right. Tiny, small. Yeah. And and the thing about peanut butter is the velocity of it, right? So the velocity is how often it moves off the shelf.

47:51 And for a consumer You might buy peanut butter. Once a month. If you're a heavy consumer once a week or once every two weeks And so

48:02 It just wasn't flying off the shelves like like a like a a bar or a energy drink would because you'd have one every day. So now I'm you know, I'm a few years in. I'm working, you know, now at h at at R I. I'm You're still working at RI. And doing all this stuff. Okay, and how many shifts were you doing at REI, by the way? About three or four days a week I work at REI part time and is mostly is mostly to to maintain the minimum to get health insurance and benefits in RIP. And at this point.

48:33 I realize that This isn't working. Because now I have real data. I'm like, oh yeah. I I was a little overly optimistic on how many, you know, jars I was gonna sell my first year. At this pace. It's gonna take me

48:46 a lot of stores to get to the scale that I need to to you know break even. I'm like, oh man, this is so now reality is setting in. And when I would get really I don't know. nervous or upset, I would go and exercise, you know, go on a big bike ride, go on a big trail run, you know, clear my mind, come back exhausted and just feeling Refreshed.

49:09 The next day. And so I'm on a big mountain bike ride, you know, and this is now two thousand and six ish, two thousand and seven. And I'm on a bike ride and I'm eating a squeeze pack of a of an energy gel. Yeah. And as I'm eating the energy gel I'm like, man, you know, this energy gel is good, but why isn't I really want peanut butter. Why isn't anyone putting peanut butter into a squeeze pack?

49:31 It just comes to you like that. Well it it makes sense, right? You're one of these like goosey with something. Yeah. Yeah. I'm with peanut butter all day, every day. Yeah. And here I am with a a gel pack. You know, and I'm like, and I just put one and two together and I was like, why isn't anyone doing this? Holy cow. Well we come back in just a moment. Justin quickly discovers why nobody is putting peanut butter

49:56 And then decides Do it anyway. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to how I built this.

50:17 I'm Guy Raz. So It's two thousand seven, and Justin has just come up with what he thinks is a brilliant idea. Put peanut butter in a little squeeze pack. So people can eat it on the go.

50:30 And I'm like, Well how do I find out if I can even make a squeeze pack? So I um talked to a few friends. I've made a lot of friends now in the natural foods community. And one of them was uh the founder of Bulder Chips this national. Um potato chip brand in John Maggio and I talked to John. I'm like, John, I got this great idea. Like How can I find out if someone can make it for me? Well, you know, just like there was for peanut butter, a a a contract manufacturer.

50:55 There's contract manufacturers for squeeze packs. Here's three that I found for you. The the largest three in the country. You know, call them up, see what they have to say. And so I'd call them up, I'd be like, hey. You know, my name's Justin. I have this natural foods company in Boulder, Colorado. I was hoping you could, you know, put my food product into a squeeze pack. Oh, they're like, Yeah, of course. You know, no squeeze packs too big or too small. Where squeeze packs are us. What are you doing? And I'd be like, oh wow, this is really great. I'm doing um peanut butter. I'm doing almond butter. I want to do a chocolate hazel. And they'd be like, whoa, whoa, whoa, you can stop right there. We're not going to be able to help you. All three of them just said no, flat out, outright said no.

51:35 They're not gonna be able to why? 'Food allergies, the nut allergy. That's where it finally showed up. And again, these are companies that are making what, energy gels or what like what are they Everything. Mustard, mayonnaise, ketchup. hair conditioner.

51:51 Honey. Anything that comes into a squeeze pack, you know, salad dressings. So they will not do peanut butter for obvious reasons because they're a I mean I say this as the uncle of a a kid with peanut allergy. It seemed like every school, every daycare center, every Youth organization was

52:14 was banning nuts. Like and and this just would go on and on. So I can understand why some of these brands were like or companies were like, We're not getting we're not touching that because we, you know, people are freaking out about this stuff. Yeah, the liability was too great and you'd have to label On the product. process in a facility that handles or shares a line with and

52:36 And you know, nob nobody wanted to do that. And And at first As you can imagine, I was kinda devastated. I was like oh I had this great idea and it was gonna be so fun and now And then it was like Wait a minute.

52:51 Maybe if I'm the only one who can make it. I should make it. Alright, well okay now all of a sudden I'm energized. Okay, well, how how do I find a squeeze pack machine? I g I gotta make it myself, and this is you know, this'll be really interesting. And so then The goalposts have moved again. Once I get this squeeze pack, it it's gonna fix all my problems. Yeah so anyway, so I get I get really excited and inspired, and then I find out that these squeezeback machines, as you can imagine, are hundreds of thousands of dollars.

53:17 And so finally, like through calling around, there's You know, I find a equipment broker who sends me to someone out of New Jersey. And this guy has a company called Proto Pack. And they basically would m take these old machines and refurb. So I started talking to him. He's like, well, you know, I got this machine, it does one at a time.

53:37 Back in like the the eighties and nineties, you'd open the Sunday paper and there'd be like this You know, squeeze pack of you know, Perel. hair conditioner in there. You know, I and it's been sitting here collecting dust and I'm I'll happily sell it to you. And I'm like, how much? She's like, Well, it'd be about thirty thousand dollars. And it's like, oh man.

53:55 30 there. Okay, well, okay, so if that's 30,000, I'm gonna need a kitchen to wire it into, because it's not gonna fit in the salsa company. I need one in Boulder. And so at this moment in time, I'm okay, well, to get that, I need$75,000. And I went out to my family, they didn't have any more resources for me. Um I talked to a few angels and they're like, excuse me, a squeeze pack of peanut butter to do what? They're not going to be able to do it. I don't know.

54:21 Too risky. So I had nowhere to go. The only place that I could go, and God bless him again was My roommate who was helping me with the farmer's market, he was helping me make it at night. And I went to his parents.

54:34 and lay down the idea, show them the business plan. and his parents loaned me seventy-five thousand dollars. Wow. That then allowed me to go out and buy this machine. Now I needed a kitchen. And I found a kitchen facility in Boulder of a company that had just gone out of business. But it was too big of a of a facility. I couldn't use it by myself. You couldn't put this in the salsa place.

55:02 Correct. Yeah. It was the s size of a small car with this squeeze pack machine. Yeah. And so I was able to find another company that was also growing. at that moment and they were a few years in called Bobo's Oat Bars.

55:16 Yeah. And so Barrel and I They're not going to be able to do it. We um shared a kitchen together. And we'd work like you know, we hired some some employees and we'd share them and on even days we'd make Bobos and on odd days we'd make Justin's and we had the squeeze pack machine now hardwired into this facility. And so I'm making these squeeze packs. Can I just ask a packets could be the game changer because now it's like runners and people doing outdoor activities. And I imagine because you had You're in forty stores, right?

55:50 You could make the case, hey, can we add the squeeze packets as part as another skew. Is that right? Is that fair to say? It is. And so I went to Whole Foods and I said look, you know.

56:02 In Boulder. Okay. Here it is. Here's the sample. It's for athletes and it belongs right here with the energy bars. And I I don't want to sell it to UNFI because I just wanna sell it to a few stores and see how it does. I've been working on this for the past year and a half. I'm so excited. It's gonna crush Let's, you know, can I put Oh yeah, Justin, we see you here all the time. Yeah, we'd love to let's put an energy bar section, we'll put it right next to the Lara bars and it'll be great. And um And it doesn't work. It doesn't sell.

56:33 This is one store, first of all, in one store. Okay, and so You're in the energy bar section, assuming this is where people are gonna look for this, right? Because you want a quick hit of energy. Right. Okay. It makes sense. And it and and it doesn't It doesn't move?

56:53 So after a few months The buyer's like, Hey Justin, you know these Squeeze packs aren't really moving. I'm probably gonna have to ask you to to remove them because you know, I I feel like the the test is over.

57:05 And we're probably not gonna bring them in. And um And to me this the squeeze pack, this was the big idea. This is what was gonna, you know, elevate the the brand and set us free and put us into every, you know, REI and running store and you know, and be this big athlete food. And so I was I was devastated. But instead of just you know, pulling it off the shelf and giving up. I I literally stood at the shelf

57:31 And watched people shop for you know half an hour. And And it came really clear to me that when people and I know this is this isn't like you know gr earth shattering news. But w when people go shopping, they're in a rush.

57:45 And so it's so hard to get people to try new things, and the problem was People would see it, they'd pick it up, they'd be like, Oh, this is a squeeze pack where my bars are. I it says protein on it, it says energy on it. I don't understand like what do I do with this? What is it? Like I I don't and then they would just ignore it. And so at that moment It was like, oh my gosh.

58:05 Rather than try to force this to be an energy food, Like people don't know what it is, it's just peanut butter in a squeeze pack. I should just sell it next to the jars. And that way people will you know they'll they'll know what it is im instantly. And boom, like it started to work. people started to buy them.

58:22 And what I started to learn was the number three reason why people were buying the squeeze packs was for, you know, portable protein. Right. And I was like, Oh well, that's why I created it. I'm glad put it on fruit, put it on a you know, one piece of toast. That's great. The number two reason I learned why people were buying them. was for portion control. And then the number one reason why people were buying the squeeze pack

58:45 was for a trial size. Like, you know what, I I saw a squeeze pack of almond butter, and I've always wanted to try almond butter, but it's too expensive and I don't want to take the risk, but you know I'm gonna buy this squeeze pack and see if I like it. And you know what? I really like almond butter. Turns out I like your almond butter, so I'm gonna buy your jars. And then what happened is the squeeze pack became this trowel vehicle, so now our jars that were weren't selling that well. Started to pick up. It's kinda crazy just by moving it from one aisle

59:16 that it actually has that much of an impact. Like it it just shows you how kinda crazy consumer behavior is, right? It's the same product that's just moved two aisles down or three aisles down. Yeah. I mean it was really like An eye opener for me. How lucky I got. So now

59:35 I'm like, okay, all this is working. Now I'm like Oh no. Like The word is out. I couldn't patent protect it. I didn't invent peanut butter. I didn't invent the squeeze pack. I couldn't protect it. I couldn't do anything.

59:48 And now my secret's out and people know and they know oh what if what if this natural food company starts making squeeze packs and what if what if and a squeeze pack company starts you know uh in the now paranoia really like grabs a hold of you. And I'm like, okay, well, I gotta raise money and I gotta move fast. And that's when I started to continue to to revamp and rewrite the business plan and then really go for angels. And I guess someone who who helped you raise money was a guy namance Gentry. Yeah. Who you soon brought on to help manage the business, to m to manage Justin's and I guess he had a lot of experience. I think I think he'd been a former executive at Izzy Sodas, which Which was another brand started in Boulder, right?

1:00:27 Well, so it took about a year. But here's where things went a little interesting. Lance meets me and he's like, Hey, I'm looking for my next career. I really like what you're doing here. I think I can help you. And I look at him and I'm like, Good, because I could use some help. Yeah. And so then we get together and it's like all right, well Tell you what.

1:00:46 You need to raise money. Because you can't afford me, and I couldn't. And he's like, You probably need a million dollars, and that's gonna allow us to hire a few more people, including me. And then let's let's rebrand the the the packaging. Let's update it so it looks a little different. And I'll help you go out there and try to raise the money. He was gonna connect you two investors. Yes.

1:01:08 So all right, a million dollars. You you're proving this out, right? At this time you've got UNFI distributing your stuff. And are the packets also being distributed to forty stores, or are they just in that one whole foods? I had to go to every single store and Talk it in.

1:01:24 And you'd have to like work the system and get people to want to help you. And the biggest advice I can give to an entrepreneur who's doing this I kept a notebook. And in in my notebook Was the names of all the stores and the people who worked in those stores. So when I would walk back into a Houston, Texas Whole Foods I hadn't been in in a year.

1:01:44 I would have the names of all the people I'd met a year ago and I'd memorize the names before I walked in the store and and I'd write a description of what they look like and maybe kids they had or where they grew up. And I'd walk into that store, I'd see that person and I'd call them out by their name and tell them a little story about what I remembered and it would blow their minds. Yeah. And they would be like, Oh my God, if this guy remembered me, the least I can do is help him. And it like It was so important. All right, so you have this goal to raise money and and you've gotten the nut butters and a lot more whole foods, and you've got the packs and I'm not, you know, gonna surprise anybody here. You do raise the money. I think it took you about probably about a year. But you raise the million dollars from

1:02:27 Angel investors. So now Lance joins you. Right. to help you. And what does he what you're the CEO, I'm assuming, is he does he take an operational role or more of an advisory role or what? Yeah, Lance was

1:02:41 He was everything, everywhere, all at once, and wherever we need help, Lance is there. If it's working on production, you know, Lance is there helping with production. If it's meeting with a retailer, Lance is there. If it's marketing is his genius, and so Lance's title was was president, you know, I was CEO, but really like I was working for him because he knew what he was doing and I was learning. Did you like that? Did it feel like okay, if finally there's like a grown up here to help me? Yeah, I I really did enjoy it. I I felt like I didn't feel like I was alone anymore. I felt like I had someone Who is not only

1:03:16 More talented than I was, but was in it. As deep as I was and felt like a real partner in the business. And did you start to see results right away? Was Lance like was his was he able to Scale. fairly quickly where you start to see like, I don't know.

1:03:32 Five million dollars in sales that year or s or or something like that. Right away. The the first thing that happened was we got into Starbucks. Wow. With the squeeze pack. And they put us into a a bistro box. Which is we're still there. It's like their protein plate little grab and go. But in order to get into Starbucks we had to have a a food audit.

1:03:52 And our little shared kitchen space with Bobos wasn't cutting it. And so we had to find A food manufacturer who would overnight Take our existing peanut butter making process.

1:04:06 And put it into their facility. Where they have full sanitation team, parts and maintenance team. They have uh employees that are, you know, come in all the time. And so we literally took this whole Yeah. and moved it into their facility and they made a bunch of other food products there. And then they had the the the credentials and the licensing and the

1:04:29 auditing that Starbucks needed in order for us to be a customer of theirs. And I kinda like Told them we already had these things, hoping that if they accepted it, this food company would want to bring us in anyway. Right. So they take your equipment, they're running it. Okay. So you start to see I mean Starbucks huge deal.

1:04:49 Sounds like Lance is a a transformational guy. The business is growing you're now like It's two thousand nine, you've raised the money, you're getting into two thousand ten and I I think that year was a

1:05:01 it it was there were a lot of setbacks. It's to actually not What what happened? So So two thousand and ten.

1:05:11 I just set this to set the stage. We're in Starbucks nationally. Right. We're in whole foods. nationally. We are now getting a lot of

1:05:20 Conventional retailers like Kroger and Target to notice us. And then Lance, who is my mentor, my hero in kind of This everywhere all at once guy is diagnosed with brain cancer. And has two young kids.

1:05:36 And then within a year passes away. And so now it's two thousand and eleven. twenty twelve in Lance. Is not only like Not with the company, but he's

1:05:45 He's He's dead, like he's gone. Did you d was he ill when you you started working with him? No. It was crazy. One day he had a headache.

1:05:56 And then The headache lasted three days. And then he went to a hospital, and then they did a brain scan. And they found a tumor. And he had no idea.

1:06:07 Oh. So then you know At that moment. Not only did we have to to grieve And as a company, there's maybe there's you know eight of us. you know, pause what we're doing and really like honor someone who is a dear

1:06:20 and and be there for his family and he was a larger than life human and so the whole community was really um Uh In shock.

1:06:30 But we had to, you know. Get back to work. And and I had to and I had to step up into a really like Powerful leadership role. Where I had to show empathy.

1:06:41 and encourage but also roll up my sleeves and be like, all right, you know, we've we've got to move on. Because the world isn't gonna wait for us to be ready. And that was a really, really hard moment for me. And then at that moment in time

1:06:55 My wife was pregnant with our first. And so A little bit after he passed away. We brought a child into the world. And so now I have

1:07:06 You know, a business I'm running on my own. newborn and I think I'm no longer working at REI now. So I left REI there for five years. And um all this stuff's happening all at once. So I mean this becomes Your focus, right? And and without Lance, I mean

1:07:23 Were you on your own or did you have other people That could sort of you know that you could lean on and and rely on for advice. Yeah, the the the Beautiful thing about the boulder community.

1:07:36 is I had a lot of great people I could lean on for advice and get you know, support from But at that moment I kind of knew like You know, I had a window of opportunity, and it was

1:07:49 Closing. Because You know, people were noticing us. We now had a national brand and we are in Starbucks and people are like, Okay, this squeeze back's a real thing. And so now I felt like okay, I need more support. I need an another adult in the room. And that's when I started to look for um institutional capital. Outside investors, yeah. Or bigger b more money and and maybe uh

1:08:13 private equity or or somebody like that. Yeah. All right. The The packets are working. And you've got the nut butters. And

1:08:22 You decide to move into Peanut butter Cops as well. Right, a really interesting idea. Right? Uh an elevated version of Reese's peanut butter cups, but like Reese's peanut butter cups, it's iconic, I imagine it dominates the The category.

1:08:38 Um, but you felt like hey, this could be the next thing, imagine, but it's also a shift, right? Because it's it's you're kinda going into candy. Like you're going into a slightly different category. Yeah, so the the idea was If Reese's can't sell a peanut butter cup into Whole Foods or into any natural food store, Then someone should

1:08:58 And why can't it be? Justin's. We already make the best peanut butter. Uh Reese's wasn't even a competitor. And where it really caught me by surprise, two things. One is the velocities in peanut butter cups are much higher than than jars and even squeeze packs. You know, people will but will eat Peanut butter cups.

1:09:16 Every day if they could. Hopefully they don't. But so the velocities were higher. And then People would be would come into the franchise in a whole new way. So now we're in a different part of the store. They see a peanut butter cup, they buy it, they're like, wow, this is really good. Now they're walking the store and they're in the peanut butter aisle. They're like, Oh, these guys make make peanut butter and almond butter now is the surround sound in the store and it amplified Both sides of the business

1:09:41 in a really, you know, critical time. Okay, so you're so you've got these out there, but you want you need to c scale and grow and you know in the back of your mind you're looking for Institutional money. Um What did you

1:09:57 to attract a big institutional backer who was going to put in significant cash to help you guys really scale. Because you're, you know, you're doing twenty million a year in twenty twelve. Still small. But may be attractive to a a private equity group or or a a V C firm or something like that.

1:10:15 So We had a really You know, we had a fast growing company in a category that was notoriously Stagnant. We had an innovation with the squeeze pack, and so

1:10:25 We were we had a really good brand story. And so we had an opportunity where we could really interview and partner with who we wanted to partner with. And I really wanted to l work with a local group because I really felt like supporting local was the right ecosystem for us. But then I I met a group out of San Francisco Called VMG. And

1:10:45 Dang it, like These guys They specialized in, you know, in Kind Bar, Pretzel Crisp, Pirates Booty. They knew exactly how to scale food companies. They had a great track record. And so I didn't take the best deal that was offered. I took the best partner that was there that knew how to help me scale. And it requires a level of sophistication to make sure that everything lines up.

1:11:09 that you know, you have to hire the make sure you have the right people and know how to do that. When you brought in when VM G I think they invested about forty seven million dollars initially. big private equity firm.

1:11:24 behind you, which is great because there's cash, but there's also complications. You've got to It's a different beast now and and they need a return on it. What kinds of challenges did it create? I mean, now you've got it's not just these small angel investors. It's a big

1:11:42 Professional. Private equity group. Yeah. We're about a year in And

1:11:49 One of my board members, Peter Burns, who had just left Celestial. was ready for his next thing and so we I was able to recruit him to come and become the CEO. And at first I was like, hey, let's be co-CEOs. And he's like, okay. And then I saw what a what a really amazing, fully functioning like CEO can do. And I was like, oh my gosh, like, hey man, this is yours. Like you can have it. I'm gonna focus on quality, on culture. on marketing, I'm gonna go to all the sales meetings, I'll be there for trade shows, and I focused on my stuff. which was making sure that our messaging and quality was right and tight.

1:12:26 And and this is the magic of having Peter,'cause Peter knows how to set expectations and how to manage, you know, large private equity groups. expectations on how things are gonna happen and how we're gonna grow the company and and he had the experience to do that, which would have probably eaten me up. And so he was he was the pro. And he I guess he becomes a co chief executive and you guys are now working together. And

1:12:51 I mean. What were you able to do with that? I mean I imagine a lot with that infusion of cash. Yeah, so what we did is we hired really Intelligent People who had experience working in

1:13:04 Food companies that were scaling as fast as we were. And so we're developing new products. Getting into more stores. And we are trying to grow outside of just groceries. We're you know, we're getting into REI, we're and it's everything is just it's just working. It was like it's it took fifteen years to push this boulder up the hill, and now all of a sudden it was rolling down the hill. Did it also drive you to start thinking about selling?

1:13:30 No It it didn't. You know, it I was Advice I got early on. Which was You build the best company that you can build.

1:13:40 And don't go out and try to sell a business. Have somebody want to come and buy it. And so I was so head down, all of us so head down focused. We knew that someday we'd have to take out debt to pay back our investors or go public or get acquired. We knew that was That was in the horizon. But we were only three years in with VM G and they generally five years is when they they They say, Okay, let's start to think about what's next, guys. We need our money back. So we're three years in and we were just

1:14:09 building a really healthy business. And And larger companies started to to reach out to us to say, Hey, we love what you're doing. We would love to know if you'd be open to a conversation to be acquired. And that's what triggered a process.

1:14:24 to kind of figure out, okay, maybe this is a good time for us. And it was Hormel who right, the initially came to you and eventually they you would uh uh you guys would come to terms and accept an offer in twenty sixteen they bought uh the brand for two hundred and eighty million dollars, which was certainly a great um outcome for even for the VM G investors who, you know, put in forty seven, forty six million dollars a few years earlier.

1:14:48 Um What was your I mean, you would end up staying With the company for for like another five or six years. But before we get get to that point, I mean I can imagine It was it I mean, thirteen years you were doing this. So this was really now a chance for you to

1:15:05 Uh and and maybe you were able to take some money off the table when when VMG made an investment. Uh but now here was a chance for you to really see like some some significant cash from from thirteen years of work. Yeah.

1:15:20 Yeah, it was it was overwhelming. And it was It was complicated, right? So it was the most Joyous

1:15:29 Moment of my life. this great opportunity to set yourself free financially. And everyone in the business was an owner. Every single person had an equity stake. So we changed everyone's life. In a meaningful way. But at the same moment

1:15:45 I had sold out. Because you know, when you're a small independent business in a liberal values oriented organization, being independent and being you know, local is so important. And when a when a large company buys you, you kind of feel like you've sold out. But what what I did, which I'm proud of

1:16:07 As I stayed for five years to learn. We stayed in Boulder and everything kind of continued on in a great way. And here's what's interesting. If someone's gonna acquire your company and they wanna scale it and grow it and turn it into a larger company. I would like to learn and figure out how they what the unlocks are so I can maybe either do it again or help other companies achieve that. So I was really excited to stick around and to learn anyway. And were you gonna be the CEO or or or w what was the role you were gonna play? That wasn't even an option. I was gonna be um

1:16:39 You know, kinda the founder on the sidelines. But I I would I would input with with innovation and with purpose and with mission and culture and things. Got it. Alright, you ended up staying with Justin's under Hormel until twenty twenty one and then You took a a uh a a position at Rudy's organic bakery that uh makes uh gluten free bread and organic bread. But I'm curious about

1:17:02 W happened. In your view to Justin's Maybe after you left or even as you were leaving, because It was struggling. Like Hormel did not I mean they they recorded you know, losses, um, they were not able to, for whatever reason

1:17:20 accomplish what they want to accomplish with the brand. W what's your take on what happened? I think to to to Hormel's credit, they're a I don't know, a six billion dollar company. They've been around for 110 years. Like they clearly know what they're doing. They're good people who run that organization. And Justin's was such a small company. That They just didn't know how to run a company of that size. And then when they integrated it into all the functions of the Hormel.

1:17:46 Portfolio. The people there didn't have the focus on the Justin's brand because that wasn't paying their bills, you know, Skippy and Dinty more Stu and Spam was paying the bills, and so Justin's didn't get the focus. That's

1:18:01 It needed to be successful. But to their credit, the Justin's brand didn't fall off a cliff, they didn't change all the ingredients, they didn't try to turn it into Skippy. But it didn't grow. It's just kind of been

1:18:13 frozen. Right from when w it was acquired to right where it is today, it's just been on cruise control. And so during covid Um I wasn't being utilized. I wasn't helping the company. I was m maybe even getting in the way. And so it just didn't make sense to continue to stay there, especially when you know, a company like Rudy's really could could use some help and use support.

1:18:36 All right, so you are kind of you you sort of move out of Justin's. And I guess I mean you're now at Rudy's and um, you know, working on this new project, helping them as a kind of advising them Um, and I'm assuming you thought that was kind of your Your life with Justin's nut butter.

1:18:56 Was done. Like that was a it w that chapter was ended. W is that fair to say? It's interesting. So yes and no. So When I first left Justin's I was pretty upset.

1:19:07 It's like a bad breakup. You were upset because you felt you were kind of marginalized during Covid? Yes. You left in a bad way. Not in a bad way. I was let go from the organization.

1:19:18 They didn't need you anymore. They and you felt okay. I was a line item that wasn't adding value. And so I was crossed off. And I was like, Oh my gosh, like, what do you mean you you're firing me? Like I didn't do anything to get fired. And I'm like it was just bizarre. It was so bizarre to me. And I was angry and I was resentful. And then I, you know, went through all the phases of grief. And then I was like, okay, and then I went through you know, acceptance and then I went through joy. Like oh my gosh, my life is mine and I can

1:19:45 do whatever I want and I can go live a sabbatical in another country and I can do other help other companies and s you know I'm set free. Yeah. Yeah. All right, so you you go away.

1:19:57 And You're working on other things. And Justin's in the rear view mirror, sort of. But I I imagine people still were coming up to you all the time and saying, Hey man, I just bought your nut butter. I just bought I I'm buying your nut butter every week and people probably still say that to you. And maybe maybe part of

1:20:15 you felt really happy about that and part of you felt frustrated by that'cause it wasn't yours anymore. Wow. Yeah. I would I would oftentimes lie. If someone who's like a peripheral friend was like, Oh, hey man, how's business?

1:20:30 You know, I'd be like Great. 'Cause it you know, the the the twenty minutes it would take to explain what happened and what I was doing wasn't worth it. And so I would just It's great. You know, and move move on.

1:20:42 But then You know, like I just accepted it and was really proud. of what we accomplished and what we did and the disruption we created and proud to still see it on the on the shelves. Okay, so Justin's is in the rear view mirror, right?

1:20:57 And And then it's not anymore because you would eventually get approached to come back to the company. This happened fairly recently. Uh and I guess now you're back involved with it again. Can you tell me the story, like h how did that happen? You know, it's kind of a every entrepreneur's dream when their company

1:21:19 isn't living up to its fullest potential. And Usually what happens is a company Falls off a cliff and is barely salvageable and the and the founder comes back and buys it for, you know, pennies on the dollar, but by then it's it's it's too late. You can't revive it. You just have a corpse.

1:21:37 But what happened here, like we talked about earlier, was Justin's is just, you know, kind of Frozen. On cruise control. And This one investment group out of Connecticut, I'm forwarded.

1:21:49 Their founder is a a young, super intelligent, way smarter than me guy. This kid Matt Leeds and Matt had just come off of a another fund and started his own. And he's found Kind of his Sweet spot, which is finding brands that are kind of trapped in a corp under a corporate umbrella that aren't living up to their full potential and pulling those brands out.

1:22:11 And then Giving them attention and focus and building them back, building them up. Maybe back up. And then finding a a better home for them. And so he he loves the Justin's brand, he grew up with it, right? Like

1:22:24 He's a kid. He grew up with the brand and he's like So it one day he calls me up and he's like hey uh I've been trying to What do you think about coming back and being a part of it? And it's like Okay, here we go. So they acquired a part of

1:22:41 of Justin's Hormel still owns I think half. A little over half of it. Um and so this group for consumer products bought about uh forty nine percent.

1:22:52 They bought fifty one percent. Controlling interest. And they Brought you in as part of this investment? Yeah, so I'm a I'm a I'm an owner. And I'm also a board member, but I'm not a board member. I'm a founder. And so I don't just go to board meetings. I'm there for all the big calls. I'm there at the office.

1:23:11 almost every day and I'm a I'm a big part of the team. But I'm not running the team. Which is, you know, which is a blessing for me. So what is the prospect now? I mean, now that it's uh partially owned by Hormel.

1:23:24 partial and and the majority stake is by this um group forward. What Like w how do they then turn it you know, turn it into a return f I mean is it is it then eventually one day gonna be sold again? I mean what's the The long term

1:23:41 Play. Yeah, so Yeah. It's to do what should have been done.

1:23:49 in the first place. It's to grow the company to it reach its full potential. We really think that we can double, triple, quadruple the size of this business. And then once we build a business and Get it to a size that

1:24:03 Is larger. I could go anywhere, you know, I think that the opportunity is to find it a home. Where It can continue to thrive just it by being a bigger business.

1:24:15 And then being acquired by, you know, a larger group will give it a a a healthier opportunity to to be integrated because it's'cause that now the size demands that it gets attention. Um, when just when you think about, you know, the journey you took and it was you know, third from really from experimenting a kitchen to selling it. It was about thirteen years and

1:24:38 You know, the outcome was really great for you. And then of course you had the Departure. this thing that you started, how much of of where what happened where you got to and and just the outcome Do you attribute to the to the work you put in the grind and how much do you think

1:24:55 had to do with luck, you know, right timing, the right Place. etc. It's probably fifty fifty. I think that

1:25:05 I don't take no for an answer. I worked hard when most people were, you know, parting and traveling the world. At a young age. But If I wasn't in Boulder, Colorado, if I didn't if Lance didn't find me and I didn't find Lance in the moment in his life when he was hungry and ready to prove himself, if if I didn't go on a mountain bike ride and was eating a lot of squeeze packs, if if Reese's hadn't done a great job of training consumers on what a peanut butter cup should be like, and I could make one organic and it it all these things laddered up. into success and and I can't take credit for all of it.

1:25:39 But if I didn't work hard and and take no for an answer and surround myself with people who are smarter than me and and take direction I wouldn't be where I am, and I pinch myself every day. for how lucky I've been I don't deserve, you know. it nearly as much credit as everyone else does, but because my name's on it, everyone's always gonna, you know, look to me.

1:26:00 That's Justin Gold. founder of Justin's. And by the way, if you're wondering what might be next for the brand. I like the joke that, you know, we're gonna go into skin care. We're gonna come out with, you know,

1:26:13 peanut butter deodorant and peanut butter shampoo conditioner, some ex crunchy for exfoliation. So you know this the sky's the limit. But at the end of the day Protein snacking is really kind of what's Yeah. That's where the opportunities are.

1:26:30 Yeah, I mean we could mean sparkling peanut water. I mean how refreshing does that sound? 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 do sign up for my newsletter at gyros.com or on Substack. This episode was produced by JC Howard with music composed by Ramtina Oblui. It was edited by Neva Grant with research help from Alex Chung.

1:27:01 Our engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Casey Herman, Chris Massini, Catherine Cypher, Carrie Thompson, Carla Esteves, Sam Paulson, John Isabella, and Elaine Coates. I'm Guy Roz and you've been listening. how I built this.

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